The Kainantu gold mine in Papua New Guinea’s Eastern Highlands Province has been in continuous expansion since its acquisition by K92 Mining in 2015. CEO John Lewins shares his company’s aspiration to become the PNG’s mining sector’s largest taxpayer – and the investment underpinning it.

The Kainantu mine. Credit: K92 Mining

While some of PNG’s major resources projects are still forthcoming, one capital-intensive project is already in full swing: the expansion of the Kainantu gold mine in Eastern Highlands Province.

Canadian operator K92 Mining has spent or committed 57 per cent (at time of writing) of the US$320 million earmarked for its stage 3 and 4 expansions, which are expected to quadruple current gold, copper and silver production to 470,000 ounces (oz) per year of gold-equivalent by 2027.

“We’ve reinvested in our business, and we’ll continue to reinvest.”

When K92 acquired Kainantu from Barrick Gold in 2015, the operation had been on care and maintenance for six years and had never achieved commercial production. But it had all the ingredients necessary to become a successful mine, according to K92’s CEO, John Lewins.

“We’ve got great infrastructure,” he tells Business Advantage PNG. “We’re right next to the sealed road. We’ve got grid power from the Yonki dam [that supports the Ramu 1 hydroelectric power plant], so it’s also green power. We’ve got an airstrip right next to us. And we’re in the Markham Valley, so we have all the real estate we require to build our assets.”

Expanding through cashflow

K92 achieved commercial production in January 2018, with the processing plant initially capable of handling 200,000 tonnes per annum (tpa) of ore throughput – enabling production equivalent to 50,000 oz of gold per annum.

K92 Mining’s John Lewins. Credit: K92 Mining

The company quickly embarked on its stage 2 and stage 2A expansions, which took the mine to 600,000 tpa by May 2023.

Commissioning of the stage 3 plant will begin in the second quarter of 2025 and will double the plant’s capacity. Work will then begin on stage 4, with the aim of increasing capacity to 1.8 million tpa by the first half of 2027.

Lewins notes that K92 has funded these expansions almost entirely from generated cashflow.

“In 10 years, K92 shareholders have not seen a dividend, but they have seen significant capital growth,” he says.

“We’ve reinvested in our business, and we’ll continue to reinvest, and hopefully at some point or other we’ll be paying dividends to our shareholders.”

Aggressive exploration program

These expansions have been accompanied by an aggressive exploration program, most of it in the 830 square kilometres (km²) of land surrounding the 15km² mining lease area.

“We’re the largest explorer in the country. We’ll spend about US$25 million [on exploration] this year, which I believe is the equivalent of the rest of the industry put together,” Lewins says.

Kainantu currently has a 7.6 million oz gold-equivalent resource, thanks largely to the 2017 discovery of the Kora North deposit – which won the prize for best international discovery at PDAC, the world’s largest annual mining convention, in 2021.

“We’ve significantly grown that resource we inherited. It’s about the fifth-highest grade resource of over six million ounces in the world. It’s testament to the endowment of PNG in the mineral space,” Lewins says.

The current focus is on the adjacent Arakompa deposit, where K92 has four drilling rigs deployed. Lewins believes it has the potential to add another multi-million ounce resource, which could be brought into production in time for the plant’s expansion in 2027-28 and extend Kainantu’s mine life beyond 2038.

In total, K92 has 11 drill rigs deployed across its tenements.

“People talk about the cost of exploration in PNG – and it is expensive. We’ve got helicopters to get us on top of mountains. But our discovery cost is about US$7.50/oz. The world average is about US$50/oz, so targeted exploration can deliver an economic return.”

This is a version of an article first published in the Business Advantage PNG Mining & Energy Special Edition 2024/25, which was published in October 2024.