West African Resources’ Kiaka gold project on track for first gold in 2nd half of 2025.

About West African Resources

West African Resources Limited (West African, the Group, ASX:WAF) is an emerging mid-tier gold producer focused on the West African country of Burkina Faso. Headquartered in Perth, WAF was listed on the ASX in June 2010. WAF currently has about 2000 square kilometres of exploration potential wherein the Sanbrado, Toega and Kiaka mine sites are located. The Group has an unhedged resource base of 12.6 million ounces of gold and aims to be producing 400,000 ounces of gold annually from two mines by 2025.

Kiaka mine development on track for first gold in 2nd half of 2025

West African has received its first drawdown for US$100 million under the US$265 million funding facility to be used in developing the Kiaka gold project in Burkina Faso. Mine development is well underway, and the project’s first gold pour is on track for the second half of 2025. Kiaka positions WAF as a 400,000 ounce per annum gold producer from 2025 to 2032. Kiaka has an estimated mine-life of 18.5 years from 2025 and is expected to produce 219,000 ounces of gold annually.

Specialist experienced mining sector financier Sprott Resource Lending Corp (Sprott) and Coris Bank International SA (Coris) are the joint financiers of the Kaiko gold project which is fully funded through to production. Sprott is a global alternative asset and investment manager based in Canada specialising in precious metals and has a history of financing major mining projects in Burkina Faso. Coris has assets of more than US$3.2 billion and operations in nine countries. The bank is headquartered in Burkina Faso and its shares are listed on the Bourse Regionale des Valeurs Mobileres, which is the regional stock exchange of the West African Economic and Monetary Union.

The world-class US$430 million Kiaka gold project passed stringent financial, technical and environmental due diligence before the US$265 million structured finance solution was approved. The $165 million funding balance is to be sourced from existing cash and internally generated cash flow from WAF’s operating mine Sanbrado, which is also in West Africa. Loan repayments are scheduled to commence two years after the second drawdown and the interest margin is 5.3 percent over the reference rate. An interesting feature of the funding package is that a gold hedge is not required by the lenders. This reflects the confidence of lenders in the cash flow generation capability of the Kaika mine and its low average all-in sustaining cost (AISC) of US$953/oz for the initial five years and US$1052/oz over the life of the mine. These low costs are attributable to the low risk and low-cost open pit mine structure using a single stage crusher reserve.

Looking Ahead

West African Rersources is set to produce 200,000 ounces of gold in 2024 and at least 400,000 ounces annually from 2025 on completion of the low-cost Kaika gold mine. Kaika is one of the best gold projects currently in development anywhere in the world. WAF’s unhedged gold position may contribute to share price volatility in the period ahead, however, this should be considered in the context of the Group’s low AISC, and as savvy investors know, share price volatility is the price investors pay for long-term share price outperformance.

Importantly, WAF’s mining operations are centred in one of the world’s largest gold producing and most attractive mining regions that produces 16 million ounces of gold annually and has the lowest construction capital intensity in the world.

West Africa is an ideal location for an aspiring global gold producer like WAF, and shareholders can expect positive share value accretion at least over the medium term.