By CLARISSA MOI
K92 Mining Inc is expanding its Kainantu gold mine in Eastern Highlands by doubling production from the current 200,000 tonnes to 400,000 tonnes per annum by next year.
Chief executive and director, John Lewins, said the mine planned to invest K100 million over the next 12 months with capital cost for the expansion estimated to be K50 million.
Lewins, during the announcement in Port Moresby yesterday, said that this expansion would double plant and mining capacity.
He said it would increase production to an average of over 1.3 million ounces of gold per annum and 130 million pounds of copper over the next 13 years, with potentially more to come as they ramp up exploration efforts.
“2018 for us was a very good year,” he said. “The mine produced almost more ounces in 2018 – in one year of our operation – than it had produced in its entire existence.
“With that knowledge and record, we were then able to look at what we had discovered and brought to the table.
“I’m happy to announce now that we will be expanding production which will allow us to more than double the number of ounces of gold and tonnes of copper that we’ll produce from the mine.”
Lewins said the decision followed the completion of preliminary economic assessment (Pea) in January, which also identified that:
- Total revenue would be over K7 billion (US$2 billion);
- royalty payments would be K170 million (US$50 million);
- total tax paid would be K1 billion (US$300 million);
- total sustaining capital of K700 million (US$202 million) would be required;
- net present value (NPV5) would be US$710 million pre-tax, or US$559 million after tax; and
- The internal rate of return (IRR) would be in excess of 350 per cent.
Mining Minister Johnson Tuke, when welcoming the announcement, said Kainantu was the second mining project, within the space of six months, to announce plans to expand its operations after Ramu Nickel last Sept.
He said both those mine expansion plans complemented the advanced exploration work and negotiations associated with the Wafi-Golpu project, which was set to be permitted this year.
Tuke also said he was happy to hear that a further 150 new jobs would be created as a result of the mine expansion, adding to the current 650 that K92 had created since 2016.
He challenged the mine management to ensure that those jobs go to competent Papua New Guineans, and particularly locals of Kainantu.
Mineral Resource Authority (MRA) managing director Jerry Garry has also commended
K92 Mining Inc on the plan to expand the mine.
He said the company’s plans to produce 1.3 million ounces was just over what Lihir produced annually and 60,000 tonnes of copper concentrate was almost equivalent to what Ok Tedi was producing.
“This is indeed a very-successful story for a medium-scale mining operation in Papua New Guinea,” Garry said.