K92 Mining Announces Strong 2022 Q4 and Annual Financial Results – Record Cash Balance, Revenue, ORE Mined and ORE Processed; Cash Cost and Aisc Better Than Guidance
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 STRONG 2022 Q4 AND ANNUAL FINANCIAL RESULTS –
RECORD CASH BALANCE, REVENUE, ORE MINED AND ORE PROCESSED; CASH
COST AND AISC BETTER THAN GUIDANCE
Vancouver, British Columbia, March 30 , 202 3 - K92 Mining Inc . (“ K92” or the “ Company”)
(TSX: KNT; OTCQX: KNTNF) is pleased to announce financial results for the three and twelve
months ended December 31, 2022.
Safety
• Strong focus on safety with zero Lost Time Injuries (“LTI”) during the quarter and one of the
best safety records in the Australasia region since commencement of operations.
• 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
Fourth Quarter 2022
• Record quarterly ore processed of 121,686 tonnes or 1,323 tonnes per day (“tpd”), significantly
exceeding the Stage 2 Expansion run-rate and a 22% increase from Q4 2021.
• Record monthly ore processed achieved in November, averaging 1,382 tpd, above the Stage 2A
Expansion run-rate of 1,370 tpd. Record daily mill tonnes processed achieved on December 25,
of 1,714 tonnes. Importantly, the records were achieved prior to commissioning of a major
Stage 2A Expansion plant upgrade, the flotation expansion, with commissioning planned for
Q2 2023.
• Record total material mined (ore plus waste) of 287,446 tonnes mined during the quarter, an
increase of 28% from Q4 2021.
• Strong quarterly production, the second highest on record, of 35,538 oz gold equivalent
(“AuEq”), or 31,204 oz gold, 1,827,085 lbs copper and 40,517 oz silver (1) (2).
• Cash costs of US$512/oz gold and all-in sustaining costs (“AISC”) of US$870/oz gold (2).
Full Year 2022
• Record annual production, increasing 18% year over year, of 122,806 oz AuEq or 107,546 oz
gold, 6,247,950 lbs copper and 126,043 oz silver, achieving the guidance range of 115,000 to
140,000 oz AuEq.
• Cash costs of US$5 38/oz gold and AISC of US$864/oz gold, beating the guidance range for
cash cost of $560 to $640/oz gold, and AISC of $890 to $970/oz gold (2).
• Record annual ore processed of 448,087 tonnes, a 33% increase from 2021.
• Record ore mined of 448,079 tonnes and total material mined (ore plus waste) of 994,175 during
the year, increases of 40% and 25% from 2021, respectively.
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Financials
Fourth Quarter 2022
• Record cash position of US$109.9 million as of December 31, 2022 while remaining debt-free.
• Record quarterly revenue of US$62.0 million, an increase of 15% from Q4 2021.
• Net income of US$13.3 million or $0.06 per share.
• Sales of 35,212 oz gold, 1,923,116 lbs copper and 44,828 oz of silver. Gold concentrate and
doré inventory of 3,612 oz as of December 31, 2022, a decrease over the prior quarter of 3,183
oz.
• Operating cash flow (before working capital adjustments) for the three months ended December
31, 2022, of US$ 26.6 million or US$0. 11 per share, and earnings before interest, taxes,
depreciation and amortization (“EBITDA”) (2) of US$30.5 million or US$0.13 per share.
Full Year 2022
• Record annual revenue of US$188.2 million, an increase of 22% from 2021.
• Annual net income of US$35.5 million or $0.16 per share, the second highest on record.
• Record sales of 110,654 oz gold, 6,072,879 lbs copper and 125,155 oz of silver.
• Operating cash flow (before working capital adjustments) for the twelve months ended
December 31, 2022, of US$72.5 million or US$0.32 per share, and earnings before interest,
taxes, depreciation and amortization of US$82.2 million or US$0.36 per share (2).
Growth
• Announced the extension to Mining Lease 150 for an additional 10 years to June 2034, by the
Government of Papua New Guinea. The renewal was well in advance of the original renewal
date of June 2024, highlighting the strong support from all levels of Govern ment and
stakeholders for the Kainantu Gold Mine. Concurrently, the Board of Directors of K92
approved the Stage 3 and 4 Expansions, increasing the annual processing throughput to 1.2
mtpa and 1.7 mtpa, respectively. This represents a 140% increase and 240 % increase,
respectively, from the Stage 2A processing capacity of 500,000 tonnes per annum (“tpa”) (see
December 6, 2022 press release).
• The Stage 2A Expansion to 500,000 tpa continued to progress during the quarter, the new filter
press and the additional TC -1000 crusher is operational , with the final major remaining
expansion item, the new rougher flotation tanks , planned to be commissioned in 2Q 2023.
Additional mining equipment arrived on site during Q4, including a new loader. Subsequent to
year end, multiple pieces of equipment arrived at site , including a new jumbo, loader, two
integrated tool carriers, Normet explosive charging machine, cement agitator truck and very
recently 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. The performance of the process plant to
date continues to demonstrate the potential to ultimately exceed the Stage 2A Expansion run-
rate.
• Strong results from 93 diamond drill holes were reported from underground and surface at Kora,
Kora South, Judd, Judd South and Northern Deeps. The results considerably extended the
known drilled deposit strike length of both the Kora -Kora South and Judd -Judd South veins
systems by ~600 metres to the South. In addition, the second hole drilled at the Northern Deeps
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target ~700 m north of the Kora Resource intersected 3.08 metres (2.15 m true width) at 7.18
g/t AuEq. The drilled deposit strike length of the Kora -Kora South Vein system has now been
established to be over 2.65 km. Additionally, drilling at Kora South and Judd South both
intersected potential dilatant zone mineralization, including Kora South underground drill hole
KMDD0495 recording multiple intersections including 30.55 m (11.80 m true width) at 12.82
g/t AuEq or 4.15 g/t Au, 78 g/t Ag and 4.79% Cu from the K2 Vein. The hole ended in
mineralization as it was terminated early due to grou nd conditions and is situated more than
400 metres down-dip from the previously reported hole KUDD0002, that intersected a dilatant
zone, recording 35.90 m (23.34 m true width) at 5.98 g/t AuEq (see October 18, 2022 press
release).
• Subsequent to year end, 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,
- KUDD0033 recording 27.90 m at 10.48 g/t AuEq from the K2 Vein,
- 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, 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 4, with incline #2 (6m x 6.5m) advanced to 1, 843
metres and #3 (5m x 5.5m) advanced to 1, 811 metres as of December 31, 2022. Overall mine
development during the fourth quarter was 2,221 metres, an increase of 45% from Q4 2021 and
a quarterly record.
2023 Operational Outlook
During the first quarter the operation experienced challenges at the process plant and the underground
mine. The process plant experienced two notable unplanned maintenance events, with one of the mill
trunnion bearings failing and requiring immediate repl acement resulting in 2 days downtime, and a
limited electrical fire in a cable tray resulting in damage to a number of cables feeding the wet section
of the process plant for 6 days downtime. The total combined impact was 8 days of unplanned
downtime for the process plant during the first quarter. (See February 27, 2023 press release.)
The process plant has performed well after the completion of the unplanned maintenance, achieving
multiple new daily throughput records including 1,726 tonnes processed on February 26, 1,773 tonnes
processed on February 28, 1,802 tonnes processed on March 3 and 1,815 tonnes processed on March
11. This is significantly higher throughput than the Stage 2A Expansion average daily throughput rate
of approximately 1,370 tonnes pe r day. Additionally, we see further upside to overall process plant
performance upon commissioning of the rougher flotation cells to double capacity in 2Q 2023.
During the second half of the first quarter, underground mining encountered an area with more
challenging ground conditions than expected, which impacted our production stoping rates and access
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to higher grade material. Generally, in this situation, mill feed would be supplemented by mining from
additional mining fronts as we mine through the impacted area more slowly. However, due to
development rates being below budget for several quarters during the COVID -19 pandemic, many of
the alternative mining areas were not yet developed, therefore supplementing from our low -grade
stockpile was required.
Development is a major focus as we emerge from the pandemic environment, with record development
advance achieved in Q4 2022, development advance proceeding well year-to-date and multiple new
equipment arrivals this quarter and scheduled for delivery in Q2 to increase our advance rates further.
Furthermore, we expect a substantial increase to our underground mining operational flexibility near-
term with two new sublevels currently being established, and importantly, an entirely new mining front
at depth from the twin incline in the second half of this year.
As a result, we expect the first quarter to be notably below budget, the second quarter to be moderately
below budget and annual production to be within the bottom half of the guidance range. As noted in
our operational guidance previously, we expect the second half of the year to be our strongest in terms
of production.
The Company’s annual consolidated financial statements and associated management’s discussion and
analysis for the year ended December 31, 2022 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, “In 2022, Kainantu took another major
step forward, achieving significant growth financially, operationally , in our resource base and from
exploration in general. Financially, the Company ended the year stronger than ever, with $110 million
of cash and no debt. Operationally, in 2022 we achieved record production, ore tonnes processed, ore
tonnes mined and underground development . Our resource base expanded considerably, with
measured and indicated resources increasing by 92% and inferred by 251%, driven by our updated
resource estimate at Kora, maiden resource at Judd and maiden resource at Blue Lake. Exploration
outside of our resource base has made significant progress, with record thickness intersections
recorded via dilatant zones that were first discovered in early 2022 at Kora South and Judd South, in
addition to significant strike extensions from step -out drilling at Kora-Kora South and Judd -Judd
South. Drilling has now defined a known drilled strike length at Kora-Kora South of over 2.65 km, and
both Kora-Kora South and Judd-Judd South are open in multiple directions.
Importantly, in December 2022, the Government of Papua New Guinea approved the extension of
Mining Lease 150 to June 2034 with the Board of Directors of K92 concurrently approving the Stage
3 and 4 Expansions. This is a major milestone for the Company and all of our stakeholders as the Stage
3 and 4 Expansions plan to transform Kainantu into one of the industry’s next world class gold mines,
with the Integrated Development Plan Stage 4 PEA case outlining peak annual production of 500 koz
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gold equivalent. The tender process is making considerable progress , and we will provide an update
once this has been completed.
Looking ahead at 2023, there is tremendous excitement within the Company. On vein field exploration,
a large majority of our drill rigs are focuse d on resource growth and have delivered strong results,
including an increasing hit-rate of dilatant zone intersections plus many high-grade intersections (see
February 21, 2023 press release). Significantly, over the next few months, u nderground development
plans to establish access to multiple highly prospective exploration fronts at depth, particularly at Kora
South, Judd South, Kora Deeps and Judd Deeps.
Operationally, we expect the second half of the year to be our strongest in terms of production. This is
driven by the arrival of plant and equipment which has been considerably slower than expected due to
supply chain constraints, commissioning of the Stage 2A Expansion rougher flotation cells planned for
Q2 and increased underground development rates to establish new sublevels, plus an entirely new
mining front around the twin incline . This is expected to provide a considerable increase to our
operational flexibility.
And lastly, I am very pleased to announce that we have commenced drilling our first hole at the A1
copper-gold porphyry target. The drill program has leveraged data from our extensive soil
geochemical program and advanced MobileMT airborne geophysics. The initial program is targeting
a depth of approximately 500 metres to defined vectors for deeper targeted drilling. We look forward
to providing an update on A1 in due course.”
Mine Operating Activities
Three months ended
December 31, 2022
Twelve months ended
December 31, 2022
Operating data
Head grade (Au g/t) 8.8 8.3
Gold recovery (%) 91.2% 90.4%
Gold ounces produced 31,204 107,546
Gold ounces equivalent produced (1) (2) 35,538 122,806
Tonnes of copper produced 829 2,834
Silver ounces produced 40,517 126,043
Financial data (in thousands of dollars)
Gold ounces sold 35,212 110,654
Revenues from concentrate and doré sales US$61,980 US$188,186
Mine operating expenses US$10,344 US$36,908
Other mine expenses US$13,120 US$38,914
Depreciation and depletion US$6,320 US$20,450
Statistics (in dollars)
Average realized selling price per ounce, net US$1,652 US$1,711
Cash cost per ounce (2) US$512 US$538
All-in sustaining cost per ounce (2) US$870 US$864
Notes:
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(1) Gold equivalent in 2022 is calculated based on: gold $1,793 per ounce; silver $22 per ounce; and copper $3.95 per
pound. Gold equivalent in Q4 2022 is calculated based on: gold $1,728 per ounce; silver $21 per ounce; and copper
$3.63 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 March 29, 2023 , available on SEDAR or the Company’s website, for reconciliation of these
measures.
K92 has not based its production decisions on mineral reserve estimates or feasibility s tudies, and
historically such projects have increased uncertainty and risk of failure. 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 2022 fourth quarter and annual financial
results at 8:30 am (EDT) on Thursday, March 30, 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/k92mining2022q4.html
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 , 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
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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 always, identi fied 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 “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 th at 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 weath er 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 e conomic
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
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 copp er; 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 operatio ns; 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 wh en 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 materially 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