K92 Mining Announces Strong 2023 Q2 Financial Results – Significant Cash Balance Increase and Low Cash & All-IN Sustaining Costs
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 2023 Q2 FINANCIAL RESULTS – SIGNIFICANT
CASH BALANCE INCREASE AND LOW CASH & ALL-IN SUSTAINING COSTS
Vancouver, British Columbia, August 10, 2023 - K92 Mining Inc . (“K92” or the “ Company”)
(TSX: KNT; OTCQX: KNTNF) is pleased to announce financial results for the three months ended
June 30, 2023.
Production
• Strong quarterly production of 30,794 ounces gold equivalent (“AuEq”) (1) (2) or 27,405 oz gold,
1,526,547 lbs copper and 34,001 oz silver, representing an 18% increase from Q2 2022 and
43% increase from Q1 2023.
• Cash costs of US$597/oz gold (2) and all-in sustaining costs (“ AISC”) of US$975/oz gold (2),
notably better than the annual guidance of US$620 -680/oz gold cash costs(2) and US$1,180 to
US$1,300/oz gold AISC (2).
• Strong metallurgical recoveries of 92.4% for gold and 92.8% for copper, representing the
highest quarterly recoveries since Q4 2021 for both gol d and copper, following the successful
completion of the final upgrade for the Stage 2A Plant Expansion in May, the rougher flotation
expansion.
• Quarterly ore processed of 112,471 tonnes or 1,236 t onnes per day (“tpd”) at a grade of 9.23
g/t AuEq or 8.20 g/t gold, 0.66% copper and 11.56 g/t silver and ore tonnes mined of 109,155
tonnes or 1,200 tpd. Total ore tonnes processed and total mined material (ore and waste)
increased 3% and 17% from Q2 2022, respectively.
Financials
• Cash position of US$95.6 million as of June 30, 2023, increasing US$6.9 million quarter-over-
quarter, while remaining debt -free. During the quarter, $22.0 million was spent on property,
plant and equipment and a Company record, US$6.3 million in exploration an d evaluation
expenditures.
• Revenue of US$51.8 million, increasing 39% from Q2 2022.
• Net earnings of US$8.8 million or $0.04 per share, increasing 71% from Q2 2022.
• Sales of 28,141 oz gold, 1,657,115 lbs copper and 36,253 oz silver. Gold concentrate and doré
inventory of 2,398 oz as of June 30, 2023, a decrease of 895 oz over the prior quarter.
• Operating cash flow (before working capital adjustments) for the three months ended June 30,
2023, of US$16.2 million or US$0.07 per share, and earnings before interest, taxes, depreciation
and amortization (“EBITDA”) (2) of US$21.6 million or US$0.09 per share.
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Growth
• A major milestone achieved in May with the completion of the Stage 2A Plant Expansion to
500,000 tonnes per annum (“ tpa”) following the commissioning of the final upgrade, the
rougher flotation expansion. Post-commissioning, the process plant continues to perform well,
delivering a significant increase to metallurgical recoveries. Recoveries for June were 93.0%
for gold and 92.9% for copper. As mentioned above, Q2 recoveries averaged 92.4% for gold
and 92.8% for copper, representing the highest quarterly recoveries since Q4 2021 for both gold
and copper, and significantly higher than the 2022 average of 90.4% for gold and 90. 5% for
copper. The performance of the process plant to date continues to demonstrate the potential to
ultimately exceed the Stage 2A Expansion name-plate of 500,000 tpa.
• Strong results from 62 diamond drill holes were reported from underground and surface at Kora,
Kora South, Judd, Judd South and Kora Northern Deeps. The results demonstrated multiple
high-grade results, including the discovery of high -grade mineralization at the J2 Vein to the
South. The J2 Vein is not part of the current resource. Highlights from the J2 Vein include:
- KUDD0040 recording 2.40 m at 345.36 g/t AuEq from the J2 Vein at Judd South,
- KUDD0045 recording 11.20 m at 12.69 g/t AuEq from the J2 Vein at Judd South, and
- KUDD0043 recording 3.80 m at 10.19 g/t AuEq from the J2 Vein at Judd South.
Other highlights include:
- KODD0036 recording 5.00 m at 161.57 g/t AuEq from the J1 Vein
- KUDD0043 recording 6.20 m at 26.52 g/t AuEq from the J1 Vein at Judd South,
- JDD0178 recording 6.36 m at 23.07 g/t AuEq from the J1 Vein, and
- KUDD0041 recording 3.20 m at 11.27 g/t AuEq from the K2 Vein and 1.80 m at 16.45 g/t
AuEq from the J1 Vein.
Drilling also intersected a dilatant zone:
- KUDD0040 recording 22.00 m at 5.14 g/t AuEq within a substantial 57.80 m at 2.73 g/t
AuEq from the J1 Vein (see May 24, 2023 press release).
• Significant advance of the twin incline in Q 2 with incline #2 (6m x 6.5m) advanced to 2,447
metres and #3 (5m x 5.5m) advanced to 2,506 metres as of June 30 , 202 3. Overall mine
development during the quarter of 2,173 metres. 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 as 2024
progresses. We note that this area w as not included in the 2023 budget and it is being mined
earlier as a result of strong development advance rates.
The Company’s interim consolidated financial statements and associated management’s discussion and
analysis for the three and six months ended June 30, 2023 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 and AISC Chart
See Figure 2: Quarterly Total Ore Processed, Development Metres Advanced and Total Mined
Material Chart
John Lewins, K92 Chief Executive Officer and Director, stated, “ During the second quarter, the
Company achieved a significant number of positives with production growing 43% from Q1 2023 and
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18% from Q2 2022; strong cash costs of $597/oz and AISC of $975/oz, well below the annual guidance
range of $620-$680/oz for cash costs and $1,180-$1,300/oz for AISC; completion of the Stage 2A Plant
Expansion in May, which delivered an immediate and notable boost to metallurgical recoveries; the
discovery of a new high-grade zone at the J2 Vein at Judd South; exploration expanding multiple high-
grade areas at Kora -Kora South and Judd -Judd South ; and the considerable strengthening of our
financial position.
Financially, the cash balance grew by $6.9m, even after a near-record $22.0m was spent on property,
plant and equipment plus a record $6.3 million on exploration and evaluation expenditures during the
quarter. The balance sheet is strong, standing at $95.6m cash and no debt at quarter end. Subsequent
to quarter end, our financial outlook also strengthened significantly upon the order of long-lead items
and the award of the Lump Sum Fixed Price engineering, pro curement, construction and
commissioning (“EPC”) contract for the 1.2 mtpa Stage 3 Process Plant. Combined with the long-lead
items, K92 has awarded approximately 94% of the process plant capital cost, our largest growth
capital item for the expansion, forecasted to represent over half of the growth capital, on a fixed price
basis, significantly mitigating potential capital cost increases for the expansion. Other packages for
the Stage 3 Expansion are also substantially progressing (see July 24, 2023 press release).
On the process plant, I would like to acknowledge and congratulate the team on site for the completion
of the Stage 2A Plant Expansion. Since the end of 2019, the plant’s quarterly throughput has more than
tripled, with two expansions, Stage 2 and Stage 2A, completed largely during the pandemic
environment. The plant, as noted above, has performed well – our gold and copper reco veries in Q2
were the highest since Q4 2021. In June, the first full month post -commissioning, gold recoveries
already achieved the Integrated Development Plan’s recovery parameter of 93%. Optimization work
on the plant is underway, and we look forward to discovering its ultimate throughput and recovery
potential.
On exploration, we are progressing on multiple fronts, with a total of 11 drills operating at the Kora-
Kora South, Judd -Judd South vein systems and the A1 porphyry. We expect to provide another
extensive exploration update shortly.”
Mine Operating Activities
Three months ended
June 30, 2023
Three months ended
June 30, 2022
Operating data
Head grade (Au g/t) 8.2 7.2
Gold recovery (%) 92.4% 91.0%
Gold ounces produced 27,405 22,934
Gold ounces equivalent produced (1) (2) 30,794 26,085
Tonnes of copper produced 692 558
Silver ounces produced 34,001 25,224
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Financial data (in thousands of dollars)
Gold ounces sold 28,141 23,674
Revenues from concentrate and doré sales US$51,759 US$37,356
Mine operating expenses US$9,782 US$9,310
Other mine expenses US$12,268 US$9,363
Depreciation and depletion US$7,148 US$4,496
Statistics (in dollars)
Average selling price per ounce, net US$1,883 US$1,782
Cash cost per ounce (2) US$597 US$617
All-in sustaining cost per ounce (2) US$975 US$893
Notes:
(1) Gold equivalent in Q2 2023 is calculated based on: gold $1, 976 per ounce; silver $2 4.13 per ounce; and copper
$3.85 per pound. Gold equivalent in Q2 2022 is calculated based on: gold $1,870 per ounce; silver $23 per ounce;
and copper $4.32 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 m easures on pages 12 and 13 of the Company’s
management’s discussion and analysis date d August 9, 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 second quarter financial results at 8:30
am (EDT) on Thursday, August 10, 2023.
• Listeners may access the conf erence 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/k92mining2023q2.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 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
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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 always, identified by words such as “expec t”, “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 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 are as 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
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
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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