K92 Mining Inc. (“
K92” or the
“
Company”) (TSX
: KNT;
OTCQX
: KNTNF) announces production results for the
first quarter (“
Q1”) of 2022 at its Kainantu Gold
Mine in Papua New Guinea, of 28,188 oz AuEq or 24,152 oz gold,
1,524,827 lbs copper and 28,142 oz silver. Sales during the first
quarter were 29,728 oz AuEq or 26,471 oz gold, 1,247,967 lbs copper
and 24,899 oz silver.
During the first quarter, Kainantu delivered its
second consecutive quarter at Stage 2 Expansion run-rate
throughput, processing 99,611 tonnes. Mine performance was also
strong, exceeding mill throughput, with 100,124 tonnes of total
mill feed mined.
Importantly, in March, the mill delivered a
monthly average throughput record of 1,219 tpd, significantly
exceeding the Stage 2 Expansion target of 1,100 tpd. Mill
throughput exceeded 1,300 tpd for 45% of the days (14 days) during
the month of March, continuing to demonstrate much higher
throughput rates than the Stage 2 Expansion design.
The strong performance bodes well for the Stage
2A Expansion to expand plant designed throughput another 25%, to
500,000 tpa or 1,370 tpd, at an estimated growth capital cost of
US$2.5 million. The expansion was approved in October 2021 (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) and works are currently underway with the
new filter press installed and operational; the additional TC-1000
secondary crusher arrived on site in late Q1 and is planned to be
installed in Q2, while the new flotation tanks are scheduled to
arrive in the second half of 2022 when commissioning of the
expanded plant will commence.
Mine productivity was impacted by delays being
experienced in the delivery of underground mobile equipment as a
result of the ongoing challenges in the global supply chain. A new
twin boom jumbo, 45 tonne truck and 17 tonne loader were all due
for delivery at the beginning of Q1, however, the jumbo arrived in
late Q1, while the truck and loader only arrived in country in
early April. The equipment all arrived already commissioned and is
expected to provide an immediate boost to mine productivity and
development.
During the quarter, long hole stoping continued
to perform to the design, with operations focused on Kora’s K1 and
K2 veins, and Judd’s J1 Vein for a total of 8 levels mined. Mining
on Kora was conducted on the 1150, 1170, 1225, 1245, 1265 and 1285
levels, and Judd on the 1235 and 1285 levels. Development on Judd
along the 1285 level will establish the next series of long-hole
stoping panels that is planned to commence mining in Q2.
The operation delivered head grades of 8.3 g/t
gold, 0.76% copper and 11.5 g/t silver (9.7 g/t AuEq) in Q1. Gold
grades were below budget as development had not yet opened up
higher grade stoping areas that were scheduled for March and will
now be mined in Q2. Metallurgical recoveries averaged 90.9% for
gold and 91.1% for copper during the quarter.
Twin incline development made significant
progress, advancing 15% above budget during Q1. As of March 31,
2022, incline #2 (6m x 6m) advanced to 1,101 metres and #3 (5m x
5m) advanced to 1,063 metres. Over the last three quarters, twin
incline development has advanced 10% above budget.
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 its various control measures, K92
continues to make considerable progress increasing resiliency
through vaccinations of our expatriate and PNG national workforce,
with vaccinations administering on site well underway. Over 75% 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 – Q1 2022 & 2021 Annual Production
Data
|
|
Q1 2021 |
Q2 2021 |
Q3 2021 |
Q4 2021 |
2021 |
Q1 2022 |
Tonnes Processed |
T |
73,221 |
75,667 |
87,621 |
99,713 |
336,221 |
99,611 |
Feed Grade Au |
g/t |
8.5 |
10.3 |
9.0 |
11.2 |
9.8 |
8.3 |
Feed Grade Cu |
% |
0.31% |
0.76% |
0.48% |
0.51% |
0.51% |
0.76% |
Recovery (%) Au |
% |
88.9% |
88.3% |
86.1% |
92.8% |
89.4% |
90.9% |
Recovery (%) Cu |
% |
86.2% |
87.2% |
87.2% |
92.9% |
88.8% |
91.1% |
Metal in Conc Prod Au |
Oz |
17,774 |
22,153 |
21,908 |
33,220 |
95,055 |
24,152 |
Metal in Conc Prod Cu |
T |
193 |
498 |
364 |
475 |
1,531 |
692 |
Metal in Conc Prod Ag |
Oz |
7,925 |
14,914 |
19,736 |
28,218 |
70,792 |
28,142 |
Gold Equivalent Production |
Oz |
18,914 |
25,015 |
24,121 |
36,145 |
104,196 |
28,188 |
Note - Gold equivalent for Q1 2022 is based on
the London Metal Exchange quarterly spot average price: gold $1,879
per ounce; silver $24 per ounce; and copper $4.53 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.
John Lewins, K92 Chief Executive Officer and
Director, stated, “In the first quarter, we continued our positive
operational momentum, delivering near-record mining and milling
rates, the second consecutive quarter at Stage 2 Expansion run-rate
and significant advancement of the twin incline, exceeding budget
by 15%.
The strong performance of the process plant was
a major positive development, with monthly record throughput of
1,219 tpd achieved in March, considerably greater than the 1,100
tpd Stage 2 Expansion run-rate target. In March, 45% of days
exceeded 1,300 tpd and it is also important to highlight that this
strong performance was achieved before the installation of key
Stage 2A Expansion upgrades, such as the additional TC-1000
secondary crusher and flotation cells. The Stage 2A Expansion is
targeting 1,370 tpd, with commissioning planned for the second half
of 2022. The arrival of a new jumbo in late-Q1 and truck and loader
in early April, is expected to provide a further boost to mine
productivity and development. As noted in our operational guidance,
AuEq production during the second half of the year is expected to
be the strongest, and we are very pleased by the strong performance
of the plant to date.
Notably, while Q1 was once again impacted by
COVID-19, due to a large number of cases in Papua New Guinea from
the Omicron Variant resulting in some operational disruptions
including elevated absenteeism, I am pleased to report that our
mitigation measures, including our quarantine system, were
effective in reducing the impact. As Papua New Guinea emerges from
the Omicron wave, restrictions at Kainantu are now at the lowest
level since before the start of the pandemic. This is expected to
have a deflationary impact on costs as pandemic-related overheads
such as quarantining are significantly reduced in addition to
increased operational efficiencies in general.
Exploration is also a major and increasing
focus, with the vast majority of our drill rigs focused on resource
growth. Drilling is underway at Kora, Kora South, Judd, and Judd
South. We recently completed our drill program at the Blue Lake
porphyry and look forward to providing an update. We see the
potential to increase our exploration budget during the year.
Lastly, the achievements over the last two
years, would not have been possible if it were not for the
extraordinary dedication, commitment, and resourcefulness of our
workforce. The Governments of Papua New Guinea and Australia have
also been a major factor in our success.”
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 +1-604-416-4445
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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