Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- K92 Mining Inc (KNTNF, Financial) reported a record quarterly production of 44,304 ounces gold equivalent, with a head grade of 13.8 grams per tonne, the highest since Q4 2020.
- The company achieved significant cost reductions, with cash costs at $584 per ounce and all-in sustaining costs at $941 per ounce, well below the 2024 guidance.
- K92 Mining Inc (KNTNF) has a strong financial position with $120.3 million in cash and cash equivalents and access to additional liquidity through undrawn credit facilities.
- The company is on track with its Stage 3 and Stage 4 expansions, aiming to increase production to over 300,000 ounces per annum by 2025 and over 410,000 ounces by 2027.
- K92 Mining Inc (KNTNF) has made significant progress in its ESG initiatives, including a $6.6 million infrastructure tax credit scheme project to upgrade local roads, benefiting community development.
Negative Points
- The company has experienced elevated all-in sustaining costs in recent quarters due to significant investments in the Stage 3 expansion.
- There is a reliance on the completion of infrastructure upgrades and recruitment of specialized personnel to achieve increased mining productivity and development rates.
- The company has drawn $60 million from its credit facilities, indicating a reliance on external financing for expansion projects.
- Despite strong production, the company faces potential challenges in maintaining high-grade production levels in the future, as indicated by the focus on exploration to bring higher-grade resources earlier.
- The company is exposed to commodity price fluctuations, although it has purchased put option contracts to mitigate downside price risk.
Q & A Highlights
Q: Can you provide more insight into the mobilization of specialist jumbo operators and consultants to optimize advance rates?
A: John Lewins, CEO, explained that recruiting specialized jumbo operators is ongoing, with some already starting. A specialist group will be on-site in early 2025. The company saw improvements in meters advanced, with over 900 meters achieved last month, aided by additional operators and infrastructure improvements, including ventilation upgrades expected later this month.
Q: Could you update us on the progress of the raise boring reaming with the two units you have?
A: John Lewins, CEO, stated that the smaller unit is currently on a small fend rise, while the larger unit, with a five-meter diameter, is transitioning from drilling the pilot hole to starting the reaming process.
Q: What are the financial highlights from the third quarter of 2024?
A: Justin Blanchet, CFO, reported revenue of $122.7 million, with 45,248 gold ounces sold at an average price of $2,388. The cash cost was $584 per ounce, and the all-in sustaining cost was $941 per ounce. The company ended the quarter with $120.3 million in cash and cash equivalents.
Q: How is the Stage 3 and Stage 4 expansion progressing, and what is the expected impact?
A: John Lewins, CEO, noted that 69% of the growth capital for Stage 3 and Stage 4 has been spent or committed. The expansions aim to transform K92 into a Tier 1 mid-tier producer, increasing production to over 300,000 ounces per annum by mid-2025 and over 410,000 ounces by the second half of 2027.
Q: Can you discuss the recent exploration results at Arakompa and their significance?
A: John Lewins, CEO, highlighted significant exploration success at Arakompa, with step-out holes discovering a potential thick high-grade zone. The bulk tonnage strike extended by 50% to over 750 meters. The company plans to announce a maiden resource in Q1 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
