Market Smells Big Resource Increase Coming At West African
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It’s no big deal to find a couple of million ounces of low grade gold in West Africa.
But it’s another thing altogether if the resource base comes with seriously high-grade shoots that can sweeten head grades to make a project a real money spinner.
The latter is the position West African Resources (WAF) finds itself in at its Sanbrado gold project in sunny Burkina Faso courtesy of the game-changing high-grade results from the M1 South shoots.
The discovery of exceptional grades across three sub-vertical lodes which remain open at depth compelled WAF to hold back on its original development planning which envisaged an open-cut capable of producing more than 150,000oz in the first three years of a nine-year mine life.
But that February 2017 open-cut feasibility study was sidelined when drilling at M1 South (part of which was captured in the open-cut scenario) started to return bonanza hits like 1,613g/t over 0.5m and 21m grading 53g/tonne beyond what was considered in the FS.
Now work at Sanbrado is focussed on resource and extensional drilling to upgrade the resource estimates for the deposits which make up the project, ahead of re-thinking the best development scenario in the first half of 2018.
A resource update is likely next week and the market is expecting M1 South alone to more than double from the current 288,000oz to more than 600,000 ozs, with both open-cut and underground resources to be reported at an impressive grade.
Ahead of next week’s upgrade, Hartleys and Euroz operatives headed off to Burkina Faso for a look-see. Hartleys came back with 70c price target on the stock, and Euroz was at 60c. Both are kind of interesting given WAF was trading on Thursday at 40c for a market capitalisation of $230m.
Hartleys said that the introduction of M1 South as an open pit and high-grade underground ore source sweetens the anticipated open pit base feed from the M5 deposit, with opportunities to lift blended head grades above 3.4g/t in the early production years.
“We see potential for annual production of plus 200,000oz for the first couple of years, well above the 150,000oz annual target in the interim open-pit FS,” Hartleys said.
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