K92 Mining granted 10-year extension for PNG gold mine

Extension will allow the miner to move ahead with planned expansions for the Kainantu Gold Mine in the Eastern Highlands of Papua New Guinea

K92 Mining, the mining company engaged in the production of gold, copper, and silver at the Kainantu Gold Mine in the Eastern Highlands province of Papua New Guinea, has said that the government has granted it an extension of Mining Lease 150 for the mine for a period of 10 years to June 13, 2034.

In a statement, the company said that the renewal was well in advance of the original expiry date of June 2024, and that it highlighted the significant support from various levels of the Papua New Guinea government and stakeholders for the Kainantu Gold Mine.

Concurrent with this announcement, K92’s Board of Directors have approved the company progressing with its planned Stage 3 and Stage 4 expansions for the mine, increasing the annual processing throughput to 1.2 million tonnes per annum and 1.7 million tonnes per annum, respectively. 

This represents a 140% increase and 240% increase, respectively, from the Stage 2A processing capacity of 500,000 tonnes per annum, the statement added. 

The current Stage 2A Expansion run-rate throughput has already been achieved, with the last major process plant upgrade, the installation of flotation cells to double rougher capacity expected in early 2023, it continued.

John Lewins, K92 Chief Executive Officer and Director stated: “The extension of the Mining Lease by the Government of Papua New Guinea and the approval of the Stage 3 and 4 Expansions by the Board of Directors of K92 are major milestones for the Kainantu Gold Mine, Papua New Guinea, our communities, investors and many other stakeholders.

“When we acquired the Kainantu Gold Mine in 2015, it was under care and maintenance and had a designed throughput of 150,000 tpa – the Stage 4 Expansion targets throughput of 1.7 million tonnes per annum, a more than 11-fold increase. The throughput increase, as outlined in the IDP Stage 4 PEA Case, transforms Kainantu into a Tier 1 mine, with peak production of 500,192 oz AuEq in 2027, low life of mine average all-in sustaining costs of $687/oz (co-product) or $444/oz net of by-product credits and capital self-funded from mine cash flow.”

Benefiting the Local Community 

He added that the expansion would provide a ‘very significant’ boost to the economy of Papua New Guinea, in terms of jobs, exports, royalties and income tax. Furthermore, he revealed that K92 Mining plans to expand its community programs as it expands the mine so that the benefit to the local community continues to grow along with the mine.

“Beyond the mine expansion, as we approach 2023, we are very excited about our exploration programs at Kainantu. We plan to expand the number of drill rigs in 2023 from the 11 currently operating, with a focus on resource expansion of our vein fields and porphyries,” Lewins added.

The Expansions are expected to be transformational for Kainantu, as demonstrated by the company’s Integrated Development Plan (IDP) Stage 4 PEA Case, which outlined a peak annual production of 500,192 oz AuEq in 2027, a life of mine average all-in sustaining cost of $687/oz (co-product) or $444/oz net of by-product credits. 

More importantly, the growth capital cost of US$187 million, sustaining capital cost until operating both process plants of approximately US$60 million per annum, and life of mine sustaining capital cost of US$429 million are expected to be self-funded from mine cash flow at US$1,600/oz Au. 

Tendering for long-lead time items for the expansion has already commenced, the statement concluded.

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