K92 Mining loses $389,139 (U.S.) in Q3
2019-11-12 20:04 ET - News Release
Mr. John Lewins reports
K92 MINING INC. RELEASES 2019 Q3 FINANCIAL RESULTS
K92 Mining Inc. has released results from its financial statements for the three and nine months ended Sept. 30, 2019.
This third quarter of 2019 saw 32,094 tonnes processed, production of 19,170 oz AuEq from the Kora North deposit, with Cash Costs of US$602/gold oz, and AISC per ounce produced of US$709/gold oz. Revenue for the third quarter was US$20,989,036 with a gross margin of US$8,750,138 which excluded 4,277 ounces of gold that was held in inventory as at September 30, 2019 due to a breakdown of a crane that prevented the ounces to be transported for sale until October 2019.
For complete details, please refer to the consolidated interim financial statements and associated management's discussion and analysis, under the Company's profile on SEDAR (www.sedar.com). All amounts are in U.S. dollars unless otherwise indicated.
John Lewins, K92 Chief Executive Officer and Director, stated, "The Third Quarter saw a substantial strengthening of the financial and commercial position of the Company and the achievement of a number of major milestones.
During the quarter, the Company paid out all the outstanding gold ounces owed to Cartesian Royalty Holdings II ("CRH") and having previously paid US$3 million to extinguish the royalty held by CRH on Kora and Irumafimpa, now has no outstanding liabilities or obligations to CRH. In addition, the Company paid the sum of US$12.5 million to Barrick Gold Corporation ("Barrick") to eliminate the contingent payment of up to US$60 million payable under the original share sale agreement dated June 11, 2014, again leaving no outstanding liability or obligation to Barrick. As a result, as at September 30, 2019, the Company held just under US$18 million in cash, with the only material debt being a US$15 million secured facility with Trafigura Pte Ltd.
The Company celebrated 1,216 days with no Lost Time Injury ("LTI") at the end of the quarter, a very special and industry-leading achievement. At the same time, the progress on the Kainantu Mine Expansion Project has been very pleasing with a number of significant capital projects completed, including the incline bypass and debottlenecking, the first phase of the camp expansion and the installation of the gravity circuit in the plant which is currently being commissioned.
With production of just under 20,000 oz AuEq for the Third Quarter and just under 60,000 oz AuEq for the year-to-date and despite significant disruption associated with the expansion project, we have confirmed our conviction that we will achieve the top half of our updated AuEq production guidance, while delivering all-in sustaining costs at the bottom of or below our guidance."
MINE OPERATING ACTIVITIES
Three months ended September 30, 2019Nine months ended September 30, 2019 Operating data Head grade (Au g/t) 19.20 19.44 Gold Recovery (%) 94.1% 93.7% Gold ounces produced 18,636 56,741 Gold ounces equivalent produced (1) 19,170 58,610 Pounds of copper produced 209,287 735,131 Silver ounces produced 5,284 17,742 Financial data (in thousands of dollars) Gold ounces sold 15,652 52,893 Gold ounces produced 18,636 56,741 Revenues from gold sales US$20,989 US$68,277 Mine operating expenses US$9,670 US$28,184 Depreciation and depletion US$2,569 US$5,886 Statistics (in dollars) Average realized selling price per ounce, netUS$1,341 US$1,291 Cash cost per ounce (1) sold US$602 US$507 All-in sustaining cost per ounce (1) sold US$740 US$650 All-in sustaining cost per ounce (1) producedUS$709 US$638 Note:
(1)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 of the Company's management's discussion and analysis dated November 12, 2019, available on SEDAR, for reconciliation of these measures.
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.
Review of financial results
Net income
The Company's net loss for the three months ended September 30, 2019, totalled US$389,139, or loss per share of US$0.002 compared with US$1,831,372 or US$0.01 per share for the three months ended September 30, 2018.
The loss was attributable to the full repayment of gold deliverable to CRH Funding II Pte Ltd during the quarter. K92 recorded its final amortization of deferred loss (see Note 10 to the financial statements) of $3,279,469 and its final fair value loss on the gold purchase agreement of $802,386.
In addition, 4,277 ounces of gold was held in inventory as at September 30, 2019 due to a breakdown of a crane that prevented the ounces being transported for sale until October 2019.
Operating Cash Flow
The Company's operating cash flow for the nine months ended September 30, 2019 totalled US$12,910,698 or US$0.06 per share compared with US$11,871,213 or US$0.07 per share for the nine months ended September 30, 2018. Operating cash flow before working capital adjustments for the nine months ended September 30, 2019 totalled US$31,652,183 or US$0.15 per share compared with US$11,352,456 or US$0.07 per share for the nine months ended September 30, 2018.
Qualified Person
K92 mine geology manager and mine exploration manager, Andrew Kohler, PGeo, a qualified person under the meaning of Canadian National Instrument 43-101 {&#A A ; } Standards of Disclosure for Mineral Projects, has reviewed and is responsible for the technical content of this news release. Data verification by Mr. Kohler includes significant time onsite reviewing drill core, face sampling, underground workings, and discussing work programs and results with geology and mining personnel.
For further information regarding the Kainantu gold mine, please refer to the technical report dated January 8, 2019, and entitled, "Independent Technical Report, Mineral Resource Estimate Update and Preliminary Economic Assessment of Kora North and Kora Gold Deposits, Kainantu Project, Papua New Guinea," available on SEDAR.
About K92
K92 Mining Inc. is engaged in the production of gold, copper and silver from the Kora and Kora North deposits of 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 has commenced an expansion of the mine. An updated Preliminary Economic Assessment on the property was published in January 2019. K92 is operated by a team of mining company professionals with extensive international mine-building and operational experience.
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