K92 Mining Announces Strong 2023 Q3 Financial Results Including Strengthening Financial Position and Process Plant Records
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 Q3 FINANCIAL RESULTS INCLUDING
STRENGTHENING FINANCIAL POSITION AND PROCESS PLANT RECORDS
Vancouver, British Columbia, November 14, 2023 - K92 Mining Inc. (“K92” or the “Company”)
(TSX: KNT; OTCQX: KNTNF) is pleased to announce financial results for the three months and nine
months ended September 30, 2023.
Production
• Quarterly production of 26,225 ounces gold equivalent (“ AuEq”) (1)(2) or 22,227 oz gold,
1,784,009 lbs copper and 40,233 oz silver.
• Cash costs of US$684/oz gold (2) and all-in sustaining costs (“AISC”) of US$1,300/oz gold (2).
• Multiple processing throughput records set in Q3, including a monthly record in September
averaging 1,542 tonnes per day (“tpd”) and a new daily record on September 28 of 1,867 tpd,
13% and 36% above the Stage 2A Expansion annual average run -rate of 1,370 tpd (3),
respectively. Subsequent to quarter end, new daily records of 1,902, 1,921 and 2,027 tonnes
processed were achieved on October 6, 8 and 10, respectively . Quarterly ore processed was
121,201 tonnes or 1,317 tpd.
• Strong metallurgical recoveries of 92.0% for gold and 9 3.0% for copper, significantly higher
than the 2022 average of 90.4% for gold and 90.5% for copper , following the successful
completion of the final upgrade for the Stage 2A Plant Expansion in May.
• The average mill head grade in Q3 was 7.32 g/t AuEq or 6.20 g/t gold, 0.72% copper and 12.84
g/t silver. Quarterly ore tonnes mined of 124,236 tonnes and 305,506 tonnes of total material
mined (ore plus waste).
Financials
• Cash position of US$79.9 million as of September 30, 2023. During the quarter, the Company
entered into a US$100 million senior secured l oan and amended offtake agreement with
Trafigura Pte Ltd, further strengthening K92’s financial position and future metals payabilities.
K92 expects the first drawdown to occur in Q4 2023.
• Quarterly revenue of US$32.8 million.
• Net loss in the quarter of US$0.6 million or ($0.00) per share.
• Quarterly sales of 18,339 oz gold, 1,255,291 lbs copper and 30,484 oz silver. Gold concentrate
and doré inventory of 6,066 oz as of September 30, 2023, an increase of 3,668 oz over the prior
quarter.
• Operating cash flow (before working capital adjustments) for the three months ended
September 30, 2023, of US$10.9 million or US$ 0.05 per share, and earnings before interest,
taxes, depreciation and amortization (“EBITDA”) (2) of US$7.0 million or US$0.03 per share.
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Growth
• Following the completion of the Stage 2A Plant Expansion to 500,000 tonnes per annum
(“tpa”) in May , the process plant has continued to perform well , delivering a significant
increase to metallurgical recoveries. In September, a new recovery record of 93.7% for copper
was achieved. As mentioned above, Q3 recoveries averaged 92.0% for gold and 93.0% for
copper, significantly higher than the 2022 average s of 90.4% for gold and 90.5% for coppe r.
Optimization efforts are ongoing, including to increase throughput that we believe has the
potential to be materially greater than its nameplate design.
• During the quarter, K92 announced that the Board of Directors authorized the award of the
US$81 million lump sum engineering, procurement, construction and commissioning (“EPC”)
Lump Sum Contract for the 1.2 million tonnes per annum (“mtpa”) Stage 3 Expansion Process
Plant to GR Engineering Services Limited following a tender process, significantly de -risking
potential cost increases to K92. In addition, all process plant long -lead item contracts have
already been awarded on a fixed price basis (excluding freight). Following the award of the
EPC Lump Sum Contract and the placement of orders for the long lead items, the forecast cost
of the 1.2 mtpa Stage 3 Process Plant is within 10% of the capital cost outlined in the Kainantu
Integrated Deve lopment Plan (“ IDP”) Definitive Feasibility and Preliminary Economic
Assessment cases (see September 12, 2022 press release – K92 Mining Inc Announces Robust
Kainantu Gold Mine Integrated Development Plan ), and importantly , approximately 94% of
the forecast capital cost has been fixed. This significantly mitigates K92’s cost inflation risk for
the largest growth capital cost item for the Stage 3 Expansion (the 1.2 mtpa Stage 3 Process
Plant), representing over half of the forecast growth capital (inclusive of attributable EPC costs)
as outlined in the IDP.
• In the second half of September, the Company announced that the first ore tonnes were mined
from the twin incline area, two months earlier than expected, when thick Judd mineralization
was encountered while developing the first waste pass access drive, in an area sparsely drilled
and previously interpreted to be waste. Two ore drives recorded multiple high-grade faces from
channel samples including: Southern Drive – 4.6 m at 14.89 g/t AuEq and 6.8 m at 11.77 g/t
AuEq; and Northern Drive – 4.3 m at 7.19 g/t AuEq (4). Targeted diamond drilling of this area
has recently commenced , and mining Kora via the twin incline is planned to commence in
December. We anticipate a strong boost to mine flexibility and productivity as this second
mining front is developed.
• Strong results from 56 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. The
results demonstrated multiple high-grade areas, including a potential high-grade zone along the
J1 Vein at the sparsely-drilled Northern Deeps area, with multiple intersections recorded at:
- K92DD0018 recording 5.05 m at 12.51 g/t AuEq from the J1 Vein,
- K92DD0021 recording 2.00 m at 6.94 g/t AuEq from the J1 Vein, and 3.80 m at 15.64 g/t
AuEq from the K1 Footwall Vein,
- K92DD0019 recording 1.47 m at 11.70 g/t AuEq from the J1 Vein.
Highlights from the J1 Vein include:
- JDD0185 recording 8.83 m at 38.08 g/t AuEq,
- JDD0204 recording 7.50 m at 38.26 g/t AuEq, and
- JDD0206 recording 7.67 m at 36.31 g/t AuEq.
Highlights from the K1 and K2 Vein include:
- K2 Vein high-grade bulge in thickness recorded from 3 holes over ~100 metre vertical:
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o KMDD0565 recording 28.05 m at 15.45 g/t AuEq,
o KMDD0576 recording 10.60 m at 15.67 g/t AuEq, and
o KMDD0564 recording 15.07 m at 10.47 g/t AuEq.
- KMDD0570A recording 4.44 m at 21.42 g/t AuEq from the K1 Vein, and
- KMDD0528 recording 1.80 m at 61.66 g/t AuEq from the K1 Vein.
• Significant advance of the twin incline in Q 3 with incline #2 (6m x 6.5m) advanced to 2,639
metres and #3 (5m x 5.5m) advanced to 2,660 metres as of September 30, 2023. Overall mine
development totaled 2,227 metres, an increase of 18% from Q3 2022.
The Company’s interim consolidated financial statements and associated management’s discussion and
analysis for the three and nine months ended September 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.
Figure 1: Quarterly Production and AISC Chart
Figure 2: Quarterly Total Ore Processed, Development Metres Advanced and Total Mined Material
Chart
Figure 3: Process Plant Throughput Performance and Daily Records
Figure 4: Overview of Mine Infrastructure Upgrades
Figure 5: Comparison of 800 Portal Incline and Twin Incline Infrastructure
Figure 6: Mining Front Location Longsection
John Lewins, K92 Chief Executive Officer and Director, stated, “During the third quarter, the
Company saw a significant strengthening to its financial position, with a strong cash balance of $79.9
million, a quarter end inventory of 6,066 ounces gold equivalent subsequently sold in October and on
September 26, 2023 a senior secured loan with Trafigura was announced for $100 million, financially
well positioning the Company to deliver its Stage 3 and 4 Expansions while also enabling an expansion
to exploration activities. Importantly, during the first nine months of the year, the Company also
invested $69.4 million on property, plant and equipment and $15.3 million on exploration.
Year to date, a notable amount of progress ha s been made on the Stage 3 and 4 Expansions. On July
24, 2023, a major de -risking milestone was achieved, with the award of the Lump Sum Fixed Price
contract for the design and construction of the 1.2 mtpa Stage 3 Process Plant to GR Engineering
Services Limited. Combined with the award of various long-lead time items, approximately 94% of the
forecast capital cost for the Process Plant, which represents over half of the total growth capital as
outlined in the Integrated Development Plan, has been significantly de -risked on a fixed price basis .
Clearing and completion of the contractor staging area is nearly complete for the process plant,
contractor mobilization is scheduled for January and plant commissioning remains unchanged for the
end of Q1 2025.
Various other works for Stage 3 have also made significant progress. The Front End Engineering and
Design (FEED) for the Paste Fill Plant is well advanced, with the ordering of long -lead time items
expected in January. The tailings storage facility lift 1C is now over 78% complete, while construction
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of the camp expansion to meet the workforce requirements for Stage 4 and the interim power station
are also well advanced.
The underground mine is also progressing multiple infrastructure projects, including but not limited
to: i) the twin incline, now over 93% complete, ii) interim ventilation fan upgrade targeting completion
by year end , iii) Puma vent incline targeting completion mid -2024, iv) ore pass system for highly
efficient material movements targeting completion Q3 2024 , v) Pastefill system targeting soon after
commissioning of the Stage 3 process plant, and, vi) underground development tripling the number of
mining fronts through 2024 (see Figure 4 to 6).
These infrastructure upgrades, both underground and on surface, are expected to transform Kainantu
and the business into a Mid-Tier, Tier 1 gold producer.
On operations, we continue to see the fourth quarter as the strongest for the year and re -iterate our
updated guidance. The performance of the process plant has been exceptional, delivering a flurry of
daily throughput records in early October including 2,027 tonnes processed (3) on October 10, well
above the Stage 2A Plant design of 1,370 tonnes per day (see Figure 3). Development has also seen a
significant step up in October, achieving a monthly record of 903 metres. Multiple initiatives are
underway to increase development considerably over the next few months.
Lastly, on exploration, as previously announced, we are very pleased to have increased our exploration
budget for 2023 with plans to expand the program to drill multiple new high priority targets in addition
to our existing primary targets.”
Mine Operating Activities
Three months ended
September 30, 2023
Three months ended
September 30, 2022
Operating data
Head grade (Au g/t) 6.2 8.7
Gold recovery (%) 92.0% 88.9%
Gold ounces produced 22,227 29,256
Gold ounces equivalent produced (1) (2) 26,225 32,995
Tonnes of copper produced 809 756
Silver ounces produced 40,233 32,161
Financial data (in thousands of dollars)
Gold ounces sold 18,339 25,297
Revenues from concentrate and doré sales US$32,814 US$36,438
Mine operating expenses US$9,811 US$8,516
Other mine expenses US$5,280 US$7,031
Depreciation and depletion US$7,422 US$5,237
Statistics (in dollars)
Average selling price per ounce, net US$1,848 US$1,663
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Cash cost per ounce (2) US$684 US$503
All-in sustaining cost per ounce (2) US$1,300 US$909
Notes:
(1) Gold equivalent in Q3 2023 is calculated based on: gold $ 1,928 per ounce; silver $23.57 per ounce; and copper
$3.79 per pound. Gold equivalent in Q3 2022 is calculated based on: gold $1,730 per ounce; silver $19 per ounce;
and copper $3.51 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 1 4 and 1 5 of the Company’s
management’s discussion and analysis date d November 10, 2023 , available on SEDAR + or the Company’s
website, for reconciliation of these measures.
(3) Daily tonnes processed records achieved on days with 23 to 23.6 hours of plant operation. 2023 budget annual
average plant availability is 94.2%.
(4) Gold equivalent (AuEq) exploration results are calculated using longer-term commodity prices with a copper price
of US$3.75 per pound, a silver price of US$20 per ounce and a gold price of US$1,600 per ounce .
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 third quarter financial results at 8:30
am (EST) on Tuesday, November 14, 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/k92mining2023q3.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.
Technical Report
The Integrated Development Plan (“IDP”) for the Kainantu Gold Mine Project in Papua New Guinea
is included in a 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
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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 always, id entified 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”, “wo uld”, “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 assumption s 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 w eather 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
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 oper ations; 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”.
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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 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 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 f uture 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