West African Resources Ltd

Just got our forward-looking statement here. So this is a snapshot of where we’ve got to over the last few years. So currently, we’re tracking very well to guidance, probably towards the upper end of the 430,000 to 490,000 ounce range for this year. A little under 14 million ounces of unhedged resources, 7 million ounces of unhedged reserves. We’re tracking to a ten-year production target of 5.3 million ounces, which is based 82% on reserves, but I think that’s relatively conservative. We still have a very large land package in Burkina.

Currently, we have a market cap of about A$4.1 billion, or roughly $3 billion US, with about US$777 million in cash and bullion, or just over a billion Australian in cash and bullion at the end of the June quarter. So that’s gonna be higher next quarter ’cause we’re actually having a very good quarter this quarter as well.

So, quickly touching on the board. We’ve built the board over the last decade to a very balanced, very fit for purpose board. And they’re supported by a very well-qualified and experienced management team. We’re located in Burkina, which, if you have been following Burkina’s history in the last few years, has had its trouble in the north and the east of the country. Thankfully, to date, we haven’t had any security issues around either of our projects at Sanbrado and Kiaka. And as you can see, it’s located in the south-central portion of Burkina, which has been relatively safe to date.

Just a snapshot on our half-year performance. We produced a half-year profit of A$437 million. We’ve declared our first dividend, so a maiden dividend of 20 cents a share, which we’ll get paid next week. I’ve mentioned our guidance. We’re actually tracking very nicely to guidance at the moment. We’re having a very good quarter at the moment, which we’ll finish up in the next few days. And costs are on track as well, just tracking under $1,900 US an ounce. Our half-year production, as you can see, was mid to upper end of guidance and I think, with this quarter’s production and we expect to have a very strong fourth quarter as well, we’ll be towards the top end of guidance.

And of course, we’re doing an extensive amount of drilling, so over 100,000 meters of RC and diamond drilling annually on our projects, either infilling resources and upgrading them from lower resource categories to higher resource categories or we’re stepping down deeper or along strike and adding more resources on.

So our ten-year production target, you can see here. It peaks at nearly 600,000 ounces in a couple of years’ time. We’re already on that 500,000 ounce a year run rate on a quarterly basis. We did 125,000 ounces last quarter, and it’s looking like a similar quarter this quarter. It’s backed by a lot of drilling. I think that’s what we do different to most companies: don’t under-drill projects, and it’s something that happens in a lot of companies. But I think this ten-year plan is still quite conservative. I think we’ll exceed that once we’ve got full power on at Kiaka, which should be in place in the next six months or so.

Here’s a snapshot of Kiaka. It’s brand-new. Commissioned it less than a year ago. Currently tracking very nicely to its guidance. And you can see on the right-hand side of the screen, Kiaka’s a very robust deposit. It had been sitting there for about 20 years. Initially discovered by Randgold back in the late nineties. Acquired by Volta Resources. Volta was acquired by B2Gold, and we bought this off B2Gold for effectively $50 million cash up front in 2021 with some contingent payments and royalties. So we think it’s a very smart acquisition, even considering the current situation we’re in. We’ve turned that resource from about 4 million ounces into 9 million ounces by smart drilling and obviously a high gold price. But it’s a very robust ore body, which I’ll show you in a moment with a cross-section.

It’s got a sixteen-year mine life. It’s conventional. Currently, we’re running at about 11 million tonne per annum run rate. We’re gonna install additional power by the middle of next year. We’ve just acquired a HFO power plant because we’ve actually connected this to the grid in Burkina. Unfortunately, the grid’s been very unreliable, and that’s impacted our potential performance. Obviously, we’ve still performed very well against our initial guidance, but I think we can do a lot better here. With additional power, we’ll have about 40 megawatts of HFO and about another 30 megawatts of diesel, which is already installed, plus a grid connection. So we’ve got all bases covered when it comes to power and I think we’ll see this asset do 12 to 14 million tonnes per annum, which puts that into the mid-three hundreds ounces per annum when you’re thinking about annual production.

We built this project in 2023 and ’4. And then after we commissioned it and poured first gold, the government approached us, because we’d done such a magnificent job, and they’d like to buy another 25% of it. So we’ve finalized that negotiation and we’re in the process of documenting. It’ll be all wrapped up by the end of the year, and it’s a very good deal for Burkina. But we’re just pleased we can move on and operate this asset as best we can for all the stakeholders involved, including West African shareholders who put a lot of money to work to build the asset.

So what does a real project look like? This is it. So it’s about 400 meters wide at surface. The major parts of it are over 200 meters wide. So very little strip ratio in our ore reserve pit. You can see the blue line’s our resource pit, and it’s really constrained by the depth of drilling. And I won’t read off all these results, but 250 meters at a gram. Down the bottom there’s another 185 meters at a gram or 1.7 grams. 154 meters at 1.3. These are magnificent intercepts and it’s a very, very straightforward mining project.

Our flagship project, Sanbrado, which was built with Matt Wilcox who spoke earlier, is obviously a company maker for us. M-One South, the high-grade street that we discovered in 2016, really changed this project. So again, it’s almost a eleven, twelve-year project. When we started this project six years ago, it had a six-and-a-half-year mine life. So what we’ve shown is through clever drilling and smart acquisitions, by acquiring Tougga next door from B2Gold as well, we’ve added significant mine life. So the actual Tougga project is now being stripped. We expect first ore to come from Tougga in the first quarter of next year. The haul road’s in place, all the mine services buildings and other buildings are in place there at Tougga. So we’re ready to start processing Tougga ore.

Again, conventional milling at Sanbrado with very high gravity recovery. The life of project to date has been over 90%, 92%. And currently set to average about 250,000 ounces over the next decade per annum.

So what does it look like? You can see the amount of drilling we’ve put into this project. Since discovery, we’ve taken M-One South from surface down to about 1.2 kilometers in resources. We’re in the process of doing the same at M-Five. You can see the high-grade shoot there in the central part of the screen. To the north, we’ve been drilling as well, so we’re expanding the reserve at M-Five North, and that pit is gonna cut back and we expect to extend operations at Sanbrado out to about 2042. In long section, you can see where we have been drilling. Most of that drilling’s down to about 180 vertical meters along the whole strike length and down to about 700 meters maximum depth at the southern end. And again, this isn’t our highest grade ore shoot on the project, but 27 at 6 grams and 28 at 6 grams, you can see it’s got quite a bit of potential as well.

So when I started this company, there were three of us. When we made the discovery at M-One South in 2016, I think we had about 20 people in the company. And now we’ve got nearly 4,000 people in the business across direct staff and also contractors. One of the things we have focused on is training. So our local workforce makes up the majority of our workforce and we’ve done an extensive amount of internships. Lots of training, over 32,000 hours of training covering all of our inductions, leadership development, also occupational training as well. And some of the important things we’ve done there is we’ve got some of our training courses recognized by the government, which means that they can do them on the job without really requiring to take time out to study, which is really important because a lot of the staff we have, they are the only earners in that family or in that larger family, so it’s important they keep working.

Our first graduate from the university program has just finished and he’s just taken a job with us as a geologist, which is fantastic. We’re expanding this program to have eight university students a year across the group and we expect to continue to employ those graduates as they finish their studies and also provide them with real-life work experience during their vocational period when they’re studying at university. So that’s part of our commitment to the local areas that we operate in.

Again, our sites are very, very, very safe. So in comparison to Western Australia, we’re trending at a TRFR of 1.35 compared to the industry average in Australia of 5.7. We’ve got dedicated teams on site for occupational health and safety, for emergency response and also for medical events. So quite often they get used by the local communities as well when there’s been certain incidents in the community that require our help as well. And we’ve got a multilayered strategy for keeping all of our people and assets safe in Burkina. It’s not the most straightforward jurisdiction to operate in, but we’ve demonstrated over the last five or six years of operations that we can operate in Burkina. In saying that, we haven’t missed a quarter of guidance in five years, which really speaks to the quality of our team.

So what we actually have delivered in Burkina is substantial. Over $850 million US directly in royalties and taxes since we started operations in 2020. We’ve invested $18 million directly into community projects with construction projects or specific community projects and donations. We’ve invested nearly US$50 million into the local development fund. And we’ve already invested 6 million into our closure fund as well.

Like I mentioned previously, we do focus heavily on education and training. We’ve rebuilt and refurbished at least four schools in the local areas. We have installed with one of our contractors solar power and batteries so that those facilities can be used in the evenings for adult learning because education is a key part to really escaping poverty in West Africa. Our livelihood restoration programs, they’ve been extensive, and we know that the positive benefit of mining in developing countries like Burkina Faso and receiving training in everyday professions or things that are gonna be useful and let people earn money and survive. Because really Burkina historically has survived on subsistence farming and still is one of the poorest countries in the world, and we’re making a big effort to try and lift them out of that. And again, all the work we’re doing with the local communities, we’ve got school lunch programs. We’ve got nursery programs. We’ve got cropping programs that produce things like moringa that are essential parts of the daily life of people in the areas that surround our projects.

So just to wrap up, WAF’s got a quality team. We’ve demonstrated over the last five or six years of operations and it’s 20 years since I started the company, so we’ve come a long way. We’re a quality team aligned with our shareholders. We’ve built and commissioned two mines in the last five years. We’ve invested about a billion US dollars into Burkina while we’ve been doing that. We’ve demonstrated we’re good custodians of the projects. We’re paying our first dividend at the moment, a maiden dividend, which is gonna be well received by a lot of our long-serving shareholders, or long-suffering shareholders probably.

We’ve got a very, very strong gold exposure, all of it’s unhedged. So we’ve managed to finance all of our projects without requiring to hedge away the upside, which I think is really important. Too many times you see junior companies listen to the banks and say, “Well, if you put a hedge in here, it’s gonna help you later.” But as we’ve seen in the last four or five years, it’s been the worst thing most junior companies can do. So timing around that is also very important. So we’ve been quite fortunate to bring on two projects during a rising gold price and retain all of our reserves and resources, so that our shareholders and also our stakeholders can benefit from those resources and reserves being developed.

I’ve mentioned our ESG programs. We’re very serious about maintaining our partnerships with local communities and investing in community projects. And all of our ESG programs are aligned with international standards. So I’d encourage anyone who’s been following WAF to have a look at our responsible mining report. We issue that around the same time that we issue our annual report. So WAF operates the calendar annual year. So do look at that responsible mining report. It’s very impressive.

We’ve got very strong cash flow. So I’m not a mathematician, but we’re gonna be producing around about half a million ounces a year at cost less than $1,900 US. So that’s very, very strong cash flow. We still got a lot of upside in our projects in Burkina that we are drilling, and we’re very keen to add more resources and reserves to our projects. And we’re doing that through our own drill fleet, which we’re managing ourselves. So 100,000 meters of RC and diamond drilling being drilled annually by us. And we’ve already demonstrated we’re on a track record of a run rate of 500,000 ounces per annum. So the last quarter and this quarter should be demonstrating that. Thank you.

Thank you, Richard. We’ve got a question here down in the front.

Thank you. Willem Middelkoop, Commodity Discovery Fund. Used to be a shareholder a few years back. [laughs] So your profit in H1 was over 400 million. 400 million, is that right?

Australian, yeah.

So what do you expect the full year profit to be?

About double that. So it should be close to a billion Australian. [laughs]

I was just tweeting that, but… [laughs] So that means you have a PE of four, price earnings ratio of four.

Yeah. Well, you could say they were at two times our ’29 earnings.

Okay. Pretty cheap. You also said you want to pay a dividend for the first time. What’s the dividend policy? What will it be going forward?

I’m reluctant to set an official policy, but I think it would be as much as we can whenever we can. We’ve set this business up now to produce cash and cash flow, to be good custodians of the assets that we’ve got. So we’re paying 20 cents next week. That record date was about three or four weeks ago. We’ll be aiming to pay another dividend before end of June next year. And it’s always a debate, do you buy back shares or do you pay dividends? But I think from my perspective, given that I started the company 20 years ago, IPO price was 20 cents. A 20 cent dividend is a round number. I like it. I’m getting set to pay half of it to the Australian government, so that’s gonna be a bit of a pain for me. But I know a lot of our shareholders who are overseas are gonna appreciate that. And I think it’s an unusual circumstance where a junior company can come all the way from a 20 cent IPO to a $4 stock and pay a meaningful dividend. So I think we’re paying something like $240 million in a dividend as our first one. And based on our cash flow going forward, I think that’s something that we can continue doing.

You can also use the money to do M&A?

Yeah, we could. But look, I think the team’s done a magnificent job over the last five or six years. I think we should just bed down what we’ve got, make sure we can squeeze the assets as best as we can. So by putting that power in at Kiaka, I think we can get that to a mid 300,000 ounce a year producer. We know San Borado is gonna do at least 250,000 ounces a year. So that would get us over 600,000 ounces a year annually for a long time. I think that’s a good target. And let’s just see how things play out in the rest of West Africa over the next year or two because it’s been challenging for us in Burkina. But I think the challenges are yet to come for the rest of the region.

So we could expect that at least half of the profits will be paid in dividends?

No, I think it’s a reasonable assumption.

Okay. Thank you very much.

At this stage, I’d like to thank Richard for presenting on behalf of West African Resources. Thank you so much.

No worries. Thank you.