Mine plans improvements

The Kainantu gold mine in Eastern Highlands recorded a positive performance last year and plans to improve and expand based on its aim to double its capacity and production, according to the mine operator, K92 Mining Ltd.
Business reporter DALE LUMA talked to the company’s senior vice-president for operations Warren Uyen about the mine’s performance last year and its outlook for this year.

Q: What was 2019 like for K92 Mining Ltd?
UYEN: 2019 was both a successful and a transformative year for K92 Mining.

In March 2019, K92 announced its decision to proceed with the phase two expansion, which will double the size of the mining operation from 200,000 tonnes to 400,000 tonnes per annum, and increase annual production to an average of over 120,000 ounces (ozs) gold equivalent (AuEq) per year.
The decision to expand has resulted in significant additional investment in the Kainantu mine in 2019 with approximately K100 million committed to capital expenditure on the mobile plant, fixed plant, development, camp, workshops, offices, etc.
The expansion has also resulted in the creation of more employment opportunities with more than 800 landowners and nationals now employed directly or through contractors at the mine.

Q: What were some of the challenges and achievements?
Some of the achievements that we are particularly proud of are:

having one of the best safety records in Australasia, achieving over three years without a lost time injury in 2019;
maintaining a strong focus on community, social and business development programmes;
operating a low-footprint, environmentally responsible operation;
having a workforce that is over 95 per cent locals. Our key challenge has been that the mine is rapidly expanding and is quite busy. However, to date, the mine has performed quite well, a testament to the quality of the team at Kainantu; and,
producing outstanding results from our exploration work both on the mining lease and our exploration leases.
A major challenge that remains is the very poor power supply from PNG Power, which caused significant disruptions during the year.
But these were largely mitigated by the company purchasing more diesel standby generators as part of the expansion.

Q: What was production like in 2019?
In 2019, we produced 82,256 ounces on a gold equivalent basis – representing a 74 per cent increase from 2018 production.
Our 2019 production considerably exceeded our original guidance made in March 2019 of 68,000 to 75,000 ounces gold equivalent, and also our upgraded guidance made in August 2019 of 72,000 to 80,000 ounces gold equivalent.

**Underground drilling at the K92 mine in Eastern Highlands.**

**Kainantu gold mine processing plant in Eastern Highlands. – Picture courtesy of K92 Mining Ltd**

Q: What will 2020 be like (outlook)?
For 2020, we are expecting production of approximately 110,000 to 120,000 ounces gold equivalent, which is over an additional 40 percent increase from gold equivalent production in 2019.
It includes over 8.5 kilometres of development and increased daily ore production rates in excess of 100 per cent over 2020.
We note that our outlook for the year is pending review and will be finalised in the coming weeks.

Q: On the government intervention as regards the tax regimes, what is K92 Mining Ltd’s stand?
Historically, the Government of Papua New Guinea has been very supportive of extractive industries, and this is expected to continue going forward.
The industry is also the largest contributor to the economy and largest export earner.
There has been ongoing consultation with industry on the development of new legislation.
And the current Government has committed to continuing with this consultation with the aim of finalising the new legislation this year.
The Government has certainly indicated that it is seeking an appropriate balanced approach to the taxation regime which includes royalties, levies and other charges, to ensure Papua New Guinea benefits from the development of its natural resources, while at the same time providing the appropriate fiscal environment for mining and exploration companies to invest in exploration and capital development.
K92 Mining expects to continue to be involved in this process, the aim of which is to reach an outcome that is in the best interest for the long-term development and prosperity of Papua New Guinea, while providing the certainty of an appropriate fiscal, regulatory and operating environment for future investment and growth of our industry.