Nordesmic A merger of Orezone and WAF may have made sense for...

Nordesmic

A merger of Orezone and WAF may have made sense for WAF shareholders before the country became increasingly destabilised by the Jihadist movement and the military coups but in the current circumstances I think it would be a bad idea for the shareholders of both companies. The MergedCo with its much higher level of profits, revenue and gold production would just become an even bigger target for terrorists and incite the govt to make even more demands on them, which is partly why I think EDV sold its mines in that country.

I think that once Orezone is fully ramped up and WAF has built Kiaka the govt will move to extract more out of them. There will not be any new mines built in Burkina Faso for some years, and very little exploration other than around exisiting mines. The existing mines will be allowed to operate but will be milked as much as possible given the lack of other revenue options available to the govt, IMO.

The proposed co-operation between WAF and Orezone should be beneficial for both companies.

WAF is going to be constrained for some years building Kiaka and paying off its debt, and any future expansion plans should be in another country in order to diversify country risk.

One thing RH should consider is a listing of WAF on the LSE where there is greater risk tolerance to investment in Africa. That seems to have worked well for RSG.

A fall in the share price below 70 cents looks pretty certain as the gold price eventually finds a lower floor and WAF becomes a net debter. First gold production from Kiaka in the September 2925 quarter can not come fast enough for WAF and its shareholders.

GLA

loki (speculating in goldies with an African focus can prove deadly to ones bank balance, especially during a crashing USD POG - ouch).