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K92 Mining's Kainantu gold expansion valued at US$559M after tax

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K92 Mining's Kainantu gold expansion valued at US$559M after tax

An updated preliminary economic assessment on K92 Mining Inc.'s Kora and Kora North gold deposits, part of an expansion project at its Kainantu mine in Papua New Guinea, estimated a pretax net present value of US$710 million, discounted at 5%, with a 350% internal rate of return.

The company noted Jan. 8 that the net present value was estimated at US$559 million after taxes.

The expansion study defined gold equivalent production averaging 120,000 ounces per year over a 13-year mine life, with cash costs of US$429/oz and all-in sustaining costs of US$615/oz.

For the first five years of operations, annual production is expected to average 145,000 ounces of gold equivalent, comprising 135,000 ounces of gold and 2,100 tonnes of copper.

The expansion project includes a doubling of the capacity at the existing processing plant, increasing to 400,000 tonnes per year within approximately 12 months.

Initial capital costs are pegged at US$13.6 million, including US$3.7 million allocated for the plant upgrade, which the company said can be entirely covered using cash flows from existing production. Additional development and sustaining capex are estimated at US$202 million over the life of mine.

K92 Mining CEO John Lewins said the Kainantu mine is expected to produce more than 60,000 gold equivalent ounces in 2019, or more than 80,000 ounces of gold equivalent with the expansion outlined in the PEA. The mine achieved commercial production in early 2018.

According to a November 2018 estimate, the Kora North deposit hosts measured and indicated resources of 850,000 tonnes grading 12.9 g/t of gold, 13.1 g/t of silver and 0.7% copper for 350,000 ounces of gold, 360,000 ounces of silver and 13.3 million pounds of copper, or 390,000 gold equivalent ounces.

The Kora/Eutompi deposit hosts inferred resources of 4.4 million tonnes grading 7.3 g/t of gold, 35 g/t of silver and 2.23% copper, representing 1 million ounces of gold, 4.9 million ounces of silver and 215 million pounds of copper, or 1.6 million gold equivalent ounces.