West African Resources Ltd (ASX: WAF) released its quarterly gold production figures this week, prompting the analyst team at Macquarie to run the ruler over the numbers.
The broker has maintained its outperform rating on West African shares and is predicting more share price upside, along with a healthy dividend yield.
I'll get to the specifics of those later. First, let's look at the company's September quarter production.
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Record quarter of gold production
West African Resources said in a statement to the ASX that it had produced 127,950 ounces of gold from its Sanbrado and Kiaka gold mines in Burkina Faso during the quarter, and had sold 135,245 ounces at US$4240 per ounce.
The company also confirmed it was on track to achieve its annual guidance of 430,000 to 490,000 ounces of gold.
West African Resources said it had received approval from the Burkina Faso Government for the M5 South underground extension at Sanbrado.
The company added:
M5 South underground development activities have commenced, and stoping activities are now scheduled to start in early H2 2027. There is flexibility within the overall Sanbrado mine plan and this delayed start is therefore expected to have minimal impact on 2027 gold production.
West African Executive Chair Richard Hyde said the record quarter maintained the company's production run rate at more than 500,000 ounces per year.
Shares still looking like good value
Macquarie said in its new research note on the company that the third-quarter production was 11% higher than consensus estimates.
This was driven by a 15% lift in tonnage processed at Kiaka, with mined material also up 13% quarter on quarter.
Sanbrado, on the other hand, missed production expectations by a small amount, Macquarie said.
The broker added:
Barring any material disruptions, WAF should comfortably meet its production targets, particularly if improved access to explosives continues. We are likely to see improved all-in sustaining costs this quarter, given stronger sales (135koz, +22% quarter on quarter) offsetting the increase in mined and milled tonnage.
Macquarie increased its earnings per share estimates for West African Resources by 7% for this year, and upgraded its forecasts from CY27 to CY30 by 1%.
The broker added:
We maintain our Outperform recommendation for WAF, with lowered risk to CY27 production from receipt of the Sanbrado underground mine plan.
Macquarie maintained its $4 price target for West African Resources shares, compared with $3.61 at the time of writing.
If achieved, this would constitute a 10.8% return.
Macquarie is forecasting a 7.4% dividend yield this calendar year, falling to 4.9% next year, then rising to 5.4%.
West African Resources is valued at $4.01 billion.
