With a ten-year extension to its mining lease secured, K92 Mining is moving to the next phase of its project to transform the Kainantu mine in Papua New Guinea. Business Advantage PNG spoke with CEO John Lewins about the vision to create a world-class gold mine.

A view from above the site of K92’s operations in Papua New Guinea. Credit: K92 Mining

In December 2022, Canadian gold producer K92 Mining, operator of the Kainantu gold mine, was granted a mining lease extension out to June 2034. 

The ten-year extension is encouraging the miner to forge ahead with two further stages of mine expansion which will dramatically increase production at the gold mine in PNG’s Eastern Highlands Province. 

Stage 3, now under way, will increase annual processing throughput by 140 per cent, up to 1.2 million tonnes per annum (mtpa). Stage 4, which will be complete by 2026, will increase it by 240 per cent (to 1.7 mtpa).

While the mine-life at Kainantu remains unclear, K92 Mining’s CEO John Lewins advises Business Advantage PNG that it could easily exceed 30 plus years. 

‘Kainantu is expected to hit peak production of 500,192 oz gold equivalent in 2027, at a low life-of-mine average all-in sustaining cost of US$687 per ounce,’ he says.

PNG success story

Through hard work and a lot of drilling in the mine lease area, K92 has taken an unproductive mine that Barrick Gold was keen to offload in 2015, and transformed it into the country’s most prospective gold mine. 

Including Stages 3 and 4, it has invested around K1 billion in refurbishment and expansions since acquiring Kainantu. Over the last six years, it has more than tripled mine capacity.

‘PNG has the potential to host at least another six new mines with world-class copper/gold deposits.’

High grade low-cost

In addition to having the world’s third-highest grade deposits (9.5 grammes of gold per tonne), Lewins attributes the company’s low-cost production/expansion to encouraging topography, climate, and infrastructure.

‘In our business, grade is king and, sitting in the Markham Valley, which is 20km wide, we have all the real estate to build whatever we need in terms of infrastructure,’ Lewins notes.

‘Add to this grid power 20km away, a sealed highway, an existing airstrip, plus a tailings dam and a port, and we have some powerful dynamics working for us.’

Benefits of future investment

Sir Ano Pala, Mining Minister announces the extension of the mining lease for Kainantu with John Lewins, CEO of K92 Mining. Credit: K92 Mining

Having grown its workforce from 100 in 2015 to 1500 in 2022, K92 plans headcount to grow to 2000 by 2024 and 2500 by 2026.

Lewins observes that the benefits of the Kainantu expansion are being seen at both a national and local level, with K92 Mining the second largest taxpayer in PNG’s mining sector in 2021/22.

In addition to multiple joint venture business opportunities already created, including in catering and camp management, security and road transport, the miner is also currently working with the PNG Power to upgrade the distribution and reliability of the Yonki Hydroelectric Dam.

Tier 1 mine?

Truck Being loaded at the Twin Incline. Credit: K92 Mining

Ultimately, the goal is to transform Kainantu into a Tier 1 mine: large, long-life and low-cost. 

‘Expansions are expected to deliver over K3.3 billion to local communities over the next 10 years,’ says Lewins.

K92 expects to self-fund Kainantu’s planned expansion from the mine’s own cash flow and to substantially increase exploration for further deposits. 

It spent K65 million on exploration in PNG in 2022 and is focused on the discovery of new vein and porphyry deposits, which Lewins believes could lead to the development of new major mines.

‘PNG has the potential to host at least another six new mines with world-class copper/gold deposits, plus other opportunities.’