Name and Location
Karma gold project, Burkina Faso.

Client
True Gold Mining.

Project Description
The feasibility study completed on the Karma project supports a heap-leach mine scenario from currently defined openpit deposits containing 949 000 oz of probable mineral reserves.

The heap-leach pad is designed to process oxide and transition ore from the five shallow pits, with a small amount of leachable sulphide ore extracted from two pits.

The two pits with the highest-grade mineral reserves will be mined first, allowing for rapid payback and strong cash flow from the outset of commercial production.

About 113.8-million tonnes of material will be mined from the five openpits over the course of the estimated project life. This will deliver an estimated 33.2-million tonnes of ore to the process facility and 80.6-million tonnes of waste to storage facilities located near each pit. The overall strip ratio for the project is 2.43:1, with mining being conducted 350 days a year by an owner-operated fleet at total material movement rates ranging from 35 000 t/d to 45 000 t/d.

Conventional truck and shovel methods are likely to be used. Two 200 t hydraulic excavators, configured in backhoe mode, will load a fleet of ten 90 t trucks for the transport of ore and waste to the primary crusher and respective near-pit waste dumps.

Four additional 90 t trucks will deliver ore directly from the pits to the process facilities without the need for ore rehandling.

The soft nature of the openpit ore and waste material will allow for free-digging (excavated without blasting) of the bulk of the material.

Twenty-five per cent of the transition ore and all the sulphide ore material will be drilled and blasted at low powder factors. This comprises only about 10% of the total material to be excavated over the mine life.

The Karma project’s process design is based on using conventional heap-leach technology, with a production capacity of four-million tonnes a year. Mined ore will be crushed, agglomerated and conveyed to the leach pad, where it will be stacked in two 10 m lifts and irrigated with a dilute cyanide solution. Gold dissolved by the cyanide will then be adsorbed onto activated carbon in a carbon-in-column circuit. The loaded carbon is then stripped of the gold using Zadra-type elution and the resulting product will be subjected to electrowinning and smelting to produce doré on site.

The mine will produce an average of 97 000 oz/y of gold over a mine life of 8.5 years.

Net Present Value/Internal Rate of Return
The project has an after-tax net present value at a 5% discount rate of  $178.2-million and after-tax internal rate of return of 43.1%, with payback after 1.4-years.

Value
The project requires initial capital of $131.5-million, including on-site working capital and contingency, to support the construction of a mine and associated facilities, with a process capacity of four-million tonnes a year.

Franco-Nevada and Sandstorm Gold have entered into a $120-million stream financing agreement, with True Gold Mining to assist in funding the construction of the Karma project.

Duration
The implementation schedule will be carried out over 18 months, with prestripping beginning 12 months prior to the first gold pour, which is expected at the end of 2015.

Latest Developments
True Gold has reported that, owing to the continued fluidity of events in Burkina Faso, providing an update on the timeline of its flagship Karma gold project is difficult, with the company initially expecting to pour first gold as early as October this year.

While the project has some flexibility in the timeline, as mine construction was ahead of schedule before activities were suspended early in January this year, there could be a material change to the project timeline if the work stoppage at Karma continues.

True Gold temporarily suspended construction activities at Karma last month after several hundred members from two surrounding communities, Ramatoulaye and Namissiguima, had protested at the mine, threatening employees and damaging equipment.

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

The Rambo pit is a small, shallow pit that will be mined over 18 months using smaller, low-intensity equipment. True Gold has put in place all safety and environmental protection measures to ensure activities do not impact Ramatoulaye structures, including a 4-m-high sound barrier, a 250-m-wide safety zone, groundwater monitoring and several dust-suppression initiatives.

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

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.

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

The firm has received assurances from the central government that its permits remain 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.

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

True Gold aims to finalise a plan in the coming weeks that will 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 has advanced $58-million of the $100-million stream financing announced in August last year.

True Gold has noted that the project contingency and the available overrun facility will 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 will 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.

Key Contracts and Suppliers
Senet (barrage construction, detailed engineering and construction-level design work).

On Budget and on Time?
To date, all aspects of the project are on time and within budget.

Contact Details for Project Information
True Gold Mining, tel +1 604 801 5020 or email info@truegoldmining.com.