(Credit: Reuters/Orla Ryan)

(Credit: Reuters/Orla Ryan)

Only a few days after receiving the environmental nod from Burkina Faso authorities for one of their deposits and after coming off a late 2013 which included receiving their main environmental permit as well as releasing a robust feasibility study, True Gold (TGM:TSXV) announced this morning that it plans to begin phase 2 construction of the freshwater reservoir at their Karma gold project in February 2014.  They expect the reservoir to take roughly 4-5 months to complete.

The plan is for this reservoir to be completed prior to the rainy season in order to capture as much water as possible in order to be able to operate a heap leach mine in West Africa.  This will also offer locals a stable source of water for their agricultural needs.

True Gold expects to begin construction at Karma late this year with production commencing by the end of 2015.  Capex for the project is approximately $130 million, but given the team's background and the robust economics of the project (43% after-tax IRR and 1.4 year payback), True Gold shouldn't have an issue with a substantial debt package for the mine.

Phase 2 of the reservoir will add roughly 1.5m to the existing height enabling substantially more water to be collected.  True Gold is budgeting phase 2 at approximately $2.5 million.  The company was sitting on roughly $28 million in cash and short-term investments as of September 30.

Read: True Gold Starts Phase 2 Barrage Construction at Karma Project