K92 Mining (TSX-V: KNT) President Bryan Slusarchuk on Milestones at the Kainantu Gold Mine: Declaring Commercial Production & Hitting the Best Drill Hole Yet

February 12, 2018

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President of K92 Mining (TSX-V: KNT)(OTC: KNTNF), Mr. Bryan Slusarchuk. Bryan, how are you today?

Bryan Slusarchuk: Doing really well, Gerardo. We've had a great week with K92 announcing commercial production, following that up with just some exceptional assay results. I spent the last two days with the CEO of K92, John Lewins, who flew into Canada for a couple of days straight from Papua, New Guinea. I've got a great update for people and it is really evident that John is incredibly enthusiastic about what's unfolding over there at the Kora North area.

Gerardo Del Real: Let’s talk about both. Let's start with the commercial production announcement. Congratulations, that's a milestone for the company. You produced 2,700 gold equivalent ounces, 2,500 ounces of actual gold and I believe the total cash costs for the month of January were below $850 an ounce in US dollars. Can we talk about that a bit, Bryan?

Bryan Slusarchuk: Absolutely. If you'll remember, Gerardo, this area that we declared commercial production on the back of, is Kora North. This Kora North area was a discovery that we made in May of 2017. Kora North's discovery hole was 500 meters along strike, and 150 meters downdip from the known Kora deposit. That known Kora deposit is where Barrick did a whole lot of drilling. That's approximately 1.6 million ounces gold equivalent, open in every direction, strongly mineralized at the extent of all drilling, etc. The discovery hole of the extension of Kora was made by K92, as I mentioned, in May. We then put a cross-cut in, put a drill cuddy in underground and started to drill in that area at 25 meter by 25 meter grade control spacings. The first 14 holes that we drilled from that cuddy all intersected mineralization.

In fact, to this day and we've established a second drill cuddy now, we're getting more than a 95% hit rate in that area. On the back of successful drilling, getting the cross-cut in, we went out and took a bulk sample. The bulk sample was run through the existing processing facility that we have, and with no optimization, performed incredibly well as far as metallurgical work. In fact, the recoveries from that bulk sample at Kora North met or exceeded the assumptions that were made in the Preliminary Economic Assessment of Kora itself. We were exceptionally pleased metallurgically. We were in a great zone there, and we started production. So we've gone from that discovery hole in May, through a series of drillings, through the bulk sample, and now eight months later we're able to declare commercial production.

The move from discovery to commercial production at Kora North, it just moved at light speed. As you mentioned, 2,700 ounces gold equivalent in January, total cash costs expected to be below $850 an ounce, and that's very important considering that this is the first month and we plan to ramp up the ounces that will be produced on a monthly basis. So when you look at the fixed costs that are there no matter what you produce as a total ounces per month, it bodes very well for hitting our targets in terms of cash costs and all in sustaining costs.

Gerardo Del Real: Congratulations Bryan. Sorry to cut in. Congratulations on the execution. It's been very, very well done, it's been very impressive to watch, and again, my apologies for cutting in.

Bryan Slusarchuk: Not at all. The execution, with John Lewins and the team on site, from discovery through to commercial production at Kora North, it's just been exceptional. Then this morning we announced some of the best results yet in this Kora North area. The drill hole, KMDD0049, which is the most southerly hole drilled from our second underground drill cuddy in the area, intersected multiple intervals of high-grade. The Kora vein that we've labeled K2, we had the best intersection through that vein yet, 6.8 meters of 56.45 grams per tonne gold equivalent. We then intersected the Kora vein that we've labeled K1, continued to get excellent grades there. That interval, 5.6 meters of 41.71 grams per tonne gold equivalent, so just exceptional. We also intersected a cross-cutting link structure that assayed 13.3 grams per tonne. And the presence of that link structure, and the results there, are very important because what we potentially believe that indicates is that the current high-grade that we're encountering in Kora K1 continues even farther to the south.

So really exceptional commercial production numbers and then followed up with this expansion drilling. We've got two drills on site, the drilling's continuing. In the months and weeks ahead, we'll have more updates as we continue to ramp production up, but we're into this very high-grade situation, metallurgy's excellent. And outside of the production ramped up, Gerardo, the other exciting thing here, of course, is that Kora just seems to be getting bigger and bigger. We believed from day one that Kora has enormous, it has huge, size potential. Kora is already large, it's very high-grade, but this is not only open in every direction, but it's strongly mineralized at the extent of all drilling. In addition to the production work that we're doing in the Kora North area, we've also got a bigger drill rig on site now, that we'll be drilling some underground setups, longer holes, to start to really test the size potential of Kora. So I think this is a production growth story, but also an unfolding resource growth story. Both of these things being targeted as we speak.

Gerardo Del Real: Really, really good stuff. Let me ask you a question. You mentioned the Kora K1 possibly continuing further to the south. How soon will you follow up and see if mineralization does indeed extend to the south, because that's got to be important for you considering the grades.

Bryan Slusarchuk: Absolutely. We're continuing literally as we're on the telephone call. John Lewins, after a very quick few days in Canada, is on an airplane currently back to Papua, New Guinea. He's headed back to site. The drill continues 24/7, so there'll be a whole lot more news flow about this expansion drilling, grade control drilling, and soon to start up exploration drilling in this area between Kora and Irumafimpa in this discovery area that we’ve called the Kora North.

Gerardo Del Real: Fantastic stuff, Bryan. Again, congratulations. I know it was an important week, a milestone week for the company. I look forward to you coming back on and providing further updates because any time you have commercial production all in the same week as the best drill hole that you've had in this part of the property and drills are turning and you're cashed up. That's exciting. I know we haven't had the most supportive gold market, but the fact that you've been able to execute the way that you've executed, merits a big congratulations.

Bryan Slusarchuk: Thanks, Gerardo. And the gold market out there, as you've alluded to, has been rather difficult for the equities. However, our view has been if we just keep executing on the ground, continue to build production, continue to build ounces that when the market picks up a bit, we will be one of those first gold stories that should really catch a bid. We're excited about what's occurring on the ground and hopefully that will translate in very short order, to some positive activity in the underlying equity.

Gerardo Del Real: Absolutely. Bryan, thanks again for the update.

Bryan Slusarchuk: Thanks, Gerardo.

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