Release Date: March 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- K92 Mining Inc (KNTNF, Financial) achieved a record quarterly production of 53,401 ounces gold equivalent in Q4 2024.
- The company reported a significant year-over-year production growth of 27%, exceeding the top of their production guidance range.
- Cash costs of $664 per ounce and all-in sustaining costs of $1,066 per ounce were below the guidance range, indicating strong cost management.
- K92 Mining Inc (KNTNF) ended 2024 with a strong financial position, holding $141 million in cash and cash equivalents.
- The company received an industry ESG award for Outstanding Community Humanitarian Initiative, highlighting its commitment to sustainable practices.
Negative Points
- The company experienced an increase in cash cost per ounce of gold from $585 in the prior year to $664, attributed to expenditures during a temporary suspension.
- All-in sustaining costs have been notably higher than cash costs due to ongoing investments in the Stage 3 expansion.
- There is a risk of oxidation if material sits too long on the surface, which could affect stockpile management.
- The company has a loan outstanding balance of $60 million, which could impact financial flexibility.
- The transition to the new plant in Q4 may involve operational challenges as the old plant is phased out.
Q & A Highlights
Q: Can you provide insights into the outlook for 2025, particularly regarding grade and tonnage expectations?
A: John Lewins, CEO, stated that the guidance for 2025 is relatively wide due to the commissioning of Stage 3. The expectation is that the back end of the year will be tonnage-driven as the Stage 3 plant comes into full production in Q4. The first quarter is expected to have the highest grade for the year, continuing the higher grades seen in Q4 2024.
Q: What are your plans for building up a stockpile ahead of the new mill starting up, and will there be any downtime during the transition?
A: John Lewins explained that the focus is on opening up underground rather than bringing too much to the surface to avoid oxidation. They aim for a stockpile of 10,000 to 20,000 tons by the end of Q2. The existing plant will continue to run through Q3, with the new plant being commissioned, and the transition to the new plant will occur in Q4.
Q: How is the company tracking on building up the stockpile and transitioning to the new plant?
A: The intent is to continue running the old plant until some point in Q4. Additional personnel have been recruited, including graduates from the University of Lay, to assist with the setup and optimization of the new plant.
Q: Can you elaborate on the financial position and outlook for K92 Mining?
A: John Lewins highlighted that K92 Mining is in a strong financial position with $141 million in cash and $20 million in unrestricted cash. The company has access to significant liquidity through an undrawn credit facility. The strong gold price environment has resulted in robust free cash flow generation.
Q: What are the expectations for the Stage 3 expansion and its impact on production?
A: The Stage 3 expansion is expected to transform K92 into a tier 1 mid-tier producer, increasing production to over 300,000 ounces gold equivalent per annum. The commissioning is targeted for the second half of Q2 2025, with the new plant designed to be expandable to 1.8 million tons per annum for Stage 4.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
