Earnings Transcript for WAF.AX - Q2 Fiscal Year 2021

Operator: webinar for its June 2021 quarterly activity report. All attendees are in the listen-only mode and if you would like to ask a question, please do so by the Q&A panel within the Zoom down the bottom of the screen. I’ll now hand it over to West African’s Executive Chairman and CEO, Richard Hyde. Please go ahead.

Richard Hyde: Thank you, Simon. Just firstly like to extend my thanks on behalf of the Board and the team here at WAF to the site teams. They continue to do an excellent job and also through our international fly in fly out expats and their families who are continuing to put up with the situation certainly here in Australia, but also in the world where a number of them have to go through a hotel quarantine and return to their country of origin. So just quickly moving on to health and safety, we've had another good quarter with 7 million hours works LTI free, so that's about 26 months LTI free on the project now. We maintained continuous drilling and mining operations during Q2 and yes we are managing with the COVID pandemic onsite and in our supply chains and with international travel. But now, we are seeing significant disruptions with particularly our Australian fly in fly out workers with limited seats returning back to Australia and often people being pumped from Perth to Sydney or Melbourne or Brisbane.

Operator: The first question is from Roger Fitzpatrick at Charlton Asset Management. Richard, can you please provide some data on how the underground ramp up is progressing?

Richard Hyde: Thank you, Roger. Well, we've moved into back-to-back stoping cycle now which is where we've been wanting to get to for the last kind of 18 months, we've now got I think seven levels to developed and two main areas of stoping ore production, which is going to give us continuous stoping ore feed for the rest of this year. You know, we set ourselves a target of hitting an average of 1,000 tons a day from the underground and last six weeks, we've been exceeding that and that looks like it's going to continue for the rest of the year. So we're very pleased that we were finally into this more continuous stoping phase and we should see the benefit of continued drive improvement over the back half of the year.

Operator: Thanks, Richard. Next question. How much do the sustaining capital costs makeup of the total costs and will this continue?

Richard Hyde: We'll go to Padraig O'Donoghue, our CFO, who is also here with me.

Padraig O'Donoghue: Hi, the sustaining capital makes up about US$76 per ounce of the all-in sustaining costs. It's going to continue at lower levels on that, we're thinking about US$40 or so, or less per US dollars per ounce going forward.

Operator: Right. Thank you. Next question is - how is Sanbrado's performance reconciled to the resource and reserve modeling, and have there been any significant variances to date since the start of production?

Richard Hyde: We're tracking very closely with reserves. Well, we have had some production from outside reserves but early on when we first ramped up in the first six to eight weeks, we will have a negative reconciliation but that was generally due to new surface oxygen activity which - and some of the bulk density that were included in the resource work, but after the first sort of six to eight weeks, it's corrected itself and we've tracked up and we track slightly down, but on average we're tracking very closely to our reserves.

Operator: Right thanks, Richard. Next question is regarding the company's debt is it likely to be repaid in 2021.

Richard Hyde: Padraig, I'll pass it on to you.

Padraig O'Donoghue: Our current modeling goal is to repay them in first quarter of 2022. But I guess if gold prices really did well and production came ahead and we would look for opportunities to pay down early because we just want to get the interest put away and open up our optionality on our cash going forward.

Operator: All right, thanks. Can you please comment on the security situation within Burkina.

Richard Hyde: Well, the situation in Burkina has not improved in the last four or five years. You know, there is a significant humanitarian crisis in Burkina. I think 1.5 million people being displaced from Southern Mali, Northern Burkina Faso and also from Niger. This is something that Burkina government is dealing with a limited resources. I think since 2015 about 1,500 people have also been killed on the border with Mali and Niger. So we continue to see unrest in that region and much of it is really due to the Eastern two-thirds of Mali being ungoverned and it's a place where some Islamic insurgents are operating. So it's very unfortunate and it's something we are watching very closely. Coming into sort of the central part of Burkina where we located, we don't see a lot of local issues regarding the security. We are the biggest employer now in our area, and we've got very strong links with local groups and the local security forces and the army and the police. So it's something we are monitoring, we obviously take precautions when we're moving our people around and right now for the foreseeable future, we believe we can operate safely in the country and also doing our part to help improve the situation by being a large royalty and - royalty payer and tax payer to the Burkina government.

Operator: All right. Thanks, Richard. Just on Toega feasibility timing, is it still like calendar year '22. Any additional math test work required.

Richard Hyde: Right. So part of the drilling program, we've completed, the first thing we did was we completed a number of mid holes and geo-tech holes, both those selected samples are back in Perth being tested at the moment. We, as I mentioned just in the description before the question the Q&A, we have completed most of the drilling for the resource work, there is only sort of three or four holes to go. We have made really good progress with wet season sampling, so we started with aquatic sampling for the permitting and also proud that we've been doing dry season sampling as well. That's part of the feasibility study is lined up to be finished by Q4 and submitted to the government, that's all part of the permitting process. So, we would expect to get fully permitted towards the back end of 2022 which lines up well with the original timeline.

Operator: Thanks, Richard. Can you please give an update on the progress of accessing the higher grade ore in the M1 South open pit.

Richard Hyde: We are accessing it, so that's the update, really it's the pits are going well. So once we got down through the artisanal zones, which was pretty extensive at M1 South, part of the increase in grade that we're seeing, we've gone from 2.3 grams to 2.9 grams per ton in the last quarter, part of that increase is coming from M1 South open pit as well as the underground.

Operator: Perfect, thanks. A dividend is being considered post repayment of the Taurus debt.

Richard Hyde: Look, we will probably look - we got to look at our capital management program last this year and will take some thoughts on that. So, we look at the range of options but certainly paying dividends or buying back shares will be on the table. We need to pay Taurus back before we can implement those programs. So, that's our focus right now is to pay it back to the debt as quickly as possible.

Operator: Thanks, Richard. That concludes the Q&A segment, I might just hand it back to you for closing remarks.

Richard Hyde: Thanks, Simon. Thanks again. It was another good quarter of increased production and decreased costs and we expect that to continue for the rest of the year, while we remain on track to meet our guidance.

Operator: Got it. Thanks Richard. and Thanks all for joining.

Operator: Good bye.