TORONTO, Feb. 14, 2022 /CNW/ - Karora Resources Inc. (TSX:
KRR) ("Karora" or the "Corporation") is pleased to announce 2022
gold production guidance of 110,000 – 135,000 ounces and all-in
sustaining cost (AISC)1 cost guidance of US$950 – US$1,050
per ounce sold. Karora is also pleased to provide its first nickel
production guidance at Beta Hunt (since its 2020 re-naming),
following a successful 2021 drilling campaign. Nickel production
for 2022 is forecasted to range between 450 - 550 nickel tonnes.
Karora has used a conservative nickel price assumption of
$16,000 per tonne in its
AISC1 by-product credit forecast. Karora notes the 2022
nickel guidance does not include any nickel production from the
newly discovered 50C/Gamma zone.
Table 1 – 2022 GUIDANCE
PRODUCTION &
COSTS
|
Gold
Production
|
koz
|
110 – 135
|
Payable Nickel
Production2
|
tonnes
|
450 - 550
|
All-in sustaining
costs (AISC) 1
|
US$/oz
|
950 – 1,050
|
|
CAPITAL
INVESTMENTS
|
Sustaining
Capital
|
A$M
|
9 – 15
|
Growth Plan
Capital
|
A$M
|
52 – 65
|
Exploration &
Resource Development Capital
|
A$M
|
21 – 24
|
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures
section of Karora's MD&A dated November 8, 2021.
|
2.
|
Payable nickel
production guidance is treated as a by-production credit that is
reflected in AISC.
|
3.
|
See below for "Notes to
Table 1" for additional information.
|
Paul Andre Huet, Chairman &
CEO, commented: "Following our record full year 2021 gold
production of 112,814 ounces, gold production for 2022 is projected
be between 110,000 – 135,000 ounces. After careful review, we
consider it prudent at this time to both widen and trim our 2022
production guidance range to factor in the ongoing challenges
associated with COVID-19 restrictions that are impacting the entire
mining sector in Western
Australia.
We are also very pleased to announce our first nickel guidance
of 450 - 550 tonnes from our Beta Hunt operation (since our 2020
re-naming), as nickel becomes an increasingly important part of the
Karora story. Currently, we are mining nickel from remnant nickel
Mineral Resource areas. However, the recent 50C and 30C nickel
discoveries position us well to increase nickel production in the
coming years beyond what we have forecast for 2022. Nickel
production is reflected as a by-product credit in our 2022 AISC
guidance at a conservative assumed nickel price of US$16,000 per tonne. With the current LME nickel
spot price over US$23,000 per tonne,
there is upside potential for achieving a significantly higher
by-product credit to our AISC.
Like all our peers operating in Western Australia, we have been preparing for
continued pressure associated with labour availability and supply
chain constraints at our operations. Combining the sector-wide
impacts on materials, labour supply, cost inflation and the lack of
clarity as to when these constraints may ease, we consider it
important to factor this into our production and cost guidance
forecasts for 2022.
Should restrictions ease in the near term, we expect some lag
before relief from these challenges can be realized across the
mining sector. We note that we are not making any revision to our
2023 and 2024 numbers.
We have also adjusted AISC cost guidance slightly upwards due to
the same constraints. The increase in AISC is primarily due to
increased labour costs, fuel and consumables. We remain optimistic
that the situation will improve later in the year with the
anticipated easing of restrictions. However, we are forecasting
higher AISC in the first half of 2022, with lower second half costs
anticipated to bring our full year numbers within the guided range.
Our 2022 capital guidance has been increased by approximately 12%
(midpoint to midpoint) to account for increased labour, contractor
and materials costs associated with our mill expansion work at
Higginsville and the development of a second underground decline at
Beta Hunt.
With respect to progress on our growth plan, I am pleased to
announce that development of our second decline at Beta Hunt is
underway and ahead of schedule. Karora crews have commenced work on
the second decline from underground with the first cut taking place
on the 506 level of the mine. We have also selected a contractor
for construction of the portal and upper portion of the decline
with mobilization scheduled for February 14,
2022.
We enjoyed strong exploration success in 2021 at Beta Hunt with
both new discoveries and significant extensions of gold zones
(Larkin, Fletcher and Gamma) and nickel zones (50C and 30C). In
2022, we will continue to push ahead on the exploration and
resource development front with an aggressive drilling program
planned across both operations with total expected expenditures of
between A$21 - A$24 million.
Wrapping up, although challenges exist for our Western
Australian operations in the presence of continued COVID
restrictions, I have never been more confident in the abilities of
our team to execute on our plans, as we have demonstrated during
these past three years. Whether it was bush fires, floods or COVID
restrictions, our Karora team has continuously risen to overcome
these impacts to deliver on our strategy to expand the business and
deliver shareholder value."
Figure 1: Beta Hunt Second Decline Commenced
Underground
2022 Exploration
Karora's exploration will be underpinned by both surface and
underground drilling at Beta Hunt and Higginsville with a total of
85,000 metres planned in 2022. Drill metres are divided into both
Exploration drilling (42,000 metres) aimed at delivering additional
resources from new discoveries and Resource Definition drilling
(43,000 metres) directed at upgrading and extending existing
Mineral Resources.
At Beta Hunt, the growth opportunity is significant. During
2022, Karora plans to drill 43,000 metres to test more of the eight
kilometre strike of the gold and nickel mineralized system.
Drilling will target extensions to the Western Flanks and A Zone
Mineral Resources, Larkin, the new Fletcher
Shear Zone and follow up on the significant gold
intersections in the under-explored shear zones south of the Alpha
Island and Gamma faults. Exploration drills will also be following
up on the recent nickel discovery towards the southern end of the
mine with drilling aimed at extending the 50C Nickel Trough in the
Gamma Block as well as testing for new parallel nickel troughs in
the Beta Block. Karora is committed to developing its nickel
potential and has committed 16,000 metres to test and upgrade
nickel targets in 2022. By the end of February Beta Hunt will have
in place three underground diamond rigs (full-time) and a surface
diamond rig (part-time).
At Higginsville, Karora's exploration budget is focused on an
extensive near-mine and greenfields drilling program to follow-up
on priority targets including the Sleuth Trend as well as
extensions to the Spargos Mineral Resource. Planned drilling totals
42,000 metres of which 13,000 metres is aimed at extending,
upgrading and adding additional mineral resources at Spargos.
On-site drill equipment currently comprises three rigs: two diamond
rigs plus one RC rig. Dedicated salt lake drilling equipment
comprising diamond, RC and aircore rigs will be used later in the
year to undertake the drilling on Lake Cowan.
Notes to Table 1
- 2022 guidance, which was announced in June 2021 (see Karora news release dated
June 29, 2021), is updated as
detailed above in Table 1.
- The Corporation's guidance assumes targeted mining rates and
costs, availability of personnel, contractors, equipment and
supplies, the receipt on a timely basis of required permits and
licenses, cash availability for capital investments from cash
balances, cash flow from operations, or from a third-party debt
financing source on terms acceptable to the Corporation, no
significant events which impact operations, such as COVID-19,
nickel price of US$16,000 per tonne,
as well as an A$ to US$ exchange rate of 0.74 and A$ to C$ exchange
rate of 0.91. Assumptions used for the purposes of guidance may
prove to be incorrect and actual results may differ from those
anticipated. See below "Cautionary Statement Concerning
Forward-Looking Statements".
- Exploration expenditures include capital expenditures related
to infill drilling for Mineral Resource conversion, capital
expenditures for extension drilling outside of existing Mineral
Resources and expensed exploration. Exploration expenditures also
includes capital expenditures for the development of exploration
drifts.
- Capital expenditures exclude capitalized depreciation.
- AISC guidance includes general and administrative costs and
excludes share-based payment expense.
- See "Risk Factors" described on page 29 of the Corporation's
MD&A dated March 19, 2021.
About Karora Resources
Karora is focused on doubling gold production to 200,000 ounces
by 2024 compared to 2020 and reducing costs at its integrated Beta
Hunt Gold Mine and Higginsville Gold Operations ("HGO") in
Western Australia. The
Higginsville treatment facility is a low-cost 1.6 Mtpa processing
plant, expanding to a planned 2.5 Mtpa by 2024, which is fed at
capacity from Karora's underground Beta Hunt mine and Higginsville
mines. At Beta Hunt, a robust gold Mineral Resource and Reserve is
hosted in multiple gold shears, with gold intersections along a 4
km strike length remaining open in multiple directions. HGO has a
substantial Mineral gold Resource and Reserve and prospective land
package totaling approximately 1,800 square kilometers. The Company
also owns the high grade Spargos Reward project, which came into
production in 2021. Karora has a strong Board and management team
focused on delivering shareholder value and responsible mining, as
demonstrated by Karora's commitment to reducing emissions across
its operations. Karora's common shares trade on the TSX under the
symbol KRR and also trade on the OTCQX market under the symbol
KRRGF.
Cautionary Statement Concerning Forward-Looking
Statements
This news release contains "forward-looking information"
including without limitation statements relating to the timing for
the completion of technical studies, liquidity and capital
resources of Karora, production guidance, cost guidance, the
Corporation's growth plan, the completion of the HGO mill
expansion, the growth opportunities at Beta Hunt Mine and the
potential of the Beta Hunt Mine, Higginsville Gold Operation and
the Spargos Gold Mine and the timing for production at the Spargos
Gold Mine.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Karora to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Factors that could
affect the outcome include, among others: future prices and the
supply of metals; the results of drilling; inability to raise the
money necessary to incur the expenditures required to retain and
advance the properties; environmental liabilities (known and
unknown); general business, economic, competitive, political and
social uncertainties; results of exploration programs; accidents,
labour disputes and other risks of the mining industry; political
instability, terrorism, insurrection or war; or delays in obtaining
governmental approvals, projected cash operating costs, failure to
obtain regulatory or shareholder approvals. For a more detailed
discussion of such risks and other factors that could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements, refer to Karora 's filings with
Canadian securities regulators, including the most recent Annual
Information Form, available on SEDAR at www.sedar.com.
Although Karora has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date
of this news release and Karora disclaims any obligation to update
any forward-looking statements, whether as a result of new
information, future events or results or otherwise, except as
required by applicable securities laws.
www.karoraresources.com
SOURCE Karora Resources Inc.