K92 Mining Announces 2023 Q1 Financial Results Including Multiple Process Plant Records Significantly Exceeding the Stage 2A Expansion Design and Record Development
Suite 488 - 1090 West Georgia Street
Vancouver, British Columbia
Canada V6E 3V7
Telephone: +1 (604) 416-4445
Facsimile: +1 (604) 608-9110
www.k92mining.com
NEWS RELEASE
K92 MINING ANNOUNCES 2023 Q1 FINANCIAL RESULTS INCLUDING MULTIPLE
PROCESS PLANT RECORDS SIGNIFICANTLY EXCEEDING THE STAGE 2A
EXPANSION DESIGN AND RECORD DEVELOPMENT
Vancouver, British Columbia, May 15, 2023 - K92 Mining Inc. (“K92” or the “Company”) (TSX:
KNT; OTCQX: KNTNF) is pleased to announce financial results for the three months ended March
31, 2023.
Safety
• Zero Lost Time Injuries (“LTI”) during the quarter, and proactive and focused management of
COVID-19. K92 has continuously operated throughout the COVID -19 pandemic, and has
strong preventative and response plans in place.
Production
• Record monthly ore processed achieved in March, averaging 1,490 tonnes per day (“tpd”), 9%
above the Stage 2A Expansion run-rate of 1,370 tpd. Multiple new daily records set during the
quarter, with the highest mill tonnes processed to date being 1,815 tonnes on March 11 .
Importantly, the records were achieved prior to commissioning of the final Stage 2A Expansion
plant upgrade, the flotation expansion, with wet commissioning currently underway in Q2. The
completion of this final Stage 2A Expansion upgrade is expected to improve recoveries and
potentially increase plant throughput even further.
• Quarterly ore processed of 117,903 tonnes or 1,310 tpd, our third highest on record, even after
encountering 8 days of unplanned process plant downtime as previously reported and increasing
18% from Q1 2022.
• As previously reported, head grade was impacted by underground mining encountering an area
with more challenging ground conditions than expected in Kora, which impacted near-term
production stoping rates and access to higher grade material during the quarter. Generally, mill
feed would be supplemented by mining from additional mining fronts in these situations;
however, due to development rates being below budget for several quarters during the COVID-
19 pandemic, many o f the alternative mining areas were not yet developed, therefore
supplementing from lower grade sources (stockpile and underground) was required during Q1.
As previously reported, we expect Q2 to be moderately below budget, with the second half of
2023 being our strongest, and 2023 production in the bottom half of the guidance range.
• Total material mined (ore plus waste) of 277,534 tonnes mined during the quarter, an increase
of 33% from Q1 2022.
• Quarterly production of 21,488 oz gold equivalent (“AuEq”), or 17,593 oz gold, 1,651,297 lbs
copper and 29,859 silver (1) (2).
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• Cash costs of US$758/oz gold and all-in sustaining costs (“AISC”) of US$1,506/oz gold (2).
Financials
• Cash position of US$ 88.6 million as of March 31, 202 3 while remaining debt -free. Strong
working capital position of $1 17.3 million as of March 31, 2023, with a quarterly increase in
receivables of $ 5.9 million, increase in inventory of $3. 4 million and accounts payable
decreasing by $7.2 million. During the quarter a record $2 3.5 million was spent on property,
plant and equipment.
• Revenue of US$40.4 million.
• Net income of US$5.0 million or $0.02 per share.
• Sales of 17,602 oz gold, 1,538,590 lbs copper and 29,164 oz silver. Gold concentrate and doré
inventory of 3,292 oz as of March 31, 2023, a decrease over the prior quarter of 320 oz.
• Operating cash flow (before working capital adjustments) for the three months ended March
31, 202 3, of US$ 16.5 million or US$0. 07 per share, and earnings before interest, taxes,
depreciation and amortization (“EBITDA”) (2) of US$14.8 million or US$0.06 per share.
Growth
• The Stage 2A Expansion to 500,000 tonnes per annum (“tpa”) continued to progress during the
quarter, and subsequent to quarter end, the final major remaining expansion item, the new
rougher flotation cells, commenced commissioning and are currently in the wet commissioning
stage. The performance of the process pl ant to date continues to demonstrate the potential to
ultimately exceed the Stage 2A Expansion run -rate. Additional mining equipment arrived on
site during Q1, including a new jumbo, loader, two integrated tool carriers, Normet explosive
charging machine, cement agitator truck and a new long hole drill rig. During the remainder of
the first half of 2023, two underground trucks and one jumbo are scheduled for delivery . The
arrivals of equipment are to both replace existing equipment and expand the fleet.
• Strong results from 89 diamond drill holes were reported from underground and surface at Kora,
Kora South, Judd, Judd South and Northern Deeps, including 5 dilatant zone intersections plus
multiple high-grade results. The dilatant intersections from surface drilling include:
- KUDD0035 recording 50.05 m at 5.25 g/t AuEq from the K1 Vein at Kora South,
- KUDD0033 recording 27.90 m at 10.48 g/t AuEq from the K2 Vein at Kora South,
- KUDD0038 recording 14.00 m at 5.49 g/t AuEq from the K1 Vein at Kora South,
- KUDD0032 recording 30.30 m at 6.13 g/t AuEq from the J1 Vein at Judd South, and
- KUDD0038 recording 28.70 m at 4.53 g/t AuEq from the J1 Vein at Judd South.
Other highlights include:
- Judd surface hole KODD0026 recording 5.40 m at 56.76 g/t AuEq from the J1 Vein, and
- Kora underground hole KMDD0504 recording 6.12 m at 88.44 g/t AuEq from the K1 Vein
(see February 21, 2023 press release).
• Significant advance of the twin incline in Q 1, with incline #2 (6m x 6.5m) advanced to 2,172
metres and #3 (5m x 5.5m) advanced to 2,230 metres as of March 31, 202 3. Overall mine
development during the quarter of 2,278 metres, an increase of 48% from Q 1 2022 and a
quarterly record. The twin incline advance is ahead of schedule and as a result we expect first
ore to be mined at Kora at depth in Q4, establishing a major new mining front at depth that will
provide a significant boost to operational flexibility in 2024. We note that this area was not
included in the 2023 budget and it is being mined earlier as a result of strong development
advance rates.
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The Company’s interim consolidated financial statements and associated management’s discussion and
analysis for the quarter ended March 31, 2023 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.
See Figure 1: Quarterly Production and AISC Chart
See Figure 2: Quarterly Total Ore Processed, Development Metres Advanced and Total Mined
Material Chart
See Figure 3: Ore Processed Daily Records Chart
John Lewins, K92 Chief Executive Officer and Director, stated, “During the first quarter we continued
to expand our operational capabilities with multiple records achieved while working through some
short-term and localized challenges operationally.
Firstly, the process plant has continued to perform exceptionally well, setting a new monthly ore
processed record in March of 1,490 tpd which is 9% higher than the Stage 2A Expansion design of
1,370 tpd. The plant also delivered multiple new daily records well in excess of the Stage 2A Expansion
design, with the latest record of 1,815 ore tonnes processed on March 11. Importantly, this strong
performance was achieved prior to the commissioning of the additional flotation cells being installed
for the Stage 2A Expansion, and I am pleased to report that this final upgrade is currently in the wet
commissioning phase. Completion of this upgrade is expected to provide a boost to metallurgical
recoveries and plant flexibility to potentially increase throughput further.
In terms of the underground mine, having recently returned from site in late -April, the operational
performance has made a solid improvement in the second quarter to date. Kora and Judd are
exceptional orebodies; we have mined and sequentially expanded them successfully for 5 years and
rapidly increasing our operational flexibility is a major focus. The last two quarters delivered record
development advance towards opening up more mining areas, our material rates have been strong,
our stoping sequence is setting the operation up for a strong second half of the year and we expect our
operational flexibility to increase significantly in multiple areas as the year progresses.
Lastly, we remain very excited about our exploration progress so far this year and into the rest of 2023.
The majority of our eleven drill rigs operating are focused on resource growth, and the reported results
to date have been very strong, demonstrating an increasing hit-rate of dilatant zone intersections and
expansion of the drilled deposit extents at Kora -Kora South and Judd -Judd South (see February 21,
2023 press release) . We expect to provide another extensive exploration update shortly. Porphyry
drilling on A1, our top copper-gold porphyry target, has also commenced and we are currently on our
second hole, with an update planned to be released in due course.”
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Mine Operating Activities
Three months ended
March 31, 2023
Three months ended
March 31, 2022
Operating data
Head grade (Au g/t) 5.2 8.3
Gold recovery (%) 89.1% 90.9%
Gold ounces produced 17,593 24,152
Gold ounces equivalent produced (1) (2) 21,488 28,188
Tonnes of copper produced 749 692
Silver ounces produced 29,859 28,142
Financial data (in thousands of dollars)
Gold ounces sold 17,602 26,471
Revenues from concentrate and doré sales US$40,366 US$52,412
Mine operating expenses US$8,753 US$8,738
Other mine expenses US$8,241 US$9,400
Depreciation and depletion US$6,744 US$4,397
Statistics (in dollars)
Average selling price per ounce, net US$1,807 US$1,769
Cash cost per ounce (2) US$758 US$536
All-in sustaining cost per ounce (2) US$1,506 US$788
Notes:
(1) Gold equivalent in Q1 2022 is calculated based on: gold $1,879 per ounce; silver $24 per ounce; and copper $3.95
per pound. Gold equivalent in Q1 2023 is calculated based on: gold $1,890 per ounce; silver $22.55 per ounce;
and copper $4.05 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 t he Company’s financial
results. Please refer to non -IFRS financial performance measures on pages 12 and 13 of the Company’s
management’s discussion and analysis dated May 1 2, 2023, available on SEDAR or the Company’s website, for
reconciliation of these measures.
Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Conference Call and Webcast to Present Results
K92 will host a conference call and webcast to present the 2023 first quarter financial results at 8:30
am (EDT) on Monday, May 15, 2023.
• Listeners may access the conference call by dialing toll -free to 1-800-319-4610 within North
America or +1-604-638-5340 from international locations.
The conference call will also be broadcast live (webcast) and may be accessed via the following link:
https://services.choruscall.ca/links/k92mining2023q1.html
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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. A maiden resource estimate on
the Blue Lake copper-gold porphyry project was completed in August 2022. K92 is operated by a team
of mining company professionals with extensive international mine -building and operational
experience.
On Behalf of the Company,
John Lewins, Chief Executive Officer and Director
For further information, please contact David Medilek, P.Eng., CFA, President at +1-604-416-4445
CAUTIONARY STATEMENT REGARDING FORWARD -LOOKING INFORMATION: This news
release includes certain “forward-looking statements” under applicable Canadian securities legislation. Such
forward-looking statements include, without limitation: (i) the results of the Kainantu Project Definitive
Feasibility Study, and the Kainantu 2022 Preliminary Economic Assessment, including the Stage 3 Expansion,
a new standalone 1.2 mtpa process plant and supporting infrastructure; (ii) statements regarding the expansion
of the mine and development of any of the deposits; and (iii) the Kainantu Stage 4 Expansion, operating two
standalone process plants, larger surface infrastructure and mining throughputs.
All statements in this news release that address events or developments that we expect to occur in the future are
forward-looking statements. Forward -looking statements are statements that are not historical facts and are
generally, although not al ways, identified by words such as “expect”, “plan”, “anticipate”, “project”,
“target”, “potential”, “schedule”, “forecast”, “budget”, “estimate”, “intend” or “believe” and similar
expressions or their negative connotations, or that events or conditions “wi ll”, “would”, “may”, “could”,
“should” or “might” occur. All such forward -looking statements are based on the opinions and estimates of
management as of the date such statements are made. Forward -looking statements are necessarily based on
estimates and as sumptions that are inherently subject to known and unknown risks, uncertainties and other
factors, many of which are beyond our ability to control, that may cause our actual results, level of activity,
performance or achievements to be materially different from those expressed or implied by such forward-looking
information. Such factors include, without limitation, Public Health Crises, including the COVID-19 Pandemic;
changes in the price of gold, silver, copper and other metals in the world markets; fluctuations in the price and
availability of infrastructure and energy and other commodities; fluctuations in foreign currency exchange
rates; volatility in price of our common shares; inherent risks associated with the mining industry, including
problems related to weather and climate in remote areas in which certain of the Company’s operations are
located; failure to achieve production, cost and other estimates; risks and uncertainties associated with
exploration and development; uncertainties relating to estimates of mineral resources including uncertainty that
mineral resources may never be converted into mineral reserves; the Company’s ability to carry on current and
future operations, including development and exploration activities; the timing, extent, duration and economic
viability of such operations, including any mineral resources or reserves identified thereby; the accuracy and
reliability of estimates, projections, forecasts, studies and assessments; the Company’s ability to meet or achieve
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estimates, projections and forecasts; the availability and cost of inputs; the availability and costs of achieving
the Stage 3 Expansion or the Stage 4 Expansion; the ability of the Company to achieve the inputs the price and
market for outputs, including gold, silver and copper; inability of the Company to identify appropriate
acquisition targets or complete desirable acquisitions; failures of information systems or information security
threats; political, economic and other risks associated with the Company’s foreign operations; geopolitical
events and other uncertainties, such as the conflict in Ukraine; compliance with various laws and regulatory
requirements to which the Company is subject to, including taxation; the ability to obtain timely financing on
reasonable terms when required; the current and future social, economic and political conditions, including
relationship with the communities in Papua New Guinea and other jurisdictions it operates; other assumptions
and factors generally associated with the mining industry; and the risks, uncertainties and other factors referred
to in the Company’s Annual Information Form under the heading “Risk Factors”.
Estimates of mineral resources are also forward-looking statements because they constitute projections, based
on certain estimates and assumptions, regarding the amount of minerals that may be encountered in the future
and/or the anticipated economics of production. The estimation of mineral resources and mineral reserves is
inherently uncertain and involves subjective judgments about many relevant factors. Mineral resources that are
not mineral reserves do not have demonstrated economic viability. The accuracy of any such estimates is a
function of the quantity and quality of available data, and of the assumptions made and judgments used in
engineering and geological interpretation , Forward-looking statements are not a guarantee of future
performance, and actual results and future events could materiall y differ from those anticipated in such
statements. Although we have attempted to identify important factors that could cause actual results to differ
materially from those contained in the forward-looking statements, there may be other factors that cause actual
results to differ materially from those that are anticipated, estimated, or intended. There can be no assurance
that such statements will prove to be accurate, as actual results and future events 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.
Figure 1: Quarterly Production and AISC Chart
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Figure 2: Quarterly Total Ore Processed, Development Metres Advanced and Total Mined Material Chart