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K92 Mining (TSX-V: KNT) Capital Markets Advisor Bryan Slusarchuk on Yet Another Spectacular Exploration Drill Hole and Macquarie Analyst’s Assertion that Kainantu Gold Mine has Tier 1 Potential

June 12, 2018

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is Capital Markets Advisor for K92 Mining (TSX-V: KNT)(TSX: KNTNF), Mr. Bryan Slusarchuk. Bryan, how are you this afternoon?

Bryan Slusarchuk: Doing really well, Gerardo. I'm actually in Toronto with John Lewins, the CEO of K92, and we've just wrapped up two days of institutional marketing in Toronto and New York.

Gerardo Del Real: Well, I have to congratulate you and I joked off-air a couple of minutes ago that this is getting repetitive. But congratulations are absolutely in order. You reported an exploration hole, and I should stress that it's an exploration hole, earlier this week that intersected 22.2 meters at 61.81 grams per tonne gold. That is a huge deal! So much so that some of the top research firms are now providing very, very good research on K92 Mining. Let me highlight one, because one, they're top-notch, two, they're typically very conservative, and three, they had nothing but great things to say about the company.

Macquarie Research put out a $2.50 price target on the stock and called it a top pick for a junior producer. A big deal. Can you paint the picture for us, Bryan? You're as good as anybody at providing context.

Bryan Slusarchuk: It was exciting to see the Macquarie research, Gerardo. The analyst at Macquarie that put this out, very well respected guy. He's a mining engineer, he's also a CFA. He was recently on site at the K92 project and obviously, judging by the report, came back very impressed with what he saw. In fact, Gerardo, what I thought was just incredibly positively, for the fact that, he described the Kainantu asset as having tier 1 potential. And for listeners that don't realize what that means, it means best of the best and it's just exceptionally rare for a junior company like K92 to own a project with tier 1 world-class potential. What's even more rare about the situation, of course, is that K92 is cash flow positive, we're in production, and we have a way to non-dillutively test that tier 1 potential without having to raise additional capital.

Gerardo Del Real: I have to believe that the non-dilutive aspect of how you can advance this project contributed to that $2.50 price target. They mentioned in the report several catalysts. Exploration of course, which is ongoing. An expansion decision which is due in Q3 of this year. And production results, of course, which are also ongoing as well as a potential updated resource estimate in Q3 of 2018.

So you talked about locked and loaded for the second half of this year, that's a lot of catalysts.

Bryan Slusarchuk: Well that's right, and right up front in the report, it's noted under the key points section, that not only is exploration upside very compelling, and reiteration that Kainantu has tier 1 asset potential. But the analyst also notes that there are multiple high impact near term catalysts that can drive a re-rating. And this is what we're seeing, Gerardo. We're seeing institutions that are very pleased. We are now cash flow positive. The production profile has been very impressive, we've put out strong Q1 numbers that beat analyst estimates. And here we are on the back of that, now starting to execute on exploration.

And, because of the fact we are cash flow positive, people out there in the institutional investment community realized, we can test this large land package without having to raise additional equity. And that makes the situation just exceptionally unique, exceptionally special.

Gerardo Del Real: Well, let me say this. Tier 1 assets are far and few between and they don't command market caps anywhere near where your market cap is now. There's clear upside here and again I believe why the $2.50 price target was issued. I believe your market cap as it stands right now is right around $150 million Canadian. And again, anyone who wants to do the research and do some comps just google tier 1 assets of the better companies and see what those assets are priced at because it's a whole heck of a lot from $150 million. Any last comments, Bryan?

Bryan Slusarchuk: Well on site, Gerardo, right now we are very active. There are two drill rigs turning. One drill rig will be concentrating on building up mineable inventory in the Kora North area, where we are now mining and in production. The other rig will focus on drilling exploration holes from underground, these holes can be very high impact. And the goal of course with that exploration rig will be to build up ounces.

And remember, the size potential here is huge. Papua New Guinea is known as the land of large mines. Prior to K92 this project was owned by Barrick Gold, the world's largest gold mining corporation at the time. They don't buy assets unless there's huge size potential. And here we are with an ability to chase after this tier 1 size. But, at the same time, remember that grades here are just exceptionally high. I encourage people to read the report that Macquarie did issue and the buy recommendation, the reasons for that, and you'll see, within that report, the drill results are just consistently big wide cuts of high grade. And we're seeing that as we move further south in these underground setups, we appear to be really picking up grades in the current structure that we are drilling.

Gerardo Del Real: Well, again congrats, Bryan. I get the feeling that we are going to be chatting again soon.

Bryan Slusarchuk: Great. Look forward to it, Gerardo. Thank you.

Gerardo Del Real: Thank you for your time.

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