K92 Mining Inc. (“
K92” or the
“
Company”) (TSX
: KNT;
OTCQX
: KNTNF) is pleased to announce that it has
entered into a loan agreement with Trafigura Pte Ltd, a market
leader in the global commodities industry, pursuant to which
Trafigura will provide a US$100 million senior secured loan (the
“
Loan”) to K92.
In addition, the Papua New Guinea subsidiary of
the Company, K92 Mining Limited, and Trafigura have amended and
restated the offtake agreement dated July 1, 2019 for the purchase
by Trafigura of 100% of K92’s copper/gold concentrates produced at
the Kainantu Gold Mine in Papua New Guinea (“the
Amended Offtake Agreement”). The Loan and
the Amended Offtake Agreement will only come into effect upon
satisfaction of express conditions precedent, including but not
limited to (i) the execution and registration of the Security and
(ii) regulatory approvals. These conditions precedent have not as
yet been satisfied. K92 expects first drawdown to occur in early to
mid-Q4 2023.
The Loan is at the corporate-level and may be
used for general corporate purposes, working capital purposes, and
capital expenditures. No hedging is required for the Loan. The Loan
further strengthens K92’s strong financial position, with US$95.6
million and no debt as at June 30, 2023.
Key Terms
US$100 Million Senior Secured Loan
- 4-year term from the date which the
first advance of funds are made.
- Competitive interest rates.
- One-year interest only repayment
grace period.
- No hedging conditions.
- The Loan will be secured by, among
other things, a charge over the assets of K92 Mining Limited and a
pledge of the shares of both K92 Mining Limited and K92 Holdings
International Limited (the “Security”).
- Drawdown of the first US$25 million
under the Loan (the “Initial Advance”) is subject
to conditions precedent, including but not limited to (i) the
execution and registration of the Security and (ii) regulatory
approvals, which have not as yet been satisfied.
- Drawdown of the balance of the Loan
is subject to subsequent conditions in relation to the registration
of certain items which form part of the Security (the
“Conditions Subsequent”).
- Prior to satisfaction of the
Conditions Subsequent, should an event of default occur under the
Loan, Trafigura has, among other rights, the right to accelerate
repayment of the Loan, and convert all or any portion of the
Initial Advance into common shares of K92 (the “Conversion
Right”).
- Once the Conditions Subsequent are
satisfied, the Conversion Right will expire and be of no further
force or effect.
Amended Offtake Agreement
- The term of the Offtake Agreement
will extend and continue for an additional 7 consecutive calendar
years, beginning January 1, 2026, or until a minimum quantity of
600,000 dry metric tons of concentrate have been delivered to
Trafigura.
- Competitive industry terms in
relation to all metrics at London Metals Exchange spot prices.
- Attractive payment arrangements
which provide for upfront payment on delivery of concentrates to
port of dispatch and provision of certain shipping documents.
- Amended and improved metals
payabilities for deliveries of concentrates, which includes
amending penalties, treatment and refining charges, and transport
charges, all of which are better than the assumptions outlined in
the Kainantu Integrated Development Plan (“IDP”) Definitive
Feasibility and Preliminary Economic Assessment cases (see
September 12, 2022 press release – K92 Mining Inc Announces Robust
Kainantu Gold Mine Integrated Development Plan).
John Lewins, K92 Chief Executive Officer and
Director, stated, “We are extremely pleased to be expanding our
partnership with Trafigura, with a US$100 million Loan and amended
off-take agreement. Trafigura has been our offtake partner since
the start of operations at the Kainantu Gold Mine, and these
agreements reinforce our strong relationship with Trafigura.
In combination with K92’s already strong cash
position of $96m at the end of Q2 2023, the US$100 million Loan
effectively fully finances the growth capital outlined in the IDP
for both the Stage 3 DFS and Stage 4 PEA cases, which transform
Kainantu into a Tier 1 producer with run-rate production of 300 koz
AuEq and 470 koz AuEq per annum, respectively. Importantly, the
Loan enables K92 to more confidently invest and potentially
increase exploration activities while completing the major
production expansions. The offtake agreement also secures long-term
competitive terms and provides security and confidence in our
income from the sale of our concentrate product.”
About K92
K92 Mining Inc. is engaged in the production of
gold, copper and silver at the Kainantu Gold Mine in the Eastern
Highlands province of Papua New Guinea, as well as exploration and
development of mineral deposits in the immediate vicinity of the
mine. The Company declared commercial production from Kainantu in
February 2018, is in a strong financial position. A maiden resource
estimate on the Blue Lake porphyry project was completed in August
2022. K92 is operated by a team of mining company professionals
with extensive international mine-building and operational
experience.
On Behalf of the Company,
John Lewins, Chief Executive Officer and
Director
For further information, please contact David
Medilek, P.Eng., CFA, President at +1-604-416-4445
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION: This news release includes certain “forward-looking
information” within the meaning of applicable Canadian securities
legislation (“forward-looking statements”), including, but not
limited to, the impact of global supply chain and financial market
disruptions; projections of future financial and operational
performance; statements with respect to future events or future
performance; production estimates; anticipated operating and
production costs and revenue; estimates of capital expenditures;
future demand for and prices of commodities and currencies;
estimated mine life of our mine; estimated closure and reclamation
costs and statements regarding anticipated exploration,
development, construction, production, permitting and other
activities on the Company’s properties, including: expected gold,
silver and copper production and the Stage 3 Expansion and Stage 4
Expansion. Estimates of mineral reserves and mineral resources are
also forward-looking statements because they constitute
projections, based on certain estimates and assumptions, regarding
the amount of minerals that may be encountered in the future and/or
the anticipated economics of production. All statements in this
Annual Information Form that address events or developments that we
expect to occur in the future are forward-looking statements.
Forward-looking statements are statements that are not historical
facts and are generally, although not always, identified by words
such as “expect”, “plan”, “anticipate”, “project”, “target”,
“potential”, “schedule”, “forecast”, “budget”, “estimate”, “intend”
or “believe” and similar expressions or their negative
connotations, or that events or conditions “will”, “would”, “may”,
“could”, “should” or “might” occur. All such forward-looking
statements are based on the opinions and estimates of management as
of the date such statements are made.
Forward-looking statements are necessarily based
on estimates and assumptions that are inherently subject to known
and unknown risks, uncertainties and other factors, many of which
are beyond our ability to control, that may cause our actual
results, level of activity, performance or achievements to be
materially different from those expressed or implied by such
forward-looking information. Such factors include, without
limitation, Public Health Crises, including the COVID-19 Pandemic;
changes in the price of gold, silver, copper and other metals in
the world markets; fluctuations in the price and availability of
infrastructure and energy and other commodities; fluctuations in
foreign currency exchange rates; volatility in price of our common
shares; inherent risks associated with the mining industry,
including problems related to weather and climate in remote areas
in which certain of the Company’s operations are located; failure
to achieve production, cost and other estimates; risks and
uncertainties associated with exploration and development;
uncertainties relating to estimates of mineral resources including
uncertainty that mineral resources may never be converted into
mineral reserves; the Company’s ability to carry on current and
future operations, including development and exploration
activities; the timing, extent, duration and economic viability of
such operations, including any mineral resources or reserves
identified thereby; the accuracy and reliability of estimates,
projections, forecasts, studies and assessments; the Company’s
ability to meet or achieve estimates, projections and forecasts;
the availability and cost of inputs; the availability and costs of
achieving the Stage 3 Expansion or the Stage 4 Expansion; the
ability of the Company to achieve the inputs the price and market
for outputs, including gold, silver and copper; inability of the
Company to identify appropriate acquisition targets or complete
desirable acquisitions; failures of information systems or
information security threats; political, economic and other risks
associated with the Company’s foreign operations; geopolitical
events and other uncertainties, such as the conflict in Ukraine;
compliance with various laws and regulatory requirements to which
the Company is subject to, including taxation; the ability to
obtain timely financing on reasonable terms when required; the
current and future social, economic and political conditions,
including relationship with the communities in Papua New Guinea and
other jurisdictions it operates; other assumptions and factors
generally associated with the mining industry; and the risks,
uncertainties and other factors referred to in the Company’s Annual
Information Form under the heading “Risk Factors”.
Estimates of mineral resources are also
forward-looking statements because they constitute projections,
based on certain estimates and assumptions, regarding the amount of
minerals that may be encountered in the future and/or the
anticipated economics of production. The estimation of mineral
resources and mineral reserves is inherently uncertain and involves
subjective judgments about many relevant factors. Mineral resources
that are not mineral reserves do not have demonstrated economic
viability. The accuracy of any such estimates is a function of the
quantity and quality of available data, and of the assumptions made
and judgments used in engineering and geological interpretation,
Forward-looking statements are not a guarantee of future
performance, and actual results and future events could materially
differ from those anticipated in such statements. Although we have
attempted to identify important factors that could cause actual
results to differ materially from those contained in the
forward-looking statements, there may be other factors that cause
actual results to differ materially from those that are
anticipated, estimated, or intended. There can be no assurance that
such statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. The Company disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
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