K92 Mining Inc. is pleased to announce production results for the second quarter (“ Q2 ”) of 2023 at its Kainantu Gold Mine in Papua New Guinea, of 30,794 oz AuEq or 27,405 oz gold, 1,526,547 lbs copper and 34,001 oz silver, representing an increase of 18% from Q2 2022 and 43% from Q1 2023, respectively. Sales during the quarter were 28,141 oz gold, 1,657,115 lbs copper and 36,253 oz silver.
Underground mine performance strengthened significantly after early April, which was impacted by an area of localized challenging ground conditions. Long hole stoping performed to design, with mining focusing on Kora’s K1 and K2 veins, and Judd’s J1 Vein. During the quarter, 10 levels were mined for a total of 109,155 ore tonnes mined, and the mill head grade averaged 9.23 g/t AuEq or 8.20 g/t gold, 0.66% copper and 11.56 g/t silver. Mining on Kora was conducted on the 1130, 1150, 1170, 1205, 1265, 1285, 1305 and 1325 levels, and Judd on the 1235 and 1325 levels.
In May, a major milestone was achieved; the commissioning of the final component of the Stage 2A Plant Expansion resulting in the doubling of rougher flotation circuit capacity. After commissioning, the process plant recorded a significant increase in metallurgical recoveries for gold and copper. In June, the first full month of the Stage 2A Expansion being fully commissioned, recoveries averaged 93.0% for gold and 92.9% for copper. Recoveries for Q2 averaged 92.4% for gold and 92.8% for copper, the highest since Q4 2021 for both gold and copper, and significantly higher than the 2022 average of 90.4% for gold and 90.5% for copper. Total ore processed during the quarter was 112,471 tonnes. With the Stage 2A Plant Expansion now commissioned, optimization efforts are underway, including to increase throughput that we believe has the potential to be materially greater than its nameplate design.
As previously reported, underground mining operations were briefly suspended on June 28 following an underground vehicular incident (see June 28, 2023 press release - K92 Mining Reports Mine Accident Resulting in Two Fatalities ). There was limited impact to surface activities and surface stockpiles were treated during the suspension. Underground mining operations resumed on July 6 (see July 6, 2023 press release - K92 Mining Resumes Mining Operations at Kainantu Gold Mine ).
Notably, production and cost guidance for 2023 remain unchanged, with the second half of 2023 expected to be our strongest in terms of production, and 2023 production being within the lower half of the guidance range (as previously disclosed). The anticipated stronger production for the second half of 2023 is based on an expected significant increase to our operational flexibility and stope sequencing.
Note - Gold equivalent for Q2 2023 is calculated based on: gold $1,976 per ounce; silver $24.13 per ounce; and copper $3.85 per pound. Gold equivalent for Q1 2023 is calculated based on: gold $1,890 per ounce; silver $22.55 per ounce; and copper $4.05 per pound. Gold equivalent for 2022 is calculated based on: gold $1,793 per ounce; silver $22 per ounce; and copper $3.95 per pound. Gold equivalent for Q4 2022 is calculated based on: gold $1,728 per ounce; silver $21 per ounce; and copper $3.63 per pound. Gold equivalent for Q3 2022 is calculated based on: gold $1,730 per ounce; silver $19 per ounce; and copper $3.51 per pound. Gold equivalent for Q2 2022 is calculated based on: gold $1,870 per ounce; silver $23 per ounce; and copper $4.32 per pound.
John Lewins, K92 Chief Executive Officer and Director, stated, “The second quarter of 2023 has demonstrated that we have moved beyond the localized geotechnical challenges encountered in the second half of Q1, and the initial part of Q2, with the operation delivering near-budget production and showing that Kainantu production is well positioned for the balance of 2023. As we have been guiding since the beginning of the year, the second half of 2023 is expected to be our strongest, driven by stope sequence and operational flexibility significantly increasing through the remainder of the year.
We are very pleased with the performance of the process plant, especially after completing the final commissioning of the Stage 2A Plant Expansion in May. Plant recoveries in Q2 were the highest for both gold and copper since Q4 2021 and in June, the first full month after completing commissioning, strong recoveries of 93.0% for gold and 92.9% for copper were recorded. These recoveries are significantly higher than the 2022 average of 90.4% for gold and 90.5% for copper, and the gold recovery from June already achieved the recovery parameter of 93% in the Kainantu Integrated Development Plan economic study (see September 12, 2022 press release - K92 Mining Inc Announces Robust Kainantu Gold Mine Integrated Development Plan).
For the second half of the year, there is a tremendous amount of sense of anticipation in the Company. On the process plant, now that the Stage 2A Plant Expansion is complete, optimization efforts are underway to thoroughly test its recovery and throughput potential. We believe throughput has the potential to be notably above design nameplate. On mining, we continue to benefit from the arrival of more equipment, with a new jumbo scheduled to arrive this month and multiple long-term infrastructure projects that will drive efficiencies and boost operational flexibility such as the twin incline, also progressing well. We are also active in exploration, with our underground program currently drilling Kora Deeps and Judd South in addition to Kora and Judd. Surface exploration is drilling Judd, Judd South and Kora South, in addition to the A1 Porphyry. And lastly, the tender process for our major growth capital packages for the Stage 3 and 4 Expansions are well advanced and we look forward to providing an update near-term.”
