West African Resources (ASX:WAF) delivered a record quarterly gold production of 125,179 ounces in Q2 2026, maintaining its trajectory toward full-year guidance amid robust cash generation and promising drilling results.
- Record Q2 gold output of 125,179 ounces at US$1,730/oz AISC
- Year-to-date production at 232,905 ounces, on track for 430,000–490,000 ounces guidance
- Strong operating cash flow of A$249 million and A$876 million cash balance
- High-grade drilling results at M5 South underground suggest Ore Reserve growth
- SOPAMIB to acquire 25% stake in Kiaka SA, reducing WAF's interest to 60%
Record Gold Production and Cost Efficiency
West African Resources Limited (ASX:WAF) set a new quarterly gold production record in Q2 2026, delivering 125,179 ounces at an all-in sustaining cost (AISC) of US$1,730 per ounce. This performance lifts the year-to-date output to 232,905 ounces at an AISC of US$1,823/oz, keeping the company on track to meet its annual guidance of 430,000 to 490,000 ounces at an AISC below US$1,900/oz.
The twin production hubs of Sanbrado and Kiaka in Burkina Faso remain the engines of growth, with Sanbrado producing 57,608 ounces; up 37% from the prior quarter; driven by a surge in underground mining tonnes and grade. Kiaka contributed 67,571 ounces, a modest 3% increase, supported by higher mill throughput despite some operational constraints.
Financial Strength and Cash Flow Resilience
Financially, WAF reported a robust operating cash flow of A$249 million for the quarter, underpinning a strong balance sheet with A$876 million in cash and approximately A$247 million in unsold gold bullion. The group’s notional net cash position improved to US$497 million by quarter-end, reflecting disciplined capital management despite significant payments to the Burkina Faso government, including A$67 million in priority dividends and A$124 million in corporate income taxes.
Capital expenditure was focused on growth projects, with A$107 million spent in Q2, notably A$55 million on the Kiaka heavy fuel oil power station and A$30 million on pre-production stripping at Toega. The company also maintained a tight grip on sustaining costs, with site sustaining costs at Sanbrado and Kiaka falling 15% and 6% respectively quarter-on-quarter.
Exploration Success and Expansion Prospects
Exploration continues to be a key value driver, with outstanding drilling results from the M5 South underground at Sanbrado, including intercepts of 29 metres at 16.4 g/t gold and 27 metres at 6.7 g/t gold. These findings confirm the potential for Ore Reserve growth and support an updated 10-year production forecast expected in Q1 2027. Drilling at M5 North and Toega underground remains underway, with further results anticipated in Q3.
Meanwhile, development at the Toega deposit progresses, albeit with some delays in ore delivery due to permitting and explosives supply issues. WAF is actively managing these challenges by adjusting mine plans to focus on free dig material and reallocating explosives to priority areas.
Strategic Partnership with Burkina Faso Government
In a significant corporate development, the state-owned Société de Participation Minière du Burkina Faso (SOPAMIB) is set to acquire a 25% stake in Kiaka SA for approximately A$176 million. This transaction will reduce WAF’s ownership in Kiaka from 85% to 60%, reflecting a strategic partnership with the host government. Discussions remain ongoing, with completion expected within 2026.
Such a move aligns with WAF’s broader strategy to foster local partnerships while advancing its growth projects. However, permitting delays for Sanbrado’s M5 South underground life-of-mine plan and Kiaka’s explosives manufacturing facility highlight regulatory risks that the company continues to navigate.
Social and Environmental Commitments
WAF reported no significant health or safety incidents during the quarter, maintaining a Total Reportable Injury Frequency Rate (TRIFR) of 1.25, well below the Western Australian gold industry benchmark. The company’s social investment programs continue to focus on education, health, and economic development, including preschool construction and vocational training initiatives.
Environmental stewardship remains a priority, with biodiversity strategies and reforestation campaigns underway. Notably, WAF supported Burkina Faso’s National Tree Day by donating ecologically significant tree species and conducting on-site planting activities.
Bottom Line?
West African Resources is capitalising on strong production momentum and cash flow while navigating permitting hurdles and advancing key growth projects, positioning itself for sustained value creation in Burkina Faso.
Questions in the middle?
- How will permitting delays in Burkina Faso affect the timing and scale of Toega and M5 South underground expansions?
- What impact will SOPAMIB’s 25% stake acquisition have on WAF’s operational control and future capital allocation at Kiaka?
- Can ongoing high-grade drilling results translate into meaningful Ore Reserve upgrades and extended mine life beyond current forecasts?