K92 Mining (TSX-V: KNT) Capital Markets Advisor Bryan Slusarchuk on Upcoming PEA & Increased Resource at Kora North
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is Capital Markets Advisor to K92 Mining (TSX-V: KNT)(OTC: KNTNF), Mr. Bryan Slusarchuk. Bryan, how are you this morning?
Bryan Slusarchuk: Doing really well, Gerardo. Thank you.
Gerardo Del Real: Well, we haven't spoken in about a month or so, and you had some news yesterday that I wanted to get your opinion on. You announced an increased resource for Kora North. Grade looks good, the increase looks good. Can you fill in the details for us, Bryan?
Bryan Slusarchuk: Absolutely, Gerardo. It was an exciting news release, a nice big jump in the resource at Kora North. This is a high-grade deposit. We announced 390,000 ounces gold equivalent in the measured and indicated category at 14.1 grams per tonne. We also announced 740,000 ounces in inferred category at a grade of 11.9 grams per tonne gold equivalent.
Gerardo Del Real: Now something that stood out in the release is that this resource represents just 15% of the area that's being drilled out here in the coming year, if I'm not mistaken. Is that accurate, Bryan?
Bryan Slusarchuk: That is accurate, Gerardo. I think that really speaks to the size potential here. Everybody that has followed K92 has seen the production numbers, the head grade, has seen some of the drill holes – including what I understand is the third best drill hole drilled in the entire world by a TSX company this year – knows that this is a very high-grade situation.
What's also becoming apparent to investors is that this situation also has just huge size potential. And as you note, this updated resource that we put out just yesterday represents approximately 15% of the target area that we plan to drill from underground over the next 12 months.
Gerardo Del Real: Now Kora is on track to produce 45,000 ounces gold equivalent for 2018. What do the cash costs look like?
Bryan Slusarchuk: The cash costs are actually below $600 per ounce, with all-in sustaining costs of less than $800 per ounce. This is really significant for people to understand, Gerardo, is that it’s very impressive resource growth. And remember, this was all based on just start of a drill program 12 months ago to now, so it's really moved at light speed. This resource growth has happened at the same time as we've started up a new mining operation in the Kora North area, and we're on track to produce 45,000 ounces for the year at very compelling cash costs and all-in sustaining cost numbers. And that's a real testament to John Lewins, the CEO, and the team that he's put together on site in Papua New Guinea.
Gerardo Del Real: Now this new resource estimate is being used to update the existing PEA. When can we assume that we're going to see the new PEA?
Bryan Slusarchuk: The new PEA is anticipated to come out in approximately one month from now, and it's really key that people understand that that PEA will be used to make a production expansion decision. Investors, over the short term here, can expect a number of catalysts and over the next 12 months can expect two-fold growth.
Number one, growth coming from production expansion. And two, growth coming from resource expansion. So that's a two-part strategy that one, we'll continue to drill from underground to target dramatic growth of the resource and, at the same time, use the PEA that's coming out in approximately one month from now to target a large and aggressive expansion strategy as far as the production profile.
And remember, the existing PEA contemplates 108,000 ounces per year of production via approximately 400,000 tonnes per annum of throughput. What we're seeing at this point are very good head grades. We're seeing very high grades in drilling, we're seeing high grades in the resource. If the grade is higher in the resource, I would assume that there's real potential that that 400,000 tonnes per annum will equate to more ounces than the 108,000 that are in the current PEA that's online.
Gerardo Del Real: The company's executed well on both the exploration and the production front. What's the market cap looking like right now, Bryan? I know it's a tough market out there. One of the worst that I've seen in the 11, 12 years that I've been doing this. What does market cap look like?
Bryan Slusarchuk: The market cap's currently $145 million Canadian. We anticipate that there's real potential for growth here as more investors see what we're doing both in terms of drilling and in production. But, of course, it's been a very difficult market out there, and we're just trying to stay in front of shareholders, continue to supply them with information about how well things are going on site. With a little bit of luck, the gold market will improve sometime in the next quarter.
Gerardo Del Real: Well said. Bryan, thank you so much for the update.
Bryan Slusarchuk: Thanks, Gerardo.