TORONTO (miningweekly.com) – True Gold on Monday reported that it had on Thursday broken first ground at its Karma project, in Burkina Faso, marking the start of construction of a 97 000 oz/y gold mine, slated to pour its first yellow metal late next year.

The TSX-V-listed project developer said that construction of its $131.5-million mine would take about 18 months.

The company hosted a sod-turning ceremony attended by a high-level delegation of the Burkina Faso government and other dignitaries, including the Canadian ambassador to the country. About 1 500 people attended the ceremony.

The event included a ribbon-cutting ceremony to also celebrate recently completing construction of the freshwater reservoir/barrage, which would provide water for mine construction and operational needs, as well as providing a year-round water source for local communities.

“Through dedicated teamwork, hard work, and collaboration with governments and stakeholders, we have achieved a tremendous accomplishment: five deposits have been discovered, which will be mined one after another over the next nine years, providing approximately 400 jobs over the life of the mine,” True Gold president and CEO Dwayne Melrose said.

The Karma project has a total compliant resource estimate of 5.4-million ounces of gold, comprising 1.6-million ounces in the oxide and transition zones, and about 3.8-million ounces in the sulphide zone.

A December feasibility study had calculated the project to hold 949 000 oz of gold in 33.2-million tonnes at a grade of 0.89 g/t.

The company expects to produce 97 000 oz/y of gold over an 8.5-year mine life at an all-inclusive cash cost of $720/oz.

Karma has an after-tax net present value at a 5% discount rate of $178.2-million, and an after-tax internal rate of return of 43.1%.

The $131.5-million project is fully permitted, and True Gold had already raised part of the financing in equity. The company is expected to raise another $90-million in debt later this quarter to be fully funded and to bring Karma into production.

Since the start of the year, True Gold had completed several milestones on the road to production, including building the barrage; ordering the mining fleet; nearly completing detailed engineering work; and starting early construction activities, including site access road upgrades and plant site earthworks.

All of the building blocks were now in place to start construction of the Karma mine, the company said.