KNT.TO · 2018-02-20 12:00:00

K92 Awards Contract for Installation of Gravity Circuit at Kainantu Gold Mine

Metallurgy & Processing

Suite 488 – 1090 West Georgia Street

Vancouver, British Columbia

Canada V6E 3V7

Telephone: (604) 687-7130

Facsimile: (604) 608-9110

NEWS RELEASE

20 February 2018 Vancouver, British Columbia

K92 MINING INC.

K92 Awards Contract for Installation of Gravity Circuit at Kainantu Gold Mine

K92 Mining Inc. (“K92”) (TSXV - KNT) is pleased to advise it has awarded the contract from the

installation of a gold gravity recovery circuit into the Proces s Plant at its Kainantu Gold Mine in

Papua New Guinea to Mincore Pty Ltd (“Mincore”).

Previous testwork carried out on samples from the Kora deposit indicated that up to 65% of the

gold could be recovered by gravity concentration. These results are supported by ongoing plant

scale testwork carried out by K92 on Kora North material curren tly being treated through the

process plant. The gravity circuit will comprise centrifugal co ncentrators and a gold room

containing a shaking table and induction furnace for the production of gold dore bars.

The cost of the gravity circuit is expected to be US$1 million and the installation of the gravity

circuit is expected to improve gold recovery by between 2% and 5% and also increase the payment

terms for the gold produced in dore form by approximately 3% to 4% giving a net increase in gold

revenue of at least 4%.

The ongoing high grades being treated through the process plant make the installation of the

gravity circuit a priority. The feed grade to the plant has ave raged almost 20 g/t Au during

February, requiring the throughput of the plant to be significa ntly reduced to ensure acceptable

recoveries are achieved. While currently gold recoveries of over 92% are being achieved, testwork

has indicated that the installation of a gravity circuit will allow design throughput to be maintained

while also achieving up to 95% recovery. Importantly the gravit y circuit being installed will be

sized to be able to treat the i ncrease in throughput envisaged in the Preliminary Economic

Assessment (“PEA”) referenced below, of 400,000 tpa.

Mincore carried out the refurbish ment of the Kainantu Processin g Plant prior to the restart of

operations and also completed the metallurgical component as re ported in the “Independent

Technical Report, Mineral Resource Update and Preliminary Econo mic Assessment of

Irumafimpa and Kora Gold Deposits, Kainantu Project, Papua New Guinea," with an effective date

of March 2, 2017.

John Lewins, K92 Chief Executive Officer and Director, states, “The award of the contract for the

installation of the gravity circui t is not only a major step in op timizing the performance of the

process plant when treating Kora North material, but also the first step in increasing the plant

capacity from 200,000 tpa to 400,000 tpa. The ant icipated payback for the US$1 million

investment, based on an improved gold recovery and payability, is less than one year. We are also

extremely pleased to be continuing our associ ation with Mincore, who completed the initial

refurbishment of the Kainantu Process Plant within a very tight budget and who are also extremely

familiar with both the process plant and the metallurgy of the Kora deposit.”

K92 has filed and made available for download on the company's SEDAR profile a technical report

titled "Independent Technical Re port, Mineral Resource Update a nd Preliminary Economic

Assessment of Irumafimpa and Kora Gold Deposits, Kainantu Project, Papua New Guinea," with

an effective date of March 2, 2017, that provides additional in formation on the geology of the

deposits, drilling and sampling procedures, lab analysis, and quality assurance/quality control for

the project, and additional details on the resource estimates.

The PEA estimates for Kora, based on the current resource estim ates (4.36 million tonnes of 7.3

g/t Au, 35 g/t Ag and 2.23 per cent Cu):

• Over a nine-year operating life, the plant would treat 3.2 mill ion tonnes averaging 7.1 g/t

Au, 25 g/t Ag and 1.7 per cent Cu (9.3 g/t AuEq (1));

• This would generate an estimated positive cash flow of $537-mil lion (U.S.) using current

metal prices if 15-metre levels are used in mining; if 25-metre levels are used, then net cash

flows are estimated as $558-million (U.S.); this cash flow includes conceptual allowances

for capital;

• Production of an estimated average of 108,000 AuEq (1) ounces per annum over an eight-

year period from year 2 through to year 9;

• An estimated pretax net present value (NPV) of $415-million (U. S.) for 25-metre levels,

or $397-million (U.S.) for 15-metre levels, using current metal prices, exchange rates and

a 5-per-cent discount;

• An estimated after-tax NPV of $329-million (U.S.) for 25-metre levels, or $316-million

(U.S.) for 15-metre levels, using current metal prices, exchang e rates and a 5-per-cent

discount;

• Initial capital cost is estimated to be $13.8-million (U.S.), including the $3.3-million (U.S.)

for the plant upgrade identified in the Mincore scoping study, but excluding the proposed

Kora exploration inclines and di amond drilling; sustaining capi tal cost is estimated to a

further $64-million (U.S.) spent over the life of the Kora mini ng for 25-metre levels, or

$83-million (U.S.) for 15-metre levels;

• Operating cost per tonne is estim ated to be $125 (U.S.) per ton ne for 25-metre levels, or

$126 (U.S.) per tonne for 15-metre mining levels;

• Excluding initial capital expend iture of $14-million (U.S.), ca sh cost is estimated to be

$547 (U.S.) per ounce AuEq (inclusive of a 2.5-per-cent net smelter return (NSR) royalty)

and all-in sustaining cost (AI SC) of $619 (U.S.) per ounce AuEq for 25-metre mining

levels, or $549 (U.S.) per ounc e (inclusive of a 2.5-per-cent N SR royalty) and AISC of

$644 (U.S.) per ounce AuEq for 15-metre mining levels.

Metal prices used were $1,300 per ounce for gold, $18 (U.S.) per ounce for silver and $4,800 per

tonne for copper.

(1) Gold equivalent calculated on above metal prices.

Kora remains open for expansion in every direction and strongly mineralized at the extent of all

drilling.

The PEA is preliminary in nature and includes inferred mineral resources that are considered too

speculative geologically to have the economic considerations ap plied to them that would enable

them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.

K92 has not based its production decisions on ongoing mine prod uction or mineral reserve

estimates or feasibility studies, and historically such projects have increased uncertainty and risk

of failure.

The technical report contains a full description of all underlying assumptions relating to the PEA.

Mineral resources that are not mineral reserves and do not have demonstrated economic viability.

Table 3.0 IRUMAFIMPA AND KORA/EUTOMPI RESOURCES

Resource by Deposit and Category

Deposit Resource