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Saturday, Dec 2, 2023
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.


K92 Mining bolsters financial position in Q3, expects record-breaking performance in Q4

During the quarter, the company reported a strong cash balance of $79.9 million

K92 Mining strengthens financial position ending Q3 with $79.9M
K92's Kainantu gold mine in Papua New Guinea. Photo via K92 Mining.

K92 Mining Inc. (TSX: KNT) (OTCQX: KNTNF) says its fourth-quarter operations are set to be the strongest of the year given the strong performance of its processing plant delivering a “flurry” of daily throughput records.

On Tuesday, the company announced its financial results for the three months and nine months ended Sept. 30 this year and reported ending the quarter with a cash position of US$79.9 million.

During the quarter, the company strengthened its financial position by entering into a US$100 million senior secured loan and amending an offtake agreement with Trafigura Pte Ltd. This move is expected to enhance K92’s ability to meet future metals payabilities, with the first drawdown anticipated in Q4 2023.

The quarterly results indicate revenue of US$32.8 million, a net loss of US$0.6 million. The company achieved sales of 18,339 ounces of gold, 1,255,291 pounds of copper and 30,484 ounces of silver in Q3.

The gold concentrate and doré inventory increased by 3,668 ounces over the prior quarter, reaching 6,066 ounces. Operating cash flow, before working capital adjustments, was US$10.9 million, or US$0.05 per share, and the earnings before interest, taxes, depreciation, and amortization (EBITDA) came to US$7.0 million, or US$0.03 per share.

“Year to date, a notable amount of progress has been made on Stage 3 and 4 expansions,” K92 CEO John Lewins said.

“On July 24, 2023, a major de-risking milestone was achieved, with the award of the lump sum fixed price contract for the design and construction of the 1.2 mtpa Stage 3 process plant to GR Engineering Services Limited,” Lewins said.

“Combined with the award of various long-lead time items, approximately 94 per cent of the forecast capital cost for the process plant, which represents over half of the total growth capital as outlined in the Integrated Development Plan, has been significantly de-risked on a fixed price basis.”

Read more: K92 Mining breaks records for daily processing in Q3 with 1,542 tonnes per day

Read more: K92 Mining reports 39% YoY revenue increase in Q2

Third quarter saw ‘impressive’ processing achievements

In the third quarter, production at the company yielded 26,225 ounces of gold equivalent (AuEq), which includes 22,227 ounces of gold, 1.8 million pounds of copper and 40,233 ounces of silver. The cash costs for gold were reported at US$684 per ounce, with all-in-sustaining costs (AISC) amounting to US$1,300 per ounce.

The quarter saw processing achievements, setting new records with a monthly throughput averaging 1,542 tonnes per day in September and a daily record of 1,867 tonnes on September 28. These figures were 13 per cent and 36 per cent higher than the Stage 2A Expansion’s annual average run rate of 1,370 tonnes per day.

“On operations, we continue to see the fourth quarter as the strongest for the year and re-iterate our updated guidance,” Lewins said.

The performance of the process plant has been exceptional, delivering a “flurry” of daily throughput records in early October including 2,027 tonnes processed on October 10, well above the Stage 2A Plant design of 1,370 tonnes per day.

“Development has also seen a significant step up in October, achieving a monthly record of 903 metres. Multiple initiatives are underway to increase development considerably over the next few months,” he added.

Meanwhile, metallurgical recoveries were robust, with 92 per cent for gold and 93 per cent for copper, surpassing the 2022 averages.

The average mill head grade for the quarter was 7.32 g/t AuEq or 6.20 g/t gold, 0.72 per cent copper, and 12.84 g/t silver. The quarterly ore processed amounted to 121,201 tonnes or 1,317 tonnes per day, with 124,236 tonnes of ore mined and 305,506 tonnes of material mined (ore plus waste).

K92 Mining operates the Kainantu Gold mine in Papua New Guinea which declared commercial production in February 2018.

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