West African Resources (WAF) started producing gold about two years ago

Now with the cash flow from their Burkina Faso gold mine they have transitioned from having $220m of net debt to having $200m of net cash.

So WAF are a cash producing behemoth.

Now Burkina Faso is a volatile country with a coup in January that temporarily impacted WAF's share price. And with that sovereign risk there is a significant discount to WAF's valuation.

Market Cap is approximately $1.4b

Cash receipts (TTM) = $740m

Operating cash flow (TTM) = $430m

CAPEX (TTM) = $60m

Free cash flow (TTM) = $360m (you can see why/how the company have gone from high debt to high cash levels)

So the company is trading on about 4 times free cash flow.

**Note: the company will pay $45m for the final downpayment of another project**

These guys were mentioned on the call as a cheap gold play.

If you're interested, make sure you have a read of the wikipedia page. https://en.wikipedia.org/wiki/Burkina_Faso#2022_coup_d'%C3%A9tat

Burkina Faso has a err... interesting history.

30-Sep-2020:  WAF hits 15.5m at 20.5 g/t Au beneath reserves at M1 South

WAF intercepts 15.5m at 20.5 g/t Au including 5m at 52.2 g/t Au beneath reserves at M1 South

Unhedged gold mining company West African Resources Limited (ASX: WAF) is pleased to report high grades and extensive visible gold have been intercepted in the deep diamond drilling beneath reserves at the M1 South deposit, Sanbrado Gold Project, Burkina Faso.

Highlights

• Deep diamond drilling beneath reserves at M1 South returns high grade results including; ­
  • 15.5m at 20.5 g/t Au from 852m including; ­
    • 5m at 52.2 g/t Au and, ­
    • 4m at 10.4 g/t Au ­
  • 32m at 4.9 g/t Au from 854.5m including; ­
    • 4m at 14.3 g/t Au and, ­
    • 4.5m at 18.7 g/t Au ­
  • 7m at 7.8 g/t Au from 1238m including; ­
    • 1m at 29.9 g/t Au
• Deepest intercept 950m below surface, 400m beneath current Probable Ore Reserves
• Geological model reinforced
• Demonstrates potential to extend the M1 South underground mine life
• Drilling ongoing with two rigs on site extending high-grade gold mineralisation

West African Executive Chairman Richard Hyde commented:

“High-grade gold mineralisation has been intercepted beneath the current underground ore reserves at M1 South, with diamond drilling returning 15.5m at 20.5 g/t gold and 32m at 4.9 g/t gold.

“The results confirm the predictable geometry of high-grade zone at M1 South. The current drilling program has been designed to extend high-grade mineralisation to support an underground mine life out to 2030.

“Drilling is continuing onsite with two rigs operating on double shift, with further results expected over the coming weeks.  Updated resources, reserves and a life of mine plan incorporating new results are expected by late Q4 2020.”

--- click on link above for more ---

[I do not hold WAF shares.  It's all in the name - West Africa is not where I like my gold companies to be mining.  However - there is no denying they've had a good year!  WAF is up +161% since April 3rd, when they closed at 41c after a lot of sideways trading in the months leading up to that point.  Since early April, it's been a beautiful north easterly trajectory to close today at $1.07, and they were nudging $1.15/share a couple of weeks ago.]