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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 2020, K92 announced its updated Kora Resource of 1.1moz at 10.4g/t AuEq Measured and Indicated and 3.7moz at 9.0g/t AuEq Inferred. This is in addition to the Irumafimpa deposit at 0.2moz at 13.4g/t Measured and Indicated and 0.2moz at 11.5g/t AuEq Inferred. In July 2017, based on the updated Kora Resource, K92 announced the Stage 3 Expansion PEA study outlining Tier 1 production (+300,000koz gold equivalent (“AuEq”) per annum run-rate starting in late-2023, <$500/oz AuEq life of mine average all-in sustaining costs and an After-Tax NPV5% of US$1.5 billion at $1,500/oz with significant upside potential).

Kainantu has a large ~725km2 land package (under application to increase to ~925km2 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 and the number of diamond drill rigs has been increasing.

Kainantu Achievements and Milestones

Oct 2016

Stage 1 Production Restart - 200ktpa

May 2017

Kora North Discovery

Jan 2018

Commercial Production Declared

Mar 2019

Stage 2 Expansion Announced

May 2020

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

July 2020

400ktpa, Stage 3 Expansion PEA

Sep 2020

Stage 2 Expansion Commissioned

Stage 3 Expansion PEA Summary

Mine Life & Material Movements
Mine Life 12 Years
Expansion Year Q4 2023
Throughput 816 ktpa
Throughput - Stage 3 Run-Rate 1.0 mtpa
Total Ore Mined 9.8 mt
LOM Average Grades
Gold Grade 8.8 g/t
Copper Grade 1.0%
Silver Grade 17.5 g/t
AuEq Grade 10.4 g/t
Average Recoveries
Gold Recovery 95%
Copper Recovery 95%
Production
Stage 3 Run-Rate 318 kozAuEq
LOM Avg 258 kozAuEq
Costings
Expansion Capex $125M
Sustaining Capex $341M
Avg Unit Costs $94 ($/t)
LOM Avg Cash Cost $202 ($/ozAu, net of by-product)
LOM Avg AISC $362 ($/ozAu, net of by-product)
Economics
After-Tax NPV5% $1.5 B
After-Tax LOM CF $2.0 B
Gold Price $1,500 ($/oz)
Silver Price $18.0 ($/oz)
Copper Price $3.00 ($/lb)

US$ unless otherwise noted.

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.

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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, Mati, Maniape and Arakompa. Mining is focused on the Kora vein system, consisting of two dominant veins, with Judd and Karempe near-mine infrastructure. Both Judd and Karempe have limited exploration conducted and observed geology similar to Kora.

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 exclusively on the northern portion of the Kora deposit. Longer term production will balance out between the K1 and K2 veins, both majority mined via long hole stoping, utilizing the modified AVOCA Method initially, with pastefill expected to be implemented later on. Mining is mechanized using twin and single boom Jumbos; 517i, 1700 and 1300 LHDs, and; 20, 30, 40 & 45 tonnes trucks. 20t surface road trucks transport material ~6 km from the portal to the Process Plant.

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.

Resources

  Tonnes Gold Silver Copper Gold EQ.
mt g/t Moz g/t Moz % kt g/t Moz
Kora  Measured & Indicated 3.13 9.47 0.95 15 1.5 0.6 19 10.4 1.1
  Inferred 12.67 7.32 2.98 20 8.1 1.1 139 9.0 3.7
Irumafimpa Indicated 0.56 12.80 0.23 9 0.2 0.3 17 13.3 0.2
  Inferred 0.53 10.70 0.16 9 0.2 0.3 34 11.4 0.2
Consolidated Total Measured & Indicated 3.69 9.95 1.18 14 1.7 0.4 36 11.3 1.3
  Total Inferred 13.20 7.46 3.17 19 8.3 1.1 173 9.1 3.9
  • The Independent and Qualified Person who prepared 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 April 2, 2020.
  • Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
  • Resources were compiled at 1,2,3,4,5,6,7,8,9 and 10 g/t Au cut-off grades; the official resource is at a cut-off grade of 1g/t Au.
  • Density (t/m3) is on a per zone basis, K1 & Kora Link: 2.84 t/m3; K2: 2.93 t/m3; Waste: 2.8 t/m3
  • 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.
  • Calculations used metric units (metres, tonnes and g/t)
  • Gold equivalents are calculated as AuEq = Au g/t + ((0.923 x Cu%)*1.38)+ ((0.77 x Ag g/t*0.0115). Gold price US$1,400/oz; Silver US$16.05/oz; Copper US$3.05/lb. Metal payabilities and recoveries are incorporated into the AuEq formula. Recoveries 92.3% for copper and 77% for silver.

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