Mark O'Dea's West African gold development play, True Gold Mining (TGM:TSX) released a robust feasibility study for the Karma gold development project in Burkina Faso. At $1,250 per ounce gold, the project provides an after-tax NPV(5%) of $180 million and a 43.1% IRR (TGM's netted amount). This provides for a payback of the initial $131.5 million in capital within 1.4 years. The project is slated to produce an average of 97,000 ounces per year over an 8.5 year mine life with all-in sustaining costs of $720 per ounce. Karma hosts 33.2Mt at 0.89g/t gold containing 950,000 ounces of gold in ore amenable to heap leaching. True Gold is confident in their ability to grow the resources there as their exploration programs continue to find gold mineralization.
"The Karma Project is an ideal foundation upon which to build a mining company. It is straightforward, financeable, resilient, and has tremendous room to grow. We are delighted to have achieved this important milestone, and feel strongly that our development approach is ideally suited to the attributes of our project," said Mark O'Dea, Executive Chairman, True Gold. "I am very proud of our team for designing a mine plan that honours the characteristics of our deposits. It maximizes profitability, minimizes technical risk and manages both capital and operating costs."
Karma is designed to process oxide and transition ore from five shallow pits, with a small amount of leachable sulphide ore extracted from two pits. The two pits with the highest-grade mineral reserves would be mined first, providing True Gold with the strong economics seen in the feasibility study. Approximately 90% of the ore at Karma is oxidized.
Karma is expected to take 18 months to construct with pre-stripping beginning 12 months prior to the first gold pour, which is anticipated at the end of 2015. Throughput at the project is estimated at 36,000tpd with an overall life of mine stripping ratio of 2.43:1. The project has good metallurgical gold recoveries in excess of 87%. The project has a very rapid leach cycle with most gold recovered within 10-days.
The company has received its exploration permits and expects to receive the final exploitation permit in Q1/2014. The company is already well underway in sourcing project financing from equity, debt and equipment finance.