Ground Breakers: Analysts bearish on gold, but one miner is smiling today

West African Resources (ASX:WAF) has continued its stunning run since popping the cork at the Sanbrado mine in Burkina Faso, setting another production record and blitzing guidance for 2021.

In its first full year of operations at Sanbrado, WAF stamped its claim as a stock to watch last year as one of the few gold producers to improve its standing in the market.

The fruits of its labour, a record 288,720oz of gold production, well over the upper limit of its guidance of 280,000oz.

That came off the back of a 7% increase in ounces in the December 2021 quarter to 87,320oz, the best three month performance in the mine’s short history.

WAF attributed its strong results to higher production from the high grade M1 South underground, up 29% in the December quarter with 119,000t at 9.5g/t mined for 36,256oz of gold.

That compared to a 15% drop in production from the open pit to prioritise underground ounces, to 979,000t at 1.9g/t for 58,404oz.

WAF boss Richard Hyde has attributed the company’s success in commissioning and delivering early doors at Sanbrado to its geological knowhow. Hyde told Stockhead back in November its commitment to grade control drilling was a major factor in proving up the asset ahead of mining.

It has helped the company expand in its early days as a miner, with the Kiaka mine bought from B2Gold and GAMS Mining last year presenting a pathway to become a 400,000ozpa producer by the middle of the decade.

“To have exceeded 2021 production guidance in what was a very challenging year is a credit to our dedicated team of staff and contractors. I extend my thanks to team members that have spent extended periods away from their families either on site or in quarantine while working for our Company during 2021,” Hyde said.

“We look forward to releasing production and cost guidance for 2022, and updated resources and reserves for Sanbrado and Toega later in Q1 2022. Work on the Kiaka feasibility study is underway and is on track for completion by the end of Q2 2022.”

WAF stock was up 4% this morning on a bad day in general of ASX listed gold stocks.

West African Resources share price today:

Imminent rate hikes to place lid on gold: Metals Focus

Gold tumbled 1.3% overnight to US$1789/oz after the minutes of the December meeting of the US Fed came out, with analysts now rating a more than 70% chance of interest rate rises coming from March.

It sucked optimism out of the gold investment market, which has been counting on rising inflationary pressures to bolster the value of the safe haven commodity which has also had its wings clipped by the flow of capital into Bitcoin and other cryptos.

Metals Focus said gold has started 2022 on a cautious note, saying unless economic conditions worsen rapidly on rate hikes that go too hard too soon or coronavirus fears, prices will be stuck below 2021 highs.

Gold miners in the red today include Northern Star (ASX:NST), Evolution (ASX:EVN), St Barbara (ASX:SBM), Newcrest (ASX:NCM) and Regis Resources (ASX:RRL).

The materials sector, mostly comprised of mining and resources stocks, posted a 0.89% gain to 11.20am AEDT as the ASX 200 rebounded from its worst daily performance in 16 months yesterday.

That was led by gains in the big iron ore miners as the price of the bellwether Australian commodity rose above US$127/t overnight.

Lithium stocks were also supported in the mid-tier, repeating their form of earlier in the week when many hit all time highs on the back of news Tesla had hit record sales of its electric vehicles.

NT lithium mine builder Core Lithium (ASX:CXO) rose 5%, while Lake Resources (ASX:LKE) stock gained 4.74%.