Resource World Magazine

54 www.resourceworld.com f e b r u a r y / m a r c h 2 0 1 6 mINING True Gold on track for first Karma gold pour by Thomas Schuster true Gold mining's [TGM-TSXV] Karma Project in Burkina Faso, West Africa, is permitted, financed, under construc- tion and scheduled to pour its first bar of gold in March 2016. Mining began at the Goulagou II deposit in October 2015. The Goulagou II deposit hosts a reserve of 273,000 leachable ounces of gold (con- tained in 7.6 million tonnes averaging 1.12 g/t Au). It will be the first of six deposits mined over an initial 11.5 years. "As we transition into gold production over the next few months, our team is increasingly focused on operational readi- ness," said Christian Milau, President and CEO. "Karma will produce about 120,000 of ounces of gold per year during our first five years at the lowest quartile of cash costs, laying the foundation for True Gold to become a mid-tier producer." The Karma Project is designed as a sim- ple open pit, heap leach operation with a low strip ratio and good gold recoveries. The mine is expected to produce 110,000- 120,000 ounces of gold in years 1-5 with all-in sustaining costs of about US $700/oz and an after-tax free cash flow in excess of US $265 million (over the first five years). The Feasibility Study quotes a life-of-mine NPV (5%) of US $198 million, an IRR of 46.3% and a 1.4-year payback period. Total capital costs were estimated at US $207 million. This analysis was based on a gold price of US $1,250/oz. Total probable reserves consisting of oxide, transition and sulphide ore, in the six deposits weigh in at 33.2 million tonnes averaging 0.89 g/t gold or 949,000 oz of contained gold. An additional 2.6 million oz gold is classified in the indicated resource category (75.2 million tonnes at 1.08 g/t gold). The inferred resource cat- egory hosts another 2.3 million oz (65.3 million tonnes at 1.13 g/t gold). Construction is now in full swing with over 1,100 staff and contractors on site and True Gold reports that the overall project is about 77% complete and remains on budget and on schedule. On the mining front, True Gold reports that grade control drilling has reconciled well with resource estimates. Excavation of the first three cells of the heap leach pad has been completed and installation of lin- ers, piping and leak recovery systems are well underway. At last report, the raw water, pregnant leach solution ponds and intermediate leach solution ponds were operational. In addition, construction of the cyanide mixing area was completed and the hard rock crusher was producing aggregate for the drainage layer of the heap leach pads. Work is progressing on the adsorption, desorption and recovery building and commissioning of diesel generators has begun. The company has also made impor- tant strides in community relations. Last September, True Gold inaugurated a Stability Forum led by its strategic advi- sor Maître Halidou Ouedraogo, a respected Magistrate and Human Rights advocate in Burkina Faso. The forum was set up to foster a dialogue about how True Gold is perceived in Burkina society as well as to provide information about the company's future plans. Delegates come from various business, community and political back- grounds, including leading parties in the upcoming elections. In November, the Minister of Mines of Burkina Faso and Canadian Ambassador to the country toured Karma and held meetings with the community, including regional leaders. On the political front, the Burkina Faso Council of Ministers ratified the Mining Convention. Once signed, along with the mining decree, True Gold can operate under the 2003 Mining Code and would be subject to a 17.5% corporate tax rate. The Mining Convention is expected to be valid for 20 years and should be renewable for subsequent five-year periods. Financially, the Karma Project is expected to be funded through to produc- tion. True Gold has up to $48.4 million available in its finance facility. In January 2016, the company entered into an equip- ment refinancing facility with Auramet International for US $10 million. "This financing provides an alternative to drawing all of the $20 million increase option from the stream finance provid- ers and also provides an additional and flexible source of capital as we move to production," stated Christian Milau. Over the last four months True Gold has made some changes to its management team. Peter Hardie is now the company's CFO and Mark Tomek was appointed director. The company has 398.8 million shares outstanding, a market capitalization of $100 million and about $22 million in cash and marketable securities. n

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