VANCOUVER, British Columbia, Sept. 12, 2022 (GLOBE NEWSWIRE) --
K92 Mining Inc
. (“
K92
” or the “
Company
”) (TSX
: KNT;
OTCQX
: KNTNF)
is pleased to announce the results of its Integrated Development Plan (“IDP”) for its Kainantu Gold Mine Project (the “Kainantu Project”) in Papua New Guinea. The IDP comprises two scenarios: 1) Kainantu Stage 3 Expansion Definitive Feasibility Study Case (“DFS” or “DFS Case”); and 2) Kainantu Stage 4 Expansion Preliminary Economic Assessment Case (“PEA” or “PEA Case”). The results of the IDP will be set forth in an independent technical report prepared in accordance with National Instrument 43-101-
Standards for Disclosure of Mineral Projects
(“NI 43-101”) within forty-five days from this date.
Integrated Development Plan Highlights:
-
The DFS Case evaluates the Stage 3 Expansion to 1.2 million tonnes per annum (“mtpa”), representing a 140% throughput increase from the Stage 2A Expansion. Stage 3 involves a new standalone 1.2 mtpa process plant and supporting infrastructure constructed with mining focused on the Kora Central Zone within the Kora Deposit and Judd Deposit, utilizing a cut-off grade of 3.0 grams per tonne (“g/t”) gold equivalent (“AuEq”).
- After-tax NPV5% of US$586 million at US$1,600 per ounce gold, with no internal rate of return (“IRR”) as the project generates cashflow during construction. After-tax NPV5% of US$855 million at US$2,000 per ounce gold.
- Average annual run-rate production of 290,771 ounces AuEq per annum, run-rate achieved in 2025 and a peak annual production of 308,793 ounces AuEq in 2026.
- Life of Mine average cash costs of US$366 per gold ounce and all-in sustaining cost (“AISC”) ( 2) of US$545 per gold ounce over a 7-year mine life.
-
Growth capital cost of US$177 million, sustaining capital cost prior to commissioning of US$125 million and life of mine sustaining capital cost of US$218 million.
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The alternate PEA Case evaluates two-stages of expansions to a run-rate throughput of 1.7 mtpa, representing a 240% throughput increase from the Stage 2A Expansion. The ultimate run-rate throughput of the second expansion is referred to as Kainantu Stage 4 Expansion, operating two standalone process plants, larger surface infrastructure and mining throughputs achieved through mining Kora Upper, Lower, and Central Zones within the Kora Deposit, and the Judd Deposit, utilizing a cut-off grade of 4.5 g/t AuEq.
- After-tax NPV5% of US$1.3 billion at US$1,600 per ounce gold with no IRR as the project generates cashflow during construction. After-tax NPV5% of US$1.8 billion at US$2,000 per ounce gold.
- Average annual run-rate production of 405,661 ounces AuEq per annum, run-rate achieved in 2027 and a peak annual production of 500,192 ounces AuEq in 2027.
- Life of Mine average cash costs of US$275 per gold ounce and AISC ( 2) of US$444 per gold ounce over an 11-year mine life.
-
Growth capital cost of US$187 million, sustaining capital cost until operating both process plants of US$235 million and life of mine sustaining capital cost of US$429 million.
-
Both the DFS and PEA Cases are fully funded from mine production and mine cash flow. K92 has a strong financial position having, as at June 30, 2022, a cash balance of US$82 million and no debt, and on July 6, 2022, closed a C$50 million bought deal equity financing.
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Low environmental impact through being supplied with clean hydroelectricity, mining high grades with both the DFS and PEA Cases outlining a low footprint, no-cyanide operation, with a majority of tailings reporting underground as paste fill, and an environmentally friendly paste binder solution.
K92 plans to upgrade the grid infrastructure, which is expected to significantly reduce greenhouse gas emission intensity per ounce produced near-term. WSP Consultants has been engaged to complete a green house gas emissions forecast for the IDP which will improve K92’s corporate climate change goal and target setting, and which will be released in due course.
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AuEq – calculated on the following metal prices: Au – US$1,600/oz, Ag – US$20.00/oz, Cu – US$4.00/lb. Note that gold equivalence factors for the production estimates are different to those used for reporting the Mineral Resource estimate.
- AISC – All-In Sustaining Costs include cash costs plus estimated corporate general and administrative (“G&A”) costs, sustaining costs and accretion.
The IDP, which includes the Kainantu Stage 3 Expansion DFS Case and the alternative Kainantu Stage 4 Expansion PEA Case, was independently prepared by Lycopodium Minerals Pty Ltd (“Lycopodium”) of Brisbane, Australia; Entech Pty Ltd of Perth, Australia and Entech Mining Ltd of Toronto, Canada (collectively referred to as “Entech”); ATC Williams Pty Ltd (“ATC Williams”) of Brisbane, Australia; MineFill Services Pty Ltd. (“MineFill”) of Newcastle, Australia, and; H & S Consultants Pty. Ltd of Sydney, Australia.
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. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Mineral Reserves are defined by the Definitive Feasibility Study and are not predicated on the Preliminary Economic Assessment in any way.
John Lewins, K92 Chief Executive Officer and Director, stated, “The Integrated Development Plan represents a major milestone for K92, providing independent verification by some of the world’s leading engineering firms of Kainantu’s robust economics. The Stage 3 Expansion Definitive Feasibility Study delivers capital expenditures fully funded from mine cash flow, Tier 1 peak production scale of 309 koz AuEq, Tier 1 costs averaging over the life of mine of $366/oz cash costs and all-in sustaining cost of $545/oz and a solid after-tax NPV5% of $586 million at US$1,600/oz or US$855 million at US$2,000/oz over a 7-year mine life.
The Preliminary Economic Assessment, shows potential for further growth, increasing throughput by 240% from the Stage 2A Expansion for a run-rate for a peak production of 500 koz AuEq, low life of mine average cash costs of $275/oz and all-in sustaining costs of $444/oz with a NPV5% of $1.3 billion at US$1,600/oz or US$1.8 billion at US$2,000/oz over an 11-year mine life. PEA capital expenditures are also fully funded from mine cash flow and it is important to highlight that K92’s financial position has never been stronger than it is today.
It is also important to highlight that we see a tremendous opportunity to enhance the outcomes of the Integrated Development Plan through exploration in addition to other regional targets and have placed a major focus on this. Since late-2021, we have increased our exploration budget and our drills have shifted from predominantly infill drilling to resource growth exploration. There are up to 11 drill rigs operating on surface and underground, targeting multiple near-mine targets including Kora, Kora South, Judd and Judd South, with plans to target Kora Deeps later this year from the twin incline. Porphyry exploration has also made considerable progress with the maiden inferred resource at Blue Lake announced last month and surface exploration at A1 has already commenced.”
1 – Kainantu IDP - Definitive Feasibility Study Case
1.1 - DFS Overview
The DFS evaluates an expansion of mining and processing to a run-rate throughput of 1.2 mtpa, representing a 140% increase from the Stage 2A run-rate of 500,000 tonnes per annum (“tpa”). This expansion is referred to as the Stage 3 Expansion and involves on-site treatment of ore by a new standalone 1.2 mtpa process plant, utilizing single stage crushing, SAG and ball milling, gravity and flotation recovery.
The DFS and mineral reserve statement is derived from the Company’s Mineral Resource estimate for Kora (effective date of October 31, 2021) and Judd (effective date of December 31, 2021), with Kora depleted based on mining actuals until December 31, 2021, and does not incorporate post-resource-estimate drilling results.
Table 1.1: DFS Highlights
| US Dollars unless otherwise stated |
Life of Mine
(starting January 2022) |
Stage 3 Expansion
(Q3 2024 onwards) |
| Production | ||
| Mine life (years) | 7 years | |
| Total mill feed (000s tonnes) | 6,153 | |
| Average mill throughput (tonnes per annum) | 879 ktpa | 1.2 Mtpa (run-rate) (1) |
| Total Metal Production | ||
| AuEq (000s ounces) | 1,544 | 1,049 ( 2 ) |
| Gold (000s ounces) | 1,224 | 799 ( 2 ) |
| Copper (mlbs) | 114 | 89 ( 2 ) |
| Silver (000s ounces) | 2,773 | 2,164 ( 2 ) |
| Peak Annual Production | ||
| Year | 2026 | |
| AuEq (000s ounces per annum) | 309 | |
| Average Annual Metal Production | ||
| AuEq (000s ounces per annum) | 221 | 291 (run-rate) (1) |
| Gold (000s ounces per annum) | 175 | 224 (run-rate) (1) |
| Copper (mlbs per annum) | 16 | 24 (run-rate) (1) |
| Silver (000s ounces per annum) | 396 | 574 (run-rate) (1) |
| Average Grade | ||
| AuEq grade (g/t) | 8.4 g/t | |
| Gold grade (g/t) | 6.7 g/t | |
| Copper grade (%) | 0.9% | |
| Silver grade (g/t) | 18 g/t | |
| Average Recovery | ||
| Gold Recovery (%) | 93% | |
| Copper Recovery (%) | 95% | |
| Silver Recovery (%) | 80% | |
| Costs | ||
| Mining cost per tonne (US$/t) | $66.54 | $61.97 (run-rate) ( 1) |
| Processing cost per tonne (US$/t) | $17.36 | $15.32 (run-rate) ( 1) |
| G&A cost per tonne (US$/t) | $32.43 | $28.88 (run-rate) ( 1) |
| Total operating cost per tonne of mill feed (US$/t) | $ 116.34 | $106.17 (run-rate) ( 1) |
| Sustaining capital per tonne of mill feed (US$/t) | $35.50 | $19.26 (run-rate) ( 1) |
| Total cost per tonne of mill feed (US$/t) | $ 151.83 | $125.43 (run-rate) ( 1) |
| Expansion capital expenditure ($m) | $177 | |
| Sustaining capital expenditure ($m) | $218 | |
| Total capital expenditure with closure costs ($m) | $ 402 | |
| Cash cost per ounce AuEq ($/oz) ( 3 ) | $574 | $554 (run-rate) (1) |
| All-in sustaining cost per ounce AuEq ($/oz) ( 4 ) | $716 | $634 (run-rate) (1) |
| Cash cost per ounce gold ($/oz) ( 3 ) | $366 | $313 (run-rate) (1) |
| All-in sustaining cost per ounce gold ($/oz) ( 4 ) | $545 | $416 (run-rate) (1) |
| Base Case Economic Analysis at US$1,600/oz Gold, US$4.00/lb Copper and US$20.00/oz Silver | ||
| After-tax NPV0% | $729 million | |
| After-tax NPV5% | $586 million | |
| IRR (%) and Payback Period (years) | N/A (Self-Funded) | |
| Economic Analysis at $2,000/oz Gold, US$4.00/lb Copper and US$20.00/oz Silver | ||
| After-tax NPV0% | $1,051 million | |
| After-tax NPV5% ( 5 ) | $855 million | |
| IRR (%) and Payback Period (years) | N/A (Self-Funded) | |
- Run-rate excludes the final partial calendar year of production.
- Excludes 2H 2024 commissioning and initial ramp-up stage.
- Cash costs are net of by-product credits and are inclusive of mining costs, processing costs, site G&A and refining charges and royalties.
- AISC includes cash costs plus estimated corporate general and administration costs, sustaining costs and accretion.
-
Net present value is calculated utilizing mid-year discounting.
1.2 - Kainantu Mineral Reserve Statement
The mineral reserve estimate outlined in the DFS was prepared by Patrick McCann PEng, of Entech Mining Ltd and Shane McLeay FAusIMM of Entech Pty Ltd, in accordance with the classification criteria set out in the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves prepared by the CIM Standing Committee on Reserve Definitions. Patrick McCann and Shane McLeay are independent consultants of the Company and are Qualified Persons as defined by NI 43-101. The total Mineral Reserve for the Kainantu Project is shown in Table 1.2. The mineral reserve estimate is based on the Judd mineral resource estimate (December 31, 2021 effective date – refer to Table 1.3) and the Kora mineral resource estimate (October 31, 2021 effective date – refer to Table 1.3), net of post-resource mining depletion from November 1, 2021 to December 31, 2021 of 36,765 tonnes at 12.94 g/t Au, 0.59 % Cu and 9.29 g/t Ag.
Table 1.2 – Kainantu Mineral Reserve Statement (Effective Date January 1, 2022)
| Tonnes | Gold | Silver | Copper | AuEq | |||||
| Mt | g/t | moz | g/t | moz | % | kt | g/t | moz | |
| Kora | |||||||||
| Proven | 2.26 | 7.58 | 0.55 | 14.96 | 1.09 | 0.82 | 18.52 | 9.17 | 0.67 |
| Probable | 3.55 | 5.88 | 0.67 | 19.46 | 2.22 | 0.95 | 33.90 | 7.76 | 0.89 |
| Total P&P | 5.81 | 6.54 | 1.22 | 17.71 | 3.31 | 0.90 | 52.41 | 8.31 | 1.55 |
| Judd | |||||||||
| Proven | 0.21 | 9.99 | 0.07 | 16.88 | 0.11 | 0.57 | 1.17 | 11.18 | 0.07 |
| Probable | 0.14 | 6.50 | 0.03 | 10.65 | 0.05 | 0.59 | 0.81 | 7.65 | 0.03 |
| Total P&P | 0.34 | 8.60 | 0.09 |
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