Earnings call transcript: K92 Mining Q1 2025 beats earnings expectations

K92 Mining Inc. reported strong financial results for the first quarter of 2025, with earnings per share (EPS) of $0.29, significantly surpassing the forecast of $0.1438. The company achieved record quarterly revenue of $144.6 million, exceeding the expected $85.41 million. Following the announcement, K92 Mining’s stock price increased by 2.22% to close at $13.62, reflecting investor optimism. According to InvestingPro data, the company maintains a "GREAT" financial health score of 3.44, with 14 additional ProTips available to subscribers highlighting the company’s strong fundamentals.

Key Takeaways

• K92 Mining’s EPS of $0.29 outperformed the forecast by over 100%.
• Record quarterly revenue of $144.6 million, a 142% increase year-over-year.
• Stock price rose by 2.22% following the earnings announcement.
• Stage 3 expansion nearing completion, targeting increased production capacity.

Company Performance

K92 Mining demonstrated strong performance in Q1 2025, driven by increased gold production and favorable market conditions. The company sold 45,886 ounces of gold at an average price of $2,739 per ounce, contributing to record revenue levels. With a robust gross profit margin of 59.43% and return on equity of 27%, this performance marks a significant improvement compared to the same quarter last year, showcasing the company’s operational efficiency and strategic positioning within the gold mining sector.

Financial Highlights

• Revenue: $144.6 million, a 142% increase from Q1 2024.
• Earnings per share: $0.29, more than double the forecast.
• Cash flow from operating activities: $80.9 million, setting a new quarterly record.
• Cash costs: $559 per ounce, down from $934 in Q1 2024.

Earnings vs. Forecast

K92 Mining’s actual EPS of $0.29 significantly exceeded the forecast of $0.1438, resulting in a positive surprise of over 100%. The company’s revenue also surpassed expectations, with actual figures reaching $144.6 million compared to the forecasted $85.41 million. This marks a strong performance relative to previous quarters, highlighting the company’s ability to capitalize on favorable market conditions.

Market Reaction

Following the earnings announcement, K92 Mining’s stock price increased by 2.22%, closing at $13.62. This movement reflects investor confidence in the company’s financial health and growth prospects. The stock’s performance is notable given its proximity to the 52-week high, with a remarkable 66.21% return over the past year. InvestingPro analysis suggests the stock is currently fairly valued, trading at a P/E ratio of 20.45 and a Price/Book ratio of 4.85.

Outlook & Guidance

K92 Mining is focused on completing its Stage 3 expansion, which is 87% complete and expected to commission in late Q2 2025. This expansion aims to increase production capacity to over 300,000 ounces of gold equivalent annually. The company also plans to further increase its exploration budget post-Stage 3, targeting high-potential areas for growth. Analysts maintain a bullish outlook, with consensus recommendations trending strongly positive. Get detailed insights and access the comprehensive Pro Research Report for K92 Mining, along with 1,400+ other stocks, exclusively on InvestingPro.

Executive Commentary

John Lewins, CEO of K92 Mining, expressed satisfaction with the company’s performance, stating, "We’re obviously clearly very happy with the performance of the operation." He also highlighted the strategic importance of the Stage 3 expansion, noting, "Upon delivery of the Stage three expansion, we expect not only a major inflection in our production and free cash flow, but also a significant ramp up in our exploration budget."

Risks and Challenges

• Gold price volatility could impact revenue and profitability.
• Potential delays in the completion of the Stage 3 expansion.
• Operational risks associated with mining activities in Papua New Guinea.
• Regulatory changes affecting the mining sector.

K92 Mining’s Q1 2025 results underscore its strong operational performance and strategic growth initiatives, positioning the company favorably in the competitive gold mining industry.

Full transcript - K92 Mining Inc (KNT) Q1 2025:

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the K92 Mining twenty twenty five First Quarter Financial Results Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

I would now like to turn the conference over to David Medallac, President and COO. Please go ahead.

David Medallac, President and COO, K92 Mining: Thank you, operator, and thanks, everyone, for attending K92 Mining’s twenty twenty five First Quarter Results Conference Call. We hope you and your families are doing well. In addition to myself, we have on the line John Lewins, chief executive officer and director and Justin Blanchett, chief financial officer. I would also like to remind everyone that after the remarks from management, the call will be followed by a q and a session. As we will be making forward looking statements during the call, please refer to the cautionary notes and risk disclosure in our MD and A and slide two of the webcast presentation.

Also, please bear in mind that all dollar amounts mentioned in the conference call are in United States dollars unless otherwise noted. Now I’ll turn it over to John to provide you with an overview.

John Lewins, Chief Executive Officer and Director, K92 Mining: Well, thank you, David, and welcome, everyone. We begin, as always, with safety, very much K92’s number one priority. I’m pleased to report there have been no lost time injuries recorded for the first quarter, marking yet another major safety milestone with now seven consecutive zero LTI quarters. During this time, two independent safety audits were completed. And from those audits, a number of actions have been identified and many actions have already been taken and completed.

Concurrently, there’s been a major focus within the organization on reinforcing the safety first culture. Our employees have responded well with a significant increase in hazard identifications and risk assessments completed. Our safety team has been expanded on-site. Safety technologies have been enhanced and more technologies are planned to be introduced in the near future. And as stated in the previous conference calls, we take the increased lost term injury frequency rate in 2023 extremely seriously, while also noting that historically, K-ninety two has operated one of the safety records in Papua New Guinea and the broader Australasian region, as shown in this slide.

I’d like to reiterate that K-nine-two relentlessly pursues our goal of achieving zero harm among our workforce. Earlier this month, the inaugural K-nine Two Pairs Award ceremony was held in Port Moresby, where we recognized and celebrated outstanding individuals and teams within our organization that have demonstrated exemplified our vision, mission, and most importantly, our values. CARES is the acronym for our five values that we strive to uphold: collaborative teamwork, accountability in everything we do, respect others, excellence in outcomes and safety always. Winners receive a formal certificate and a cash prize in recognition of their outstanding contributions. The ceremony was attended by several government officials, including Gerry Gary, Managing Director of Mineral Resources Authority of Papua New Guinea, who delivered an inspirational closing speech as shown there on the image on the right.

The event was also featured in local media, including on television and on the news. And the CARES Awards are part of our ongoing commitment to building a strong values driven culture at K-nine-two, where our people are recognized, celebrated and empowered to lead by example. Moving on to operational performance. During the quarter, the Kanante Gold Mine produced 47,817 ounces gold equivalent with cash costs of $559 per ounce gold and all in sustaining cost of $10.10 dollars per ounce gold or on a co product basis, cash costs of $616 per ounce gold equivalent and all in sustaining cost of $10.48 dollars gold equivalent. This marks the second highest quarterly production on record and represents a 74% increase compared to Q1 twenty twenty four.

As annotated on the chart, all in sustaining costs have been notably higher than cash costs since the beginning of 2023 due to K9-two’s ongoing considerable investment in the Stage three expansion, with costs costs expected to decline considerably after delivering the expansion, which will be discussed later in the presentation. In terms of throughput, a total of 103,449 tonnes was processed at a head grade of 14.9 grams per tonne gold equivalent. The elevated head grade was significantly above budget, benefiting from higher grade stopes from both Kora and Judd, as well as a positive gold reconciliation relative to the latest independent mineral resource estimate. Images you can see here are shown from Judd, an example of some of the high grade areas that were mined. In terms of key operational quarterly physicals, total material mined was the second highest on record, with plant throughput optimally reduced to maximize recoveries due to the high head grades.

The last few quarters have also provided us with the opportunity in the underground mine to prioritize waste development for the Stage three expansion, resulting in a record 211,000 tons of waste being mined. On development, a new monthly development advanced record was set in March with nine fifty four meters achieved, 6% greater than the previous monthly record set in the fourth quarter of twenty twenty four, and nearing the Stage three expansion run rate of 1,000 meters per month. The development rates are expected to continue to improve in 2025 on the back of various key enablers being fully integrated. And these include the power upgrade, which was completed in Q4 twenty twenty four the interim primary ventilation upgrade, which was completed in January. This resulted in a 50% increase in airflow, which was notably higher than the 30% increase expected confirming that the modeled airflow resistance factors for the expansion are conservative.

Second stage of the interim water upgrade, which was completed again at the January providing clean water service to the main mine. The number of available headings has also significantly increased and will continue to increase through the year driven by opening additional mining fronts. Also of note, high speed development experts have been hired and we will have additional jumbles within the company to be introduced as we require them. Working with those high speed development experts, a major focus continues to be placed on an enhanced maintenance program to increase equipment availability. And then concurrent with these enablers, we’re on the cusp of a productivity technology leap forward with the underground fiber optic network nearly completed.

This will unlock multiple productivity improvements in the coming months, including surface remote loading, real time fleet management systems, personnel tracking and introduction of DesWig Ops for enhanced short interval control. As previously mentioned, throughput during the quarter was deliberately reduced to maximize recoveries due to the high head grades. Q1 achieved very strong recoveries of 95.8% for gold and 95.1% for copper, both near records. Recoveries for the last four quarters have been notably higher than the updated DFS. This performance is driven by an improved reagent mix, while also benefiting from higher gold head grades in the second half of twenty twenty four and the first quarter of this year.

The strong performance of the Stage 2a plant bodes well for the Stage three plant, which is a more optimal circuit design, improved technologies and instrumentation, including online analysis. The multiple daily, weekly, monthly throughput records well above current design demonstrates the significant potential upside of the Stage three process plant. Notably, Stage three was designed using the same conservative parameters as the Stage 2A plant. To better realize the potential, the Stage three plant under construction includes design allowance for cost effective expansion through upgrades to flotation and filter press capacity. We believe these upgrades will enable the plant to achieve the 1,800,000 tonnes per annum throughput required for the Stage IV expansion, allowing the Stage IIa plant to be repurposed for alternate feed sources.

I’ll now turn the call over to our Chief Financial Officer, Justin Blanchet, to discuss our financial results for the first quarter.

Justin Blanchett, Chief Financial Officer, K92 Mining: Thank you, John, and hello, everyone. During the first quarter of twenty twenty five, we had record quarterly revenue of $144,600,000 an increase of 142% compared to Q1 twenty twenty four. We sold 45,886 gold ounces at an average selling price of $2,739 compared to 27,996 ounces at an average selling price of $20.16 dollars in the prior year. As at 03/31/2025, there were 4,425 gold ounces in inventory including both concentrate and dore, a decrease of five thirty six gold ounces when compared to 12/31/2024 due to timing of sales. During the first quarter of twenty twenty five, cost of sales was $34,100,000 compared to $40,100,000 in the prior year or $27,400,000 compared to $32,900,000 when excluding non cash items.

Lower cost of sales was primarily due to a higher proportion of capital tons mined relative to operating tons, resulting in increased capitalization of development expenditures when compared to Q1 twenty twenty four. Q1 ’20 ’20 ’5 cash flow from operating activities before changes in working capital was $80,900,000 compared to $20,000,000 in the prior year, a new quarterly record. As of 03/31/2025, we had $182,100,000 in cash, cash equivalents and term deposits, while spending $30,900,000 in expansion capital during the quarter. We had a record working capital balance of 187,700,000 and a record net cash balance of $123,000,000 The company also has a debt balance of 60,000,000 During the quarter, the company drew $20,000,000 from the Canadian credit facility and repaid the Papua New Guinean credit facility in full. As a result, the company no longer holds any cash designated as restricted cash for the purposes of security under the loan with Trafigura.

As John mentioned, during the quarter, the Kanantu gold operations produced 45,735 gold ounces, 1,141,379 pounds of copper, and 34,085 ounces of silver or 47,817 ounces of gold equivalent. We sold 45,886 ounces of gold, 1,069,373 pounds of copper, and 32,439 ounces of silver. Net of byproduct credits, we incurred a cash cost of $559 per ounce and an all in sustaining cost of $10.10 dollars per ounce of gold, which was significantly below our realized selling price of $2,739 per ounce. Our first quarter byproduct cash cost per ounce of gold decreased to $559 from $934 in Q1 twenty twenty four. The decrease was due to significantly higher gold ounces sold, increased capitalization of development expenditures due to a higher proportion of capital tons mined relative to operating tons, and lower variable costs associated with reduced throughput.

These were partially offset by lower byproduct credits. It is important to note that we will see a downward pressure on costs via economies of scale as operations ramp up and Stage three expansion is complete. I will now turn the call back to John to continue with the rest of the presentation.

John Lewins, Chief Executive Officer and Director, K92 Mining: Well, thank you, Justin. For the Exploration and Growth section, we begin with an update on the Stage three and Stage four expansions, which plan to fundamentally transform K9-two into a Tier one mid tier producer through sequentially increasing production to over 300,000 ounces gold equivalent per annum with the commissioning of Stage three expansion, targeting the second half of second quarter twenty twenty five to start commissioning and then to over 400,000 ounces gold equivalent per annum with Stage IV targeting second half of twenty twenty seven. As at the April, ’70 ’7 percent of the growth capital had either been spent or committed with a significant portion of the project on a fixed price lump sum basis. Importantly, the project is fully funded and our financial position is strong. K9-two has a cash balance at the end of Q1 of $182,000,000 in cash.

We also have access to significant amounts of liquidity through undrawn credit facilities with $60,000,000 available to drawdown on demand plus an additional $30,000,000 of liquidity through an accordion feature. The recent record levels of production and the record gold price environment has resulted in strong free cash flow generation. As Justin noted, our net cash balance has significantly grown during the last three quarters even after considerable capital expenditure during that period. And lastly, our commodity price downside is protected through the cost effective purchase of put option contracts. Earlier this month for a little under $4,000,000 or $33.25 per ounce, we purchased put option contracts covering May until the end of twenty twenty five for 15,000 ounces of gold per month at $3,000 per ounce to protect against downside price risk.

But to be clear, it’s not a hedge. We will sell at spot if it is higher than $3,000 an ounce. This is an insurance, and we retain full exposure to the upside in the commodity price. In summary, our financial position and outlook is strong. I’ll now provide an update on the construction progress for the Stage three expansion.

Starting with the underground, the Twin Incline is complete. The first ore pass has been developed and is on schedule to be fully operational in Q3. The Puma Incline has approximately 200 meters of development remaining and is scheduled for portal breakthrough in Q3. On ventilation, our raised bore is completing a two leg fresh air rise. With the first leg completed, the second leg is being developed and on schedule for completion mid-twenty twenty five.

Upon completion of the Puma breakthrough and the ventilation raises, we expect each will contribute an additional 50 cubic meters per second of airflow to the circuit, representing a combined 60% increase to airflow from current levels. Through the previously conservative modeled mine resistance factors, we now expect to not need the new primary vent fans to meet Stage three vent requirements. These fans are really needed for Stage four, so our plan is to opportunistically install them in 2026 to minimize any disruption. On Pasteville, commissioning is targeted to commence in late Q4. And while the infrastructure is being transformed, so is the number of mining fronts with a significant increase underway to drive the ramp up.

It’s important to highlight for several quarters, we have leveraged the high head grades to prioritize waste development with Q1 marking a record for waste tonnes mined. This has resulted in a notable increase in our inventory of areas ready for long haul stoping, which we will leverage in the second half of the year as we ramp up ore tonnes for the Stage three expansion. We now move to the latest drone footage taken just a few days ago from the construction site of the 1,200,000 ton per annum Stage three expansion process plant. Starting at the dry end of the plant, in the foreground, the ROM pad continues to get built with waste rock. At the crusher, the ROM bin and the crusher mechanical and structural installation is complete.

Installation of wing walls and electric fit out is underway. The conveyor to the surge bin is complete. The surge bin and reclaim area are also structurally and mechanically complete. On the far side of the surge beam out of view, work is underway on the motor and belt installation. Preassembly of the conveyor to connect to the grinding circuit is complete, and installation will commence shortly.

The high voltage switch room is installed, including HV cables to their respective crusher and grinder switch rooms. Temporary power to expedite commissioning is also being installed. Commissioning of grid power to the process plant is planned for June. At the grinding circuit, both the SAG and ball mill shells and heads were installed last month. Preparation of girth gear and bearings is ongoing.

High pressure lubrication piping is practically complete for both mills. 80% of all rubber line piping at the mill area has been installed. Electrical installation is ongoing. The cyclones and the MCC are complete. For the flotation area, all mechanical, structural, and tanks are installed.

Major cable routes have been completed. Final grouting of mechanical equipment and level piping spools is 95% complete. Electrical installation is ongoing. The multi stream analyzer is installed with piping mainly completed. In terms of the thickeners, the concentrate thickener is complete, the tailings thickener construction is complete, has been sealed and is ready for final hydro test.

For the concentrate filter presses, all structural, mechanical and tanks are installed with piping and electrical installation ongoing. As at the April, ’80 ’7 percent of the Stage three process plant construction is complete. In terms of the ancillary buildings, the interim power station and warehouse are complete. The new Cumian Creek Camp is also almost complete. All rooms are installed and available for occupation.

The final project is the kitchen and dining facilities. Now this has added an additional 160 ensuite rooms. The camp is initially being used for excess capacity during construction and will then obviously be repurposed to provide accommodation for a Stage IV expansion. The primary power station is progressing well, with civil works advanced for the genset installation, plus all the underground electrical conduit having been installed, tested and are now complete. Stage one commissioning is planned to commence in June.

In terms of the new maintenance facilities, all structural steel and buildings are on-site. The main workshop is progressing well with the foundations and footings poured, as shown in the image. On the paste fill project, the underground paste plant construction contract has been self awarded. Tailings filtration plant, surface storage system earthworks are progressing, and the award of the contract for these two packages is planned for later this month. All long lead items have been ordered.

Front end engineering design work is complete. Completion of detailed engineering work and design by GR Engineering is nearly complete, and quarter engineering is well advanced. In the first quarter, we were honored to host a delegation from the Merobi And Eastern Highlands Provincial Governments, where our various licenses and leases are located. In February, we welcomed a delegation led by the Governor of Morobe Province, the Honorable Luther Wengi, as shown on the left and in March, a delegation led by the Governor of the Eastern Highlands Province, the Honorable Simon Sear, shown on the right. Both visits received strong media coverage and included tours of the underground process plant Stage three construction and a helicopter tour of our exploration areas.

These visits also underscore our strong commitment to transparent stakeholder engagement and responsible mining. Moving on to exploration. We’re drilling the Cora Cora Scythe Jad Scythe vein system from underground plus the Aracampa vein system from the surface. At Kora, during the first half of the year, drilling has focused on increasing drill density at the Twin Incline mining front and above Main Mine ahead of Stage three expansion ramp up. Recent drilling has delivered strong results, expanding high grade zones and also intersecting near mine infrastructure dilatant zones as annotated in the long section here.

Later in the year, a stronger focus is planned on drilling Cora Deeps at depth, while also continuing our step out drilling to the south. At Judd, drilling results continue to extend high grade mineralization up dip and above the main mine workings as shown in the top black ellipses. Multiple high grade results outside of these of the resource have also been recorded. Similar to Cora, Judd Deep’s drilling is planned for the second half of the year. On February 20, we announced the latest 13 holes at Aracampa, bringing the total number of holes drilled in the maiden program to 43 holes.

A major highlight from the results was a confirmation of two significant high grade veins, AR1 and AR2, which recorded a significant average true thickness of approximately three meters over large strike lengths of approximately six seventy five and seven seventy five meters, respectively, for AR1 and AR2. The veins have a strong high grade drilling rate at plus five gram per ton of 50% for AR-one and forty two % for AR-two and plus 10 gram per ton gold equivalent 28% for AR-one and 21% for AR-two. To date, step out drilling has focused towards the South, and we are nearing a major milestone in our exploration capabilities with the arrival of a compact, heli portable rig in June. This rig will enable drilling of the northern extension of Aracampa, which as shown in the ellipse is a large, highly prospective target area that also features a strong vector from artisanal workings. We see high potential for underground mining at Aracompa.

The drilling results also extended the interpreted bulk tonnage zone approximately 150 meters south to a total strike length of 900 meters, vertical depth of up to six fifty meters and average true thickness recorded from drilling of approximately 48 meters. The bulk zone remains open in multiple directions and will also be targeted from the northern extension drilling as shown in the ellipse. We view it as a longer dated project with the high grade the priority for the near term mining. Aracanpa’s growth over the past year has been exceptional. The image on the left shows drilling as of February 2024, while the far right highlights our latest results just one year later.

This progress has driven an increase in drilling activity from one rig at the start of 2024 to up to four rigs operating. Looking ahead, our surface drilling capabilities will be significantly enhanced with the arrival of the new heli portable rig in June, a rebuild of one of our surface rigs entering production this month and two additional rigs recently ordered. Lastly, we highlight the significant pipeline of highly prospective exploration targets. The colored icons indicate where we’re currently drilling and the black icons indicate where we plan to drill in the next twenty four months. Upon delivery of the Stage three expansion, we expect not only a major inflection in our production and free cash flow, but also a significant ramp up in our exploration budget aiming to target many of these highly prospective targets concurrently.

With that, operator, we’d like to commence the Q and A session. Thank you.

Conference Operator: Thank you. We will now begin the question and answer session. The first question comes from Ralph Profiti with Stifel. Please go ahead.

Ralph Profiti, Analyst, Stifel: Thanks, operator, and good day, John, David and team. Thanks for taking my questions. The first one is whether you can help me reconcile some of the commentary around positive gold reconciliation. John, can you help us understand by domain or by mining front? Is this something that’s evenly distributed between K1, K2 and Judd?

It would be very helpful. Thank you.

John Lewins, Chief Executive Officer and Director, K92 Mining: Thanks, Ralph. I can’t give you the precise breakdown between K1, K2 and Judd. It was it was spread across them and obviously was was fairly significant. It was a high grade area that they were high grade stopes that came out as higher grade, but I I can’t really give you the reconciliation between the individual ones.

Ralph Profiti, Analyst, Stifel: Okay. I understand. Maybe if you can address sort of some of the pinch and swell characteristics that are happening or contracting contrasting that against maybe some selective mining on high grade areas, that would also be helpful.

John Lewins, Chief Executive Officer and Director, K92 Mining: Sorry. How do you mean, Rob? Sorry.

Ralph Profiti, Analyst, Stifel: Yes. Thanks, John. Just wondering if you can talk a little bit about pinch and swell in some of these areas where you’re getting the higher grades and where you’re seeing positive reconciliation. Has that been a factor?

John Lewins, Chief Executive Officer and Director, K92 Mining: Pinch and swell hasn’t really been a factor that we’ve seen. We generally get fairly consistent in terms of our wits overall. Okay. You do get a often with these a central higher grade section surrounded by lower grades.

Ralph Profiti, Analyst, Stifel: Understood. And and if I can just ask a follow-up It seems like the design allowances allowed for the plant to perform very well just by optimizing that flotation reagent mix. And it doesn’t sound like there were any large changes to things like grinding or paste plant. I’m just wondering, is that the right characterization of how the plant was able to respond to some of these higher grades and the reconciliation?

John Lewins, Chief Executive Officer and Director, K92 Mining: Yes. So in terms of grind, no. In fact, recovery is not not grind sensitive. We’re probably grinding in the plant finer than we need to. Mhmm.

It is in part this change to the reagent mix, and that’s certainly been a contributing factor. Mhmm. Second thing is retention time. And that is fairly key, especially when you’ve got high higher grades. Hence, reduction in throughput is is directly designed to increase our retention time in the flotation.

The The other point I’d make is that we get a higher percentage of gravity recovery with higher grade head with higher head grades.

Andrew Mikitchuk, Analyst, BMO Capital Markets: Yeah. Yeah.

Ralph Profiti, Analyst, Stifel: Thanks, John. It’s very helpful and well done.

John Lewins, Chief Executive Officer and Director, K92 Mining: Thank you.

Conference Operator: The next question comes from Andrew Mikitchuk with BMO Capital Markets. Please go ahead.

Andrew Mikitchuk, Analyst, BMO Capital Markets: Hi, John. Thanks for hosting the call. Congrats on the strong quarter again. Any commentary on what you’re seeing into Q2 in terms of this positive grade reconciliation? Is this partially or fully expected to extend into the current quarter?

John Lewins, Chief Executive Officer and Director, K92 Mining: Thanks, Andrew. We don’t really expect to see any significant continuation of that positive reconciliation into the second quarter. It was mainly during the first half, first ’3 quarters of Q1 that we saw.

Andrew Mikitchuk, Analyst, BMO Capital Markets: Okay. And then coming back to this stage three, Just for to give us a sense of the trend, how did April perform in development meters compared to the record from March, which was nine fifty four meters?

John Lewins, Chief Executive Officer and Director, K92 Mining: April would have been not quite as good as we saw in in March. Couple of issues. But I think overall, we’re we’re happy with the overall trend that we’re seeing.

Andrew Mikitchuk, Analyst, BMO Capital Markets: K. And then the pictures and the flyover of the construction of the physical plant looks like it’s just advancing very quickly. And I’m sure we’re looking forward to seeing the commissioning in Is there any constraint in operating both mills in terms of power, water, anything else that we should be aware of? And specifically in my mind, I’m thinking, is there a period of time where you can operate both at the same time and essentially find yourself at even without Stage three operating at full capacity effectively at the 1,200,000 tonnes per year run rate very quickly. Is that an option for you, or is that the the reality of what’s going to happen?

Look. I think

John Lewins, Chief Executive Officer and Director, K92 Mining: we’d say that well, obviously,

John Lewins, Chief Executive Officer and Director, K92 Mining: we can run both together. We’ve set up to be able to do that. The intent is very much to switch the the old plant off once we’re happy with the performance of the of the new plant. I’m not trying to run them for any length of time to to get additional throughput. If you recall, the the critical path to achieving 1,200,000 tons per annum has always been the mining side in any event, and plant actually is is not a not even on the critical path.

It’s more about ramping up your underground production.

Andrew Mikitchuk, Analyst, BMO Capital Markets: And the I think we talked about this earlier, but you said you’re comfortable with the trajectory or the progress on underground development. So you’re expecting to see material progress in q two so that you’ll either on the way or in position to deliver to the kind of throughput that’s required for stage three?

John Lewins, Chief Executive Officer and Director, K92 Mining: Yes. That’s correct.

Andrew Mikitchuk, Analyst, BMO Capital Markets: Well, thank you. I’ve kinda monopolized this for a while. I’ll let someone else ask questions.

John Lewins, Chief Executive Officer and Director, K92 Mining: Thanks, Andrew.

Conference Operator: This concludes the question and answer session. I would like to turn the conference back over to John Lewins for any closing remarks.

John Lewins, Chief Executive Officer and Director, K92 Mining: Well, thanks, operator. Thanks, for participating, attending our quarterly review. I’m still in Papua New Guinea, so it’s a bit after 11PM here, a little bit ahead of time there. Like I say, obviously, it’s it’s the best first quarter we’ve we’ve ever had. Second best quarter we’ve we’ve we’ve had full stop.

So we’re obviously clearly very happy with the performance of the operation. In terms of the stage three, again, very happy with the progress as as I think Andrew noted there. You can clearly see very, very significant progress in the in the drone fly through. So it’s actually really getting to a really exciting stage where you can actually see the whole thing coming together. So this is obviously a very exciting time for us.

Certainly happy to see the the gold price where it is. That’s obviously helped us greatly. It’s great to do records when you’re getting record high gold prices as well. So we look forward to the next quarter and the report on the next quarter. So thanks, everyone, for participating today.

Conference Operator: This concludes the question and answer session. I would like to turn excuse me, this concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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