K92 Mining Inc. (“
K92” or the
“
Company”) (TSX
: KNT;
OTCQX
: KNTNF) is pleased to provide its
operational outlook for 2022. The Company expects a significant,
year over year, increase in gold equivalent production of up to 34%
to 115,000 to 140,000 ounces, while also delivering low-cost
production with an estimated cash cost of $560-$640 per ounce gold
and all-in sustaining cost (“AISC”) of $890-$970 per ounce gold.
Additionally, the Company plans to ramp-up exploration activities
and invest in future production growth.
On exploration, 2022 is forecasted to have a
significant increase in both near-mine and regional activities with
forecasted expenditures of $12-15 million. Since 2020, the drill
fleet has more than doubled to up to eleven drill rigs.
Importantly, exploration has recently made a major pivot to focus
on resource growth from previously largely infill-drilling at Kora,
with plans to drill the Judd, Kora, Judd South and Kora South vein
systems, and the Blue Lake porphyry. Significant generative surface
exploration activities from 2021 are planned to continue into
2022.
Growth capital is forecasted to be $41-$47
million, which includes the ongoing Stage 2A Expansion to 500,000
tonnes per year (1,370 tonnes per day), substantial upgrades to our
underground and surface infrastructure and the twin incline
development to also support the Stage 3 Expansion. The twin incline
is designed for a throughput capacity of up to 2 million tonnes per
annum (“tpa”) or 3 million tonnes per annum with conveyors. As of
December 31, 2021, the furthest twin incline has advanced 893
metres.
Table 1 – 2022 Operational Outlook Summary
Gold Equivalent Production(1) |
Oz |
115,000 to 140,000 |
Cash Costs(2) |
$/Oz |
$560 to $640 per ounce gold |
All-in Sustaining Costs(2) |
$/Oz |
$890 to $970 per ounce gold |
Growth Capital |
US$ |
$41 to $47 million |
Exploration |
US$ |
$12 to $15 million |
(1) – Gold Equivalent Production based on the
following commodity prices: Gold $1,750/oz; Copper $3.75/lb, and;
Silver $25/oz. (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 November 10, 2021,
available on SEDAR, for reconciliation of these measures.
John Lewins, K92 Chief Executive Officer and
Director, stated, “2021 was a record year and we plan to deliver
another record year in 2022. The end-of-year momentum from the
fourth quarter of 2021 which delivered record production, mill
throughput, mine throughput and some of the highest metallurgical
recoveries over the past two years for both gold and copper, has
certainly set the operation up well for 2022. We also achieved our
beginning of 2021 target of reaching Stage 2 Expansion mine and
mill throughput by year-end, and we look to continue to expand in
2022 through the Stage 2A Expansion designed to increase throughput
+25% to 500,000 tpa with commissioning planned for 3Q 2022.
We are also very excited about exploration for
2022, with most of the program focused on resource growth. Surface
drilling is advancing at Judd South and Kora South, targeting large
step-outs from the existing known deposits. Surface drilling is
also advancing at Blue Lake with deeper drilling targeting the
potassic core. Underground drilling for the first time has the
majority of drill rigs at Judd and plans are also in place to
leverage the twin incline later in the year for step-outs at Kora
along strike to the north and at depth.
Advancing the Stage 3 Expansion is a key part of
our plans this year, with considerable progress planned on multiple
fronts. Twin incline development advance has performed well,
exceeding budget in the second half of 2021. The resource update
for Judd and Kora is planned to be announced together this quarter,
and our Stage 3 Definitive Feasibility Study and Updated
Preliminary Economic Assessment (“PEA”) are progressing well and
planned for Q2 publication. Work on the drilling of a 5-metre
diameter raisebored ventilation shaft located in the south of the
Mining Lease is also scheduled to commence in late 2022.
In terms of COVID-19, it continues to be a
factor to societies and industries globally, and as a result, we
have incorporated a contingency in our production guidance range by
extending its lower bound. It is also important to highlight that
our resiliency to the pandemic has significantly improved over the
past year, with over 65% of our workforce having received their
first vaccine dose and COVID-19 control measures on site have
proven durable to date. Operations have also benefited from a
substantial improvement in international travel for our expatriate
workforce, consultants and suppliers.
Lastly, I would like to once again thank our
workforce – their strong commitment and resilience have been
extraordinary. The Government of Papua New Guinea and the
Government of Australia have also been a major factor in our
success. This has set up a potentially very exciting 2022.”
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.
About K92
K92 Mining Inc. is engaged in the production of
gold, copper and silver from the Kora deposit 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 +1-604-687-7130.
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.
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