K92 Mining TSE: KNT reported higher first-quarter revenue and record cash balances as production at its Kainantu Gold Mine in Papua New Guinea benefited from the commissioning of its Stage 3 processing plant and continued underground development gains, management said on the company’s first-quarter 2026 earnings call.
Chief Executive Officer and Director John Lewins said the quarter included “strong” operational, financial and project delivery performance, while also acknowledging a fatal contractor incident during the period. The company produced 46,743 gold-equivalent ounces in the quarter, with mill throughput of 142,017 tonnes and a head grade of 10.9 grams per tonne gold equivalent.
Cash costs were $785 per ounce of gold and all-in sustaining costs were $1,421 per ounce on a byproduct basis. On a co-product basis, cash costs were $991 per gold-equivalent ounce and all-in sustaining costs were $1,587 per gold-equivalent ounce.
Revenue rises 63% as gold prices lift results
Chief Financial Officer Justin Blanchet said K92 generated revenue of $236.3 million in the first quarter, up 63% from the same period a year earlier. The company sold 44,854 ounces of gold at an average selling price of $4,641 per ounce, compared with 45,886 ounces at an average selling price of $2,739 per ounce in the prior-year period.
Cost of sales rose to $57.3 million from $34.1 million a year earlier, or to $45.5 million from $27.4 million excluding non-cash items. Blanchet said the increase reflected significantly higher tonnes mined and processed as the company ramped up activity tied to the Stage 3 expansion.
Operating cash flow before changes in working capital was $132.9 million, compared with $80.9 million in the prior-year quarter. As of March 31, K92 had $287 million in cash and cash equivalents, working capital of $343.3 million and a net cash position of $242.6 million, all described by Blanchet as records.
Blanchet said the Stage 3 and Stage 4 expansion projects are fully funded and that the company has access to additional liquidity through undrawn credit facilities, including $60 million available on demand. He also said K92 has purchased put option contracts through the end of 2026 covering 10,000 ounces of gold per month at a strike price of $3,500 per ounce. “To be clear, this is not a hedge,” Blanchet said, adding that the company retains upside exposure if spot gold prices are above that level.
Safety incident prompts audits and mitigation measures
Lewins opened the call by addressing a first-quarter incident that resulted in the death of a contractor supporting surface roadwork near the Kumian Creek camp. He said the incident occurred in a designated area about 1.5 kilometers northeast of the process plant and 8 kilometers northeast of the underground mine.
According to Lewins, the contractor and relevant authorities, with K92 oversight, conducted safety audits and implemented mitigation measures that went beyond regulator requirements at K92’s request. A progressive restart of the contractor’s activities began March 1, and the contractor has been fully operational since March 7.
Lewins said K92 had recorded 10 quarters without a lost-time injury before the contractor incident and highlighted the company’s ongoing integration of the Skytrust cloud-based safety and compliance platform. He said the platform is designed to centralize safety and environmental incidents, frontline safety interactions, injury management, inspections, audits and health and safety documentation.
Stage 3 ramp-up advances with new plant and underground gains
Lewins said the Kainantu operation processed all first-quarter material through the new Stage 3 plant, which achieved gold recoveries of 95.1%, above updated definitive feasibility study parameters, and copper recoveries of 94%, in line with DFS results.
The quarter also included record total material moved to surface of 410,356 tonnes and record mine development of 3,007 meters, up 21% year over year. Lewins said March set a monthly development record of 1,067 meters, followed by another record of 1,109 meters in April.
Management said lateral development rates are now exceeding the Stage 3 requirement of 1,000 meters per month, even with some jumbo capacity still allocated to capital projects. Lewins cited the completion of the twin incline internal ramp system, the first material pass and the Puma vent drive as key operational enablers.
The breakthrough of the Puma vent incline and completion of the internal ramp increased underground primary ventilation by 75%, from 200 cubic meters per second to about 350 cubic meters per second, meeting initial Stage 3 ventilation requirements. Lewins said commissioning of the fan chamber is planned around mid-year, which would raise primary ventilation capacity to more than 600 cubic meters per second, with potential expansion to more than 740 cubic meters per second.
K92 reiterated 2026 production guidance of 190,000 to 225,000 gold-equivalent ounces. Lewins said production is expected to be weighted to the second half of the year as additional mining fronts come online and expansion enablers are completed.
Expansion work continues toward Stage 4
Lewins said Stage 3 is designed to support throughput of 1.2 million tonnes per year, equivalent to 300,000 gold-equivalent ounces annually. Stage 4 is expected to raise throughput to 1.8 million tonnes per year and production to more than 400,000 gold-equivalent ounces, with commissioning targeted for late 2027.
The company said 2026 growth capital is expected to total $100 million to $108 million, including $25 million to $28 million for Stage 3 work and $75 million to $80 million for Stage 4 and accelerated growth capital.
Lewins said construction of the paste fill system is progressing, with the tailings filter plant practically complete and first filter cake produced in late April. Once fully operational, the paste fill system is expected to divert about 60% to 70% of tailings underground, reducing surface storage needs and supporting higher mining rates.
Other infrastructure projects advancing include haul road and river crossing upgrades designed to enable 60-tonne surface trucks, with Phase I on track for completion mid-year and Phase II scheduled by year-end. Lewins said a full standby power station expansion to 15.3 megawatts is also expected to be commissioned in the second quarter.
Exploration budget rises as drilling expands
Vice President of Exploration Rob Smillie said K92 has budgeted $31 million to $35 million for exploration in 2026, more than 50% above 2025 levels. He said the company currently has seven underground drill rigs operating at Kora and Judd, five surface rigs at Arakompa and Maniape, and one at Wira, with another surface rig expected this quarter.
Smillie highlighted recent drill results at Kora South and Judd South, including high-grade intercepts near existing infrastructure and deeper results suggesting extension potential. He also said work at Arakompa, located 4.5 kilometers from the Kainantu process plant, is progressing ahead of a maiden resource estimate targeted for mid-year.
During the question-and-answer session, President and Chief Operating Officer David Medilek said positive grade reconciliation in the first quarter was around 10%, similar to the prior quarter. He said high-grade areas that have been top-cut in the resource model tend to reconcile positively, and that the company may refine geostatistical parameters in future resource updates.
Asked about potential shareholder returns, Medilek said the board has discussed returning capital through a buyback or dividend. He said the company’s current thinking is “late this year, early next year,” while noting that cash flow generation is expected to increase in the second half of 2026.
About K92 Mining TSE: KNT
K92 Mining Inc is engaged in the production of gold, copper and silver at the Kainantu Gold Mine in the Eastern Highlands province of Papua New Guinea, as well as exploration and development of mineral deposits in the immediate vicinity of the mine. The Company declared commercial production from Kainantu in February 2018, is in a strong financial position, and is working to become a Tier 1 mid-tier producer through ongoing expansions. A maiden resource estimate on the Blue Lake copper-gold porphyry project was completed in August 2022.
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