October 18, Mines K92 inc. (TSX: KNT) released their third quarter production results. The company announced a record throughput of 87,621 tonnes processed, up 35% year-over-year. Quarterly production rose to 21,908 ounces of gold, 802,545 pounds of copper and 19,736 ounces of silver. The company further announced that the company has approved the expansion of Phase 2A of its Kainantu gold mine, which is expected to increase the annual throughput of K92 by 25% to 500,000 tonnes.
There are currently 11 analysts covering K92 Mining with a 12-month average price target of C $ 11.45, up 65%. Of the 11 analysts, 3 have good buy ratings and 8 have buy ratings. Stifel-GMP has a high selling price target of C $ 14 while the low is C $ 8.75.
In BMO’s memo, they reiterated their C $ 11 price target and outperformance rating, saying K92 is “Building momentum after strong Q3 end”, although the gold equivalent output of 24 122 ounces is lower than their estimates.
Management noted that workforce issues related to COVID-19 are the main reason for mining developments and lower production. For this reason, the higher grade stopes were not mined in the third quarter, which had an impact on the initial grades, which stood at 9 g / t compared to 14 g / t last year.
Although management has reported labor issues, BMO notes that production at this mine reached 49% of total production in the third quarter. They believe that and the start of mining at Judd will help move production into the fourth quarter.
Finally, BMO expects K92 to fall short of the 115,000 to 135,000 ounce directions, writing: “Although we expect a return to strong production in the fourth quarter thanks to an improving COVID-19 situation and at the start of Judd mining, in our opinion, it is unlikely that the fourth quarter can compensate for the challenges encountered earlier in the year. For this reason, they slightly lowered their production forecast for 2021 to 103,000 ounces from 108,000 ounces of gold equivalent.
Below you can see BMO’s estimates for the third quarter and 2021.
Information for this briefing was found through Sedar and Refinitiv. The author has no title or affiliation related to this organization. Not a buy or sell recommendation. Always do additional research and consult a professional before purchasing a title. The author does not hold any license.