VANCOUVER — A 1.7-million oz. estimate for the North Kao deposit at True Gold Mining’s (TSXV: TGM; US-OTC: RVREF) Karma property in Burkina Faso is reminding investors that the feasibility stage gold project has lots of room to grow.
True Gold has already planned a strong mine at Karma. Before adding North Kao, the project hosts 2.62 million oz. of pit-constrained indicated gold, which translates to 33.2 million probable tonnes grading 0.89 gram gold per tonne of heap-leachable oxide reserves.
According to a December feasibility study, that reserve can support a 10,000-tonne-per-day mine producing 97,000 oz. gold annually at an all-in sustaining cost of US$720 per oz. for 8.5 years. Better yet, the mine could generate a 43% after-tax internal rate of return and cost just US$132 million to build.
While True Gold pushes towards construction at Karma, the company is exploring new targets within its 856 sq. km land package. True Gold’s drills have hit gold at all five of its new targets, and there are another 35 drill-ready targets within 100 km of the planned mine.
True Gold will certainly be pleased if some of those targets follow North Kao’s development path. North Kao was a blind discovery in late 2013. In less than five months the company drilled 161 holes into the zone and defined an inferred resource of 47.8 million tonnes grading 1.08 grams gold, for 1.66 million oz.
The resource includes oxide, transition and sulphide mineralization. The heap-leachable part of the resource totals 16.4 million tonnes grading 0.8 gram gold, which complements the 10.9 million oxide and transition tonnes grading 0.96 gram gold at the adjacent Kao deposit — the largest of five deposits in the Karma mine plan.
“The simple and flexible mine plan at Karma, as laid out in our feasibility study, is specifically designed to integrate opportunities such as North Kao, as potential mining centres emerge across the Karma project,” said True Gold president and CEO Dwayne Melrose. “In addition to our success at North Kao, discoveries at four other target areas have the potential to meaningfully add to our current resource base through further drilling.”
True Gold will finish a preliminary economic analysis of North Kao as a first step towards integrating the new deposit into the Karma mine plan.
A week before releasing the North Kao resource, True Gold announced drilling results from two other targets at Karma. At both Yabonsgo and Rounga, gold mineralization starts at surface and is oxidized to a 75-metre depth.
Every hole of a five-hole program at Yabonsgo returned gold, including some high grade. Three holes tested historic workings, returning a best result of 4.5 metres grading 10.8 grams gold in hole 155. True Gold stepped out 200 metres along strike with hole 157 and hit 5.6 metres grading 12.6 grams gold, including 30.6 grams gold over 1.5 metres.
At Rounga, a four-hole program met mineralization in every hole, returning a best result of 5.94 grams gold over 3 metres. Gold at both targets is associated with multiple quartz-veining phases within a variably sheared sequence of metavolcanic, volcaniclastic and intrusive rocks.
Karma could soon be under construction. In December True Gold received an exploitation permit for the project, which authorizes construction.
And in February the company raised $51.9 million in two financings: a $42-million bought deal offering and a $9.9-million private placement with Liberty Metals & Mining.
The financings left True Gold with $70 million in its treasury, which is half the amount required to build Karma. The company expects to access the rest of the funds through a debt deal and has been in talks with lenders for the past six months.
News of the North Kao resource estimate lifted True Gold’s share price by half a cent, to 43.5¢. The company has a 52-week trading range of 21¢ to 48.5¢, and has 398 million shares outstanding.