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West African Resources ‘monitoring’ Burkina Faso situation as shares dive amid permitting uncertainty

Adrian RausoThe West Australian
Mon, 7 October 2024 10:47AM

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Adrian Rauso
Shares in West African Resources have plunged on Monday morning after Burkina Faso’s junta leader proclaimed he will strip mining permits from foreign companies.
Ibrahim Traore, Burkina Faso’s leader, on Saturday made the statement in a radio address — without specifying which permits could be cancelled.
“We know how to mine our gold and I don’t understand why we’re going to let multinationals come and mine it,” he said according to a Reuters report.
“In fact, we are going to withdraw mining permits.”

Burkina Faso president Ibrahim Traore. Burkina Faso government
Shares in Subiaco-headquartered West African Resources plunged 25.2 per cent in the first half an hour of trade before the ASX froze the stock pending a further announcement. The company’s operations are centred on Burkina Faso.
West African, which holds the ASX ticker WAF, emerged from the pause mid-morning to reassure shareholders that its mining permits were still in place.
“WAF is not aware of any plans by the government of Burkina Faso to withdraw any of its mining permits. President Traore has spoken previously about taking action against miners who have not adhered to the Mining Code and also regulating the semi-mechanised and artisanal mining sectors,” the company stated.
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“The government remains supportive of WAF’s position in Burkina Faso as demonstrated by recent positive interactions between WAF and the government last month.
“WAF is continuing to monitor the situation in Burkina Faso and will provide more updates when appropriate.”
Following the announcement shares in West African resumed trade and recovered slightly to finish trade 19.5 per cent in the red.
West African, London-listed Endeavour Mining, Russia’s Nordgold, and Canada’s Orezone Gold are the main foreign miners operating in the gold-rich country.
Last month West African’s boss Richard Hyde downplayed concerns about Burkina Faso’s leadership nationalising mines, after the country adopted a new mining code that increases government ownership in mining projects from 10 per cent to 15 per cent.
Mr Hyde said these changes would not have a material impact on West African’s operations and disputed it was part of a wider push for governments to take back control of mines across the African continent.
“It’s happened in Africa previously, and it hasn’t been successful. Mining’s such a complicated business. . . African governments understand that mining is so specialised and you’ve got to have the right partners,” he told The West Australian.
In Burkina Faso West African runs the Sanbrado mine and is currently building the Kiaka mine.
West African on Monday said operations at Sanbrado and construction at Kiaka are “progressing without interruption”.
“WAF is on track to achieve annual guidance of 190,000 to 210,000 ounces of gold at an AISC of less than US$1,300 per ounce and remains on track to produce 4 million ounces over the next decade, with annual production set to peak in 2030 at 494,000 ounces of gold.”
Terrorism is also plaguing Burkina Faso and adding more risk to mining ventures in the country. A militant Islamist group killed 200 innocent people in August.
Mr Hyde argued last month there are projects in Western Australia — which he lauds as the world’s mining capital — that carry their own risk.
“I don’t know of many mines that haven’t ramped up successfully in West Africa. It’s a real contrast to say, Western Australia. Bankers love to bank jurisdictional risk before project risk. And it’s wrong. There are projects in Western Australia should never been funded and should never been built.”
West African has a market value of about $1.4 billion and its shares were up 135 per cent over the past year prior to this plunge.