TORONTO (miningweekly.com) – TSX-V-listed True Gold Mining on Monday announced that it had completed building the fresh water reservoir at its Karma gold project, located in Burkina Faso, which would provide water for mine construction and operational needs, as well as providing a year-round water source for local communities.

The construction of the barrage was overseen by South Africa-based SENET in collaboration with True Gold's on-site owner's team, and was completed ahead of schedule and under budget.

"The completion of this major piece of infrastructure is a significant milestone in the mine development process, as it mitigates water-related project risks as we gear up to begin construction of Burkina Faso's next gold mine,” True Gold president and CEO Dwayne Melrose said.

The barrage is constructed on a tributary to the Nkambe river, 4 km south of the proposed mine site.

Phase 1 construction, completed in 2013, involved building a one-metre-high dam with enough capacity to provide water for exploration and development operations. The second and final phase of construction, now complete, increased the barrage height to 2.5 m and deepened the barrage basin to store more water.

The dam would now provide 1.3-million cubic metres of water a year to meet the operating requirements of the mine. The average yearly flow of the Nkambe river is 22-million cubic metres which, based on hydrological studies conducted over the past 50 years, can vary from 7-million cubic metres to 40-million cubic metres during ten year lows and highs.

Water would be drawn from the dam during the three-month rainy season, generally late June to mid-September, and will be pumped to water storage ponds for use throughout the remainder of the year. Water stored in the raw and storm water ponds would be used for heap leach irrigation, plant processing, dust suppression, potable water and other mining construction and operational needs.

SENET is also leading detailed engineering and construction-level design work, which True Gold expects to be complete on schedule and on budget by the end of the month.

True Gold's main project is the Karma project, which is currently preparing for construction to start in the second half of the year, with production slated to start in the second half of 2015.

The project has a total compliant resource estimate of 5.4-million ounces of gold, comprising 1.6-million ounces in the oxide and transition zones, and about 3.8-million ounces in the sulphide zone.

A December feasibility study had calculated the project to hold 949 000 oz of gold in 33.2-million tonnes at a grade of 0.89 g/t.

The company expects to produce 97 000 oz/y of gold over an 8.5-year mine life at an all-inclusive cash cost of $720/oz.

Karma has an after-tax net present value at a 5% discount rate of $178.2-million, and an after-tax internal rate of return of 43.1%.

The $131.5-million project is fully permitted, and True Gold had already raised part of the financing in equity. The company is expected to raise another $90-million in debt later this quarter to be fully funded and to bring Karma into production.