KNT.TO · 2024-01-01

K92 MINING ANNOUNCES SIGNIFICANT IMPROVEMENT TO ECONOMICS WITH UPDATED KAINANTU GOLD MINE INTEGRATED DEVELOPMENT PLAN Updated Integrated Development Plan

Technical Reports (NI 43-101) Economic Studies

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Telephone: +1 (604) 416-4445 Facsimile: +1 (604) 608-9110 www.k92mining.com

NEWS RELEASE

K92 MINING ANNOUNCES SIGNIFICANT IMPROVEMENT TO ECONOMICS WITH UPDATED KAINANTU GOLD MINE INTEGRATED DEVELOPMENT PLAN

Updated Integrated Development Plan (“IDP”) Highlights (effective date January 1, 2024):

The DFS Case evaluates the Stage 3 Expansion to 1.2 million tonnes per annum

(“mtpa”), consistent with the 2022 IDP, representing a 100% throughput increase from the 600,000 tpa Stage 2A Expansion design throughput (upgraded from 500,000 tpa in the 2022 IDP). Stage 3 involves a new standalone 1.2 mtpa process plant and supporting infrastructure, which is currently under construction, with mining focused on the Kora Central Zone within the Kora Deposit and Judd Deposit, utilizing a cut-off grade of 3.5 grams per tonne (“g/t”) gold equivalent (“AuEq”).

After-tax NPV5% US$680 million at US$1,900 per ounce gold and at around

current spot prices, at US$2,600 per ounce gold, After-tax NPV5% is US$1.2 billion.

Average annual run-rate production of 303,288 ounces AuEq per annum, run-

rate achieved in 2027 and a peak annual production of 319,360 ounces AuEq in 2027.

Life of Mine average cash costs of US$380 per gold ounce or US$694 per AuEq

ounce and all-in sustaining cost (“AISC”)⁽²⁾ of US$665 per gold ounce or US$920 per AuEq ounce over a 7-year mine life. The mine life is now extended to 2030, previously 2028 in the 2022 IDP.

Growth capital cost of US$194 million and life-of-mine sustaining capital cost

of US$337 million.

The alternate PEA Case evaluates two-stages of expansions to a run-rate throughput

of 1.8 mtpa, representing a 200% throughput increase from the 600,000 tpa Stage 2A Expansion design throughput (upgraded from 500,000 tpa). The ultimate run-rate throughput of the second expansion is referred to as Kainantu Stage 4 Expansion, operating two standalone process plants, larger surface infrastructure and mining throughputs achieved by mining Kora Upper, Lower, and Central Zones within the Kora Deposit, and the Judd Deposit, utilizing a cut-off grade of 4.0 g/t AuEq.

After-tax NPV5% of US$2.3 billion at US$1,900 per ounce gold and at around

current spot prices, at US$2,600 per ounce gold, After-tax NPV5% is US$3.5 billion.

Average annual run-rate production of 413,593 ounces AuEq per annum, run-

rate achieved in 2028 and a peak annual production of 484,692 ounces AuEq in 2034.

Life of Mine average cash costs of US$174 per gold ounce or US$633 per AuEq

ounce and all-in sustaining cost (“AISC”)⁽²⁾ of US$432 per gold ounce or US$822 per AuEq ounce over a 14-year mine life. The mine life is now extended to 2037, previously 2032 in the 2022 IDP.

Growth capital cost of US$201 million and life of mine sustaining capital cost

of US$900 million.

Prior to the January 1, 2024 Updated IDP effective date, $15 million of expansion

growth capital was spent. The total growth capital for the project, remains closely aligned with the operational guidance announced on February 22, 2024 of US$210 million. As at September 30, 2024, approximately 63% of the total growth capital for the Stage 3 and 4 Expansions is either spent or committed, and subsequent to quarter end, following the award of the river crossing construction contract in October, approximately 68% of total growth capital has either been spent or committed.

A major driver for the improvement in economics is the significant increase to the

Mineral Resource estimate at Kora and Judd reported in Q4 2023 and incorporated into the Updated IDP, with Measured and Indicated Resources increasing by 14% to 2.6 million ounces at 10.0 g/t AuEq and Inferred Resources increasing by 73% to 4.5 million ounces at 8.5 g/t AuEq.

Both the DFS and PEA Cases are fully funded from existing cash balances, mine cash

flow and available liquidity through credit facilities. K92 is in a strong financial position having, as at June 30, 2024, a cash balance of US$71 million and up to US$110 million in remaining undrawn liquidity from the Trafigura Credit Facilities. K92 recently announced record Q3 2024 AuEq production of 44,304 oz which has resulted in an increase to its cash balance, even with significant capital expenditures for the expansion (see October 9, 2024 press release).

Both the DFS and PEA Cases have a low environmental impact, being supplied with

clean hydroelectricity, mining high grades outlining a low footprint, no-cyanide operation, and a majority of tailings reporting underground as pastefill. K92 plans to upgrade the grid infrastructure, which is expected to significantly reduce greenhouse gas emission intensity per ounce produced near-term.

1. AuEq – calculated on the following metal prices: Au – US$1,900/oz, Ag – US$25.00/oz, Cu – US$4.50/lb. Note that gold equivalent factors for the production estimates are different to those used for reporting the Mineral Resource estimate.

2. AISC – All-In Sustaining Costs include cash costs plus estimated corporate general and administrative (“G&A”) costs, sustaining costs and accretion.

Vancouver, British Columbia, October 16, 2024 - K92 Mining Inc. (“K92” or the “Company”) (TSX: KNT; OTCQX: KNTNF) is pleased to announce the results of its Updated Integrated Development Plan (“Updated IDP”) for its Kainantu Gold Mine Project (the “Kainantu Project”) in Papua New Guinea. The Updated IDP comprises two scenarios: 1) Kainantu Stage 3 Expansion Definitive Feasibility Study Case (“DFS” or “DFS Case”); and 2) Kainantu Stage 4 Expansion Preliminary Economic Assessment Case (“PEA” or “PEA Case”). The results of the Updated IDP will be set forth in an independent technical report prepared in accordance with National Instrument 43-101 - Standards for Disclosure of Mineral Projects (“NI 43-101”) within forty-five days from now.

The Updated IDP supersedes the January 1, 2022 effective date Integrated Development Plan (“2022 IDP”) and has delivered a significant improvement in economics in both the DFS Case and the PEA Case, and particularly the PEA Case, driven by the following key changes:

A significant increase to the Mineral Resource estimate at Kora and Judd reported in Q4 2023 (see December 5, 2023 press release), with Measured and Indicated Resources increasing by 14% to 2.6 million ounces at 10.0 g/t AuEq and Inferred Resources increasing by 73% to 4.5 million ounces at 8.5 g/t AuEq. This has extended the mine life for the DFS Case to 2030 from 2028 and the PEA Case to 2037 from 2032 from the 2022 Integrated Development Plan (see September 12, 2022 press release).
The new off-take agreement with Trafigura, commencing January 1, 2026, which has improved metals’ payabilities for deliveries of concentrates, in addition to amending penalties, treatment and refining charges, and transport charges, all of which are better than the assumptions used in the 2022 IDP.
Significant margin expansion forecasted, as cash costs and all-in sustaining costs in the Updated IDP have only moderately increased from the 2022 IDP, while the economic evaluation gold price has increased from $1,600/oz to $1,900/oz to be closer aligned to recent peer studies and the current commodity price environment. Cut-off grades were slightly modified in the Updated IDP to achieve the optimal mine plan, with the cut-off grade for the PEA Case reduced from 4.5 g/t AuEq in the 2022 IDP to 4.0 g/t AuEq and the cut-off grade for the DFS Case increasing from 3.0 g/t AuEq in the 2022 IDP to 3.5 g/t AuEq. The updated IDP has made only limited changes to the mining method and recovery method from the 2022 IDP, with changes made to improve the pastefill plant and delivery design.
Limited forecasted Updated IDP growth capital cost inflation in a rising commodity price environment. This has been demonstrated to date from the construction activities well underway at the Kainantu Gold Mine for the Stage 3 and 4 Expansions. Importantly, the total growth capital for the project, remains closely aligned with the Operational Guidance announced in February 2024 of $210 million (see February 22, 2024 press release), that incorporated design and scope changes, including improving the expandability of the process plant and redesigning the pastefill plant to mitigate transport and delivery risk (trucking filter cake to an underground pastefill plant – previously involved extensive pumping and piping). Prior to the January 1, 2024 Updated IDP effective date, $15 million of expansion growth capital was spent. As at September 30, 2024, approximately 63% of the total growth capital for the Stage 3 and 4 Expansions has either been spent or committed, and subsequent to quarter end, following the award of the river crossing

construction contract in October, approximately 68% of total growth capital is either spent or committed.

Throughput increase for the PEA Case to 1.8 mtpa from 1.7 mtpa driven by the Stage 2A Plant design throughput being upgraded from 500,000 tpa to 600,000 tpa as demonstrated from recent planted performance.

The Updated IDP, which includes the Kainantu Stage 3 Expansion DFS Case and the alternative Kainantu Stage 4 Expansion PEA Case, was independently prepared by Entech Pty Ltd of Perth, Australia (“Entech”); ATC Williams Pty Ltd (“ATC Williams”) of Brisbane, Australia; WSP Canada Inc. (“WSP”) of Ontario, Canada; Metallurgical Management Services Pty Ltd (“MMS”) of Perth, Australia, EMM Consulting Pty Ltd (“EMM”) of Queensland, Australia, H & S Consultants Pty. Ltd (“H&SC”) of Sydney, Australia, and; GR Engineering Services Limited (“GR”) of Brisbane, Australia, with some cost information provided by K92.

The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the PEA will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Mineral Reserves are defined by the Definitive Feasibility Study and are not predicated on the Preliminary Economic Assessment in any way.

John Lewins, K92 Chief Executive Officer and Director, stated, “The Updated Integrated Development Plan is a major milestone for K92, marking a significant improvement to mine economics by incorporating a larger updated Mineral Resource estimate, a new off-take agreement with Trafigura, more robust engineering designs and information from our ongoing construction activities, along with margin expansion from improved commodity prices.

This has resulted in the DFS Case NPV5% increasing from US$586 million at $1,600/oz in the 2022 IDP to, in the Updated IDP, US$680 million at $1,900/oz, or US$1.2 billion at near-spot prices of $2,600/oz. The PEA Case saw its NPV5% rise from US$1.3 billion at $1,600/oz in the 2022 IDP to, in the Updated IDP, US$2.3 billion at $1,900/oz or US$3.5 billion at near-spot prices of $2,600/oz gold.

Importantly, the realization of strong cash flow and the economic benefits of the Updated IDP are expected near-term. In less than nine months, the commissioning of the Stage 3 Plant Expansion is planned to begin, marking the start of K92’s transformation into a Tier 1 Mid-Tier Producer. Concurrent with advancing the Stage 3 and 4 Expansions, we remain very active in improving upon the outcomes of the study, particularly through exploration. There are currently 11 drill rigs on site of which 6 are operating underground and 5 on the surface, focused on upgrading and expanding resources both near-mine and across our highly prospective gold-copper district.

Later this month, we are excited to host a large group of analysts and investors on-site to showcase our progress to date in multiple areas and also the mining-friendly jurisdiction of Papua New Guinea.”

1 – Kainantu Updated IDP - Definitive Feasibility Study Case

1.1 - DFS Overview

The DFS evaluates an expansion of mining and processing to a run-rate throughput of 1.2 mtpa, representing a 100% increase from the Stage 2A Expansion run-rate of 600,000 tpa. This expansion is referred to as the Stage 3 Expansion and involves on-site treatment of ore by a new standalone 1.2 mtpa process plant, utilizing single stage crushing, SAG and ball milling, along with gravity and flotation recovery.

The DFS and Mineral Reserve statement is derived from the global Kora and Judd Mineral Resource Estimate (September 12, 2023 effective date), net of post-resource mining depletion from September 12, 2023 to December 31, 2023, and does not incorporate post-resource-estimate drilling results.

Table 1.1: DFS Highlights

US Dollars unless otherwise stated		Updated IDP
		Life of Mine (starting January 2024)	Stage 3 Run-Rate(1) (2027-2029)
	Production
Mine life (years) Total mill feed (000s tonnes) Average mill throughput (000s tonnes per annum) Total Metal Production AuEq (000s ounces) Gold (000s ounces) Copper (million lbs) Silver (000s ounces) Peak Annual Production Year AuEq (000s ounces per annum) Average Annual Metal Production AuEq (000s ounces per annum) Gold (000s ounces per annum) Copper (mlbs per annum) Silver (000s ounces per annum) Average Grade AuEq grade (g/t) Gold grade (g/t) Copper grade (%) Silver grade (g/t) Average Recovery Gold recovery (%) Copper recovery (%) Silver recovery (%)		7 years 6,176 882 1,561 1,223 126 2,910 2027 319 223 175 18 416 8.5 g/t 6.7 g/t 1.0% 19 g/t 93% 94% 78%	3,600 1,200 910 666 92 1,986 303 222 31 662
	Costs
Mining cost (US$/t ore mined) Processing cost (US$/t processed) G&A cost (US$/t processed)		$68.05 $19.44 $37.11	$57.73 $18.12 $33.38

US Dollars unless otherwise stated		Updated IDP
		Life of Mine (starting January 2024)	Stage 3 Run-Rate(1) (2027-2029)
Paste plant cost ($/t processed) TSF cost ($/t processed) Transport and Insurance cost ($/t processed) Total operating cost per tonne processed (US$/t) Royalties ($/t processed) Sustaining capital per tonne processed (US$/t) Total cost per tonne processed (US$/t) Growth capital expenditure ($m) Sustaining capital expenditure ($m) Total capital expenditure with closure costs ($m) Cash cost per ounce AuEq ($/oz)(2) All-in sustaining cost per ounce AuEq ($/oz)(3) Cash cost per ounce gold ($/oz)(2) All-in sustaining cost per ounce gold ($/oz)(3)		$10.31 $0.64 $9.85 $145.40 $10.90 $54.59 $210.88 $194 $337 $541 $694 $920 $380 $665	$13.32 $0.48 $10.93 $134.56 $10.93 $34.47 $179.96 $646 $789 $204 $397
	Base Case Economic Analysis at US$1,900/oz Gold, US$4.50/lb Copper and US$25.00/oz Silver
After-tax NPV0% After-tax NPV5%(4)		$869 million $680 million
	Economic Analysis at $2,500/oz Gold, US$4.50/lb Copper and US$25.00/oz Silver
After-tax NPV0% After-tax NPV5%(4)		$1,359 million $1,091 million

1. Run-rate is calculated based on 2027-2029.

2. Cash costs are net of by-product credits and are inclusive of mining costs, processing costs, site G&A and refining charges and royalties.

3. AISC includes cash costs plus estimated corporate general and administration costs, sustaining costs, and accretion.

4. Net present value is calculated utilizing monthly discounting.

1.2 - Kainantu Mineral Reserve Statement

The Mineral Reserve estimate outlined in the DFS was prepared by Daniel Donald FAusIMM MSME of Entech, in accordance with the classification criteria set out in the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves prepared by the CIM Standing Committee on Reserve Definitions. Daniel Donald is an independent consultant of the Company and is a Qualified Persons as defined by NI 43-101. The total Mineral Reserve for the Kainantu Project is shown in Table 1.2. The Mineral Reserve estimate is based on the Global Kora and Judd Mineral Resource estimate (September 12, 2023 effective date – refer to Table 1.3), net of post-resource mining depletion from September 12, 2023 to December 31, 2023, of 183,768 tonnes at 8.1 g/t Au, 0.9 % Cu and 15 g/t Ag.

Table 1.2 – Kainantu Mineral Reserve Statement (Effective Date January 1, 2024)

	Kora and Judd Deposit Reserve Summary (January/2024)
Tonnes mt Kora Deposit Proven 2.95		Gold g/t moz 7.4 0.70	Silver g/t moz 19 1.9	Copper % kt 1.1 31
Probable 2.52		5.7 0.46	19 1.6	1.0 26	7.6 0.61
Proven & Probable 5.47		6.6 1.16	19 3.4	1.1 57	8.6 1.50

	Kora and Judd Deposit Reserve Summary (January/2024)
Tonnes mt Judd Deposit Proven 0.24			Gold g/t moz 8.3 0.06			Silver g/t moz 17 0.1			Copper % kt 0.6 1
Probable 0.47			6.5 0.10			13 0.2			0.5 2			7.5 0.11
Proven & Probable 0.71			7.1 0.16			14 0.3			0.5 4			8.1 0.18
	Consolidated
	Total Proven	3.19		7.5	0.77		19	2.0		1.0	33		9.4	0.96
	Total Probable	2.99		5.8	0.56		18	1.8		1.0	28		7.6	0.73
	Total Proven & Probable	6.18		6.7	1.32		19	3.7		1.0	61		8.5	1.69

The long-term metal prices used for calculating the financial analysis is US$1,900/oz gold, US$4.50/lb copper, US$25/oz silver.
Gold Equivalents are calculated as AuEq = Au g/t + Cu % *1.62406 + Ag g/t*0.01316. Metal payabilities and recoveries are not incorporated into this formula.
A minimum mining width of 3.0 m has been applied for stoping, inclusive of a 1.0 m dilution skin.
In addition to the 1.0 m dilution skin, additional dilution of 5% has been added for Avoca mined stopes and 2.5% for long hole stoping with pastefill. Where a stope is within 5.0m proximity of the HW or FW of the fault gouge, an additional 1.0m of dilution was added at a grade averaging 1.42g/t AuEq. This results in a total average dilution of 27.8%.
Mining recoveries of 90% have been applied to Avoca mined stopes, and 95% for long hole stoping with pastefill.
A cut-off grade of 3.5 g/t AuEq was used to define stoping blocks. Stope shapes with uneconomic development were excluded. The cut-off grade takes into account site operating costs, G&A costs, sustaining capital costs and relevant processing and revenue inputs.
Measured Mineral Resources were used to report Proven Mineral Reserves.
Indicated Mineral Resources were used to report Probable Mineral Reserves.
Tonnage and grade estimates include dilution and recovery allowance.
The Mineral Reserves reported are not added to Mineral Resources.

1.3 - Kainantu Mineral Resource Estimate

The Company’s current Mineral Resource estimate for Kora and Judd (effective date of September 12, 2023) was completed by H & S Consultants Pty. Ltd. (Table 1.3). The Irumafimpa deposit was not incorporated into the Updated IDP and will be reviewed at a later date.

Table 1.3 – Global Kora and Judd Mineral Resource Estimate, (3.0 g/t AuEq cut-off)

	Kora Deposit Resource Summary (September 12/2023)
Tonnes mt Kora Deposit Measured 3.7		Gold g/t moz 8.7 1.0	Silver g/t moz 21 2.5	Copper % kt 1.2 45	Gold Equivalent g/t moz 11.0 1.3
Indicated 3.1		7.0 0.7	22 2.2	1.3 41	9.4 1.0
Measured & Indicated 6.9		7.9 1.8	21 4.7	1.3 86	10.2 2.3
Inferred 14.3		5.6 2.6	29 13.2	1.6 231	8.6 3.9

	Judd Deposit Resource Summary (September 12/2023)
Tonnes mt Judd Deposit Measured 0.4			Gold g/t moz 9.1 0.12			Silver g/t moz 19 0.2			Copper % kt 0.8 3			Gold Equivalent g/t moz 10.6 0.14
Indicated 0.8			6.4 0.17			16 0.4			0.7 6			7.8 0.21
Measured & Indicated 1.2			7.2 0.29			17 0.7			0.8 9			8.7 0.35
Inferred 2.3			6.3 0.45			16 1.1			0.8 17			7.7 0.56
	Consolidated
	Total Measured	4.1		8.8	1.2		20	2.7		1.2	48		10.9	1.5
	Total Indicated	4.0		6.9	0.9		21	2.6		1.2	47		9.1	1.2
	Total Measured & Indicated	8.1		7.8	2.0		20	5.3		1.2	96		10.0	2.6
	Total Inferred	16.5		5.7	3.0		27	14.3		1.5	248		8.5	4.5

The Independent and Qualified Person responsible for the Mineral Resource estimate is Simon Tear, P.Geo. of H & S Consultants Pty. Ltd., Sydney, Australia, and the effective date of the estimate is September 12, 2023.
Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
Geological interpretation has generated a series of narrow, sub-vertical vein structures based on delineated wireframes on 10 m, 20 m and 25 m spaced cross sections. The design of the lode wireframes is based on a combination of logged geology, Au, Cu & Ag assay grades and locally on a nominal minimum mining width of 5.2 m, all coupled with geological sense.
Resources were compiled at 3.0 g/t gold equivalent cut-off grades for Kora and Judd.
Density (t/m³) was modelled using Ordinary Kriging on 2,778 sample measurements. Areas within the mineral wireframes where no density grades were interpolated had average default values inserted at appropriate levels.
Reported tonnage and grade figures are rounded from raw estimates to reflect the order of accuracy of the estimate.
Minor variations may occur during the addition of rounded numbers.
Estimations used metric units (metres, tonnes and g/t).
Gold equivalents are calculated as AuEq = Au g/t + Cu%*1.6481+ Ag g/t*0.0114. Gold price US$1,700/oz; Silver US$22.5/oz; Copper US$4.00/lb. Metal payabilities and recoveries are incorporated into the AuEq formula. Recoveries of 95% for copper and 80% for silver were used.

1.4 - DFS Mining Operations

K92 engaged Entech to undertake the DFS for the Kainantu Project, which involved:

Applying financial and processing parameters to determine appropriate cut-off grades for stope design.
Generating three-dimensional stope shapes and mining inventory using the Datamine Mineable Shape Optimiser (MSO) program.
Creating a development layout to suit the MSO inventory.
Geotechnical assessment and generating the stoping parameters.
Ventilation design and ventilation tradeoff studies.
Mining capital and operating costings.

The Stage 3 Expansion mine plan considered in the DFS is designed as an incline access operation with a series of ore passes for efficient material movement between sublevels and the twin incline for material transport to surface. The DFS mine plan initially employs a long hole open stoping mining method utilizing Avoca and Modified Avoca mining methods, which are currently employed at the mine. Upon construction of the pastefill plant, the mining method transitions to long hole open stoping with pastefill in Q3 2025.

Long hole open stoping has been successfully executed at both the Kora and Judd deposits, with the first long hole stope mined in Q1 2020 at Kora, and Q4 2021 at Judd. The Avoca mining method involves backfilling from the overcut sublevel while the long hole stope is advanced from the undercut sublevel to limit the strike length of the open stope. By limiting the strike length of the open stope, the method is designed to provide sufficient stability to the stope walls and backs, increasing the ultimate strike length extracted. The application of cemented pastefill provides improved geotechnical conditions for less dilution and higher mining recovery factors, greater operating flexibility through the ability to mine above and below pastefill and a reduction in surface tailings storage requirement.

Stopes were identified for the mine plan contained in the DFS based on the Datamine Mineable Shape Optimizer (MSO) program at a cut-off grade of 3.5 g/t AuEq. Stope shapes with uneconomic development access requirements were excluded. Dilution was estimated based on a 0.5 m dilution skin for both the footwall and hanging wall using the MSO program for a minimum stope width of 3.0 m. Additional dilution factor of 5% was added for stopes utilizing Avoca and Modified Avoca and 2.5% for stopes with pastefill. Where a stope is within 5.0 m proximity of the HW or FW of the fault gouge, an additional 1.0 m of dilution was added at a grade averaging 1.42g/t AuEQ. The overall dilution averaged 27.8%. Mining recovery factors of 90% and 95% were applied for long hole open stoping with Avoca and long hole open stoping with pastefill, respectively. The life of mine average head grade is 6.7 g/t Au, 1.0 % Cu and 19 g/t Ag or 8.5 g/t AuEq.

The DFS Case operates at the Stage 2A Expansion 600,000 tpa throughput rate until mid-2025, where the operation commences ramp up to the Stage 3 Expansion run-rate of 1.2 mtpa in late Q2 2025. Mining is predominately from the Kora Central Zone within the Kora deposit and the Judd deposit. See Table 1.6 for a material movement summary as part of the simplified economic model.

Figure 1.1 – DFS Life of Mine Plan – Lateral, Vertical Development and Stope Shapes at 3.5 g/t AuEq cut-off grade (looking West)

1.4 - DFS Mineral Processing, Tailings and Infrastructure

K92 engaged GR Engineering Services, WSP, and ATCW to complete and update the DFS Stage 3 Expansion process plant, pastefill plant, tailing facility and integration of surface infrastructure design. The DFS involves the construction of a standalone 1.2 mtpa processing plant and supporting infrastructure. The new plant is adjacent to the existing process plant, which is undergoing a Stage 2A Plant Expansion with an upgraded design throughput of 600,000 tpa (previously 500,000 tpa). The existing plant will be placed on care and maintenance in Q4 2025 upon the commissioning and ramp-up of the Stage 3 Expansion Process Plant commencing in late Q2 2025.

Run-of-mine (ROM) material is trucked ~6 km from the 800 Portal to the Kainantu process plant, where it is either stockpiled or direct tipped into the crusher. The 1.2 mtpa processing plant design flowsheet incorporates a conventional single stage jaw crusher (200 tph) reporting to a crushed ore overflow surge bin and dead stockpile which provides 12 hours of stockpile capacity. The primary crushed ore supplies a SAB milling circuit (150 tph) that includes an open circuit SAG mill and closed circuit ball mill. The ball mill product reports to hydrocyclones, with cyclone overflow reporting to the flotation circuit and the cyclone underflow stream being split between the gravity circuit, flash flotation circuit and ball mill for grinding.

The gravity circuit involves one batch centrifugal concentrator followed by two stages of gravity separation using shaking tables to upgrade the gravity concentrate, which is then calcined and smelted to produce gold doré. The flotation circuit includes flash flotation and conventional sulphide flotation, followed by thickening and filtering to produce a gold-copper-silver concentrate. The circuit is based on simple conventional technology with the flowsheet largely similar but optimized from the existing Kainantu processing plant. The key difference between the existing plant and the proposed Stage 3 Expansion process plant is the implementation of a one stage crushing circuit (vs two stage crushing) and two stages of milling with a SAG and ball mill (vs one stage of ball milling).

Tailings management upgrades would be part of the Stage 3 Expansion, through the construction of a pastefill plant to provide improved underground support and reduce surface tailings deposition needs. Thickened tailings at the process plant are designed to be dewatered in filter presses and trucked to the underground pastefill plant, with the final pastefill product pumped to stope voids as fill. Remaining thickened tailings report to the tailings impoundment on the surface. To support the increased processing capacity, implementation of the pastefill plant and increased underground mining activity, the standby diesel generator capacity is expanded.

Papua New Guinea Power Limited (“PNG Power”) have completed engineering information which has been used in the DFS and involves an upgrade of the local electrical grid to facilitate improved availability and distribution of clean hydroelectricity to the mine. This is expected to considerably reduce the mine’s Scope 1 and Scope 2 greenhouse gas emission intensity per ounce produced - the amount of diesel fuel consumed for backup generators. K92 has already engaged with PNG Power to commence this project and the Company expects it to have a notable improvement on our greenhouse gas emission intensity over the next 6 to 12 months. In June 2023, the Company announces its 2030 greenhouse reduction target, as part of its ongoing overall sustainability commitments to reduce Scope 1 and Scope 2 emissions by 25% on a business-asusual basis by 2030 (a 25% reduction against forecast Scope 1 and 2 GHG emissions by 2030 assuming no mitigation measures are implemented to reduce carbon emissions). Further information on the GHG target and the overall approach to sustainability is available in the Company’s 2022 and 2023 Sustainability Reports.

The tailings storage facility (“TSF”) design was completed by ATC Williams. With the application of pastefill significantly reducing the amount of tailings reporting to surface, the current storage facility approved has sufficient capacity (constructed as staged development) for the DFS mine plan. The TSF is constructed as a downstream type, utilizing Australian and International guidelines and standards.

Figure 1.2 – DFS 1.2 mtpa Process Plant Flowsheet

1.6 - DFS Capital and Operating Costs

The initial capital cost estimate in the DFS includes contingency ranging from 7% to 15% depending on the capital item, with the major items outlined in Table 1.4. Operating costs are presented in Table 1.5.

Table 1.4: DFS - Capital Cost Estimates

US Dollars unless otherwise stated Process Plant $90.3m Paste Plant $42.5m River Crossing $14.4m Power Station $10.3m Electrical Infrastructure $6.9m OHPL $1.9m Maintenance Facilities $3.0m Warehouse $0.9m Owner’s Team, Approvals, Indirects $20.1m Camp Upgrade $4.2m Growth Capital $194.4m

Total Life of Mine Sustaining Capital $337.1m Totals may differ due to rounding

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