West African Resources Strengthens Cash Position Amid Heavy Exploration Spend

Robust Cash Flow Amidst Intensive Exploration

West African Resources Limited has released its quarterly cash flow report for the period ending 31 December 2024, revealing a strong cash position of A$391.7 million. This figure reflects the company's ability to sustain liquidity despite substantial cash outflows primarily associated with exploration and evaluation activities.

The quarter saw net cash inflows from operating activities of A$76.3 million, a positive indicator of the company's core business generating cash. However, these inflows were counterbalanced by significant investing cash outflows totaling A$131.7 million, largely attributable to ongoing exploration and evaluation expenditures, which are critical for the company’s growth pipeline.

Financing Facilities and Capital Structure

West African Resources continues to benefit from strong financing arrangements, with secured loan facilities amounting to A$410.6 million arranged through Sprott Resource Lending Corp and Coris Bank International SA. Additionally, the company holds unsecured credit standby arrangements, including a deferred payment facility and an equipment finance facility, collectively providing an extra A$41.1 million in available funding.

Despite no equity issues during the quarter, the company managed to raise A$150 million earlier in the year, bolstering its capital base. Interest and financing costs remain notable, with A$9.6 million paid on borrowings and other financing costs, reflecting the cost of leveraging these facilities to fund exploration and development.

Operational and Corporate Expenditure

Operationally, West African Resources incurred payments for staff costs, administration, and corporate expenses, alongside exploration and evaluation outlays. The company paid A$18 million in income taxes during the quarter, underscoring its operational profitability. Payments to related parties, including executive and non-executive directors, amounted to A$564,000, consistent with governance standards.

The company’s cash management strategy appears focused on balancing aggressive exploration with maintaining sufficient liquidity to meet ongoing obligations and capitalize on growth opportunities.

Outlook and Strategic Implications

With total available funding of approximately A$417.5 million, West African Resources is well-positioned to continue its exploration and development programs without immediate funding concerns. The company’s ability to generate positive operating cash flow while investing heavily in its asset base suggests a disciplined approach to growth.

Investors will be watching closely for updates on exploration results and any shifts in capital allocation that could impact future cash flow dynamics. The company’s financing structure and cash reserves provide a buffer against market volatility, but the high level of expenditure underscores the importance of successful project outcomes.