West African Resources Ltd (ASX: WAF) this week announced record gold production guidance for this year and, looking further out, said it expects to average more than half a million ounces of gold production per year for the next decade.
It was a positive announcement, though it led the team at Macquarie to slightly lower its price target for the company.
They are still bullish on the stock, however, and think investors can make serious gains over the next 12 months.
We'll get to the details of their share price target shortly.
Firstly, what did West African Resources announce?
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Strong production profile
The company said its ore reserves had increased to seven million ounces of gold, which would underpin 5.3 million ounces of gold production from 2026 to 2035.
West African Executive Chair Richard Hyde said there could be further upside:
WAF's updated 10-year production outlook forecasts the production of 5.3 million ounces of gold over the next decade, with production peaking in 2030 at 596,000 ounces. Our unhedged Mineral Resources now stand at 13.6 million ounces of gold, while Ore Reserves total 7.0 million ounces. We see potential to improve annual production further through our ongoing drilling programs where we plan to drill more than 100,000m annually targeting extensions at M5 South underground, beneath M5 North open-pit and Toega underground. Our 2026 10-year production plan highlights WAF's strong and sustainable long-term future.
The company said its Sanbrado and Kiaka projects, along with surrounding exploration licenses, had "strong potential" for new discoveries and extensions of existing resources.
The company added:
Current efforts are focused on near mine exploration to maximise value from our operating assets, where mineralisation remains open at depth. West African plans to further expand its owner operated drilling fleet in 2026 with the purchase of two additional surface diamond rigs to accelerate resource and reserve growth.
Shares looking cheap
The analyst team at Macquarie ran the ruler over this week's announcement and said that the production forecast was in line with consensus estimates.
However, they said that the higher overall production over the next 10 years was offset by higher expected costs across the operations.
They said the company had also hinted at paying a dividend, so they had factored a 10-cent per share dividend into their calculations on the company's shares.
Macquarie has a 12-month price target of $4.50 on West African shares, which they reduced by 10 cents from $4.60, compared with the current share price of $3.37.
That would be a return of 33.5% if achieved.
