WAF - West African Resources

[Miner]

WAF is doing very nicely and consistently.
But I wondered why the SI received shares at about one-third of market price? Who subsidised ? Was it a COVID 19 give away deal
https://www.asx.com.au/asxpdf/20200611/pdf/44jkjgk05cz6fw.pdf

 

[finicky]

The other notices at this time suggest it is managers of the company exercising cheap or zero priced unlisted options that they'd previously granted themselves.
I'll be selling half my holding in June/July

 

[Miner]

The other notices at this time suggest it is managers of the company exercising cheap or zero priced unlisted options that they'd previously granted themselves.
I'll be selling half my holding in June/July

Mate @finicky
Notwithstanding it's your personal decision is your decision to sell half to book profit?
Some of the key results are coming.
Just curious.
I do hold.
Thanks

 

[finicky]

@Miner, nothing to do with the specifics of the stock, just part of the program to sell down my 'p/f' to get to 30% cash that I've been raving on about ad nauseum. WAF's doing really well so far and fast progress, I like their recent tenement acquisition from B2, bit nervous about sovereign risk but again that's not the reason for selling down. I think the 'global deflationary bust' that I believe will happen later this year will hit gold miners just as hard, I'll even pare down my NST holding.

 

[aus_trader]

@Miner, nothing to do with the specifics of the stock, just part of the program to sell down my 'p/f' to get to 30% cash that I've been raving on about ad nauseum. WAF's doing really well so far and fast progress, I like their recent tenement acquisition from B2, bit nervous about sovereign risk but again that's not the reason for selling down. I think the 'global deflationary bust' that I believe will happen later this year will hit gold miners just as hard, I'll even pare down my NST holding.

How bad could it get ? Just a short term dip or a massive sell down to below 1k/oz ?

I am asking because if that plays out, I'll be deep underwater with my Gold plays. I get a lot of opposing views wherever I look about Gold price outlook.

If only a short term dip is expected, I may do what you are doing and sell out of or sell down on Gold miners and hold the Gold ETF's long term. But if huge falls are expected, I should sell the ETFs as well and lock in the profit rather than riding it all the way down to a loss !

 

[qldfrog]

How bad could it get ? Just a short term dip or a massive sell down to below 1k/oz ?

I am asking because if that plays out, I'll be deep underwater with my Gold plays. I get a lot of opposing views wherever I look about Gold price outlook.

If only a short term dip is expected, I may do what you are doing and sell out of or sell down on Gold miners and hold the Gold ETF's long term. But if huge falls are expected, I should sell the ETFs as well and lock in the profit rather than riding it all the way down to a loss !

An hint in my opinion: market falling hard today 4 to 5pc and gold not reached yet the 1750 in usd
I am bull long term gold but sold what i could: paper and not systems positions at 1750
You will be somewhat protected by AUD fall
I own WAF within my systems, no discretionary position

 

[aus_trader]

An hint in my opinion: market falling hard today 4 to 5pc and gold not reached yet the 1750 in usd
I am bull long term gold but sold what i could: paper and not systems positions at 1750
You will be somewhat protected by AUD fall
I own WAF within my systems, no discretionary position

I think I will let go of my Gold bullish bias. That way I could be ready either way:

• Hold positions if price goes higher
• Let go of the positions if Gold also starts falling with general market

finicky could be onto something, so I need to pay attention to how this plays out...

With the current big down day Oil, Gold, Silver, Copper all getting sold down, although Gold is holding ground pretty well at the moment. So that's in line with finicky's idea. So have to watch if that continues or Gold retains some sort of 'safe haven' status by either rising against the market or by holding ground while market heads south.

 

[qldfrog]

I think I will let go of my Gold bullish bias. That way I could be ready either way:

• Hold positions if price goes higher
• Let go of the positions if Gold also starts falling with general market

finicky could be onto something, so I need to pay attention to how this plays out...

View attachment 104648

With the current big down day Oil, Gold, Silver, Copper all getting sold down, although Gold is holding ground pretty well at the moment. So that's in line with finicky's idea. So have to watch if that continues or Gold retains some sort of 'safe haven' status by either rising against the market or by holding ground while market heads south.

If you just hope for gold holding, then go cash?why risk it?
I believe gold has a lag: during crash, gold is sold to cover cash need as do some bounds etc, then after the crash it rises until bull market is firmly in place.but i am no expert.
Probably outside WAF thread...

 

[qldfrog]

bonds not bounds

 

[finicky]

@aus_trader
I'm clueless in Seattle, which is why I looked for someone to follow as to what lies ahead. I put it into this thread: David Hunter Market Collapse Prophesy

So with the massive drop overnight I am a bit concerned that DaveHcontrarian (twitter) might have overestimated and mistimed the 'melt-up' but I am sticking with his outlook. He put out a tweet reply in the last few hours that this SPX/DJIA plunge has not budged his view, so I just await developments. I am not a trader, it's a big deal for me to sell 30% of my shareholdings.

I have a physically backed gold and silver account with my metal dealer and that will remain untouched. I was around and invested for the 2008 crash and saw gold crash and gold miners crash along with the general market. Mind you they turned quickly at the bottom. We saw what happened to gold miners in March this year - they were no help at all, one of the best, SAR, was down 39% peak to trough in less than a month, NST down 40%. Personally I won't be focusing on gold miners when trimming, I will just be paring them along with the rest and probably a bit lighter than general stocks. Cash will be needed I believe.

DaveH reckons the second shoe to drop will be way worse than March in quantity and duration. About gold, I think he said he expects as low as $1,000 USD but favours a bit higher, maybe $1,200 USD. He thinks by 6 -7 years after the 12-18 month 2020/2021 bust Gold will reach +$10,000 USD, participating in a highly inflationary recovery cycle - gold miners will perform like dotcom stocks of the 90's. Again, all his ideas, not mine.

SAR in March
$4.50 - 2.75 = 1.75
1.75 ÷ 4.50 x 100 = -39%

NST in March
$15 - 9 = 6
6 ÷ 15 x 100 = -40%

 

[aus_trader]

@aus_trader
I'm clueless in Seattle, which is why I looked for someone to follow as to what lies ahead. I put it into this thread: David Hunter Market Collapse Prophesy

So with the massive drop overnight I am a bit concerned that DaveHcontrarian (twitter) might have overestimated and mistimed the 'melt-up' but I am sticking with his outlook. He put out a tweet reply in the last few hours that this SPX/DJIA plunge has not budged his view, so I just await developments. I am not a trader, it's a big deal for me to sell 30% of my shareholdings.

I have a physically backed gold and silver account with my metal dealer and that will remain untouched. I was around and invested for the 2008 crash and saw gold crash and gold miners crash along with the general market. Mind you they turned quickly at the bottom. We saw what happened to gold miners in March this year - they were no help at all, one of the best, SAR, was down 39% peak to trough in less than a month, NST down 40%. Personally I won't be focusing on gold miners when trimming, I will just be paring them along with the rest and probably a bit lighter than general stocks. Cash will be needed I believe.

DaveH reckons the second shoe to drop will be way worse than March in quantity and duration. About gold, I think he said he expects as low as $1,000 USD but favours a bit higher, maybe $1,200 USD. He thinks by 6 -7 years after the 12-18 month 2020/2021 bust Gold will reach +$10,000 USD, participating in a highly inflationary recovery cycle - gold miners will perform like dotcom stocks of the 90's. Again, all his ideas, not mine.

SAR in March
$4.50 - 2.75 = 1.75
1.75 ÷ 4.50 x 100 = -39%

NST in March
$15 - 9 = 6
6 ÷ 15 x 100 = -40%

Thank you for the explanation finicky. Don't worry I never blame anyone for what happens in the markets and take full responsibility for whatever happens to my portfolio.

If there is a deflationary phase before the inflationary phase it makes sense to keep watch of the Gold and Gold stock holdings, so that's what I'll do. It could mean re-entering at a later stage if positions gets liquidated in a deflationary environment.

So as both you and qldfrog said, I'll be ready to raise cash if markets turn sour from here including selling any Gold related investments/trades if they follow the falling market.

 

[rnr]

Following a 5 wave move up over the last 8 weeks WAF is (hopefully) looking for a three wave pullback (a-b-c) before moving higher.
There appears to be support at the $0.81 to $0.84 range so probably worth keeping an eye on this stock over the next couple of weeks as the next move higher (wave b) looks imminent.

[N.B. This is not a recommendation and I do not hold.]

 

[Miner]

https://www.asx.com.au/asxpdf/20200930/pdf/44n4md00h2h9t5.pdf

Hold

 

[finicky]

15.5m at 20.5 g/t gold and 32m at 4.9 g/t gold

Those intercepts read as roughly 300 metres below current reserves. They already have heaps of underground reserves anyway so I wonder why they're spending apace with expensive deeper diamond drilling from surface.

“Drilling is continuing onsite with two rigs operating on double shift with further results expected over the coming weeks"

Doesn't matter I suppose as they're making bulk cash at their cost level.
Maybe they're making themselves a more formidable acquisition target or maybe just keeping their exploration crew occupied. Someone I subscribe to on Patreon reckons this whole team of exploration, construction and mining has been so successful at Sanbrado that management wants to hold it together by finding another big project from scatch.

Held

 

[Miner]

15.5m at 20.5 g/t gold and 32m at 4.9 g/t gold

Those intercepts read as roughly 300 metres below current reserves. They already have heaps of underground reserves anyway so I wonder why they're spending apace with expensive deeper diamond drilling from surface.

“Drilling is continuing onsite with two rigs operating on double shift with further results expected over the coming weeks"

Doesn't matter I suppose as they're making bulk cash at their cost level.
Maybe they're making themselves a more formidable acquisition target or maybe just keeping their exploration crew occupied. Someone I subscribe to on Patreon reckons this whole team of exploration, construction and mining has been so successful at Sanbrado that management wants to hold it together by finding another big project from scatch.

Held

Enriching asset value to be like solid gold
P

 

[finicky]

Gap up, modest volume move of 12% today after update.
Taken a shot at a rough valuation.

Sanbrado Gold Operations (Sanbrado), Burkina Faso were updated for fy21 (WAF reports on the calendar year)

West African anticipates Sanbrado will produce between 250,000 and 280,000 ounces of gold in 2021 with adjusted operating costs of US$530 – 630/oz and all-in sustaining costs (AISC) of US$720 – 800/oz.

However average annual production envisaged as >200,000 ozs p.a over 10 years

• Taking just the average production at Sanbrado at minimum 200kozs
• Using maximum AISC estimate of US$800/oz
• Which at conversion rate of 1:1.30 AUD = AISC of AUD1,140/oz
• Unhedged producer, so assume current approx AUD spot price of $2,200
• Gives AISC margin to spot = AUD$1,060/oz
• Tax + royalties: 34%: 1,060 x 0.66 = $700/oz profit after tax
• Multiply by avg production: 200koz x $700 = AUD$140,000,000 NPAT p.a
• Divide by diluted shares of 900,000,000 = $0.155 earning per share

Share price close Wednesday: $0.88, or rounded = $0.90
So WAF's average P/E on static assumptions:
Price/Earning (P/E) currently = .90 ÷ .15 = 6

Caveat: there's something in the preso about VAT (value added tax) of 18% which I don't know how to include. Surely it wouldn't be a simple addition to the ordinary tax and royalties? Would make it enormous: 34% + 18%. Why would anyone mine in Burkina Faso with those imposts?

Potentially a growth producer through acquisition and organically, has an exploration budget in 2021 of US$12.5M

Held

 

[Sean K]

• Taking just the average production at Sanbrado at minimum 200kozs
• Using maximum AISC estimate of US$800/oz
• Which at conversion rate of 1:1.30 AUD = AISC of AUD1,140/oz
• Unhedged producer, so assume current approx AUD spot price of $2,200
• Gives AISC margin to spot = AUD$1,060/oz
• Tax + royalties: 34%: 1,060 x 0.66 = $700/oz profit after tax
• Multiply by avg production: 200koz x $700 = AUD$140,000,000 NPAT p.a
• Divide by diluted shares of 900,000,000 = $0.155 earning per share

Good work finicky. What are they going to do with all that cash? Acquisition?

 

[finicky]

So WAF still have $175M of debt to pay off while holding +80M cash/gold end of Dec. The Sanbrado mine and plant was built using part debt. This 2021 calendar year will be the first where they reach fully ramped up production, forecasted to be well in excess of the average > 200kozs p.a for the 10 year Sanbrado plan. In 2020 they were still developing and gathering steam and recorded a loss.

So cash will go also to exploration ($US12.5M)

Also 'Between Lines Finance' on Patreon/Youtube in an earlier video gave the opinion that this whole team of exploration, construction and mining has been so successful at Sanbrado that management wants to hold it together by finding another big project from scatch.

However in his latest comments (see vid) he seened to favour the possibility of a merger with a similar company and ventured as a candidate Rox Gold which has an asset in Cote D'Ivoire as well as Burkina Faso

His latest vid has been unlocked, so I assume its ok to post:

 

[Sean K]

However in his latest comments (see vid) he seened to favour the possibility of a merger with a similar company and ventured as a candidate Rox Gold which has an asset in Cote D'Ivoire as well as Burkina Faso

PRU would probably be a candidate too.

 

[finicky]

Possibly, I have no idea, but Nordesmic of Between the Lines Finance is a student of African gold miners and is also a PRU shareholder, mentioning PRU a few times. I suspect he would have brought PRU up as a possible acquirer in this latest vid if he rated the chance as significant.