RM Corporate Finance
Our Guy le Page has noticed a few rumblings in West Africa this year, with the recent Wagner-backed coup d’etat in Niger not making life any easier in the region.
There have been some security concerns in Burkina Faso, but this hasn’t stopped West African Resources (ASX:WAF), chaired by regular NextGen gym goer Richard Hyde, from powering on at its Sabrado Gold Mine.
Some recent USD strength and political instability have seen a sell-down in WAF from just over $1.40 down to around 79 cents per share.
Macquarie Research, however, has a some-of-parts valuation of $1/60/share which Guy wouldn’t disagree with.
The company, which has total JORC Resources of 80Mt at 1.9 g/t for 4.9Moz gold, appears on track for FY 2023 production of around 210,000-230,000oz Au at an all-in sustaining cost of under US$1,200/ounce and is aiming for around average annual production of around 185,000ozpa over the next 10 years or so.
This is projected by Macquarie to deliver some substantial free cash flow over the coming years
“There is plenty of earnings upside with Kiaka Gold project to produce over 200Koz of gold per annum over an 18 year (from mid-2025) mine life,” Le Page says.
Guy is a big believer that Australian mining companies operating in Africa have been good corporate citizens and have been adept at pushing through periods of instability, and reckons that when sentiment turns around, WAF are going to have their day in the sun again…
WAF Price at posting:
79.0¢ Sentiment: Buy Disclosure: Held
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