K92 Mining Releases Strong 2022 Q2 Financial Results – Record Cash Balance, Mine and Mill Throughput

·7 min read
K92 Mining Inc.
K92 Mining Inc.

VANCOUVER, British Columbia, Aug. 15, 2022 (GLOBE NEWSWIRE) -- K92 Mining Inc. (“K92” or the “Company”) (TSX: KNT; OTCQX: KNTNF) is pleased to announce second quarter financial results for the three and six months ended June 30, 2022.

Safety

  • Strong focus on safety with one of the best safety records in the Australasia region since commencement of operations.

  • Proactive and focused management of COVID-19. K92 has continuously operated throughout the COVID-19 pandemic, and has strong preventative and response plans, with pandemic resiliency strengthening through ongoing vaccination programs.

Production

  • Record plant throughput of 108,853 tonnes processed during the quarter, or 1,196 tonnes per day (“tpd”), significantly exceeding the Stage 2 Expansion run-rate and a 44% increase from Q2 2021.

  • Record mine throughput with 114,471 tonnes mill feed mined during the quarter or 1,258 tpd, an increase of 59% from Q2 2021.

  • Strong quarterly gold equivalent (“AuEq”) production of 26,085 oz or 22,934 oz gold, 1,229,961 lbs copper and 25,224 oz silver (1).

  • Cash costs of US$617/oz gold and all-in sustaining costs (“AISC”) of US$893/oz gold (2).

  • Strong metallurgical recoveries of 91.0% for gold and 90.9% for copper, ahead of the installation of the additional flotation cells planned for Q4 2022, which will double rougher tank capacity.

  • Record monthly throughput achieved in June, averaging 1,251 tpd, 14% above the Stage 2 Expansion run-rate of 1,100 tpd. During May and June, 48% of days (29 days) exceeded 1,300 tpd.

  • Subsequent to quarter end, multiple process plant daily throughput records were realized that significantly exceeded the Stage 2A Expansion run-rate of 1,370 tpd, with 1,638 tonnes and 1,642 tonnes processed on July 6 and 14, respectively, in addition to 1,609 tonnes processed on July 12.

Financials

  • Record cash position of US$81.7 million as of June 30, 2022. Subsequent to quarter end, K92 closed a C$50 million bought deal financing to further strengthen the balance sheet while remaining debt-free.

  • Sales of 23,674 oz of gold, 1,349,816 lbs of copper and 27,033 oz of silver. Gold concentrate and doré inventory of 3,012 oz as of June 30, 2022, a quarterly decrease of 1,836 oz.

  • Operating cash flow (before working capital adjustments) for the three months ended June 30, 2022, of US$10.5 million or US$0.05 per share, and earnings before interest, taxes, depreciation and amortization (“EBITDA”) of US$13.3 million or US$0.06 per share.

  • Net income of US$5.1 million or $0.02 per share, a 17% increase from Q2 2021.

  • Quarterly revenue of US$37.4 million, a 5% increase from Q2 2021.

Growth

  • The Stage 2A Expansion to 500,000 tonnes per annum (“tpa”) continued to progress during the quarter, with works underway and the new filter press operational; the additional TC-1000 crusher was installed in late Q2 and was commissioned in July, while new flotation tanks are scheduled to arrive in Q4 2022. Additional mining equipment arrived on site in early Q2, including a new truck and loader; while a loader and jumbo are scheduled to arrive in Q3. The performance of the process plant to date continues to demonstrate the potential to approach Stage 2A Expansion run-rate ahead of the new flotation tanks being installed.

  • Results for 116 diamond drill holes reported for the Kora and Judd deposits with 25 intersections exceeding 10 g/t AuEq at Kora and 19 intersections exceeding 10 g/t AuEq at Judd. Highlights include multiple intersections at JDD0051 including 8.80 m at 61.17 g/t AuEq from the J1 Vein and multiple intersections at KMDD0402 including 4.20 m at 37.38 g/t AuEq from the K2 Vein and 8.50 m at 26.34 g/t AuEq from the K1 Vein (see June 9, 2022 press release).

  • Significant advance of the twin incline in Q2, with incline #2 (6m x 6.5m) advanced to 1,276 metres and #3 (5m x 5.5m) advanced to 1,317 metres as of June 30, 2022. Year-to-date, twin incline development has exceeded budget by 38%. Overall mine development was 1,826m, an increase of 75% and 19% from Q2 2021 and Q1 2022, respectively.

  • Subsequent to quarter end, K92 announced its maiden resource estimate at the Blue Lake porphyry project. The maiden Blue Lake resource estimate reported a significant inferred resource of 10.8 million ounces AuEq at 0.61 g/t AuEq or 4.7 billion pounds copper equivalent (“CuEq”) at 0.38% CuEq. Future exploration plans at Blue Lake include drilling to target expanding the higher-grade core, which is open at depth, and exploring for additional mineralized porphyries beneath an extensive composite lithocap that extends to and includes the A1 Porphyry Target, our highest priority porphyry target based on geophysics completed in late 2021. Plans are underway to imminently commence soil sampling at A1 followed by drilling (see August 9, 2022 press release).

The Company’s interim consolidated financial statements and associated management’s discussion and analysis for the quarter ended June 30, 2022 are available for download on the Company’s website and under the Company’s profile on SEDAR (www.sedar.com). All amounts are in U.S. dollars unless otherwise indicated.

John Lewins, K92 Chief Executive Officer and Director, stated, “In the second quarter we continued our growth trajectory with multiple records achieved: record cash balance of $82 million with no debt; record mill throughput averaging 1,196 tpd that is significantly higher than the Stage 2 Expansion run-rate of 1,100 tpd; record mine production averaging 1,258 tpd, and; record average monthly throughput in June of 1,251 tpd.

Following the installation of our additional TC-1000 crusher the process plant took another step forward, achieving daily process plant records well in excess of the Stage 2A Expansion design of 1,370 tpd or 500,000 tpa. July 6 recorded 1,638 tonnes, on July 14 1,642 tonnes were processed, and on July 12, 1,609 tonnes were processed. This strong performance is especially significant as we have not yet installed a key upgrade for the Stage 2A Expansion, which is the additional flotation cells to double rougher capacity targeting Q4. Concurrent with the increasing mill throughput capabilities, underground mine throughput capabilities are growing as well, with a new jumbo and loader recently arriving in-country and plans to add more equipment over the coming months. The strong performance of the process plant and plans for higher grade stopes in the second half of this year well positions K92 to achieve its 2022 production guidance of 115,000 to 140,000 ounces AuEq. In addition to Stage 2A, economic studies for the Stage 3 Expansion and beyond are progressing well and we plan to announce near term.

Only a few days ago, K92 achieved a major milestone in our copper-gold porphyry exploration, with the announcement of the maiden inferred resource estimate for the Blue Lake Porphyry of 10.8 million oz AuEq or 4.7 million lbs CuEq. We believe Blue Lake is only the tip of the porphyry iceberg at Kainantu. In Papua New Guinea, porphyries tend to cluster and there are five other porphyry targets proximal to Blue Lake, with A1 being of highest priority. Soil sampling of A1 is expected to commence imminently, followed by diamond drilling.

Also on exploration, we are pleased to report that our fourth drill rig is now operating at Kora South and Judd South, and a fifth rig is now on order. Underground drilling of Kora South and Judd South has also commenced through long targeted holes.

Between our operational growth, copper-gold porphyry exploration and high-grade vein field exploration, there is certainly a lot to look forward to.

Mine Operating Activities

 

Three months ended
June 30, 2022

Three months ended
June 30, 2021

Operating data

 

 

Head grade (Au g/t)

7.2

10.3

Gold recovery (%)

91.0%

88.3%

Gold ounces produced

22,934

22,153

Gold ounces equivalent produced(1)

26,085

25,015

Tonnes of copper produced

588

498

Silver ounces produced

25,224

14,914

 

 

 

Financial data (in thousands of dollars)

 

 

Gold ounces sold

23,674

18,939

Revenues from concentrate and doré sales

US$37,356

US$35,518

Mine operating expenses

US$9,310

US$8,789

Other mine expenses

US$9,363

US$9,005

Depreciation and depletion

US$4,496

US$3,154

 

 

 

Statistics (in dollars)

 

 

Average realized selling price per ounce, net

US$1,783

US$1,754

Cash cost per ounce

US$617

US$736

All-in sustaining cost per ounce

US$893

US$1,057


Notes:

(1) Gold equivalent for Q2 2022 is based on the London Metal Exchange quarterly spot average price: gold $1,870 per ounce; silver $23 per ounce; and copper $4.32 per pound. Gold equivalent for 2021 is based on the following prices: gold $1,800 per ounce; silver $25 per ounce; and copper $4.35 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 measures in the Company’s management’s discussion and analysis dated August 12, 2022, available on SEDAR or the Company’s website, for reconciliation of these measures.

K92 has not based its production decisions on mineral reserve estimates or feasibility studies, and historically such projects have increased uncertainty and risk of failure. 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 2022 second quarter financial results at 8:30 am (EDT) on Monday, August 15, 2022.

  • 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/k92mining2022q2.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.

Resource estimates are in included in a technical report titled, “Independent Technical Report, Mineral Resources Estimate Update Kora and Judd Gold Deposits, Kainantu Project, Papua New Guinea” dated 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 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.

The Company commenced an expansion of the mine based on an updated Preliminary Economic Assessment on the property which was published in January 2019 and updated in July 2020. 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 at +1-604-416-4445

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. 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 “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”, “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 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; the fact that a feasibility studying of mineral reserves demonstrating economic and technical viability has not been prepared for the Kainantu Mine; 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 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 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 and/or the anticipated economics of production, should mining occur. 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 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.