K92 Mining (TSX: KNT) has solidified its financial position by securing a $100 million loan from global commodities trader Trafigura, with whom it has an offtake agreement for the copper/gold concentrates produced at the Kainantu mine in Papua New Guinea.
The loan, which will be secured against K92’s PNG assets, has a four-year term from the date which the first advance of funds are made. The company expects first drawdown to occur in early to mid-Q4 2023. Currently, K92 has a cash balance of $95.6 million and no debt.
In addition, the offtake agreement with Trafigura has been extended for an additional seven consecutive calendar years, beginning January 1, 2026, or until a minimum quantity of 600,000 dry metric tons of concentrate have been delivered to Trafigura.
“We are extremely pleased to be expanding our partnership with Trafigura, with a $100 million loan and amended offtake agreement. Trafigura has been our offtake partner since the start of operations at the Kainantu gold mine, and these agreements reinforce our strong relationship with Trafigura,” K92 CEO John Lewins said in a news release.
He added that the Trafigura loan combined with the company’s cash holdings “effectively finances” the growth capital outlined in the integrated development plan for both the Stage 3 DFS and Stage 4 cases highlighted in the preliminary economic study.
These staged expansions, according to Lewins, would transform Kainantu into a Tier 1 producer with run-rate production of 300,000 oz. and 470,000 oz. gold-equivalent per annum, respectively. The company previously noted that the processing capacity would increase by 140% and 240% respectively under the two cases.
“Importantly, the loan enables K92 to more confidently invest and potentially increase exploration activities while completing the major production expansions,” Lewins said.
The Kainantu property comprises an 830-sq.-km land package in PNG’s Eastern Highlands province, hosting several highly prospective vein field and porphyry targets that are being drill tested.
Shares of K92 Mining traded 2.1% higher at $5.95 apiece by 12:25 p.m. in Toronto. The company has a market capitalization of C$1.4 billion ($1bn).
