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Fluid Burkina Faso situation still delaying progress at True Gold’s Karma

30th January 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – The continued fluidity of events in Burkina Faso has made an update on the timeline of TSX-V-listed True Gold's flagship Karma gold difficult to pin down, with the company initially expecting to pour first gold as early as October this year.

While the West Africa-focused project developer noted on Thursday that it had some flexibility in the timeline, as mine construction was ahead of schedule before activities were suspended early this month, if the work stoppage at Karma continued, there could be a material change to the project timeline.

True Gold had earlier this month temporarily suspended construction activities at Karma after several hundred members from two surrounding communities, Ramatoulaye and Namissiguima, had marched on the mine, threatened employees and damaged equipment.

Locals were concerned about potential damage to a mosque, 1.18 km from the edge of the Rambo pit, and other buildings in the neighbouring town of Ramatoulaye and were concerned about the negative effects the pit could have on dust, noise and groundwater quality in the community.

The Rambo pit was a small, shallow pit that would be mined over 18 months with smaller, low-intensity equipment. True Gold had put in place all safety and environmental protection measures to ensure activities did not impact Ramatoulaye structures, including a 4-m-high sound barrier, a 250-m-wide safety zone, ground water monitoring and several dust suppression initiatives.

The Burkina Faso government was meeting with community members to re-establish the Community Liaison Committee (CLC)  to facilitate a return to work and resumption of construction.

True Gold expected the new CLC to serve as a critical bridge between the project and the local community in future.

The firm had received assurances from the central government that its permits remained valid and secure for all deposits. The Burkina Faso Minister of Mines and Energy, along with the Governor of Yatenga province also held a nationwide press conference on January 20, where they reinforced the validity and acceptance of the Karma mine plan and promoted community dialogue.

The company hoped to resume work as issues were discussed and resolved through the CLC, which dissolved late last year with the change in central government. The CLC was originally created in 2012 and served as a channel for dialogue, engagement, issue resolution and project orientation. It included representation from 65 different stakeholders, including True Gold.

During this period, the company would take steps to limit its capital expenditures, including reducing employees, deferring payments and holding materials and equipment in supplier inventory.

True Gold was working to finalise a plan in the coming weeks that would enable it to efficiently restart operations at the mine, working closely with the engineering, procurement and construction management contractor SENET.

To date, the groundbreaking Franco-Nevada/Sandstorm Gold funding partnership had advanced $58-million of the $100-million stream financing announced in August last year.

True Gold noted that the project contingency and the available overrun facility would be employed as required to fund any necessary changes to the development plan, enable construction to restart and the project to successfully move forward to completion. 

Once in production, the $131.5-million Karma project would be one of the lowest-cost gold mines in West Africa, with an initial 8.5-year mine life, excluding North Kao, and significant exploration growth potential. The Karma feasibility study had estimated that Karma would over its lifetime deliver about $160-million in revenue to Burkina Faso through a net smelter royalty, corporate taxes and a 10% carried interest.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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