Earnings call transcript: K92 Mining Q2 2025 sees strong revenue growth

K92 Mining reported a robust second quarter for 2025 with revenue and earnings per share (EPS) exceeding market expectations. The company posted an EPS of $0.16, surpassing the forecasted $0.1488 by 7.53%. Revenue reached $96.3 million, slightly above the anticipated $93.65 million, marking a 102% increase year-over-year. The company maintains excellent financial health, with an InvestingPro Overall Score of "GREAT" and impressive gross margins of 69%. Despite these positive results, the stock saw a decline of 2.93% in pre-market trading, reflecting investor concerns or profit-taking behavior.

Key Takeaways

• K92 Mining’s Q2 2025 revenue grew by 102% year-over-year.
• EPS surpassed expectations by 7.53%.
• Stock price fell by 2.93% in pre-market trading.
• Stage Three expansion process plant commissioning began in June.
• Record cash and cash equivalents of $182.9 million.

Company Performance

K92 Mining demonstrated significant growth in Q2 2025, with revenue more than doubling compared to the same period last year. The company sold 28,864 ounces of gold at an average price of $3,166 per ounce. With a return on equity of 39% and operating with moderate debt levels, K92 Mining continues to strengthen its position in the Papua New Guinea mining sector, benefiting from strategic expansions and robust local engagement. InvestingPro analysis reveals 13 additional key insights about the company’s performance and potential.

Financial Highlights

• Revenue: $96.3 million, up 102% year-over-year.
• Earnings per share: $0.16, exceeding the forecast by 7.53%.
• Cash flow from operating activities: $47 million, compared to $17.3 million last year.
• Net cash position: $123.8 million.

Earnings vs. Forecast

K92 Mining’s Q2 2025 EPS of $0.16 beat the forecast of $0.1488 by 7.53%, marking a positive surprise. Revenue also exceeded expectations, coming in at $96.3 million against a forecast of $93.65 million, a 2.83% surprise. This performance aligns with the company’s recent trend of surpassing market expectations.

Market Reaction

Despite the positive earnings report, K92 Mining’s stock experienced a 2.93% decline in pre-market trading. This movement may reflect investor concerns or profit-taking after a strong performance, though the stock has delivered an impressive 77% return year-to-date. The stock’s current price remains within its 52-week range, and InvestingPro Fair Value analysis suggests the stock is currently slightly undervalued. Get detailed insights and access to the comprehensive Pro Research Report, available for over 1,400 top stocks including K92 Mining.

Outlook & Guidance

K92 Mining is targeting to complete the Stage Three plant commissioning by Q4 2025 and plans to increase production capacity significantly. The company aims for over 300,000 ounces of gold equivalent production annually, with further expansion to over 400,000 ounces anticipated by 2027. Future guidance remains optimistic with projected revenue and EPS growth.

Executive Commentary

John Lewins, CEO of K92 Mining, emphasized the company’s strong financial position, stating, "We’re fully funded through the expansion via our record net cash balance and mine cash flow." He also highlighted the importance of safety, saying, "Safety always is one of K-nine-two’s core values."

Risks and Challenges

• Potential operational challenges in the underground development.
• Fluctuations in gold prices impacting revenue.
• Execution risks associated with the Stage Three and Four expansions.
• Regulatory changes in Papua New Guinea.
• Market volatility affecting stock performance.

Q&A

During the earnings call, analysts inquired about the company’s underground development challenges and future strategies for debt repayment and shareholder returns. K92 Mining confirmed that Q3 production remains on budget and highlighted ongoing exploration efforts at the Cora and Judd vein systems.

Full transcript - K92 Mining Inc (KNT) Q2 2025:

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

I would now like to turn the conference over to David Metallak, President and COO. Please proceed, sir.

David Metallak, President and COO, K92 Mining: Thank you, operator, and thanks, everyone, for attending K92 Mining’s twenty twenty five second 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 with safety, K-nine-two’s number one priority as always. I’m pleased to report that there have been no lost time injuries recorded in the second quarter, marking yet another major safety milestone with eight consecutive LTI free quarters. This achievement is particularly significant, as it was achieved during a notable increase in total man hours worked as construction and delivery of the Stage three expansion progressed. Field level risk assessments, hazard identification, and safety observations have significantly increased over the past two years, which are positive leading indicators for safety.

As the operation expands, we have continued to increase the capacity and capabilities of our occupational health and safety team, and also the training team. Systems continue to be enhanced, safety technologies have introduced, and additional technologies are planned to be introduced in the near future. Safety always is one of K-nine-two’s core values, and I’d like to reiterate that K-nine-two relentlessly pursues our goal of achieving zero harm among our workforce. We’re extremely pleased to have released our 2024 sustainability report in June. The report builds on previous versions, maintaining alignment with the SASB metals and mining standard for the sixth consecutive year and demonstrating continued progress towards alignment with the TCFT framework.

The report highlights K92’s strong commitment to ESG and to the people and country of Papua New Guinea, including our focus on hiring and developing local content with approximately 92% to 93% of our workforce PNG nationals, including a majority from our local communities. Our strong commitment to supporting the local economy, including $28,000,000 of expenditure to support our local joint ventures and procurement of $96,000,000 incurred in Papua New Guinea, representing 42% of our total procurement for the mine. Our delivery of significant benefits to the country with $62,600,000 in taxes and royalties paid in 2024, That’s a 134% increase over 2023. I’d also like to highlight that in 2025 year to date has eclipsed 2024 in terms of corporate tax paid, with approximately 70,000,000 paid as of the July. And this has gained significant positive coverage from the media in Papua New Guinea.

Dollars 6,600,000.0 was allocated for K-nine-two’s first PNG infrastructure tax credit scheme project for the 11.7 kilometers Konkua Billemoyer local road upgrade, which will connect many of our communities to the main road network and ultimately lead to significant opportunities for increased trade and business development. K-nine two’s ongoing success with its adult literacy program in partnership with local communities. We expect to enroll over 500 local community members in the program in 2025. And our commitment to combating climate change with an emission reduction target set for 2030. K nine two is extremely proud of the positive impact it is having on the prosperity and development of Papua New Guinea, and we encourage you to read our report, which you can find at www.k92mining.com.

In terms of the operations, during the quarter the Kanantu Gold Mine produced 34,816 ounces of gold equivalent, the cash cost of $786 per ounce gold, all in sustaining cost of $14.00 $8 per ounce gold. On a co product basis, cash costs were $9.00 $7 per ounce gold equivalent, and all in sustaining costs $14.89 dollars per ounce gold equivalent. Gold equivalent production increased 43% from Q2 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 significant investment in that Stage three expansion, with costs expected to decline considerably after delivering the Stage three expansion, which will be discussed later in the presentation. Mill throughput for Q2 totaled 130,337 tons, in line with our budget, with a head grade of 8.9 grams per ton gold equivalent.

With eighty two thousand six and thirty three ounces gold equivalent produced in the first six months of 2025. We’ve exceeded budget so far, and the second half is forecast to be stronger. So we reiterate our 2025 operational production guidance of 160,000 to 185,000 ounces gold equivalent. In terms of our key operational quarterly physicals, Q2 delivered the second highest total material movements, that’s ore plus waste, on record, and another solid quarter of mine development with 2,466 meters achieved, despite cumulative five days of disruption of underground operations from the Stage three expansion electrical commissioning activities that we undertook. The team remains focused on ramping up development rates, completing key projects underground and building out stoping capacity for the Stage three expansion.

With several projects and initiatives either recently completed or nearing completion, we expect development and mine physicals to continue to increase as the year progresses. Mining activities during the quarter took place across 13 levels at Cora and Judd, with long haul stoping executed to design. Process grades were largely in line with the latest independent mineral resource estimate. The Sage IIa process plant continues to perform well, exceeding the updated DFS recoveries for the fourth consecutive quarter, achieving 93.3% recovery for gold and 94.9 for copper, and that compares with recoveries of 92.6% for gold and 94.2% copper in the updated DFS. I will now turn the call over to our Chief Financial Officer, Justin Blanchet, to discuss our financial results for the second quarter.

Justin Blanchett, Chief Financial Officer, K92 Mining: Thank you, John, and hello, everyone. During the 2025, K92 had quarterly revenue of $96,300,000 an increase of 102% from the same period prior year. We sold 28,864 gold ounces at an average selling price of $3,166 compared to 19,064 ounces at an average selling price of $2,246 in the prior year. As at 06/30/2025, there were 8,413 gold ounces in inventory including both concentrate and dore, an increase of 3,988 gold ounces when compared to 03/31/2025 due to timing of sales. During the 2025, K-ninety two had quarterly cost of sales of $32,400,000 compared to $27,700,000 in the prior year or $26,200,000 compared to $19,400,000 when excluding noncash items.

The increase in cost of sales was primarily due to an increase in tonnes mined and processed, including an increase in capital development tonnes mined that resulted in an increase to capitalized development costs in property, plant and equipment. Q2 twenty twenty five cash flow from operating activities before changes in working capital was $47,000,000 compared to $17,300,000 in the prior year. As at 06/30/2025, K92 had a record $182,900,000 in cash and cash equivalents. We had a record working capital balance of $189,300,000 and we had a record net cash balance position of $123,800,000 The company does have a loan balance of 60,000,000 Importantly, the stage three and four expansion projects are fully funded and our financial position is strong. We also have access to significant amounts of liquidity through undrawn credit facilities with 60,000,000 available to draw down on demand plus an additional 30,000,000 of liquidity through an accordion feature.

We would also like to highlight that our commodity price downside is protected through the cost effective purchase of put option contracts, which extend until the 2025, allowing for 15,000 ounces of gold per month at a strike price of $3,000 per ounce. To be clear, this is not a hedge. We will sell at spot if it is higher than $3,000 per ounce. This is insurance, and we retain full exposure to the upside in commodity prices. As John mentioned, during the second quarter, the Kanantu gold operations produced 32,375 ounces of gold, 1,536,505 pounds of copper, and 42,824 ounces of silver or 34,816 ounces of gold equivalent.

We sold 28,864 ounces of gold, 1,275,176 pounds of copper and 34,532 ounces of silver. On a byproduct basis, we incurred a cash cost of $786 per ounce, down from $919 in the corresponding period last year and an all in sustaining cost of $14.00 $8 per ounce, down from $15.10 dollars per ounce in the prior year. Our all in sustaining cost in Q2 was significantly below our realized selling price of $3,166 per ounce. Our second quarter cash cost per ounce of gold net of byproduct credits decreased to $786 from $919 in Q2 twenty twenty four. The decrease was due to an increase in gold ounces sold and our fixed costs charged accordingly as well as higher byproduct credits.

It is important to note that we will see downward pressure on costs via economies of scale as operations ramp up and the Stage three expansion is complete. I will now turn the call back to John to discuss exploration and growth.

John Lewins, Chief Executive Officer and Director, K92 Mining: Well, thank you, Justin. So turning to growth and exploration. We begin with an update of the Stage three and Stage four expansions, which are expected to fundamentally transform K-ninety two into a Tier one mid tier gold producer. The Stage three expansion process plant commissioning commenced in June, supporting the planned ramp up to over 300,000 ounces gold equivalent per annum. Stage four is expected to further increase production at a very low capital cost to over 400,000 ounces gold equivalent per annum, with commissioning targeted in the 2027.

So we’ll now provide an update on the construction progress of the Stage 3 expansion. As of 07/31/2025, 87% of growth capital has been spent or committed, and the expansion remains on budget. Progress into major underground infrastructure upgrades. The twin incline is complete, and earlier this month we marked a major milestone with the first material conveyed down the ore waste pass, which we also refer to as the material pass. The video shown is taken on the 12 45 level, so at the top of the material pass.

It’s approximately three fifty meters long, and connects the main mine with the twin incline. The material pass enables a truck to get loaded within the main mine, haul a short distance, and then tip the rock down the material pass. The top of the material pass, as you’ll see, has grizzly installed, which prevents oversize traveling down that pass. Of course, that mitigates the risk of blockages and improves material handling at the twin inclined truck loading pocket at the bottom. Multiple safety systems have been incorporated in our material pass design, including engineered truck stops, signage, lighting, training procedures, and obviously a grizzly capable of supporting large loads.

The grizzly, as you’ll see, is positioned at an angle to encourage oversize to roll off. Not all of that oversize rolls off, as you can see in the video there. In this instance, secondary breakage of oversize is dealt with by using a rock breaker and loader, which are on the other side of the material pass, the side where we’re filming from, effectively. So importantly, this means that the bulk of material handling shifts from the existing smaller, more congested incline that has serviced the main mine since we started commercial production, as shown in that image on the left, to the highly productive twin incline, as shown in the image on the right. And that can run trucks that are 50% larger, they travel at far faster speeds, and importantly also by trucking from underground to the plant, we eliminate rehandling at the portal.

So work is well underway for additional passes, and to provide even greater efficiencies obviously. On ventilation, Puma Incline is approximately a 120 meters from the breakthrough, and we expect that to occur in early Q4, a slight revision from late Q3, and in the main part due to the modifications that we’ve made to the portal breakthrough location, which was based on Geotech probe drilling that we carried out last quarter. Shorter development runs are also required for this final stage as we approach surface to better control that incline breakthrough. Our company owned raised bore is currently drilling a two leg fresh air rise, with the first leg completed. The second leg is scheduled for completion in late q three.

So upon completion of the Puma breakthrough and those ventilation raises, each of those two are expected to contribute an additional approximately 50 cubic meters per second of airflow to our circuit, and that represents a combined 60% increase to airflow from the current levels to an estimated primary airflow of around two sixty cubic meters per second. Due to the previously conservative modeled mine resistance factors, we now expect to not need the primary vent fans to meet stage three vent requirements, or not be required until very late in the piece. That said, work continues to advance the fan chamber from the stage three expansion. And as shown in the photo, the fan chamber is very substantial. It’s capable of delivering airflow up to four times of our current rate.

And we plan to opportunistically complete the project in the 2026. So in addition to completing the various infrastructure enablers for the expansion, mine development continues to open up two new fronts, the Twin Incline and Lower Cora, with four and two new sublevels being opened up respectively. Both these fronts are planned to be notable contributors to production stoping in 2026. And currently, we’re also introducing technology to maximize our productivities. This video shows our recently commissioned surface operated tele remote loaders being operated from just outside the portal in our office area.

The system was commissioned in late July, leveraging on our underground fiber optic system to continuously operate our production stoping loaders during shift change and blast reentry, thereby maximizing the amount of productive hours we get per twenty four hour period. Multiple pieces of new equipment are also arriving on-site. This image shows our new Epiroc Ezer L raise bore rig, which arrived on-site in late July and is currently being commissioned. The IZR L rig is capable of drilling blind raises for our stope slots to help with de risk the production blasting and also to accelerate drilling of our paste fill holes. As part of the ramp up to Stage three and four throughput rates, we’re also expecting the arrival of several underground mobile mining fleet equipment that includes new cable bolter, shock reader, adgi, four low profile underground loaders, two of which are replacement, two of which are additional, and additional trucks and a high profile loader for the twin incline.

They’ll all be coming in the next few months. We now move on to the latest drone footage taken just a few days ago of the new 1,200,000 ton per annum Stage three process plant, which as we noted commenced commissioning in late June. Starting at the ROM stockpile, we’re pleased to report that the stockpile build is tracking ahead of schedule, now totaling over 20,000, almost 25,000 tons. Commissioning of the crusher is well advanced, with a dedicated crusher commissioning stockpile established nearby. First tons have already gone through the crusher as shown in the video with the ore feeder loading it.

Going through the rest of the circuit, transfer conveyor, stacking conveyors, reclaim are all complete. Moving on to the grinding area, ball mill lining is complete. Sag mill lining is a bit over 50% complete. The mills are supported by a dedicated liner handler as annotated in the video there. First material through the mill is scheduled for early September.

The Admin Building Gold room was substantially complete. Gravity circuit is complete. Floatation circuit is practically complete with the team going through final checks ahead of wet commissioning planned for early September. Both the tailings and the concentrate thickeners are complete, and the multistream analyzer is going through its final checks. Filter price is also complete and going through final checks.

Lastly, all high voltage MCCs and infrastructure are complete and have been commissioned. We remain on track to complete the commissioning and hand over the process plant to operations in the first half of Q4. In terms of ancillary buildings, the interim power plant and warehouse are complete. The new Kumian Creek Camp is complete, adding an extra 160 ensuite rooms. The camp is initially being used for excess capacity during construction and then be repurposed for accommodation for our Stage IV expansion.

The primary power plant is nearing completion, with commissioning commencing in the coming weeks. This project will add an immediate 8.8 megawatt generation capacity, increasing to 10.6 by, I think, the end of the year. And the next phase of expansion, which will take that up to over 15 megawatts, is already underway, with orders already placed to complete this stage in 2026. 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.

Civil works have also progressed at the tire and weld shop and the mine rebuild center buildings. Completion of all three workshops is targeted for late twenty twenty five. Now in Q2 twenty twenty five, significant progress was also made with the award of the EPCM contract for the paste fill filtration plant and the EPC contract for the storage facility, while the underground paste fill package was self awarded earlier in the quarter. All background paste fill plant long lead items have been ordered, front end engineering design work is complete, detailed engineering work and design by GR Engineering is complete, and the quarter of engineering is nearing completion. Underground development of the various large, paceful infrastructure excavations is progressing well.

Earthworks are also progressing well for the surface storage area near the portal, and the tailings filtration plant near the Stage three process plant is complete. Commissioning of all three facilities is expected to commence in Q1 twenty twenty six, with practical completion and full paced full circuit remaining on schedule for mid-twenty twenty six. Now in August 8, we were honored to host the honorable Rainbow Paita, minister for mining along with a government delegation for a site visit. The visit received significant media coverage and also included tours of the underground, a new stage three expansion process plant, and a helicopter tour of our exploration areas and our new infrastructure tax credit scheme road. These visits also underscore our strong commitment to transparent stakeholder engagement and responsible mining.

Moving on to exploration, we are now drilling the Cora Cora South Judd Judd South vein systems from underground, plus drilling the Aracampa vein system from surface. Earlier stage exploration work programs are focused on the Matte Mesoine, and also the Wira Henke prospects. In June, we reported 19 diamond drill holes from Cora Cora South, Jadjaj South, with the results further reinforcing the significant potential for high grade resource growth. The K2 vein drilling expanded the dilatant zone, recording 12.8 meters at 31.89 gram per ton gold equivalent, and also 10.1 at 16.29 gold equivalent. The results are especially significant as they are near mine infrastructure located only 100 meters from existing mine workings, and that provides the potential for near term bulk mining to support Stage three expansion ramp up once our paste fill system is complete.

Results also continued to extend high grade mineralization up tip at k one and k two, as shown on the right black ellipses, and delineated a substantial high grade copper zone at k two, as shown in the left black ellipse. Importantly, the drilling has also commenced at Cora Deeps, targeting over the next twelve months a substantial area 400 meters below the twin incline down to around 500 meter RL, as shown in the shaded light green rectangle. After multiple years of focusing on infill drilling ahead of stage three expansion, we’re fairly excited to now be targeting this area for some of our step out drilling. As noted earlier, the results have delineated a substantial high grade copper zone to the south. Magenta represents grades exceeding 4% copper, and the consistency of the high grade copper drilling hit rates is very encouraging, as as shown in the long section here.

Our Judd drill results continued to extend high grade mineralization up dip of the main mine, as shown in the top black ellipse, and below the main mine workings. Multiple high grade results outside of the resource have also been recorded. Like Cora Deeps, Judd Deeps drilling has also commenced, initially targeting down to that 500 meter RL, and that very much over the next twelve months, and as again as shown in the light green shaded rectangle. From the initial Judd Deep results, which have been reported, the structure appears to remain robust at depth with hole KMDD zero eight zero nine, which was located approximately 300 meters below the twin incline, recording 12.9 meters at 4.3 grams per ton gold equivalent from Chad Link and 14.15 meters at 3.97 grams per ton gold equivalent from J-one. And obviously, we’re looking forward to providing the next set of results in due course.

Exploration activity at the Atacampa Vein system, located approximately four and a half kilometers from the process plant, is progressing with up to five rigs active. As shown in the image, the deposit is rapidly growing, and so is our conviction by adding more rigs. The results reported today have delineated two significant high grade veins, AR one, AR two, which recorded an average true thickness of approximately three meters over strike lengths of approximately six hundred and seventy five and seven hundred and seventy five meters, respectively. Veins are also high grade, with previously reported drilling results recording a hit rate of plus five gram per ton gold equivalent of 50% to AR 142% to AR two, and plus 10 gram per ton gold equivalent of 28% to AR one, twenty one percent at AR two. Arakampo also features a large lower grade balcon, which is open in multiple directions as shown in the plan view here.

With the addition of the new compact heli portable rig, drilling of the northern strike extension of Arakampo, as shown in the ellipse on the far right image, will be an increased focus. The area is highly prospective, featuring strong vectors from artisanal workings. We plan to announce our next set of drilling results at Aracampa later this quarter, and we’re targeting a maiden resource late twenty twenty five, early twenty twenty six. Lastly, we’d like to highlight the significant pipeline of highly prospective exploration targets that we have. The colored icons indicate current exploration focus and the blank icons indicate where we plan to be drilling within the next twenty four months.

Upon delivery of the Stage three expansion, we expect to not only see 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. Two additional surface rigs have been ordered recently, and they will assist with that future ramp up. So in summary, Q2 twenty twenty five was another strong quarter for K-nine ’22 from an operational, financial, safety perspective. We’re fully funded through the expansion via our record net cash balance and mine cash flow, And we’re tracking well to our 2025 operational guidance and continue to execute on a number of key Stage three expansion projects, including achieving the major milestone, the start of commissioning of the new 1,200,000 tonne per annum process plant during the quarter. We’re confident that we will continue this positive momentum into the second half of the year, and we expect to see the benefit to mine physicals from the delivery of a number of key underground infrastructure and operational improvement projects, including the material pass.

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

Conference Operator: Thank you. We will now begin the question and answer session. Today’s first question comes from Harrison Reynolds with RBC. Please proceed.

Harrison Reynolds, Analyst, RBC: Hey, good morning everyone and congratulations on a good quarter K-ninety two team. One question from my end is could you talk about your confidence and comfort level on progress made in the underground development to reach the run rates required for Stage three? I imagine more progress will be made with the material pass system up and running and the additional ventilation. But is there anything else we should be thinking about here? Is kind of the 2,500 meters what you expected for the quarter, or were there any challenges that came up?

John Lewins, Chief Executive Officer and Director, K92 Mining: Thanks. Thanks, Harrison, for the question. In in relation to the development meters, I would say it’s one one area within the within the quarter that we didn’t really achieve what we wanted. We were certainly looking for higher than that, 2,700, 2,800. The what we did have that we hadn’t really factored in was that if we look at our underground development in of infrastructure, we had about a five, six day delay where because of the because of the installation of electrical infrastructure underground, we we basically had five, six days of delays in the in the development.

And if you look at that in the context of achieving around 30 to 40 meters a day, that that basically drops you a couple of 150 to 200 meters, and and so we did drop that during the quarter. You’re correct in that the commissioning of the ore pass is is quite not quite. It’s a very significant contributor to to enable us to achieve the meters that we’re looking to do. As you know, as it currently stands, we’ve got more activity, I think, than we actually recognize we would have in the construction period. So that’s adding to the congestion that we see in our single incline.

So we’ve got the one right up until the end of the quarter. We’ve been running basically all of our waste, all of our ore coming in sorry, going out on that one existing incline. But in addition to that, we’ve got, for instance, multiple concrete loads moving moving up for the construction of our our underground infrastructure. So the ore pass itself, all the work that we’ve been doing on the the vent chamber, all the concrete that comes in, all the steelwork that’s come in for those and continues to come in for those, all of that, I think, had more impact than perhaps we’d we’d realized it would. There’s a there’s a huge amount of work being done there.

And, obviously, we’ve also got the the work that we’re doing on the paste fill underground, the excavations for the paste fill underground, which also add to that. So certainly, the the ore pass and or or waste pass, in our view, is going to be a very significant contributor to improving our performance in terms of development meters. I think the other point you would have seen is that we do have additional equipment that will be coming in. I think our first loader is due in September, October, our first new loader. So there are also additional pieces of equipment that will be coming in, you’ll be able to also utilize that improved access.

Harrison Reynolds, Analyst, RBC: Great. No. And thank you. That’s that’s incredible color, and, yeah, looking forward to continued progress. Thanks,

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

Conference Operator: And the next question will come from Alex Tarantu with National Bank. Please proceed.

Alex Tarantu, Analyst, National Bank: Yeah. Hi, guys. Thanks for taking my question, and congrats on getting everything coming off, moving along nicely. It’s good to see the both the underground and the mill progressing well. A question on that.

You you note first half q four to complete commissioning. I’m just trying to understand to make sure I understand kind of how you’re defining that. Is that is that coincident with declaring commercial production as well? Or what kind of metrics are you looking for to to to to complete commissioning?

John Lewins, Chief Executive Officer and Director, K92 Mining: Okay. Well, I guess, first off, commercial production per se, we don’t really use simply because we’re already in commercial production. So we’d be we’d be declaring something we’re already doing.

Alex Tarantu, Analyst, National Bank: Yeah. No. That’s true. Good point.

John Lewins, Chief Executive Officer and Director, K92 Mining: Yeah. No. No. It it it’s a this it’s a discussion we’ve had internally, actually. So it’s it’s not a not an incorrect question, and I understand what you mean.

So what we anticipate is that by the the end of the quarter, we will we will effectively have the the plant able to operate at its its design capacity. Now we’d also expect that we should be able to achieve our our design recoveries by that point. So we’re really looking that the the plant is effectively operating at at its at its design.

Alex Tarantu, Analyst, National Bank: Okay. No. That’s that’s helpful. And then another question on grades, you know, obviously, the past, I guess, three or four quarters, you guys have been mining some pretty good grades above plan. How should we think about grades for the next couple quarters?

Q two obviously came down, but still was probably, I think, a little bit higher than long term. But what do you what’s any guidance you can kinda give us to to prepare for the next couple of quarters and what what to expect?

John Lewins, Chief Executive Officer and Director, K92 Mining: In terms of grade, you should expect pretty much what is the long term. If anything, grades in q four, would expect to be lower simply because we will be commissioning with lower grade material into the plant. So it will have a bias towards lower grade.

Alex Tarantu, Analyst, National Bank: Yeah. That makes sense. Okay. And then the last question, maybe just on your balance sheet. Obviously, very strong, 183,000,000.

You know, free cash flow is obviously gonna start to pick up even more next year. What’s your plan? You’ve got 60,000,000 in in in debt outstanding. I would assume that gets kind of, you know, the easy one to to repay first or, just trying to understand, make sure I understand that, you know, your your your your plans for your for your good free cash flow you’re gonna be generating next year.

John Lewins, Chief Executive Officer and Director, K92 Mining: So, certainly, the repayment of debt is is something that will be prioritized. However, it’ll it’ll fit into an overall picture of what we’re doing as a as a company. We don’t have a high level of debt as as as I think was noted. And I think we’re certainly not not in a position where where we need to repay that debt in order to to meet any requirements or or anything else. As you say, depending on on gold price, which which we’d obviously like to see sitting where it is for some time going into the future.

We will be generating a large amount of of free cash flow going forward, basically, as you say, all of next year and and going beyond then. We’ve got the whole thing of of dividends and buybacks, etcetera, etcetera, which is something that as a company, we are we are in the in the process of of discussing internally.

Alex Tarantu, Analyst, National Bank: Okay. That’s good good to hear. Alright. That’s it for me. Thank you.

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

Conference Operator: And our next question comes from Andrew Mikitchuk with BMO Capital Markets. Please proceed.

Andrew Mikitchuk, Analyst, BMO Capital Markets: John. Congrats on the you and the team on the massive progress here towards Stage three. There’s already been a lot of detail given in the Q and A about ramp up rates and development rates. Any sense that you could comment on how Q3 is going so far? Like or maybe where you would like to see Q3 exit?

You know, maybe in I think the market is probably watching development meters, but maybe also even kind of annualized tons per day.

John Lewins, Chief Executive Officer and Director, K92 Mining: Okay. Andrew, thanks for that. We’re I mean, we’re obviously early in in well, actually, we’re not early. I guess we’re almost halfway through q three, so it’s not that early in q three. I think I’d be fair to say that q three is is fairly much on budget for us in in relation to our production.

We are developing a reasonable stockpile. I think we’re we’re in excess of 20 approaching 25,000 tonnes. So stockpile wise, we’re probably marginally ahead actually of where we anticipated being. So from the context of the stockpile, I think we’re in we’re in a fairly good position. In terms of the enablers, we really only just commissioned those now.

So I think in in meters, we would expect to see an improvement from second quarter, not perhaps as as high as we want in terms of where we want where we want to get to by the end of the year. Sorry. If that answers your question.

Andrew Mikitchuk, Analyst, BMO Capital Markets: And just overall, the trajectory and the timeline is preserved to, you know, to be blunt, to fill them to stage three, you know, once this thing is turned on.

John Lewins, Chief Executive Officer and Director, K92 Mining: Yes. I mean, if you look at I’m trying to think where I think the the sign the IDP has has something like a million tons being mined and processed next year. And at this point in time, we’re comfortable with with the numbers that are in the IDP.

Andrew Mikitchuk, Analyst, BMO Capital Markets: Okay. That, runs me out of questions. Thank you, and congrats again.

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

Conference Operator: The next question is from Michael Gray with AgenTus Capital. Please proceed.

Alex Tarantu, Analyst, National Bank: Good morning, John and team. Exciting Cordyce is going to be tested below the twin incline. John, you said 450 meters below. Can you give us a little bit of color on scope of drilling, spacing of drilling at this point if you can?

John Lewins, Chief Executive Officer and Director, K92 Mining: Good day, Mike. Thanks for that. Yeah. Look, this is it’s obviously early days at this point in time. So we’re at the first stage of that, which is which is drilling very much from existing development.

We do intend longer term to put a couple of a couple of development drives further out from where we are so we can get a better angle into Cora and Judd at depth. So we’re limited to those those two sort of boxes as the area that we can reasonably access without without coming in to to accout an angle. Generally speaking, when we’ve when we’ve been looking at these areas, we’ve been drilling in the 50 to a 100 meter centers, and and that would be the intent of the of this initial initial drilling that we’re doing. We’ve got we’ve got one rig currently drilling there. I don’t see us getting heavily into that more heavily focused into that until until next year.

We can’t do any we don’t really wanna do any additional development to set up better drill cuties for that area at this point in time because all of our focus on that on the development meters is obviously in the upper part of the mine, opening the mine. Right. No. It’ll really be, I would say, second half of next year before we see that program pick up to where I personally would like to see it. I’m pretty excited by what we’ve seen, for instance, in that in that Judd deep hole.

So that Yeah. And I think for me, it’s it’s it’s really exciting.

Alex Tarantu, Analyst, National Bank: Okay. Thanks very much. Congratulations on the progress this quarter.

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

Conference Operator: And this concludes today’s question and answer session. I would now like to turn the conference back over to John Lewins for any closing remarks.

John Lewins, Chief Executive Officer and Director, K92 Mining: Thanks for that, Chris. Well, thanks everyone for joining us for for this conference call. It’s approaching 11:15 here. I’m in I’m in Papua New Guinea. As some would have seen, I was hosting the mining minister on-site on Friday.

We made the the local news and media here, including video from from underground with our with our minister, our new minister. One of the things that we got from the minister was that he was excited by not only the the what he was what the project is and the and the production that we have, the fact that we’ve we’ve paid 300,000,000 Kiena in tax this year, but the sheer scale of what he saw underground, for instance, in the in the vent fan chamber. The the new plant, especially when he he could compare it to the old plant and realize that that old plant had produced a 150,000 ounces a year. And in fact, he made comments, surely, John, if that little plant could make a 150, you’re gonna make a lot more than 300 with this plant, which, of course, directed into our our stage four. The other thing that impressed him was that we we took him up in the chopper and took him around showing him our exploration activities and direct exploration areas.

And, again, being the largest explorer in the country, we’ve commended for our investment, in the future of not only K 92, but as you saw it, PNG. And I think those those thoughts and those those statements are reflective of where we’re sitting at this point in time. We have a relatively old, smallish plant, which last year did a 150,000 ounces, and we’ve got this this phenomenal new plant, which which is going to take us to an entirely different level. Underground, you can see the massive amount of work that’s that’s gone in both in the context of the infrastructure. They were impressed, for instance, that you could be underground at the at the fan chamber, and you could connect with your office in Vancouver and and receive an email, send a photograph, etcetera, etcetera, and that you could operate equipment from the surface while it was it was effectively no one underground.

All of those things have have happened in the last in the last twelve months, and a lot of them are now coming to an incredible culmination towards the end of this year. And as I think many of you would be aware, in watching canine two, it’s also coming to a culmination just as the the country itself is celebrating, its fiftieth anniversary of independence next next month. So this really is incredibly transformative. I mean, it’s it it is it is a statement we use on our on our slides, on the first page of that slides. But I continue to see that as one as how things are happening right now every time that I every time that I go to site.

So this is an exciting time for for k nine two. It’s not without its its challenges. Anybody who’s ever built a mine, commissioned a plant, or whatever else will will obviously attest to the fact that it is also a challenging time, but with challenges come opportunities. We’ll be having an analyst investor tour early in in q four. And so some of you, at least, will have an opportunity to see things on the ground.

I think especially, I know that we’ve got some people who’ve who’ve been out before. I think you’re going to be incredibly impressed with the changes that occurred both on the surface and underground. So with that, I’d just like to say thank you all for for attending early in the morning, your case, later in the evening in in mine. And thank you for your continued interest in in the company and and what we’re trying to achieve. Thanks, everyone.

Conference Operator: This concludes today’s conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.

David Metallak, President and COO, K92 Mining: Thank you, operator, and thanks, everyone, for attending K92 Mining’s twenty twenty five second 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 with safety, K-nine-two’s number one priority as always. I’m pleased to report that there have been no lost time injuries recorded in the second quarter, marking yet another major safety milestone with eight consecutive LTI three quarters. This achievement is particularly significant, as it was achieved during a notable increase in total man hours worked as construction and delivery of the Stage three expansion progressed. Field level risk assessments, hazard identification, and safety observations have significantly increased over the past two years, which are positive leading indicators for safety.

As the operation expands, we have continued to increase the capacity and capabilities of our occupational health and safety team, and also the training team. Systems continue to be enhanced, safety technologies have introduced, and additional technologies are planned to be introduced in the near future. Safety always is one of K-nine-two’s core values. I’d like to reiterate that K-nine two relentlessly pursues our goal of achieving zero harm among our workforce. We’re extremely pleased to have released our twenty twenty four sustainability report in June.

The report builds on previous versions maintaining alignment with the SASB metal.

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