JOHANNESBURG (miningweekly.com) – TSX-V-listed True Gold Mining has, to date, spent, as well as committed, about $51.5-million, or more than 39% of its $131.5-million initial capital expenditure (capex), on the company’s Karma gold project, in Burkina Faso.
Prestripping of the Rambo deposit, Karma's highest-grade deposit and the first to be mined, will begin in December. To date, all aspects of the project are on time and within budget, True Gold noted in a statement on Monday.
"We continue to make excellent progress at Karma and remain on track to pour gold by the end of next year,” stated True Gold president and CEO Dwayne Melrose. The company expected Karma to produce about 150 000 oz of gold in 2016.
"Construction progress continues at a strong pace and you can see the mine taking shape. We have an exceptional mine-building team in Burkina Faso, which includes more than 200 people from local communities. The capacity of this team to work efficiently and cost-effectively has increasingly become a competitive advantage for the company,” he pointed out.
Karma was currently fully funded and permitted, one of a select few gold mines under construction globally as well as scheduled to be the next gold mine to go into production in Burkina Faso. During mine operations, True Gold expected to employ over 400 people at the mine. The company noted that key personnel were already in place, with recent hires including the mine superintendent and mine general foreman.
True Gold pointed out that procurement was 33% complete at the end of October, ahead of the planned 23%, while earthworks on the plant site terraces were completed one month ahead of schedule. Civil works were 20% complete at the end of October, ahead of the planned 14%, and work had started on foundations for the adsorption, desorption and recovery plant, cement-storage facility and maintenance shop. The administration, security and medical buildings were built, with mine offices 90% complete. Major earthwork projects and construction of haul roads, a raw water-storage pond and the base for the heap leach pad would start in January 2015.
True Gold added that two dozers and two graders, part of the mining fleet, were delivered to site on November 11, while all mining fleet vehicles and equipment were expected on site by January 2015.
FINANCIALS
True Gold had about C$49.1-million in the treasury and it expected to draw down the next tranche under its facility with gold streaming companies Franco-Nevada and Sandstorm by December 2014.
Over the next ten months, the company expected to draw down the balance of the $100-million financing and, with its portion of up-front capex substantially invested, Franco-Nevada and Sandstorm would fund the majority of the remaining capex through to construction completion.
POTENTIAL MINE EXPANSION
On October 21, True Gold explained that it had completed a preliminary economic assessment (PEA) on the North Kao deposit that demonstrated the potential to enhance the 8.5-year mine life outlined in the Karma project’s definitive feasibility study (DFS). The PEA on North Kao, or the Phase 2 expansion scenario, supported a heap leach mine that would produce an average of 118 000 oz/y of gold over 2.5 years.
The PEA indicated the potential to add $118-million in after-tax free cash flow to the DFS economics. North Kao would yield an after-tax internal rate of return of over 200% and add about $70-million to Karma's after tax net present value.
“The company plans to carry out infill drilling to upgrade the inferred resources at North Kao, which is the northern extension of the existing Kao deposit. Upon upgrading the resource category, True Gold will be able to advance further mine schedule optimisations; however, there is no certainty the resources will be converted to reserves,” explained the company.
Meanwhile, True Gold had identified more than 40 high-priority exploration targets over the 856 km2 property, with targets including high-grade rock values associated with gold-in-soil anomalies and historical workings at Karma that have yet to be tested.
The company had budgeted about $5-million for exploration through 2015 and would be focused on discovering new domains of openpit, leachable material that could be incorporated into a future mine plan. Mapping of the Kao trend was currently under way.
Over a strike length of more than 10 km, the trend hosts the Kao/North Kao pair of deposits open to the north and south, as well as the Nami deposit and its extensions and numerous earlier-stage targets, including anomalies B & C, Idriss and Bonguirga.