Why are West African Resources shareholders celebrating today?

Shares in West African Resources Ltd (ASX: WAF) were trading broadly flat on Tuesday after the company announced the Burkina Faso Government would acquire another 25% of its Kiaka operations for $175 million.

Shareholders in the money

But the announcement is good news for shareholders, with the ASX gold company saying it would distribute the money by way of a special dividend.

The Burkina Faso Government already held a 15% stake in the Kiaka operations, which poured their first gold ahead of schedule and under budget in June of last year.

The Burkina Faso government has now passed a decree authorising Société de Participation Minière du Burkina Faso (SOPAMIB) to acquire the extra stake.

West African executive chair Richard Hyde said regarding the announcement:

Publication of the Decree removes uncertainty regarding the Government’s interest in Kiaka. WAF will proceed to finalise a transaction with SOPAMIB, which we aim to have completed by the end of CY 2026. WAF plans to distribute the cash proceeds received from the sale of its interest in Kiaka back to shareholders by way of a special dividend. Our discussions with SOPAMIB have been extensive and robust. During these discussions, we have also explored opportunities for a mutually beneficial long-term partnership on advanced gold projects within SOPAMIB’s current portfolio.

West African Resources said its Sanbrado and Toega operations are not the subject of a request for additional participation by the Government and are not referred to in the Decree.

Mr Hyde added that the company would release its quarterly activities and cash flow reports later this week, “which are anticipated to report a record high cash position for WAF”.

West African Resources shares were marginally higher, up 2.9% in early trade, before settling back to be 1.7% lower at $3.38.

The company is valued at $3.93 billion.

Long term growth

West African Resources announced in late March that it had a strong production profile over the next decade, built around its African operations.

Mr Hyde said at the time:

WAF’s updated 10-year production outlook forecasts the production of 5.3 million ounces of gold over the next decade, with production peaking in 2030 at 596,000 ounces. Our unhedged Mineral Resources now stand at 13.6 million ounces of gold, while Ore Reserves total 7.0 million ounces. We see potential to improve annual production further through our ongoing drilling programs where we plan to drill more than 100,000m annually targeting extensions at M5 South underground, beneath M5 North open-pit and Toega underground. Our 2026 10-year production plan highlights WAF’s strong and sustainable long-term future.

The company added that its Sanbrado and Kiaka projects, along with surrounding exploration licenses, had “strong potential” for new discoveries and extensions of existing resources.

The post Why are West African Resources shareholders celebrating today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.