Mr. John Lewins reports
K92 MINING RELEASES 2021 Q1 FINANCIAL RESULTS - RECORD NET CASH & PROCESS PLANT THROUGHPUT
K92 Mining Inc. has released results from its financial statements for the three months ended March 31, 2021.
Strong focus on safety with one of the best safety records in the Australasia region since start of operations;
- Pro-active and focused management of COVID-19; K92 continues to operate and has strong preventative and response plans.
- Record quarterly tonnage of 73,221 tonnes treated, a 54-per-cent increase from Q1 2020.
- Quarterly gold equivalent production of 18,654 ounces, or 17,774 ounces gold, 426,153 pounds copper and 7,925 ounces silver.
- Cash costs of $745 (U.S.) per ounce gold and all-in sustaining costs of $1,038 (U.S.) per ounce gold ounce.
- Long-hole stoping continuing to perform well and to design on both the K1 and K2 veins, with stoping operations interrupted for approximately three weeks in March and recommenced near the end of the quarter, following an incident involving an underground loader, which prevented backfilling operations. Production from four high-grade stopes was deferred to Q2, resulting in the plant treating a larger amount of lower-grade stockpile material during Q1, while benefiting Q2 production (see March 18, 2021, press release). Operations were also impacted from mid-January to late February due to a shortage of bulk emulsion explosives as a result of unforeseen COVID-19 international shipping logistical issues compounded by increasing global transport restrictions as a result of the Beirut incident. This was addressed through utilizing less-productive alternative explosives (ANFO and packaged explosives) and supplementing mill feed from lower-grade stockpiles. A significant shipment of bulk emulsion explosives arrived on site in late February; the supplier has diversified sources and is expected to commence domestic production in May, nearby in Lae, to totally mitigate this issue (see April 16, 2021, press release).
Balance sheet significantly strengthened during Q1. During the quarter, K92 fully repaid the outstanding loan balance of $5-million (U.S.) and increased its cash balance by $15-million (U.S.), ending the quarter with a historically high cash balance of $66-million (U.S.) as at March 31, 2021.
- Sold 21,879 ounces of gold, 394,635 pounds of copper and 7,463 ounces of silver. Gold concentrate inventories of 2,379 ounces as of March 31, 2021, a quarterly decrease of 3,072 ounces.
- Record quarterly revenue of $29.5-million (U.S.), increasing 7 per cent from Q1 2020.
- Operating cash flow (before working capital adjustments) for the three months ended March 31, 2021, of $7.7-million (U.S.) or four U.S. cents per share and earnings before interest, taxes, depreciation and amortization of $8-million (U.S.) or four U.S. cents per share.
- Net income for Q1 of $2.2-million (U.S.) or one U.S. cent per share.
Reported high-grade underground development extensions results on the underexplored Judd vein No. 1 (J1) with 65 metres of strike recording an average J1 vein thickness of 3.8 m at 18.7 grams per tonne AuEq (see Jan. 26, 2021, press release).
- Results for 35 diamond drill holes reported for the Kora deposit, with 25 intersections exceeding 10 g/t AuEq, including KMDD0266 recording multiple intersections including 7.2 m at 59 g/t Au, 56 g/t Ag and 3.89 per cent Cu (64.88 g/t AuEq, 4.69 m true width) on the K1 vein and KMDD0280 recording multiple intersections including 6.82 m at 34.8 g/t Au, 22 g/t Ag and 1.59 per cent Cu (37.19 g/t AuEq, 5.05 m true width) on the K2 vein (see Feb. 18, 2021, press release).
- Diamond drill rig fleet increased to 11 at the end of the quarter, targeting multiple vein and porphyry targets concurrently. Manpower ramping up for exploration after Australia-Papua New Guinea travel restrictions lifted for expatriate fly-in fly-out workers (see May 10, 20121, press release).
For complete details of the interim consolidated financial statements and associated management's discussion and analysis, please refer to the company's website or profile on SEDAR.
John Lewins, K92 chief executive officer and director, stated: "The company continued to make considerable progress in the first quarter despite multiple short-term and unexpected events resulting from COVID-19 travel restrictions, loader incident and international bulk emulsion shipping issues. Financially, the last $5-million of debt was repaid and the cash balance increased to a historically strong $66-million at the end of the quarter. Operationally, process plant throughput potential appears to be greater than the 1,100 tpd with several records achieved, long-hole stoping continuing to perform well and development prior to the short-term disruptions tracking above budget. On exploration, Judd made significant progress with development results now extended to a total of 288 metres of vein strike reported, including the last 179 metres of J1 vein strike averaging 3.7 metres thickness at 15.39 g/t AuEq, and Kora continued to deliver high grades, with 35 intersections exceeding 10 g/t AuEq from 35 diamond drill holes.
"Importantly, all three unexpected events that impacted the operation have been effectively mitigated, with the loader incident and international bulk shipping issued resolved in the first quarter. Late last week, travel restrictions for the resource sector's expatriate work force between Australia and Papua New Guinea was lifted, following the introduction of enhanced COVID-19 protocols by the resource sector to ensure there are no further disruptions to the movement of expatriate personnel. K92's expatriate work force travelled from Australia to Papua New Guinea this week. With these challenges behind us, we anticipate normal operations being quickly re-established, although we remain vigilant for any potential impacts or issues resulting from the ongoing COVID-19 pandemic."
MINE OPERATING ACTIVITIES
Three months ended Three months ended
March 31, 2021 March 31, 2020
Head grade (Au g/t) 8.5 13.6
Gold recovery (%) 88.9% 93.0%
Gold ounces produced 17,774 19,240
Gold ounces equivalent produced (1) 18,654 19,944
Tonnes of copper produced 193 154
Silver ounces produced 7,925 7,678
Financial data (in thousands of dollars)
Gold ounces sold 21,879 18,747
Revenues from concentrate sales $29,513 (U.S.) $27,633 (U.S.)
Mine operating expenses $7,630 (U.S.) $8,145 (U.S.)
Other mine expenses $10,420 (U.S.) $4,297 (U.S.)
Depreciation and depletion $2,857 (U.S.) $2,781 (U.S.)
Statistics (in dollars)
Average realized selling price per ounce, net $1,735 (U.S.) $1,502 (U.S.)
Cash cost per ounce $745 (U.S.) $752 (U.S.)
All-in sustaining cost per ounce $1,038 (U.S.) $885 (U.S.)
Gold equivalent for 2021 is based on the following prices: gold $1,800 (U.S.) per ounce, silver $25 (U.S.) per ounce and copper $3.25 (U.S.) per pound. Gold equivalent for 2020 based on the following prices: gold $1,500 (U.S.) per ounce, silver $17.75 (U.S.) per ounce and copper $2.70 (U.S.) per pound.
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 Q1 financial results at 8:30 a.m. Eastern Time on Friday, May 14, 2021:
- Listeners may access the conference call by dialling 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).
K92 Mine geology manager and mine exploration manager, 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.
About K92 Mining Inc.
K92 Mining is engaged in the production of gold, copper and silver from the Kora deposit 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.
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