K92 clarifies its disclosure in its news release dated March 1, 2017.
Suite 488 – 1090 West Georgia Street
Vancouver, British Columbia
Canada V6E 3V7
Telephone: (604) 687-7130
Facsimile: (604) 608-9110
NEWS RELEASE
March 3, 2017 Vancouver, British Columbia
K92 clarifies its disclosure in its news release dated March 1, 2017.
K92 Mining Inc. (“K92” or the “Company”) announces as a result of a review by the British
Columbia Securities Commission, we are issuing the following news release to clarify our
disclosure.
In the Company’s news release dated March 1, 2017 (the “News Release”), the Company provided
certain production updates without including additional disclosure regarding the risks associated
with the production decision, which is required by Nationa l Instrument 43 -101 Standards of
Disclosure for Mineral Projects.
In addition, the News Release contained numerous references to the word “ore”. The use of the
word “ore” in the context of mineral resource estimates to be potentially misleading because “ore”
implies technical feasibility and economic viability that should only be attributed to mineral
reserves.
The News Release also contained references to a “Mine Plan” and a “budget”. The Company
advises that its decision regarding production at the Kainantu Gold Mine was based on the
conceptual mine plan described in the Company’s technical report titled “Independent Technical
Report, Preliminary Economic Assessment of Irumafimpa and Kora Gold Deposits, Kainantu
Project, Papua New Guinea” dated November 25, 2016. On March 2, 2017, the Company filed an
amended technical report titled “Independent Technical Report, Preliminary Economic
Assessment of Irumafimpa and Kora Gold Deposits, Kainantu Project, Papua New Guinea” dated
March 2, 2017 (the “Technical Report”) and details of the conceptual mine plan a can be found in
the Technical Report. The Company’s decision regarding production at the Kainantu Gold Mine
was not based on a feasibility study demonstrating economic and technical viability and, as a result,
there is increased uncertainty and multiple technical and economic risks that are associated with
this decision. These risks include areas that are analyzed in detail in a feasibility study, such as
applying economic analysis to resources and reserves, more detailed metallurgy, and a number of
specialized studies in areas such as mining and recovery methods and environmental and
community impacts. In addition, there are certain specific risks associated with the Kainantu Gold
Mine (as described in the Technical Report) including, but not limited to, inadequate water access
and access to power. Project failure may adversely impact K92 and future profitability. As such,
K92 cautions the reader that where projects are put into production without first esta blishing
mineral reserves, as opposed to mineral resources, supported by a technical report and completing
a feasibility study such projects have historically had a higher risk of economic or technical failure.
With respect to the references to “budget”, as the Company does not have a formal budget that is
based on a feasibility study or similar study, readers should not rely on such references.
The preliminary economic assessment (the “PEA”) contained in the Technical Report is
preliminary in nature and includes inferred mineral resources that are considered too speculative
geologically to have the economic considerations applied to them that would enable them to be
categorized as mineral reserves, and there is no certainty that the PEA will be realized. The
Technical Report contains a full description of all underlying assumptions relating to the PEA.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
The Company is retracting the disclosure made in the News Rele ase and replacing it with the
disclosure set out below. Readers should not rely on information in the News Release.
K92 Provides Operational Update With Production Rates
As at February 24th, 2017, almost 8,000 tonnes of material mined for the month, and
the Company expects to achieve over 10,000 tonnes for the month
As at 24th February, 2017, almost 5,000 tonnes processed and the Company expect to
achieve 7,000 tonnes for the month
Over 200 tonnes of concentrate produced to date, with the first container s currently
being filled for shipment to the port of Lae. First shipment of concentrates from the
port of Lae to smelter scheduled for early to mid-March
K92 Mining Inc. (“K92” or the “Company”) is pleased to report mining production has shown a
steady ramp up over the last 3 months. The Company mined over 8,000 tonnes of material by
February 24th, 2017, and the Company expects to achieve 10,000 tonnes by month end. The
increased material production is in part due to significant lower grade material being identified
outside of the planned material envelope, which was identified by our ongoing grade control
program, highlighting the importance and success of this program. All current February production
has come from material development headings and the Com pany currently anticipates the first
stope mining to commence on schedule by the end of March.
The commissioning of the drum scrubber at the process plant has now been completed and
production is ramping up to meet the mine production, with 5,000 tonnes processed as at February
24, 2017. The product from the drum scrubber has met the required specifications and has allowed
the crushing plant to operate satisfactorily, with all of the fines portion, accounting for
approximately 30% of the feed, bypassing th e crusher and reporting directly to the milling
classification circuit.
The process plant has produced in excess of 200 tonnes of concentrate, with current grades
averaging approximately 150 g/t Au. This material is currently being loaded into containers for
transport to the port of Lae, with the first shipment scheduled to depart the port of Lae early to
mid-March, 2017.
As at February 24, 2017, there were approximately 12,000 tonnes of material stockpiled on surface
at an average grade of just over 5 g/ t, which included some lower grade development material
mined from outside the targeted material envelope. The Company anticipates that this stockpile
will allow the plant to achieve over 80% of the design throughput in March, 2017. Based on
performance to date, the Company anticipates that both mine production and process plant
throughput will meet the Company’s expectations.
The above production has been achieved despite unusually high rainfall during January and early
February, with January recording 700 mm of rain on site against a long-term average of 240 mm.
This rainfall has also caused some disruption to the power supply from PNG Power which has had
some adverse effect on operations, primarily the process plant.
The Company does have standby powe r installed for the mine, camp and offices and is in the
process of upgrading the installed standby power to also provide sufficient power to run the entire
processing plant. The diesel generators for this upgrade are currently on site and their installati on
is due to be completed shortly.
Ian Stalker, K92 Chief Executive Officer and Director, states, “It is encouraging to report to all
stake-holders the current operational status of the Kainantu Mine. Progress has been made in all
aspects of our business, in excess of our own expectations. Our first concentrate is being loaded
into containers ready for onward shipping to the Smelter facility, and the grade being recorded at
+150 gpt Au., is coming from treatment of our lower grade development material This is hugely
encouraging for the operation forecast when we start processing our mined stope material later
in March.
The performance of the underground mine has been excellent, with material production being
ahead of schedule. This is all the more remarkable against the background of re -starting an old
mine in weather conditions that are the wettest recorded for many years. I think this is testament
to the skills and dedication of the entire team that is K92, and I wish to record my thanks to them.”
On behalf of the Company,
Ian Stalker
Chief Executive Officer and Director
K92 Advisor, Brian Lueck, P.Geo, a qualified person under the meaning of Canadian National
Instrument 43-101, has reviewed and is responsible for the technical content of this news release.
CAUTIONARY STATEMENT REGARDING FORWARD -LOOKING INFORMATION: This
news release includes certain “forward-looking statements” under applicable Canadian securities
legislation. Forward-looking statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable, are subject to known and unknown risks,
uncertainties, and other factors which may cause the actual results and future events to differ
materially from those expressed or implied by such forward -looking statements. All statements
that address future plans, activities, events or developments that the Company believes, expects or
anticipates will or may occur are forward -looking information, including statements regarding
potential ongoing production which may or may not occur and the generation of further production
assessment work at deposits, which may or may not occur. The Preliminary Economic Assessment
(“PEA”) issued by K92 is preliminary in nature and includes inferred mineral resources that a re
considered too speculative geologically to have the economic considerations applied to them that
would enable them to be categorized as mineral reserves, and there is no certainty that the PEA
will be realized. Forward-looking statements and information contained herein are based on certain
factors and assumptions regarding, among other things, the market price of the Company’s
securities, metal prices, taxation, the estimation, timing and amount of future exploration and
development, capital and operati ng costs, the availability of financing, the receipt of regulatory
approvals, environmental risks, title disputes, failure of plant, equipment or processes to operate
as anticipated, accidents, labour disputes, claims and limitations on insurance coverage and other
risks of the mining industry, changes in national and local government regulation of mining
operations, and regulations and other matters. There can be no assurance that such statements will
prove to be accurate, as actual results and future even ts could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue reliance on forward -
looking statements. The Company disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise,
except as required by law.