K92 Awards Contract for Installation of Gravity Circuit at Kainantu Gold Mine

VANCOUVER, British Columbia, Feb. 20, 2018 (GLOBE NEWSWIRE) -- K92 Mining Inc. (“K92”) (TSXV:KNT) is pleased to advise it has awarded the contract from the installation of a gold gravity recovery circuit into the Process Plant at its Kainantu Gold Mine in Papua New Guinea to Mincore Pty Ltd (“Mincore”).

Previous testwork carried out on samples from the Kora deposit indicated that up to 65% of the gold could be recovered by gravity concentration. These results are supported by ongoing plant scale testwork carried out by K92 on Kora North material currently being treated through the process plant. The gravity circuit will comprise centrifugal concentrators and a gold room containing a shaking table and induction furnace for the production of gold dore bars.

The cost of the gravity circuit is expected to be US$1 million and the installation of the gravity circuit is expected to improve gold recovery by between 2% and 5% and also increase the payment terms for the gold produced in dore form by approximately 3% to 4% giving a net increase in gold revenue of at least 4%.

The ongoing high grades being treated through the process plant make the installation of the gravity circuit a priority. The feed grade to the plant has averaged almost 20 g/t Au during February, requiring the throughput of the plant to be significantly reduced to ensure acceptable recoveries are achieved. While currently gold recoveries of over 92% are being achieved, testwork has indicated that the installation of a gravity circuit will allow design throughput to be maintained while also achieving up to 95% recovery. Importantly the gravity circuit being installed will be sized to be able to treat the increase in throughput envisaged in the Preliminary Economic Assessment (“PEA”) referenced below, of 400,000 tpa.

Mincore carried out the refurbishment of the Kainantu Processing Plant prior to the restart of operations and also completed the metallurgical component as reported in the “Independent Technical Report, Mineral Resource Update and Preliminary Economic Assessment of Irumafimpa and Kora Gold Deposits, Kainantu Project, Papua New Guinea," with an effective date of March 2, 2017.

John Lewins, K92 Chief Executive Officer and Director, states, “The award of the contract for the installation of the gravity circuit is not only a major step in optimizing the performance of the process plant when treating Kora North material, but also the first step in increasing the plant capacity from 200,000 tpa to 400,000 tpa. The anticipated payback for the US$1 million investment, based on an improved gold recovery and payability, is less than one year. We are also extremely pleased to be continuing our association with Mincore, who completed the initial refurbishment of the Kainantu Process Plant within a very tight budget and who are also extremely familiar with both the process plant and the metallurgy of the Kora deposit.”

K92 has filed and made available for download on the company's SEDAR profile a technical report titled "Independent Technical Report, Mineral Resource Update and Preliminary Economic Assessment of Irumafimpa and Kora Gold Deposits, Kainantu Project, Papua New Guinea," with an effective date of March 2, 2017, that provides additional information on the geology of the deposits, drilling and sampling procedures, lab analysis, and quality assurance/quality control for the project, and additional details on the resource estimates.

The PEA estimates for Kora, based on the current resource estimates (4.36 million tonnes of 7.3 g/t Au, 35 g/t Ag and 2.23 per cent Cu):

• Over a nine-year operating life, the plant would treat 3.2 million tonnes averaging 7.1 g/t Au, 25 g/t Ag and 1.7 per cent Cu (9.3 g/t AuEq (1));
• This would generate an estimated positive cash flow of $537-million (U.S.) using current metal prices if 15-metre levels are used in mining; if 25-metre levels are used, then net cash flows are estimated as $558-million (U.S.); this cash flow includes conceptual allowances for capital;
• Production of an estimated average of 108,000 AuEq (1) ounces per annum over an eight-year period from year 2 through to year 9;
• An estimated pretax net present value (NPV) of $415-million (U.S.) for 25-metre levels, or $397-million (U.S.) for 15-metre levels, using current metal prices, exchange rates and a 5-per-cent discount;
• An estimated after-tax NPV of $329-million (U.S.) for 25-metre levels, or $316-million (U.S.) for 15-metre levels, using current metal prices, exchange rates and a 5-per-cent discount;
• Initial capital cost is estimated to be $13.8-million (U.S.), including the $3.3-million (U.S.) for the plant upgrade identified in the Mincore scoping study, but excluding the proposed Kora exploration inclines and diamond drilling; sustaining capital cost is estimated to a further $64-million (U.S.) spent over the life of the Kora mining for 25-metre levels, or $83-million (U.S.) for 15-metre levels;
• Operating cost per tonne is estimated to be $125 (U.S.) per tonne for 25-metre levels, or $126 (U.S.) per tonne for 15-metre mining levels;
• Excluding initial capital expenditure of $14-million (U.S.), cash cost is estimated to be $547 (U.S.) per ounce AuEq (inclusive of a 2.5-per-cent net smelter return (NSR) royalty) and all-in sustaining cost (AISC) of $619 (U.S.) per ounce AuEq for 25-metre mining levels, or $549 (U.S.) per ounce (inclusive of a 2.5-per-cent NSR royalty) and AISC of $644 (U.S.) per ounce AuEq for 15-metre mining levels.

Metal prices used were $1,300 per ounce for gold, $18 (U.S.) per ounce for silver and $4,800 per tonne for copper.

(1) Gold equivalent calculated on above metal prices.

Kora remains open for expansion in every direction and strongly mineralized at the extent of all drilling.

The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. 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.

The technical report contains a full description of all underlying assumptions relating to the PEA. Mineral resources that are not mineral reserves and do not have demonstrated economic viability.

M in Table is millions. Reported tonnage and grade figures are rounded from raw estimates to reflect the order of accuracy of the estimate. Minor variations may occur during the addition of rounded numbers. Gold equivalents are calculated as AuEq = Au g/t + Cu%*1.52+ Ag g/t*0.0141.

On behalf of the company,

John Lewins
Chief Executive Officer and Director

Suite 488 – 1090 West Georgia Street
Vancouver, British Columbia
Canada V6E 3V7

Telephone: (604) 687-7130
Facsimile: (604) 608-9110

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. All statements that address future plans, activities, events or developments that the Company believes, expects or anticipates will or may occur are forward-looking information, including statements regarding the realization of the preliminary economic analysis for the Project, expectations of future cash flows, the proposed plant expansion, potential expansion of resources and the generation of further drilling results which may or may not occur. Forward-looking statements and information contained herein are based on certain factors and assumptions regarding, among other things, the market price of the Company’s securities, metal prices, exchange rates, taxation, the estimation, timing and amount of future exploration and development, capital and operating costs, the availability of financing, the receipt of regulatory approvals, environmental risks, title disputes, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes, claims and limitations on insurance coverage and other risks of the mining industry, changes in national and local government regulation of mining operations, and regulations and other matters.. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.