Company Overview

We view West African Resources  (WAF) as one of the most compelling mid‑tier gold producers globally, combining scale, margin resilience, and organic growth optionality. The June 2026 quarter marked a decisive inflection point: record quarterly gold production of 125,179 oz, operating cash flow of A$ 249 million, and a cash balance of A$ 876 million plus A$ 247 million in unsold bullion, positioning WAF for accelerated shareholder returns and expansion funding.

With two large, low‑cost production centres- Sanbrado and Kiaka -WAF now operates at a run‑rate exceeding 500,000 oz pa, fully unhedged, and supported by 13.7 Moz resources and 7 Moz reserves. The company’s execution consistency, disciplined capital allocation, and strong local workforce (>95 % Burkinabe) underpin its reputation as West Africa’s premier gold operator.

Operational Performance: Record Output and Margin Strength

Group Highlights (Q2 FY26)

Group performance in Q2 FY26 was exceptionally strong, with West African Resources delivering 125,179 ounces of gold, an 11 per cent increase on the previous quarter. The company sold 110,737 ounces at an average realised price of US$4,556 per ounce, while all‑in sustaining costs fell to US$1,730 per ounce, representing a 10 per cent improvement quarter‑on‑quarter. Operating cash flow reached A$249 million, underpinned by robust production from both Sanbrado and Kiaka. Cash and bullion holdings climbed to A$1.12 billion, supporting a notional net cash position of US$497 million and reinforcing the company’s balance‑sheet strength.

The quarter’s performance confirms WAF’s ability to deliver high‑margin growth even amid logistical constraints in Burkina Faso. The AISC US$ 1,730/oz remains well below spot gold prices, driving exceptional free‑cash‑flow conversion.

Sanbrado: Underground Strength and Grade Upside

Sanbrado produced 57,608 oz @ US$ 1,737/oz site cost, up 37 % QoQ, driven by higher tonnes and grade from the M1 South underground, which delivered 43,644 oz @ 8.1 g/t. The process plant milled 787 kt @ 2.4 g/t with 93.7 % recovery, confirming operational excellence.

Outstanding drilling results—29 m @ 16.4 g/t Au and 27 m @ 6.7 g/t Au—extend mineralisation 400 m below current reserves, supporting long‑term resource growth and potential mine‑life extension beyond 2035.

Kiaka: Ramp‑Up Momentum and Throughput Gains

Kiaka delivered 67,571 oz @ US$ 1,666/oz site cost, a 3 % increase QoQ, with mill throughput up 6 %. Despite temporary explosives‑supply constraints, the operation maintained strong performance through adaptive mine planning and prioritisation of ore zones.

The Kiaka process plant achieved 92.9 % recovery from 2.49 Mt @ 0.9 g/t, validating design efficiency. With a 16‑year LOM and scalable 10 Mtpa CIL plant (expanding to 12 Mtpa in 2028), Kiaka is set to become one of West Africa’s largest single‑site gold producers.

Financial Strength: Cash Engine and Capital Discipline

WAF’s financial profile is exceptionally strong for a mid‑tier gold producer. The company generated A$249 million in operating cash flow during Q2, reflecting the underlying profitability of its two large production centres. Investing cash outflows totalled A$112 million, largely driven by development spending on the Kiaka HFO power station and pre‑strip activity at Toega. Financing cash outflows reached A$105 million, including A$67 million in priority dividends paid to the Government of Burkina Faso. WAF closed the quarter with a cash balance of A$876 million, up 3 per cent quarter‑on‑quarter, alongside A$247 million in unsold bullion valued at 42,453 oz at A$5,820/oz. The company remains firmly net‑cash‑positive, holding US$497 million in notional net cash, with US$327 million of secured loan facilities fully drawn and no standby credit lines available. This liquidity position provides substantial flexibility for ongoing exploration, expansion initiatives, and potential future shareholder returns.

Strategic Execution: Scaling Toward 500 koz pa

1 - Dual‑Asset Platform

Sanbrado and Kiaka together form a two‑pillar production base capable of sustaining >500 koz pa from 2027. The integration of Toega and MV3 deposits adds optionality for incremental throughput and reserve conversion.

2 - Exploration Leverage

Over 100,000 m of drilling planned for 2026, targeting depth extensions at M5 South UG, M5 North OP, and Toega UG. Early results confirm continuity and grade consistency, supporting the company’s 10‑year production target of 533,000 oz pa (peak 596,000 oz in 2030).

3 - Government Partnership

WAF continues to collaborate with SOPAMIB, the state‑owned mining company, on its 25 % stake acquisition in Kiaka SA for A$ 176 million. This partnership enhances local alignment and de‑risks long‑term operations.

Sustainability and Workforce

WAF’s social footprint is a competitive advantage. The company employs 3,653 people across Burkina Faso, including 2,491 direct employees (>95 % Burkinabe). Its scholarship and internship programmes cultivate local talent, reinforcing community integration and operational stability.

Health and safety performance remains exemplary, with a TRIFR of 1.25, far below the Western Australian gold‑industry average (5.7).

Valuation and Peer Context

Peer	EV/EBITDA	FY26 Production (koz)	AISC (US$/oz)	Differentiator
Perseus Mining	~6.1x	520	1,250	Multi‑asset West Africa
Resolute Mining	~5.0x	350	1,600	Turnaround story
West African Resources	~3.9x	490 (target)	1,730	Unhedged growth, record cash

Despite its superior margins and balance‑sheet strength, WAF trades at a low EV/EBITDA multiple of ~4×, a high discount to global peers averaging 5-7×. We believe this undervaluation is temporary; as Kiaka ramps and Sanbrado’s underground expansion crystallises, a rerating toward A$ 4.00–4.50/share appears justified.

Market Context: Gold and Macro Tailwinds

Gold’s sustained strength above US$ 4,500/oz (A$ 6,800/oz) provides a powerful earnings tailwind. With no hedging, WAF captures full upside from spot prices. The company’s low AISC and high cash conversion make it one of the most leveraged plays on gold’s structural bull cycle driven by geopolitical risk, inflation persistence, and central‑bank accumulation.

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Catalysts

FY26 Full‑Year Results (August 2026) confirming record production and cash flow

SOPAMIB stake completion and potential special dividend

Toega and M5 drilling updates extending mine life

Kiaka expansion to 12 Mtpa capacity by 2028

Exploration success at MV3 and resource upgrade in Q4 2026

Risks

Despite its strong financial and operational footing, West African Resources remains exposed to several structural and jurisdictional risks that investors must weigh carefully.

1 - Burkina Faso Sovereign & Security Risk WAF operates entirely within Burkina Faso, a jurisdiction with elevated geopolitical and security volatility. While operations have remained uninterrupted and the company maintains strong government relationships, any deterioration in regional stability could affect logistics, permitting timelines, or workforce mobility.

2 - Regulatory & Permitting Delays Approval for the M5 South Underground and the Kiaka explosives facility remains pending. Delays have already impacted development sequencing and waste‑stripping schedules. Although WAF has demonstrated flexibility in adjusting mine plans, prolonged regulatory bottlenecks could defer production uplift and increase operating costs.

3 - Gold Price Sensitivity As a fully unhedged producer, WAF is highly leveraged to spot gold prices. This is a strategic advantage in a rising gold market, but it also exposes earnings and cash flow to downside volatility. A sustained decline in gold prices would compress margins and potentially slow capital deployment.

4 - Operational Execution at Scale The transition toward 500,000+ oz pa production requires flawless execution across two major assets. Risks include underground development delays, plant throughput variability, explosives supply constraints, and grade reconciliation challenges. Kiaka’s ramp‑up, in particular, must maintain consistency to meet FY26–27 guidance.

5 - Cost Inflation & Supply Chain Constraints Mining consumables, fuel, reagents, and equipment remain subject to global inflationary pressures. Burkina Faso’s import‑dependent supply chain amplifies this risk. Any disruption could elevate AISC and reduce free‑cash‑flow conversion.

6 - Government Participation & Fiscal Terms The Burkina Faso government holds 15% equity in WAF’s operating subsidiaries and is negotiating a 25% stake in Kiaka SA. While this partnership strengthens alignment, changes in fiscal terms, royalty structures, or taxation could affect long‑term project economics.

Technical Analysis of West African Resources (ASX: WAF)

Source: TradingView

Price Action

WAF has broken above its multi-month descending trendline, shifting the structure to bullish. Price now trades near $3.48, with resistance zones determining follow-through strength.

Stop Loss

We have set the chart stop-loss zone under A$2.65, beneath horizontal support and the rising trendline. A sustained daily break below this area invalidates bullish structure.

Volume and RSI

Breakout volume appears constructive but remains below earlier peak-volume sessions. RSI has risen to 69.82, confirming momentum while nearing technically overbought conditions.

FAQs about West African Resources (ASX: WAF)

1 - Does WAF pay dividends?

WAF does not currently pay dividends, prioritising reinvestment into expansion and exploration. However, with A$1.12 billion in cash and bullion, capital‑management initiatives are under review for Q3 2026.

2 - What is the biggest risk for WAF investors?

Jurisdictional risk in Burkina Faso remains the most material. Regulatory delays and security conditions can influence operational continuity and project timelines.

3 - Why is WAF considered undervalued relative to peers?

Despite superior margins, strong cash generation, and a clear path to >500 koz pa production, WAF trades at a discounted EV/EBITDA multiple. We believe this reflects jurisdictional risk rather than operational fundamentals.