Dr. Mark O'Dea's West African gold developer, True Gold Mining (TGM:TSXV) has released the findings of their recently completed construction-level engineering plan and design work that has identified $9.7 million of capex savings at the Karma gold project. This represents a potential saving of roughly 7% from the current (and already low) $131.5 million identified in the feasibility study. This lowers any risk of capex overruns in the development of the project.
True Gold sees the potential savings coming from: earthworks, civil construction and fuel storage costs by using construction methods employed in the building of the barrage, freight costs by using in-country fabrication and sourcing materials regionally and, finally, from relocation costs for the settlement of the Tang-Zugu village by rescheduling the construction of the leach pad without impacting the production timeline.
"We are very pleased with the results from detailed engineering, which reinforce the technical simplicity and low-capital-cost nature of this open pit heap leach project," stated Peter Carter, COO and vice-president, engineering, of True Gold. "These results further support the Karma mine as a leading development project globally."
In addition to completing detailed engineering, True Gold says it has undertaken preliminary construction activities, including the construction of the plant site access road and administration offices, as well as upgrading 10kms of public roads leading to Karma.
Recently, True Gold announced the signing of a letter of intent to purchase its primary mining equipment, which includes: one excavator, one loader, six haul trucks, four dozers and two graders. It also comes just days after they held their groundbreaking ceremony to officially mark the start of construction of the Karma mine.
The project is expected to take 18 months to construct, with the company estimating their first gold pour by the end of 2015. According to the company, debt discussions for a $90 million facility are advancing well and should be secured in relatively short order.
Karma is a low capital intensity project, with low technical risk, good economics and is complemented with the right operating team; therefore, financing terms for the project should be favorable.
Upcoming catalysts include:
- Receive exploitation permits for the Nami and Kao deposits (Q2/14)
- Complete debt financing for Karma (Q3/14)
- Release results from economic study at North Kao deposit (Q3/14)
Shares of True Gold have lost momentum as of late as investors wait on the finalization of a debt package: