MENU

Here’s why gold miner West African Resources Ltd shares rocketed 34% today

Today has been yet another day of gains for shareholders of gold exploration company West African Resources Ltd (ASX: WAF). Today the share price rocketed higher by 34% bringing the year-to-date return to almost 500%.

Today’s gain comes following news of a successful $21 million placement of 70 million shares at a price of 30 cents per share.

The funds raised from existing shareholders and leading institutional investors will mean the company can continue to rapidly progress its wholly-owned Tanlouka Gold Project and allow it to fully repay its debt facility with Macquarie Group Ltd (ASX: MQG) ahead of the maturity date.

Furthermore, the placement provides West African Resources with the capacity to accelerate exploration and resource drilling, as well as completion of the definitive feasibility study on its Burkina Faso gold project.

Much like fellow gold producers Resolute Mining Limited (ASX: RSG), St Barbara Ltd (ASX: SBM), and Newcrest Mining Limited (ASX: NCM), West African Resources shares have gone ballistic this year thanks in part to the incredible rise in the gold price.

But unlike those three, it has yet to pull any gold out of the ground this year. Whilst the company undoubtedly has excellent prospects and a strong balance sheet, I would be reluctant to make an investment at this stage. Especially considering the direction in which the price of gold takes from here is quite literally anybody’s guess.

It may however be a good idea to add it to your watch list, as the results of its definitive feasibility study will no doubt make for interesting reading. Until then I would suggest focusing on other areas of the market with more predictable outlooks.

In fact, these three new breed blue chips could be the best investments you make this year.

Why These 3 Blue Chip Shares Are Set to Soar in 2016

Discover The Motley Fool's Top 3 blue chips for 2016. These 3 'new breed' shares pay fully franked dividends AND offer the prospect of significant capital appreciation. Simply click here to gain access to this comprehensive FREE investment report.

No credit card required!

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!