Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- K92 Mining Inc (KNTNF, Financial) achieved zero lost time injuries over the last 12 months, highlighting their strong safety record.
- The company reported significant progress in their stage 3 and 4 expansions, which are expected to transform K92 into a Tier 1 mid-tier producer.
- K92 Mining Inc (KNTNF) has a strong commitment to ESG, with 94% of their workforce being Papua New Guinea nationals and substantial local economic contributions.
- The process plant set multiple records in terms of throughput and metallurgical recoveries, indicating strong operational performance.
- The company has secured $120 million in credit facilities with Trafigura, providing significant liquidity for their expansion projects.
Negative Points
- Production was impacted by a temporary suspension of underground operations due to a non-industrial fatal incident, affecting March and April outputs.
- Cash costs per ounce increased to $919 from $597 in 2023, primarily due to higher costs of sales and lower byproduct credits.
- All-in sustaining costs have been elevated for the past few quarters due to considerable investments in stage 3 expansion.
- The company faces challenges in ramping up underground operations, with ventilation improvements being a critical factor.
- The timeline for the paste fill plant and other infrastructure upgrades extends into late 2024 and 2025, indicating ongoing capital expenditure and potential delays.
Q & A Highlights
Q: Second half is expected to be significantly better than the first half. What is going to be driving that? Is that basically grade or throughput or both?
A: The second half will primarily be driven by an increase in tonnes processed through the plant, with a marginal increase in grades. The first half, despite challenges, was still one of our best, and we expect a significant ramp-up in throughput in the second half.
Q: In terms of increasing the mining rates, where does the ventilation raise stand in terms of completion?
A: The ventilation raise is due to break through early in September, with the new ventilation system operational by the end of the quarter or early next quarter. This will enable accelerated development and mining rates.
Q: What is the critical path on the plant construction to ensure it's online by the end of Q2 next year?
A: The critical path primarily involves the SAG and ball mills, which have the longest lead times. The mills are on site, and the SAG mill shell will be transported soon. We are on track to start commissioning by the end of Q2. Flotation is the next critical area, and we are comfortable with the progress there.
Q: Are the civil excavations at the plant site complete, and have you handed over the site to the contractor?
A: Yes, all civil excavations are complete, including necessary piling. The contractor has mobilized, and the steelwork subcontractor will start erection in September.
Q: Can you provide an update on the timeline for the paste backfill plant?
A: The paste fill plant, costing over USD 50 million, has long-lead items ordered. We expect to award the construction contract early next quarter, with commissioning planned for Q3 next year. The design allows for better flexibility between the process plant and paste fill plant.
Q: What are the steps for permitting and mining at Arakompa to get ore into the mill?
A: We plan to apply for a mining license next year, covering Arakompa and other areas. Discussions with the MRA and government have started, and we are mapping communities. The earliest we could start mining is 2027, aligning with the capacity of the new plant.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
