K92 Mining Inc. (“
K92” or the
“
Company”) (TSX
: KNT;
OTCQX
: KNTNF) announces production results for the
fourth quarter (“
Q4”) of 2021 at its Kainantu Gold
Mine in Papua New Guinea, of 36,145 oz AuEq or 33,220 oz gold,
1,048,100 lbs copper and 28,218 oz silver. Annual production also
achieved a record of 104,196 oz AuEq or 95,055 oz gold, 3,375,528
lbs copper and 70,792 oz silver, exceeding the updated guidance
range of 96,000 to 102,000 oz AuEq.
During the fourth quarter, the process plant
delivered record throughput of 99,713 tonnes. Excluding 5
consecutive days of downtime due to scheduled plant maintenance,
the mill operated at an average throughput of 1,146 tonnes per day
(“tpd”), exceeding Stage 2 Expansion design throughput of 1,100
tpd. Multiple daily records were set during the quarter, with 21
days exceeding 1,300 tpd throughput and a daily record of 1,538
tonnes set on October 24, 2021.
Importantly, recoveries were also strong during
the quarter at 92.8% for gold and 92.9% for copper, both exceeding
budget. Gold and copper recoveries represent the highest recoveries
since Q4 2020 and Q4 2019, respectively. Plant capabilities are
expected to also further improve with the full integration of the
gravity circuit planned for Q1 2022.
With the process plant continuing to deliver
significantly above design throughput and a notably finer than
required product size, a Stage 2A Expansion to increase throughput
from 400,000 tonnes per annum (1,100 tpd) to a nameplate of 500,000
tonnes per annum (1,370 tpd) has been approved (see October 7, 2021
press release: K92 Mining Announces Stage 2A Expansion to Increase
Throughput +25% to 500,000 Tonnes Per Annum at Kainantu Gold Mine).
Works are already underway targeting commissioning in Q3 2022, with
an estimated plant expansion capital cost of US$2.5 million.
Mining operations also achieved record material
movements in the fourth quarter with 108,461 tonnes of mill feed
material movements. The mining rate exceeded our target of
achieving the Stage 2 target throughput of 1,100 tpd at year end,
averaging ~1,180 tpd (mill feed), and the strong performance
resulted in an increase to our stockpiles.
During the quarter, the first production stope
from the Judd #1 (“J1”) Vein was mined and has delivered strong
performance thus far, including solid geotech, high grades, and
strong drill and blast characteristics (see Figure 1). Judd has
also shown that it is capable of delivering large stopes (first
stope 40 m strike x 30 m height x 4.5-5m thickness) and large
blasts with a fast turnaround cycle, including a stoping single
blast record of 4.1 kt in December 2021. The establishment of the
Judd Vein System as a new major mining front has provided a
significant boost to operational flexibility and material
movements. Judd is located ~150-200m from existing infrastructure
at the Kora high-grade deposit, making it highly efficient to
access going forward.
The operation delivered head grades of 11.2 g/t
gold, 0.51% copper and 10 g/t silver (12.1 g/t AuEq) in Q4. Gold
grades delivered a positive reconciliation against the resource
model and were also above budget. Long hole stoping continued to
perform to design, with operations focused on Kora’s K1 and K2
veins and also Judd’s J1 Vein for a total of 7 levels mined. Mining
on Kora was conducted on the 1150, 1170, 1205, 1225 and 1265 levels
and Judd on the 1235 and 1265 levels.
The new twin incline development resumed in late
May, after the COVID-19 Papua New Guinea and Australia travel
restrictions were lifted and the COVID-19 situation in Papua New
Guinea improved. Twin incline development advancement has continued
to progress well, exceeding budget for the second half of 2021 and
in line with budget during Q4. The #2 (6m x 6m) incline has now
advanced a total of 803 metres and the #3 (5m x 5m) incline has now
advanced a total of 893 metres as of December 31, 2021.
COVID-19 Operational
Resiliency
The Kainantu Gold Mine operates under a
comprehensive COVID-19 Management Plan and has continuously
operated during the pandemic. A considerable focus is on health and
safety and risk-mitigation. Under the COVID-19 Management Plan, K92
has established a Government-recognized testing lab facility
utilizing qualified medical personnel on site, established
quarantine and isolation facilities for incoming staff, and
implemented enhanced hygiene, disinfecting and training systems and
procedures. Additional controls were implemented in 2021, requiring
external COVID-19 testing prior to travel to quarantine at site in
addition to on arrival at site before reporting to quarantine. A
focus has been supporting Government efforts at a national,
provincial and local level through the 1.5 million PGK (Papua New
Guinea Kina) COVID-19 Assistance Fund and a further 1.0 million PGK
of additional assistance funding to Eastern Highlands Province.
In addition to various control measures, K92
continues to make considerable progress increasing our resiliency
through vaccinations of our expatriate and PNG national workforce,
with vaccinations administered on site well underway. Over 65% of
our workforce (employees and contractors) have received at least
one vaccine dose. The Company is in close communications with the
provincial and national health authorities of Papua New Guinea and
the Government of Australia, in addition to the Papua New Guinea
Chamber of Mines and Petroleum to deliver an effective pandemic
response.
Table 1 – Q4 2021 & 2020 and Annual 2021 Production
Data
|
|
2020 |
Q1 2021 |
Q2 2021 |
Q3 2021 |
Q4 2021 |
2021 |
Tonnes Processed |
T |
230,365 |
73,221 |
75,667 |
87,621 |
99,713 |
336,221 |
Feed Grade Au |
g/t |
14.0 |
8.5 |
10.3 |
9.0 |
11.2 |
9.8 |
Feed Grade Cu |
% |
0.40% |
0.31% |
0.76% |
0.48% |
0.51% |
0.51% |
Recovery (%) Au |
% |
91.8% |
88.9% |
88.3% |
86.1% |
92.8% |
89.4% |
Recovery (%) Cu |
% |
90.9% |
86.2% |
87.2% |
87.2% |
92.9% |
88.8% |
Metal in Conc Prod Au |
Oz |
95,109 |
17,774 |
22,153 |
21,908 |
33,220 |
95,055 |
Metal in Conc Prod Cu |
T |
841 |
193 |
498 |
364 |
475 |
1,531 |
Metal in Conc Prod Ag |
Oz |
36,067 |
7,925 |
14,914 |
19,736 |
28,218 |
70,792 |
Gold Equivalent Production |
Oz |
98,872 |
18,914 |
25,015 |
24,121 |
36,145 |
104,196 |
Note - 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. Gold equivalent for 2020 is based on the
following prices: gold $1,500 per ounce; silver $17.75 per ounce;
and copper $2.70 per pound.
John Lewins, K92 Chief Executive Officer and
Director, stated, “The fourth quarter delivered our strongest
quarter to date at the Kainantu Gold Mine, with record production,
record mill throughput, record mine throughput, above budget
processing recoveries and an excellent start to stoping activities
at Judd, our new mining front.
We believe that Q4 represented a major
inflection point for Kainantu both operationally and with
exploration. Operationally, we met our beginning of year goal of
achieving Stage 2 Expansion mine and mill throughput by year-end
and exceeded our updated production guidance. In 2022, we look to
take another step forward with the Stage 2A Expansion, increasing
nameplate throughput by +25% to 500,000 tonnes per annum, targeting
commissioning in Q3 2022.
On exploration, activities have recently shifted
from an extended period of infill drilling at Kora to now almost
entirely focused on resource growth. Step-out drilling is underway
at Judd, Judd South, Kora, Kora South and also the Blue Lake
Porphyry. We certainly are excited about our 2022 exploration
program.
It is also important to highlight that COVID-19
was certainly a factor in Q4, with a record surge of cases during
the first two months driven by the Delta Variant in Papua New
Guinea. K92 has a tremendous attachment to our communities, the
people of Papua New Guinea, a strong sense of responsibility and it
was especially painful to see the impact that COVID-19 has had. We
are proud to have provided an additional 1.0 million PGK of
COVID-19 assistance funding to Eastern Highlands province in Q4, in
addition to our 1.5 million PGK COVID-19 Assistance Fund created in
April 2020. Our site logistics team was active in rapid procurement
and delivery of medical oxygen plants from Australia to the local
Goroka hospital, and we strongly believe that our efforts made a
difference and saved lives.
I am also pleased to report that our COVID-19
control measures on site held up very well, although there were
impacts from absenteeism. Encouragingly, our COVID-19 resiliency
continues to improve with over 65% of our workforce vaccinated with
at least one dose, and a progressive easing of restrictions has
begun within the resources sector in Papua New Guinea. We have also
seen a significant improvement in international travel for our
expatriate workforce, consultants and suppliers over the last three
months that is beginning to benefit the operation.
Lastly, I would like to once again thank the K92
workforce for their extraordinary commitment, dedication and
resourcefulness. The support of the Government of Papua New Guinea,
and also the Australian Government has been a major factor in our
success as well.”
Qualified Person
K92 Mine Geology Manager and Mine Exploration
Manager, 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. Data verification by Mr.
Kohler includes significant time onsite reviewing drill core, face
sampling, underground workings, and discussing work programs and
results with geology and mining personnel.
On Behalf of the Company,
John Lewins, Chief Executive Officer and
Director
For further information, please contact David
Medilek, P.Eng., CFA at +1-604-687-7130.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION: This news release includes certain “forward-looking
statements” under applicable Canadian securities legislation.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable, are
subject to known and unknown risks, uncertainties, and other
factors which may cause the actual results and future events to
differ materially from those expressed or implied by such
forward-looking statements. All statements that address future
plans, activities, events, or developments that the Company
believes, expects or anticipates will or may occur are
forward-looking information, including statements regarding the
realization of the preliminary economic analysis for the Kainantu
Mine, expectations of future cash flows, the planned plant
expansion, production results, cost of sales, sales of production,
potential expansion of resources and the generation of further
drilling results which may or may not occur. Forward-looking
statements and information contained herein are based on certain
factors and assumptions regarding, among other things, the market
price of the Company’s securities, metal prices, exchange rates,
taxation, the estimation, timing and amount of future exploration
and development, capital and operating costs, the availability of
financing, the receipt of regulatory approvals, environmental
risks, title disputes, failure of plant, equipment or processes to
operate as anticipated, accidents, labour disputes, claims and
limitations on insurance coverage and other risks of the mining
industry, changes in national and local government regulation of
mining operations in PNG, mitigation of the COVID-19 pandemic,
removal of travel restrictions, continuation of the lifted state of
emergency, and regulations and other matters. 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.
Figure 1 – Judd Vein #1 Long Hole Stope,
viewing from the top of the stope at the 1265 Level. The stope
delivered solid geotechnical performance with sizeable geometry: 30
m high, 40 m strike, thickness between 4.5-5.0 m.
Available
at https://www.globenewswire.com/NewsRoom/AttachmentNg/9831135a-5b4f-421c-b7ec-5c8bc91632b9
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