West African Resources shares dive after discounted placement
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The news: Gold miner West African Resources slumped on the ASX after announcing a $150 million placement to progress the development of its Kiaka gold project in Burkina Faso.
The numbers: West African shares were down 13.1% to $1.38 by 12:50pm AEST, making it the worst performer across the ASX 200.
The company said it had received firm commitments for a placement of around 109.5 million new shares, priced at $1.37 per share, to raise approximately $150 million before costs.
The placement issue price represented a 13.8% discount to Monday's closing price of $1.59, and a 9.1% discount to its 10-day volume-weighted average price.
However, over the past 12 months its share price has surged 51.7%.
West African said the placement will support development activities at the Kiaka gold project, which the company expects to be a "long-life, low-cost" project averaging 234,000 ounces per year for 20 years, at an all-in sustaining cost of USD1,196 ($1,781) per ounce.
With an estimated pre-production capital cost of USD447 million, the Perth-based miner expects the project construction and ramp-up to be financed by a combination of the placement proceeds, existing cash at bank, $484 million in unsold bullion, finalisation of equipment finance facilities, and ongoing cashflows from its Sanbrado project.
The context: West African said the placement proceeds will be primarily used to purchase owner mining fleet, establish owner mining workshop facilities and purchase exploration drill rigs, utilising mining pre-production capital at Kiaka. The company is targeting first production at the site from Q3 CY2025.
What they said: West African executive chair and CEO Richard Hyde said: "West African continues to make significant progress towards development of the Kiaka Gold Project with development 50% complete and 75% of capital costs fixed".
"Proceeds from the placement are expected to provide West African with proforma cash at bank and unsold bullion proceeds of $604 million, positioning West African to continue to rapidly progress the development of the Kiaka Gold Project," he said.
The source: ASX announcement
