Having successfully established itself as an unhedged mid-tier gold producer in Burkina Faso, an ASX-listed miner is developing another lucrative yellow metal project in the small West African nation.
During the December quarter the aptly-named Perth-based West African Resources Ltd (ASX: WAF) said annual 2022 gold production at Sanbrado, which covers an aggregate area of 116 square kilometres and sits around 90km east-southeast of the country’s capital Ouagadougou, was 229,224 ounces at an all-in sustaining cost (AISC) of US$1,086/oz, achieving the company’s guidance of 220,000 oz to 240,000 oz at an AISC below US$1,100/oz.
Sales for the period were 233,930 oz at an average price of US$1,798/oz ($2,586/oz), generating revenues of $605 million.
Meanwhile, gold production for the December quarter was 49,807 oz at an AISC of US$1,286/oz.
Additionally, yellow metal sales of 55,364 oz in the last reporting period averaged a realised price of US$1,758/oz.
All of this good news put more feathers in the cap of WAF, which poured first gold at Sanbrado in March 2020 ‒ six months ahead schedule and US$20 million under budget.
Regardless of this success, and its ongoing expansion of the project via drilling, the mining house has started extending its operational capacity in Burkina Faso through its 90 per cent-owned Kiaka project, where initial site works are now underway.
Situated about 45km south of Sanbrado, and around 110km south east of Quagadougou, Kiaka sits under 20 metres of cover and is hosted by a sheared and folded sequence of mafic volcanics and volcanic sediments.
As at last November the project had a resource estimate of 280 million tonnes at 0.9 grams per tonne for 7.7 million oz to a maximum of (according to one broker at least) 650 metres’ vertical depth.
Moreover, at the same time, WAF enjoyed gold reserves at Kiaka of 155Mt at 0.9g/t for 4.5 million gold oz, with the proposed operation having a strip ratio of 1.8:1 and a nominal mine life of 18.5 years.
These JORC numbers compare favourably with Sanbrado which, also in November, reported probable resources totalling 80Mt at 1.8g/t gold for 4.9 million oz and reserves of 26Mt at 2g/t for 1.7 million oz.
As it stands WAF is looking to establish an 8.4 Mt per annum carbon-in-leach operation at Kiaka for US$472 million (including a US$42 million capital injection following the first gold pour), with construction set to start sometime this year and initial production scheduled for mid-2025.
If all goes to plan, over its life the mine will generate a pre-tax free cash flow of US$2,361 million ($3,373 million in Australian dollars) and a post-tax free one of US$1,723 million ($2,462 million).
According to the company, the process plant could be expanded to over 10 Mtpa through a number of minor upgrades, which were assessed during the due diligence reworking of mid-2022, wherein metallurgical gold recovery was estimated at 89 to 91 per cent.
Furthermore, lower strip ratios (0.6:1) and higher head grades (1g/t) were scheduled for the first 30Mt of open pit mining (over three to five years). WAF expects gold output to average 233,000 ozpa in the operation’s first half decade.
At the end of 2022 the miner received “strong interest” from eight tier-one financiers, with competitive non-binding offers for debt funding packages supporting its target of US$300 million debt for Kiaka’s construction.
WAF and debt advisors Orimco Pty Ltd moved the process to the second stage, short listing the financing offers with the aim of appointing the preferred financier or syndicate to arrange ‒ and underwrite ‒ debt facilities sometime during the current quarter.
The legal due diligence (including independent technical data) and facility documentation are being progressed in parallel with this process.
Also in the December quarter WAF awarded the Kiaka engineering, procurement and construction management contract to Lycopodium Ltd and the semi-autogenous grinding and ball mill package to Metso Outotec Corporation. Site earthworks started late last year with the grubbing and clearing of the front gate and camp accommodation area, as well as the temporary relocation of housing for the community.
The existing exploration camp continues to be upgraded, while key orders for fencing and construction accommodation are being finalised.
During the March quarter WAF will focus on site access road upgrades, initial bulk earthworks, perimeter fencing, contracts for construction of the permanent camp and front gate building as well as the procurement of long lead items.
As for its 90 per cent-owned Sanbrado operation, in which, like Kiaka, the Western Australian-based company is in partnership with the Burkina Faso government, WAF recently completed 642m of underground development, including 175m of decline, which increased the vertical depth by 25m to 461m below surface.
This section of the mine yielded 25,963 oz during the December reporting period – some 22 per cent above the previous quarter, with 43 per cent more ore tonnes mined partly offset by a 14 per cent lower gold grade averaging 6.1g/t.
Meanwhile, drilling beneath the southern end of the M5 open pit has started as part of a scoping study to explore the viability of a second underground operation at Sanbrado.
This document will investigate the potential of accessing deeper mineralisation beneath M5 via a portal at the base of the southern portion of the open pit, and is scheduled for completion later in the year.
In addition, 140 diamond holes (for 13,392m) were drilled at MV3 East, which sits just 6km from Sanbrado, revealing some high grade gold intercepts ‒ including 20.5m at 2.98g/t from 192m, 16m at 2.88g/t (254.5m), 21m at 2.16g/t (254m) and 12m at 2.02g/t (260.5m).
According to the company, this deeper drilling confirmed the geological and mineralisation interpretation developed from earlier near surface exploration.
Flexures along the main shear corridor appear to control the high grade shoots with grade and widths increasing at these zones. Structural measurements from this work indicated there was a steep northerly plunge to the high grade mineralisation. The strike of the southern high grade shoot now extends over 200m and remains open to the south.
Field activities at MV3 East have resumed, with further drilling planned to test both the down plunge of the remaining high grade shoots as well as the surface mineralisation along strike.
Additionally, several targets generated from an induced polarisation survey, on top of historical RAB and WAF auger drilling, will be tested in the coming months.
These targets all lie within 700m of MV3 East.