Mar 3 2015
True Gold Mining Inc. ("True Gold" or the "Company") today provided the following update regarding its Karma Gold Project ("Karma" or the "Project") in Burkina Faso:
Project Update and Recovery Plan
- Working with SENET, the engineering, procurement and construction management (EPCM) contractor for Karma, the Company expects to optimize the project plan and be 10 months to first gold pour once construction activities fully resume. As of December 2014, Karma had US$61.7 million of US$131.5 million spent and committed. True Gold will provide a definitive update on the project timeline as soon as it is able.
- True Gold estimates equipment and site damages to be approximately US$6.1 million. Of that, approximately US$2 million will be compensated through various insurance policies and True Gold is working with its insurance providers to finalize the quantum and coverage.
- The Company has approximately US$40 million in cash on hand and recorded realized capex savings of approximately US$5 million as of December 2014. True Gold has drawn US$57.7 million of the US$100 million Franco Nevada and Sandstorm financing package with an option to draw up to an additional US$20 million.
- As part of its effort to limit capital expenditures until construction resumes, the Company implemented a technical shutdown as prescribed under applicable Burkina Faso labour laws. This allows the Company to provide financial assistance to its employees during the shutdown, preserve capital and efficiently restart operations.
Community Relations
- True Gold is engaged with diverse working groups that include leaders from government, traditional authorities, religious groups, and local business. The groups are also taking an active role in dealing with a small fringe element largely responsible for the unrest in January. The discussions have been productive and are ongoing.
- The Burkina Faso Minister of Mines hosted a news conference in February reassuring the local community that mine construction and operations will not impact the Ramatoulaye mosque. Upon the request of local leaders, the Minister also delivered a letter to the Sheik of Ramatoulaye expressing the same assurance.
Mark O'Dea, True Gold's Executive Chairman and interim President and CEO, said: "We are now rapidly progressing towards resuming full construction at Karma. In the last few weeks, we have been particularly encouraged to see a number of influential local stakeholders step forward and advocate on our behalf; they share our commitment to bring about a lasting resolution and establish a foundation of mutual understanding and trust with the community.
"While we recognize the need to resume construction, we are working towards a long-term, 15 to 20-year solution, that builds strong ties with all of our stakeholders. We believe that this approach is the best way to minimize the risk of a future disruption and enable Karma to deliver sustainably on its significant potential over its long mine life."
"At the same time, we are mindful of our immediate business reality and the need to be prudent stewards of shareholder capital. To this end, we made the decision to formalize a technical shutdown of operations as prescribed by Burkina Faso labour laws. This will enable us to preserve capital in the near term and resume construction quickly and efficiently while still providing an income source to our valued and loyal staff," said Dr. O'Dea.
The Company will continue to provide updates as it works towards the resumption of construction at Karma as new information becomes available.
With respect to the Company's ongoing search for a new chief executive, True Gold has been impressed by the number and quality of applications, and is now evaluating a short list of candidates. It expects to complete this process shortly.
About Karma
The Karma Project is an ideal foundation upon which to build a mining company. Karma is a technically simple open-pit heap leach project that offers low capital and operating costs, rapid payback and strong financial performance. Once in production, Karma will be one of the lowest cost gold mines in West Africa with significant exploration growth potential.
It is estimated that Karma will deliver approximately US$162(1) million in revenue to the Government of Burkina Faso during the life of the mine through a net smelter royalty, corporate taxes and a 10% carried interest. The mine will also provide extensive local investment in infrastructure, education and procurement.
About True Gold
True Gold Mining Inc. is where gold comes to life. We are committed to growing a successful gold exploration, development and production company, by focusing on projects with low costs, low technical risks and solid economics. The Company's board, management and technical teams have proven track records in gold exploration, development, operations and production worldwide.
Additional information about the Company and its activities may be found on the Company's website at www.truegoldmining.com and under the Company's profile at www.sedar.com.
ON BEHALF OF THE BOARD
Mark O'Dea, Interim President & CEO
Source: http://www.truegoldmining.com/