Monday, July 18, 2016 12:42:19 PM
WAF.V/WAF.AX - bought on maybe Roxgold 2.0
Been watching WAF.V and pulled the trigger today on news. WAF.V is in Burkina Faso, has a $CAD 85M MC, just raised AUD 12.5M, and is hitting ultra-high grade gold ore shoots at depth. They announced 18m @ 82.3 g/t today at 100m depth which could be near bottom of an M5 open pit. Current price is AUD 0.24 and Hartleys has a very speculative NAV14% target of AUD 0.48 at spot gold. When project is derisked that may be AUD 0.80 target at NAV5% (lower discount rate)
http://www.westafricanresources.com/wp-content/uploads/2016/07/01757971.pdf
Idea here is there is:
1) at least a 500k oz heap-leach project on M5 prospect
2) In a few months market will see a combined M1 (low grade oxide) M5 (high grade shoots) open pit scenario with a 10 year mine life per Hartleys analyst report below
3) Blue sky is that WAF.V develops in Roxgold 2.0 and the current success on deep exploration at M5 delineates an ultra-high grade underground
Here are some highlights from the Hartley's report (only anayst report out - Australian firm).
WEST AFRICAN RESOURCES LTD (WAF)
Site visit confirms a first class discovery at Tanlouka
West African Resources (WAF) continues to discover significant high grade
mineralisation at the M1 prospect, Tanlouka project in Burkina Faso. The
high grades now have strong continuity over ~300m of strike at M1 South and another ~300m of strike at M1 North. The M1 South prospect is faulted and offset with discrete zones of ~80-100m strike length, while the M1 North body is interpreted as one continuous body. We believe the M1 prospect (North & South) is likely to be a high grade open pit mine transitioning into a high grade underground mine at depth.
One of the best we’ve seen in West Africa for some time
The M1 discovery is one of the best high grade discoveries in West Africa for some time and is testament to the persistence and expertise of the WAF exploration team. Our recent site visit to Tanlouka confirmed WAF as one of the better West African gold explorer/developers around. The combination of strong management and a first class discovery should continue to drive further share price appreciation in the near term.
Our initial estimates suggest the M1 discovery has potential to grow into a high grade (~2-3g/t Au) open pit mine transitioning into a high grade (~5-10g/t Au) underground mine. The M1 prospect will most likely be blended with the lower grade (~1.5g/t Au) M5 deposit which should provide the bulk of the tonnes to a CIL processing plant. We see potential for a blended head grade of ~2.0-2.5g/t Au at low strip ratios (currently ~2:1 LOM strip ratio at M5).
What does the combined M1 & M5 mining scenario look like?
We now model a (pre-study) mining scenario which combines the existing M5
deposit (23.6Mt @ 1.7g/t Au for ~1.3Moz, 1g/t lower cut) with the M1 high
grade discovery. Our initial estimates suggest the M1 discovery combined
with the M5 deposit is likely to justify a CIL processing plant in the order of ~2.5Mtpa. The bulk of the tonnes (up to ~2.0Mtpa) could come from the M5 deposit and the M1 discovery should deliver the high grade “sweetener”. We see potential for the combined (M1 & M5) mining scenario to produce in the order of ~150-170kozpa at low operating costs (<US$700/oz).
We now model (pre-study) the Tanlouka project to generate ~160kozpa at
AISC of ~US$660/oz over a minelife of 8 years from FY18 onwards. This
assumption is based on M1 (North & South) delivering an initial open pit
followed by an underground mining scenario. These assumptions will require further exploration and infill drilling success at M1 (North & South).
High grade at M1 distinguishes from peers, maintain Spec Buy
In our opinion the discovery of high grade mineralisation at M1 distinguishes the Tanlouka project from West African gold developer peers. We see a strong likelihood of further high grade mineralisation at M1 (North & South) and see potential for further parallel mineralisation to be discovered. We like the prospects to the north (of M1 North) and towards the Laterite Hill. The Company will now continue drilling to define the extent of the M1 discovery and gain a better understanding of the scale and potential of the high grade mineralisation. We look forward to further strong newsflow as the drilling program ramps-up and explores the full extent of the M1 discovery.
We maintain our Speculative Buy recommendation and a price target of
40cps, NAV of 36c, spot NAV of 48c
Target summary. NAV is at $USD 1200 long term gold.
Been watching WAF.V and pulled the trigger today on news. WAF.V is in Burkina Faso, has a $CAD 85M MC, just raised AUD 12.5M, and is hitting ultra-high grade gold ore shoots at depth. They announced 18m @ 82.3 g/t today at 100m depth which could be near bottom of an M5 open pit. Current price is AUD 0.24 and Hartleys has a very speculative NAV14% target of AUD 0.48 at spot gold. When project is derisked that may be AUD 0.80 target at NAV5% (lower discount rate)
http://www.westafricanresources.com/wp-content/uploads/2016/07/01757971.pdf
Idea here is there is:
1) at least a 500k oz heap-leach project on M5 prospect
2) In a few months market will see a combined M1 (low grade oxide) M5 (high grade shoots) open pit scenario with a 10 year mine life per Hartleys analyst report below
3) Blue sky is that WAF.V develops in Roxgold 2.0 and the current success on deep exploration at M5 delineates an ultra-high grade underground
Here are some highlights from the Hartley's report (only anayst report out - Australian firm).
WEST AFRICAN RESOURCES LTD (WAF)
Site visit confirms a first class discovery at Tanlouka
West African Resources (WAF) continues to discover significant high grade
mineralisation at the M1 prospect, Tanlouka project in Burkina Faso. The
high grades now have strong continuity over ~300m of strike at M1 South and another ~300m of strike at M1 North. The M1 South prospect is faulted and offset with discrete zones of ~80-100m strike length, while the M1 North body is interpreted as one continuous body. We believe the M1 prospect (North & South) is likely to be a high grade open pit mine transitioning into a high grade underground mine at depth.
One of the best we’ve seen in West Africa for some time
The M1 discovery is one of the best high grade discoveries in West Africa for some time and is testament to the persistence and expertise of the WAF exploration team. Our recent site visit to Tanlouka confirmed WAF as one of the better West African gold explorer/developers around. The combination of strong management and a first class discovery should continue to drive further share price appreciation in the near term.
Our initial estimates suggest the M1 discovery has potential to grow into a high grade (~2-3g/t Au) open pit mine transitioning into a high grade (~5-10g/t Au) underground mine. The M1 prospect will most likely be blended with the lower grade (~1.5g/t Au) M5 deposit which should provide the bulk of the tonnes to a CIL processing plant. We see potential for a blended head grade of ~2.0-2.5g/t Au at low strip ratios (currently ~2:1 LOM strip ratio at M5).
What does the combined M1 & M5 mining scenario look like?
We now model a (pre-study) mining scenario which combines the existing M5
deposit (23.6Mt @ 1.7g/t Au for ~1.3Moz, 1g/t lower cut) with the M1 high
grade discovery. Our initial estimates suggest the M1 discovery combined
with the M5 deposit is likely to justify a CIL processing plant in the order of ~2.5Mtpa. The bulk of the tonnes (up to ~2.0Mtpa) could come from the M5 deposit and the M1 discovery should deliver the high grade “sweetener”. We see potential for the combined (M1 & M5) mining scenario to produce in the order of ~150-170kozpa at low operating costs (<US$700/oz).
We now model (pre-study) the Tanlouka project to generate ~160kozpa at
AISC of ~US$660/oz over a minelife of 8 years from FY18 onwards. This
assumption is based on M1 (North & South) delivering an initial open pit
followed by an underground mining scenario. These assumptions will require further exploration and infill drilling success at M1 (North & South).
High grade at M1 distinguishes from peers, maintain Spec Buy
In our opinion the discovery of high grade mineralisation at M1 distinguishes the Tanlouka project from West African gold developer peers. We see a strong likelihood of further high grade mineralisation at M1 (North & South) and see potential for further parallel mineralisation to be discovered. We like the prospects to the north (of M1 North) and towards the Laterite Hill. The Company will now continue drilling to define the extent of the M1 discovery and gain a better understanding of the scale and potential of the high grade mineralisation. We look forward to further strong newsflow as the drilling program ramps-up and explores the full extent of the M1 discovery.
We maintain our Speculative Buy recommendation and a price target of
40cps, NAV of 36c, spot NAV of 48c
Target summary. NAV is at $USD 1200 long term gold.
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