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
Images: West African Resources