West African Resources Ltd (ASX: WAF) provided the market with a very positive quarterly activities report today which is sending the company’s shares shooting higher. The miner reported gold production increased by 40% to 45,719 ounces. In addition, unhedged gold sales averaged US$1,868 per ounce. Consequently, the West African share price has rocketed up by 9.38% at the time of writing.
What’s moving the West African share price?
Investors are today sending the West African share price higher after the company announced it was able to operate continuously through the September quarter, unhindered by the COVID-19 pandemic. Moreover, it was able to process the first underground ore in late September. Consequently, underground ounces mined were up 16% over the previous quarter. The ramp up of production will continue through December.
The Sanbrado mine ramp-up progressed in Q3 with mined open pit ounces up 84% versus the previous quarter. Gold produced was up 40% to 45,719 ounces at an all-in sustaining cost (AISC) of US$1,009/oz. This is US$168 less than Q2 and aligns with some of the cheaper ore bodies to mine in the world. As production levels increase, the AISC will decrease even further.
Lastly, the company is continuing with its deep drilling beneath M1 South. This has revealed further underground reserves including 15.5m at a very high grade of 20.5 g/t gold, and 32m at 4.9 g/t gold.
West African Executive Chairman and CEO, Richard Hyde, commented:
The Sanbrado mine showed solid production improvements during Q3 2020 while dealing with the challenges presented by COVID19, which is a credit to the commitment of our in-country team of staff and contractors.
Further important milestones are expected for the Company in Q4 with stope production ramping up at M1 South, continuation of deep drilling to extend underground Reserves, and a Resource and Reserve and 10-year production to be updated for the group late in the quarter.
Over the last quarter of 2020, West African intends to focus on a range of areas. In terms of mining activities, this will include ramping up the underground and increasing stoping tonnes. In terms of physical growth, the company will continue to drill the M1 South pit and recommence the Sanbrado regional exploration program. Early debt repayment and updating reserves will be the company’s financial focus.
West African share price performance
In year-to-date trading, the West African share price has risen by more than 144%. Currently, it has a market capitalisation of $924 million, and is trading at a very high price-to-earnings (P/E) ratio of 374 due to the early stage in its ramp up. In addition, the company has achieved an AISC that is well within the top 17 gold mines.
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