True Gold Karma project

With construction under way at the Karma project True Gold Mining (TGM.V) has released a PEA on its North Kao Deposit, showing that it contains 312,000 inferred gold ounces at a grade of .98 grams per tonne. As the North Kao deposit is located in close proximity to the planned Karma processing facilities the economics are very strong with a 213% IRR and payback period of ~5 months.

True Gold management has moved the North Kao deposit from a blind discovery to a PEA in just over a year. The team is following a plan of building a centralized heap leach processing facility for the five closely spaced deposits found so far.

The goal at True Gold is to become a high margin, mid-tier producer and the Karma project confirms that they on the right track.

North Kao PEA Highlights

  • Initial CAPEX: US$17.7M (including contingency)
  • NPV @ 5% (after tax): US$69.6M (discounted from 2022-2026)
  • IRR (after tax): 213%
  • Payback (after tax): ~5 months
  • All-in Sustaining Cash Costs: $652/oz

"The North Kao PEA provides us with a blueprint on how to expand our mine life and production profile at Karma as we look to the future of our district," says Mark O'Dea, True Gold's Executive Chairman. "We have deployed a modest amount of capital in discovering and delineating these ounces and the return on our investment is exceptional. This PEA, together with the recent long-term cement contract, represents a significant increase in project value since September 2014."

 

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True Gold stock appears to be over sold.  After trading in the low 40 cent range all summer it is currently at 34 cents, and definitely on my watch list.

Management continues to add value to the Karma Project. A $100 million dollar stream agreement was reached with Franco-Nevada and Sandstorm in August and will fund True Gold through construction. Construction is well under way with the first gold pour expected at the end of 2015.

Symbol: TGM.V

Share price: $0.335

Shares outstanding: 398.84 M

Market cap: $133.6 M

Read: True Gold's North Kao Deposit to generate over US$118 million in free cash flow to Karma

I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence.