K92 Mining Inc. is pleased to announce it has achieved and declares commercial production effective February 1, 2018 at its Kainantu Gold Mine in Papua New Guinea.
Production for the month of January 2018 exceeded 2,700 ozs gold equivalent (2,500 ozs gold). At this level of production, based on the budgeted monthly operating costs, Total Cash Costs1 for the month of January are expected to be below US$850/oz gold equivalent.
K92 defined commercial production as having commenced stope production underground, achieving a minimum of 60% of designed gold production and a minimum of 90% of designed metal recovery from the process plant over a 30 day period. These metrics were met during the month of January and the company expects them to be maintained going forward and has therefore declared commercial production effective February 1, 2018.
Production levels from Kora North are anticipated to continue building up over the coming months from development and tonnage from the cut and fill stopes, with design levels expected to be achieved during the June 2018 Quarter, when the first long hole stope production commences.
John Lewins, K92 Chief Executive Officer and Director, states, “We are extremely pleased to have reached this very significant milestone of commercial production. That we have achieved this mining the Kora North Lode, eight months after drilling the first discovery hole and just four months after commencing grade control drilling and the treatment of the initial bulk sample is a testament to the professionalism, enthusiasm and ability of the entire team at our Kainantu operation.”
K92 has not based its production decisions on ongoing mine production or 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.
(1) “Total Cash Costs” per ounce is a non-GAAP financial measure which is calculated in accordance with a standard developed by The Gold Institute, a worldwide association of suppliers of gold and gold products that ceased operations in 2002. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled measures of other companies. K92 believes that certain investors would use this information to evaluate K92’s performance and ability to generate liquidity through operating cash flow to fund future capital expenditures and working capital needs. Total cash costs include mine site operation costs such as mining, processing and administration costs, royalties, and selling costs but are exclusive of amortization, reclamation, capital and exploration costs. Total cash costs are then dividend by ounces of gold equivalent produced. This data is furnished to provide additional information and is a non-GAAP financial measure. Total cash costs presented do not have a standardized meaning under IFRS and may not be comparable to similar measures presented by other mining companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS and is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under GAAP.