West African Resources Ltd (ASX: WAF) has had strong news flow over the past week, with the ASX gold company reporting a large cash balance in its most recent quarterly and an important transaction relating to one of its assets.
The analyst team at Canaccord Genuity has taken the opportunity to run the ruler over the company in the wake of these announcements, and has a speculative buy recommendation on the stock, as well as a bullish share price target, which we'll get to shortly.
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Major transaction
Firstly, let's have a look at what has been announced in recent days.
At the beginning of last week, the company announced that the Burkina Faso Government would acquire another 25% of its Kiaka operations for $175 million, taking its stake to 40%.
This was good news for shareholders, with West African Resources saying it would distribute the money to shareholders by way of a special dividend.
Interestingly, West African Resources Executive Chair Richard Hyde said the company was also looking at ways it could potentially partner on other projects with the government's Société de Participation Minière du Burkina Faso (SOPAMIB).
Also, last week, West African Resources released its quarterly report, in which it divulged it had a record cash balance of $847 million, while gold production in the quarter had come in at 107,728 ounces.
Mr Hyde said regarding the quarterly results:
With quarterly production of 107,728 ounces gold at an AISC (all-in sustaining cost) of US$1,921/oz from our two large low-cost gold production centres of Sanbrado and Kiaka in Burkina Faso and based on our planned production profile for 2026, WAF is on-track to achieve annual production guidance of 430,000 – 490,000 ounces of gold at an AISC below US$1,900/oz. WAF is on an exciting growth trajectory, and we continue to create value through the drill-bit with a US$20 million exploration budget and more than 100,000 metres of drilling planned at our Sanbrado and Kiaka production centres and surrounding exploration areas in 2026.
Shares looking cheap
The Canaccord Genuity team said they had increased their share price target for the company from $6.70 to $7, "with a partial unwinding of risk and change in equity ownership''.
That implies upside of more than 100% from the current share price of $3.20.
They added:
The market may take some time to digest this equity update and may apply some initial … negativity, but over the coming weeks we think the company could trade up following relief that this issue is behind WAF and the impact is less than previously feared.
West African Resources is valued at $3.68 billion.
