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.
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
|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|
|(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.
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.
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.
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