K92 Mining Announces Strong 2023 Q4 and Annual Financial Results – Record Quarterly Revenue, Net Income, Operating Cash Flow, EBITDA, Production, Ore Mined, Ore Processed and Development; Annual Production, Cash Cost and AISC Better Than Guidance

April 1, 2024

11 minutes read

VANCOUVER, British Columbia, April 01, 2024 (GLOBE NEWSWIRE) — K92 Mining Inc. (“K92” or the “Company”) (TSX: KNT; OTCQX: KNTNF) is pleased to announce financial results for the three and twelve months ended December 31, 2023.

Production
Fourth Quarter 2023

Record quarterly production of 39,101 ounces gold equivalent (“AuEq”), or 33,309 oz gold, 2,728,623 lbs copper and 56,502 oz silver ⁽¹⁾ ⁽²⁾.
Cash costs of US$430/oz gold, second lowest to date, and all-in sustaining costs (“AISC”) of US$1,062/oz gold ⁽²⁾.
Record quarterly ore processed of 151,908 tonnes or 1,651 tonnes per day (“tpd”), 21% greater than the Stage 2A Expansion run-rate and a 25% increase from Q4 2022.
Record daily throughput achieved on November 19^th of 2,320 tonnes, and a 7-day throughput record achieved in November averaging 2,136 tpd, 69% and 56% greater than the Stage 2A Expansion plant design rates, respectively ⁽³⁾. The records demonstrate not only a significant immediate opportunity with the Stage 2A plant having considerably greater capacity than expected, but also the potential for the Stage 3 Expansion process plant, which is based on the same design throughput parameters, for significantly greater capacity than its 1.2 million tpa (“tonnes per annum”) design.
Record amount of ore mined of 155,062 tonnes and record total mined material (ore plus waste) of 347,529 tonnes, a 39% and 21% increase from Q4 2022, respectively.

Full Year 2023

Strong annual production of 117,607 ounces AuEq or 100,533 oz gold, 7,690,477 lbs copper and 160,628 oz silver, beating updated guidance range of 111,000 to 116,000 oz AuEq.
Cash costs of US$585/oz gold and AISC of US$1,162/oz gold, beating original guidance ranges for cash cost of $620 to $680/oz gold, and AISC of $1,180 to $1,300/oz gold ⁽²⁾.
Record annual ore processed of 503,484 tonnes, a 12% increase from 2022.
Record annual ore mined of 506,318 tonnes, a 13% increase from 2022.
Strong recoveries achieved during the year of 91.5% for gold and 92.8% for copper.

Financials

Fourth Quarter 2023

Record quarterly revenue of US$75.3 million, an increase of 22% from Q4 2022.
Record net income of US$20.0 million or $0.09 per share, a 51% increase from Q4 2022.
Strong cash and treasury bill position of US$79.1 million as of December 31, 2023 while remaining debt-free.
Sales of 33,273 oz gold, 3,061,956 lbs copper and 63,301 oz of silver. Gold concentrate and doré inventory of 5,285 oz as of December 31, 2023, a decrease of 781 oz over the prior quarter.
Record operating cash flow (before working capital adjustments) for the three months ended December 31, 2023, of US$38.6 million or US$0.16 per share, and record earnings before interest, taxes, depreciation and amortization (“EBITDA”) ⁽²⁾ of US$40.7 million or US$0.17 per share.

Full Year 2023

Record annual revenue of US$200.3 million, an increase of 6% from 2022.
Annual net income of US$33.2 million or $0.14 per share.
Annual sales of 97,355 oz gold, 7,512,951 lbs copper and 159,202 oz of silver.
Record operating cash flow (before working capital adjustments) for the twelve months ended December 31, 2023, of US$82.1 million or US$0.35 per share, and record earnings before interest, taxes, depreciation and amortization of US$84.1 million or US$0.36 per share ⁽²⁾.

Growth

During the quarter, K92 announced its updated Kora and Judd resource estimates. The updated Kora resource estimate reported a Measured and Indicated Resource of 2.3 million ounces at 10.24 g/t AuEq and an Inferred Resource of 3.9 million ounces at 8.60 g/t AuEq, representing increases of +8% and +58% from the previous resource estimate respectively. The updated Judd resource estimate reported a Measured and Indicated Resource of 0.35 million ounces at 8.68 g/t AuEq and Inferred Resource of 0.56 million ounces at 7.72 g/t AuEq, representing increases of +167% and +211% respectively.
Subsequent to year end, results from the first two holes from K92’s maiden drill program at the Arakompa project recorded significant near-surface mineralization, with 4 high-grade lodes intersected in hole KARDD0002. Between the high-grade lodes, the tonalite to dioritic host rock is overprinted with porphyry style mineralization increasing the potential for bulk mining. The target size of Arakompa is very large, with mineralization demonstrated from drill holes, rock samples and surface workings for at least 1.7 km of strike, hosted within a ~150-225 m wide mineralized intense phyllic altered package, and exhibits a vertical extent of +500 m. Arakompa is sparsely drilled, with K92’s maiden drill results representing the first drilling on the project completed in 32 years. A total of 18 holes were drilled historically, with the vast majority shallow. Highlights from the maiden drill program include:
- KARDD0002 recording 7.20 m at 24.76 g/t AuEq, 5.70 m at 9.94 g/t AuEq, 5.30 m at 6.06 g/t AuEq and 3.60 m at 3.38 g/t AuEq ⁽⁴⁾.
- KARDD0002 recording a bulk intersection of 219.8 m at 1.59 g/t AuEq with a higher grade core of 149.4 m at 2.12 g/t AuEq, starting at 5.2 m from surface.
  
  Other historic highlights reported include:
- 004DA92 recording 4.00 m at 32.03 g/t AuEq
- 013AD92 recording 4.00 m at 20.21 g/t AuEq
- 016AD92 recording 6.30 m at 14.96 g/t AuEq
- 010AD92 recording 9.20 m at 10.67 g/t AuEq
The twin incline is now effectively complete, with incline #2 (6m x 6.5m) advanced to 2,863 metres and #3 (5m x 5.5m) advanced to 2,838 metres as at December 31, 2023. Overall mine development during the fourth quarter was 2,649 metres, an increase of 19% from Q4 2022 and a quarterly record.

The Company’s annual consolidated financial statements and associated management’s discussion and analysis for the year ended December 31, 2023 are available for download on the Company’s website and under the Company’s profile on SEDAR+ (www.sedarplus.ca). All amounts are in U.S. dollars unless otherwise indicated.

See Figure 1: Quarterly Production, Cash Cost and AISC Chart
See Figure 2: Quarterly Total Ore Processed, Development Metres Advanced and Total Mined Material Chart
See Figure 3: Process Plant Throughput Performance, Daily Records and Near-Records

John Lewins, K92 Chief Executive Officer and Director, stated, “In 2023, K92 once again took a major step forward in numerous areas, delivering a strong finish to the year with multiple records achieved both financially and operationally, including, but not limited to, record production, development, material movements, earnings per share, cash flow per share, and revenue. With the strong fourth quarter, K92 exceeded the top end of its updated production guidance range and delivered better cash costs and all-in sustaining costs than the original guidance range. 2023 also delivered a significantly expanded resource base, with the combined Measured and Indicated resource at Kora and Judd increasing by +13% to 2.6 Moz AuEq at 10.0 g/t AuEq and the Inferred resource increasing by +70% to 4.5 Moz AuEq at 8.5 g/t AuEq, firmly placing Kainantu in an elite category of large high-grade gold systems globally.

Looking ahead, we are very excited for 2024 as we continue to advance the transformation of Kainantu and K92 into a Tier 1, mid-tier producer in 2025. Concurrent with our transformative expansion works, we also remain focused on exploration, both near-mine and regionally, with very encouraging results to date, particularly from Arakompa in late-February reporting high-grade drill results including 7.20 m at 24.76 g/t AuEq, 5.70 m at 9.94 g/t AuEq, 5.30 m at 6.06 g/t AuEq and 3.60 m at 3.38 g/t AuEq and a bulk intersection of 219.8 m at 1.59 g/t AuEq with a higher grade core of 149.4 m at 2.12 g/t AuEq, starting at 5.2 m from surface. Importantly, this is the first time that any drilling has been completed on Arakompa in 32 years with only very limited and shallow drilling completed historically. The second drill rig has already commenced drilling at Arakompa and we look forward to providing exploration updates on our various targets in due course.”

Mine Operating Activities

	Three months ended December 31, 2023	Twelve months ended December 31, 2023
Operating data
Gold head grade (Au g/t)	7.4	6.8
Copper grade (%)	0.87%	0.75%
Gold equivalent head grade (AuEq g/t)	8.7	7.9
Gold recovery (%)	91.7%	91.5%
Copper recovery (%)	93.6%	92.8%
Gold ounces produced	33,309	100,533
Gold ounces equivalent produced⁽¹⁾⁽²⁾	39,101	117,607
Tonnes of copper produced	1,238	3,488
Silver ounces produced	56,502	160,628

Financial data (in thousands of dollars)
Gold ounces sold	33,273	97,355
Revenues from concentrate and doré sales	US$75,316	US$200,255
Mine operating expenses	US$11,692	US$40,038
Other mine expenses	US$13,684	US$39,473
Depreciation and depletion	US$10,563	US$31,877

Statistics (in dollars)
Average realized selling price per ounce, net	US$1,898	US$1,869
Cash cost per ounce⁽²⁾	US$430	US$585
All-in sustaining cost per ounce⁽²⁾	US$1,062	US$1,162

Notes:

(1)	Gold equivalent in 2023 is calculated based on: gold $1,950 per ounce; silver $23.37 per ounce; and copper $3.83 per pound. Gold equivalent in Q4 2023 is calculated based on: gold $1,974 per ounce; silver $23.20 per ounce; and copper $3.71 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 April 1, 2024, available on SEDAR+ or the Company’s website, for reconciliation of these measures.

(3)	Daily tonnes processed record achieved on day with 23.7 hours of plant operation. 7-day tonnes processed recorded achieved with 95.5% plant availability. 2023 budget annual average plant availability is 94.2%.

(4)	Gold equivalent exploration results are calculated using longer-term commodity prices with a copper price of US$4.00/lb, a silver price of US$22.50/oz and a gold price of US$1,750/oz.

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 2023 fourth quarter and annual financial results at 8:30 am (EDT) on Tuesday, April 2, 2024.

The conference call will also be broadcast live (webcast) and may be accessed via the following link: https://services.choruscall.ca/links/k92mining2023q4.html.

Qualified Person

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.

Technical Report

The Integrated Development Plan (“IDP”) for the Kainantu Gold Mine Project in Papua New Guinea is included in a Technical Report, titled, “Independent Technical Report, Kainantu Gold Mine Integrated Development Plan, Kainantu Project, Papua New Guinea” dated October 26, 2022, with an effective date of January 1, 2022.

About K92

K92 Mining Inc. is engaged in the production of gold, copper and silver 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. A maiden resource estimate on the Blue Lake copper-gold porphyry project was completed in August 2022. 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, President and Chief Operating Officer at +1-604-416-4445

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Such forward-looking statements include, without limitation: (i) the results of the Kainantu Mine Definitive Feasibility Study, and the Kainantu 2022 Preliminary Economic Assessment, including the Stage 3 Expansion, a new standalone 1.2 mtpa process plant and supporting infrastructure; (ii) statements regarding the expansion of the mine and development of any of the deposits; (iii) the Kainantu Stage 4 Expansion, operating two standalone process plants, larger surface infrastructure and mining throughputs; and (iv) the potential extended life of the Kainantu Mine.

All statements in this news release that address events or developments that we expect to occur in the future are forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, although not always, identified by words such as “expect”, “plan”, “anticipate”, “project”, “target”, “potential”, “schedule”, “forecast”, “budget”, “estimate”, “intend” or “believe” and similar expressions or their negative connotations, or that events or conditions “will”, “would”, “may”, “could”, “should” or “might” occur. All such forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors, many of which are beyond our ability to control, that may cause our actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Such factors include, without limitation, Public Health Crises, including the COVID-19 virus; changes in the price of gold, silver, copper and other metals in the world markets; fluctuations in the price and availability of infrastructure and energy and other commodities; fluctuations in foreign currency exchange rates; volatility in price of our common shares; inherent risks associated with the mining industry, including problems related to weather and climate in remote areas in which certain of the Company’s operations are located; failure to achieve production, cost and other estimates; risks and uncertainties associated with exploration and development; uncertainties relating to estimates of mineral resources including uncertainty that mineral resources may never be converted into mineral reserves; the Company’s ability to carry on current and future operations, including development and exploration activities at the Arakompa, Kora, Judd and other projects; the timing, extent, duration and economic viability of such operations, including any mineral resources or reserves identified thereby; the accuracy and reliability of estimates, projections, forecasts, studies and assessments; the Company’s ability to meet or achieve estimates, projections and forecasts; the availability and cost of inputs; the availability and costs of achieving the Stage 3 Expansion or the Stage 4 Expansion; the ability of the Company to achieve the inputs the price and market for outputs, including gold, silver and copper; failures of information systems or information security threats; political, economic and other risks associated with the Company’s foreign operations; geopolitical events and other uncertainties, such as the conflicts in Ukraine, Israel and Palestine; compliance with various laws and regulatory requirements to which the Company is subject to, including taxation; the ability to obtain timely financing on reasonable terms when required; the current and future social, economic and political conditions, including relationship with the communities in Papua New Guinea and other jurisdictions it operates; other assumptions and factors generally associated with the mining industry; and the risks, uncertainties and other factors referred to in the Company’s Annual Information Form under the heading “Risk Factors”.

Estimates of mineral resources are also forward-looking statements because they constitute projections, based on certain estimates and assumptions, regarding the amount of minerals that may be encountered in the future and/or the anticipated economics of production. The estimation of mineral resources and mineral reserves is inherently uncertain and involves subjective judgments about many relevant factors. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The accuracy of any such estimates is a function of the quantity and quality of available data, and of the assumptions made and judgments used in engineering and geological interpretation, Forward-looking statements are not a guarantee of future performance, and actual results and future events could materially differ from those anticipated in such statements. Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking statements, there may be other factors that cause actual results to differ materially from those that are anticipated, estimated, or intended. 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.

Figure 1: Quarterly Production, Cash Cost and AISC Chart