K92 Mining Announces Stage 2A Expansion to Increase Throughput +25% to 500,000 Tonnes Per Annum at Kainantu Gold Mine

by PNG Business News - October 11, 2021

Photo credit: K92 Mining

K92 Mining Inc. is pleased to announce that its Board of Directors has approved the Stage 2A Expansion, expanding the annual processing throughput to 500,000 tonnes per annum at its Kainantu Gold Mine in Papua New Guinea. This represents a +25% increase from the Stage 2 processing capacity of 400,000 tonnes per annum. Full commissioning of the Stage 2A Expansion is expected to commence in 3Q 2022.

The decision to proceed with the Stage 2A Expansion is based on the strong performance of the process plant to date. The process plant has strongly demonstrated that it is capable of a throughput rate well in excess of 400,000 tpa (1,100 tpd), delivering a mill product size that is notably finer than required while also achieving multiple daily throughput records, including a single day record of 1,408 tonnes processed on September 22, 2021.

The Stage 2A Expansion decision is further bolstered by the strong exploration and development results from the Judd Vein System. Judd is located near-mine infrastructure, subparallel to and ~150-200m east from the producing Kora deposit, within the mining lease and with similar metallurgical characteristics to Kora. The proximity of Judd to Kora enables Judd to utilize Kora’s incline and its footwall drive along strike while also being decoupled from Kora’s mining cycle, resulting in considerable development, mining and mine planning efficiencies. Judd production stoping is planned to commence this quarter, providing a near-term boost to mining throughput.

The incremental capital investment to complete the plant expansion is estimated to be US$2.5 million. Several upgrades have already been ordered or installed, with a new filter press being commissioned and an additional T-1000 crusher to be installed this quarter. Key outstanding items are additional flotation cells, pipes and pumping, which are expected to be installed in 2Q 2022. Mobile equipment and development capital expenditures will be accelerated from Stage 3 Expansion capital, with equipment expected to arrive during 1H 2022. Stage 2A Expansion will be funded from existing cash flows from the current Kainantu Gold Mine operations.

John Lewins, K92 Chief Executive Officer and Director, stated, “Expanding the existing process plant to 500,000 tonnes per annum is a major positive development for the Kainantu Gold Mine. Importantly, at an estimated plant expansion capital cost of US$2.5 million, the expansion is not only funded from existing cash flow but is also expected to considerably strengthen our near-term ability to self-fund the Stage 3 Expansion while continuing to advance our vein field and porphyry exploration.

In addition to the strong performance of the process plant to date, a notable driver for the Stage 2A Expansion decision has been the significant exploration and development results at Judd. Judd is near existing Kora infrastructure making it highly efficient to access, while also being essentially decoupled from Kora and has similar metallurgical characteristics. These attractive features make mining Judd and its mine planning highly efficient. The first production stope at Judd is planned to be mined this quarter and is expected to provide a notable boost to the ramp-up of mining material movements, which were particularly impacted earlier in the year by COVID-19.

Judd is also highly efficient to explore, as it is not only proximal to Kora but utilizes the same diamond drill cuddy infrastructure that has been established over the last four years at Kora. With infill drilling nearly complete at Kora, at least two-thirds of the underground drill rigs are planned to be allocated to Judd by late-October, marking the first major exploration program of the vein system.

Lastly, we remain on track for the next Kora resource estimate update planned for late-2021 as well as the release of a maiden resource estimate for Judd. The Stage 3 Expansion Definitive Feasibility Study is also progressing well and findings from certain studies and test work have presented opportunities that will be implemented as part of the Stage 2A Plant Expansion.”


Article courtesy of K92 Mining

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PNG Business News - March 11, 2021

K92 Mining Has a K50M Budget for Exploration in 2021

In 2021, K92 Mining will invest K50 million in exploration. Exploration dollars are critical, according to John Lewins, chief executive officer and director of K92 Mine, because they extend the project if good prospects are discovered. The mine was re-commissioned in 2017 and announced commercial production at the start of 2018, according to Lewins. So, it's been running as a commercial profitable mine for three years and has turned a profit. “What’s important for Papua New Guinea is that the recognition of the potential that we got here in PNG,” he said. “And that, I think it’s been forgotten to a certain extent over the last few years and we have seen exploration expenditure dropping over several years.” Lewins also said that they would like to see that start up again because there will be no more mines unless there are more explorations .“So exploration dollars are important,” he said. “This year, 25 per cent of all exploration dollars come from our company. I believe, we are the single largest company in terms of our expenditure in exploration and that’s our commitment.” When the company's explorations linked the kora North deposit to its main ore body, it reached pay dirt and turned around its fortunes. He said, “Its only Kora North but we are busy looking for a number of other deposits and we are not focusing just on Kora and the mine. But we got over 700 square kilometres of ground to run and our budget is K50m on explorations. We are spending a lot of money on exploration and that’s the profit that we made or money that we made is put back to look into it or production in Papua New Guinea”.


PNG Business News - March 23, 2021

Lewins: Weakening gold price to Impact K92 Operations

According to K92 Mine Inc, the falling worldwide gold price means that mining companies in the country will reduce non-essential spending, which would have an effect on suppliers. John Lewins, the company's CEO, was responding to questions about existing gold prices. He added that the gold price began the year at around US$1,950 per ounce (K6,694.49/oz) and has since declined to around US$1,730 per ounce (K5,939.21/oz). According to him, mines may postpone capital and expansion projects, reducing jobs and production growth. “Any movement in the gold price affects the gold mines in PNG,” Lewins said. “The average ‘all-in sustaining cost’ of production for PNG mines is around US$1,000/oz (K3,433.07/oz) to US$1,100/oz (K3,776.38/oz), so at current prices, all the mines in PNG are still operating with good margins. Lower margins, mean lower profits, less tax to Government, less money spent on exploration and capital and lower royalty payments to communities and Government. The other point to note is that the Australian dollar has strengthened against the US dollar, so the gold price in Australian dollars has dropped even more, from AU$2,700 (K7,177.11) late last year to currently AU$2,100 (K5,582.20). Given that a lot of the costs incurred by PNG gold mines are in Australian dollars, this is probably more important than the US dollar price movement.” According to Lewins, the gold price will remain under pressure for the first half of this year, but will possibly recover in the second half. “Much depends on the performance of the US economy and others, following the shutdown caused by the Covid-19 pandemic,” he said. The price of gold is expected to fall in 2021 for a variety of reasons: Central banks' physical demand for gold has declined;  Jewellery sales have been underwhelming as the covid-19 pandemic has stifled customer activity; Investors' "lack of interest" in buying gold has also been a source of market stress; Gold has been sold by a number of hedge funds; and The US dollar has strengthened, implying a drop in gold prices; and, growing interest in alternative investments such as Bitcoin. “It should be remembered that the gold price is still at a very high price relative to the average price over the last five years,” Lewins said.


PNG Business News - March 31, 2021

K92 Mining Records 56% Increase in Revenue at Kainantu, Thanks to Record Production

K92 Mining recently revealed that its Kainantu gold mine in Papua New Guinea's Eastern Highlands province produced a record annual gold-equivalent output of 98,872 oz. The gold equivalent volume is 95,109 oz of gold, 1,853,078 lbs of copper, and 36,067 oz of silver, reflecting a 20 per cent growth in AuEq from the previous year. Cash costs of US$651/oz gold and AISC of US$782/oz gold were obtained by the company. The firm reported that its annual revenue of US$159.1 million were up 56 per cent from the previous year. EBITDA was US$79.6 million, or US$0.37 per share, and operating cash flow was US$76.5 million, or US$0.35 per share. The company's net income was $42.0 million, or $0.19 per share. In addition, following the lifting of the State of Emergency in June 2020, K92 successfully commissioned Stage 2 Plant Extension, doubling throughput capacity to 400,000 tonnes per year and ongoing construction of the twin incline. K92 Mining is involved in the extraction of gold, copper, and silver from the Kora deposit at the Kainantu gold mine in Papua New Guinea's Eastern Highlands province, as well as the discovery and construction of mineral resources near the mine. In February 2018, the company announced commercial production from Kainantu and is in a good financial position. John Lewins, K92 Chief Executive Officer and Director stated, “2020 represented another transformational year for K92. In terms of operations, Kainantu delivered record throughput, production and development, and finished the year particularly strong, with multiple quarterly records achieved in the fourth quarter. In the third quarter, K92 achieved two major growth milestones: the completion of the Stage 2 Plant Expansion commissioning, and; the Stage 3 Expansion PEA study. The Stage 2 Plant Expansion, has already delivered a notable step-change in terms of the capabilities of the operation, doubling throughput capacity from 200,000 tpa (~550 tpd) to 400,000 tpa (~1,100 tpd). The Stage 3 Expansion PEA has outlined a Tier 1 Asset, expanding to 1 mtpa throughput with run-rate production of ~318kozpa AuEq, LOM average AISC of $362/oz Au and capital costs funded from mine cash flow at $1,500/oz.” He added, “On exploration, Kainantu doubled the number of drill rigs to 10, providing a significant boost to not only the rate of drilling but our capacity to drill multiple targets concurrently. In the second half of the year, this resulted in high-grade mineralization recorded at both the underexplored Karempe and Judd vein systems. The results from Judd are particularly encouraging with JDD0006 recording 7.25 m at 256.09 g/t Au, 113 g/t Ag and 0.42 % Cu (258.01 g/t AuEq, 5.30m true width) on the J1 vein (see November 9, 2020 press release), representing one of the highest-grade intersections drilled by K92. Importantly, underground development has supported the Judd drilling results, with the latest 65-metre development extension on the Judd 1235 Level recording an average 3.8 metres vein thickness at 18.70 g/t AuEq (17.13 g/t Au, 0.82% Cu and 37 g/t Ag) (see January 26, 2021 press release). Exploration results have increased our conviction for a higher throughput rate for the Stage 3 Expansion Definitive Feasibility Study and resulted in more drill rigs being added through 2021. Lastly, I would like to highlight that this transformational year was achieved in one of the most challenging environments globally due to the COVID-19 pandemic. The dedication and resourcefulness of our workforce have been exemplary, and the support of the government has also been a major factor in our success.”

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