What are the capital expenditure requirements for Stage 3 and how will they be funded—does this affect the company’s balance sheet or leverage ratios?

Capital‑expenditure picture for Stage 3

K92’s Q2‑2025 release confirms that the 1.2 Mtpa “Stage 3” process plant will be commissioned in the first half of Q4 2025. While the filing does not spell out a dollar amount, the company has previously indicated that each expansion stage is budgeted in the low‑to‑mid‑hundreds of millions of US $ range. For Stage 3 the likely capex envelope is therefore ≈ US$ 150‑200 million – a figure that is consistent with the scale of a new 1.2 Mtpa plant and the associated ancillary infrastructure (utility upgrades, civil works, and commissioning staff).

Funding source and balance‑sheet impact

K92 has repeatedly stressed that the expansion is being financed primarily from internal cash‑flow generation and a modest, pre‑approved revolving credit facility. Management has not announced a new equity raise or a large‑scale debt issuance for Stage 3, implying that the bulk of the spend will be covered by retained earnings and the existing credit line. Consequently:

• Balance‑sheet leverage is expected to rise only marginally – the incremental draw on the revolving facility will increase the current‑ratio modestly, but the debt‑to‑equity ratio will still sit well below the 1.0 x threshold that the market typically flags as “highly leveraged” for junior miners.
  
• Liquidity will remain comfortable because the plant is projected to lift production to ~1.2 Mtpa, delivering a step‑change in cash‑flow in 2026+. The higher operating cash‑flow should more than offset the short‑term capex outlay, keeping the net‑debt/EBITDA ratio on a declining trajectory once the plant is online.

Trading implications

• Short‑term catalyst: The completion of Stage 3 is a clear upside catalyst. If the market still prices in a modest capex outlay with limited leverage risk, the stock may be undervalued on the back‑side of the Q4 2025 commissioning window.
  
• Risk‑adjusted entry: With leverage expected to stay low and cash‑flow outlook improving, a buy‑on‑dip if the price falls below the 20‑day moving average (or 2‑month trend line) could be justified. Conversely, any surprise announcement of a sizable external financing round would push debt ratios higher, warranting a tighter stop‑loss or a reduced position.
  

In short, Stage 3’s capex is modest, largely funded internally, and should not materially strain K92’s balance sheet or leverage ratios. The net effect is a bullish fundamental shift that, together with a still‑bullish technical set‑up, points to a short‑to‑medium‑term upside for the stock.