K92 Mining Announces 2024 Q2 Financial Results – Strong Financial Position and Stage 3 and 4 Expansions Fully Financed
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 2024 Q2 FINANCIAL RESULTS – STRONG FINANCIAL
POSITION AND STAGE 3 AND 4 EXPANSIONS FULLY FINANCED
Vancouver, British Columbia, August 13, 2024 - K92 Mining Inc . (“K92” or the “ Company”)
(TSX: KNT; OTCQX: KNTNF) is pleased to announce financial results for the three and six months
ended June 30, 2024.
Production
• Quarterly production of 24,347 ounces gold equivalent (“AuEq”) or 21,661 oz gold, 1,246,639
lbs copper and 26,754 oz silver (1). Production for the quarter was impacted by the temporary
suspension of operations as previously announced.
• Cash costs of US$919/oz gold and all-in sustaining costs (“AISC”) of US$1,510/oz gold (2).
• Strong metallurgical recoveries in Q2 of 93.7% gold and 95.3% copper, representing the highest
gold recoveries since Q4 2019 and record quarterly recoveries to date for copper.
• Quarterly ore processed of 95,582 tonnes and total ore mined of 99,209 tonnes, with long hole
open stoping performing to design, and 1,938 metres of total mine development.
• Head grade of 8.5 grams per tonne (“ g/t”) AuEq or 7.5 g/t gold, 0.62% copper and 10.6 g/t
silver. Gold and copper grades were in-line with budget, and both gold and copper delivered a
positive grade reconciliation when compared with the mineral resource model of 11% and 9%,
respectively.
Financials
• Entered into two separate credit facilities for up to US$1 20 million (the “ Loan”) with an
accordion feature that allows for an increase in the aggregate amount available to US$150
million with Trafigura Pte Ltd (“Trafigura”). As at June 30, 2024, US$100 million of the Loan
is available for immediate drawdown ( US$40 million drawn) and subsequent to quarter end ,
US$120 million of the Loan is available.
• The Company entered into a new offtake agreement with Trafigura.
• Strong cash and cash equivalent position of US$71.1 million, which excludes restricted cash of
$20 million (4). Under the terms of the Loan, the Company has the ability to convert restricted
cash to cash and cash equivalents on January 1, 2025. Subsequent to quarter end, the Company
completed an additional drawdown of $20 million of unrestricted cash and has $60 million of
unrestricted cash available to draw anytime.
• Operating cash flow (before working capital adjustments) for the three months ended June 30,
2024, of US$17.3 million or US$0.07 per share, and earnings before interest, taxes, depreciation
and amortization (“EBITDA”) (2) of US$17.1 million or US$0.07 per share.
• Quarterly revenue of US$47.8 million.
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• Quarterly net income of US$6.1 million or $0.03 per share.
• Sales of 19,064 oz gold, 898,578 lbs copper and 18,467 oz silver . Gold concentrate and doré
inventory of 4,968 oz as of June 30, 2024, an increase of 3,291 oz over the prior quarter.
Growth
• On the Stage 3 and 4 Expansions, 57% of growth capital has been either spent or committed as
of July 31, 2024. K92 has completed handover to GR Engineering Services (GRES) for the
construction of the 1.2 million tpa (“ tonnes per annum ”) Stage 3 Process Plant , with
commissioning of the Stage 3 Process Plant targeting late-April 2025. Multiple long-lead time
items have arrived on site for the process plant and well ahead of when required for its
construction schedule, including but not limited to: flotation cells, mill components including
motors, ball mill (shell and ends), SAG mill (ends), concentrate thickener and tailings thickener.
The SAG mill shell is in-country and scheduled to arrive on site imminently. Underground, the
two raise bore rigs are operational, with the first raise (5 m diameter) to be completed to upgrade
ventilation to the main mine. The first waste/ore pass is scheduled to commence boring in Q3
2024.
• Strong results in the quarter from 140 diamond drill holes were reported from underground and
surface at Kora, Kora South, Judd, and Judd South deposits in addition to Kora and Judd
Northern Deeps. Multiple dilatant zones intersected at Kora’s K2 Vein, including a new dilatant
zone discovered outside of the Kora resource at Kora South and the extension of an existing
dilatant zone down-dip:
- Kora South new dilatant zone intercepts:
o KUDD0053: 78.50 m at 27.03 g/t AuEq (3)
o KUDD0056: 34.00 m at 8.14 g/t AuEq
- Known Dilatant zone extended down-dip:
o KUDD0058: 51.00 m at 7.04 g/t AuEq
High-grade zones extended in multiple directions including up-dip from the main underground
mining area at the K1, K2 and J1 Veins, to the South outside the Kora resource at the K2 Vein
and 300 m to the North near surface at the J1 Vein. Highlights include:
- KMDD0590: 3.26 m at 86.92 g/t AuEq from the K1 Vein
- KMDD0634: 12.09 m at 18.90 g/t AuEq from the K1 Vein
- KMDD0662: 9.00 m at 40.36 g/t AuEq from the K2 Vein
- KMDD0654A: 17.45 m at 23.79 g/t AuEq from the K2 Vein
- JDD0235: 4.13 m at 69.10 g/t AuEq from the J1 Vein
- KODD0055: 9.85 m at 7.58 g/t AuEq from the J1 Vein
See the Company’s news release dated May 6, 2024 for additional details.
• Results from the second set of holes were reported in the quarter from K92’s maiden drill
program at the Arakompa project , with significant bulk intersections and multiple high grade
lodes intersected. Between the high-grade lodes, the tonalite to dioritic host rock is overprinted
with porphyry style mineralization increasing the potential for bulk mining. The target size of
Arakompa is very large, with mineralization demonstrated from drill holes, rock samples and
surface workings for at least 1.7 km of strike, hosted within a ~150 -225 m wide mineralized
intense phyllic altered package, and exhibits a vertical extent of +500 m. Arakompa is sparsely
drilled, with K92’s maiden drill results representing the first drilling on the project completed
in 32 years. Exploration has ramped up from 1 rig in Q1 2024 to 4 rigs currently operating. K92
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is targeting a maiden mineral resource estimate for Arakompa by Q1 2025. Highlights from the
second set of drill results include:
- KARDD0006 recording 12.60 m at 19.87 g/t AuEq within a bulk intersection of 94.40 m at
3.14 g/t AuEq.
- KARDD0002 recording 3.70 m at 42.35 g/t AuEq within a bulk intersection of 86.60 m at
2.12 g/t AuEq.
Other historic highlights reported include:
- 004DA92 recording 4.00 m at 32.03 g/t AuEq
- 013AD92 recording 4.00 m at 20.21 g/t AuEq
- 016AD92 recording 6.30 m at 14.96 g/t AuEq
- 010AD92 recording 9.20 m at 10.67 g/t AuEq
See the Company’s news release dated June 10, 2024 for additional details.
The Company’s interim consolidated financial statements and associated management’s discussion and
analysis for the three and six months ended June 30, 2024 are available for download on the Company’s
website and under the Company’s profile on SEDAR+ (www.sedarplus.ca). All amounts are in U.S.
dollars unless otherwise indicated.
See Figure 1: Quarterly Production, Cash Cost and AISC Chart
John Lewins, K92 Chief Executive Officer and Director, stated, “In the second quarter, K92 continued
to deliver strong financial results even with the impact of the Form 29 (temporary suspension of
underground operations for part of March and April ) due to the non -industrial fatal incident. Our
financial position at quarter end is strong, with $71 million (4) in cash and cash equivalents plus $20
million of restricted cash that can be available January 1, 2025. This includes proceeds from our first
drawdown of $40 million from the Loan with Trafigura. Trafigura has been our offtake partner since
the start of operations and the upsized credit facilities and new-offtake agreement reinforces our strong
long-term relationship. Subsequent to quarter end a drawdown of $20 million was made, with $60
million remaining for immediate drawdown as unrestricted cash, plus another $30 million through an
accordion feat ure providing considerable liquidity going forward. Operationally, performance
strengthened in the second half of Q2, and production in the second half of the year is expected to be
considerably higher than the first half – we reiterate our 2024 operational guidance.
In terms of production growth, the fully funded Stage 3 and 4 Expansions to transform K92 into a Tier
1 Mid-Tier Producer continues to gain momentum, making significant progress to date, with 57% of
the Stage 3 Expansion growth capital either spent or committed as at July 31 st, 2024. The timing of
long lead time item deliveries is tracking well, including the arrival of the ball mill and flotation cells
on site in August with the SAG mill in-country and scheduled to arrive on site imminently, well ahead
of our construction schedule.
Lastly, we are very excited about our exploration programs with 11 drill rigs operating. At Arakompa,
the fourth drill rig recently commenced drilling, increasing the number of rigs to four, from one at the
start of the year. We look forward to providing updates in due course.”
Mine Operating Activities
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Three months ended
June 30, 2024
Three months ended
June 30, 2023
Operating data
Gold head grade (Au g/t) 7.5 8.2
Copper grade (%) 0.62% 0.66%
Gold equivalent head grade (AuEq g/t) 8.5 9.2
Gold recovery (%) 93.7% 92.4%
Copper recovery (%) 95.3% 92.8%
Gold ounces produced 21,661 27,405
Gold ounces equivalent produced (1) (2) 24,347 30,794
Tonnes of copper produced 565 692
Silver ounces produced 26,754 34,001
Financial data (in thousands of dollars)
Gold ounces sold 19,064 28,141
Revenues from concentrate and doré sales US$47,791 US$51,759
Mine operating expenses US$11,248 US$9,782
Other mine expenses US$8,489 US$12,268
Depreciation and depletion US$8,005 US$7,148
Statistics (in dollars)
Average realized selling price per ounce, net US$2,246 US$1,883
Cash cost per ounce (2) US$919 US$597
All-in sustaining cost per ounce (2) US$1,510 US$975
Notes:
(1) AuEq in Q2 2024 is calculated based on: gold $2,338 per ounce; silver $2 8.84 per ounce; and copper $ 4.42 per
pound. AuEq in Q2 2023 is calculated based on: gold $1,976 per ounce; silver $24.13 per ounce; and copper $3.85
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 August 8, 2024, available on SEDAR+ and on the Company’s website, for reconciliation of these
measures.
(3) AuEq exploration results are calculated using longer-term commodity prices with a copper price of US$4.00/lb, a
silver price of US$22.50/oz and a gold price of US$1,750/oz.
(4) The restricted cash is in relation to a condition precedent in the Loan with Trafigura. All conditions precedent for
the advance of US$100 million have been satisfied, with the remaining conditions precedent for the additional
US$20 million satisfied subsequent to June 30, 2024. Restricted cash can become unrestricted beginning
January 1, 2025. Subsequent to quarter end, the Company completed an additional drawdown of $20 million of
unrestricted cash and has $60 million of unrestricted cash available to draw anytime.
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 2024 second quarter financial results at 5:30
pm (EDT) on Tuesday, August 13, 2024.
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• Listeners may access the conference call by dialing toll -free to 1-844-763-8274 within North
America or +1-647-484-8814 from international locations.
The conference call will also be broadcast live (webcast) and may be accessed via the following link:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=KeTO9ljU
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.
Technical Report
The Integrated Development Plan (“IDP”), including the Definitive Feasibility Study and Preliminary
Economic Assessment for the Kainantu Gold Mine Project in Papua New Guinea is included in the
Technical Report, titled, “Independent Technical Report, Kainantu Gold Mine Integrated Development
Plan, Kainantu Project, Papua New Guinea” dated October 26, 2022, with an effective date of January
1, 2022.
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 and Chief Operating
Officer 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 Mine 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; (iii) the Kainantu Stage 4 Expansion, operating two standalone
process plants, larger surface infrastructure and mining throughputs; and (iv) the potential extended life of the
Kainantu Mine.
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
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generally, although not always, 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 tha t events or conditions “will”, “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 assumptions 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 virus;
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 uncert ainties 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 at the Arakompa, Kora, Judd and other
projects; 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, studi es and
assessments; the Company’s ability to meet or achieve 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; 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 s in Ukraine,
Israel and Palestine ; 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, i ncluding 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 p roduction. 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 accu racy 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 materially differ from those anticipated in such
statements. Although we have attempted to identify important factors that could cause actual r esults 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, Cash Cost and AISC Chart