Tag Archives: K92

Kainantu profitable and will have long mine life, says K92 CEO

A core from Kainantu’s Kora deposit Source: K92 Mining

David James | Business Advantage | 4 December 2018 

Canadian miner K92 has found new ore and is ramping up its operations at its Kainantu mine in Papua New Guinea’s Eastern Highlands Province. In this exclusive interview, Chief Executive John Lewins tells Business Advantage PNG that the company is now profitable and has an anticipated mine life of over 15 years.

New ore discoveries are at the heart of Kainantu’s current health. When the mine was bought by K92 from Barrick Gold in 2015, John Lewins says the focus was initially on restarting mining operations on the Irumafimpa ore body.

The expectation in the previous owners’ original design was that this would yield about 20 grams of gold per tonne, but it was closer to 8.5 grams.

‘It was still pretty good but, when you are expecting 20, it is not so good,’ he tells Business Advantage PNG.

‘It was recognised that this ore body was also relatively difficult mining, in terms of narrow veins, clay and other technical issues.

‘It was therefore the intent of K92 to bring the previously unmined Kora ore body into production.’

Kora and Kora North

In mid-2017, K92 drilled the first diamond drill hole from underground, looking for an extension. Attention then turned to the Kora ore body, closer to the existing underground workings, which proved to be more prospective—and ultimately profitable.

Lewins says the initial discovery hole had yields of 11.7 grams of gold per tonne, 25 grams per tonne of silver and 1.2 per cent copper.

‘We developed out to this extension area, designated “Kora North” and mined a bulk sample which was treated through the existing process plant in October 2018, achieving recoveries of 92 per cent copper and gold from that sample.

‘So, we switched our mining to basically focus on Kora and in January of this year we were 100 per cent Kora.

‘At the end of January, we declared commercial production and made a profit. The first quarter for us was profitable, the second quarter was profitable, and the third quarter is not out yet but it is definitely positive cash flow.

‘So, for the year we will make money.’

Costs

Lewins says K92’s cash costs are ‘running at around’ US$560 an ounce (the current gold price is US$1213 an ounce).

‘All in sustaining costs, bearing in mind that we are developing a brand new mine effectively underground below US$800 an ounce.

‘We are giving (production) guidance this year of 42,000-46,000 oz. We will make that.‘

Lewins says the original Kora deposit contained an estimated resource of at least 1.65 million ounces of gold, and an additional Kora North is expected to be over one million ounces.

‘We are looking at a 15-to-20 year life for an expanded operation, treating 400,000 tonnes per annum and producing over 100,000 ounces per annum. And (production of) 400,000 ounces per annum, not the current 200,000 per annum.

‘We are planning an expansion that will cost about US$15 million to double throughput,’ says Lewins.

‘We are continuing to drill the Kora and Kora North deposits from underground, with a target of doubling the resource. All of this has been underground drilling.

‘We have a third rig coming in to extend the drilling.’

Lewins says the company will conduct a preliminary economic assessment by the third quarter of next year, and expects to have an estimated total resource of five million ounces (including Irumafimpa). K92 is also planning further exploration of the Kora ore body outside the existing mine lease.

Share price

Lewins says K92’s share price has doubled in the past year.

‘A company like ourselves, having five million ounces at relatively high grades at 12 grams per tonne—and in production in a market where quality assets are in short supply—is an attractive investment.

‘From a shareholder perspective that is positive. We have started delivering.’

K92’s share register is 45 per cent institutional investors and 40-45 per cent retail investors, mainly out of Canada.

Lewins acknowledges PNG is a challenging environment.

‘We are in a better position than most. We have got grid power, for instance.

‘We have got a sealed road, a highway which runs from the port of Lae to about 8 kilometres from the site.

‘We have a government airstrip right next to the road as well. We have good infrastructure.’

Up in smoke?

One challenge is entirely unforeseen, however.

‘Something that is totally out of left field is the legalisation of marijuana,’ says Lewins.

‘This has created a massive marijuana boom in Canada.

‘Hundreds of millions of dollars are going into investment in marijuana and that money is coming out of the mining sector.

‘If you look at the TSX and the ASX (Australian Securities Exchange) over the last 18 months; for the first time in living memory, the ASX has actually been outperforming the TSX in terms of the junior mining sector.’

Advertisements

1 Comment

Filed under Financial returns, Papua New Guinea

Tuke Calls For Transparency On K92 Deal

Mining Minister Johnson Tuke

Post Courier | August 22, 2018

Mining Minister Johnson Tuke has appealed to parties to the K92 mining project memorandum of agreement to be transparent when negotiating benefits of the project.

The Minister was speaking to parties on Tuesday during the review of the MOA which is taking place in Lae this week.

“Mi laikim state imas tok tru, mi laikim line agencies blo gavman mas tok tru, kampani mas tok tru na ol landowners tu mas tok tru (I want the State to tell the truth, government line agencies to tell the truth, the developer company must tell the truth, and the landowners must tell the truth).”

Tuke said it was important to be upfront on issues and in that way, all stakeholders could achieve their objectives in a timely manner.

He urged all parties to have understanding and respect for each other during the negotiations.

The Minister raised issues with the fact that Kainantu District has not seen development as a result of the mine’s operations so far.

Mr Tuke said as long as he is the Minister for Mining, he would try to ensure that all parties, especially landowners of all mines in the country, receive benefits through their various MOA.

He said the National Government has reviewed the Mining Act 1992 in efforts to better the way government regulates the mining industry in the country.

“This is part of the government’s intervention to ensure that the country’s aspirations and interests are captured sufficiently,” Mr Tuke said.

Leave a comment

Filed under Financial returns, Papua New Guinea

Kainantu Mining Put On Notice By Landowners

Post Courier | March 28, 2018

Landowners from the K92 Mining Limited in Kainantu, Eastern Highlands province have raised concerns over 18 years of being left out of spin-off benefits from the Kainantu mine operation.

The groups from Kainantu in Eastern Highlands and Markham in Morobe are calling on the operator to back pay them over no spin-off.

Pomasi and Unantu groups from Kainantu and the Watarais and Marawasa groups in Markham said since the establishment of the mine, they have not been part of any spin-off activities.

Chairman of associate infrastructure group Aigdevco Limited, Sonny Maraba, said the groups have missed out on royalties, enclave allowances and employment from the mining operations.

“The four mentioned groups and five others have been left out from the development stages to the construction and actual progress of the mine and not in any way received royalty payments, and compensation payment for the damage done to the environment and even have not been given spin-offs,” Mr Maraba said.

He said the mine commenced operation in 2000 and since then the groups have not received anything.

“The Markham landowner groups have been ignored for 18 years now,” he said.

He added that the groups want the mining operators to calculate 18 years of no spin-off benefit and pay the agreed 30 percent benefit.

“We have been spectators to the benefits for so long and as the new chairman I want to make it happen for my people,” he said.

1 Comment

Filed under Financial returns, Human rights, Papua New Guinea

K92 first production ready for shipment

The National aka The Loggers Times | November 16, 2017

THE K92 Mining Inc says the first concentrate from the Kora production in Eastern Highlands has been transported to Lae to be shipped overseas.
This is pursuant to a new off-take agreement, with the provisional payment (90 per cent of total value of shipment) received by K92.
According to the company, the new off-take agreement included a provision for a funding of US$15 million (K47.04 million) in non-dilutive financing from one of the world’s largest commodity trading groups, to secure the long-term off-take for production from the Kora Deposit.
The financing is subject to a number of closing conditions, which the two parties have started pursuing.
Prior to the removing of these conditions, K92 will ship the Kora concentrate under an agreement with interim provisions facilitating the same.
K92 expects to use the US$15m to target an expansion of the mining and processing rate to a level envisioned in the preliminary economic assessment.
K92 chief executive John Lewins said the off-take agreement “allows for immediate shipping of concentrate that K92 is producing from Kora”.
“At the same time, it provides a potential path for a non-dilutive financing to target significant production expansion,” he said.
“The off-taker is one of the world’s largest commodity traders, is very active in Papua New Guinea and familiar with K92 and our operations.
“The discovery of the Kora extension area adjacent to our current mining area has been game-changing for the company and we are continuing to drill and mine in this area.”
K92 Mining has begun gold production from the Irumafimpa gold deposit, which together with the Kora gold deposit, is part of the company’s Kainantu gold project located in the Eastern Highlands.
Kora remains open for expansion in every direction and strongly mineralised at the extent of all drilling.

Leave a comment

Filed under Financial returns, Papua New Guinea

K92 Mining: Landowner pact allows mine to resume

Leave a comment

Filed under Financial returns, Human rights, Papua New Guinea

Mine attack threatens investor [exploiter] confidence: MRA

Cedric Patjole | Loop PNG | September 5, 2017

The re attack at the Kainantu Gold Mine last week has seriously threatened investor [exploiter] confidence in a big way, according to Mineral Resources Authority Managing Director, Philip Samar.

In a media conference yesterday, Samar said the attack on the mine developer K92 Mining Inc, which was a new company to PNG and who invested millions of kina to revive the mine, had serious implications.

He said the company spent the last two years carrying out maintenance at the mine site and only began selling in July, of which the true bene ts were yet to be seen when the attack occurred.

“It’s really discouraging,” said Samar.

“There will be people (investors) watching and wondering what’s going to happen next.”

According to K92 Mining Inc, K120 million (US$40 million) was injected to restart the mine while its total annual operating expenditure sits at K77 million per annum.

There have also been payments to landowners to the tune of K2 million while local landowner contracts total K738,000.

Samar said with such level on investment, any outstanding issues must be addressed through the proper channels and not by landowners taking the law into their own hands.

1 Comment

Filed under Financial returns, Human rights, Papua New Guinea

K92 Mine Damage Valued at K6-9 Million [PC] or K13 million+ [RH]

Rosalyn Albaniel | Post Courier | September 4, 2017

The developers of the mine in Kainantu have reported the destruction and damage to its assets to be between US$2-3million (K6-9million).
The company has begun its rebuilding process, but the damage has set the company back quite substantially.
This was revealed by the Mineral Resources Authority managing director Philip Samar at a press conference in Port Moresby yesterday.
Mr Samar said the firm had advised that as a result it has since been forced to stop its underground production for at least a month.
The loss in revenue as a result is estimated to be US$2.5 million (K7.9million).
The firm also reported that about 200 workers and contractors would also have to be stood down or laid off in the short term.
Mr Samar said while the mine workers have returned to site following the mayhem he had been advised that it would take up to two months before it recommences commercial production.
The ripple effect of this he said would be a delay in benefits to the country including royalties.
He said among the properties burnt and damaged were the firms underground cablings, the prime movers all amounting to an estimated K13 million.
The latter the developer K92 Mines had advised required a lead time of about six months to order.
He said there were other costs also likely to be incurred including a penalty clause from their marketing contracts.
“Those are some of the costs that come with us acting the way we did,” the MD stated.
Mr Samar said the situation was quite disappointing and concerning especially for the developer which after two years had just kept true to its word turning around a mine which two other previous developers had relinquished ownership of.
Further and only after just one shipment.
Meanwhile, the company in its brief shows expenditure on mine restart was US$40million, while revenue from its first and only sale to date US$3million.
The mine had provided employment for 500 workers, 300 local landowners, 170 nationals and 30 expatriates.
Its wages bill annually is K6.6million for local landowners, while total operating expenditure K75 million per annum.
In the two years it has contributed to the socio-economic development in the local community it operates in including haus krai’s.

Property damage to cost K92 mine K13mil-plus

Shirley Mauludu | The National aka The Loggers Times | September 5, 2017
THE cost of the damage by landowners to the K92 mine in Eastern Highlands has been put at K13 million by the operator K92 Mining Ltd.
This is broken down into K10 million for the damage to mobile equipment, K2 million to fixed plant and K1 million to damage underground.
This will likely result in the suspension of underground production for at least one month which may cost the operator US$2.5 million (K7.82 million) loss.
In addition, about 200 workers and contractors will be stood down or laid off for a while.
Mineral Resources Authority managing director Philip Samar said the damage to the mine on Aug 24 was huge.
“The mine employees have gone back to work. But I don’t think they will go straight to commercial production. The damage is significant,” Samar said.
“From the briefing that I have received from the company, it’ll be something like two months before they go into commercial production.”
He said royalties for the months of July, August and even September may not be paid also.
“In terms of return to commercial production, it’s difficult because of all these things they need to be fixed. All the cabling into underground, everything was ripped up. Significant damage there,” he said.
Samar said other costs could be added on later for the mine to return to normal operation.
“Those underground miners are not easy to replace,” he said.
“And to replace one of those trucks, it’s not easy.
“You can’t make a phone call (to order a new one) for them to ship one over just like that.
“There is a leave time in access of six months for one. They destroyed two trucks. You can’t use a wheelbarrow to do that.”

Leave a comment

Filed under Financial returns, Human rights, Papua New Guinea