True Gold Mining (CVE:TGM) popped higher on Tuesday in heavy volume, after announcing the start of mining at its Karma Gold Project in Burkina Faso.
During early afternoon trade the Vancouver-based junior was trading at $0.225, up 18.4% on the Toronto Venture Exchange, at its high for the day. More than 900,000 shares in the $87 million company changed hands. Like most if its peers True Gold has had a tough year – the counter is down 11% year to date.
True Gold said in a statement that mining has started at the Goulagao II deposit, the first of six deposits that will be mined over an 11.5 year period. This deposit has reserves of 273,000 leachable ounces of gold (contained in 7.6 million tonnes at 1.12 g/t gold), and will be mined during the first two years of production according to the company.
The overall project is approximately 73% complete and is funded through construction to production. The company has $19 million cash on hand and a $48 million financing facility as part of a streaming deal with Franco-Nevada and Sandstorm Gold. The first gold pour scheduled for the first quarter of next year.
Christian Milau, President & CEO of True Gold said the mine “will produce approximately 120,000 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.” During years one to five, all-in cash costs are estimated at roughly $700 an ounce according to True Gold.
The company suspended construction work at Karma in January for three months, after several hundred members from two surrounding communities marched on the mine, threatened employees and damaged equipment.