K92 Mining Inc. (“
K92” or the
“
Company”) (TSX
: KNT;
OTCQX
: KNTNF) is pleased to announce results from
its financial statements for the three and twelve months ended
December 31, 2021.
Safety
- Strong focus on safety with zero
lost time incidents (“LTI”) in the fourth quarter.
Since the start of operations, Kainantu has had one of the best
safety records in the Australasia region.
- Proactive and
focused management of COVID-19. K92 has continuously operated
throughout the COVID-19 pandemic, has strong preventative and
response plans, with pandemic resiliency strengthening through
ongoing vaccination programs.
ProductionFourth Quarter
2021
- Record quarterly tonnage of 99,713
tonnes treated, a 45% increase from Q4 2020.
- Record quarterly gold equivalent
(“AuEq”) production of 36,145 oz, or 33,220 oz
gold, 1,048,100 lbs copper and 28,218 oz silver, representing a 21%
increase from Q4 2020 (1).
- Cash costs of US$456/oz gold and
all-in sustaining costs (“AISC”) of US$672/oz gold
(2).
- During the quarter, the first stope
from the Judd #1 Vein was mined and delivered strong performance
including solid geotech, high grades delivered to the plant, and
robust drill and blast characteristics.
- Gravity circuit commissioned in Q4
2021 producing 1,066 gold doré ounces.
Full Year 2021
- Record annual tonnage of 336,221
tonnes treated, a 46% increase from 2020.
- Record annual AuEq production of
104,196 oz 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.
- Cash costs of US$614/oz gold and
AISC of US$856/oz gold, beating our updated guidance cash cost of
between $670 and $720/oz gold, and AISC of between $920 and $970/oz
gold.
FinancialsFourth Quarter
2021
- Sales of 30,068 oz of gold, 969,992
lbs of copper and 25,871 oz of silver. Gold concentrate and doré
inventory of 7,147 oz as of December 31, 2021, a quarterly increase
of 2,678 oz.
- Record quarterly revenue of US$53.9
million, an increase of 12% from Q4 2020.
- Operating cash flow (before working
capital adjustments) for the three months ended December 31, 2021
of US$24.3 million or US$0.11 per share, and earnings before
interest, taxes, depreciation and amortization
(“EBITDA”) of US$29.7 million or US$0.13 per
share.
- Net income for the fourth quarter
of US$15.8 million or US$0.07 per share.
- Balance sheet significantly
strengthened during Q4, with a record cash position and quarterly
cash increase of US$16.7 million to US$71.3 million as of December
31, 2021.
Full Year 2021
- Sales of 92,560 oz of gold,
3,095,208 lbs of copper and 66,251 oz of silver, recording annual
revenue of US$154.3 million.
- Operating cash flow (before working
capital adjustments) for the twelve months ended December 31, 2021
of US$59.8 million or US$0.27 per share and EBITDA of US$62.2
million or US$0.28 per share.
- Net income for the twelve months
ended December 31, 2021 of US$27.2 million or US$0.12 per
share.
Growth
- Following the strong performance of
the expanded Stage 2 process plant, in October 2021, K92 announced
the approval of a Stage 2A Expansion to increase annual throughput
+25% to 500,000 tonnes per annum (“tpa”). The
expansion is expected to further drive economies of scale, increase
production and involves low plant capital cost upgrades with an
estimate capital cost of $2.5 million (see October 7, 2021 press
release). Works are underway and commissioning is planned for H2
2022.
- Strong results at the Kora deposit
from 50 diamond drill holes reported during the quarter, with 25
intersections exceeding 10 g/t AuEq, including drill hole KMDD0415
recording multiple intersections including 7.51 m at 192.50 g/t Au,
8 g/t Ag and 0.22% Cu (192.92 g/t AuEq, 4.11 m true width) from the
K1 Vein and drill hole KMDD0312 recording multiple intersections
including 7.60 m at 41.02 g/t Au, 24 g/t Ag and 0.41% Cu (41.91 g/t
AuEq, 4.96 m true width) from the K1 Vein (see December 8, 2021
press release).
- Significant development advance of
the twin incline, with incline #2 (6m x 6.5m) advanced a total of
803 metres and incline #3 (5m x 5.5m) advanced a total of 893
metres as of December 31, 2021. Twin incline development
advancement exceeded budget for the second half of 2021 and was in
line with budget during Q4.
- Subsequent to year
end, K92 announced its updated Kora resource estimate and Maiden
Judd resource estimate. The updated Kora resource estimate reported
a Measured and Indicated Resource of 2.1 million ounces at 9.20 g/t
AuEq and Inferred Resource of 2.5 million ounces at 9.48 g/t AuEq.
The maiden resource estimate for the Judd deposit reported a
Measured and Indicated Resource of 0.13 million ounces at 11.00 g/t
AuEq and Inferred Resource of 0.18 million ounces at 5.66 g/t AuEq.
The resource estimates will form the basis for the upcoming
Definitive Feasibility Study and Updated Preliminary Economic
Assessment (see February 23, 2022 press release).
- Subsequent to year-end, K92
announced high-grade and record thicknesses from maiden surface
step-out drilling results at both Kora South and Judd South. The
results include the discovery of a previously unknown vein, and the
discovery of significant mineralized dilatant zones at both Kora
South and Judd South. An airborne geophysics survey was also
completed, defining extensive new targets (see February 16, 2022
press release). Exploration at Kora South and Judd South has
increased to two drill rigs operating, with plans underway to add a
third drill rig near term. In 2022, up to 11 drill rigs are planned
to be operating.
For complete details of the annual audited
consolidated financial statements and associated management’s
discussion and analysis, please refer to the Company’s website or
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, “2021 represented another major step forward for
K92. Operationally, Kainantu delivered record throughput,
production and finished the year particularly strong. Q4 also
provided our most complete quarter to date, including record
quarterly production, mine throughput, mill throughput, strong
metallurgical recoveries, low all-in sustaining costs of $672/oz
and, once again, a positive grade reconciliation to the resource
model. This resulted in the Kainantu operation beating our updated
guidance on both production and costs. Financially, K92 is the
strongest position it has ever been, with a record cash balance of
$71m and no debt, well positioning the Company to fund its growth
and exploration.
In terms of production growth, we achieved the
Stage 2 Expansion run-rate of 400,000 tpa (1,100 tpd) in late-Q3,
and in early Q4, announced a Stage 2A Plant Expansion to increase
throughput another 25%, as the mill has continued to show that it
is very capable of operating at much higher throughput rates. Q4
recorded 21 days with throughput exceeding 1,300 tpd and a daily
record of 1,538 tonnes. Commissioning is expected for Stage 2A in
the second half of 2022, at a plant expansion capital cost of
approximately $2.5m. Subsequent to year-end, we announced a
high-grade updated Kora resource estimate and maiden Judd resource
estimate, providing the basis for the Definitive Feasibility Study
and Updated Preliminary Economic Assessment for the additional
expansion, Stage 3. Work is well underway on these studies.
Exploration also delivered strong results during
the year, reporting 177 drill holes at Kora and Judd. Drilling
recorded some of our highest drill holes recorded to date, with
many highlights including hole KMDD0415 recording 7.51 m at
192.50 g/t Au, 8 g/t Ag and 0.22% Cu (192.92 g/t AuEq, 4.11m true
width) from the K1 Vein, 6.45 m at 105.96 g/t Au, 11
g/t Ag and 0.60% Cu (106.95 g/t AuEq, 4.06 m true width) from the
K1 Vein, and at Judd, hole JDD0022 recording 8.51 m at 48.56 g/t
Au, 47 g/t Ag and 0.54% Cu (49.93 g/t AuEq, 6.25 m true width) from
the J1 Vein. Importantly, due to the proximity of
our exploration to mine infrastructure, production is able to
rapidly benefit from exploration success. At Judd, in just over a
year from the discovery of high-grade underground, its first long
hole stope was mined in Q4 and has become a new major mining front
for K92 that is expected to provide a boost to operational
flexibility in both the near and long-term.
The recent strong results from surface
exploration drilling at Kora South and Judd South, also show very
promising potential and plans are well underway to ramp-up
exploration, with the second drill rig now operating and a third
drill rig planned near-term. Concurrently, Kora South and Judd
South surface sampling and mapping is underway, stepping out along
strike towards the interpreted A1 Porphyry. Our property wide
airborne geophysics results also show that exploration is
potentially just scratching the surface in terms of both vein and
porphyry exploration. We see an elevated likelihood that our
exploration budget will increase for 2022.
Lastly, I would like to underscore that these
significant accomplishments were achieved during the burdens from
the COVID-19 pandemic. Our workforce has been extraordinary during
the last two years and our resiliency towards COVID-19 continues to
strengthen. The support of the Governments of both Papua New Guinea
and Australia have also been a major factor in our success as
well.”
Mine
Operating Activities |
|
|
|
|
Three months endedDecember 31, 2021 |
Twelve months endedDecember 31, 2021 |
Operating data |
|
|
Head grade (Au g/t) |
11.2 |
9.8 |
Gold recovery (%) |
92.8% |
89.4% |
Gold ounces produced |
33,220 |
95,055 |
Gold ounces equivalent produced (1) |
36,145 |
104,196 |
Tonnes of copper produced |
475 |
1,531 |
Silver ounces produced |
28,218 |
70,792 |
|
|
|
Financial data (in thousands of dollars) |
|
|
Gold ounces sold |
30,068 |
92,560 |
Revenues from concentrate sales |
US$53,925 |
US$154,326 |
Mine operating expenses |
US$7,495 |
US$29,990 |
Other mine expenses |
US$9,065 |
US$39,194 |
Depreciation and depletion |
US$4,750 |
US$14,113 |
|
|
|
Statistics (in dollars) |
|
|
Average realized selling price per ounce, net |
US$1,707 |
US$1,724 |
Cash cost per ounce |
US$456 |
US$614 |
All-in sustaining cost per ounce |
US$672 |
US$856 |
Notes: |
|
|
|
|
(1) |
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. |
|
|
|
|
(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 March 28, 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 2021 fourth quarter and annual financial results at
8:30 am (EDT) on Thursday, March 31, 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/k92mining20220331.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 from the Kora and Judd deposits 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.
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
Project, 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, assumptions
contained in the preliminary economic assessment, 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,
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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