K92 Mining Inc.

Thank you, Operator, and thanks, everyone, for attending K92 Mining's 2024 Second Quarter Results Conference Call. We hope you and your families are doing well. In addition to myself, we have on the line John Lewins, Chief Executive Officer and Director, and Justin Blanchett, Chief Financial Officer. I would also like to remind everyone that after the remarks from management, the call will be followed by a Q&A session. As we will be making forward-looking statements during the call, please refer to the cautionary notes and risk disclosure in our MD&A and slide 2 of the webcast presentation. Also, please bear in mind that all dollar amounts mentioned in the conference call are in United States dollars unless otherwise noted. Now, I'll turn it over to John to provide you with an overview.

Thank you, David, and welcome, everyone. We begin with safety, K92's number one priority. At the end of the second quarter, K92 marked a major achievement with zero lost time injuries recorded over the last 12 months. Over this period, two independent safety audits were conducted. From these audits, a number of actions were identified and many actions have been taken and completed. Safety technology on site has been enhanced, including the introduction of in-cab monitoring and a proximity and collision avoidance system, with more systems planned for the future. Culturally, there's also been multiple positive leading indicators. For several consecutive quarters, there has been a significant increase in job safety assessments to reinforce our safety mindset, and the number of safety warnings from our in-cab monitoring system has actually significantly reduced. Changes to personnel have been made where required. Resources have been and are being expanded for safety and training. As stated on previous conference calls, we take the increased lost-term injury frequency rate in 2023 very seriously, while also noting that historically K92 has operated with one of the best safety records in Papua New Guinea and the broader Australasia region, as shown in the chart. I'd like to reiterate that K92 relentlessly pursues our goal of achieving zero harm amongst our workforce. K92 is extremely pleased to have announced its 2023 sustainability report in June. The report builds on previous versions, enhancing our ESG reporting disclosure and our alignment with the global frameworks of SASB and TCFD. The report highlights K92's strong commitment to ESG and to the people and the country of Papua New Guinea. And this includes our focus on hiring and developing local content. with approximately 94% of our workforce Papua New Guinean nationals, including a majority from our local communities. Our strong commitment to supporting the local economy, including 24.5 million of expenditure to local support joint ventures, and procurement of 105 million incurred in Papua New Guinea, representing 56% of our total procurement for the mine. Our delivery of significant benefits to the country with 26.8 million of taxes and royalties paid, plus 0.8 million in direct community investment. Our commitment to combating climate change with emission reduction targets set for 2030. So K92 is extremely proud of the positive impact it's having on the prosperity and development of Papua New Guinea. We encourage you to read our report found at www.k92mining.com. In May 2024, K92 achieved a major milestone with the commencement of its inaugural infrastructure tax credit scheme project to upgrade the Konkua-Billimoia road. The $6.6 million project, inclusive of $0.5 million of general administration for the project itself and for other ITCS projects, is expected to be transformational for many of our communities, enabling reliable and efficient sealed road access to the main road network. This also opens up many opportunities for our community, including increased trade and business development. The picture on the right is a groundbreaking ceremony attended by the Honourable Simon Sear, Governor of Eastern Highlands Province and K92's VP Government and Community Affairs, Philip Samar. Funding for the project is through a tax credit scheme with up to 2% of assessable income to be allocated by K92 for government-approved community projects and deducted from future corporate tax payable. It's an excellent program. We're proud to be part of it and we look forward to positively transforming the infrastructure of our local communities through this and many other projects to come. Moving on to operational performance. During the quarter, the Canantu gold mine produced 24,347 ounces gold equivalent. As previously announced, production for the quarter was impacted by the temporary suspension of underground operations for approximately a month starting in mid-March as a result of a Form 29 issued by the Mineral Resources Authority of Papua New Guinea for a non-industrial fatal incident which occurred on site and this significantly impacted March and also April production as underground operations needed to be re-ramped up and processing stockpiles needed to be rebuilt from scratch. During the quarter, a total of 95,582 tons were processed at a head grade of 8.5 grams per ton, with a cash cost of $919 an ounce and an all-in sustaining cost of $1,510 an ounce. As annotated on the chart, all in-sustaining costs have been elevated for the past few quarters as the company continues to make a considerable investment in the Stage 3 expansion, particularly in 2024, with costs expected to decline considerably after delivering the expansion. I think it's important to highlight that prior to the non-industrial incident, Q1 was actually on track to be one of our strongest quarters on record, and a lot of positives can be taken from that going forward. Operational performance in May and June was strong, and as outlined in our operational guidance earlier in the year, the second half of the year is expected to be our strongest. We reiterate our 2024 operational guidance. In terms of key operational quarterly physicals, K92 has demonstrated the ability to sequentially expand the operation for several years, with physicals in the first half of the year clearly impacted by the temporary suspension of underground operations that impacted that March and then in April. During the first half of the year, the process plant has continued to be a major operational positive. In the first quarter, the process plant set multiple monthly, weekly and daily throughput records, exceeding the 2A throughput by 35%, 57% and 75% respectively, clearly demonstrating that with tons in front of it from the mine, it is extremely capable and provides significant optionality going forward. The records also highlight the potential that the Stage 3 process plant, which was designed on the same throughput parameters as the Stage 2a process plant, is much more capable than its 1.2 million tons per annum nameplate design. In the second quarter, the process plant set records in terms of metallurgical recoveries. As shown in the bar charts, gold and copper recoveries were significantly higher than both 2023 and Q1 2024, and importantly, higher than our integrated development plan assumptions. We see additional upside to recoveries on delivery of the Stage 3 process plan under construction, which is a more optimal plan design. I will now turn over to our Chief Financial Officer to discuss our financial results.

During the second quarter of 2024, we had revenue of $47.8 million. We sold 19,064 gold ounces at an average selling price of $2,246 compared to 28,141 ounces at an average selling price of $1,883 in the prior year. As at June 30, 2024, there was 4,968 gold ounces in inventory, including both Concentrate and Dore, an increase of 3,291 gold ounces when compared to March 31 due to timing of sales. During the second quarter of 2024, cost of sales was $27.7 million compared to $29.2 million in the prior year, or $19.4 million compared to $21.8 million when excluding non-cash items. Cost of sales is lower primarily due to reduced variable costs including consumables and haulage associated with throughput, which decreased when compared to 2023. Q2 2024 cash flow from operating activities before changes in working capital was $17.3 million compared to $16.2 million in the prior year. As of June 30, 2024, we had $71.1 million in cash and cash equivalents, spending $29.8 million in expansion capital in the quarter. We had a working capital balance of $91.7 million and had a net debt balance of $38.9 million on the balance sheet. In June, K92 established two credit facilities with Trafigura, referred to as a loan in the financial statements, to borrow up to $120 million, with an accordion feature that allows for an increase to $150 million. As of June 30, K92 has drawn $40 million from the loan and has since drawn an additional $20 million or $60 million in total. There are no restrictions on the remaining $60 million that may be drawn from the loan. Further, the $20 million of restricted cash shown on the balance as security for the loan can become unrestricted on January 1st, 2025, meaning we have access to an additional $80 million. As John mentioned, during the second quarter, The Kanantu Gold Operations produced 21,661 ounces of gold, 1,246,639 pounds of copper, and 26,754 ounces of silver, or 24,347 ounces of gold equivalent. We sold 19,064 ounces of gold, 898,578 pounds of copper, and 18,467 ounces of silver. incurred a cash cost of $919 and an all-in sustaining cost of $1,510 per ounce of gold, which was significantly below our selling price of $2,246 per ounce. Our second quarter cash cost per ounce increased to $919 from $597 in 2023. The increase was due to the higher cost of sales from expenditures incurred during the temporary suspension which were expense directly to cost of sales, lower amounts of development, and a lower amount of byproduct credits. It is important to note that we will see downward pressure on costs via economies of scale as operations ramp up and the Stage 3 expansion is complete. I will now turn the call back to John to continue with the rest of the presentation.