True Gold's Karma project is now fully permitted and is on track for first production by the end of 2015 (Photo: AFP/Ariel  Marinkovic)

True Gold's Karma project is now fully permitted and is on track for first production by the end of 2015 (Photo: AFP/Ariel Marinkovic)

West African gold developer, True Gold Mining (TGM:TSX), is developing one of the most intriguing gold projects held by a junior cap company, and has received its final exploitation permit for the company's Karma gold project in Burkina Faso.  This represents the final permitting hurdle after announcing, earlier this month, that they had received the environmental go ahead from the authorities.  True Gold continues to advance the project through to construction finance.  They have appointed Barclays and SocGen as lead arrangers for a debt facility to finance a major part of the capex, which is approximately $131 million (according to their Feasibility Study).

The project is economically viable, even at current gold prices, which should make for an easier financing hunt. According to the latest economic study, Karma has an after-tax payback period of 1.4 years and an IRR of over 43%.  The average gold grade at Karma is higher than that of a typical heap leach operation which lays the foundation for these strong economics.  The average grade for the LOM operation at Karma is 0.89g/t with a strip of 2.43:1.

"True Gold is now uniquely positioned with a permitted, feasible gold project that shows excellent economics at $1,250 (U.S.) gold and resilience at significantly lower prices," said Dwayne Melrose, President and CEO, True Gold. "This, coupled with a proven in-house mine building and operations team, keeps the Karma project firmly on track to becoming Burkina Faso's next gold mine."

The company expects construction to begin in the second half of 2014 after it secures financing.  For a project like this, debt will be a major component, with vendor financing also available.  An equity component will likely be part of the overall financing package, although it will likely be a small part.

The company expects to release an initial resource estimate for the mineralization north of the Kao zone in the first quarter, along with an official development decision for Karma.  First gold, remains on schedule before the end of 2015.

Shares in True Gold are up nearly 100% from their summer lows and are at $0.46 at the time of writing, up $0.01 on 1.67 million shares.  Here's the chart:

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Read: True Gold receives mining permit for Karma Project

Listen: Mark O'Dea, Chairman of True Gold, discusses the appeal of West Africa for the development of gold projects (West Africa Is Now The World’s Low Risk Mining Jurisdiction, Says Gold Vet Mark O’Dea (Podcast))