Karora Resources Timeline 2023 - Becoming a 200,000 Oz/year Gold Producer

About Karora Resources

Karora Resources is a growing gold and nickel producer focused on Western Australia. Led by Chairman and CEO Paul Huet, the company aims to increase annual gold production at its flagship Beta Hunt mine to between 185,000-205,000 ounces by 2024, doubling its gold output compared to 2020 levels. 

With its asset base in Western Australia and operational infrastructure already in place, Karora ramps up mining and processing capacity by upgrading its Higginsville treatment facility and optimizing operations at the high-grade Beta Hunt mine.

What Happened in 2023?

November

2023 Gold Guidance

Over just three years, Karora had gone from under 100,000 ounces of annual gold production to a targeted 160,000 ounces in 2023. A key driver was continual investment into ramping up output from Beta Hunt through aggressive drilling and infrastructure spending. This allowed Karora to open up seven new shear zones slated for production as the company had been deploying capital to expand production at its Beta Hunt mine, adding substantial gold and nickel resources along with infrastructure upgrades.

Major Expansion of Gold Resources and Reserves

A major expansion of gold resources and reserves was announced at its flagship Beta Hunt mine. Measured and indicated resources grew by 18% to 1.6 million ounces while reserve grade improved 8%. On a consolidated basis including Higginsville, total gold resources increased 9% to 3.2 million ounces, net of 101,000 ounces mined over the past year. The key Western Flanks Zone expanded 16% to over 1 million ounces measured and indicated, at an upgraded average grade of 2.9 g/t, and a new discovery at the Fletcher Zone showed potential for maiden resource additions.

With a strong cash balance of $84 million at the end of Q3 2023, Karora has funding for its growth plans as the company targets 2 million tonnes per annum at Beta Hunt by 2024.‍

October

Production Growth in Western Australia

‍Karora Resources produced 40,000 ounces of gold in the third quarter of 2023, keeping it on track to meet full-year production guidance of 145,000-160,000 ounces and was expected to boost output to 165,000-180,000 ounces. Despite weak sector sentiment, Karora built fundamental value by leveraging exploration success into low-cost production growth.

Three new ventilation raises slated for completion by late 2023 aimed to increase mining rates and enable the targeted doubling of production tonnages by the end 2024. Recent high-grade intercepts highlighted additional potential not incorporated into the 2023 estimate. Karora planned to invest around $100 million on development and exploration to announce an updated resource estimate showing further growth

Third Quarter Results‍

Karora Resources delivered strong third quarter 2023 results keeping it well positioned to meet full-year guidance of 145,000-160,000 ounces of gold production. Q3 output highlights include production of 39,548 ounces of gold, with quarterly gold sales reaching 41,278 ounces. Cash balances strengthened to $84.2 million, up $13 million from the end of Q2 2023.

Exploration results were also announced during the quarter from Beta Hunt, indicating the potential for significant mineral resource additions. Karora remained on track with its growth plan to double gold production to 185,000-205,000 ounces by 2024, progressing planned capital investments at Beta Hunt focused on increasing throughput to 2 million tonnes per annum.

September

Significant Gold and Nickel Growth at Beta Hunt Mine

Karora Resources Chairman and CEO Paul Huet discussed the company's significant gold and nickel growth plans at its Beta Hunt mine in Western Australia. It grew its gold resources from 400,000 ounces to 2.4 million ounces in just two years through acquisition and exploration and already produced 80,000 ounces in the first half of 2023. A key enabler of growth was eliminating restrictive royalties at Beta Hunt which allowed exploration spending to ramp up from $300,000 to $20-30 million in 2023. 

Beyond gold, Beta Hunt was also historically a high-grade nickel mine. Karora aimed to increase nickel production from around 1,000 tonnes per month currently to 10,000 tonnes per month in the coming years. With a proven track record and significant exploration upside, Karora offered compelling value trading at just 0.5-0.6x NAV with the potential to rerate further as it grew towards its target of becoming a mid-tier gold producer.

Fletcher South Infill Drill Program First-Half Results

Results from the second set of drill holes aimed at testing and infilling the southern extension of the Fletcher Shear Zone (FSZ) over 500 metres north of the Alpha Island Fault were reported. Assays were received from the final five holes of the nine-hole program where results confirmed the existence of a significant mineralized system west of Western Flanks with potential for the FSZ to represent Beta Hunt's third major gold system after Western Flanks and A Zone. Additional variably broad and narrow mineralized zones west of the southern FSZ are now considered part of a new hanging wall system, underlined by results such as 15.9 g/t over 6.0 metres and 4.8 g/t over 32.0 metres. A second infill drill program in Q4 aims to produce an initial mineral resource estimate for Fletcher.‍

August‍

Beta Hunt’s Third Major Gold System

Early results from 4 out of 9 holes from the high-grade Fletcher gold zone at Beta Hunt, testing and infilling the southern 500-meter strike length just north of previous high-grade intercepts, showed continued mineralization along the targeted Fletcher shear zone and new parallel mineralized zones. Highlights included 2.8 g/t over 52 meters and 4.7 g/t over 11 meters, reinforcing Fletcher as Beta Hunt’s “third major gold system”, after Western Flanks and A Zone, with its significant potential along strike and at depth as Karora continues to increase gold production from its Beta Hunt Mine and Higginsville Gold Operations in Western Australia.

Path to Becoming a 200,000 oz Gold Producer

The report analyzed Karora Resources' potential to become a 200,000-ounce-per-year gold producer with its two main operations - the Beta Hunt mine and Higginsville Gold Operations in Western Australia. 

Beta Hunt historically produced 3,000-5,000 tonnes per year of nickel, which Karora recently established a team to ramp up as a by-product that could reduce gold all-in sustaining costs by $200-300 per ounce. At Higginsville, mining fed the 1.6 million tonnes per annum processing plant. The significant 2,000 km2 land package provided exploration upside potential for +1 million ounce discoveries. Karora's total gold resources were around 4 million ounces, supporting an 8-year mine life. Numerous growth projects at both sites were underway or planned.

July

Record production

Karora Resources announced a record quarterly gold production of 40,823 ounces in Q2 2023. The company also reported a rise in its cash balance to $70.8 million at quarter end.

The update showed that Karora's operations were performing well and the company was on track to meet growth and production targets. This supported the investment thesis as Karora executes its strategy to increase low-cost gold production to 170,000-195,000 ounces per year by 2024. With the Lakewood Mill acquisition completed in 2022, Karora had a processing capacity of 2.6 Mtpa, providing a platform for continued production growth as exploration and development advances.‍

May

Karora Resources and Kalamazoo Resources Join Forces

On May 8th, 2023, Karora Resources announced an agreement with Kalamazoo Resources to create a new lithium exploration company called Kali Metals Limited. Under the deal, Kalamazoo will contribute its lithium projects in Western Australia and Victoria to Kali Metals as Karora contributes its 1,607 sq km. lithium mineral rights package south of Kalgoorlie in Western Australia.

The combined land package will total 3,833 km2 across highly prospective lithium regions near major mines and deposits. Kalamazoo will own 55% of Kali Metals and Karora 45% prior to a proposed A$10-12 million IPO to fund exploration and drilling. The company will be led by an experienced team including Graeme Sloan as Managing Director and Luke Reinehr as Non-Executive Chairman.

First Quarter Financial and Operating Results

Gold production reached 39,827 ounces for the first quarter of 2023, exceeding target levels and increasing 45% from the first quarter of 2022. This growth reflected a 27% increase in tonnes processed and a 13% improvement in average grade. Cash operating costs per ounce sold averaged $1,124, a 14% improvement in the same 2022 period, while all-in-sustaining costs averaged $1,213 per ounce. 

Revenue totaled $96.8 million while operating earnings of $8.6 million were up from losses in the prior periods. Operating cash flow before changes in working capital more than doubled to $28.6 million. Karora maintained its 2023 and 2024 production and cost guidance with growth in gold reserves and measured & indicated resources at Beta Hunt mine. While net loss totaled $2.9 million due to non-cash items, adjusted earnings increased over 3 times to $4.8 million from last year's first quarter based on higher operating margins.

April

Major Extension To 1.4 Km of Fletcher Shear Zone

Investors who had been waiting on results from Beta Hunt received positive announcements regarding high-grade discoveries at the mine. Drilling at Beta Hunt results reported from the Fletcher Zone substantially increase the interpreted strike length of the zone to 1.4 km from the previous known strike length of 0.5 km with Intersections of 6.5 g/t over 26 metres and 46.5 g/t over 7.0 metres.

Karora Resources also signed new contracts with BHP and continued working towards their growth plan under Leigh Junk's leadership. Karora Resources plans to increase focus on nickel in 2024, which Huet called their "most aggressive year yet" for nickel exploration.

March

Karora Resources Appoints Leigh Junk As Managing Director

Karora Resources Inc. announced the appointment of Leigh Junk as Managing Director, of Australia. Junk has over 30 years of mining industry experience, including senior management and operational roles. According to Chairman and CEO Paul Andre Huet, Junk's background in both gold and nickel mining in Western Australia makes him well-suited to provide senior leadership as Karora Resources executes its growth plan and ramps up production of both metals. With his extensive industry expertise and experience across gold and nickel, Junk's appointment represents a strategic addition to strengthen Karora Resources' management team in Australia as the company advances its growth strategy for both metals.

Record Revenue and Earnings from Q4 and Full Year 2022 Revealed

On  March 23, 2023, Karora Resources reported its financial and operating results for the fourth quarter and full year 2022. In Q4, the company achieved record quarterly revenue of $96.8 million, up 45% year-over-year, driven by 39,900 ounces of gold sold. Net earnings grew 56% to $9.6 million compared to Q4 2021. 

In 2022, Karora acquired the Lakewood Mill, increasing processing capacity by 63%, and advancing underground development at Beta Hunt mine. For the full year 2022, Karora produced a record 133,887 ounces of gold and full-year revenue of $317.0 million in gold sales, meeting the top end of its production guidance range.

8% Increase in Nickel Mineral Resource at Beta Hunt Mine

Karora Resources Inc. announced an 8% increase in the Measured and Indicated Mineral Resource for nickel at its Beta Hunt mine to 21,100 nickel tonnes. The Beta Block measured and indicated mineral resource rose 11% to 15,100 nickel tonnes while inferred mineral resources grew 2% to 13,400 nickel tonnes compared to January 31, 2022. According to Chairman and CEO Paul Andre Huet, the resource additions came from the Beta West zone within the Beta Block north of the Gamma Fault. 

Karora's 2023 nickel exploration will focus on upgrading and extending resources in the Beta and Gamma zones. With only 800 metres of 2.6-kilometre strike length delineated south of the Gamma Fault, Huet emphasized the largely untapped potential remaining down-plunge of current workings once additional ventilation raises enable more drilling and development.

Completion of Beta Hunt’s Second Decline, Director Morley-Jepson’s Retirement‍

The 1-km decline at Beta Hunt Mine which connects to existing underground working for improved haulage efficiency was completed ahead of schedule and on budget. The first of three planned ventilation raises was also finished, spanning 235 vertical meters to the 800 level. With new ventilation operational, more equipment can be utilized underground to support the ramp-up of Beta Hunt to a 2 Mtpa annual production rate over 2024. Additional trucks and mining equipment will be added through 2023 to aid the expansion. 

In addition, the company also announced the retirement of Director Warwick Morley-Jepson from Karora's Board after nearly 5 years of service whose experience helped guide Karora's transition from a single-asset to multi-asset gold producer in Western Australia.

February

Significant Increases In Beta Hunt Gold Mineral Resources And Gold Mineral Reserves

Significant increases in the gold mineral resources and reserves were announced at the Beta Hunt Mine since the previous report as of January 31, 2022. The measured and indicated gold mineral resources increased by 20% to 1.35 million ounces while inferred gold mineral resource also grew by 34% to 1.05 million ounces. Additionally, the proven and probable gold mineral reserves rose 12% to 538,000 ounces. All resource and reserve estimates were effective as of September 30, 2022.

Most of the growth came from the Western Flanks zone, with net additions of 146,000 ounces in measured and indicated resources and 338,000 ounces of inferred resources. Over 2022, drilling successfully extended mineralization up to 250 meters below the previous resource limit at Western Flanks. For 2023, Karora continued upgrading inferred resources to indicated status to enable increased mineral reserves with additional drillings to test extensions of known mineralized zones.

January

Gold Production Of 133,836 Ounces And Record Gold Sales Of 132,047 Ounces In 2022‍

Karora Resources Inc. announced record annual gold production and sales from its Western Australian operations in 2022. Consolidated gold production reached 133,836 ounces for the year and hit a new high for sales of 132,047 ounces in 2022.  Karora's cash position rose by $12.6 million compared to the end of the third quarter, finishing 2022 at a healthy $68.7 million with ongoing investments made into the business during the year.

Despite severe temporary labour shortages earlier in the year due to COVID-19 impacts that constrained production in the first half, the company’s operational team delivered as promised with a robust second half that represented nearly a 20% increase over the previous annual production record set in 2021.

Intersects at Western Flanks Deeps And Extension at New Mason Zone

Deep drilling continued to show the main Western Flanks shear mineralization extending up to 250 meters below the current mineral resource at the Hunt Block, remaining open at depth. Initial deep drilling results at the A Zone central area also supported extending defined mineralization up to 150 meters below the current resource while drilling at the Mason and Cowcill zones delivered supportive results for potential new mining zones located west and east of the Larkin resource, respectively. Highlight Mason intersections included 5.4 g/t over 11 meters. New southern step-out drilling extended the potential mineralized strike length at Mason to 700 meters.

An updated resource and reserve estimate was expected in late Q1 2023 as infill and extensional drilling continued advancing targets across Beta Hunt during 2023.