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West African Resources (ASX:WAF) - Executive Chairman & CEO, Richard Hyde
Executive Chairman & CEO, Richard Hyde
Sourced: Hot Copper
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  • West African Resources (WAF) has finalised an agreement to acquire 100 per cent of the Toega gold deposit from B2Gold and GAMS-Mining F&I
  • WAF will acquire Toega in staged payments for a total of US$45 million
  • The stages include US$10 million in cash, a further US$10 million in cash or shares, and US$25 million in royalties
  • B2Gold and GAMS will also retain a 0.5 per cent royalty after the final US$25 million tranche is finalised, capped at 1.5 million ounces of total production
  • Toega has an initial non-JORC inferred mineral resource of over 1.1 million ounces of gold from 17.53 million tonnes at 2.01 grams per tonne
  • WAF will now conduct detailed feasibility studies and additional drilling to define the Toega resource and create a roadmap to first gold
  • West African Resources has jumped 14.8 per cent on the back of this news, with shares trading for 73.5 cents each

West African Resources (WAF) has finalised an agreement to acquire 100 per cent of the Toega gold deposit from B2Gold and its partner, GAMS-Mining F&I (GAMS).

The deal

WAF will acquire Toega in staged payments for a total of US$45 million.

Stage one is an initial cash payment of US$10 million, to be paid from existing cash reserves.

Stage two is a further US$10 million to be paid in either cash or shares. This payment is due within two years of signing of the agreement, pending the completion of a feasibility study.

Ownership of the Nakomgo exploration permit will be transferred upon payment. Any shares used for payment would be issued under a placement calculated on the five-day trading VWAP prior to the completion date.

Stage three will consist of US$25 million in royalty payments from production in the Nakomgo exploration permit area. WAF will pay three per cent of net smelter returns (NSR) until the final sum is reached.

B2Gold and GAMS will also retain a 0.5 per cent NSR royalty after the final US$25 million tranche is finalised, capped at 1.5 million ounces of total production.

The Burkina Faso government is also entitled to a 10 per cent free carried interest in the Toega deposit upon the granting of a mining licence, as set out in the 2015 Mining Code.

The resource

In early 2018, B2Gold announced an initial non-JORC inferred mineral resource of over 1.1 million ounces of gold from 17.53 million tonnes at 2.01 grams per tonne.

Toega’s mineral resources have been classified using the 2014 CIM Definition standards for mineral resources and mineral reserves. All tonnage, grade and contained metal content estimates have been rounded, so actual JORC estimates may differ from current figures.

That said, a total of 165 drill holes for 37,776 metres of total drilling were used in the estimate over the 516,000 square metre resource area. 65 per cent of the reported resource has been drilled to a 50 by 50 metre, or tighter, drill hole spacing, with the remainder drilled on a 100 by 100 metre grid.

WAF stresses additional drilling will be required to verify the estimates, and there is no certainty that all of the inferred resources will be converted to measured and indicated resources. A work program will be undertaken to verify exactly what’s in the ground at Toega.

Next steps

The company says it does have experience in developing similar deposits to Toega, in particular at its nearby Sanbrado gold project.

Detailed feasibility studies, additional exploration and resource definition drilling will be undertaken to define the Toega resource and create a roadmap to first gold. It’s expected this work will be completed within two years and funded from currently held cash reserves.

A big part of the reason for WAF’s interest in the Toega project is its proximity to Sanbrado. The new project is situated just 14 kilometres from the Sanbrado mine and mill, which produced its first gold last month – under budget and ahead of schedule.

The anticipated mill feed from Toega will supplement Sanbrado ore processing, displacing lower grade materials from Sanbrado and extending the operation past its original ten-year lifespan.

WAF says infill drilling at Toega is expected to commence around September, with a range of other technical activities being conducted over the next 20 months.

The company anticipates first gold within three years.

West African Resources has jumped 14.8 per cent on the back of this news, with shares trading for 73.5 cents each as at 3:37 pm AEST.

WAF by the numbers
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