West African Resources cash flow is strong but Kiaka ownership clouds valuation

West African Resources (ASX: WAF) owns the Sanbrado Gold Operations, brought Kiaka into first production in June 2025, and has now posted a record year with 300,383oz of gold output, $1.54bn in revenue and $567m in net profit after tax in 2025. That is the core tension in the stock today.

On one hand, the business is generating serious cash from two producing mines and remains fully unhedged to a strong gold price. On the other, the market has had to weigh that asset value against a very real sovereign risk after Burkina Faso’s government sought an additional equity stake in Kiaka.

That clash between cash flow and country risk explains why investors are still paying attention. West African Resources is not a speculative explorer.

It is already a profitable producer with scale, and it ended 2025 with $584m in cash and bullion plus 27,095oz of bullion on hand. But it also operates entirely in Burkina Faso, so any change in mining policy, ownership terms or licence conditions matters more here than it would for a geographically diversified miner.

Over the past 12 months, the stock’s path has been shaped by two opposing forces.

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The double-edged sword debate with West African Resources

The positive side has been clear: a rising gold price, the successful transition to a second production centre at Kiaka, and proof in January and March that management could hit output guidance and translate that into earnings and cash. The negative side arrived in late November 2025 and again in February 2026, when the company disclosed discussions with the Burkina Faso government over a potential additional 25% equity stake in Kiaka SA.

That ownership question produced the biggest reaction because it goes to the heart of valuation. If investors are unsure how much of Kiaka West African Resources will ultimately own, they will apply a discount, no matter how strong recent profits look.

West African Resources’ business model is straightforward. It produces and sells unhedged gold from owned mining operations in Burkina Faso.

Sanbrado has been in production since March 2020 and remains the current cash engine. Kiaka is newer, with first production in June 2025, and is ramping up through 2025 and 2026.

The Project developments timelines 

Toega is under development and pre-stripping is under way, with ore delivery to the Sanbrado plant expected in early Q3 2026. That matters because it can add feed, support production continuity and improve the value of existing processing infrastructure.

The key reason the stock sits where it does is not that the operations are weak. It is that the market is trying to put a number on sovereign risk around Kiaka.

On 25 November 2025, West African Resources said it was in advanced discussions after the government requested an additional equity interest in Kiaka SA. On 23 February 2026, the company said the government was considering a decree to authorise acquisition of an additional 25% stake.

Those announcements mattered because Kiaka is not a side project. It is central to the growth story, the move to two production hubs and the company’s ambition to exceed 500,000oz a year by 2029. A forced change in ownership could reduce future attributable production, lower net asset value and change how the market thinks about long-dated growth from the mine.

What’s driving the valuation 

In our view, this is the single most important driver of the current valuation. Gold prices, drilling success and mine plans all matter, but the answer on Kiaka ownership matters more because it changes the slice of the asset that shareholders actually keep.

The other side of the ledger is operational proof. On 7 January 2026, West African Resources reported annual production above 300,000oz, with 205,228oz from Sanbrado and 95,155oz from Kiaka during ramp-up.

On 17 March 2026, it followed up with the full-year result showing all-in sustaining costs (AISC) of US$1,488/oz and operating cash flow of $790m. We think those numbers were important because they moved Kiaka from promise to evidence. Investors could see that a second mine was no longer just a future plan.

There is a difference between structural developments and shorter-term noise. Structurally, West African Resources now has two production centres, a reserve base of 6.5 million ounces, mineral resources of 12.2 million ounces, and a pathway to much higher group production over the rest of the decade. That is not a one-quarter story. It is the foundation of the investment case.

The main pressure point remains

The short-term pressure is mainly political and transactional. The government’s interest in a bigger Kiaka stake may alter value sharing, but it has not stopped operations at Sanbrado or Kiaka.

The company has said Sanbrado and Toega are not part of the Kiaka discussions. That distinction matters. It means the current cash flow base remains intact even while the market debates how future Kiaka economics might be split.

There is also a cyclical element from the gold price itself. Because West African Resources is unhedged, strong bullion prices feed directly into revenue and cash generation, but any pullback would also be felt immediately. That is a benefit and a risk.

Against that, recent drilling has been genuinely useful rather than merely interesting. In December, M5 North returned high-grade mineralisation below the open-pit reserve.

In February, M5 South drilling extended mineralisation 400m below the current resource, including 28m at 6.1g/t gold. We believe these updates matter because they can extend mine life at Sanbrado and improve the 10-year plan due in Q2 2026. Mine life growth at an existing operation is usually higher quality than a distant greenfield promise.

The final call from here

The technical conditions for the stock to strengthen further are fairly clear. First, West African Resources needs to resolve the Kiaka ownership issue without a punitive dilution of its economic interest.

It is because West African Resources has enough operating strength, enough cash and enough visible production growth to justify taking that risk, provided investors understand what could change the story. The catalyst that matters most from here is not another strong quarter on its own.

It is clarity on Kiaka ownership, backed by an updated long-term mine plan that proves the group can convert today’s cash flow into a longer and larger production base. If that arrives on acceptable terms, we believe the market’s view can shift quickly. In our opinion, the right call comes down to whether the core earnings driver is strengthening or weakening.