Rising Royalties and Expansion Costs Pose Challenges for West African Resources
West African Resources has met its 2025 gold production and cost targets for the fifth consecutive year, reporting robust quarterly results and promising exploration outcomes that suggest extended mine life at Sanbrado.
- 2025 gold production guidance met for fifth year running
- Q4 production of 112,019 ounces at AISC of US$1,561/oz
- Strong cash position with A$584 million and A$177 million in unsold bullion
- Exploration drilling confirms potential mine life extension at M5 North
- Plans to release 2026 guidance and capital management strategy in Q1
Steady Performance Amid Rising Gold Prices
West African Resources Limited (ASX, WAF) has delivered another solid quarter, maintaining its track record of meeting production and cost guidance for the fifth consecutive year. The company produced 112,019 ounces of gold in the December 2025 quarter at an all-in sustaining cost (AISC) of US$1,561 per ounce, reflecting operational discipline despite rising royalty costs linked to higher gold prices.
The Sanbrado gold production centre in Burkina Faso contributed 49,732 ounces at a site sustaining cost of US$1,399/oz, while Kiaka, which completed its first full operational quarter, produced 62,287 ounces at a higher site sustaining cost of US$1,649/oz. Together, the group produced over 300,000 ounces for the year, comfortably within its 290,000 to 360,000-ounce guidance range.
Robust Financial Position and Cash Flow
Financially, West African Resources ended the quarter with a strong cash balance of A$584 million and held A$177 million in unsold gold bullion. Operating activities generated A$389 million in cash after income tax payments, underscoring the company’s healthy cash flow generation. This robust liquidity provides flexibility for ongoing growth initiatives and capital management.
Capital expenditure in the quarter was significant, with A$159 million invested mainly in completing Kiaka’s construction, acquiring mining equipment for Toega and Sanbrado, and establishing the Toega site. These investments are critical for sustaining and expanding production capacity.
Exploration Success Points to Extended Mine Life
Exploration drilling beneath the M5 North open-pit Ore Reserve at Sanbrado has confirmed promising mineralisation extending more than 300 metres below current reserves. Notably, high-grade intercepts such as 16 metres at 11.2 grams per tonne gold, including a spectacular 1 metre at 167.7 grams per tonne, highlight the potential for mine life extension.
Ongoing drilling programs at M5 South Underground and Toega aim to further define resources and support future production plans. The company plans a cutback study for the M5 North open pit in the first quarter of 2026, which could unlock additional ore tonnes and extend the mine’s operational horizon.
Looking Ahead, 2026 Guidance and Capital Strategy
West African Resources intends to release its 2026 annual production guidance and capital management strategy in the coming quarter. Investors will be keen to see how the company balances growth investments with shareholder returns, particularly given its strong cash position and unhedged exposure to gold prices.
Meanwhile, the company continues to engage constructively with the Burkina Faso government and local communities, maintaining a strong focus on health, safety, environmental stewardship, and social investment programs such as scholarships and community infrastructure.
Bottom Line?
With solid 2025 results and promising exploration, West African Resources is poised to define its next growth chapter in 2026.
Questions in the middle?
- How will escalating royalty rates impact future cost structures?
- What are the timelines and expected production volumes from the Toega project ramp-up?
- Will the company pursue dividends or share buybacks as part of its capital management strategy?
