K92 Mining Releases Strong 2021 Q4 & Annual Financial Results - Record Cash Balance, Throughput & Production
VANCOUVER, British Columbia, March 30, 2022 (GLOBE NEWSWIRE) --
K92 Mining Inc
” or the “
is pleased to announce results from its financial statements for the three and twelve months ended December 31, 2021.
Strong focus on safety with zero lost time incidents (“
”) 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.
Fourth Quarter 2021
Record quarterly tonnage of 99,713 tonnes treated, a 45% increase from Q4 2020.
Record quarterly gold equivalent (“
”) 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
Cash costs of US$456/oz gold and all-in sustaining costs (“
”) of US$672/oz gold
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.
Fourth 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 (“
”) 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.
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 (“
”). 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 ended
December 31, 2021
Twelve months ended
December 31, 2021
|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|
|(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:
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.
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.