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Burkina Faso gives True Gold’s Karma project the environmental nod

20th September 2013

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – TSX-V-listed True Gold on Friday said it had received an environmental permit from the Burkina Faso Environment and Sustainable Development Ministry to develop the Goulagou 1, Goulagou 2 and Rambo deposits at its flagship Karma gold project.

The West Africa-focused company said the approval advanced its application for an exploitation permit for the deposits, which was the final permit required.

True Gold said exploitation permits were typically granted about two months after receiving environmental permits.

The Karma project consists of five closely spaced deposits, which remained open in multiple directions. The company completed a preliminary economic assessment of the project, which concluded that the project held an after-tax net present value of $192-million, when applying a 5% discount.

The internal rate of return was stated at 37%, with the total payback time for the $125-million capital requirement being two years.

The mine would produce between 70 000 oz and 90 000 oz a year of gold over its expected ten-year life. The operation would process about three-million tons a year at a grade of 0.88 g/t. The company assumed a gold price of $1 350/oz for its calculations.

The company plans to start production by the end of 2015.

An October, 2012, Canadian National Instrument 43-101-compliant mineral resource update had estimated the Karma project to hold a total pit shell-constrained resource of 56.5-million tons grading 1 g/t of gold, for 1.94-million ounces, while the inferred resource comprised 15.3-million tons grading 1.07 g/t of gold, for 492-million ounces.

As permitting advanced, True Gold said it would move forward with optimising mine engineering, site preparation, evaluating and pricing longer-lead capital cost items, and finalising capital and operating cost estimates as part of the ongoing feasibility study.

"Our goal is to have the operating permit and completed Karma project feasibility study in hand by the end of the year," president and CEO Dwayne Melrose said.

The company had not yet made a production decision and the strategic plan to develop a standalone heap-leach operation was subject to the results of the feasibility study.

The company in August sold a 2% net smelter return royalty on the company’s interest in the Karma project to Liberty Metals & Mining Holdings (LMM) for $6.04-million. The royalty payment represented the second tranche of a $23.5-million strategic investment agreement between True Gold and LMM, which was first announced on July.

In the first tranche, LMM bought 52.75-million True Gold common shares through a nonbrokered private placement at a price of $0.33 a share, for gross proceeds of about $17.4-million.

Edited by Creamer Media Reporter

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