West African Resources on Wednesday reported it was well-positioned to cover the remaining US$135 million or so needed to bring its Kiaka development into operation later this year and, in doing so, become a circa 420,000 ounce per annum gold producer.
The Burkina Faso gold miner's A$392 million cash at the end of the December quarter meant it had a "notional net debt balance" of US$8 million.
That equates to the current 210,000oz-per-annum WAF having an enterprise value of about A$1.9 billion.
By way of high-level comparisons, the 110,000ozpa Western Australian gold miner Capricorn Metals — with concrete aspirations later this decade to reach circa 300,000ozpa — has a current enterprise value of about $3 billion.
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Emerald Resources, a circa 115,000ozpa producer in Cambodia with potential new development assets both there and in Australia, is capitalised at $2.4 billion.
And the list goes on and on.
Voila, the African sovereign risk discount.
While Burkina Faso is not WA, countering perceptions is the reality of WAF meeting guidance for the fourth consecutive year.
Still, when Kiaka kicks into operation, shareholders will be expecting a re-rate.
Capital markets firm Canaccord is bullish, having a price target of more than double current levels.
The Richard Hyde-founded and led WAF will provide guidance in upcoming months.
Recent all-in-sustaining costs from the company's Sanbrado operation have been around the US$1200/oz mark.
WAF is unhedged.
Shares in WAF were little changed at A$1.64 in midday trade.
