West African Resources secures new gold deposit

West African Resources has acquired a gold deposit located near its existing Sanbrado project in Burkina Faso, with the Subiaco-base company to pay up to $US45 million ($A69 million) in staged payments.

The vendors are B2Gold Corp and GAMS-Mining.

West African Resources’ primary focus is its Sanbrado project - 80 kilometres south-east of Burkina Faso's capital Ouagadougo - a deposit with a 10-year mine life and probable reserves of 1.7 million ounces.

Given the close proximity (14km) of the Teoga deposit to the Sanbrado deposit, West African executive chairman Richard Hyde said the Toega deposit was expected to increase Sanbrado’s production profile and mine life.

“[West African Resources intends to] kick off drilling and feasibility studies in the near future, with the aim of bringing Toega ore into the Sanbrado mine plan within three years,” he said.

West African will pay $US10 million initially for the new deposit, from its existing cash reserves.

It will make a further payment of $US10 million in cash or shares upon completion of a feasibility study.

The remainder will be in the form of production payments based on a 3% net smelter returns royalty.

West African Resources said today it acknowledged the support of its financier Taurus Investments in making the acquisition.

In return West African has offered Taurus 250,000 4-year options with a strike price of $0.7346 (20% premium to the 5-day VWAP up until close of trade 28/4/2020).

The Toega deposit’s main ore body is 1,200 metres long to a depth of 400 metres, and has an inferred resource of 1.1 million ounces grading at 2.1 g/t, with the company saying it has excellent exploration upside.

Last week, West African announced its March 2020 quarter results, recording $81.5 million cash on hand. The company was pleased to state that the COVID-19 crisis was yet to have an impact on its operations.