K92 Mining Inc. (“
K92” or the
“
Company”) (TSX
: KNT;
OTCQX
: KNTNF) announces production results for the
first quarter (“
Q1”) of 2023 at its Kainantu Gold
Mine in Papua New Guinea, of 21,488 oz AuEq or 17,593 oz gold,
1,651,297 lbs copper and 29,859 oz silver. Sales during the first
quarter were 17,602 oz gold, 1,538,590 lbs copper and 29,164 oz
silver.
During the first quarter, the process plant
delivered a strong quarterly ore processing rate of 117,903 tonnes
or 1,310 tpd, our third highest quarter on record despite
experiencing 8 days of combined unplanned maintenance. The
unplanned plant maintenance occurred in February due to a mill
trunnion bearing failure (2 days downtime) and a limited electrical
fire in a cable tray, which damaged a number of cables feeding the
wet section of the process plant (6 days downtime) (see February
27, 2023 press release).
After completion of the unplanned maintenance in
February, the process plant performed very strongly, setting a new
monthly ore processed record of 1,490 tpd in March which is 9%
greater than the Stage 2A Expansion design throughput of 1,370 tpd.
Additionally, multiple new daily throughput records were achieved
during the quarter including 1,726 tonnes processed on February 26,
1,773 tonnes processed on February 28, 1,802 tonnes processed on
March 3 and 1,815 tonnes processed on March 11. Importantly these
records were achieved prior to the final major upgrade to the Stage
2A Expansion process plant, the flotation expansion to double
rougher capacity, which is planned for commissioning in Q2 and is
expected to provide a boost to metallurgical recoveries and
flexibility to potentially increase throughput further.
Mine performance during the first quarter
recorded 117,865 tonnes of ore mined, an 18% increase from Q1 2022,
and delivered a total material mined (ore plus waste) of 277,534
tonnes mined, representing an increase of 33% from Q1 2022. During
the quarter, 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 1130, 1150, 1170, 1205, 1265 and 1285 levels, and
Judd on the 1285 and 1305 levels.
The operation delivered head grades of 5.21 g/t
gold, 0.70% copper and 10.14 g/t silver (6.35 g/t AuEq) in Q1.
Metallurgical recoveries averaged 89.1% for gold and 91.3% for
copper during the quarter, with recoveries expected to improve upon
the commissioning of the flotation expansion planned in Q2 2023.
Head grade was notably impacted, during the second half of the
quarter, when underground mining encountered an area with more
challenging ground conditions than expected, associated with where
the K1 and K2 veins almost converge, which impacted our production
stoping rates and access to higher grade ore. Generally, in this
situation, mill feed would be supplemented by mining from
additional mining fronts as we mine through the impacted area more
slowly. However, due to development rates being below budget for
several quarters during the COVID-19 pandemic, many of the
alternative mining areas were not yet developed, therefore
supplementing from our low-grade stockpile was required (see March
30, 2023 press release, and see Figure 1).
Operationally, as previously disclosed, we
expect Q2 production to be moderately below budget, with the second
half of 2023 being our strongest in terms of production and 2023
production being within the bottom half of the guidance range (see
March 30, 2023 press release).
The anticipated strength of the second half of
2023 is driven by an expected significant increase to our
operational flexibility and stope sequencing. In terms of
operational flexibility, it is important to highlight the following
positive trends:
- Significant increase in
development achieved over the last two quarters: Q1 2023
and Q4 2022 both set new quarterly records for development, of
2,278 m and 2,221 m, respectively. Development for both quarters
was also significantly greater than prior quarters, with Q1 2023
development increasing 48% compared to Q1 2022. Strong development
rates is a positive leading indicator for operational flexibility,
and we note that there are two new sublevels currently being
established.
- Multiple equipment recently
arrived on site: Recent arrivals include a new loader in
Q4 2022, and in Q1 2023 a new jumbo, loader, two integrated tool
carriers, Normet explosive charging machine, cement agitator truck
and very recently a new long hole drill rig. The arrival of the
long hole rig is particularly important as it now doubles our long
hole drill fleet, which is expected to drive a notable increase in
our drilled stocks (stopes drilled and available for immediate
blasting, including more stopes available as “backups” to
supplement mill feed if required). The majority of this equipment
was originally scheduled to arrive in 2022 and in certain cases was
considerably delayed due to the global supply chain. The arrivals
of equipment are to both replace existing equipment and expand the
fleet. During the remainder of the first half of 2023, two
underground trucks and one jumbo are also scheduled for
delivery.
- Entirely new mining front
to be established in H2 2023: During the second half of
the year, we will be accessing the ore body at depth from the twin
incline, opening up an entirely new mining front that is serviced
by our large and highly productive twin incline infrastructure. As
of March 31, 2023, incline #2 (6m x 6.5m) advanced to 2,172 metres
and #3 (5m x 5.5m) advanced to 2,230 metres, with development
advance during Q1 2023 22% ahead of budget.
See Figure 1: Quarterly Total Ore Processed,
Development Metres Advanced and Total Mined Material ChartSee
Figure 2: Daily Ore Processed Records Chart
COVID-19 Operational
Resiliency
The Kainantu Gold Mine operates under a
comprehensive COVID-19 Management Plan that 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, set up quarantine
and isolation facilities for incoming staff (currently not in use),
and implemented enhanced hygiene, disinfecting and training systems
and procedures. A focus has been towards 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 our various control measures, K92
continues to make considerable progress increasing resiliency
through vaccinations of our expatriate and PNG national workforce,
with vaccinations continuing to be administered on site. 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 2023 & 2022 Annual Production
Data
|
|
Q1 2022 |
Q2 2022 |
Q3 2022 |
Q4 2022 |
2022 |
Q1 2023 |
Tonnes Processed |
T |
99,611 |
108,853 |
117,938 |
121,686 |
448,087 |
117,903 |
Feed Grade Au |
g/t |
8.3 |
7.2 |
8.7 |
8.8 |
8.3 |
5.2 |
Feed Grade Cu |
% |
0.76% |
0.56% |
0.72% |
0.74% |
0.70% |
0.70% |
Recovery (%) Au |
% |
90.9% |
91.0% |
88.9% |
91.2% |
90.4% |
89.1% |
Recovery (%) Cu |
% |
91.1% |
90.9% |
88.4% |
91.8% |
90.5% |
91.3% |
Metal in Conc & Dore Prod Au |
Oz |
24,152 |
22,934 |
29,256 |
31,204 |
107,546 |
17,593 |
Metal in Conc Prod Cu |
T |
692 |
558 |
756 |
829 |
2,834 |
749 |
Metal in Conc Prod Ag |
Oz |
28,142 |
25,224 |
32,161 |
40,517 |
126,043 |
29,859 |
Gold Equivalent Production |
Oz |
28,188 |
26,085 |
32,995 |
35,538 |
122,806 |
21,488 |
Note - Gold equivalent for Q1 2023 is calculated
based on: gold $1,890 per ounce; silver $22.55 per ounce; and
copper $4.05 per pound. Gold equivalent for 2022 is calculated
based on: gold $1,793 per ounce; silver $22 per ounce; and copper
$3.95 per pound. Gold equivalent for Q4 2022 is calculated based
on: gold $1,728 per ounce; silver $21 per ounce; and copper $3.63
per pound. Gold equivalent for Q3 2022 is calculated based on: gold
$1,730 per ounce; silver $19 per ounce; and copper $3.51 per pound.
Gold equivalent for Q2 2022 is calculated based on: gold $1,870 per
ounce; silver $23 per ounce; and copper $4.32 per pound. Gold
equivalent for Q1 2022 is calculated based on: gold $1,879 per
ounce; silver $24 per ounce; and copper $4.53 per pound.
John Lewins, K92 Chief Executive Officer and
Director, stated, “While the first quarter was more challenging
than expected, there were many positives that we can build on for
the operation going forward.
Firstly, the performance of the process plant
was very strong, setting a new monthly ore processed record in
March of 1,490 tpd, 9% greater than the Stage 2A Expansion Rate.
Multiple new daily records were also set during the quarter, with
the latest record now standing at 1,815 ore tonnes processed on
March 11th. Importantly, this strong performance has been achieved
prior to the commissioning of the flotation expansion for the Stage
2A Expansion that is planned for Q2 and is expected to provide a
boost to metallurgical recoveries and flexibility to potentially
increase throughput further.
On the underground mine, we see operational
flexibility significantly improving over the coming weeks and
months, driven by our recent record development advance rates,
multiple key pieces of equipment now on site, and, a new mining
front at depth in H2 serviced by our twin incline that is
significantly oversized for not just the Stage 2A Expansion
(500,000 tpa) throughput rate but also Stage 4 (1.7 mtpa).
And lastly, we are very excited about our
exploration plans for 2023. In Q1, exploration continued to expand
the drilled deposit extents at our Kora-Kora South and Judd-Judd
South vein system (see February 21, 2023 press release), and
porphyry drilling also recently commenced on A1, our top
copper-gold porphyry target.”
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 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, is in a strong financial position. A maiden resource
estimate on the Blue Lake porphyry project was completed in August
2022. 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, President at +1-604-416-4445
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION: This news release includes certain “forward-looking
information” within the meaning of applicable Canadian securities
legislation (“forward-looking statements”), including, but not
limited to, the impact of global supply chain and financial market
disruptions; projections of future financial and operational
performance; statements with respect to future events or future
performance; production estimates; anticipated operating and
production costs and revenue; estimates of capital expenditures;
future demand for and prices of commodities and currencies;
estimated mine life of our mine; estimated closure and reclamation
costs and statements regarding anticipated exploration,
development, construction, production, permitting and other
activities on the Company’s properties, including: expected gold,
silver and copper production and the Stage 3 Expansion and Stage 4
Expansion. Estimates of mineral reserves and 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. All statements in this
Annual Information Form 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;
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 availability and costs of
achieving the Stage 3 Expansion or the Stage 4 Expansion; the
ability of the Company to achieve the 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 Papua New Guinea and
other 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. The estimation of mineral
resources and mineral reserves is inherently uncertain and involves
subjective judgments about many relevant factors. Mineral resources
that are not mineral reserves do not have demonstrated economic
viability. The accuracy of any such estimates is a function of the
quantity and quality of available data, and of the assumptions made
and judgments used in engineering and geological interpretation,
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.
Figure 1: Quarterly Total Ore Processed,
Development Metres Advanced and Total Mined Material Chart
https://www.globenewswire.com/NewsRoom/AttachmentNg/80437b29-a957-4975-81b6-dbc943e628f0
Figure 2: Ore Processed Daily Records Chart
https://www.globenewswire.com/NewsRoom/AttachmentNg/bc591ae1-b6c1-49eb-be02-cf908f2ac5ff
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