K92 MINING ANNOUNCES SIGNIFICANT IMPROVEMENT TO ECONOMICS WITH UPDATED KAINANTU GOLD MINE INTEGRATED DEVELOPMENT PLAN Updated Integrated Development Plan (“IDP”) Highlights (effective date
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 SIGNIFICANT IMPROVEMENT TO ECONOMICS WITH
UPDATED KAINANTU GOLD MINE INTEGRATED DEVELOPMENT PLAN
Updated Integrated Development Plan (“IDP”) Highlights (effective date January 1, 2024):
• The DFS Case evaluates the Stage 3 Expansion to 1.2 million tonnes per annum
(“mtpa”), consistent with the 2022 ID P, representing a 1 00% throughput increase
from the 600,000 tpa Stage 2A Expansion design throughput (upgraded from 500,000
tpa in the 2022 IDP ). Stage 3 involves a new standalone 1.2 mtpa process plant and
supporting infrastructure, which is currently under construction, with mining
focused on the Kora Central Zone within the Kora Deposit and Judd Deposit, utilizing
a cut-off grade of 3.5 grams per tonne (“g/t”) gold equivalent (“AuEq”).
o After-tax NPV5% US$680 million at US$1,900 per ounce gold and at around
current spot prices, at US$2, 600 per ounce gold, After -tax NPV5% is US$1.2
billion.
o Average annual run-rate production of 303,288 ounces AuEq per annum, run-
rate achieved in 2027 and a peak annual production of 319,360 ounces AuEq
in 2027.
o Life of Mine average cash costs of US$380 per gold ounce or US$694 per AuEq
ounce and all -in sustaining cost (“AISC”) (2) of US$ 665 per gold ounce or
US$920 per AuEq ounce over a 7-year mine life. The mine life is now extended
to 2030, previously 2028 in the 2022 IDP.
o Growth capital cost of US$194 million and life-of-mine sustaining capital cost
of US$337 million.
• The alternate PEA Case evaluates two-stages of expansions to a run-rate throughput
of 1.8 mtpa, representing a 200% throughput increase from the 600,000 tpa Stage 2A
Expansion design throughput (upgraded from 500,000 tpa). The ultimate run -rate
throughput of the second expansion is referred to as Kainantu Stage 4 Expansion,
operating two standalone process plants, la rger surface infrastructure and mining
throughputs achieved by mining Kora Upper, Lower, and Central Zones within the
Kora Deposit, and the Judd Deposit, utilizing a cut-off grade of 4.0 g/t AuEq.
o After-tax NPV5% of US$2.3 billion at US$1,900 per ounce gold and at around
current spot prices, at US$2, 600 per ounce gold, After -tax NPV5% is US$3.5
billion.
2
o Average annual run-rate production of 413,593 ounces AuEq per annum, run-
rate achieved in 2028 and a peak annual production of 484,692 ounces AuEq
in 2034.
o Life of Mine average cash costs of US$174 per gold ounce or US$633 per AuEq
ounce and all -in sustaining cost (“AISC”) (2) of US$ 432 per gold ounce or
US$822 per AuEq ounce over a 14 -year mine life. The mine life is now
extended to 2037, previously 2032 in the 2022 IDP.
o Growth capital cost of US$201 million and life of mine sustaining capital cost
of US$900 million.
• Prior to the January 1, 2024 Updated IDP effective date, $ 15 million of expansion
growth capital was spent. The total growth capital for the project, remains closely
aligned with the operational guidance announced on February 22, 2024 of US$210
million. As at September 30, 2024, approximately 63% of the total growth capital for
the Stage 3 and 4 Expansions is either spent or committed, and subsequent to quarter
end, following the award of the river crossing construction contract in October,
approximately 68% of total growth capital has either been spent or committed.
• A major driver for the improvement in economics is the significant increase to the
Mineral Resource estimate at Kora and Judd reported in Q4 2023 and incorporated
into the Updated IDP, with Measured and Indicated Resources increasing by 14% to
2.6 million ounces at 10.0 g/t AuEq and Inferred Resources increasing by 73% to 4.5
million ounces at 8.5 g/t AuEq.
• Both the DFS and PEA Cases are fully funded from existing cash balances, mine cash
flow and available liquidity through credit facilities . K92 is in a strong financial
position having, as at June 30, 2024, a cash balance of US$71 million and up to US$110
million in remaining undrawn liquidity from the Trafigura Credit Facilities. K92
recently announced record Q3 2024 AuEq production of 44,304 oz which has resulted
in an increase to its cash balance, even with significant capital expenditures for the
expansion (see October 9, 2024 press release).
• Both the DFS and PEA Cases have a low environmental impact , being supplied with
clean hydroelectricity, mining high grades outlining a low footprint, no -cyanide
operation, and a majority of tailings reporting underground as pastefill. K92 plans
to upgrade the grid infrastructure, which is expected to significantly reduce
greenhouse gas emission intensity per ounce produced near-term.
1. AuEq – calculated on the following metal prices: Au – US$1,900/oz, Ag – US$25.00/oz, Cu – US$4.50/lb.
Note that gold equivalen t factors for the production estimates are different to those used for reporting the
Mineral Resource estimate.
2. AISC – All-In Sustaining Costs include cash costs plus estimated corporate general and administrative
(“G&A”) costs, sustaining costs and accretion.
3
Vancouver, British Columbia, October 16, 2024 - K92 Mining Inc. (“K92” or the “Company”)
(TSX: KNT; OTCQX: KNTNF) is pleased to announce the results of its Updated Integrated
Development Plan (“Updated IDP”) for its Kainantu Gold Mine Project (the “Kainantu Project”)
in Papua New Guinea. The Updated IDP comprises two scenarios: 1) Kainantu Stage 3 Expansion
Definitive Feasibility Study Case (“DFS” or “DFS Case”) ; and 2) Kainantu Stage 4 Expansion
Preliminary Economic Assessment Case (“PEA” or “PEA Case”). The results of the Updated IDP
will be set forth in an independent technical report prepared in accordance with National
Instrument 43-101 - Standards for Disclosure of Mineral Projects (“NI 43-101”) within forty-five
days from now.
The Updated IDP supersedes the January 1, 2022 effective date Integrated Development Plan
(“2022 IDP”) and has delivered a significant improvement in economics in both the DFS Case and
the PEA Case, and particularly the PEA Case, driven by the following key changes:
• A significant increase to the Mineral Resource estimate at Kora and Judd reported in Q4
2023 ( see December 5, 2023 press release ), with Measured and Indicated Resources
increasing by 14% to 2.6 million ounces at 10.0 g/t AuEq and Inferred Resources
increasing by 73% to 4.5 million ounces at 8.5 g/t AuEq. This has extended the mine life
for the DFS Case to 2030 from 2028 and the PEA Case to 2037 from 2032 from the 2022
Integrated Development Plan (see September 12, 2022 press release).
• The new off -take agreement with Trafigura, commencing January 1, 2026, which has
improved metals’ payabilities for deliveries of concentrates, in addition to amending
penalties, treatment and refining charges, and transport charges, all of which are better than
the assumptions used in the 2022 IDP.
• Significant margin expansion forecasted, as cash costs and all -in sustaining costs in the
Updated IDP have only moderately increased from the 2022 IDP , while the economic
evaluation gold price has increased from $1,600/oz to $1,900/oz to be closer aligned to
recent peer studies and the current commodity price environment . Cut-off grades were
slightly modified in the Updated IDP to achieve the optimal mine plan, with the cut -off
grade for the PEA Case reduced from 4.5 g/t AuEq in the 2022 IDP to 4.0 g/t AuEq and
the cut-off grade for the DFS Case increasing from 3.0 g/t AuEq in the 2022 IDP to 3.5 g/t
AuEq. The updated IDP has made only limited changes to the mining method and recovery
method from the 2022 IDP, with changes made to improve the pastefill plant and delivery
design.
• Limited forecasted Updated IDP growth capital cost inflation in a rising commodity price
environment. This has been demonstrated to date from the construction activities well
underway at the Kainantu Gold Mine for the Stage 3 and 4 Expansions . Importantly, the
total growth capital for the project, remains closely aligned with the Operational Guidance
announced in February 2024 of $210 million (see February 22, 2024 press release ), that
incorporated design and scope changes, including improving the expandabi lity of the
process plant and redesigning the pastefill plant to mitigate transport and delivery risk
(trucking filter cake to an underground pastefill plant – previously involved extensive
pumping and piping). Prior to the January 1, 2024 Updated IDP effective date, $15 million
of expansion growth capital was spent. As at September 30, 2024, approximately 63% of
the total growth capital for the Stage 3 and 4 Expansions has either been spent or
committed, and subsequent to quarter end, following the award of the river crossing
4
construction contract in October, approximately 68% of total growth capital is either spent
or committed.
• Throughput increase for the PEA Case to 1.8 mtpa from 1.7 mtpa driven by the Stage 2A
Plant design throughput being upgraded from 500,000 tpa to 600,000 tpa as demonstrated
from recent planted performance.
The Updated IDP, which includes the Kainantu Stage 3 Expansion DFS Case and the alternative
Kainantu Stage 4 Expansion PEA Case, was independently prepared by Entech Pty Ltd of Perth,
Australia (“Entech”); ATC Williams Pty Ltd (“ATC Williams”) of Brisbane, Australia ; WSP
Canada Inc. (“WSP”) of Ontario, Canada; Metallurgical Management Services Pty Ltd (“MMS”)
of Perth, Australia, EMM Consulting Pty Ltd (“EMM”) of Queensland, Australia, H & S
Consultants Pty. Ltd (“H&SC”) of Sydney, Australia, and; GR Engineering Services Limited
(“GR”) of Brisbane, Australia, with some cost information provided by K92.
The PEA 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.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
Mineral Reserves are defined by the Definitive Feasibility Study and are not predicated on the
Preliminary Economic Assessment in any way.
John Lewins , K92 Chief Executive Officer and Director, state d, “The Updated Integrated
Development Plan is a major milestone for K92, marking a significant improvement to mine
economics by incorporating a larger updated Mineral R esource estimate, a new off -take
agreement with Trafigura, more robust engineering designs and information from our ongoing
construction activities, along with margin expansion from improved commodity prices.
This has resulted in the DFS Case NPV5% increasing from US$ 586 million at $1,600/oz in the
2022 IDP to, in the Updated IDP, US$680 million at $1,900/oz, or US$ 1.2 billion at near -spot
prices of $2,600/oz. The PEA Case saw its NPV5% rise from US$1 .3 billion at $1,600/oz in the
2022 IDP to, in the Updated IDP, US$2.3 billion at $1,900/oz or US$3.5 billion at near-spot prices
of $2,600/oz gold.
Importantly, the realization of strong cash flow and the economic benefits of the Updated IDP are
expected near-term. In less than nine months, the commissioning of the Stage 3 Plant Expansion
is planned to begin, marking the start of K92’s transformation into a Tier 1 Mid -Tier Producer.
Concurrent with advancing the Stage 3 and 4 Expansions, we remain very act ive in improving
upon the outcomes of the study, particularly through exploration. There are currently 11 drill rigs
on site of which 6 are operating underground and 5 on the surface , focused on upgrading and
expanding resources both near-mine and across our highly prospective gold-copper district.
Later this month, we are excited to host a large group of analysts and investors on-site to showcase
our progress to date in multiple areas and also the mining-friendly jurisdiction of Papua New
Guinea.”
5
1 – Kainantu Updated IDP - Definitive Feasibility Study Case
1.1 - DFS Overview
The DFS evaluates an expansion of mining and processing to a run -rate throughput of 1.2 mtpa ,
representing a 1 00% increase from the Stage 2A Expansion run-rate of 600,000 tpa. Th is
expansion is referred to as the Stage 3 Expansion and involves on-site treatment of ore by a new
standalone 1.2 mtpa process plant, utilizing single stage crushing, SAG and ball milling, along
with gravity and flotation recovery.
The DFS and Mineral Reserve statement is derived from the global Kora and Judd Mineral
Resource Estimate (September 12, 2023 effective date) , net of post -resource mining depletion
from September 12, 2023 to December 31, 2023, and does not incorporate post-resource-estimate
drilling results.
Table 1.1: DFS Highlights
US Dollars unless otherwise stated
Updated IDP
Life of Mine
(starting January 2024)
Stage 3 Run-Rate(1)
(2027-2029)
Production
Mine life (years) 7 years
Total mill feed (000s tonnes) 6,176 3,600
Average mill throughput (000s tonnes per annum) 882 1,200
Total Metal Production
AuEq (000s ounces) 1,561 910
Gold (000s ounces) 1,223 666
Copper (million lbs) 126 92
Silver (000s ounces) 2,910 1,986
Peak Annual Production
Year 2027
AuEq (000s ounces per annum) 319
Average Annual Metal Production
AuEq (000s ounces per annum) 223 303
Gold (000s ounces per annum) 175 222
Copper (mlbs per annum) 18 31
Silver (000s ounces per annum) 416 662
Average Grade
AuEq grade (g/t) 8.5 g/t
Gold grade (g/t) 6.7 g/t
Copper grade (%) 1.0%
Silver grade (g/t) 19 g/t
Average Recovery
Gold recovery (%) 93%
Copper recovery (%) 94%
Silver recovery (%) 78%
Costs
Mining cost (US$/t ore mined) $68.05 $57.73
Processing cost (US$/t processed) $19.44 $18.12
G&A cost (US$/t processed) $37.11 $33.38
6
US Dollars unless otherwise stated
Updated IDP
Life of Mine
(starting January 2024)
Stage 3 Run-Rate(1)
(2027-2029)
Paste plant cost ($/t processed)
$10.31
$13.32
TSF cost ($/t processed) $0.64 $0.48
Transport and Insurance cost ($/t processed) $9.85 $10.93
Total operating cost per tonne processed (US$/t) $145.40 $134.56
Royalties ($/t processed) $10.90 $10.93
Sustaining capital per tonne processed (US$/t) $54.59 $34.47
Total cost per tonne processed (US$/t) $210.88 $179.96
Growth capital expenditure ($m) $194
Sustaining capital expenditure ($m) $337
Total capital expenditure with closure costs ($m) $541
Cash cost per ounce AuEq ($/oz)(2)
All-in sustaining cost per ounce AuEq ($/oz)(3)
Cash cost per ounce gold ($/oz)(2)
$694
$920
$380
$646
$789
$204
All-in sustaining cost per ounce gold ($/oz) (3) $665 $397
Base Case Economic Analysis at US$1,900/oz Gold, US$4.50/lb Copper and US$25.00/oz Silver
After-tax NPV0% $869 million
After-tax NPV5%(4) $680 million
Economic Analysis at $2,500/oz Gold, US$4.50/lb Copper and US$25.00/oz Silver
After-tax NPV0% $1,359 million
After-tax NPV5%(4) $1,091 million
1. Run-rate is calculated based on 2027-2029.
2. Cash costs are net of by-product credits and are inclusive of mining costs, processing costs, site G&A and refining charges and royalties.
3. AISC includes cash costs plus estimated corporate general and administration costs, sustaining costs, and accretion.
4. Net present value is calculated utilizing monthly discounting.
1.2 - Kainantu Mineral Reserve Statement
The Mineral Reserve estimate outlined in the DFS was prepared by Daniel Donald FAusIMM
MSME of Entech, in accordance with the classification criteria set out in the 2014 CIM Definition
Standards for Mineral Resources and Mineral Reserves prepared by the CIM Standing Committee
on Reserve Definitions . Daniel Donald is an independent consultant of the Company and is a
Qualified Persons as defined by NI 43-101. The total Mineral Reserve for the Kainantu Project is
shown in Table 1.2. The Mineral Reserve estimate is based on the Global Kora and Judd Mineral
Resource estimate (September 12, 2023 effective date – refer to Table 1.3), net of post -resource
mining depletion from September 12, 2023 to December 31, 2023 , of 183,768 tonnes at 8. 1 g/t
Au, 0.9 % Cu and 15 g/t Ag.
Table 1.2 – Kainantu Mineral Reserve Statement (Effective Date January 1, 2024)
Kora and Judd Deposit Reserve Summary (January/2024)
Tonnes Gold Silver Copper Gold Equivalent
mt g/t moz g/t moz % kt g/t moz
Kora Deposit
Proven 2.95 7.4 0.70 19 1.9 1.1 31 9.4 0.89
Probable 2.52 5.7 0.46 19 1.6 1.0 26 7.6 0.61
Proven & Probable 5.47 6.6 1.16 19 3.4 1.1 57 8.6 1.50
7
Kora and Judd Deposit Reserve Summary (January/2024)
Tonnes Gold Silver Copper Gold Equivalent
mt g/t moz g/t moz % kt g/t moz
Judd Deposit
Proven 0.24 8.3 0.06 17 0.1 0.6 1 9.4 0.07
Probable 0.47 6.5 0.10 13 0.2 0.5 2 7.5 0.11
Proven & Probable 0.71 7.1 0.16 14 0.3 0.5 4 8.1 0.18
Consolidated
Total Proven 3.19 7.5 0.77 19 2.0 1.0 33 9.4 0.96
Total Probable 2.99 5.8 0.56 18 1.8 1.0 28 7.6 0.73
Total Proven & Probable 6.18 6.7 1.32 19 3.7 1.0 61 8.5 1.69
• The long-term metal prices used for calculating the financial analysis is US$1,900/oz gold,
US$4.50/lb copper, US$25/oz silver.
• Gold Equivalents are calculated as AuEq = Au g/t + Cu % *1.62406 + Ag g/t*0.01316.
Metal payabilities and recoveries are not incorporated into this formula.
• A minimum mining width of 3.0 m has been applied for stoping, inclusive of a 1.0 m dilution
skin.
• In addition to the 1.0 m dilution skin, additional dilution of 5% has been added for Avoca
mined stopes and 2.5% for long hole stoping with pastefill. Where a stope is within 5.0m
proximity of the HW or FW of the fault gouge, an additional 1.0m of dilution was added at
a grade averaging 1.42g/t AuEq. This results in a total average dilution of 27.8%.
• Mining recoveries of 90% have been applied to Avoca mined stopes, and 95% for long hole
stoping with pastefill.
• A cut -off grade of 3.5 g/t AuEq was used to define stoping blocks. Stope shapes with
uneconomic development were excluded. The cut -off grade takes into account site
operating costs, G&A costs, sustaining capital costs and relevant processing and revenue
inputs.
• Measured Mineral Resources were used to report Proven Mineral Reserves.
• Indicated Mineral Resources were used to report Probable Mineral Reserves.
• Tonnage and grade estimates include dilution and recovery allowance.
• The Mineral Reserves reported are not added to Mineral Resources.
1.3 - Kainantu Mineral Resource Estimate
The Company’s current Mineral Resource estimate for Kora and Judd (effective date of September
12, 2023) was completed by H & S Consultants Pty. Ltd. (Table 1.3). The Irumafimpa deposit was
not incorporated into the Updated IDP and will be reviewed at a later date.
Table 1.3 – Global Kora and Judd Mineral Resource Estimate, (3.0 g/t AuEq cut-off)
Kora Deposit Resource Summary (September 12/2023)
Tonnes Gold Silver Copper Gold Equivalent
mt g/t moz g/t moz % kt g/t moz
Kora Deposit
Measured 3.7 8.7 1.0 21 2.5 1.2 45 11.0 1.3
Indicated 3.1 7.0 0.7 22 2.2 1.3 41 9.4 1.0
Measured & Indicated 6.9 7.9 1.8 21 4.7 1.3 86 10.2 2.3
Inferred 14.3 5.6 2.6 29 13.2 1.6 231 8.6 3.9
8
Judd Deposit Resource Summary (September 12/2023)
Tonnes Gold Silver Copper Gold Equivalent
mt g/t moz g/t moz % kt g/t moz
Judd Deposit
Measured 0.4 9.1 0.12 19 0.2 0.8 3 10.6 0.14
Indicated 0.8 6.4 0.17 16 0.4 0.7 6 7.8 0.21
Measured & Indicated 1.2 7.2 0.29 17 0.7 0.8 9 8.7 0.35
Inferred 2.3 6.3 0.45 16 1.1 0.8 17 7.7 0.56
Consolidated
Total Measured 4.1 8.8 1.2 20 2.7 1.2 48 10.9 1.5
Total Indicated 4.0 6.9 0.9 21 2.6 1.2 47 9.1 1.2
Total Measured & Indicated 8.1 7.8 2.0 20 5.3 1.2 96 10.0 2.6
Total Inferred 16.5 5.7 3.0 27 14.3 1.5 248 8.5 4.5
• The Independent and Qualified Person responsible for the Mineral Resource estimate is
Simon Tear, P.Geo. of H & S Consultants Pty. Ltd., Sydney, Australia, and the effective
date of the estimate is September 12, 2023.
• Mineral Resources are not Mineral Reserves and do not have demonstrated economic
viability.
• Geological interpretation has generated a series of narrow, sub -vertical vein structures
based on delineated wireframes on 10 m, 20 m and 25 m spaced cross sections. The design
of the lode wireframes is based on a combination of logged geology, Au, Cu & Ag assay
grades and locally on a nominal minimum mining width of 5.2 m, all coupled with
geological sense.
• Resources were compiled at 3.0 g/t gold equivalent cut-off grades for Kora and Judd.
• Density (t/m 3) was modelled using Ordinary Kriging on 2,778 sample measurements.
Areas within the mineral wireframes where no density grades were interpolated had
average default values inserted at appropriate levels.
• Reported tonnage and grade figures are rounded from raw estimates to reflect the order
of accuracy of the estimate.
• Minor variations may occur during the addition of rounded numbers.
• Estimations used metric units (metres, tonnes and g/t).
• Gold equivalents are calculated as AuEq = Au g/t + Cu%*1.6481+ Ag g/t*0.0114. Gold
price US$1,700/oz; Silver US$22.5/oz; Copper US$4.00/lb. Metal payabilities and
recoveries are incorporated into the AuEq formula. Recoveries of 95% for copper and
80% for silver were used.
1.4 - DFS Mining Operations
K92 engaged Entech to undertake the DFS for the Kainantu Project, which involved:
• Applying financial and processing parameters to determine appropriate cut-off grades for
stope design.
• Generating three -dimensional stope shapes and mining inventory using the Datamine
Mineable Shape Optimiser (MSO) program.
• Creating a development layout to suit the MSO inventory.
• Geotechnical assessment and generating the stoping parameters.
• Ventilation design and ventilation tradeoff studies.
• Mining capital and operating costings.