West African Resources (ASX:WAF) share price falls 22% on quarterly earnings and coup concerns

Here’s what’s been weighing on the West African Resources share price this week.

| More on:
a woman sits with a concerned look on her face at her computer in an home office environment.

Image source: Getty Images

Key points

  • The West African Resources share price has tumbled 22% since it released its quarterly earnings on Monday
  • Its stock might have also been impacted by news of a coup in its operating nation
  • The company reached its full year guidance during the previous quarter and underwent 2 notable acquisitions

The West African Resources Ltd (ASX: WAF) share price has tumbled 22% this week after the company released its activities and cash flow report for the quarter ended 31 December on Monday.

Additionally, the gold miner’s stock has likely been weighed down by news of a coup in Burkina Faso, the West African nation where the company’s operations are based, as reported by SBS.

The company issued an announcement today stating its staff and contractors are safe and work is continuing as normal at its Sanbrado Gold Operations.

As of Tuesday’s close, the West African Resources share price is $1.06. That’s 16.86% lower than it was at the end of Monday’s session and 22% lower than it was at Friday’s close.

Let’s take a look at what the company announced on Monday.

West African Resources share price tumbles after quarter 4 update

  • Quarterly gold production increased 7% to 87,324 ounces
  • An all-in sustaining cost (AISC) averaged at US$721 per ounce over the period
  • Generated $139 million of operating cash flow
  • Cash balance at the end of the quarter was $183 million – up from $130 million

During the December quarter, West African Resources produced 87,324 ounces of gold, bringing its annual production to a record 288,719 ounces – exceeding its previous guidance of between 250,000 ounces and 280,000 ounces.

Its AISC also increased by 4.4% to US$721 per ounce. That brought its full-year AISC to US$796 per ounce – at the higher end of its guidance of US$720 to US$800 per ounce.

The company’s combined open-pit and underground mined ounces for the quarter came to 94,659 ounces – 2% less than the prior quarter’s production.

It also saw 86,516 ounces of unhedged gold sales at an average price of US$1,812 per ounce last quarter, bringing its full-year average price to US$1,808 per ounce.

During the quarter, the company repaid US$109.5 million to its Taurus debt facility, thereby extinguishing the facility.

The company also acquired the Kiaka Gold Project and the Toega Gold Project. It paid $53 million for the projects.

What else happened in the December quarter?

During the quarter just been, the company underwent a placement and share purchase plan to raise $136 million before costs.

As part of the capital raise, it offered West African Resource shares for an issue price of $1.25 apiece.

The company also implemented COVID-19 management measures at its operations last quarter. The pandemic remained stable in Burkina Faso during the period.

What did management say?

West African chair and CEO Richard Hyde commented on the company’s results for the fourth quarter of 2021 and looked to the future, saying:

Sanbrado had another outstanding quarter, producing a record 87,320 ounces at an all-in sustaining cost of US$721 per ounce in quarter 4 and reaching full year 2021 production guidance…

With our acquisition of the advanced Kiaka Gold Project [West African Resources] aims to be a +400,000 ounce per year producer by 2025.

With the repayment of Taurus, [West African Resources] has no senior debt and ended the quarter with a positive net cash position of US$137 million.

What’s next?

During the current quarter, West African Resources will progress the Kiaka Project’s feasibility study and environmental and social impact assessment updates, as well as kickstart the mobilisation of site early works.

It plans to publish the Toega Project’s feasibility study in the current quarter, while that of the Kiaka Project isn’t expected to be released until the second quarter of 2022.

The company’s share price closed 3.7% lower on Monday.

Less than 24 hours later, the company issued another announcement today, stating it will continue to monitor the political situation in Burkina Faso and provide updates when appropriate.

However, it seems investors were not convinced, dumping West African Resources shares that were trading as high as $1.22 this morning before news of the coup broke.

West African Resources share price snapshot

The West African Resources share price has had a rough trot lately.

It has fallen 19% over the last month although it has gained almost 9% since this time last year.

Should you invest $1,000 in West African Resources right now?

Before you consider West African Resources, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and West African Resources wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

Team celebrating corporate success screaming with joy.
Earnings Results

OFX share price soars 8% on record FY22 results

A huge year for the company sees investors rallying behind its stock today.

Read more »

Sad Probuild construction worker in front of half built house puts his hand to his forehead as he talks on the phone
Earnings Results

James Hardie share price stumbles despite 36% lift in annual sales

Both quarterly and yearly net income figures increased markedly.

Read more »

a medical researcher rests his forehead on his fist with a dejected look on his face while sitting behind a scientific microscope with another researcher's hand on his shoulder as if giving comfort.
Earnings Results

Avita Medical share price tumbles 7% on declining Q1 revenue

The ASX healthcare share saw its net loss for the quarter increase 58% year-on-year.

Read more »

Two laughing young women holding shopping bags ride an escalator up to another level in a Scentre Group shopping centre
Earnings Results

Scentre share price defies ASX 200 sell-off to lift on strong earnings outlook

The retail property group owns and operates Westfield properties across Australia and New Zealand.

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Bank Shares

CBA share price pushes higher on consensus-beating quarterly update

CBA's Q3 update has smashed expectations. Here's by how much...

Read more »

Person pointing at an increasing blue graph which represents a rising share price.
Earnings Results

Orica share price spikes amid 25% jump in sales revenue

The company posted mixed results today.

Read more »

Man ponders a receipt as he looks at his laptop.
Earnings Results

Xero share price in focus amid strong FY22 revenue growth but full-year loss

Xero has released its full-year results...

Read more »

CBA share price represented by branch welcome sign
Bank Shares

CBA share price on watch following $2.4bn Q3 cash profit

CBA has released its Q3 results this morning. How did it perform?

Read more »