Katana Asset Mgt's thoughts on WAF. From the...

Katana Asset Mgt's thoughts on WAF. From the Australian/*:

“Now, we’re not aware of any 200,000 ounce per annum low-cost gold producers trading on a market capitalisation of less than $1 billion,” Sala Tenna said.
“For the 2023 calendar year, WAF produced 226,000 ounces from its Sanbrado mine at an all-in sustaining cost (AISC) of $US1126 per ounce.
“This generated not only a significant paper profit, but more importantly strong operating cashflow.”
According to Katana, this factor alone justifies a notably higher valuation.
“But the real appeal for Katana is the rapidly developing Kiaka gold project south of Sanbrado,” Sala Tenna said.
“This is a mid-scale but world-class, low strip, open-pit development.
“Company releases confirm a 19-year mine life averaging 220kozpa.
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“With first production slated for the second half of 2025, this will elevate combined production to more than 400,000 ounces per annum.
“On the current market capitalisation, this seems an excellent risk-reward opportunity.”
“As with every company (and especially smaller ones) it is important to understand why we believe it is ‘mispriced’. In the case of WAF, the market would appear to be concerned with two issues: funding and country risk.
“In the case of the first issue, WAF have repeatedly stated that they are fully funded to first production and do not need to raise capital.
“As a worst case, if they need/choose to raise, it is unlikely to be more than $100 million to $200 million; which is a modest 10-20 per cent of the current market cap. So not material, even in the worst case scenario.”
In respect of Burkina Faso (country risk), Sala Tenna agrees that there’s a few superficially valid concerns around sovereignty.
But, he says investors should also take into account four factors:

• West Africa is now the largest gold producing region globally
• Burkina Faso is the second largest producer in West Africa
• Burkina Faso is ranked No.1 for gold discoveries over the past decade
• The country is also ranked No.1 globally for permitting times and construction costs