West African shares slip on 2024 production guidance

Shares in gold miner West African Resources (ASX:WAF) have taken a tumble after the company released its 2024 production guidance, marked by softer production and higher costs compared to 2023. 

The company reports that gold production from its core Sanbrado asset in Burkina Faso is forecast to land between 190,000 ounces and 210,000 ounces for the 2024 calendar year — a dip at the top of the guidance range of just over 7% compared to 2023 production of 226,823 ounces.

Meanwhile, operating costs are forecast at around US$1,050 per ounce in 2024 compared to US$927/oz in 2023, with all-in sustaining costs of around US$1,300/oz predicted for 2024 compared to US$1,126/oz over 2023. 

Shares in West African were down 15.43% to $0.80 at 12:30pm AEDT on 6 February.

West African Resources says the production forecasts are consistent with its long-term mining plan, with 2024’s figures to be driven by reduced ounces from open-pit mining but partially offset by more ounces from underground mining. 

The company is set to begin mining from the ‘higher-grade’ M5 South open pit before the end of March, though its 2024 open-pit ore will mostly come from M5 North. 

As far as costs go, West African Resources says the lower forecast gold production will be a primary driver of the higher forecast costs, with higher Burkina Faso gold royalty rates and fuel price increases also contributing to the increased expenditure. 

The company has forecasted growth capital expenditure for 2024 in the range of US$230 million to US$270 million, with the funds to be primarily allocated to the construction of the Kiaka Gold Project.

At Kiaka, a 225-kilovolt (kV) power supply line has been finalised, and major design, procurement, and installation contracts have been executed. 

West African says over the first half of 2024, it expects mill shells to arrive on site, the carbon-in-leach (CIL) tank steel fabrication to begin, tailings storage facility and water storage dam earthworks to progress, and the procurement phase to ramp up. 

Executive Chairman and CEO Richard Hyde says: “Sanbrado is expected to continue performing in line with our long-term mining plan in 2024, with unhedged production guidance of 190,000 to 210,000 ounces of gold at an AISC of less than US$1,300 per ounce.

Site construction activity at Kiaka will see a major ramp-up in 2024, with an expected growth capital investment of US$230 to US$270 million primarily allocated to Kiaka. The project remains on schedule and on budget, with first gold expected in the second half of 2025.”

At the end of December 2023, West African Resources had around $135 million in cash and $393 million in unused finance facilities at hand, according to its latest quarterly report. 

Write to Joshua Smith at Mining.com.au 

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Joshua Smith has years of experience in the media sector, having worked as a markets reporter, features writer, and editor since completing a Communications and Journalism degree and a Creative Writing degree. Josh is an avid board game fan and a self-professed coffee snob.

West African draws down US$100 million for Kiaka

West African Resources (ASX:WAF) has drawn down the first US$100 million of a US$265 million debt facility to support the development of its Kiaka Gold Project in Burkina Faso. 

The $969.67 million market capitalisation signed the funding deal with Sprott Resource Lending and Coris Bank International in late-June 2022. 

Under the terms of the deal, the loan facility will be provided under a two-tranche structure, with $165 million under tranche one and the equivalent of US$100 million denominated in CFA Francs (XOF) under tranche two.

With the first US$100 million now drawn down, West African Managing Director Richard Hyde says the company has bolstered its balance sheet, with the building of Kiaka ‘well underway’ and on-track for first gold in the second half of 2025. 

“Kiaka will be a long-life, low-cost gold project averaging 219,000 ounces of gold production per annum for 18.5 years.

WAF has an unhedged resource base of 12.6 million ounces, and we aim to be producing more than 400,000 ounces of gold annually from our 2 mines from 2025.”
 

“we aim to be producing more than 400,000 ounces of gold annually from our 2 mines from 2025”

Coris Chairman Idrissa Nassa says Kiaka is a ‘world-class’ project that is set to have a ‘significant economic and social impact’ on communities in Burkina Faso. 

“We are very proud to provide local funding for the Kiaka Gold Project. We would also like to congratulate the WAF, Sprott, and Coris teams for their excellent collaboration, which led to  the closing of the financing.”

West African Resources already produces gold from its Sanbrado Gold Project near the Burkina Faso capital of Ouagadougou. The project covers 116km-square and comprises one granted mining tenement and one granted exploration licence. 

Write to Joshua Smith at Mining.com.au

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Written By Joshua Smith
Joshua Smith has years of experience in the media sector, having worked as a markets reporter, features writer, and editor since completing a Communications and Journalism degree and a Creative Writing degree. Josh is an avid board game fan and a self-professed coffee snob.

West African flags maiden M5 South underground resource

West African Resources (ASX:WAF) has delivered a scoping study and maiden underground Mineral Resource Estimate (MRE) for the M5 South open-pit within its Sanbrado Gold Operations in Burkina Faso. 

The $867 million market capitalisation company reports that the MRE comprises 2.4 million tonnes (Mt) @ 3.8 grams per tonne (g/t) gold (Au) for 289,000 ounces of Au. 

The MRE was updated by resource geologist and employee of West African Neil Silvio and remains open at depth, and the potential remains to optimise infill and extensional drilling from the M1 South access drive. 

West African will continue to work on a proposed underground development of M5 South including further drilling, geotechnical studies, and mine planning. 

The company aims to complete this work next year and, subject to a ‘positive’ outcome being achieved, begin portal establishment and underground development in the second half of 2025 — which will lead to full underground production by mid-2026. 

Meanwhile, West African Executive Chairman Richard Hyde says a recently conducted Scoping Study has outlined the potential for an initial 5-year underground mine life at M5 South producing about 35,000 ounces of gold per annum. 

The company says the outcome of the Scoping Study supports further work on the proposed M5 South underground mine. This includes West Africa incorporating the M5 South into Sanbrado’s 10-year production plan. 

Further, West African plans to undertake further drilling at M5 to double the resource and extend the mine life to match its M1 South at depth and investigate repeat shoots to the northeast along strike. 

Hyde says: “All deposits in the Sanbrado project area show strong continuity in the vertical extent, therefore an exploration target has been estimated for M5 South beneath the resource area between 500m and 1km below surface ranging from a lower case of approximately 2Mt @ 3g/t Au for 225,000 ounces, to an upper case of approximately 3Mt @ 4.5g/t Au for 425,000 ounces Au.

WAF’s unhedged mineral resources and ore reserves stand at 12.6 million ounces and 6.4 million ounces of gold, respectively. Our unhedged 10-year production outlook estimates production of more than 200,000 ounces of gold per annum in 2023 and 2024, and more than 400,000 ounces of gold per annum from 2025 to 2032.”

“All deposits in the Sanbrado project area show strong continuity in the vertical extent…”

The company also plans to complete a geotechnical study to confirm ground conditions, as well as assess the exploration drive from M1 South to enable infill drilling of the M5 South underground resource and exploration target area at depth. 

West African Resources became West Africa’s newest unhedged gold producer after pouring its first gold at its Sanbrado Gold Operation in Burkina Faso in March 2020. 

As of 30 September 2023, the company had $152.642 million cash and cash equivalents at hand, according to its latest quarterly report.

Write to Aaliyah Rogan at Mining.com.au   

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West African Resources locks in US$265 million loan facility to fund Kiaka Gold Project to production

West African Resources (ASX:WAF) reports it is now ‘fully funded’ to bring its Kiaka Gold Project in Burkina Faso into production with a US$265 million loan facility. 

The company has mandated financiers Sprott Resource Lending and Coris Bank International to provide the syndicated corporate loan facility. The syndicate completed thorough technical and environmental due diligence on both the Sanbrado Gold Operation and the Kiaka Gold Project and has provided a credit-approved committed offer of finance.

The loan facility will be provided under a two-tranche structure, with $165 million under tranche one and the equivalent of US$100 million denominated in CFA Francs (XOF) under tranche two.

Repayments will begin 2 years after satisfying the conditions of the initial drawdown, while the final repayment will be made 5 years after the closing date. Early repayments will be permitted from 3 years after the closing date.

Other terms under the facility include an average interest rate margin on the 2 tranches of 5.3% per annum over the reference rate and a fixed production payment agreement (PPA) of US$12.44 per ounce on the first 1.5 million ounces of gold produced from Kiaka. 

West African Resources retains the right to buy back the PPA, and there is no mandatory gold hedging.

Conditions precedent to drawdown include executing and delivering documents related to the loan facility, along with lodging security documents and other conditions customary for a facility of this nature. The first drawdown under the loan facility is expected to occur in Q4 2023.

Commenting on the corporate loan facility, West African Resources Chairman and Chief Executive Officer (CEO) Richard Hyde says: “WAF has undertaken a comprehensive debt process that sees Kiaka fully funded to first gold.

Kiaka is one of the best gold projects in development globally”

We are pleased to award the US$265 million debt mandate to experienced mining sector financiers, Sprott and Coris Bank, based on their committed and credit-approved offers.

Kiaka is one of the best gold projects in development globally. Construction is well underway, and we look forward to completing the build at Kiaka and pouring first gold in the second half of 2025.

WAF is on track to become a +400,000-ounce-per-annum gold producer with the development of Kiaka. Our unhedged 10-year production outlook estimates production of more than 200,000 ounces of gold per annum in 2023 and 2024 and more than 400,000 ounces of gold per annum from 2025 to 2032.”

Sprott Resources Lending is a Toronto-based alternative asset manager that specialises in providing exchange-listed products, alternative asset management, and private resource investment strategies.

Coris Bank International is a Burkina Faso-based bank that has more than $3.2 billion in assets and finances ‘major’ mining projects in Burkina Faso, Côte d’Ivoire, Mali, and Guinea.

West African Resources is an ASX-listed gold producer focused on its Sanbrado Gold Operation as well as the Kiaka and Toega Gold projects in Burkina Faso. The company acquired a 90% interest in Kiaka in November 2021, while the remaining 10% is held by the Government of Burkina Faso.

According to the company’s latest quarterly report published on 26 April 2023, West African Resources had $160,400 cash at hand at the end of the quarter.

Write to Harry Mulholland at Mining.com.au

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Hailing from the Central Coast region of NSW, Harry is a passionate journalist with a background in print, radio and ESG news. When not bashing away on his keyboard, he can be found brewing a coffee or playing with his dog.

S&P/ASX200 closes higher crossing above 200-day moving average

The S&P/ASX200 closed higher Friday 9 June, gaining 22.80 points or 0.32% to 7,122.50, heading above its 200-day moving average.

The index has lost 0.32% for the past 5 business days, but has gained 1.19% year-to-date.

Nickel Industries (ASX:NIC) was a standout on Friday. The company soared 13.294% to a 7-week high of $0.98 following an announcement that Indonesian heavy equipment giant PT United Tractors has agreed to invest $943 million to buy a 19.99% stake in the company.

Nickel Industries reports a conditional placement to PT United Tractors, through its subsidiary, PT Danusa Tambang Nusantara at $1.10 per share representing a 12.25% premium to its Friday close trading price.

Nickel Industries soared 13.29% to a 7-week high of $0.98

West African Resources (ASX:WAF) finished trade Friday 5.325% higher, while Champion Iron (ASX:CIA) was up 4.470%, and Sandfire Resources (ASX:SFR) closed 3.614% higher.

The ASX finished higher on weak economic data supporting a pause in US rate hikes after the US Labor Department reported that first-time unemployment claims increased quite sharply in the past week.

The news has been seen as a possible sign that interest rate hikes were softening the US labour market.