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Drilling of Papua New Guinea Deposit Returns 'Appreciable Widths,' 'High Grades a Plenty'
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A Haywood report explains the positive drill results from K92 Mining's Kora.

In a July 22 research note, Haywood Securities analyst Geordie Mark reported that K92 Mining Inc. (KNT:TSX.V) just announced a positive drilling update on underground drilling at Kora.

"The consistency in hitting gold mineralization at Kora is impressive. . .step outs continue to show growth potential without bounds," Mark wrote about the results. With its efforts, K92 aimed to increase drill density across up- and down-dip orientations and toward the south. Ultimately, the objective was to convert and expand the existing resource.

The analyst explained why the results are positive. For one, the width of the intersections encountered bode well for converting the resource and, in certain areas, boosting the grade. The average thickness hit in the K1 vein was 2.64 meters (2.64m) and 3.94m in the K2 vein. 

Two, stepout holes testing the K2 hanging wall vein beyond the existing resource boundary showed that high-grade mineralization extended into that area. For instance, stepout hole KMDD0343 demonstrated 17.4m of 10.2 grams per tonne gold equivalent (10.2 g/t Au eq).

Three, the high grades of the intersections encountered were equivalent to those of the existing Measured & Indicated resource, 10.45 g/t Au eq. The grade of more than half of the reported intersections was greater than 10 g/t Au eq. These new grades should also positively affect the existing resource grade.

High grades are evident in some of the drill result highlights, which Mark provided. Intercepts from K1 included 71.64 g/t Au eq over 3.00m (hole KMDD0286) and 37.98 g/t Au eq over 5.35m (hole KMDD0292). In K2, hole KMDD0286 returned 12.75 g/t Au eq over 2.90m.

Mark pointed out that the resource update might support a larger operation than the one outlined in the preliminary economic assessment, which has a 1 million tonne per annum nameplate rate. The definitive feasibility study for a stage three expansion is anticipated in H1/22.

Haywood has a Buy rating on K92 Mining, which remains one of its Top Picks. "We believe K92 should garner further interest from investors given its re-rating potential supported by a growing production base at Kainantu, and near-mine resource expansion opportunities at Kora, Judd, Karempe, and Blue Lake," the analyst wrote. Haywood's target price on K92 is CA$11 per share; the stock is currently trading at around CA$9.


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Disclosures from Haywood Securities, K92 Mining Inc., July 22, 2021

Analyst Certification: I, Geordie Mark, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.

Important Disclosures
Of the companies included in the report the following Important Disclosures apply:
▪Haywood Securities, Inc. has reviewed lead projects of Equinox Gold Corp. (EQX-V), Calibre Mining Corp. (CXB-T), Galiano Gold (GAU-T), K92 Mining Inc. (KNT-T) and a portion of the expenses for this travel may have been reimbursed by the issuer.
▪ Haywood Securities Inc. or one of its subsidiaries has received compensation for investment banking services from Equinox Gold Corp. (EQX-V) in the past 12 months.
Other material conflict of interest of the research analyst of which the research analyst or Haywood Securities Inc. knows or has reason to know at the time of publication or at the time of public appearance: n/a.

Research policy is available here.

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