Where is the West African Resources Share Price Headed? (ASX:WAF)

Where is the West African Resources Share Price Headed? (ASX:WAF)

Like other gold producers West African Resources Ltd’s [ASX:WAF] share price has been on an upwards trajectory since the March market lows.

Gold miners have enjoyed the near record price (in USD terms) of gold brought about by the coronavirus outbreak.

WAF is no exception.

The Africa focused miner has rebounded 147% since the ASASX WX hit its lowest point in late March.

At time of writing, WAF shares are trading down 2.43% or 2.5 cents to $1.005 per share.

ASX WAF Share Price Chart

Source: Tradingview.com

While some parts of Australia are coping well with the disease, cases on the African continent continue to rise.

This could be bad news for WAF.

Aussie Gold Miner Stocks: Free report reveals why Australia is set to become the next ‘gold epicentre’ — which could result in a spike in Aussie gold stock prices. Click here to learn more.

A company good with a challenge

WAF is a company that has been faced with challenges since its inception.

Just over 10 years ago, young geologist Richard Hyde and his team listed WAF, raising $6.5 million in an IPO.

Over the next decade, Hyde grew his company into a nearly $900 million capped, +200,000 ounces of gold per year success story.

Exploration and development in Africa can be more difficult than in more developed places like Australia and the US.

There can be challenges with equipment, infrastructure and acquiring skilled staff.

So how has WAF dealt with the latest challenge of COVID-19?

According to its June production update, there has been no material impact on operations due to coronavirus.

Double shifts underground resumed in early June following roster impact caused by the virus.

Despite this, cash and gold on hand increased from Q1 to Q2 in CY20 thanks to continuous operations since early March.

Capital expenditure also decreased quarter-on-quarter as WAF’s Sanbrado mine is set to reach full production by September.

Will coronavirus hit the WAF share price?

Given the company’s ability to mitigate the affects of COVID-19 to date, it is difficult to say how the share price will react as cases increase in Africa.

WAF’s operations are based in the West African nation of Burkina Faso.

However, compared to some of its neighbours, such as Ghana and the Ivory Coast, cases in Burkina Faso have been relatively low.

Though authorities have warned this could be through a lack of testing.

Spread of the virus has been slower than other parts of the world, but health authorities are particularly concerned about the spread in rural areas.

There are also increasing concerns regarding rising jihadist activity in West Africa.

So far though, this does not seem to have impacted the WAF share price.

As it stands currently, the WAF share price seems to have been resilient to the current outbreak in Africa.

But if conditions worsen, even in neighbouring costal countries, operations, and sales deliveries could be impacted.

If you’d like to stay up to date on gold miners like WAF, or are just interested in Aussie gold explorers and producers, then make sure to subscribe to The Daily Reckoning Australia; it’s a great way to stay ahead of the curve when it comes to Australian miners. It’s free too. Subscribe here.

Kind regards,

Lachlann Tierney,

For The Daily Reckoning Australia