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
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.”
PNG Business News - October 26, 2021
Australia buys Digicel, PNG’s mobile monopoly
Photo credit: Devpolicy by Stephen Howes Yesterday, Telstra announced that it was buying Digicel Pacific. Telstra itself is only paying $270 million, and the Australian government $1.33 billion. Yet, Telstra is obtaining 100% ownership. The deal is certainly an attractive one for Telstra. But does it make sense for Australia, and for the Pacific? Digicel has had a transformational impact in the Pacific, but now has too much market power. As the Telstra release explains, it holds the dominant position in all the Pacific countries in which it operates, except for Fiji, where it is in second place. In Papua New Guinea, which I know best, and which is by far Digicel's biggest market, the company has a 92% share of the mobile phone market. That makes Digicel effectively a monopoly in PNG. And that is why it is so profitable: like any monopolist, it exploits its market power. Australian and PNG researchers have been tracking mobile internet prices in PNG since Australia gifted it a new underwater cable . Their conclusion is that since the completion of that cable in December 2019 to today there has been no decrease in mobile internet prices. The reason is simple: the lack of retail competition. Michelle Nayahamui Rooney, Martin Davies and I last year exposed Digicel PNG’s predatory loan scheme. Digicel lends phone credit to its customers. They pay it back when they next top up. Our estimate is that Digicel made a 17% return from such loans every week, which is equivalent to an unbelievable 351200% a year. Is this really the way in which Australia want to engages in the Pacific – owning an enterprise that keeps prices high for consumers, and rips them off when they are desperate to make a call? Any monopolist is necessarily engaged in a battle between the consumer and their profits. At some point, Telstra will end up going toe-to-toe with the PNG telecom regulator, NICTA, as Digicel has done several times. It’s going to be awkward for both Telstra and the Australian government. Many will welcome the investment as a sign of Australian commitment to the Pacific. However, if we want to invest in the telecom sector in the Pacific, we should be backing alternatives to Digicel, to push prices down and improve services, not buying out the dominant player. Amalgamated Telecom Holdings based in Fiji is the Pacific’s second biggest telecom provider. It is currently planning to enter the PNG mobile market with support from the Asian Development Bank. This is the sort of investment we should be financing. That Australia has bought Digicel shows the extent to which the Pacific is now viewed through a China lens. That’s unfortunate. China is a massive economic power. Its companies will have increasing stakes in economies around the world. That is a fact we have to accept. The Australian government also needs to decide if its only goal is to counter China or if it is still seeks to promote Pacific development. When I was AusAID's Chief Economist, Digicel was the new kid on the block in the Pacific, and it was successfully challenging state-owned telcos that until then had been dominant. In 2006, in Foreign Minister Alexander Downer's flagship Pacific 2020 report, we wrote glowingly about the competition that various Pacific countries had recently started allowing in the mobile phone sector. Our analysis was right then, and remains relevant today. Yet here we are, in 2021, doing the opposite: rather than supporting greater competition in the telecom sector, subsidising the purchase of the incumbent monopolist. The decision to buy Digicel Pacific should be reversed. If it is too late for that, the Australian government should at least – in return for all its cheap and risk-reducing finance – oblige Telstra to operate Digicel for the benefit of the people of the Pacific rather than solely for its shareholders through an agreement that makes it clear that the Australian company is not only expected to return the cheap loan it has been given, but also reduce prices, and end rip-offs. This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.
PNG Business News - October 26, 2021
Taureka Replaced As Managing Director
Isikeli Taureka's position as managing-director (MD) of Kumul Consolidated Holdings (KCH) was terminated by the National Executive Council (NEC) recently. Professor David Kavanamur has been appointed as interim MD until a permanent appointment is made, and Moses Maladina, the current chairman of PNG Power Ltd, has been named as acting chairman. Taureka was removed after 20 months, according to Prime Minister James Marape, due to poor performance by KCH and State-Owned Enterprises (SOEs) and missed national project deadlines. “The reforms of the SOEs were endorsed by the Government in October 2019,” he said “We see it as the most-significant reform programme to be undertaken by any Government since the corporatisation of the state utilities and the creation of the Independent Public Business Corporation (IPBC), now KCH. “Building governance and accountability must go hand in hand with successful project execution. These are viable projects that can fundamentally change the accessibility and affordability of services and benefit the welfare of our people. “Extensive unexplained delays to major projects by KCH and SOEs are not acceptable. The Government understands that SOE issues cannot be immediately resolved as they take time. “That is why the NEC provided well over a year for KCH to work with SOEs to support the development and execution of strategies. We had hoped more would have been achieved during Taureka’s tenure. We regret to take the difficult step of severing the MD’s appointment. However, the NEC felt it had to be done. “The Telikom merger and partial privatisation with majority ownership and board control to be passed onto the super funds, for example, is one major issue the Government has been pushing since 2019 when we took office. “The merger of Water PNG and Eda Ranu is another matter that has been outstanding and not yet resolved. This merger is to take on a subsidiary structure where 20 percent of Eda Ranu is to be owned by Koiari landowners and 10 per cent each by Central Province and the National Capital District. “This decision was taken in 2019 but has not been implemented to date. “As for PNG Power and its continuous performance issues, these have been ongoing and evident. “These are badly-needed reforms within the SOEs and responsive policies have been launched by the Government, yet, very little or no progress have been made. “Out of respect to Taureka as a leading Papua New Guinea son, I had reached out to him for a meeting but there was no response forthcoming. Hence, the announcement of this decision (termination),” he added. Those nominated to crucial positions, according to Marape, must grasp the larger picture and act quickly to fulfill the government's goals.“For others in key leadership roles, whether as chair, members of boards, departments or agency heads, you are not here to pass the time or warm seats. Everyone must step up. “The Prime Minister’s Department is working to take stock of work done. So, if you feel you have not met your key performance indicators, I suggest you start thinking about resigning before the NEC asks you to leave.” According to Marape, Kavanamur had previously served as the chairman of KCH and had a thorough awareness of the organization's issues as well as the government's goals. Reference: The National (22 October 2021). “Cabinet Axes Taureka”.
PNG Business News - October 26, 2021
Digicel Pacific to be Acquired by Telstra
Telstra has announced that it will buy Digicel Pacific for $US1.6 billion, plus up to an additional US$250 million based on business performance over the next three years, subject to government and regulatory approvals. In its six South Pacific markets – Papua New Guinea, Fiji, Nauru, Samoa, Tonga, and Vanuatu – Telstra, Australia's leading telecommunications and technology company, will continue to invest in and operate the business under the Digicel brand name. Telstra International CEO Oliver Camplin-Warner said the agreement will allow Telstra to expand on Digicel Pacific's regional leadership and increase mobile connectivity in Papua New Guinea. “Denis O’Brien and the Digicel team have built a phenomenal business that’s centred on providing exceptional customer service, the best coverage and leading digital experiences. Telstra will add to these strengths and the team’s local knowledge with our more than one hundred years’ experience connecting the vast expanses of Australia to continue delivering great experiences for Digicel’s customers across the Pacific.” “We have 19.5 million retail mobile customers in Australia and our 4G network is the largest and most reliable in country. It covers some of the remotest parts of Australia – from the coast, to the outback and the Torres Strait Islands, just off the coast of Papua New Guinea. And we’re in the process of building Australia’s largest 5G network that now stretches to more than 240 towns and 75 per cent of the population,” Camplin-Warner said. There will be no employment losses in the region as a result of the transaction, and the present Digicel Pacific team will continue to manage the company on a day-to-day basis. Denis O'Brien, the current owner of Digicel, will continue on the Board of Directors. “We will invest our know-how and capital to further expand coverage and over time bring the benefits of 5G to Papua New Guinea. But we’ll retain the same Digicel brand the people of PNG know and love today with the same team and services they have come to rely on,” Mr Camplin-Warner said. The purchase, according to Camplin-Warner, is in line with Telstra International's expansion plan, which now comprises operations in 20 countries outside of Australia and thousands of clients, including businesses, governments, and some of the world's largest technology firms. “Beyond Australia Telstra also has the most extensive subsea telecommunications cable network in the Asia Pacific. And we’re one of the biggest providers of voice and data services connecting the South Pacific to the rest of the world through our Southern Cross cable.” “Network traffic is growing faster than at any other period of time and digital technology is changing our world. We are at the centre of this, and so is Digicel Pacific. We are committed to delivering the best technology on the best network for PNG,” Mr Camplin-Warner said. The people and businesses of PNG will benefit from Telstra's experience rolling out a world-class 5G network and connecting diverse geographies, according to Colin Stone, CEO of Digicel Papua New Guinea. “Telstra’s network innovation has played a critical part in Australia being ranked first in the global Mobile Connectivity Index which assesses networks based on performance, affordability and availability. We look forward to working with Oliver and the Telstra team,” Mr Stone said. The two firms' ideals, according to Camplin-Warner, were likewise matched. “Digicel Pacific and Telstra are both committed to building a connected future so everyone can thrive and this includes supporting some of the most vulnerable in our communities.” “Digicel Pacific has taken community development to the next level through the Digicel Foundation’s investment in health, education and community-based programs. We look forward to continuing this work, just as we do today with the Telstra Foundation and its commitment to using technology to support young people and help to reduce the digital divide.” “We will also bring a commitment to addressing climate change to help drive better environmental outcomes for the people of PNG,” Mr Camplin-Warner said. Despite the fact that the transaction is funded by the Australian government, Telstra will remain the only owner and operator of the company. Reference: Loop (October 25, 2021). “Australia’s biggest telecommunications company to acquire Digicel Pacific”.