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Kainantu Mine

PAPUA
NEW GUINEA

K92 Mining is focused on operating and expanding the Kainantu Gold Mine, located in Eastern Highlands province, Papua New Guinea. Since acquiring the project from Barrick Gold in 2014 and restarting in late-2016, K92 has transformed Kainantu into a rapidly expanding both producer and mineral resources. Production has also been low cost, which is a testament to the high grade, continuity, solid thickness, geotechnical and metallurgical characteristics of the deposit. The transformation was driven by a series of near-mine infrastructure exploration discoveries.

In May 2017, a near-mine infrastructure discovery of Kora North was made. This discovery ultimately combined the Kora, Eutompi and Kora North deposits into what is now known as the Kora deposit. In February 2022, following extensive underground drilling focused on upgrading Inferred resources to Measured & Indicated, K92 announced its updated Kora Resource of 2.1moz at 9.2g/t AuEq Measured and Indicated and 2.5moz at 9.5g/t AuEq Inferred. In addition, a maiden Judd Resource was announced just over a year after the discovery of high-grade underground mineralization in Q4 of 2020. The Judd main resource currently stands at 0.13moz at 11.0g/t AuEq Measured and Indicated and 0.18moz at 5.7g/t AuEq Inferred.

Operations are undertaking multiple stages of expansion, with Stage 2 Expansion run-rate achieved in late-2021, Stage 2A Expansion planned for commissioning in 4Q 2022 to increase throughput 25% to 500,000 tpa, Stage 3 Expansion targeting commissioning in early-2024 that is expected to increase throughput to 1.2 mtpa, and a Stage 4 Expansion scheduled for commissioning in the second half of 2026 bringing throughput to 1.7 mtpa. As outlined in the September 2022 Stage 3 Expansion DFS study, Stage 3 is expected to achieve Tier 1 production (290,000koz gold equivalent per annum run-rate, <$550/oz (net of by-products) or <$735/oz (co-product) life of mine average all-in sustaining costs and an After-Tax NPV5% of US$586 million at $1,600/oz with significant upside potential). The Stage 4 Expansion PEA study outlines a 470,000koz gold equivalent per annum run-rate, <$450/oz (net of by-products) or <$690/oz (coproduct) life of mine average all-in sustaining costs and an After-Tax NPV5% of US$1.3 billion at $1,600/oz.

Exploration is self-funded and is a major focus, with up to 11 drill rigs operating on both vein and porphyry targets. In August 2022, K92 announced at 10.8 moz Inferred resource or 4.7 blbs CuEq at its Blue Lake Porphyry. Blue Lake is a discovery by K92, with nearly every hole intersecting mineralization and at a discovery cost of <$1/oz. Additionally, exploration is advancing at the A1 Porphyry Target, our highest priority porphyry target after completing advanced MobileMT airborne geophysics in late-2021.

Kainantu has a large ~830km2 land package in the land of large Tier 1 Gold Assets. The property hosts many highly prospective vein field and porphyry targets. Multiple targets are being drill tested concurrently.

Kainantu Achievements and Milestones

Oct 2016

Stage 1 Production Restart - 200ktpa

May 2017

Kora North Discovery

Jan 2018

Commercial Production Declared

Mar 2019

400ktpa, Stage 2 Expansion Announced

May 2020

Resource Update - 1.3 Moz AuEq Measured & Indicated, 3.9 Moz AuEq Inferred

July 2020

1mtpa, Stage 3 Expansion PEA

Sep 2020

Stage 2 Expansion Commissioned

Sep 2021

400ktpa, Stage 2 Expansion Achieved

Oct 2021

500ktpa, Stage 2A Expansion Announced

Feb 2022

Kora Resource Update and Maiden Judd Resource - 2.3 Moz AuEq M&I, 2.6 Moz AuEq Inferred

Aug 2022

Blue Lake Maiden Resource – 10.8 Moz AuEq or 4.7 Blb CuEq Inferred

Sept 2022

Kainantu Integrated Development Plan (Stage 3 DFS and Stage 4 PEA)

Stage 3 & 4 Expansion Summary

MINE LIFE & MATERIAL MOVEMENTS Stage 3 DFS Stage 4 PEA
Mine Life 7 Years 11 Years
Expansion Year H2 2024 H2 2026
Throughput - Stage 3 Run-Rate 1.2 mtpa 1.7 mtpa
Total Ore Mined 6.1 mt 12.2 mt
LOM AVERAGE GRADES
Gold Grade 6.7 g/t 7.03 g/t
Copper Grade 0.9% 1.2%
Silver Grade 18 g/t 23 g/t
AuEq Grade 8.4 g/t 9.34 g/t
AVERAGE RECOVERIES
Gold Recovery 93% 93%
Copper Recovery 95% 95%
PRODUCTION
Stage 3 Run-Rate 291 kozAuEq 470 kozAuEq
LOM Avg 221 kozAuEq 309 kozAuEq
COSTINGS
Expansion Capex $178M $187M
Sustaining Capex $218M $429M
Avg Unit Costs $116/t $118/t
LOM Avg Cash Cost
(co-product)
$579/oz $552/oz
LOM Avg Cash Cost
(net of by-product)
$366/oz
 
$275/oz
 
LOM Avg AISC
(co-product)
$732/oz $687/oz
LOM Avg AISC
(net of by-product)
$545/oz
 
$444/oz
 
ECONOMICS
After-Tax NPV5% at $1600/oz $586 M $1.3 B
After-Tax NPV5% at $2000/oz $855 M $1.8 B

US$ unless otherwise noted. Gold price of $1,600/oz, copper price $4.00/lb, silver price $20/oz.

The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. The Technical Report contains a full description of all underlying assumptions relating to the PEA. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

Life of Mine Schedules

Stage 3 DFS

Stage 4 PEA

Stage 3 DFS

Stage 4 PEA

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Regional Geology

The Kainantu property is located within the New Guinea Thrust Belt, close to its northern contact with the Finisterre Terrane. The contact is marked by the northwest trending Ramu-Markham Fault, a major suture zone that marks the northern margin of the Australian Craton. The New Guinea Thrust Belt records an early Miocene or older ductile, tight folding event that was followed by middle Miocene intrusions. Late Miocene regional scale low-angle thrust faulting followed, associated with the collision of the Finisterre Terrane. The belt is characterised by a number of north-northeast trending fault zones that commonly host major ore deposits.

Kainantu Geology

The Kainantu area is underlain by greenschist to amphibolite facies metamorphic rocks of the Early Miocene Bena Bena Formation, which are unconformably overlain by the Miocene age Omaura Formation consisting of volcano-sedimentary units and limestone lenses. The overlying Yaveufa Formation comprises basaltic and andesitic flows, agglomerates, volcanoclastic sandstone and limestone. The mid-Miocene Akuna Intrusive Complex consists of multiple phases ranging from olivine gabbros, dolerites, hornblende gabbros and biotite diorites to granodiorites. Late Miocene age Elandora Porphyry intrusions and breccias are associated with mineralization and occur within proximity to a major north-northeast trending transfer structure. Mineralization on the property includes Au, Ag and Cu occurring in low sulphidation epithermal Au-telluride veins, Au-Cu-Ag sulphide veins of Intrusion Related Gold Copper (“IRGC”) affinity, less explored porphyry Cu-Au systems and alluvial gold.

Kainantu Vein Field

Within and surrounding Mining Lease 150 (“ML 150”) is an epithermal vein field consisting of multiple known and highly prospective vein systems: Kora, Irumafimpa, Karempe, Judd, Kora South, Judd South, Mati, Maniape and Arakompa. Mining is focused on the Kora vein system, consisting of two dominant veins and the Judd vein system consisting of four known veins with one vein being mined. There are multiple near-mine infrastructure targets, within the Kora-Kora South, Judd-Judd South and Karempe vein systems.

Location & Infrastructure

The Kainantu Gold Mine is located in the Eastern Highlands Province of Papua New Guinea, approximately 180 km west-northwest of Lae. The mine is serviced by a sealed road from Lae to within 8 km of the site, nearby Gusap Airstrip in the Ramu Valley, and also has grid power from the nearby Yonki Dam hydro-electric scheme, with full on-site power generation on standby. The underground mine is located on Mining Lease 150 (“ML 150”); while the Process Plant, Offices, Workshops, Stores, Camp and Tailing Storage Facility are located on a Lease for Mining Purposes 78 (“LMP 78”).

 

Mining

The underground workings are accessed via a 2,500 metre, 5 metre x 5 metre incline from a portal located at 840 mRL level. Current mining operations are focused on the Kora deposit with some production from the Judd vein system. Production from Kora is from the subparallel K1 and K2 veins, and consists of mostly long hole stoping with limited cut and fill stoping.  Long hole stoping began in late Q1 2020. Mining is mechanized using twin and single boom Jumbos; 517i, 1700 and 1300 LHDs, and; 20, 30, 40 & 45 tonnes trucks. Material is trucked ~6 km from the portal to the Process Plant by 20 tonne road trucks. The mining fleet is modern, and utilizes some of the latest technology.

Processing

The Process Plant is a relatively simple design with a two-stage crush, ball mill, flotation circuit producing a combined gold-copper flotation concentrate which is shipped in 20 tonne containers from Lae to smelters in various parts of the world. The gravity circuit, which is being optimized, produces a dore product. The tailings storage facility (TSF) is a downstream design and located downstream of the process plant. In late-Q3 2020, the Stage 2 Plant Expansion Commissioning was completed to double mill throughput to 400,000 tpa. In October 2021, a Stage 2A Plant Expansion was approved to expand plant throughput a further 25% to 500,000 tpa.

Resources & Reserves

  Tonnes Gold Silver Copper Gold EQ.
mt g/t Moz g/t Moz % kt g/t Moz
Kora  Proven & Probable 5.81 6.5 1.22 18 3.3 0.9 52 8.3 1.55
Judd  Proven & Probable 0.34 8.6 0.09 14 0.2 0.6 2 9.8 0.11
Consolidated Total Proven & Probable 6.15 6.7 1.32 18 3.5 0.9 54 8.4 1.66
 
  Tonnes Gold Silver Copper Gold EQ.
mt g/t Moz g/t Moz % kt g/t Moz
Kora  Measured & Indicated 7.2 7.6 1.8 18 4.3 0.9 66 9.2 2.1
  Inferred 8.1 7.12 1.80 27 7.1 1.4 111 9.5 2.5
Judd  Measured & Indicated 0.38 9.70 0.12 18 0.2 0.7 3 11.0 0.1
  Inferred 1.01 4.24 0.14 11 0.4 0.9 9 5.6 0.2
Irumafimpa Indicated 0.56 12.80 0.23 9 0.2 0.3 17 13.4 0.2
  Inferred 0.53 10.70 0.19 9 0.2 0.3 34 11.5 0.2
Consolidated Total Measured & Indicated 8.13 7.84 2.05 17 4.6 0.9 86 9.8 2.6
  Total Inferred 9.64 7.02 2.13 25 7.6 1.3 153 9.2 2.9
 
  Tonnes Gold Silver Copper Gold EQ. Copper EQ.
mt g/t Moz g/t Moz % Blb g/t Moz % Blb
Blue Lake  Inferred 549 0.21 3.7 2.42 43.0 0.23 2.9 0.61 10.8 0.38 4.7

Kora and Judd Reserves Disclosure

  • The long-term metal prices used for calculating the financial analysis is US$1,600/oz gold, US$4.00/lb Copper, US$20/oz Silver.
  • Gold Equivalents are calculated as AuEq = Au g/t + Cu % *1.7143 + Ag g/t*0.0125.  Metal payabilities and recoveries are not incorporated into this formula.
  • A minimum mining width of 3.0 m has been applied for stoping, inclusive of a 1.0 m dilution skin.
  • In addition to the 1.0 m dilution skin, dilution of 5% has been added for Avoca mined stopes and 2.5% for long hole stoping with paste fill.  This results in a total average dilution of 20%.
  • Mining recoveries of 90% have been applied to Avoca mined stopes, and 95% for long hole stoping with paste fill.
  • A cut-off grade of 3.0 g/t AuEq was used to define stoping blocks. Stope shapes with uneconomic development were excluded. The cut-off grade takes into account site operating costs, G&A costs, sustaining capital costs and relevant processing and revenue inputs.
  • Measured Mineral Resources were used to report Proven Mineral Reserves.
  • Indicated Mineral Resources were used to report Probable Mineral Reserves.
  • Tonnage and grade estimates include dilution and recovery allowance.
  • The Mineral Reserves reported are not added to Mineral Resources.

Kora and Judd Resources Disclosure

  • Estimates are in Technical Report titled, “Independent Technical Report, Mineral Resources Estimate Update Kora and Judd Gold Deposit, Kainantu Project, Papua New Guinea”.
  • The Independent and Qualified Person responsible for the Mineral Resource estimate is Simon Tear, P.Geo. of H & S Consultants Pty. Ltd., Sydney, Australia, and the effective date of the estimate is October 31, 2021 for Kora and December 31, 2021 for Judd.
  • Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
  • Resources were compiled at 1.75,2.5,3,4,5,6,7,8,9 and 10 g/t gold cut-off grades for Kora and 1.75,2.5,3,4,5 for Judd.
  • Density (t/m3) is on a per zone basis, K1, K2: 2.84 t/m3; Kora Link: 2.74 t/m3; Judd: 2.71 t/m3; Waste: 2.67 t/m3
  • Minimum mining width for wireframes: Kora: 5.2 m; Judd: 5.2 m
  • Reported tonnage and grade figures are rounded from raw estimates to reflect the order of accuracy of the estimate.
  • Minor variations may occur during the addition of rounded numbers.
  • Estimations used metric units (metres, tonnes and g/t)
  • Gold equivalents are calculated as AuEq = Au g/t + Cu%*1.607*92.8% + Ag g/t*0.0125*89%. Gold price US$1,600/oz; Silver US$20/oz; Copper US$3.75/lb. Metal payabilities and recoveries are incorporated into the AuEq formula. Recoveries of 92.8% for copper and 89% for silver.

Irumafimpa Resources Disclosure

  • Irumafimpa Resource refers to Technical Report titled, "Independent Technical Report, Mineral Resource Estimate Update and Preliminary Economic Assessment of Irumafimpa and Kora Gold Deposits, Kainantu Project, Papua New Guinea", March 2017 – Qualified Person, Anthony Woodward MAIG, Nolidan Mineral Consultants.
  • Gold Equivalents are calculated as Gold equivalents are calculated as AuEq = Au g/t + Cu%*1.7308 + Ag g/t*0.0185. Metal prices Au: US$1,200/oz, Ag: US$22.26/oz, Cu US$3.03/lb.

Blue Lake Resources Disclosure 

  • Estimates are based on Technical Report titled, “Independent Technical Report, Mineral Resource Estimate Blue Lake Porphyry, Kainantu Project, Papua New Guinea”. 
  • The Independent and Qualified Person responsible for the mineral resource estimate is Simon Tear, P.Geo. of H & S Consultants Pty. Ltd., Sydney, Australia, and the effective date of the Mineral Resource is 1st August, 2022.
  • Mineral resources are not mineral reserves and do not have demonstrated economic viability.
  • Resources were compiled at 0.1, 0.2, 0.3, 0.4, 0.5, 0.6 g/t AuEq cut-off grades.
  • Density was based on 2,473 measured density data recordings (weighed core trays and measured core) which were composited and subsequently modelled unconstrained using Ordinary Kriging. Reported tonnage and grade figures are rounded from raw estimates to reflect the order of accuracy of the estimate.
  • Minor variations may occur during the addition of rounded numbers. 
  • Estimations used metric units (metres, tonnes and g/t)
  • Gold equivalents are calculated as AuEq = Au g/t + Cu%*1.607 + Ag g/t*0.0125. Copper equivalents are calculated as CuEq = Cu% + Au g/t*0.006222 + Ag g/t* 0.00007778. Gold price US$1,600/oz; Silver US$20/oz; Copper US$3.75/lb.

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