West African Resources (ASX:WAF) Q3 2026 Earnings Call

0:00 Good morning and welcome to the West African Resources investor webinar and conference call. All attendees are in a listen-only mode. If you would like to ask a question to the company, please use the raise hand function within Zoom. I'll now hand over to West African Resources Executive Chairman and CEO, Richard Hyde. Thank you, Richard. Thanks, Nathan.

0:24 Good morning, everyone, and thanks for joining us on West African Resources' September quarter conference call. West African's Chief Financial Officer, Padraig O'Donoghue, and General Manager of Finance, Todd Dulce, are also joining me on the call today. Importantly, it was another record quarter of gold production for West African. We pushed our quarterly production higher to 127,950 ounces from our Zambrado and Kiaka operations, which exceeds our run rate of 500,000 ounces of gold produced per annum. Importantly, we achieved this at an all-instituting cost of US$1,570 an ounce, which is also an improvement on quarter two.

1:12 Again, both our production and all-instituting costs are tracking well to meet 2026 guidance of 430,000 to 490,000 ounces of gold produced at an all-instituting cost of under US$1,900 per ounce. Gold sales were strong for the quarter. with 135,245 ounces sold at a realised price of 4,240 US dollars per ounce and we remain completely unhedged. Gold sales delivered cash flow from operations of some 458 million Australian dollars. An exciting milestone for the quarter was the payment of a special dividend, our maiden dividend of 20 cents Australian for Share to reward our shareholders.

2:04 With our strong cash balance of nearly AU$1.2 billion at the end of the quarter, along with AU$217 million of unsold gold bullion, we look to accelerate our debt repayments over the coming 12 months. Padraig will go into the details of our financial results shortly. Operationally during the quarter, we continue to prepare for the commencement of production We had further strong results from our ongoing drilling program. All this was achieved by our team in a safe and responsible manner with no significant health or safety incidents reported during Q3. Last total reportable injury frequency rate or TRIPA at the end of the quarter was 0.87. The injury frequency rate for the gold industry in Western Australia was 5.7 for the most recent available reporting period. which continues to underline our commitments to safety.

3:01 Looking at our operations separately, Kiaka was a standout performer with 76,030 ounces produced for the quarter, a 13% increase over last quarter, driven by a 15% increase in mill throughput. Mining activities remain focused on the Kiaka main Stage 1 pit, with Autumns Mines up 13% on the previous quarter. Kyaka Process Plant delivered strong operational performance this quarter. Kyaka sold 73,492 ounces of gold in the quarter at an average realized price of US$4,262 per ounce. Looking at the year to date, Kyaka has produced 109,305 ounces at a cyclist only cost of US$1,660 an ounce and sold just over 200,000 ounces an average realised price of US$4,559 an ounce.

3:59 In addition, Tiaka held nearly 21,000 ounces of unsold gold bullion, valued at about AU$125 million. At Zambrado, production for the quarter slipped slightly to 51,920 ounces, 10% down on the last quarter, mainly due to lower grade ore from M1 South Underground. This was partially offset by the M5 North Open pit when mined ounces increased 8% on the quarter. This brings year-to-date production for Sambrado to 151,552 ounces of gold at a site-to-standing cost of US$1,732 per ounce. 753 ounces of gold in the quarter at an average realised price of US$4,214 an ounce, bringing year-to-date gold sales to 149,468 ounces at an average realised price of US$4,537 an ounce. Sambrero held 15,224 ounces of unsold gold bullion value at about AU$92 million at the end of the quarter.

5:15 In addition to pre-strip mining activity at the Toiga Open Pit, which continued during the quarter, nearly 1.7 BCM of material was moved, which is consistent with Q2. In a pleasing development at Sambrado, approval of the application to update the Sambrado Life of Mine Plan to include the M5 South Underground was received from the Governor, McKenna Faso, during the quarter. Empire South Underground development activities have commenced and soaping activities are now scheduled to start early in the second half of 2027. There's flexibility within the overall Sanbrado mine plan and this delayed start is therefore expected to have minimal impact on 2027 gold production.

6:04 In relation to our explosives manufacturing and storage facility at Kiyaka, we are still awaiting permanent approval, but we are working around this. Access to the explosive supplies improved during the quarter, following improved performance from the existing supplier and the engagement of a second supplier. This allowed for greater focus on waste-dripping activities at Kiaka and Toowega open pits, but explosive supply remains an operational bottleneck that we continue to manage. Discussions have continued with the Burkina Faso state-owned Society to Participation, Minier, Bikini Faso or Sofamib. Regarding its acquisition of the 25% shareholding Ikiaka SA for 70 billion CFA francs, which is approximately 174 million Australian dollars, we expect to finalise this in Q4.

6:59 I'll now hand over to Padraig to talk through our financial results in more detail. Thanks, Padraig.

7:04 Thank you, Richard. The last group generated Australian dollars $813 million of gold sales revenue in the September quarter from a record high 135,245 ounces of gold sold at an average realized price of $4,240 US per ounce. Q3 saw a significant cash build in the group. Notional net cash, which is calculated as cash plus bullion minus debt, increased by $220 million in the quarter to sit at $710 million at 30 September 2026. As reported in our Appendix 5 fee, the group generated Australian $458 million of operating cash flow in Q3 and ended the third quarter with a record high cash balance of approximately $1.2 billion Australian dollars.

7:59 Capital investing activities in Q3 used Australian $77 million of cash, which comprised Australian $25 million for Sombrato, Australian $26 million for Tuiga, and $26 million for Quiaca. Financing activities used $38 million Australian dollars cash in Q3, which included $22 million of loan repayments and $9 million of interest payments. Post quarter, WAF shareholders received their 20 cents per share special dividend, which aggregated to AU$229 million. I now hand back to Richard.

8:39 Thanks, Pedro. As mentioned, we're moving closer to commencing production from Toowega, with the construction of mobile maintenance workshop, office and ancillary infrastructure largely completed during the quarter. Mining activities focus on pre-production stripping of the Stage 1 Toowiga open pit, which I saw recently while I was on site, and it's looking magnificent. Mobilisation of the haulage contractor is planned for late Q4, and Toowiga oil deliveries to the San Brodo mill are expected to commence in early 2027. Exploration also continued in Q3, with over 13,000 metres of infill drilling targeted in the Toowiga underground resource, which is ongoing, and those results are expected shortly.

9:25 At Sanbrado, we released results from our diamond drilling at the M5 South Underground, tagging the conversion of the impermeable resources between the 1800 and 1600 levels, approximately 500 to 570 metres below surface, and greater control of the lower levels of the ore reserve. Diamond drilling delivered fixed zones of high-grade mineralisation, including a best result of 27 metres at 6.7 grams per tonne beneath the current ore reserves at the M5 South underground, confirming the potential for significant ore reserve growth. We also reported results from M5 North at Sanbrado, which we are incorporating into an updated resource model to support a final pit design update, along with an optimisation of the Sanbrado open pit mining schedule, which is also underway.

10:19 We expect to deliver an updated 10-year production forecast in Q1 2027. Drilling will continue through the remainder of 2026 as we complete our exploration budget of US$20 million for more than 100,000 metres of planned drilling at our production centres and surrounding exploration areas. Looking at our environmental performance, we commenced presentations of WAF's 2025 Responsible Mining Report to national and regional governments and other stakeholders in September 2026. Our plant nursery production at Sanbrado increased from approximately 20,000 seedlings and nearly 32,000 seedlings produced here today. Social investment activities in Q3 continue to focus on education, health and economic development.

11:08 Our Sandrato Trades Training and Qualification Program was recognised at the 2026 Awards for the Australia-Africa Minerals and Exploration Group, or ANEG, where we received the Excellence in Social Development Award. This program enables employees to convert their practical work experience into nationally recognised trade qualifications while remaining in paid employment. Sanbrado collaborated with the Government of the Kennefaso and the National Training Organisation to implement this program with the Sanbrado Maintenance Department, where more than 100 employees have now completed their final assessments. At Kiaka, community health projects continue to advance.

11:53 with two new health centres more than 50% complete and refurbishment works progressing at the existing facilities. The Kiaka Livelihood Restoration Program is also moving forward with infrastructure for agriculture, livestock and market garden initiatives nearing completion. The next phase will focus on participant training and equipment distribution. while a new group of vocational training participants have already commenced trade studies at a national training school. Across the board, our teams continue to work together to deliver amazing results, a record quarter of production, strong cash flow and great community outcomes and rewards to our shareholders.

12:45 West Africa is on a great trajectory and we have no plans to stop. We look forward to further drilling results in Q4 along with ramping up activities at Toega ahead of the commencing gold production in Q1 2027. We remain firmly on track to meet our 2026 production and cost guidance as we progress towards our goal of 500,000 ounces of gold produced annually in West Africa. Thanks again for your interest in West African Resources today. I'll now turn it over back to Nate for questions. Thank you. Just a reminder, if you would like to ask a question, please use the raise hand function within Zoom. Your first question comes from Richard Knight at Barangelli.

13:33 Please go ahead, Richard.

13:36 Hi, Rich. Congrats on a pretty incredible quarter. I suppose, just wondering how you're thinking about the trade-off between making decisions around capital management and deploying that capital potentially elsewhere. Obviously, you know, I mean, you're generating nearly half a billion dollars every quarter now in terms of cash flow from operations. So you've got some decisions to make. I'm just wondering how, you know, in a broad sense, you're thinking about that trade-off.

14:10 Well, look, in the short term, we definitely focus on paying down debt obligations. Certainly in the next six to 12 months, we expect to clear those. We're also still optimising operations at Kiaka, so we don't think we've got that running perfectly yet. I think there's some improvements we can make, particularly around reliability of power. So we've required a HSA power station, which has made it into West Africa, so part of it's still in Ghana. A lot of it has arrived on site already, and we will start installing that early next year. That'll be a six-month program to build a 40 megawatt HFO power station. So that's still a pretty big job that we've got to finish, and that will absolutely underpin Kiaka's production going forward, given that we'll have the existing grid connection. We've got 30 megawatts of diesel and we'll have 40 megawatts of HFO. So you have more than enough power to push those mules to capacity.

15:17 So we've got a few things on at the moment, Richard, but we're also happy to build some cash and we'll kind of consider what we do with that later, maybe early in 2027. But certainly, they're the main programs we've got at the moment.

15:35 Yeah, okay. Can you remind me what the capital is on the power plant?

15:41 It's just over $50 million US. Yeah.

15:44 Yeah, okay. So, yeah. I mean, it's small in the context of cash flow. Perhaps one more, just on the documentation around the GIACA stake to the government. It's pushed back a little bit. Just wondering how engagement's going there and also if you've had any sort of conversations around the potential just to... get clarity around your sort of 85% ownership in Sanbrado there as well?

16:26 Look, the discussions we've had so far have been very cordial. So we're very close to completing documentation on that 25%. But look, on the 85% in the other operations we have in country, at this stage there's been no discussion of the government increasing their stake there. and we continue to have very frank and open dialogue with them around that. So at this stage, no change, and we're very close to wrapping up the 25% in Kiaka. Okay.

17:03 Thanks, Rich. Great quarter. Well done. Thank you. There are no further questions at this time, so I'll hand back to Richard for closing remarks.

17:17 Thanks, Nathan. We can thank you again to our shareholders for dialing in this morning. Keep forward, there's going to be another strong quarter of production for the company and we'll be releasing our drilling results from the underground targets at Toowega and also from M5 North and further drilling results from M5 South underground. So keep your eyes out for that and I'd just like to thank everyone for dialing in this morning.