I just bought my first parcel of WAF shares at 93.5 cents ($10k); thanks Alex
West African Resources is a mid-tier gold producer in Burkina Faso (West Africa).
They have 12 million oz (1.3 gpt) and are producing 230,000 oz annually (Sanbrado-M1-Toega).
They are building their flagship project (Kiaka), which will take their production to 400,000 oz in 2025. They acquired Kiaka (7 million oz) in 2021 from B2Gold.Cash costs should remain low, with all-in costs (breakeven) around $1200 to $1300 per oz at both Sanbrado and Kiaka.
That will give them high FCF if gold prices remain above $1800.They have $150 million in cash and no debt (see figure below).
The only red flag is the location, which has had political turbulence and Islamic terrorism since 2015.
Semfo had 37 gold miners attacked and killed in one raid in 2019. Another potential red flag is possible cost overruns for Kiaka, which has a $430 million capex.
Another issue is the >1 billion shares. The company could look at share buy backs with revenue > 2025 cv. dividend payments.
Based on the retracement of gold in late May, early June, WAF will trade under 90 cents over the next month but then re-bound.
I am doubling down every 3% downward movement. (20k, 40k, 80k etc)
From a jurisdictional perspective, gold is 75% of Burkina Faso's GDP, making the army's budget for the mine's defense against any rebel intrusion easier to justify from a budgetary perspective.
With an unhedged gold production of 210,000Oz, if gold retraces to mid-1900s in the short term (1-2 months), WAF may re-test the AUD$0.88 resistance
Does anyone know what that ~$1.40 ceiling of WAF is?
It does not track the underlying commodity of Gold prices/ USD$/Oz (see graph 2); in fact WAF is down 25% YoY, and the Shanghai Gold Futures are up YoY
Divergence in Feb 2023 occurred consistent with other Gold producers in line with gold retracement
However WAF SP has not recovered since, any thoughts?
(20min delay)