West African shares slide on Burkina Faso's new mining code
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The news: West African Resources was the worst performing stock across the ASX 200 as a new mining code in Burkina Faso threatens to cut short two of the gold explorer's mining permits.
The numbers: West African, which holds three licences under Burkina Faso's existing mining code, saw its shares plunge 10.4% to $1.25 by midday AEST.
The gold miner said that Burkina Faso's new code proposes to reduce the maximum tenure of initial mining permits from 20 years to 10 years, and the maximum term of an initial mining convention to five years.
While West African does not have any pending mining licence applications, the new code may see existing mining permits reduced to five years. However, mining permits and mining conventions will continue to be renewable for periods of five years, consistent with the current code.
West African said the mining licence for its Sanbrado project — which was renewed in April for a five-year period — will be unaffected by the new code.
However, the company is currently assessing potential impacts of the new code on its 20-year mining licence for the Kiaka project, which was issued in 2016, and its eight-year licence for the Toega project, issued earlier this year.
West African noted that its 2024 gold production guidance of 190,000 to 210,000 ounces at all-in sustaining costs of less than USD1,300 ($1,991.73) per ounce remains unchanged.
It also flagged that the construction of its Kiaka development remains on schedule, with first gold expected in Q3 2025.
The context: Burkina Faso's new laws are aimed at increasing the mining sector's contribution to the state, and promoting more local participation and capability in the mining industry.
West African said that as one of the country's largest investors, it has worked closely with government ministries to "develop a relationship of mutual understanding, respect and transparency as demonstrated by the successful renewals and modifications" of the company's existing mining licences.
The source: ASX announcment
