Sarama’s sale gain fails to resolve funding risk before Burkina Faso hearing

Profit arrives without operating revenue

Sarama Resources Ltd (ASX:SRR) turned a US$1.92 million loss into a US$2.27 million profit for the nine months to 30 September 2026, but the result says more about asset restructuring than mining economics. The company recorded a US$3.38 million gain after selling its Cosmo and Mt Venn gold projects in Western Australia to Riedel Resources in July.

“Cosmo and Mt Venn Gold Project Locations, Eastern Goldfields, Western Australia.”

The gain comprised 150 million Riedel shares valued at US$1.99 million, performance rights valued at US$1.19 million and US$209,934 in reimbursed project costs, less net assets disposed of US$14,903. Sarama received no mining revenue during the period. Its quarterly profit of US$3.10 million was similarly dominated by the disposal gain, with exploration expenditure falling to US$95,294 from US$174,331 a year earlier.

The transaction left Sarama with an approximately 32% interest in Riedel, potentially rising to about 44% if performance rights vest and are exercised. Riedel has since commenced reconnaissance drilling at Cosmo, the first drilling there in more than 30 years. The sale was previously reported as a strategy to retain exposure to the Western Australian projects while reducing Sarama’s direct exploration funding needs through the Laverton project sale.

Cash position drives going-concern warning

The balance sheet remains the more immediate issue. Sarama held US$619,667 in cash at quarter-end, down from US$865,855 at 31 December 2025, after using US$1.47 million in operating activities during the first nine months. Current liabilities exceeded current assets by US$872,919, including US$558,377 in deferred executive salaries and US$375,409 in annual leave entitlements.

Directors said the company will need to complete a capital raising or secure alternative financing to support cash flows over the following 12 months. The statements warn that failure to obtain funding, or a delay in doing so, creates a material uncertainty that could cast significant doubt on Sarama’s ability to continue as a going concern. The interim statements were unaudited and had not been reviewed by the independent auditor.

Sarama completed the second tranche of its A$1.5 million placement after quarter-end, raising A$81,750 through the issue of 2,335,715 CDIs to directors. That amount adds only modestly to the reported cash position; the earlier A$1.5m placement had raised A$1.42 million in its first tranche.

Arbitration claim reaches February hearing

The company’s principal potential source of value remains its arbitration against the Government of Burkina Faso over the withdrawal of the Tankoro 2 exploration permit. Sarama’s July Reply and Counter-Memorial on jurisdiction increased damages sought to US$245.3 million, while its independent quantum expert assessed the total claim, including pre-award interest, at US$326.8 million as at 31 July.

The Government’s Rejoinder is due on 1 December 2026, with the merits hearing scheduled for 22-26 February 2027. The final award date has not been determined. Sarama has a US$4.4 million non-recourse litigation funding facility, under which repayment is generally contingent on a successful claim, settlement or specified default.

That timetable gives Sarama a defined legal catalyst, but not a guaranteed funding solution. The company’s operating cash outflow continues while the arbitration proceeds, and the value of its Riedel interest will depend on the listed explorer’s performance and the vesting of milestones. The next financing terms, rather than the headline profit, may provide the clearest measure of how long Sarama can maintain its current strategy.