West African Resources Presenting Strong Growth and ESG Performance at Established Mines

About West African Resources

West African Resources is an Australian gold producer operating two mines in Burkina Faso, West Africa. The company is on track to meet full year production guidance of 230,000 ounces in 2023. All-in sustaining costs are also tracking below guidance, positioning WAF to generate strong margins at the current gold price. With a market capitalization under A$900 million, WAF offers investors exposure to high-quality assets with significant production growth on the horizon.

Track Record of Operational Success Driving Cash Flow

WAF’s flagship operation is the Sanbrado Gold Mine, which began commercial production in 2020. Open pit mining is complemented by an underground mine, and the processing plant has capacity for 5.5 million tonnes per annum. In the first half of 2023, Sanbrado produced 113,000 ounces of gold. This keeps WAF on pace to achieve full year guidance of 230,000 ounces.

Notably, all-in sustaining costs in the first half were US$891/oz, below the 2023 cost guidance of US$950-1,050/oz. Consistently beating cost guidance demonstrates WAF’s operational efficiency at Sanbrado. The company has an impressive track record, having met or exceeded production guidance for 10 consecutive quarters. With Sanbrado generating robust margins at today's gold prices, WAF is funding near-mine exploration from operating cash flows.

Significant Production Growth on Horizon

WAF boasts substantial gold resources of 12.6 million ounces and ore reserves of 6.3 million ounces. Approximately half of these reserves are located at the Kiaka Gold Project, which the company aims to bring into production by mid-2025. Once Kiaka is online, WAF expects to double total gold production to over 400,000 ounces per annum.

The Kiaka development project has key permits in place, having received its mining permit in 2021 and environmental approval earlier this year. WAF is focused on constructing Kiaka safely, on budget and on schedule over the next 18 months. Adding a second operation in Burkina Faso provides investors with exposure to the country's gold mining sector while diversifying single asset risk.

Disciplined Allocation to Exploration and Acquisitions

In addition to successful exploration around its mine sites, WAF has created value for shareholders through acquisitions. The US$50 million purchase of the Toega project in 2021 added 1 million ounces of reserves with significant resource upside. Toega will extend Sanbrado’s mine life beyond 2030. The US$60 million acquisition of the Kiaka project in 2016 stands out for its high leverage to the gold price. At WAF’s conservative reserve assumption of US$1,400/oz, Kiaka holds 4.5 million ounces. But at US$1,800/oz, which is below today’s spot price, the project hosts 6.5 million ounces.

Given WAF’s track record for converting resources into reserves, Kiaka should support production for over 15 years. While focused on Kiaka development over the next 18 months, WAF will be drilling targets close to Sanbrado and Kiaka. The company aims to replace reserves through disciplined near-mine exploration rather than relying heavily on acquisitions.

Strong ESG Credentials Underpin Social License

WAF has achieved robust environmental, social and governance (ESG) performance by developing collaborative relationships with communities and governments in Burkina Faso. This social license provides stability and predictability essential for long-life mining assets.

The company prioritizes local hiring. Over 90% of the 1,400 person workforce at Sanbrado is Burkinabe, with 50% drawn from surrounding communities. WAF is also a significant taxpayer, paying US$86 million to the Burkinabe government in 2022. On the environment front, progressive rehabilation is underway at waste dumps and historical mining areas. And WAF is establishing biodiversity initiatives to protect ecologically sensitive zones.

Resettlement was completed at Sanbrado with input from specialized consultants. WAF applied these lessons when designing resettlement plans at Kiaka through an inclusive process. Livelihood restoration programs focused on sustainable economic activities are implemented in partnership with NGOs. In summary, through responsible ESG policies and community engagement, WAF has developed a positive reputation enabling stable operations.

Valuation Appears Attractive at Current Prices

With a market capitalization under A$900 million, WAF is trading at valuations discounted to African gold peers. The company’s consistent operational delivery at Sanbrado and significant production growth potential at Kiaka suggest upside potential at current share prices. As WAF executes on its growth strategy and ESG initiatives in 2023, the market should close the valuation gap to quality gold miners in the region. Therefore, investors seeking African exposure may want to consider WAF based on its operational track record and growth prospects.

West African Resources could be a good investment opportunity for investors

Proven Production Track Record - WAF has a strong operational track record, meeting or exceeding guidance for 10 consecutive quarters at its Sanbrado mine. This demonstrates excellent execution and asset quality.

Significant Production Growth Ahead - Bringing the Kiaka project online in 2025 is expected to double gold output to over 400koz per year. This major expansion is fully funded.

Long Mine Lives - Current reserves support 15+ year of mine life at Sanbrado and 18+ years for Kiaka. Further exploration can extend these timeframes.

Low-Risk Jurisdiction - WAF's projects are located in secure regions of Burkina Faso with no incidents to date. The company has solid government and community relations.

Attractive Valuation - Trading at around A$720/oz resource, WAF is discounted compared to peers. Proven operational ability suggests an upside as Kiaka progresses.

Strong Cash Flow Generation - With all-in sustaining costs below $1,100/oz, WAF is generating robust margins at current gold prices.

Leverage to Gold Price - As an unhedged producer, WAF provides full exposure to any increases in the gold price.

Quality ESG Practices - Responsible policies for environment, community development and human rights lower risk.

West African Resources offers a compelling risk-reward proposition. Its operations generate strong cash flow today, funding an attractive production growth profile. The experience of management to execute gives confidence. And the valuation disconnect provides an opportunity for investors.