West African Resources (ASX:WAF) to Pay A$175 Million Special Dividend After Burkina Faso Cuts Kiaka Stake to 60%

West African Resources Special Dividend After Kiaka Deal

West African Resources (ASX:WAF) was back trading on the ASX yesterday after the Burkina Faso government formally took an extra 25% slice of the Kiaka gold mine. The state’s holding in Kiaka now jumps from 15% to 40%, which leaves West African with 60% instead of 85%. That sounds like a bad headline, but the bigger news is what comes with it. West African will receive A$175 million in cash from state mining group SOPAMIB for the stake, and management plans to hand that money straight back to shareholders as a special dividend. The deal is targeted to wrap up by the end of 2026.

Sanbrado and Toega Are Safe, and That Is the Real Story

The most important thing to understand is what was not touched. WAF’s main mine, Sanbrado, is not part of this decree. Neither is the nearby Toega project, which will start feeding the Sanbrado mill this year. Sanbrado is the engine room of the business. West African owns 90% of it. The mine has hit or beaten its production targets every year for the past five years, and it is the source of the cash that pays the bills and funds growth. Management even flagged that this week’s quarterly update will show a record cash balance. With gold prices still sitting near all-time highs, the underlying business is in very good shape. In our view, this is why the market reaction has been calm rather than panicked. The state took its slice from one project, not the whole pie.

Less Kiaka Gold, but A$175 Million in Cash to Soften the Blow

Now for the trade-off. Kiaka is expected to produce between 240,000 and 280,000 ounces of gold this year. With WAF’s share falling from 85% to 60%, the company will keep around 29% less of that gold than before. The same maths applies to Kiaka’s role in WAF’s 10-year plan to produce roughly 533,000 ounces a year on average. So future earnings from this mine will simply be smaller.

The cushion is the A$175 million cash payment from SOPAMIB. That works out to roughly 15 cents per share before tax, which is a meaningful one-off return for a stock trading around A$3.40. Investors should also keep an eye on the wider message. Burkina Faso has now used its 2024 mining law in a serious way for the first time, which adds risk for any future projects in the country.

The Investor’s Takeaway for West African Resources

In our view, the worst-case scenario has been avoided. Sanbrado is safe, the gold price is helping, and the A$175 million cash return is now confirmed. The next question is simply how the special dividend lands relative to expectations, and whether the broader country risk premium starts to compress now that the uncertainty is gone.

Conservative investors may still want to wait for the formal SOPAMIB transaction to complete before adding positions. Existing shareholders, having already lived through the worry, can take some comfort that the worst part is probably behind them. The Kiaka chapter is not closed yet, but for the first time in months, the path forward is clear.