The Prospector News

K92 Mining Releases Strong 2022 Q3 Financial Results – Record Cash Balance, Ore Mined and Ore Processed

You have opened a direct link to the current edition PDF

Open PDF Close
Uncategorized

Share this news article

K92 Mining Releases Strong 2022 Q3 Financial Results – Record Cash Balance, Ore Mined and Ore Processed

 

 

 

 

 

K92 Mining Inc. (TSX: KNT) (OTCQX: KNTNF) is pleased to announce third quarter financial results for the three and nine months ended September 30, 2022.

 

Safety

  • Strong focus on safety with one of the best safety records in the Australasia region since commencement of operations.
  • Proactive and focused management of COVID-19. K92 has continuously operated throughout the COVID-19 pandemic, and has strong preventative and response plans that remain in place.

 

Production

  • Record ore processed during the quarter of 117,938 tonnes, or 1,282 tonnes per day, significantly exceeding the Stage 2 Expansion run-rate and a 35% increase from Q3 2021.
  • Record monthly ore processed achieved in August, averaging 1,373 tpd, 25% above the Stage 2 Expansion run-rate of 1,100 tpd. Record daily mill tonnes processed achieved on July 14, of 1,642 tonnes. Importantly, the records were achieved prior to commissioning of a major Stage 2A Expansion plant upgrade, the flotation expansion, with commissioning planned for late-Q4 2022/early-Q1 2023.
  • Record ore mined with 122,035 tonnes mined during the quarter, or 1,326 tpd, an increase of 37% from Q3 2021.
  • Strong quarterly production of 32,995 oz gold equivalent, or 29,256 oz gold, 1,666,076 lbs copper and 32,161 oz silver (1).
  • Cash costs of US$503/oz gold and all-in sustaining costs of US$909/oz gold(2).

 

Financials

  • Record cash position of US$106.7 million as of September 30, 2022. During the quarter, K92 closed a C$50 million bought deal financing to further strengthen the balance sheet while remaining debt-free.
  • Sales of 25,297 oz of gold, 1,551,981 lbs of copper and 28,396 oz of silver. Gold concentrate and doré inventory of 6,795 oz as of September 30, 2022, an increase over the prior quarter of 3,783 oz.
  • Operating cash flow (before working capital adjustments) for the three months ended September 30, 2022, of US$12.8 million or US$0.06 per share, and earnings before interest, taxes, depreciation and amortization of US$11.2 million or US$0.05 per share.
  • Net income of US$3.1 million or $0.01 per share.
  • Quarterly revenue of US$36.4 million, an increase of 3% from Q3 2021.

 

Growth

  • The Stage 2A Expansion to 500,000 tonnes per annum continued to progress during the quarter, with works underway and the new filter press operational; the additional TC-1000 crusher was commissioned in July, while new flotation tanks are to be commissioned in late-Q4 2022/early-Q1 2023. Additional mining equipment arrived on site during Q3, including a new loader and jumbo. The performance of the process plant to date continues to demonstrate the potential to ultimately exceed the Stage 2A Expansion run-rate.
  • K92 announced its maiden resource estimate at the Blue Lake porphyry project. The resource estimate reported a significant inferred resource of 10.8 million ounces AuEq at 0.61 g/t AuEq or 4.7 billion pounds copper equivalent at 0.38% CuEq. Future exploration plans include drilling to target expanding the higher-grade core, which is open at depth, and exploring for additional mineralized porphyries beneath an extensive composite lithocap that extends to and includes the A1 Porphyry Target, our highest priority porphyry target based on geophysics completed in late 2021 (see August 9, 2022 press release). Soil sampling at A1 has commenced and plans to be followed by drilling(3).
  • Results of the Integrated Development Plan were reported. The IDP comprises two scenarios: Kainantu Stage 3 Expansion Definitive Feasibility Study Case, and an alternate Kainantu Stage 4 Expansion Preliminary Economic Assessment Case. The DFS Case evaluates the Stage 3 Expansion to 1.2 million tpa, with an after-tax NPV5% of US$586 million at US$1,600/oz gold, a peak annual production of 308,793 oz AuEq in 2026, and life of mine average cash costs of US$366/oz gold and AISC of US$545/oz gold. The alternate PEA Case evaluates the Stage 4 Expansion to 1.7 million tpa, with an after-tax NPV5% of US$1.3 billion at US$1,600/oz gold, a peak annual production of 500,192 oz AuEq in 2027, and life of mine average cash costs of US$275/oz gold and AISC of US$444/oz gold (see September 12, 2022 press release)(4).
  • Subsequent to quarter end, results from 93 diamond drill holes were reported from underground and surface at Kora, Kora South, Judd, Judd South and Northern Deeps. The results considerably extended the known drilled deposit strike length of both the Kora-Kora South and Judd-Judd South veins systems by ~600 metres to the South, in addition to the second hole drilled at the Northern Deeps target intersecting 3.08 metres (2.15 m true width) at 7.18 g/t AuEq ~700 m north of the Kora Resource. The drilled deposit strike length of the Kora-Kora South Vein system has now been established to be over 2.65 km. Additionally, drilling at Kora South and Judd South both intersected potential dilatant zone mineralization, including Kora South underground drill hole KMDD0495 recording multiple intersections including 30.55 m (11.80 m true width) at 12.82 g/t AuEq or 4.15 g/t Au, 78 g/t Ag and 4.79% Cu from the K2 Vein. The hole ended in mineralization as it was terminated early due to ground conditions and is situated +400 metres down-dip from the previously reported hole KUDD0002, which intersected a dilatant zone, recording 35.90 m (23.34 m true width) at 5.98 g/t AuEq (see October 18, 2022 press release).
  • Significant advance of the twin incline in Q3, with incline #2 (6m x 6.5m) advanced to 1,543 metres and #3 (5m x 5.5m) advanced to 1,581 metres as of September 30, 2022. Overall mine development was 1,887 metres, an increase of 19% from Q3 2021.

 

The Company’s interim consolidated financial statements and associated management’s discussion and analysis for the quarter ended September 30, 2022 are available for download on the Company’s website and under the Company’s profile on SEDAR (www.sedar.com). All amounts are in U.S. dollars unless otherwise indicated.

 

John Lewins, K92 Chief Executive Officer and Director, stated, “The third quarter represented yet another major step forward for the Company. Operationally, Kainantu delivered one of our most complete quarters to date, with near-record production, development, record ore processed, and record ore mined. Importantly, in August, Kainantu realized Stage 2A Expansion processing throughput, ahead of the completion of the flotation cells, the last major plant upgrade, highlighting the potential for the process plant’s ultimate throughput to exceed design.

 

The quarter also delivered a major growth milestone, with the completion of the Integrated Development Plan outlining a Stage 3 Definitive Feasibility Study and an alternative Stage 4 Preliminary Economic Assessment case. Both cases demonstrated Tier 1 production and costs, and strong economics. Importantly, both cases are expected to be fully funded from mine cashflow and K92 ended Q3 with its largest quarter end cash balance on record plus near-record gold concentrate and doré inventory of 6,795 oz to sell in Q4.

 

In late 2021, exploration activities made a major pivot from infill to resource growth, and I am pleased to report that since the Kora and Judd resource estimates, the known drilled strike length of the Kora-Kora South and Judd-Judd South vein systems have been extended by +60% and +130%, respectively (Kora effective date of October 31, 2021 and Judd effective date of December 31 2021). This strike extension increase, does not include our initial drill results at Northern Deeps, which intersected mineralization ~700 m north of the Kora Resource at the K1/M6 vein, representing a highly prospective target that we plan to continue drilling as we advance the twin incline to the South. Exploration also continues to intersect dilatant zones, in both Kora South and Judd South, including KMDD0495 recording 30.55 m at 12.82 g/t AuEq and ending in mineralization at the K2 vein. Dilatant zones represent a potential endowment intensity multiplier and are an increasing exploration focus.

 

Copper-gold porphyry exploration also continues to make significant progress, with a maiden resource of 10.8 million oz AuEq or 4.7 billion lbs CuEq at Blue Lake delivered in Q3. Blue Lake was discovered by K92 and done so at a low-discovery cost of less than $1/oz AuEq, with significant potential for resource growth. At A1, our top priority porphyry target, surface sampling is underway ahead of diamond drilling.

 

With drilling at Kora, Kora South, Judd, Judd South and Kora/Judd Northern Deeps, plus plans for porphyry drilling in 2023, we are very excited about our exploration activities and we plan to progressively increase them next year.

 

 

 

Mine Operating Activities

  Three months ended
September 30, 2022
Three months ended
September 30, 2021
Operating data    
Head grade (Au g/t) 8.7 9.0
Gold recovery (%) 88.9% 86.1%
Gold ounces produced 29,256 21,908
Gold ounces equivalent produced (1) 32,995 24,122
Tonnes of copper produced 756 364
Silver ounces produced 32,161 19,736
     
Financial data (in thousands of dollars)    
Gold ounces sold 25,297 21,675
Revenues from concentrate and doré sales US$36,438 US$35,730
Mine operating expenses US$8,516 US$6,076
Other mine expenses US$7,031 US$10,704
Depreciation and depletion US$5,237 US$3,352
     
Statistics (in dollars)    
Average realized selling price per ounce, net US$1,663 US$1,707
Cash cost per ounce US$503 US$596
All-in sustaining cost per ounce US$909 US$752

Notes:

  (1) Gold equivalent for Q3 2022 is based on the London Metal Exchange quarterly spot average price: gold $1,730 per ounce; silver $19 per ounce; and copper $3.51 per pound. Gold equivalent for 2021 is based on the following prices: gold $1,800 per ounce; silver $25 per ounce; and copper $4.35 per pound.
  (2) The Company provides some non-international financial reporting standard measures as supplementary information that management believes may be useful to investors to explain the Company’s financial results. Please refer to non-IFRS financial performance measures in the Company’s management’s discussion and analysis dated November 10, 2022, available on SEDAR or the Company’s website, for reconciliation of these measures.
  (3) The Blue Lake maiden resource estimate is included in a technical report titled, “Independent Technical Report, Mineral Resource Estimate Blue Lake Porphyry, Kainantu Project, Papua New Guinea”, and dated August 1, 2022.
  (4) The IDP is included in a technical report titled, “Independent Technical Report, Kainantu Gold Mine Integrated Development Plan, Kainantu Project, Papua New Guinea”, and dated October 26, 2022, with an effective date of January 1, 2022.

 

K92 has not based its production decisions on mineral reserve estimates or feasibility studies, and historically such projects have increased uncertainty and risk of failure. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

 

Qualified Person

 

K92 Mine Geology Manager and Mine Exploration Manager, Mr. Andrew Kohler, PGeo, a qualified person under the meaning of Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects, has reviewed and is responsible for the technical content of this news release.

 

About K92

 

K92 Mining Inc. is engaged in the production of gold, copper and silver at the Kainantu Gold Mine in the Eastern Highlands province of Papua New Guinea, as well as exploration and development of mineral deposits in the immediate vicinity of the mine. The Company declared commercial production from Kainantu in February 2018 and is in a strong financial position. The Company is carrying out a series of expansions on the mine and is operated by a team of mining company professionals with extensive international mine-building and operational experience.

 

Posted November 14, 2022

Share this news article

MORE or "UNCATEGORIZED"


Dore Copper Confirms Copper Mineralization on its Cedar Bay Southwest Extension

Doré Copper Mining Corp. (TSX-V: DCMC) (OTCQB: DRCMF) (FRA: DCM)... READ MORE

July 24, 2024

PTX Metals Announces Successful Near Surface Drill Results from W2 Cu-Ni-PGE Project which Significantly Expanded the Mineralized Trend Outside the W2 Deposit

PTX Metals Inc. (CSE: PTX) (OTCQB: PANXF) (Frankfurt: 9PX)  is p... READ MORE

July 24, 2024

Callinex Mines Closes Oversubscribed $2.1 million Private Placement Financing

Callinex Mines Inc.  (TSX-V: CNX) (OTCQX: CLLXF) is pleased to a... READ MORE

July 24, 2024

Red Pine Confirms Independent Sampling and Assaying Validating Corrected Assay Database for Updated Resource Estimation

Red Pine Exploration Inc. (TSX-V: RPX) (OTCQB: RDEXF) reports the... READ MORE

July 24, 2024

MAG Announces Second Quarter 2024 Production From Juanicipio and Increases Grade Guidance

MAG Silver Corp. (TSX:MAG) (NYSE American: MAG) reports productio... READ MORE

July 24, 2024

Copyright 2024 The Prospector News