Burkina Faso – True Gold Mining, the TSX-V listed West Africa gold junior is working to resume construction at its Karma gold project shortly having suffered huge set-backs and a complete work stoppage after a massive on-site strike which damaged millions of dollars of equipment.
The company is working with SENET, the engineering, procurement and construction management (EPCM) contractor and expects to optimise the project plan with 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 finalise the quantum and coverage.
The company has approximately US$40 million in cash on hand and recorded realised 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.
True Gold is engaging 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, says: “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 recognise 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 formalise 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.
With respect to the company’s ongoing search for a new chief executive, it reveals that a suitable candidate will be announced imminently.