Earnings call transcript: West African Resources Q4 2025 sees stable performance

West African Resources Ltd (WAF) reported its financial results for the fourth quarter of 2025, highlighting robust gold sales revenue of $254 million and a stable stock price, which remains near its 52-week high of $73.19. According to InvestingPro data, the company’s market capitalization stands at $1.9 billion, with the stock showing impressive momentum, delivering a 61.6% return over the past six months. The company’s strategic focus on unhedged gold production and operational advancements at its Burkina Faso mines were key themes during the earnings call.

Key Takeaways

• Gold sales revenue reached $254 million, with an average realized price of $3,282 per ounce.
• Operating cash flow was strong at $86 million, supporting a healthy cash balance.
• The Sanbrado and Keaca mines are key production centers, with significant output.
• The company is transitioning to owner-operated mining, aiming for increased efficiency.
• Future production targets include reaching 500,000 ounces per annum by 2030.

Company Performance

West African Resources demonstrated solid performance in Q4 2025, driven by substantial gold sales and effective cost management. The company continues to focus on its two main production centers in Burkina Faso, with the Sanbrado mine alone producing 45,611 ounces of gold in the second quarter. The introduction of the Keaca mine, with its first gold poured in June, marks a significant milestone.

Financial Highlights

• Revenue: $254 million in gold sales.
• Operating cash flow: $86 million.
• Cash balance: AUD $279 million, plus $49 million in gold bullion.
• Income tax paid: $42 million.

Outlook & Guidance

Looking forward, West African Resources maintains a positive outlook with a production guidance of 100-150 ounces for the Keaca mine in 2025 and 190,000-210,000 ounces for the Sanbrado mine. The company is preparing a 10-year production plan and aims to connect to grid power in Q3, which could enhance operational efficiency. Analyst consensus from InvestingPro suggests a mixed outlook, with price targets ranging from $41.03 to $75.45. The company’s next earnings report is scheduled for October 28, 2025, where investors can expect updates on these strategic initiatives. For detailed analysis and comprehensive insights, including exclusive Fair Value calculations and 12 additional ProTips, consider accessing the full Pro Research Report available on InvestingPro.

Executive Commentary

CEO Richard emphasized the strategic importance of the company’s unhedged gold production strategy, stating, "We now have two long-life unhedged gold cost production centers in operation in Burkina Faso." CFO Padreig O’Donohue highlighted the strong cash flow generation, noting, "We generated $86,000,000 of operating cash flow in Q2."

Risks and Challenges

• The transition to owner-operated mining could involve significant initial costs and operational challenges.
• The remaining capital expenditure at the Keaca mine and ongoing power grid negotiations are potential financial risks.
• High income tax payments may impact cash reserves and financial flexibility.

Q&A

During the earnings call, analysts inquired about the remaining capital expenditure at the Keaca mine, which stands at $40 million USD. Questions also focused on the progress of the owner-operator mining fleet procurement and the timeline for grid power connection, with management expressing confidence in achieving full power by Q4.

Full transcript - West African Resources Ltd (WAF) Q4 2025:

Richard, CEO, West African Resources: Thanks, Nathan. Good morning, and welcome to the June 2025 quarterly conference call for West African Resources. Thanks for joining us today. Joining me today on the call is chief operating officer and executive director, Lynn Hawkins company secretary and CFO, Padre O’Donohue and Todd Giltay, our GM of finance. The past quarter has been transformational for the company with our second gold mine, Keaca, coming online, pouring first gold ahead of schedule and under budget.

This achievement is a testament to the hard work and dedication of our build team at Keyarka, supported by our teams at Sandbrado and in head office. But they’ve all performed superbly to get this result, and I’m very grateful for this effort, and I’m sure our shareholders and stakeholders will agree. We now have two long life unhedged gold cost production centers in operation in Burkina Faso. These quality operations underpin our goal of flying to 500,000 ounces per annum gold production by 02/1930. We poured first gold at Keyarka on June 26, and we’ll now oversee the ramp up to full production in the September whilst grid power has been connected, which will allow us to increase our production capacity.

Keyarga’s production guidance for 2025 remains at between 100,150 ounces of gold. At Sandbrado, we produced 45,611 ounces of gold in the quarter at a site sustaining cost of US1426 dollars per ounce. This brought Sanbrado’s half year production to 95,644 ounces of gold at a site sustaining cost of $1,311 US dollars per ounce. Sandbrado remains on track to achieve twenty twenty five annual guidance of between 190 to 210,000 ounces of gold at a site sustaining cost of less than 1,350 US dollars an ounce. Gold sales for the quarter totaled 49,840 ounces at an average price of 3,282 US dollars per ounce.

West African remains unhedged. Sales in turn helped us deliver quarterly cash flow from operations of 86,000,000 Australian dollars after paying 42,000,000 Australian dollars in income tax payments. Our cash balance at the end of the quarter was a healthy 279,000,000 Australian dollars, plus we held an additional 49,000,000 Australian dollars in gold bullion, equating to 9,713 ounces of unsold gold at San Brato. Health and safety remains a priority for the company, and there were no significant health or safety incidents during the second quarter. Our total reportable injury frequency rate or TRIFR at the end of the quarter was one point four nine.

The the injury frequency rate for the gold industry in Western Australia was four point three for the most recent available reporting period. That result just demonstrates how well we track in terms of managing and implementing a strong adherence to our health and safety initiatives. Our plan to transition from contractor to owner mining at Sanbrado’s open pit is also tracking a plan. Contractor African Mining Services demobilized from site at the completion of its contract in April 2025, and we will commence open pit mining in early q four using our own fleet of Caterpillar mining equipment and Sandvik drills. Open pit mill feed is being sourced from ore stockpiles during the interim period.

In q two, the open pit at San Brado delivered 409,000 tons of ore at 0.9 grams per ton for 11,795 minuteed ounces of gold. While from the M1 South underground, we mined 1,000 sorry, a 153,000 tons of ore at six grams per ton for 29,320 minuteed ounces of gold. Underground development of just over a thousand meters was completed during the quarter, including a 161 meters of advancement of the decline. The vertical depth of development increased 23 meters to 645 meters below surface. The Sanbrado process plant continued its reliable performance with 45,611 ounces of gold produced.

The closing ROM stockpiles of 98,592 ounces of contained gold at the end of Q2 were 8% lower than previous quarter. To support our operations during the quarter, we finalized resource conversion drilling at M1 South. This has returned some strong results, including 44 meters at 25.8 grams per tonne gold and 44.5 meters at 17.1 grams per tonne gold. These results will be incorporated into WAF’s updated resource reserve and ten year production plan due for release later this quarter. During the quarter, we welcomed Jade Webb to our board as a non executive director.

Jade is an experienced and accomplished mining engineer who currently leads the mining technology development function at South thirty two, focused on identifying opportunities for innovation in mining extraction and strategically applying value adding technologies. She has worked primarily in Australia and Tanzania and has extensive technical experience across a variety of African countries, ore bodies, mining methods, and operating structures. Jade fills the board position vacated by Nigel Spicer, who retired at our AGM, and we look we are looking forward to working with Jade. I’d now like to hand over to our CFO, Padreig, to discuss our financial performance for the quarter in more detail. Thanks, Padreig.

Padreig O’Donohue, CFO, West African Resources: Thank you, Richard. So WAF has benefited tremendously from being unhedged and generated, as Richard said, 254,000,000 of gold sales revenue in the quarter from an average realized gold sales price of $3,282 per ounce. And also, as Richard mentioned, we generated $86,000,000 of operating cash flow in q two and had a healthy cash balance of AUD $279,000,000 at the end of the quarter. Our capital investing activities in q four used $126,000,000 cash, which included $90,000,000 for development of Keaaka, and we have approximately $40,000,000 cash remaining to, as the final cost up for completion of Keaaka. Financing activities used $12,000,000 cash in Q4, mostly comprised of $10,000,000 of interest paid on borrowings.

Overall, site sustaining cost per ounce were up in the quarter due to one off higher demobilization of of AMS from site, as Richard mentioned. Also, there was a shutdown for mill relines, which also affected costs in the quarter. The the higher royalty rates and higher gold price also increased the sustaining cost per ounce in in the quarter and will continue to affect us for the rest of the year. And I’d like I’d now like to hand back to Richard for his closing comments.

Richard, CEO, West African Resources: Thanks, Pedro. I appreciate your commentary. As we now wrap up the call, I’d once again like to thank all of our teams, including those on-site at Keaca and Sanbrato for continuing to do such a great job. We’re looking forward to ramping up production at Keaca over this quarter, and we’ll keep the market informed on that progress. We also look forward to releasing our resource reserve and ten year production plan update in the coming weeks.

Thanks again for joining us today and for your continued interest in West African resources. I’ll now hand back to Nathan.

Nathan, Call Moderator: Thanks, Richard. Just a reminder, if you would like to ask a question directly to the company, please use the raise hand function. So we’ll just give people So your first question comes from Paul Howard at Canaccord. Congrats

Paul Howard, Analyst, Canaccord: on another good quarterly there. I’ve got a couple of questions around Keaca. Firstly, Patrick, I I I just didn’t catch it there. What did you say was the the outstanding capital spend there?

Padreig O’Donohue, CFO, West African Resources: On a cash basis, it’s about 40,000,000 US.

Paul Howard, Analyst, Canaccord: 40 US. Great. Thank you. And then, Richard, you said guidance for Keaca for the for the financial year at the start there. Just can you re reiterate that?

I just noticed it’s not actually in the quarterly, so I was I was wondering had you withdrawn it, or was it just an omission?

Richard, CEO, West African Resources: No. No. So we we’ve maintained that, you know, between a hundred and hundred and fifty thousand ounces of gold produced for Keacus for the half or, you know, since we’ve started operations. Obviously, that is kinda contingent on on how soon we can get grid power connected, which we’re working on at the moment with the government. And we’ve also we’ve also sourced additional backup power, which, you know, will help us increase production.

So currently, Kiyaka is operating, you know, pretty stably at about 20,000 tons a day roughly on average, and we look to increase that, yeah, once we get more power on.

Paul Howard, Analyst, Canaccord: Excellent. And and so I think I read there was six extra diesel generators. That’s sort of double the the diesel generation coming to site?

Richard, CEO, West African Resources: Yeah. So in the original plan, we we were looking to have look, I think it was about 10 megawatts of backup power, then we increased it to 15, and now we’re kinda doubling that now. So we’re we we’ve got a a plan in place given that we’ve only run on budgets during the construction to have full HFO and diesel backup in in case the grid is not available. But we are expecting the grid to be available when it comes on. You know, we’re just final finalizing sort of details with the government.

We’ve completed all of the infrastructure required to connect the to turn the grid on. So this is really, you know, just getting final approvals from the government to turn the power on.

Paul Howard, Analyst, Canaccord: Right. Okay. Thanks so much for that. Appreciate it.

Nathan, Call Moderator: Just a reminder, if you’d like to ask a question, please use the raise hand function. Okay. Your next question comes from Mike Milliken at Euros Hartleys. Please go ahead, Mike.

Mike Milliken, Analyst, Euros Hartleys: Thanks for that, guys. Just a quick question for me. Just regards to Sambrado, just the owner operator, obviously, in the mining fleet. How’s it all going in regards to sourcing and getting everything up and and timing for that? Could you just provide a bit more on that?

Thanks.

Richard, CEO, West African Resources: Sure. Look. It’s going well, but I’ll I’ll pass that question on to Lyndon Hopkins. He’s also on the call.

Lyndon Hopkins, Operations Executive, West African Resources: Thanks, Rich. Yeah. Hi, Mike. Look. It it is coming together.

We’ve got, the Caterpillar equipment coming in, for delivery this quarter and assembly, and, also the rigs from Sandvik, we’ve, start delivery of those, The first two arrive in a couple of weeks’ time. So, we’re looking, pretty pretty good there. We also have some, broken stocks in the pit that we left that we can make a start on as well. So, at this stage, it’s looking okay.

Mike Milliken, Analyst, Euros Hartleys: Oh, brilliant. Sounds good. And and, obviously, Tuiga, an updated study, I suppose, for the underground, something that’s that’s coming due as well pretty soon. Also, you know, the ten year outlook. So timing for ten year outlook’s still still on track probably the next few weeks or, you know, it’s, like, kind of rough time?

Richard, CEO, West African Resources: Yeah. So we we released the scoping study on the underground, I think, in q one this year and incorporate that into the ten year plan at the moment. So that that’s being worked on. Well, it’s been finalized right now given that, yeah, we’re aiming to have that out for diggers and dealers, which, you know, we’re pushing everyone pretty hard here at the moment. We’ve got, you know, a lot on with a pretty small team.

So, hopefully, we’ll have that for for my speech next week, but we’re kinda pushing pushing at the moment, but it’ll be good. I think it’ll be appreciated by all of our, you know, supporters and and shareholders.

Mike Milliken, Analyst, Euros Hartleys: Sounds good. Yeah. And just just going back to Keokapau, obviously, you’ve done everything you can on your end for infrastructure, just the time with the government. Do they do they give you a rough timing when they kind of expect to charge the line and stuff? Don’t know.

Is it just kind of, you know, getting closer and you’re just just working for the government officials on that?

Richard, CEO, West African Resources: Yeah. Look, it’s imminent. I mean, we we expect to have it done during during q three. So we are expecting to have, you know, full full power for all of q four. And that should see us, you know, being able to increase the the throughput, you know, significantly and and still, you know, we agreed on.

We’re we’re we’re confident of of hitting our sort of production guidance. But that was always a very tricky and and ambitious sort of target given it’s a big build and and, you know, if you look at most companies ramping up, it takes them, yeah, you well well more than one quarter to ramp up a project the size of Keaka given that it’s, you know, it’s 18 megawatts of installed SAG mill capacity and another nine megawatts of of bore capacity. So, you know, it’s a big project, and we look forward to taking some of the analysts, including yourself, Mike, on our site tour in a few weeks.

Mike Milliken, Analyst, Euros Hartleys: Yeah. I can’t wait. Thanks very much. That’s all I got. Thanks, guys.

Richard, CEO, West African Resources: No worries.

Nathan, Call Moderator: Thank you. There are no further questions at this time. So I’ll now hand back to Richard for closing remarks.

Richard, CEO, West African Resources: Look. Thanks very much for, for everyone dialing in and listening to the call this morning. We look forward to updating investors during the next quarter for getting the the full grid power on at Keyarka is our our current focus and and ramping up the full production. And thanks again for joining us today, and we look forward to to updating investors over the quarter. Thank you.

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