K92 Mining Inc has entered into a loan agreement with Trafigura Pte Ltd, a market leader in the global commodities industry, pursuant to which Trafigura will provide a US$100 million (About K354.6 million) senior secured loan to K92.
In addition, the Papua New Guinea subsidiary of the Company, K92 Mining Limited, and Trafigura have amended and restated the offtake agreement dated July 1, 2019 for the purchase by Trafigura of 100 per cent of K92’s copper/gold concentrates produced at the Kainantu Gold Mine in Papua New Guinea (“the Amended Offtake Agreement”).
The loan and the amended offtake agreement will only come into effect upon satisfaction of express conditions precedent, including but not limited to (i) the execution and registration of the Security and (ii) regulatory approvals.
These conditions precedent have not as yet been satisfied. K92 expects first drawdown to occur in early to mid-Q4 2023.
The loan is at the corporate-level and may be used for general corporate purposes, working capital purposes, and capital expenditures. No hedging is required for the Loan.
The loan further strengthens K92’s strong financial position, with US$95.6 million (About K342.8) million and no debt as at June 30, 2023.
K92 Chief Executive Officer and Director John Lewins stated that:
“We are extremely pleased to be expanding our partnership with Trafigura, with a US$100 million loan and amended off-take 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.
“In combination with K92’s already strong cash position of US$96 million at the end of Q2 2023, the US$100 million loan effectively fully finances the growth capital outlined in the IDP for both the Stage three DFS and Stage four PEA cases, which transform Kainantu into a Tier 1 producer with run-rate production of 300 koz AuEq and 470 koz AuEq per annum, respectively.
“Importantly, the loan enables K92 to more confidently invest and potentially increase exploration activities while completing the major production expansions.
“The offtake agreement also secures long-term competitive terms and provides security and confidence in our income from the sale of our concentrate product.”