Mine looking to generate K3.74mil in sales revenue
THE K92 MINING Ltd, developer of the Kainantu mine, expects to generate around US$1.1 million (K3.74mil) in sales revenue with every US$10 (K34) increase in the gold price this year.
Chief executive officer John Lewins was responding to questions from The National in regards to the increase in gold prices in recent months, and the effect on the company.
“You will see that the gold price has indeed increased over the last two months,”he said.
“The gold price increased from US$1,460 (K4,974) per ounce at the beginning of last December to US$1,510 (K5,144) by the end of the month and then to US$1,575 (K5,366) currently, so a US$115 (K392) increase per ounce is very significant.
“For K92, we have given production guidance of 110,000 to 120,000 ounces for 2020, so for every US$10 increase in the gold price, we see an increase of approximately US$1.1 million (K3.7mil) in sales revenue.
“This flows through to PNG through royalty and taxes with improved profits.
“For PNG, the mining industry produces two million ounces, so every US$10 increase in the gold price also increases sales by US$20 million (K68.14mil).
“This again flows through to PNG through royalties and higher taxes with improved profit.”
Lewins said small scale miners also needed to be aware of the gold price when selling their product to ensure they got the benefit of the price.
“Ideally, they should try and increase production and sales when prices are high, although this is not always possible,” he said.
“The general view of analysts is that the gold price will be stronger this year than last.”