WEST
AFRICAN
RESOURCES
LIMITED
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2
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Annual
Report
Corporate
Directory
Company
West African Resources Limited
ABN
70 121 539 375
ASX
ASX trading code: WAF
Directors
Richard Hyde
Executive Chairman and CEO
Lyndon Hopkins
Executive Director and COO
Rod Leonard
Lead Independent Director
Libby Mounsey
Non-Executive Director
Nigel Spicer
Non-Executive Director
Stewart Findlay
Non-Executive Director
Company Secretary
Padraig O’Donoghue
Share Registry
Computershare Investor Services Pty Ltd
Level 11, 172 St George’s Terrace
Perth WA 6000 Australia
T: +61 (8) 9323 2000
Website
www.westafricanresources.com
Principal place of business
Level 1, 1 Alvan Street
Subiaco WA 6008 Australia
SOMISA office
Secteur 27, Quartier Ouayalghin,
Parcelle 07, Lot 22, Section SL,
Ouagadougou, Burkina Faso
T: +226 25 39 58 45
Kiaka SA office
Secteur 53, Parcelle 06,
Lot 12, Section 480, Zone A7
Ouagadougou, Burkina Faso
T: +226 25 37 49 74/75/76
Auditors
HLB Mann Judd (WA Partnership)
Level 4, 130 Stirling Street
Perth WA 6000 Australia
Contents
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Chairman’s Letter
2021 In Brief
Directors’ Report
Remuneration Report (Audited)
Financial Report
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
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4
6
34
48
49
Consolidated Statement of Financial Position 50
Consolidated Statement of Changes In Equity 51
Consolidated Statement of Cash Flows
52
Notes to the Consolidated
Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
ASX Additional Information
Summary of Tenements
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01
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTS
and a A$214 million after tax profit. We ended the
year with A$183 million cash and nil senior secured
debt, after repaying US$175 million of the Taurus debt
facility during the year and buying back the Taurus
offtake agreement in November 2021.
The standout growth achievement in 2021 was
acquiring the Kiaka Gold Project in Burkina Faso from
B2Gold and their partner GAMS for US$100 million in
staged cash and share payments plus a future 3% NSR
royalty on the first 2.5 million ounces produced from
Kiaka and 0.5% NSR royalty on the next 1.5 million
ounces. Kiaka is a fully licenced gold project located
just 45 km south of Sanbrado. B2Gold completed
extensive unpublished feasibility study work on Kiaka
that has been provided to WAF as part of the purchase.
Kiaka currently contains a Mineral Resource of 6.8
million ounces of gold. WAF’s updated feasibility study
for Kiaka is on track to be published in June 2022 and
is expected to result in a substantial increase in the
Company’s Ore Reserves.
During 2021 WAF completed the acquisition of the
Toega gold deposit from B2Gold and GAMS and
completed Toega’s maiden Ore Reserve estimate
of 580,000 ounces of gold at 1.9 g/t gold. Toega is
located 14 km trucking distance from Sanbrado and
ore from Toega is a significant component of mill feed
in Sanbrado’s 10-year mine plan.
Dear Fellow Shareholders,
I am pleased to present the 2021 Annual Report for
West African Resources Limited (ASX: WAF).
WAF had another successful year in 2021 operationally,
financially and in terms of strategic positioning for
future growth.
Operationally, our team safely achieved the Company’s
2021 annual guidance targets during the global
pandemic. Sanbrado produced 288,719 ounces of
gold at an average AISC of US$796/oz, which were
112% and 22% improvements, respectively, on the
prior year. Sanbrado remained LTI free with 9.8 million
hours worked since April 2019 and had an outstanding
12-month total reportable injury frequency rate of 0.78
for 2021.
Financially, WAF generated very strong results during
its second year as a gold producer with A$350 million
of operating cash flow, A$189 million of free cash flow,
The acquisitions of Kiaka and Teoga have consolidated
an exciting 2,000 km2 exploration land package over
the prospective Markoyé fault region in central and
southern Burkina Faso. In addition to completing the
feasibility work on Kiaka and Toega, exploration work in
2022 will focus on targets within the Sanbrado mining
area (including M1 South main shoot extensions)
and surrounding areas that can provide high-grade
oxide feed.
The cash consideration paid for Kiaka and Toega,
and the repayment of the Taurus debt facility were
partially funded by a A$126 million share placement
to sophisticated investors, and a A$10 million share
purchase plan that allowed WAF shareholders to
purchase up to A$30,000 each at the same $1.25 per
share price that the sophisticated shareholders paid
under the placement. The placement and SPP, which
were both well over-subscribed, were completed in
November 2021.
I am pleased to advise that West African Resources
has published its inaugural 2021 Sustainability Report
at the same time as this Annual Report. While this
Annual Report contains key sustainability highlights,
I encourage interested parties to obtain a copy of
the full 2021 Sustainability Report, which is available
electronically from the Company’s website.
West African Resources Limited is committed to
Burkina Faso and to operating in a manner that will
provide widespread economic benefits for the Burkina
Faso Government, local and regional communities, and
our other stakeholders. Looking forward, as announced
on 22 February 2022, Sanbrado’s strong performance
is set to continue in 2022 with unhedged production
guidance of 220,000 to 240,000 ounces of gold at an
AISC of US$1,040 to US$1,100 per ounce. The updated
10-year production outlook for Sanbrado is set to
average 198,000 ounces of gold per annum. Sanbrado
is set to deliver strong employment and other benefits
to the region as well as sustained significant tax and
royalty revenues to the government’s treasury past the
year 2033. Meanwhile, we are excited to commence
construction at Kiaka and this operation will also make
a significant contribution to the regional economy and
national treasury. We are targeting +400,000 ounces
of gold production per annum from 2025, with the
addition of Kiaka to existing operations at Sanbrado.
WAF’s strong and experienced board remained
stable in 2021. The only change occurred in February
2021, with the elevation of Mr Rod Leonard to the
role of Lead Independent Director to enhance the
Company’s governance structure. I would like to thank
my fellow directors for their keen interest and active
participation in overseeing the development of our
Company. We look forward to another successful year
in 2022.
Richard Hyde
Executive Chairman & CEO
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West African Resources is committed to Burkina Faso and to
operating Sanbrado in a manner that will provide widespread
economic benefits for the Burkina Faso Government, local and
regional communities, and our other stakeholders.
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Second underground ore
panel brought on-line at
M1 South for delivering
continuous stoping
production
8,000,000 hours worked
LTI free at Sanbrado
Resources grew to 11.8Moz
gold with acquisition of
6.8Moz Kiaka Gold Project
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First scheduled mandatory
debt repayment to Taurus
Inaugural production
guidance set at 250,000-
280,000 ounces gold at
AISC of US$720 –
US$800/oz
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A$126 million raised with
issue of 101 million shares at
$1.25 per share
Taurus US$200 million debt
facility repaid in full
400,000 ounces of
gold produced since
commissioning Sanbrado in
March 2020
Production guidance
exceeded with 287,700oz
gold produced at US$796/
oz AISC
2021
2020
% Change
Gold
production
288,719
ounces
136,476
ounces
AISC per
ounce
Net profit
US$796
US$1,024
A$214.4
million
A$98.9
million
112%
improvement
22%
improvement
117%
improvement
Year-end gold
Resources
11.6 million
ounces
5.1 million
ounces
127%
improvement
Year-end gold
Reserves
1.7 million
ounces
1.5 million
ounces
13%
improvement
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSWEST AFRICAN RESOURCES ANNUAL REPORT 2021
The Directors present their
report together with the
consolidated financial report
of West African Resources
Limited (the ‘Company’) and
its controlled subsidiaries
(the ‘Group’, ‘West African’ or
‘WAF’) for the year ended
31 December 2021.
About West African Resources Limited
West African Resources Limited is an international mining company actively undertaking exploration, project
development, mining, mineral processing, community & social sustainability, and rehabilitation within the West
African country of Burkina Faso. Headquartered in Perth, Western Australia, West African Resources Limited is
listed on the Australian Securities Exchange (ASX:WAF).
BURKINA FASO
SANBRADO GOLD
PROJECT
KIAKA GOLD PROJECT
EXPLORATION
» Mineral Resources:
»
WESTERN AUSTRALIA
PERTH OFFICE
» WAF Group
headquarters
» Business support
centre
Tenement portfolio
comprising 2,000
km2 over the
prospective Markoyé
fault region in
central and southern
Burkina Faso
» Gold exploration
» Mineral Resources:
6.8Moz gold
4.8Moz gold
» Mineral Reserves:
1.7Moz gold
» Commercial
production 1H 2020
» Open pit mining
» Underground mining
» Ore processing
» Gold smelting
» Acquired Q4 2021
»
»
»
Large-scale
development project
Fully permitted
Feasibility study
update
» Construction early
works
» Gold exploration
»
Toega feasibility study
» Community & social
programs
» Environmental
programs
» Gold exploration
» Community & social
programs
» Environmental
programs
» Progressive
rehabilitation
The Sanbrado Gold Project (‘Sanbrado’) and the Kiaka Gold Project (‘Kiaka’) are held under mining licences
and are 90%-owned by WAF, with the government of Burkina Faso owning the remaining 10%. All exploration
licences in WAF’s portfolio are 100%-owned by WAF. The Toega gold deposit (‘Toega’) is currently held under a
100%-owned exploration licence, with the application for a mining licence in progress.
Sanbrado is located in central Burkina Faso, 90 km east-southeast of the capital city of Ouagadougou. Kiaka
is located 110 km southeast of Ouagadougou and 45 km south of Sanbrado (refer to figure 7). Toega is located
within trucking distance (14 km southwest) of the Sanbrado processing plant. WAF has an approximately 2,000
km2 exploration land package over the prospective Markoyé fault region where Sanabrado, Toega, and Kiaka are
situated, as well as an exploration tenement package in the southwest of the country.
Operating
Review
Safety
The Company is pleased to report Sanbrado’s
outstanding safety performance for 2021:
»
»
There were no significant health or safety incidents
during the year (2020: nil).
The 2021 annual TRIFR (Total Recordable Injury
Frequency Rate) was 0.78 (2020: 2.6) versus Western
Australian average RWI was 7.1 in 202011.
Burkina Faso
3-year transitionary
government
Post year end, on 24 January 2022, a military group
called the Patriotic Movement for Safeguard and
Restoration, led by Lieutenant-Colonel Paul-
Henri Sandaogo Damiba, assumed control of the
government, deposed Mr Roch Marc Christian Kaboré
from his position as president of Burkina Faso, and
subsequently dissolved the parliament, government
and constitution. Shortly after these events, on 31
January, the group restored the constitution and
appointed Paul-Henri Sandaogo Damiba as
interim president.
On 1 March 2022, Interim President Damiba signed
a charter setting out the structure and objectives of a
36-month transition government which he will lead as
President of the Transition. The charter specifies the
missions of the transition government, summarised
as follows:
»
»
to fight against terrorism and restore the integrity of
the national territory;
to provide an effective and urgent response to the
humanitarian and socio-economic crisis caused by the
insecurity;
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to enact reforms to strengthen governance and fight
against corruption;
to ensure a return to a democratic government; and
to work towards national reconciliation and social
cohesion.
The charter also stipulates that the President of the
Transition and other senior members of the transition
government are not eligible for the presidential,
legislative, and municipal elections that will be held to
end the transition period.
On 25 January 2022, WAF released a statement on
the ASX that its staff and contractors were safe and
the Company’s Sanbrado Gold Operations in Burkina
Faso were continuing to operate as usual. The directors
are pleased to advise no change from that situation
and the Company’s observation is that government
bureaus continue to operate normally and no
controversial legislative changes have been proposed.
COVID-19
Continuous mining and milling operations were
maintained at Sanbrado during 2021, with
management having implemented measures to
manage COVID-19 risks for the foreseeable future.
The COVID-19 situation remained stable in Burkina
Faso during 2021 with low numbers of daily infections
in the country. The Company maintained its vigilance
in following health guidelines related to hygiene,
masks, testing, monitoring, and isolation for staff,
contractors, and site visitors.
1 Department of Mines, Industry Regulation and Safety, 2021, Safety performance in the Western Australian mineral industry — accident and injury statistics 2020-21:
Department of Mines, Industry Regulation and Safety, Western Australia. https://www.dmp.wa.gov.au/Documents/Safety/Safety%20performance%20in%20the%20
Western%20Australian%20mineral%20industry%202020-21%20-%20report.pdf
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTS
Sanbrado production statistics
A year-on-year comparison of the key production statistics for Sanbrado are shown in the following table.
Unit
Year 2021
Year 2020
OP mining
Total movement
Total movement
Strip ratio
Ore mined
Mined grade
Contained gold
UG mining
Ore mined
Mined grade
Contained gold
Processing
Ore milled
Head grade
Recovery
Gold produced
Gold poured
Gold sold
BCM ‘000
kt
w:o
kt
g/t
oz
kt
g/t
oz
kt
g/t
%
oz
oz
oz
9,426
24,138
5.9
3,518
1.9
8,909
21,415
5.1
3,494
1.3
210,132
145,803
372
9.5
119
10.0
113,259
38,232
3,155
3.0
94.5
288,719
287,619
295,215
2,616
1.7
93.4
136,476
133,534
118,093
A site layout of the Sanbrado project is shown below in figure 1.
Open pit mining
Gold ounces mined from open pit mining increased
44% from 145,803 ounces in 2020 to 210,132 ounces
in 2021, mainly due to a 43% increase in mined grade
from 1.3 to 1.9 g/t gold. Open pit mined ore tonnes of
3.5 million was consistent with the prior year. Mining
occurred at the M1 South, M1 North, M5 South and M5
North open pits during 2021. The increase in open pit
mined grade reflects a greater proportion of ore from
the higher-grade M1 deposits in 2021. Consistent
with the prior year, construction of the tailings storage
facility for the processing plant utilised waste material
from the M5 pit during 2021.
A long section through M5 is show below in figure 2.
FIGURE 2 – LONG SECTION THROUGH THE M5 PIT
Underground mining
Gold ounces mined from the M1 South underground
increased 196% from 38,232 ounces in 2020
to 113,259 ounces in 2021, with tonnes mined
increasing 213% from 119,000 to 372,000 tonnes.
The underground mined grade was relatively stable
at 9.5 g/t gold compared to 10 g/t gold in 2020. For
most of 2020, underground ore was sourced from
development headings with first underground stoping
ore mined from panel-1 in late September 2020.
Mining from panel-2 commenced in late Q2 2021,
which enabled more continuous stope production
from two ore panels for the remainder of 2021.
Some 3.2 km of development was completed in 2021
(2020: 2.6 km). At the end of 2021 the decline was
385 metres vertically below surface
(2020: 297 metres).
FIGURE 1 – SANBRADO LAYOUT
FIGURE 3 – INSTALLING MESH AT M1 SOUTH
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSCHAIRMAN’S LETTERHIGHLIGHTSOF THE YEARFINANCIALREPORTDIRECTORS ’REPORT
Processing
Gold ounces produced at Sanbrado increased 112%
from 136,476 ounces in 2020 to 288,719 ounces
in 2021. The increase reflects a 76% higher head
grade, a 21% increase in ore tonnes milled, and a
1.2% improvement in recovery. The head grade
improved from 1.7 g/t gold in 2020 to 3.0 g/t gold in
2021 mainly due to a greater proportion of ore feed
from the higher-grade M1 deposits. The quantity
of ore milled improved from 2,616,000 tonnes in
2020 to 3,155,000 tonnes in 2021, mainly due to
a shorter production period in the prior year, with
commissioning of the process plant commencing in
March of the prior year.
Photographs of the Sanbrado process plant and
accommodation camp are provided below in
figures 4 and 5.
FIGURE 4 – SANBRADO PROCESS PLANT
Growth
KIAKA AND TOEGA ACQUISITIONS
On 30 November 2021 closing occurred under
the share purchase agreements (SPAs) for WAF’s
acquisitions of:
» 90% of Kiaka from B2Gold Corp (‘B2Gold’) and their
partner, GAMS-Mining F&I Ltd (‘GAMS’), with the
remaining 10% held by the Government of Burkina
Faso; and
»
100% interest in Kiaka Gold SARL, an exploration
company incorporated in Burkina Faso that holds
the Nakomgo Exploration Permit in which the Toega
deposit is located.
Further explanation of the Kiaka and Toega acquisition
transactions are contained in the “Financial Review”
section of this report.
KIAKA GOLD PROJECT
Kiaka is a fully permitted gold mining project located
110 km southeast of the Burkina Faso capital,
Ouagadougou, and approximately 45 km south of
WAF’s Sanbrado Gold Operations. It is accessed from
Ouagadougou via 100 km of sealed road, and then by
30 km of all-weather dirt road to site.
B2Gold completed extensive unpublished feasibility
study work on Kiaka between 2015 and 2020. WAF has
commenced work programs for an updated feasibility
study and updates to the ESIA (Environmental and
Social Impact Assessment) and RAP (Relocation
Action Plan), leveraging off the in-depth work already
completed by B2Gold.
Kiaka currently contains a Mineral Resource of 6.8
million ounces of gold (refer to Resource and Reserves
Statement on pages 25 to 26). WAF’s updated
feasibility study for Kiaka is on track to be published
in June 2022 and is expected to result in a substantial
increase in the Company’s Ore Reserves.
Site work at Kiaka in 2022 will include early
construction works aimed at the upgrade of site
access roads, construction of camp facilities, and
commencement of community projects.
A schematic diagram of Kiaka’s block model is
provided below in figure 6.
FIGURE 6: KIAKA BLOCK MODEL +0.5 G/T AU GRADE SHELL
FIGURE 5 – SANBRADO ACCOMMODATION CAMP WITH PROCESS PLANT IN BACKGROUND
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
TOEGA DEPOSIT
The Toega gold deposit is located within trucking
distance (14 km southwest) of the Sanbrado gold
processing plant.
On 22 February 2022 WAF announced on the ASX that
it had completed work to report a maiden Ore Reserve
for Toega of 9.7 million tonnes at a grade of 1.9 g/t
gold for 580,000 contained ounces with a strip ratio
(waste : ore) of 5.4:1. Work completed to enable the
Ore Reserve estimate for the Toega deposit included:
»
Infill drilling program in the area identified as
economically extractable by open-pit mining
methods.
» Mineral Resource estimate completed by
independent resource consultants, International
Resource Solutions Pty Ltd (IRS). The estimate
included Mineral Resources of the Indicated category.
» Additional metallurgical test work conducted on
representative samples to confirm historic test work
results and process throughput through the Sanbrado
process plant.
» A geotechnical drilling program, test work and
evaluation were conducted to feasibility study level.
» Hydrological and hydrogeological studies.
» Updated environmental and social studies.
» Mine plan and pit design completed.
M1 GOLD DEPOSITS
Strike extensions to the north and south of the
currently defined M1 deposits are planned to be tested
in 2022 as part of the resource definition drill program.
A mineralised zone continuing under the northern
portion of the open pit will also be drilled to enable
resources estimation and evaluation for potential
mining in the future.
STRATEGIC EXPLORATION
POSITION
With the acquisition of Kiaka and Toega in 2021, WAF
has consolidated an exciting 2,000 km2 exploration
land package over the prospective Markoyé fault
region in central and southern Burkina Faso.
Sustainability
Review
In conjunction with this Annual Report, WAF has published
its inaugural 2021 Annual Sustainability Report, which was
prepared following the Global Reporting Initiative (GRI) 2021
Universal Standards for sustainability reporting. This Annual
Report presents some of the key highlights from our 2021
Annual Sustainability Report, however interested parties are
encouraged obtain a copy of our full 2021 Annual Sustainability
Report from the Company’s website.
FIGURE 7: MAP SHOWING LOCATION OF WAF’S MINERAL INTERESTS IN BURKINA FASO
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTS
Our community
SUSTAINABLE
DEVELOPMENT GOALS
In 2021, WAF invested $3.8 million in community
development initiatives, resettlement and livelihood
restoration, and community relations activities. Our
community development programs and environmental
initiatives considered and were guided by:
»
»
»
»
»
the overarching goal of creating a positive legacy in
the communities where we operate;
supporting the Sustainable Development Goals
(SDGs) that were developed as a key part of the 2030
Agenda for Sustainable Development, adopted by UN
Member States (including Burkina Faso) in 2015;
socio-economic baseline study updates of the
surrounding communities to understand the changes,
developments, and trends in the demographics,
standard of living, livelihoods and population
movements;
our own community and environmental monitoring
programs; and
the Burkina Faso National Development Plans.
Education, job creation, and health are the three key
areas where WAF has identified it can make the most
positive contribution to our local communities.
STAKEHOLDER ENGAGEMENT
Stakeholder engagement is a core part of our
business that happens daily at multiple points within
the organisation and for a multitude of reasons,
including building and maintaining relationships,
and exchanging information and opinions. WAF
is committed to an active process of engagement
with stakeholders and to building successful and
mutually beneficial relationships. WAF aims to meet
international practice and takes guidance from
the Equator Principles, the International Finance
Corporation and the International Council on Mining
and Metals in planning for and conducting stakeholder
engagement activities.
The community relations department at Sanbrado
leads WAF’s stakeholder engagement activities
and maintains a regular schedule of meetings with
government, local leaders and communities.
LIVELIHOOD RESTORATION AND
TRAINING
WAF is undertaking livelihood restoration programs
to support communities affected by the Sanbrado
mine and provide them with adequate opportunity
to restore their livelihoods to pre-project levels
or above. The programs were developed based
on extensive consultation with communities to
design programs that meet their needs and enable
sustainable development. The goal is for the programs
to transition from the development stage to ownership
and autonomous management by the beneficiary
communities within a five-year timeframe.
EDUCATION
A key focus in WAF’s social investment program is
improving the quality and accessibility of education
for the communities surrounding our project sites
and more broadly with a goal to improve rates
of literacy and numeracy. Surveys undertaken
for Sanbrado and Toega identified that school
attendance in the area is very low, with distance to
school and financial difficulties both contributing
factors. Literacy in the adult population is also low.
In 2021 construction of the third school funded by
WAF in the Boudry Commune, which encompasses
Sanbrado, was completed and we also donated
furniture and learning materials. In addition, WAF
funded the installation of solar power generation
systems at the three schools to improve the learning
environment and enable students to study at night.
Evening classes are also offered for adults who have
not previously had the chance to attend school or learn
French.
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HEALTH
WAF is supporting access to health care for local
communities. In 2021, we donated equipment to the
Centre de Santé et de Promotion Sociale (CSPS) at
Pousghin, a village close to the Sanbrado Mine. This
equipment has enabled the opening and effective
operation of the community health centre and reduced
the distance to a health centre for villages surrounding
the mine. This will enable better health outcomes for
the local population, directly benefiting 6,288 people.
Our support also included investments in local health
awareness programs, providing information to school
children and communities around malaria, HIV/AIDs,
Hepatitis B, women’s health and family planning, road
safety and COVID-19.
LOCAL EMPLOYMENT
A key way that WAF supports the local economy is
through prioritising people from local communities for
employment, both direct employment by the company
and employment by contractors. WAF directly employs
approximately 550 at Sanbrado, and Sanbrado has
a total workforce of around 1,300 people including
contractors. 90% of WAF’s Sanbrado employees are
of Burkina Faso nationality and 45% are from the local
Commune of Boudry.
As the Toega and Kiaka projects transition into
construction and operations, we anticipate further
growth in employment opportunities in the region,
as well as supporting continued employment at
Sanbrado. WAF is also committed to the training of
local workers hired for the projects. The experience
and skills gained will increase the skills base in
the local area and create a lasting benefit for local
residents improving their prospects for future
employment.
LOCAL PROCUREMENT AND
TRAINING
WAF aims to source necessary goods and services
within the local area or nationally wherever possible. In
2021, 62% of all suppliers were registered in Burkina
Faso (a total of 637 vendors) and 88.6% of total
expenditure on goods and services was spent within
Burkina Faso. WAF has supplied facilities, equipment,
and training to enable local communities to pursue
new economic activities related to the production
of goods which are increasing in demand due to the
Sanbrado project (e.g. establishing a poultry farm,
soap making, production of sample bags for the
geology department).
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
all stages. Each project is subject to a comprehensive
environmental and social impact assessment (‘ESIA’)
during the permitting process. This enables us to
avoid, minimise and mitigate negative environmental
impacts, as well as identifying opportunities to improve
environmental outcomes. In operations, environmental
management and monitoring continues throughout
the life of the project, guided by a project-specific
Environmental and Social Management Plan (ESMP)
developed in accordance with international industry
practice and standards. In addition, environmental
rehabilitation takes place on a continuous basis to
ensure that the planned post-closure outcomes for the
environment and the community are achieved.
WATER STEWARDSHIP
Water is a scarce resource for much of the year in
Burkina Faso. The bulk of the year’s rainfall falls over a
three to four month period in the wet season, outside
of which many streams and watercourses cease to
flow. Understanding the existing water environment
and the needs of other water users forms a core part of
the ESIA, providing the opportunity to maximise water
efficiency through project design, minimising water
extraction and reducing impacts on the environment
and other users. For example, all water storage
facilities were designed to minimise losses through
seepage and evaporation.
EMISSIONS
WAF is keenly aware of its corporate responsibility to
minimise greenhouse gas (‘GHG’) emissions. WAF
calculates direct (Scope 1) greenhouse gas emissions
on an annual basis for operations at Sanbrado. This
will be expanded to include Toega and Kiaka once
construction and operations commence at these sites.
Scope 1 emissions are those that occur from sources
that are controlled or owned by an organisation, and
for Sanbrado the key sources are fuel used in mining
activities and power generation. No electricity is drawn
from the national grid, as such Scope 2 emissions do
not apply. The emissions intensity per ounce of gold
produced at Sanbrado decreased from 0.56t CO2 -e/oz
in 2020 to 0.37t CO2 -e/oz in 2021.
BIODIVERSITY
Management of biodiversity features around the
Sanbrado and Toega sites is focused on protecting
rare trees, improving diversity through revegetation
of disturbed areas within the mine perimeter
and development of management strategies for
key fauna species, such as the hooded vulture. At
Sanbrado, a plant nursery has been developed and our
environmental team propagates plants for progressive
rehabilitation and revegetation of disturbed areas.
Critical Habitat Screening was conducted in 2021
at Sanbrado and in 2022 WAF aims to develop a
biodiversity strategy across our three projects.
WASTE AND TAILINGS
MANAGEMENT
WAF is committed to the responsible management
of waste. A variety of waste is created during mining
operations, with the largest by volume being tailings
and waste rock which is managed by the mining
department. While volumetrically less, significant
amounts of hazardous and non-hazardous waste are
still produced which are managed by the environment
department. All of these are managed according to
international standards to appropriately handle the
waste, minimise the amount of waste sent for
disposal and minimise the environmental impact
of waste disposal.
CYANIDE AND REAGENT
MANAGEMENT
Gold extraction requires the use of different reagents.
WAF has strict protocols for the handling and storage
of these reagents according to their chemical
properties to ensure that any hazard to human health
or the environment is minimised. Cyanide is a key
reagent in gold and silver processing. WAF uses the
international Cyanide Code as a key guideline for
managing cyanide transport, handling and storage at
Sanbrado and will apply the same at Kiaka in the future.
Our people
ENGAGEMENT
West African Resources strives to create a work
environment where people feel valued, where they are
provided with opportunities and where they feel safe.
We are pleased to report a low rate of staff turnover of
6% in 2021.
WAF operates in compliance with the labour code
of Burkina Faso and in alignment with the IFC
Performance Standards on Environmental and
Social Sustainability and the International Labour
Organisation (ILO), which require that companies
recruit without discrimination by giving equal
opportunity to all applicants and develop measures to
allow equal access to benefits for both women
and men.
DIVERSITY
In Burkina Faso, we prioritise the hiring of employees
from local communities as much as
possible. WAF recognises the value of
a gender-balanced workforce and the
positive impact female employment has
on the community. Women make up 20%
of WAF’s employee workforce and 19%
of management positions at Sanbrado.
The Sanbrado departments of health and
safety, open pit mining, commercial and
logistics, camp management, and human
resources are headed by women.
TRAINING AND
ADVANCEMENT
WAF operates a number of programs to
identify training needs and to support
employees in learning new skills and
advancing their careers. During 2021 a
total of 2,132 training sessions ranging
from 1-hour to 7-days were delivered to
employees, 17 employees participated in
the Company’s Leadership Development
Training, and 34 university students were
provided with internships.
Our
environmental
footprint
WAF is committed to responsible
environmental management through
the integration of environmental
considerations into business decisions at
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTS
Profit after tax in 2021 increased 117% over the prior
year primarily due to an increase in margin due to
the $400,409,000 increase in gold revenue versus
$161,657,000 increase in cost of sales. Cost of sales
increased over the prior year due to higher physical
quantities mined and processed at Sanbrado in
2021 compared to the prior year, whereas revenue
benefited from both the higher underground ore
tonnes processed and the higher average ore grade.
Refer to the “Operating Review” section of this report
for explanation of the year-on-year increase in physical
quantities and ore grade processed.
Finance expenses increased $32,591,000 over the
prior year due to a combination of the following
factors related to the Taurus syndicated debt facility:
1) interest expense on the debt facility was capitalised
to Sanbrado development costs during the first four
months of the prior year until commercial production
was declared for Sanbrado on 1 May 2020; 2) product
fee expenses increased in 2021 with the higher
quantity of gold ounces sold combined with the buy-
back of the Taurus product fee in November 2021;
and 3) accelerated repayments of the Taurus facility
in 2021 resulted in the difference between the actual
principal repayment amounts and the remaining
unamortised costs capitalised to the syndicated loan
liability account being expensed in the year.
Realised foreign exchange loss of $5,924,000 in 2021
resulted from exchange losses on foreign currency
denominated payments. Income tax expense of
$107,109,000 in 2021 mainly relates to Burkina Faso
corporate income taxes on SOMISA’s 2021 tax profit
at a rate of 27.5% (SOMISA is WAF’s Burkina Faso
subsidiary that owns 100% of Sanbrado).
Financial
Review
Summary
Revenue
Profit after tax
Operating cash flow
Free cash flow
Net asset/(debt) position
Gold ounces sold
Average sales price per ounce
All-in sustaining cost (‘AISC’) per ounce sold
Unit
oz
US$/oz
US$/oz
2021
$’000
2020
$’000
712,140
311,167
214,438
98,900
349,660
147,921
188,953
5,190
170,256
(131,306)
295,215
118,093
1,808
796
1,812
1,021
Revenue, earnings, and unit cost performance
Gold revenue in 2021 was $400,409,000 higher than the prior year due to a 150% increase in gold ounces sold,
from 118,093 ounces in 2020 to 295,215 ounces in 2021, partially offset by a A$218 per ounce lower average AUD
gold sales price realised in 2021. Refer to the “Operating Review” section of this report for explanation of the year-
on-year increase in gold ounces produced.
Gold revenue
Gold ounces sold
Average sales price per ounce AUD
Average sales price per ounce USD
Unit
2021
$’000
2020
$’000
A$’000
710,265
309,856
oz
295,215
118,093
A$/oz
US$/oz
2,406
1,808
2,624
1,812
Average FX rate used for USD conversion
AUD/USD
0.7513
0.6907
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTS
Cost per ounce performance
The ‘Adjusted operating cost’, ‘all-in sustaining cost’ (‘AISC’), and ‘all-in cost’ are per-ounce cost performance
metrics recommended by the World Gold Council for use in the gold mining industry, but they are not defined
by Australian Accounting Standards Board rules (i.e. they are non-AASB measures). WAF follows the World Gold
Council’s guidelines in the calculation of these metrics.
The below table presents a year-on-year comparison of these non-AASB per ounce performance metrics for the
Group including the underlying costs from which they are calculated.
Underlying measure
Gold sold
Gold revenue
OP mining cost
UG mining cost
Processing cost
Site administration cost
Change in inventory
Royalties & production taxes
Refining and by-product
Adjusted operating cost
Rehabilitation
Capital development
Sustaining capital
Sustaining leases
Corporate & share-based payments
All-in sustaining cost
Growth and development
Exploration non-sustaining
Capex non-sustaining
All-in cost
Performance metrics per gold ounce sold
Adjusted operating cost
All-in sustaining cost
All-in cost
Average sales price
Unit
oz
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$/oz
A$/oz
A$/oz
A$/oz
Year 2021
Year 2020
295,215
710,265
82,451
34,408
61,291
31,009
(3,408)
42,015
(13)
247,752
2,530
34,523
14,590
5,331
8,233
118,093
309,856
55,517
12,213
32,668
20,490
(15,350)
20,483
430
126,451
667
25,582
11,527
2,949
7,422
312,958
174,597
1,218
10,049
2,871
-
17,791
-
327,096
192,387
839
1,060
1,108
2,406
1,071
1,478
1,629
2,624
Average FX rate used for USD unit costs
AUD/USD
0.7513
0.6907
Adjusted operating cost
All-in sustaining cost (AISC)
All-in cost
Average sales price
US$/oz
US$/oz
US$/oz
US$/oz
631
796
832
1,808
740
1,021
1,125
1,812
The all-in sustaining cost per ounce (‘AISC/oz’) in AUD decreased 28% from A$1,478 in 2020 to A$1,060 in 2021
(and in USD it decreased 22% from US$1,021 in 2020 to US$796 in 2021). This year-on-year improvement in the
AISC/oz was mainly driven by a higher grade of ore mined and processed at Sanbrado in 2021 compared to the
prior year, which resulted in a 150% increase in the quantity of gold ounces sold (from 118,093 ounces in 2020
to 295,215 ounces in 2021), versus a comparatively lower 79% increase in the underlying all-in sustaining costs
from A$175 million in 2020 to A$313 million in 2021. The higher underlying all-in sustaining costs in 2021 mainly
results from increased physical quantities mined and processed in 2021 compared to the prior year. Refer to the
“Operating Review” section of this report on pages 7 to 12 for explanation of the year-on-year increase in ore
grades and physical quantities.
Reconciliation of non-AASB measures to
consolidated financial statements
A reconciliation of the ‘Adjusted operating cost per ounce’ and AISC per ounce presented in the previous section
of this report to the Group’s Consolidated Financial Statements is presented below:
Description
Cost of sales
(Less)/plus items:
Depreciation
Non-cash inventory movements
By-product credits
Adjusted operating cost
(Less)/plus items:
Reclamation & remediation (accretion & amortisation)
Corporate and technical services
Share-based payments
Capital development
Sustaining capital
Sustaining leases
Total All-in sustaining cost (AISC)
Gold sold (ounces)
Adjusted operating cost per ounce ($A/oz)
AISC per ounce (A$/oz)
Financial
Statement
reference*
2021
$’000
2020
$’000
P/L
306,805
145,148
Note 4
Note 4
N/A
N/A
P/L
P/L
(57,241)
(23,985)
(541)
(1,271)
5, 746
(458)
247,752
126,451
2,529
5,741
2,492
667
5,079
2,343
Note 10
34,523
25,582
N/A
CF
14,590
5,331
11,527
2,949
312,958
174,597
295,215
118,093
839
1,060
740
1,478
* The Financial Statement references in above table are abbreviated as follows:
• P/L = Consolidated Statement of Profit or Loss and Other Comprehensive Income
• CF = Consolidated Statement of Cash Flows
• N/A = A direct cross reference to the Financial Statements is not available. Sustaining capital excludes growth-related capital.
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Balance sheet and cash flow
The $382,141,000 increase in net assets during the year reflects a $273,534,000 increase in total assets and a
$108,607,000 decrease in total liabilities. Exploration and evaluation (E&E) assets increased by $160,200,000
mainly due to the acquisitions of Kiaka and Toega. Loans and borrowings (current and non-current) decreased by
$213,215,000 due to the repayment of the Taurus syndicated debt facility. Trade and other receivables increased
by $19,872,000 mainly due to an increase in the amount of value added tax recoverable from the Burkina Faso
government. Trade and other payables increased by $65,593,000 primarily due to the US$45 million convertible
note issued to B2Gold as part consideration for the purchase of Kiaka. Current tax payable increased by
$64,599,000 due to Burkina Faso income tax on SOMISA’s higher profit in 2021.
The net debt position improved by $301,562,000 over the year to a $170,256,000 net asset position at the end of
2021 and the Group’s free cash flow improved from $5,190,000 in the prior year to $188,953,000 in 2021.
CALCULATION OF NET ASSET (DEBT) POSITION
Cash and cash equivalents
Loans and borrowings
Net asset (debt)
CALCULATION OF FREE CASH FLOW
Net increase in cash held in the period
Add / (subtract):
Proceeds of borrowings
Repayments of borrowings
Proceeds from issue of shares
Proceeds from exercise of share options
Payments for share issue costs
Free cash flow
31 December
2021
$’000
31 December
2020
$’000
183,374
95,027
(13,118)
(226,333)
170,256
(131,306)
2021
$’000
87,141
2020
$’000
9,906
-
(37,832)
235,064
35,463
(136,250)
-
(1,042)
(2,369)
4,040
188,953
22
5,190
Acquisition of Kiaka and Toega
On 30 November 2021 closing occurred under the share purchase agreements (SPAs) for WAF’s acquisitions of:
» 90% of Kiaka from B2Gold and their partner, GAMS with the remaining 10% held by the State of Burkina Faso; and
»
100% interest in Kiaka Gold SARL, an exploration company incorporated in Burkina Faso that holds the Nakomgo
Exploration Permit on which the Toega Project is located.
The following consideration was delivered in relation to the above acquisitions:
» US$38 million cash consideration was paid (US$31.95m to B2Gold and US$6.05m to GAMS);
» US$27.5 million in WAF ordinary shares were issued (22,190,508 to B2Gold and 4,931,224 to GAMS);
» US$45 million promissory note was issued to B2Gold for payment in cash or shares at the election of B2Gold; and
» Royalty agreements were provided in respect of Kiaka comprising:
»
»
a 3% net smelter return (‘NSR’) royalty on first 2.5 million ounces of gold produced from Kiaka;
a 0.5% NSR royalty on next 1.5 million ounces of gold produced from Kiaka
» Royalty agreements on the first 1.5 million ounces of gold produced from the Nakomgo exploration permit area were
provided in respect of Toega comprising:
»
»
a 3% NSR royalty to a value of US$25 million; and
thereafter a 0.5% NSR
WAF held an Extraordinary General Meeting on 1 February 2022 at which shareholder approval was obtained for
the issue of shares to B2Gold in relation to settlement of the US$45 million promissory note.
Repayment of Taurus debt and buy-back of
Taurus product fee
During the year WAF fully repaid the Taurus syndicated debt facility and the Taurus product fee arrangement that
were part of the 2019 funding package for the construction of Sanbrado.
Debt repayment
WAF made scheduled and early debt repayments during the year against the Taurus syndicated USD debt facility
which resulted in the debt facility liability being reduced from US$175 million at the beginning of the year to nil by
31 December 2021 (refer to financial statement note 14A).
Buyback of product fee
Under the syndicated debt facility with Taurus, the Group had a separate contractual commitment to pay a fee
on ounces of gold refined from the Sanbrado Gold Project (the ‘Product Fee’). The Product Fee for each ounce
of gold refined was calculated as the spread between the LBMA quoted am fix price on the date the refined gold
is credited to the Group’s metals account and the lowest LBMA quoted gold price (am fix or pm fix) during the
preceding 8 business day period. In November 2021 WAF exercised its option to buy back the Product Fee which
reduced the ounces remaining under the product fee commitment from 1,131,907 ounces at the beginning of the
year to nil by 31 December 2021.
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Capital raisings
WAF undertook the below-described capital raisings in 2021. Funds raised were used for the acquisition of Kiaka
and Toega, repayment of the Taurus syndicated debt facility, and for general working capital purposes.
»
Tranche 1 Placement (completed in November 2021): An unconditional institutional placement of 101.0 million
ordinary shares at $1.25 per share under the Company’s 15% available Placement capacity under ASX Listing Rule 7.1
raising $126.25 million (before costs).
» Share Purchase Plan (‘SPP’) (completed in November 2021): The SPP complemented the above-noted Tranche 1
Placement. Under the SPP eligible shareholders could apply for up to $30,000 of ordinary shares at the same share
price as the Tranche 1 Placement without paying brokerage fees. 8,000,000 ordinary shares were issued under the
SPP at an issue price of $1.25 per share raising $10 million (before costs).
The Tranche 2 Placement, being a placement of 96,000 ordinary shares to Non-Executive Directors of the
Company at $1.25 per share raising $120,000, subject to shareholder approval, was completed subsequent to
year end (in February 2022) after shareholder approval was received at the 1 February 2022 Extraordinary General
Meeting of West African shareholders.
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
COMPETENT PERSONS
STATEMENT
All information on the Sanbrado Gold Project Mineral
Resources and Ore Reserves has been extracted from
the ASX announcement related by West African on 9th
March 2021 entitled “West African set for +1- years of
+200,000oz average gold production”. West African
confirms that it is not aware of any new information or
data that materially affects the information included
in the original ASX announcement and that all material
assumptions and technical parameters underpinning
the estimates in the ASX announcement continue
to apply and have not materially changed. West
African confirms that the form and context in which
the Competent Persons findings are presented have
not been materially modified from the original ASX
announcement.
Information in this report that relates to Mineral
Resources and Ore Reserves is based on information
compiled by Brian Wolfe (Mineral Resources with the
exclusion of M1 South Deeps), Niel Silvio (M1 South
Deeps Mineral Resources), Andrew Fox (M1 South
underground Ore Reserves) and Stuart Cruickshanks
(open pit Ore Reserves) who are Competent Persons.
Mr Wolfe is a specialist mineral resource consultant
employed by International Resource Solutions Pty
Ltd and a Member of the Australian Institute of
Geoscientists. Mr Silvio is a full-time employee of the
company and a Member of the Australian Institute of
Mining and Metallurgy. Mr Fox is a specialist mining
consultant employed by Kenmore Mine Consulting
Pty Ltd and a Member of the Australian Institute of
Mining and Metallurgy. Mr Cruickshanks is a full-
time employee of the company and a Fellow of the
Australian Institute of Mining and Metallurgy.
ORE RESERVES
The below two tables provide a year-on-year comparison of WAF Ore Reserves, showing a 13% increase to 1.7 million
ounces of gold.
31 December 2021
Ore Reserve by Deposit
Proved
Probable
Proved + Probable
Deposit
Tonnes
t
Grade
g/t
Contained Au
oz
Tonnes
Grade
g/t
Contained Au
oz
Tonnes
Grade
g/t
Contained Au
oz
M1 South UG
1,000,000
8.5
290,000
1,100,000
5.9
200,000
2,100,000
M1 South
M1 North
M5
M3
Toega
50,000
53,000
2,500,000
140,000
ROM Stockpile
1,700,000
Total*
5,600,000
5.1
1.9
1.3
1.2
1.0
2.6
9,000
0
0.0
0
50,000
3,000
320,000
100,000
10,000,000
5,300
30,000
9,700,000
2.1
1.4
1.1
1.9
56,000
21,000
370,000
420,000
12,000,000
1,000
170,000
580,000
9,700,000
1,700,000
460,000
21,000,000
1.9
1,200,000
26,000,000
7.1
5.1
2.0
1.4
1.2
1.9
1.0
2.0
490,000
10,000
24,000
530,000
6,300
580,000
56,000
1,700,000
31 December 2020
Ore Reserve by Deposit
Proved
Probable
Proved + Probable
Deposit
Tonnes
t
Grade
g/t
Contained Au
oz
Tonnes
Grade
g/t
Contained Au
oz
Tonnes
Grade
g/t
Contained Au
oz
M1 South UG
460,000
M1 South
M1 North
M5
M3
250,000
69,000
81,000
ROM Stockpile
1,000,000
Total*
1,900,000
8.6
2.9
1.6
1.6
1.2
3.3
130,000
1,600,000
23,000
400,000
4,000
430,000
4,000
15,000,000
150,000
38,000
9.2
7.3
2.3
1.4
1.7
480,000
2,100,000
94,000
650,000
31,000
500,000
670,000
15,000,000
8,000
150,000
1,000,000
9.1
5.6
2.2
1.4
1.7
1.2
610,000
120,000
35,000
670,000
8,000
38,000
200,000
18,000,000
2.2
1,300,000
20,000,000
2.3
1,500,000
* Due to rounding the totals in the above two tables may not precisely add up to, and ounces may not precisely calculate to, the amounts provided.
The changes to the Ore Reserve from December 2020 to December 2021 are comprised of:
inclusion of the Toega Ore Reserve of 580,000 oz;
open-pit mining depletion of 210,000 oz;
underground mining depletion of 113,000 oz;
stockpile balance increased by 18,000 oz from 2020 closing stocks; and
optimisation and redesign of the M5 final pit decreased Ore Reserves by 53,500 oz.
»
»
»
»
»
26
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27
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
ROD LEONARD
BSc and MSc (Metallurgical Engineering), MAusIMM, MSME, GAICD
Lead Independent Director and Non-Executive Director
Rod Leonard is one of the founding Directors of Lycopodium (ASX: LYL)
and served as an Executive Director of Lycopodium Limited from 2004
to 2019. He has more than 30 years’ experience in the operation and
project development of major projects in North and South America, Africa,
Asia and Australia. He has been involved in many aspects of the mineral
processing industry from process development, feasibility studies, and
design assignments as well as commissioning of projects.
Mr Leonard joined the Board on 6 September 2019 and was appointed as
Lead Independent Director on 2 February 2021.
Committee memberships: Remuneration, Technical and Audit
Other ASX listed directorship: Lycopodium Limited
Previous ASX listed directorship in the last 3 years: Nil
ELIZABETH (LIBBY) MOUNSEY
BBus (Human Resources and Industrial Relations), MAICD
Non-Executive Director
Libby Mounsey has over 30 years’ experience in human resources and
industrial relations across the mining, construction, health, fisheries, and
aviation industries. Over the last 15 years she has held senior positions with
resource companies in various stages of development through feasibility,
construction and operations. She holds a Bachelor of Business (Human
Resources & Industrial Relations) from Edith Cowan University and is a
Member of the Australian Institute of Company Directors.
Ms Mounsey joined the Board on 29 May 2020.
Committee memberships: Remuneration (Chair)
Other ASX listed directorship: Nil
Previous ASX listed directorship in the last 3 years: Nil
Directors and
Company Secretary
The names of Directors who held office during or since the end of the year and until
the date of this report are as follows. Directors were in office for this entire period
unless otherwise stated.
RICHARD HYDE
BSc (Geology and Geophysics), MAusIMM, MAIG
Executive Chairman and Chief Executive Officer
Richard Hyde is a geologist with over 25 years’ experience in the mining
industry and more than 19 years of experience in West Africa. He has
managed large exploration and development projects for gold and base
metals in Australia, Africa and Eastern Europe. He led the Company
from incorporation in 2006, IPO in 2010, and through the discovery,
development, and operation of the Sanbrado Gold Project.
Mr Hyde is a founding shareholder and commenced as a Director in 2006.
Committee memberships: Technical
Other ASX listed directorship: Nil
Previous ASX listed directorship in the last 3 years: Nil
LYNDON HOPKINS
BSc (Geology), MAusIMM, MAIG
Executive Director and Chief Operating Officer
Lyndon Hopkins is a geologist with more than 30 years’ experience in
gold exploration, development and production in Australia and Africa. He
was Chief Operating Officer of Equigold NL’s Ivory Coast operations and
managed the in-country aspects of the project development and feasibility
study for the Bonikro Gold Mine. He was also Mine Manager for the
construction of Regis Resources Ltd’s Rosemont Gold Mine.
Mr Hopkins has been West African’s Chief Operating Officer since 2015
and commenced as a Director on 6 September 2019.
Committee memberships: Technical
Other ASX listed directorship: Nil
Previous ASX listed directorship in the last 3 years: Nil
28
29
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSCHAIRMAN’S LETTERHIGHLIGHTSOF THE YEARFINANCIALREPORTDIRECTORS ’REPORTWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021 NIGEL SPICER
BSc (Mining), CEng, MAusIMM
Non-Executive Director
Nigel Spicer is a Mining Engineer with more than 40 years’ experience in
mining and has held operational and executive management positions
with mining companies in Africa, UK, Australia, Indonesia, PNG, Brazil and
Philippines. He has extensive open pit and underground (narrow vein
and bulk tonnage) mining experience across a range of commodities,
including gold and copper. He has significant experience managing both
owner and contract mining fleets and has been involved in the successful
commissioning of a number of gold mines in Australia and Africa.
Mr Spicer joined the Board on 6 September 2019.
Committee memberships: Audit, Technical (Chair)
Other ASX listed directorship: Nil
Previous ASX listed directorship in the last 3 years: Nil
STEWART FINDLAY
BCom (Accounting and Finance), MAICD
Non-Executive Director
Stewart Findlay has over 25 years’ financial markets experience and has
provided project finance (senior secured debt and corporate facilities),
equity investments, commodity hedging arrangements and corporate
advice to a large number of resource companies. He has held senior
positions in the metals and mining divisions of Macquarie Bank and
National Australia Bank. He holds a Bachelor of Commerce (Accounting &
Finance) from the University of New South Wales and is a Member of the
Australian Institute of Company Directors.
Mr Findlay joined the Board on 29 May 2020.
Committee memberships: Audit (Chair), Remuneration
Other ASX listed directorship: Nil
Previous ASX listed directorship in the last 3 years: Nil
Company Secretary
PADRAIG O’DONOGHUE
Chief Financial Officer since June 2018 and Company Secretary
since May 2020
Principal activities
During the year, the principal activities of the Group
were comprised of:
»
operation of the Sanbrado Gold Project (‘Sanbrado’);
» work activities to advance the feasibility study of the
Toega gold deposit (‘Toega’); and
» mineral exploration on the Group’s exploration
tenements located in Burkina Faso.
Dividends
No dividends have been paid or declared since the
start of the year and the Directors do not recommend
the payment of a dividend in respect of the year.
Significant changes in
the state of affairs
The following significant changes in the state of affairs
of the Group occurred in the year:
» Acquisitions of the Kiaka Gold Project and the Toega
Gold Deposit were completed which improve the
future growth prospects of the Group; and
»
The Syndicated Debt Facility with Taurus Mining
Finance was fully repaid, which substantially de-
leveraged the Group’s balance sheet.
Significant events after
balance sheet date
As explained in the “Operations Review” section of
this report, on 24 January 2022 a military group led
by Lieutenant-Colonel Paul-Henri Sandaogo Damiba,
assumed control of the Burkina Faso government
and on 1 March 2022 established a transitionary
government with a signed charter committing to
return to a democratically elected government
within three years in which senior members of the
transitionary government are ineligible to be elected.
The Directors are pleased to advise that the Group’s
Sanbrado Gold Operations in Burkina Faso are
continuing to operate as usual, and the Company’s
observation is that the government bureaus are
continuing to function, and no controversial legislative
changes have been proposed.
Aside from the above event, there has not arisen in
the interval between the end of the reporting period
and the date of this report, any item, transaction or
event of a material and unusual nature likely, in the
opinion of the Directors of the Company, to affect
substantially the operations of the Group, the results of
those operations or the state of affairs of the Group in
subsequent financial years.
Likely developments
and expected results
In the opinion of the Directors, likely developments in
and expected results of the operations of the Group
have been disclosed in the “Operating Review”,
“Financial Review” and “Significant Events After
Balance Sheet Date” sections of this Annual Report.
Disclosure of any further information regarding likely
developments in the operations of the Group in future
years and the expected results of those operations is
likely to result in unreasonable prejudice to
the Company.
30
31
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSCHAIRMAN’S LETTERHIGHLIGHTSOF THE YEARFINANCIALREPORTDIRECTORS ’REPORTWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021 Share options and performance rights
At the date of this report the unissued ordinary shares of the Company under option are:
Issue date
Exercise price
Expiry date
Number issued
Options
28-Dec-18
20-Jan-20
11-Jun-20
Performance Rights*
20-Jan-20
20-Jan-20
11-Jun-20
11-Jun-20
8-Jul-20
8-Dec-20
17-Dec-20
17-Dec-20
22-Jan-21
22-Jan-21
9-Apr-21
9-Apr-21
9-Apr-21
20-May-21
20-May-21
20-May-21
11-Jun-21
10-Feb-22
$0.4300
$0.6061
$0.6061
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
Total options and performance rights on issue
* Performance rights are granted subject to various performance hurdles.
28-Dec-22
20-Jan-24
11-Jun-24
20-Jan-23
20-Jan-25
11-Jun-23
11-Jun-25
8-Jul-23
8-Dec-24
17-Dec-22
17-Dec-24
22-Jan-23
22-Jan-24
9-Apr-24
9-Apr-26
9-Apr-25
20-May-24
20-May-26
20-May-25
11-Jun-24
10-Feb-24
1,223,828
131,578
657,894
2,013,300
315,866
131,578
867,041
657,894
176,951
2,995,000
28,586
2,500,000
44,554
82,942
174,478
69,306
69,306
626,496
402,103
402,102
10,148
89,092
9,643,443
11,656,743
Non-audit services
The Group may decide to employ the external auditor, HLB Mann Judd, on assignments additional to their
statutory audit duties where the auditor’s expertise and experience with the Group are important. Fees that were
paid or payable for non-audit services provided by the auditor of the parent entity during the year are outlined
in note 25 of the accompanying financial statements. The Directors are satisfied that the provision of non-audit
services during the year by the auditor are compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The Directors are of the opinion that the services as disclosed in the
financial statements do not compromise the external auditor’s independence requirements of the Corporations
Act 2001 for the following reasons:
»
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
» none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.
Directors’ meetings
The number of Directors’ meetings held during the year and the number of meetings attended by each director
were as follows:
Directors’
Meetings
Audit Committee
Meetings
Remuneration
Committee
Meetings
Technical
Committee
Meetings
A
6
6
6
6
6
6
B
6
6
6
6
6
6
A
-
-
3
3
3
-
B
-
-
3
3
3
-
A
-
-
2
-
2
2
B
-
-
2
-
2
2
A
4
4
4
4
-
-
B
4
4
4
4
-
-
Director
Richard Hyde
Lyndon Hopkins
Rod Leonard
Nigel Spicer
Stewart Findlay
Libby Mounsey
A – the number of meetings held whilst a Director or a committee member
B – the number of meetings the Director or committee member attended
Rounding of amounts
The Company is of a kind referred to in “ASIC Corporations (Rounding in Financial/Directors’ Report) Instrument
2016/191”, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of
amounts in the Directors’ Report and accompanying financial statements. Amounts in the Directors’ Report and
accompanying financial statements have been rounded off in accordance with that Rounding Instrument to the
nearest thousand dollars, or in certain noted cases, to the nearest dollar. All amounts are in Australian dollars,
unless otherwise stated.
32
33
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSCHAIRMAN’S LETTERHIGHLIGHTSOF THE YEARFINANCIALREPORTDIRECTORS ’REPORTWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021 Remuneration Report
(Audited)
The Directors of West African Resources Limited present the Remuneration
Report for the Group for the year ended 31 December 2021. This Remuneration
Report forms part of the Directors’ Report and has been prepared in
accordance with the Corporations Act 2001.
1. Remuneration report overview
This Remuneration Report details the remuneration arrangements for West African’s Key Management Personnel
(‘KMP’), being:
»
»
the Non-Executive Directors (‘NEDs’); and
the Executive Directors and the other senior executives with authority for planning, directing and controlling the
major activities of the Group (together the ‘Executives’).
2. Group performance and its link
to shareholder returns
The following table provides the earnings per share, dividends per share, net profit (loss) and share price of West
African Resources at 31 December 2021 compared to the 4 previous reporting periods.
Period ending
December
2021
December
2020
December
2019
December
2018
June
2018
Reporting period length
12 months
12 months
12 months
6 months
12 months
EPS (cents)
20.9
Dividends (cents per share)
Nil
10.2
Nil
(0.5)
Nil
(0.5)
Nil
(4.3)
Nil
Net profit / loss ($’000)
214,438
98,900
(4,334)
(3,551)
(25,300)
Share price ($)
1.320
1.050
0.430
0.250
0.380
3. Remuneration governance
A. REMUNERATION COMMITTEE RESPONSIBILITY
The Remuneration Committee is a subcommittee of the Board. It is primarily responsible for making
recommendations to the Board on:
» Executive remuneration, including the executive incentive scheme framework and associated policies, targets, and
awards;
The KMP during the year are set out below:
» matters related to Executive and Non-Executive Director (‘NED’) recruitment, retention, performance measurement
Name
Position
Appointed
Resigned
and termination; and
» NED remuneration.
Non-Executive Directors
Nigel Spicer
Rod Leonard
Non-Executive Director
September 2019
Non-Executive Director
Lead Independent Director
September 2019
February 2021
Stewart Findlay
Non-Executive Director
Libby Mounsey
Non-Executive Director
May 2020
May 2020
Executive Directors
Richard Hyde
Lyndon Hopkins
Senior Executives
Padraig O’Donoghue
Executive Chairman and
Chief Executive Officer
Executive Director and
Chief Operating Officer
September 2006
September 2019
Chief Financial Officer and
Company Secretary
June 2018
May 2020
-
-
-
-
-
-
-
-
Matthew Wilcox
Chief Development Officer
September 2018
January 2021
The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of
Executives and NEDs by reference to relevant employment market conditions in comparative peer companies
both locally and internationally with the overall objective of maximising stakeholder benefit from the retention
and incentivisation of a high performing Board and Executive team. Further information on the duties and
responsibilities of the Remuneration Committee is contained in the Remuneration Committee Charter which is
available on the Company’s website.
B. USE OF REMUNERATION ADVISORS
External remuneration consultants may be engaged directly by the Board or the Remuneration Committee to
provide information or advice. Where a remuneration recommendation is made relating to Board, Executive and
KMP, the advice will be provided directly to an Independent Non-Executive Director and shall be free of influence
from management.
In 2021 there was no engagement with remuneration specialists for advice relating to Board, Executive or KMP
remuneration, and therefore, no fees were paid to remuneration consultants during this period.
In 2018 the Remuneration Committee engaged BDO Remuneration and Reward Pty Ltd (‘BDO’) to review and
provide recommendations on the design of the Group’s overall executive remuneration and incentive framework
and policies. BDO was consulted again by the Remuneration Committee in 2020 to advise on the overall executive
incentive framework and a special remuneration initiative by the Company to address identified retention risks of
Executives and other key senior employees related to mining industry employment market conditions, COVID-
19-related travel restriction, and the transition of Sanbrado from construction phase to operations phase. BDO’s
recommendations were provided to the Remuneration Committee as an input into decision making and were used
to assist the Committee and the Board in setting out remuneration packages suitable for the Company.
34
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSCHAIRMAN’S LETTERHIGHLIGHTSOF THE YEARFINANCIALREPORTDIRECTORS ’REPORTWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021 C. EXECUTIVE REMUNERATION POLICY
In determining executive remuneration, the Board aims to ensure that remuneration practices are:
»
»
»
»
competitive and reasonable, enabling the Company to attract and retain high calibre talent;
aligned to the Company’s performance, strategic and business objectives and the creation of shareholder value;
transparent and easily understood; and
acceptable to shareholders.
The Company’s approach to remuneration ensures that remuneration is competitive, performance focused, clearly
links appropriate reward with desired business performance, and is simple to administer and understand by
Executives and shareholders.
In line with the remuneration policy, remuneration levels are reviewed annually to ensure alignment to the market
and the Company’s stated objectives.
D. REMUNERATION FRAMEWORK
The following executive remuneration framework was recommended by the Remuneration Committee and
adopted by the Board in 2018.
Type
Category
Definition of category
Purpose summary
Fixed remuneration
Total fixed
remuneration
At-risk remuneration
Short term incentive
At-risk remuneration
Long term incentive
Pay which is linked to the
present value and market
rate of the role.
Pay for delivering the plan
and growth agenda for WAF
which must create value
for shareholders. Incentive
pay will be linked to the
achievement of ‘line-of-
sight’ performance goals.
It reflects ‘pay for
performance’.
Pay for creating value for
shareholders. Reward pay is
linked to shareholder returns.
It reflects ‘pay for results’.
Pay for fulfilling the
requirements of the role.
Incentive for the
achievement of annual
objectives and sustained
business value.
Incentive for performance
over the long term.
An important governance and legal component of the remuneration framework is the Company’s Incentive Option
& Performance Rights Plan (‘Plan’). All equity incentives issued to Executives and other employees, including
options and Performance Rights, are issued by the Company under the terms and conditions of the Plan. The Plan
was most recently approved by shareholders at the Company’s Annual General Meeting on 14 May 2021. The
purpose of the Plan is to:
a. assist in the reward, retention and motivation of participants;
b.
link the reward of participants to performance and the creation of shareholder value;
c. align the interests of participants more closely with the interests of shareholders; and
d. provide greater incentive for participants to focus on the Company’s longer-term goals.
E. FIXED REMUNERATION
Total fixed remuneration (‘TFR’) consists of the base salary, superannuation, and other non-monetary benefits
such as employee leave. TFR is intended to compensate the Executives for:
» Competently and professionally fulfilling the scope of the Executive’s roles and responsibilities; and
»
the Executive’s skills, experience, and qualifications.
F. AT-RISK REMUNERATION
In order to ensure that executive remuneration is aligned to Company performance, a portion of Executives’
remuneration is placed “at risk”. The STI and LTI categories comprise the at-risk component of Executive
remuneration.
Short-term incentive (‘STI’):
»
The primary purpose of the STI is to incentivise Executives to achieve the annual STI performance targets set by the
Board at the beginning of the year. The STI performance targets clearly set out the annual performance targets the
Board requires from management and achievement of the targets is determined by the Board at the end of the year.
»
»
The STI also enables the Executives to accumulate equity in the business which provides alignment with the
shareholders for sustained strong business results.
The STI also provides an employee-retention benefit to the Company from the STI equity incentive, which contains a
vesting condition that requires a period of continuous service before the STI equity awards vest. This service condition
is typically two years.
Long-term Incentive (‘LTI’):
»
The LTI is designed to incentivise Executives in the creation of long-term shareholder value as evidenced by market
and non-market measures, by rewarding the Executives for the achievement of long-term performance targets set
by the board at the beginning of the long-term performance period. The long-term targets are set out by the Board to
provide clear and measurable direction as to what the Board and shareholders require from management by the end
of the long-term performance period, which is typically a minimum of 3 years.
»
»
The LTI also enables the Executives to accumulate equity in the business which provides alignment with the
shareholders for sustained strong business results.
The LTI also provides an employee-retention benefit to the Company from the LTI equity incentive, which contains a
vesting condition that requires the Executive to remain in continuous service to the Company until the LTI equity
awards vest.
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSCHAIRMAN’S LETTERHIGHLIGHTSOF THE YEARFINANCIALREPORTDIRECTORS ’REPORT 4. Non-Executive Director remuneration
West African Resources Limited’s NED fee policy is designed to attract and retain high calibre Directors who can
discharge the roles and responsibilities required in terms of good governance, strong oversight, independence
and objectivity.
The Company’s constitution and the ASX listing rules specify that the NED fee pool limit shall be approved
periodically by shareholders. The last determination at an AGM was an aggregate fee pool of $900,000 per year to
ensure the Company can continue to attract and retain a high-performing Board of Directors with the appropriate
overall skillset and composition.
During the year the annual fee levels paid to NEDs were increased as follows:
Annual fee level
Title
Before change
After change
Date of change
Lead Independent Director*
Not applicable
$112,500
1 February 2021
Other NEDs
$75,000
$90,000
1 April 2021
* The Lead Independent Director is a new WAF board position that commenced on 1 February 2021.
NED remuneration consists solely of their director fees. There is no scheme to provide retirement benefits to NEDs
other than statutory superannuation. Aside from being offered the option of receiving 30% of their director fees in
the form of Performance Rights, NEDs do not participate in any performance related incentive programs.
Whilst WAF has no minimum shareholding policy for NEDs, the Board is of the view that it is beneficial for NEDs
to hold an equity interest because it is an alignment with the Company’s shareholders. The NED fee structure for
2021 was either one of the following, at the election of each individual NED:
i) 100% of NED fees, paid in cash; or
ii) 70% of NED fees paid in cash and 30% paid in Performance Rights (30% equity component).
The 30% equity component of the structure has been approved, in respect of each participating Director, at a
General Meeting of Shareholders of the Company. All of the Company’s NEDs elected to participate in the 30%
equity component in respect of their 2021 NED fees.
During 2021, the NED fees covered all activities associated with the Directors’ role on the Board and no additional
fees were paid to NEDs for being a chairperson or member of a committee.
NEDs are entitled to be paid, as the Board determines, for additional services provided to the Group outside of
their Director responsibilities. They may also be reimbursed for out-of-pocket expenses they incur as a result of
their directorships.
5. Executive remuneration
A. EXECUTIVE REMUNERATION STRUCTURE
The remuneration framework provides for total remuneration for each Executive to be split between the fixed and
at-risk components in the following portions:
Executive
Executive Chairman & CEO
Chief Operating Officer
Other Executives
Fixed
remuneration
At-risk
remuneration
(STI and LTI)
42%
45%
50%
58%
55%
50%
The ‘at-risk’ apportionment for each Executive is comprised as follows, which shows a significant weighting
towards the long-term (LTI) component. In the Board’s view this provides a balance of Executive incentivisation
that aligns with shareholders for both short-term results and long-term sustainable returns.
Executive
Executive Chairman & CEO
Chief Operating Officer
Other Executives
STI
cash
incentive
STI
equity
incentive
LTI
equity
incentive
14%
17%
20%
25%
25%
40%
61%
58%
40%
The proportions in the above tables are used as a guide by the Remuneration Committee to recommend to the
Board the maximum of each component of at-risk remuneration that can be earned by the Executives each year.
The equity incentives are awarded by the Board early in the year, with the number awarded calculated based on the
7-day VWAP of WAF shares at the beginning of the incentive performance period. The number of equity incentives
that will ultimately vest and be available to be exercised by the Executives is determined by the Board based on
the assessment and achievement of the vesting conditions set out when the equity incentives were awarded. The
vesting conditions of the equity awards represent both market and non-market performance targets that the
Board needs management to achieve in order to earn that portion of their at-risk remuneration.
The equity incentives also provide an employee-retention benefit to the Company, in addition to the performance
target incentives. For example, the STI equity incentives include a 2-year continuous service vesting condition and
the LTI equity incentives include a condition that the incentive will lapse if the Executive’s employment terminates
before the board determines that the performance hurdle vesting conditions have been satisfied.
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSCHAIRMAN’S LETTERHIGHLIGHTSOF THE YEARFINANCIALREPORTDIRECTORS ’REPORT
B. EXECUTIVE SERVICE AGREEMENTS
The terms and conditions of employment of Executives are set out in their Executives’ Service Agreements
(‘ESAs’). A summary of Executive’s ESAs is shown in the following table.
Executive
Salary change^ Contract term
Company
notice-period
Employee
notice-period
Termination
benefit*
Richard Hyde
Increased from
$585,000 to
$587,671
Until
terminated by
either party
6-months’
notice
3-months’
notice
Nil termination
benefit
Lyndon Hopkins
Padraig
O’Donoghue
Increased from
$450,000 to
$452,055
Increased from
$350,000 to
$351,598
Same as above
Same as above
Same as above
Same as above
Same as above
Same as above
Same as above
Same as above
^ Amount shown includes annual salary plus superannuation. The Executives’ salary change fully relates to the Australian statutory superannuation rate increase from
9.5% to 10% on 1 July 2021.
* Termination benefits shown assume that termination was not due to a change of control of the Company. Shareholder approval was obtained at the 31 May 2020
Annual General Meeting for purposes of sections 200B and 200E of the Corporations Act in relation to termination benefits each individual Executive may become
entitled to if their employment under the ESA is terminated.
C. AT-RISK REMUNERATION
At the beginning of 2021 the Board set out STI and LTI performance targets for Executives to earn their at-risk
remuneration.
The following table summarises the Executives’ 2021 STI targets and their level of achievement as determined by
the Board at the end of the year. These targets were the same for all of the Executives and the same targets applied
to both the cash incentive portion of the STI and the equity incentive portions (as set out in section 4A of
this report).
STI Target
Weighting
Level of
achievement
At least 210,000 ounces of gold is produced from
Sanbrado in 2021
2021 production guidance is achieved, being 250,000 to
280,000 ounces of gold
2021 cost guidance is achieved, being AISC of US$720 to
US$800 per ounce
There are no significant social or environmental incidents
recorded
The Sanbrado 12-month rolling TRIFR is below the gold
industry standard for Western Australia
Weighted average level of achievement
Gateway hurdle which
determines if any STI will be
paid for 2021
Gateway
achieved
40%
20%
20%
20%
100%
100%
100%
100%
100%
For 2021 the Executives earned 100% of the cash portion of their 2021 STI. The 2021 STI equity incentive portion
was comprised of Performance Rights with an expiry period of 3 years and an additional vesting condition that
the Executive must remain an employee of the Company for two years from the date the Performance Rights were
issued. Subject to Executives satisfying this 2-year service period, the Board has determined that 100% of their
2021 STI Performance Rights will vest.
The following table sets out the vesting conditions of the 2021 LTI equity instruments issued to Executives at the
beginning of 2021 along with their proportion of each Executive’s overall 2021 equity LTI and end-of-year
vesting status.
LTI equity
instrument
Proportion of
2021 equity LTI
Vesting conditions
Vesting status
2021 Production LTI
Performance Rights
(expire 5 years
from issue date)
At least 600,000 ounces of gold is poured
within the 3-year period from 1 January
2021 to 31 December 2023.
50%
Unvested
L
E
T
T
E
R
I
C
H
A
R
M
A
N
S
’
O
F
T
H
E
Y
E
A
R
I
H
G
H
L
I
G
H
T
S
R
E
P
O
R
T
I
D
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
A
L
I
The proportion of Performance Rights that
vest will be determined by the board based
on the average annual total shareholder
return (‘TSR’) over the three-year
performance period (1 January 2021 to 31
December 2023). TSR will be measured by
the difference in the WAF share price from
the 7-day VWAP prior to, and at the end of,
the performance period:
The Board will make its determination based
on the following guidelines:
TSR
0% to 5%
Vesting
proportion
nil to 33%
5% to 10%
33% to 100%
25%
> 10%
100%
Unvested
The proportion of Performance Rights that
vest will be determined by the board based
on replacement of Ore Reserves1 due to
depletion over the three-year period from 1
January 2021 to 31 December 2023 using
the following guidelines:
Ore Reserve
change
Ore reserve is
depleted
Ore reserve is
maintained
Vesting proportion
nil
50%
Ore reserve is
maintained or
grown up to 20%
50% to 100%
(straight line
basis)
25%
Unvested
2021 Shareholder
Return LTI
Performance Rights
(expire 4 years
from issue date)
2021 Reserve
Replacement LTI
Performance Rights
(expire 4 years
from issue date)
The 2021 STI and LTI equity awards issued to the Executive Directors were approved by shareholders at the
Company’s 14 May 2021 Annual General Meeting and additional details of these awards are contained in the
notice of meeting.
1 Refer to ASX announcement of 9 March 2021: “WAF Resource, Reserve and production guidance update 2021”
40
41
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTS
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Options granted during the year as remuneration to KMP
There were no options granted to KMP in 2021.
Performance Rights granted during the year as remuneration to KMP
Type
Number granted
Value each
Total value
44,554
$0.7950
$35,420
Grant date
22-Jan-21
22-Jan-21
22-Jan-21
9-Apr-21
9-Apr-21
9-Apr-21
20-May-21
20-May-21
20-May-21
Total
21-Jan-21
23-Feb-21
2-Jul-21
9-Jul-21
9-Aug-21
16-Sep-21
Total
Other B
Other B
Other A
STI
LTI
LTI
STI
LTI
LTI
44,554
82,942
138,613
103,959
34,653
589,368
603,154
201,051
1,842,848
$1.0200
$0.9750
$0.9650
$0.9650
$0.5000
$1.0350
$1.0350
$0.6300
$45,445
$80,868
$133,762
$100,320
$17,327
$609,996
$624,264
126,662
$1,774,064
Value each on
exercise date
$0.9750
$0.8250
$1.0100
$1.1100
$1.0450
777,308
1,733,681
23,923
68,911
68,911
-
-
-
-
-
-
500,000
$1.0100
2,672,734
500,000
Other A = in lieu of STI cash incentives
Other B = in lieu of 30% of Directors’ fees
Options and Performance Rights exercised during the year by KMP
Exercise date
Rights No. of options
No. of
Performance
Options and Performance Rights forfeited / lapsed during the year by KMP
Lapse date
31-Jan-21
Total
No. of
Performance
Rights
828,419
828,419
No. of options
Financial year in which the options/
performance rights were granted
-
-
2020
.
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45
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSCHAIRMAN’S LETTERHIGHLIGHTSOF THE YEARFINANCIALREPORTDIRECTORS ’REPORTWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
Share holdings of KMP
Balance
1 Jan 2021
Issued as
remuneration
Issued on
exercise
of options/
performance
rights
Net change
other
Balance
31 Dec 2021
Directors
Richard Hyde
18,280,769
Lyndon Hopkins
3,500,000
Rod Leonard
Nigel Spicer
Stewart Findlay
-
-
-
Libby Mounsey
16,000
Executives
Padraig O’Donoghue
-
Matthew Wilcox*
581,395
Total
22,378,164
* Balance for Mr Wilcox is as at his last day of employment on 31 January 2021.
-
-
-
-
-
-
-
-
-
1,072,664
(1,000,000)
18,353,433
661,017
(375,000)
3,786,017
68,911
68,911
-
-
-
-
68,911
68,911
-
23,923
24,000
63,923
798,840
24,000
822,840
478,468
-
1,059,863
3,172,734
(1,327,000)
24,223,898
8. Loans to KMP
There were no loans to KMP during the year.
END OF AUDITED REMUNERATION REPORT.
Auditor independence
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the Directors of the
Company with an Independence Declaration in relation to the audit of the financial report. This written Auditor’s
Independence Declaration is set out on page 91 and forms part of this Directors’ Report.
Signed in accordance with a resolution of the Directors.
L
E
T
T
E
R
I
C
H
A
R
M
A
N
S
’
Richard Hyde
Executive Chairman & CEO
Perth, 30 March 2022
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46
47
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021CONTENTSWEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
Contents
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement of
Changes In Equity
Consolidated Statement of Cash Flows
49
50
51
52
Notes to the Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
ASX Additional Information
Summary of Tenements
53
90
91
92
97
99
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 31 December 2021
Revenue from continuing operations
Cost of sales
Exploration and evaluation expenses
Corporate and technical services
Growth and development
Share-based payments
Other expenses
Finance expenses
Forex realised loss
Forex unrealised gain (loss)
Profit before tax
Income tax expense
Profit after tax
OTHER COMPREHENSIVE INCOME:
Items that may be reclassified subsequently to profit
or loss:
Foreign currency translation differences for foreign
operations
Other comprehensive loss, net of income tax
Total comprehensive profit for the year
Profit attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive profit attributable to:
Owners of the parent
Non-controlling interest
Basic profit per share (cents per share)
Diluted profit per share (cents per share)
Note
3
4(a)
4(b)
5
23
23
6
6
2021
$'000
712,140
(306,805)
(2,284)
(5,741)
(1,218)
(2,492)
(6,176)
(58,730)
(5,924)
(1,223)
321,547
(107,109)
214,438
(2,265)
(2,265)
212,173
188,964
25,474
214,438
186,699
25,474
212,173
20.9
20.7
2020
$'000
311,167
(145,148)
(2,517)
(5,079)
-
(2,343)
(2,769)
(26,139)
(806)
15,002
141,368
(42,468)
98,900
(5,553)
(5,553)
93,347
89,362
9,538
98,900
83,809
9,538
93,347
10.2
10.1
48
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
West African Resources Limited|39
49
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
Consolidated Statement of Financial Position
As at 31 December 2021
Note
7
8
9
10
11
12
13
14
15
14
15
16
17
18
19
CURRENT ASSETS
Cash and cash equivalents
Restricted cash
Trade and other receivables
Inventories
Financial assets
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
Exploration and evaluation assets
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Deferred revenue
Loans and borrowings
Lease liabilities
Current tax payable
Total current liabilities
NON-CURRENT LIABILITIES
Loans and borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Equity attributable to owners of the parent
Non-controlling interest
TOTAL EQUITY
2021
$'000
183,374
1,626
42,507
58,977
39
286,523
329,556
12,713
175,455
517,724
804,247
106,072
-
214
5,591
85,418
197,295
12,904
7,096
12,579
19,967
52,546
249,841
554,406
335,334
4,173
185,540
525,047
29,359
554,406
2020
$'000
95,027
-
22,635
51,950
39
169,651
329,587
16,220
15,255
361,062
530,713
40,479
23,957
132,664
4,581
20,819
222,500
93,669
11,225
9,406
21,648
135,948
358,448
172,265
165,263
3,851
(3,885)
165,229
7,036
172,265
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
West African Resources Limited|39
50
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51
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Income tax paid
Interest received
Interest paid
Other income
Net cash inflow from operating activities
INVESTING ACTIVITIES
Payments for property, plant and equipment
Capitalised exploration and evaluation expenditure
Payment for acquisition of assets, net of cash acquired
Capitalised interest paid during construction
Repayment of loan by related party
Net cash outflow from investing activities
FINANCING ACTIVITIES
Proceeds from issue of shares
Proceeds from exercise of share options
Proceeds from borrowings
Repayment of borrowings
Subsidiary minority interest profit distribution
Payments for share issue costs
Payments for lease liabilities
Interest paid on borrowings
Financing costs
Transaction costs related to loans and borrowings
Net cash outflow from financing activities
Note
20(a)
18(b)
18(b)
20(b)
18(b)
20(b)
Net increase in cash held
Cash at the beginning of the financial period
Effect of exchange rate changes on the balance of cash held
in foreign currencies
Cash at the end of the financial period
7
2021
$'000
687,597
(301,151)
(36,538)
602
(850)
-
349,660
(48,254)
(7,003)
(52,704)
-
-
(107,961)
136,250
1,042
-
(235,064)
(2,690)
(4,040)
(5,331)
(13,395)
(31,330)
-
(154,558)
87,141
95,027
1,206
183,374
2020
$'000
334,271
(186,702)
-
681
(576)
247
147,921
(93,052)
(16,404)
-
(7,738)
290
(116,904)
-
2,369
37,832
(35,463)
-
(22)
(2,949)
(15,020)
(7,369)
(489)
(21,111)
9,906
83,584
1,537
95,027
1 BASIS OF PREPARATION
A. BASIS OF ACCOUNTING
These financial statements are presented in Australian dollars and are general purpose financial statements which have been prepared
in accordance with applicable accounting standards, the Corporations Act 2001 and mandatory professional reporting requirements in
Australia (including the Australian equivalents of International Financial Reporting Standards). They have also been prepared on the
basis of historical cost and do not take into account changing money values. The accounting policies are consistent with those of the
previous financial period, unless otherwise stated.
The financial information for the parent entity, West African Resources Limited, is disclosed in note 30 and has been prepared on the
same basis as the Group.
B. ROUNDING OF AMOUNTS
The Company is of a kind referred to in Rounding Instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to the “rounding off” of amounts in the financial statements. Amounts in the financial statements have been
rounded off in accordance with that Rounding Instrument to the nearest thousand dollars ($000’s), unless otherwise stated.
C. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Group. The financial statements of the subsidiaries are
prepared for the same reporting period as the parent company, using consistent accounting policies.
All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in
full. Unrealised losses are eliminated unless costs cannot be recovered. Subsidiaries are consolidated from the date on which control
is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Where there
is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during
which West African Resources Limited had control.
D. ADOPTION OF NEW AND REVISED STANDARDS
There have been no new or amended accounting standards or interpretations issued by the Australian Accounting Standard’s Board
(AASB) that have been applied for the first time in the current reporting period.
There are no forthcoming standards and amendments that are expected to have a material impact on the Group in the current or
future reporting periods, or on foreseeable future transactions.
E. SIGNIFICANT ACCOUNTING JUDGEMENTS AND KEY ESTIMATES
The preparation of this financial report requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from
these estimates.
In preparing this financial report, the following key judgements, estimates and assumptions were made by management in applying
the Group’s accounting policies:
Date of commencement of commercial production
Setting the pre-determined levels of operating capacity intended by management for deciding when development of the Sanbrado
gold project was completed and production started. This date is known as the ‘date of commencement of commercial production’ and
is used for establishing when project costs of an operating nature are no longer capitalised to mines under construction and when
depreciation and amortisation of the associated assets commences.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
52
West African Resources Limited|41
42|West African Resources Ltd
53
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
1 BASIS OF PREPARATION (CONTINUED)
1 BASIS OF PREPARATION (CONTINUED)
E.
SIGNIFICANT ACCOUNTING JUDGEMENTS AND KEY ESTIMATES (CONTINUED)
G.
INCOME TAXES
Accounting for leases
• Assessing contracts to determine whether they contain a lease and if so, whether they also contain non-lease components.
• Estimating the useful lives and depreciation rates of right-of-use assets.
• Setting the discount rate of the lease contracts, which is used in the calculation of lease liabilities.
Exploration and evaluation costs
On a case-by-case basis, assessing whether the acquisition costs and exploration and evaluation expenses of particular mineral
properties will be expensed or whether it is appropriate to capitalised them as exploration and evaluation (E&E) assets.
Valuation of rehabilitation provision
• Estimating the future cash flows to settle mine restoration obligations.
• Setting the discount rate and inflation rate used in the calculation of the rehabilitation provision.
Property, plant and equipment
• Setting the useful lives and depreciation rates for plant and equipment.
• Assessing assets for impairment of their carrying value.
Group consolidation
Setting the functional currency used for each entity in the Group.
Income tax
•
• Estimating future tax outcomes.
Interpreting tax legislation in a number of countries.
Classification of borrowings
Estimating future cash flows which impact on the classification of the syndicated debt facility as current versus non-current borrowings.
Share-based payments
•
•
Estimating the fair value of the share-based payments at the date at which they are granted.
Estimating number of share-based payment awards to employees that will ultimately vest at each reporting date.
Value added tax receivable
Estimating the amount recoverable and timing of recovery of VAT receivable from the Burkina Faso government.
F. REVENUE
The Group primarily generates revenue from the sale of gold bullion. This sales revenue is recognised when ownership of the metal is
transferred to the buyer. This typically occurs when physical bullion, from a contracted sale, is transferred from the Group’s metal
account to the metal account of the buyer.
Where the Group receives provisional payments from buyers, in advance of transfer of ownership, the Group classifies the provisional
payment as a deferred revenue liability until ownership is transferred and the associated revenue is recognised.
The income tax expense or benefit for the period is based on the profit or loss for the period adjusted for any non-assessable or
disallowed items. It is calculated using tax rates that have been enacted or are substantially enacted as at balance date.
Deferred tax is provided on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts
in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a
business combination, where there is no effect on accounting or taxation profit or loss.
Deferred income tax assets are recognised to the extent that it is probable that the future tax profits will be available against which
deductible temporary differences will be utilised. The amount of the benefits brought to account or which may be realised in the future
is based on the assumption that no adverse change will occur in the income taxation legislation and the anticipation that the economic
unit will derive sufficient future assessable income to enable the benefits to be realised and comply with the conditions of deductibility
imposed by law.
H. OTHER TAXES
Revenues, expenses and assets are recognised net of the amount of value added taxes (‘VAT’) except:
• when the VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the VAT
is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of VAT included.
•
Australian goods and services tax (‘GST’) is a type of VAT.
The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the VAT component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of VAT recoverable from, or payable to, the taxation authority.
I.
CASH AND CASH EQUIVALENTS
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above.
J.
INVENTORIES
Ore stockpiles, gold in circuit and finished goods (being gold doré and gold bullion) inventories are valued at the lower of weighted
average cost and net realisable value. Costs include direct production costs and an appropriate allocation of attributable overheads.
Depreciation and amortisation attributable to production of the inventory are also included in the cost of inventory.
Inventories of consumable supplies and spare parts are valued at the lower of weighted average cost and net realisable value. Net
realisable value is the estimated selling price in the ordinary course of business less estimated cost of completion, and the estimated
costs necessary to make the sale.
54
West African Resources Limited||4433
44|West African Resources Ltd
55
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
1 BASIS OF PREPARATION (CONTINUED)
K. PROPERTY, PLANT AND EQUIPMENT
Each class of property, plant and equipment (‘PP&E’) is carried at cost or fair value less, where applicable, any accumulated depreciation
and impairment losses. The cost of an item of PP&E consists of the purchase price, applicable borrowing costs, any costs directly
attributable to bringing the asset to the location and condition necessary for its intended use, and an initial estimate of the costs of
dismantling and removing the item and restoring the site on which it is located.
The carrying amount of the PP&E is reviewed at each balance sheet date to assess whether there is any indication that the assets may
be impaired. If any such indication exists, then the recoverable amount of the assets is estimated. An asset’s carrying amount is written
down immediately to its recoverable amount if the asset’s carrying amount is greater than the estimated recoverable amount.
Gains and losses on disposal of PP&E are determined by comparing proceeds with the carrying amount. These gains and losses are
included in the statement of profit or loss and other comprehensive income.
1 BASIS OF PREPARATION (CONTINUED)
K. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Depreciation
Depreciation of non-mine specific PP&E is calculated using the straight-line method to allocate their cost or revalued amounts, net of
their residual values, over their estimated useful lives determined as follows:
Land and buildings
Office equipment
Plant and equipment
Light vehicles
3 to 10 years
3 to 10 years
3 to 10 years
3 years
The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each balance sheet date.
Mines under construction
L. EXPLORATION AND EVALUATION
Expenditure on the construction, installation, and completion of infrastructure facilities for mining properties is capitalised to mines
under construction. The expenditure includes direct costs of construction, drilling costs and removal of overburden to gain access to
the ore, borrowing costs capitalised during construction and an appropriate allocation of attributable overheads. The capitalised
amount is net of proceeds from the sale of ore extracted during the construction phase to the extent that it is considered integral to
the development of the mine. Any costs incurred in testing the assets to determine if they are functioning as intended are capitalised,
net of any proceeds received from selling any product produced while testing. Where these proceeds exceed the cost of testing, any
excess is recognised in the statement of profit or loss and other comprehensive income.
After reaching pre-determined levels of operating capacity intended by management, known as ‘commencement of commercial
production’, the assets included in mines under construction are transferred out of mines under construction to their appropriate PP&E
category and depreciation and amortisation commence.
Exploration and evaluation (‘E&E’) costs are captured separately for each area of interest. Such costs comprise direct costs and an
appropriate portion of related overhead expenditure. E&E costs, including acquisition costs, are capitalised when incurred in areas
limited to a size related to a known mineral resource capable of supporting a mining operation for which the Group has rights of (or is
acquiring rights of) tenure and where activities have reached a stage which permits a reasonable assessment of the existence of
economically recoverable ore reserves, and active and significant operations in relation to the area are continuing. Each capitalised
area of interest is regularly reviewed. If the project is abandoned or if it is considered unlikely that capitalised costs will be recouped
through development or sale of the project then accumulated costs to that point are written off immediately.
Where a decision has been made to proceed with development in respect of a particular area of interest, the associated E&E assets
are transferred to PP&E and all future E&E costs for the area of interest are classified as PP&E within either mines under construction
or mine development assets, as appropriate.
Mine development assets
M. RECOVERABLE AMOUNT OF NON-CURRENT ASSETS
Mine development represents expenditure incurred in relation to overburden removal based on underlying mining activities and
related mining data and construction costs and underground development incurred by, or on behalf of, the Group previously
accumulated and carried forward in relation to mineral properties in which mining has now commenced. Such expenditure comprises
direct costs and an allocation of directly related overhead expenditure.
All expenditure incurred prior to the commencement of production from each development property is carried forward to the extent
to which recoupment out of future revenue from the sale of production, or from the sale of the property, is reasonably assured. When
further development expenditure is incurred in respect of a mine property after the commencement of commercial production, such
expenditure is carried forward as part of the cost of the mine property only when future economic benefits are reasonably assured,
otherwise the expenditure is classified as part of the cost of production and expensed as incurred. Such capitalised development
expenditure is added to the total carrying value of the mine development being amortised.
Mine development costs (as transferred from exploration and evaluation and/or mines under construction) are amortised on a units-
of-production basis over the life of mine to which they relate. In applying the units of production method, amortisation is calculated
using the expected total contained ounces as determined by the life of mine plan specific to that mine property. For development
expenditure undertaken during production, the amortisation rate is based on the ratio of total development expenditure (incurred and
anticipated) over the expected total contained ounces as estimated by the relevant life of mine plan to achieve a consistent
amortisation rate per ounce. The rate per ounce is typically updated annually as the life of mine plans are revised.
The carrying amounts of non-current assets are reviewed annually to ensure they are not in excess of the recoverable amounts from
those assets. The recoverable amount is assessed on the basis of the expected net cash flows, which will be received from the assets
employed and subsequent disposal. The expected net cash flows have been or will be discounted to present values in determining
recoverable amounts.
N. TRADE AND OTHER ACCOUNTS PAYABLE
Trade and other accounts payable represent the principal amounts outstanding at balance date, plus, where applicable, any accrued
interest.
O. BORROWINGS
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over
the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is
deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn
down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled
or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another
party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other
income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the reporting period.
56
West African Resources Limited||4455
West African Resources Limited||4477
57
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
1 BASIS OF PREPARATION (CONTINUED)
1 BASIS OF PREPARATION (CONTINUED)
P.
LEASE LIABILITIES
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the
lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value
guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated
termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they
are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a
change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty
of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-
of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in
which they are incurred.
Right-of-use assets
Right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the
initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of
any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of
costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the
asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease
term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement
of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with
terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.
Q.
ISSUED CAPITAL
Ordinary Shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included
in the cost of the acquisition as part of the purchase consideration.
R. EMPLOYEE BENEFITS
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These
benefits include wages and salaries, annual leave, and long service leave.
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within 12
months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid
when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow
to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash
outflows, the market yield as at the reporting date on national government bonds, which have terms to maturity approximating the
terms of the related liability, are used.
S. SHARE-BASED PAYMENTS
The Group provides benefits to employees (including Directors) of the Group in the form of share-based payment transactions, whereby
employees render services in exchange for shares or rights over shares (“equity-settled transactions”). The cost of these equity-settled
transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is
determined by a valuation using Black-Scholes or Binomial option pricing models.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“vesting
date”). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the
extent to which the vesting period has expired and (ii) the estimated number of awards that will ultimately vest. This estimate is formed
based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions
being met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market
condition. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not
yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated
as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the
original award.
T. FOREIGN CURRENCY TRANSLATION
Both the functional and presentation currency of West African Resources Limited and its Australian subsidiary are Australian dollars.
Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are
measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the
balance date.
All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences on foreign
currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the
disposal of the net investment, at which time they are recognised in profit or loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the
date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair
value was determined.
The functional currency of the foreign subsidiaries, Wura Resources Pty Ltd SARL, West African Resources Development SARL, Tanlouka
SARL, Société des Mines de Sanbrado SA, Volta Properties SARL, Kiaka Gold SARL and Kiaka SA, is the Communaute Financière Africaine
Franc (‘CFA’). The functional currency of the foreign subsidiary, Channel Resources Ltd is the Canadian Dollar (‘CAD’). The functional
currency of the foreign subsidiaries, Channel Resources (Cayman I) Ltd, Channel Resources (Cayman II) Ltd, Volta Resources (Cayman)
Inc., and Volta II Ltd is the United States Dollar (‘USD’).
As at the reporting date the assets and liabilities of the subsidiaries are translated into the presentation currency of West African
Resources Limited at the rate of exchange ruling at the balance date and their income and expenses are translated at the average
exchange rate for the year.
The exchange differences arising on the translation are taken directly to a separate component of equity, being recognised in the
foreign currency translation reserve.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is
recognised in profit or loss.
58
West African Resources Limited||4477
48|West African Resources Ltd
59
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
1 BASIS OF PREPARATION (CONTINUED)
U. FINANCIAL ASSETS
2 SEGMENT REPORTING
A. DESCRIPTION OF SEGMENTS
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, at fair value through other
comprehensive income (OCI), or fair value through profit or loss (FVTPL).
The classification of financial assets at initial recognition that are debt instruments depends on the financial asset’s contractual cash
flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a
significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables
that do not contain a significant financial component or for which the Group has applied the practical expedient for contracts that have
a maturity of one year or less, are measured at the transaction price determined under AASB 15.
In order for a financial asset to be classified and measured at amortised cost of fair value through OCI, it needs to give rise to cash flows
that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the
SPPI test and is performed at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows.
The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or
both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the
market place (regular way trades) are recognised on the trade date, i.e. the date that the Group commits to purchase or sell the asset.
Subsequent measurement
For the purposes of subsequent measurement, financial assets are classified in four categories:
i. Financial assets at amortised cost (debt instruments)
ii. Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
iii. Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity
instruments)
iv. Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following
conditions are met:
• The financial asset is held within a business model with the objectives to hold financial assets in order to collect contractual cash
flows; and
• The contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to
impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive
income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets at fair value through profit or loss
Financial assets that do not meet the criteria for amortised cost are measured at fair value through profit or loss.
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board and the
executive management team in assessing performance and in determining the allocation of resources. The operating segments of the
Group are:
Mining Operations: in the current period comprise the Sanbrado Gold Project operations located in Burkina Faso.
Exploration & Evaluation: in the current period comprises exploration and evaluation activities in locations other than Sanbrado.
B. SEGMENT INFORMATION
2020
Total segment revenue
Total segment expenses
Total segment results
Segment assets at 31 December 2020
Segment liabilities at 31 December 2020
2021
Total segment revenue
Total segment expenses
Total segment results
Segment assets at 31 December 2021
Segment liabilities at 31 December 2021
Mining
operations
$'000
Exploration &
Evaluation
$'000
310,667
145,148
165,519
471,222
137,036
712,130
305,626
406,504
584,190
179,541
129
2,516
(2,388)
17,339
232
-
3,463
(3,463)
131,165
554
Segment result is reconciled to the profit before income tax as follows:
Total segment results
Share-based payments
Finance expenses
Other expenses
Net foreign exchange gains (losses)
Profit before income tax
All metal sales in the year were made to MKS PAMP SA.
Other
$'000
371
5,079
(4,708)
42,152
221,180
10
6,959
(6,949)
88,892
69,746
2021
$’000
396,092
(2,492)
(58,730)
(6,176)
(7,147)
321,547
Total
$'000
311,167
152,743
158,423
530,713
358,448
712,140
316,048
396,092
807,247
248,841
2020
$’000
158,423
(2,343)
(26,139)
(2,769)
14,196
141,368
60
West African Resources Limited||4499
West African Resources Limited||5511
61
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
3 REVENUE
Metal sales
Interest received
Other income
4 EXPENSES
(a) Cost of sales
Production expenses
Royalties and other selling costs
Depreciation and amortisation
Changes in inventory (cash)
Changes in inventory (non-cash)
(b) Other expenses
Accretion of rehabilitation provision
Depreciation and amortisation
Withholding tax expense
5 INCOME TAX
A.
INCOME TAX RECOGNISED IN PROFIT OR LOSS
Current tax
Deferred tax
(Under) Over provided in prior years
2021
$'000
711,536
603
1
712,140
2021
$'000
209,157
43,273
57,241
(3,407)
541
306,805
255
53
5,868
6,176
2021
$'000
103,819
(692)
3,982
107,109
2020
$'000
310,315
605
247
311,167
2020
$'000
120,888
21,371
23,985
(15,350)
(5,746)
145,148
125
76
2,568
2,769
2020
$'000
20,819
21,649
-
42,468
5
INCOME TAX (CONTINUED)
B. NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX PAYABLE
Accounting profit before tax
Income tax expense at 30%
Add (Deduct):
Non-deductible expenses
Effect of differences in foreign tax rates
Effect of differences in foreign exchange
Deferred tax movement re borrowing costs
Other permanent adjustment
Movement in unrecognised deferred tax assets
Income tax expense
C. UNRECOGNISED DEFERRED TAX BALANCES
(a) Unrecognised deferred tax assets
Annual leave provision
Accrued expenses
Employee provisions
Long service leave provision
Borrowings
Leases
Tax losses
Section 40-880 undeducted losses
(b) Unrecognised deferred tax liabilities
Prepayments
Right-of-use assets
Borrowing costs
Net unrecognised deferred tax asset
2021
$’000
321,547
96,464
7,184
(8,266)
(241)
(793)
4,629
8,132
107,109
2021
$’000
73
107
-
20
14,406
68
23,590
634
(2)
(63)
-
38,833
2020
$’000
141,368
42,410
4,302
(3,657)
(904)
2,361
(3,769)
1,725
42,468
2020
$’000
75
46
59
13
16,961
93
14,496
82
(2)
(90)
(1,032)
30,701
62
West African Resources Limited||5511
52|West African Resources Ltd
63
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
6 EARNINGS PER SHARE
9 INVENTORIES
Basic profit per share (cents per share)
Diluted profit per share (cents per share)
The profit and weighted average number of ordinary shares used
in the calculation of basic earnings per share is as follows:
2021
$
20.9
20.7
2020
$
10.2
10.1
Ore stockpiles – cost
Finished goods – cost
Gold in circuit – cost
Consumable supplies and spares – cost
2021
$'000
34,646
6,086
2,913
15,332
58,977
2020
$'000
24,895
14,131
2,278
10,646
51,950
Attributable profit for the year
188,963,472
89,362,219
Weighted average number of shares outstanding during the period
used in calculations of basic profit per share
Weighted average number of diluted shares outstanding during the
period used in calculations of diluted profit per share
901,991,086
873,899,037
912,120,649
880,451,906
7 CASH AND CASH EQUIVALENTS
Cash at bank
Cash in hand
8 TRADE AND OTHER RECEIVABLES
Current
Prepayments
Other receivables
2021
$'000
183,277
97
183,374
2021
$'000
6,294
36,213
42,507
2020
$'000
94,944
83
95,027
2020
$'000
2,945
19,690
22,635
Other receivables include value added tax receivable from the Burkina Faso government of $35,668,000 (2020: $19,275,000).
Movement in the allowance for doubtful debts
Balance at the beginning of the year
Impairment losses and reversals recognised on receivables
Balance at the end of the year
2021
$'000
-
-
-
2020
$'000
(2,084)
2,084
-
64
54|West African Resources Ltd
54|West African Resources Ltd
65
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
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11 RIGHT-OF-USE ASSETS
Balance at 1 January 2020
Additions
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Balance at 31 December 2020
Balance at 1 January 2021
Additions
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Balance at 31 December 2021
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12 EXPLORATION AND EVALUATION ASSETS
Balance at 1 January
Additions
Effects of movement in foreign exchange
Balance at 31 December
Property
$'000
Equipment
$'000
32
359
(92)
-
299
299
-
(90)
-
209
8,103
10,838
(3,073)
53
15,921
15,921
1,462
(4,705)
(174)
12,504
2021
$'000
15,255
163,101
(2,901)
175,455
Total
$'000
8,135
11,197
(3,165)
53
16,220
16,220
1,462
(4,795)
(174)
12,713
2020
$'000
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The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is dependent on the
successful development and commercial exploitation or sale of the respective areas.
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6
5
Current
Trade payables
Accruals
Other payables
Convertible note
2021
$'000
21,570
21,580
1,007
61,915
106,072
2020
$'000
24,418
15,366
695
-
40,479
The Company issued a US$45 million convertible note to B2Gold Corp as part consideration for the purchase of the Kiaka Gold Project
(‘Kiaka’) that is payable in cash unless B2Gold elects to be paid in shares. The note is secured against WAF’s ownership interest in Kiaka
and is due for payment by the earlier of: a) 10 business days following issue of a positive feasibility study for the Kiaka Project; b) the
later of the date of commencement of construction of Kiaka and 31 May 2022; and c) 25 October 2022.
56|West African Resources Ltd
67
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66
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
14 LOANS AND BORROWINGS
16 PROVISIONS
Current
Non-current
A. SYNDICATED DEBT FACILITY
Current
Non-current
2021
$'000
214
12,904
13,118
2021
$'000
-
-
-
2020
$'000
132,664
93,669
226,333
2020
$'000
132,455
81,488
213,943
During the year the Group made early debt repayments on the USD syndicated debt facility arranged by Taurus Mining Finance for the
development of the Sanbrado Gold Project, which resulted in the facility being fully repaid. As at 31 December 2021 the remaining
balance due under the facility was nil (2020: US$175 million).
B. SUPPLIER LOAN FACILITIES
Current
Non-current
2021
$’000
214
12,904
13,118
2020
$’000
209
12,181
12,390
In 2019 a loan facility was entered into with Byrnecut Burkina Faso SARL as a component of the Sanbrado underground mining services
contract. The facility has a limit of US$10 million and interest is charged at a rate of 9.75% per annum. Interest is payable half-yearly
and the principal is due 6 months before termination of the 5-year services contract. The balance outstanding under the facility at 31
December 2021 was US$9.6 million inclusive of accrued interest (2020: US$9.6 million).
15 LEASES
Current
Non-current
Amounts recognised in profit or loss
Interest on lease liabilities
Expenses relating to short-term leases
Amounts recognised in the statement of cash flows
2021
$’000
5,591
7,096
12,687
850
22
872
2020
$’000
4,581
11,225
15,806
576
41
617
Total cash outflow for leases
5,331
2,949
Non-current
Long service leave provision
Rehabilitation provision
Reconciliation of movements in rehabilitation provision:
Balance at the start of the period
Increase in rehabilitation provision during the year
Effects of movement in foreign exchange
Balance at the end of the period
2021
$’000
67
12,512
12,579
9,362
3,266
(116)
12,512
2020
$'000
44
9,362
9,406
4,218
5,182
(38)
9,362
The Group’s rehabilitation provision is the best estimate of the present value of the future cash flows required to settle the Sanbrado
mine site restoration obligations at the reporting date, based on current legal requirements and technology. It has been calculated
with an inflation rate of 2.5% (2020: 2.5%) and by discounting the cash flows at a rate of 2.75% (2020: 2.75%). The amount provided
each period is also capitalised as an asset under mine development assets in property, plant and equipment.
17 DEFERRED TAX LIABILITIES
Deferred tax liabilities
Trade and other receivables
Property, plant and equipment
Trade and other payables
Borrowings
Borrowing costs
Net deferred tax liabilities
Movements:
Opening balance
Charged (Credited) to profit and loss
Over provision in prior years
Closing balance
2021
$'000
507
10,311
-
3,695
5,454
19,967
21,648
(692)
(989)
19,967
2020
$'000
7
6,911
175
7,070
7,485
21,648
-
21,648
-
21,648
68
West African Resources Limited||5577
58|West African Resources Ltd
69
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
18 ISSUED CAPITAL
Fully paid ordinary shares
(a) Number of shares
At start of period
Issue of shares on exercise of options
Issue of shares from capital raising
Issue of shares as consideration for acquisition
Balance at end of period
(b) Value of shares
At start of period
Issue of shares on exercise of options
Issue of shares from capital raising
Issue of shares as consideration for acquisition
Share issue costs
Balance at end of period
19 RESERVES
Reserves
Reserves comprise the following:
(a) Foreign currency translation reserve
At start of period
Currency translation differences
Balance at end of period
(b) Share-based payments reserve
At start of period
Options issued – share-based payment expense
Reclassification of expired options and rights
Balance at end of period
2021
$'000
335,334
No.
878,682,646
5,969,467
109,000,000
27,121,732
2020
$'000
165,263
No.
870,478,852
8,203,794
-
-
1,020,773,845
878,682,646
$'000
165,263
1,042
136,250
36,819
(4,040)
335,334
2021
$'000
4,173
(6,096)
(2,265)
(8,361)
9,947
2,587
-
12,534
$'000
162,919
2,369
-
-
(25)
165,263
2020
$'000
3,851
(543)
(5,553)
(6,096)
7,916
2,343
(312)
9,947
19 RESERVES (CONTINUED)
Nature and purpose of reserves
(a) Foreign currency translation reserve
The foreign currency translation reserve is used to record the Group’s exchange differences arising from the translation of loans to
foreign subsidiaries that are expected to be repaid in the long term and the translation of the financial statements of foreign
subsidiaries.
(b) Shared-based payments reserve
The shared-based payments reserve is used to recognise the fair value of options and rights issued by the Company to Directors,
employees and other suppliers or consultants that are not exercised or expired.
20 CASH FLOW INFORMATION
A. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASHFLOWS FROM OPERATING ACTIVITIES
Profit after income tax
Adjustment for:
Depreciation and amortisation
Share-based payments
Accretion of rehabilitation provision
Financing costs
Net foreign exchange (gain) loss
Changes in assets and liabilities
(Increase) Decrease in trade and other receivables
(Increase) Decrease in inventories
(Decrease) Increase in trade and other payables
(Decrease) Increase in current tax payable
(Decrease) Increase in deferred tax liabilities
Net cash flows from operating activities
2021
$'000
214,438
57,294
2,492
255
57,880
1,223
333,582
(19,818)
(7,607)
(27,068)
72,252
(1,681)
349,660
2020
$'000
98,900
24,061
2,343
125
25,563
(15,002)
135,990
(18,260)
(26,461)
14,185
20,819
21,648
147,921
70
West African Resources Limited||5599
60|West African Resources Ltd
71
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
20 CASH FLOW INFORMATION (CONTINUED)
B. RECONCILIATION OF LOANS AND BORROWINGS AND LEASES TO NET CASH FLOWS FROM FINANCING
ACTIVITIES
Balance at 1 January 2020
Cash outflow from financing activities
Cash inflow from financing activities
Leases entered into during the year
Other balance movements
Effect of changes in foreign exchange rates
Balance at 31 December 2020
Balance at 1 January 2021
Cash outflow from financing activities
Leases entered into during the year
Other balance movements
Effect of changes in foreign exchange rates
Balance at 31 December 2021
Loans and borrowings*
Lease liabilities
$’000
235,086
(35,463)
37,832
-
6,212
(17,334)
226,333
226,333
(235,064)
-
21,719
130
13,118
$’000
8,475
(2,949)
-
10,838
-
(558)
15,806
15,806
(5,331)
1,462
-
750
12,687
Total
$’000
243,561
(38,412)
37,832
10,838
6,212
(17,892)
242,139
242,139
(240,395)
1,462
21,719
880
25,805
22 COMMITMENTS AND OTHER CONTINGENCIES
A. EXPLORATION AND MINING LEASE COMMITMENTS
In order to maintain current rights of tenure to exploration tenements, the Group is required to outlay rental fees and to meet the
minimum expenditure requirements. These discretionary costs are not provided for in the financial statements and will be payable as
follows:
Due within 1 year
Due after 1 year but not more than 5 years
Due after 5 years
B. CAPITAL COMMITMENTS
2021
$'000
1,378
2,756
-
4,134
2020
$'000
775
1,549
-
2,324
Capital expenditure contracted for and payable, but not recognised as liabilities is $1,831,000 (2020: $832,000). All of the commitments
relate to the purchase of property, plant and equipment. The total amount is expected to be paid within one year of the reporting
period.
* Certain prior year reconciliation components have been reclassified to align with the categories presented in the current year.
C. CONTINGENT LIABILITIES
(i)
Burkina Faso Income Tax
21 DIVIDENDS
No dividends have been paid or declared payable during the year (2020: nil).
Société des Mines de Sanbrado SA (‘SOMISA’) is in discussions with the Burkina Faso tax authority in relation to a reassessment resulting
from an audit of its 2020 corporate income taxes. No amount in relation to this has been provided in the Group’s financial statements
as the parties have not yet come to a common understanding of the underlying transactions being reassessed and the correct tax
treatment under the tax code.
(ii) Royalty agreements
During 2021, the Group entered into royalty agreements with third parties in respect of the acquisition of the Kiaka Gold Project
(‘Kiaka’) and the Toega Gold Project (‘Toega’). Royalties will become payable under the agreements when refined gold is produced
from ore extracted from the physical areas covered by the agreements.
•
•
Royalty agreements in respect of the Kiaka comprise:
o
o
a 3% net smelter return (‘NSR’) royalty on first 2.5 million ounces of gold produced from Kiaka;
a 0.5% NSR royalty on next 1.5 million ounces of gold produced from Kiaka.
Royalty agreements on the first 1.5 million gold ounces produced from the Nakomgo exploration permit area were provided in
respect of Toega comprising:
o
o
a 3% NSR royalty to a value of US$25 million; and
thereafter a 0.5% NSR.
(iii) Other contingent liabilities
There were no other material contingent liabilities at the end of the year. During the current year the Group exercised its option to
buy back the ‘Product Fee’ contractual commitment under the syndicated debt facility with Taurus, which was reported as a contingent
liability in the prior year.
72
62|West African Resources Ltd
West African Resources Limited||6633
73
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
23 INTEREST IN SUBSIDIARIES
23 INTEREST IN SUBSIDIARIES (CONTINUED)
The consolidated financial statements include the financial statements of West African Resources Limited and the subsidiaries listed in
the following table:
A. SUMMARISED FINANCIAL INFORMATION FOR SOCIETE DES MINES DE SANBRADO BEFORE INTRAGROUP
ELIMINATIONS
Ownership interest
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
Revenue
2021
$'000
2020
$'000
710,265
309,856
Profit for the year:
Attributable to owners of the parent
Attributable to non-controlling interest
STATEMENT OF FINANCIAL POSITION
Assets
Current assets
Non-current assets
Liabilities
Current liabilities
Non-current liabilities
Equity
Attributable to owners of the parent
Attributable to non-controlling interest
STATEMENT OF CASH FLOWS
Net cash from operating activities
Net cash used in investing activities
Net cash used in financing activities
229,276
25,475
254,751
230,868
342,293
573,161
213,091
65,461
278,552
265,148
29,461
294,609
367,332
(50,782)
(234,249)
82,301
85,845
9,538
95,383
123,601
345,489
469,090
329,052
69,671
398,723
63,330
7,037
70,367
165,477
(92,532)
(18,701)
54,244
Entities
Parent company
West African Resources Limited
Direct subsidiaries
WAF Finance Pty Ltd
Wura Resources Pty Ltd SARL
West African Resources Development SARL
Channel Resources Ltd
Volta II Ltd1
Indirect subsidiaries
Channel Resources (Cayman I) Ltd
Channel Resources (Cayman II) Ltd
Tanlouka SARL
Société des Mines de Sanbrado SA2
Volta Resources (Cayman) Inc.3
Volta Properties SARL3
Kiaka Gold SARL3
Kiaka SA2,3
Country of
incorporation
Australia
Australia
Burkina Faso
Burkina Faso
Canada
Cayman Islands
Cayman Islands
Cayman Islands
Burkina Faso
Burkina Faso
Cayman Islands
Burkina Faso
Burkina Faso
Burkina Faso
2021
%
100
100
100
100
100
100
100
100
90
100
100
100
90
2020
%
100
100
100
100
-
100
100
100
90
-
-
-
-
1 Incorporated on 23 September 2021.
2 The remaining 10% is held by the government of Burkina Faso which is entitled to a free carried 10% interest in the project.
3 Acquired on 30 November 2021.
Intercompany transactions between the parent entity and its subsidiaries are eliminated on consolidation.
Amounts owed by (to) related parties
Subsidiaries
WAF Finance Pty Ltd
Wura Resources Pty Ltd SARL
Société des Mines de Sanbrado SA
West African Resources Development SARL
Tanlouka SARL
Channel Resources (Cayman I) Ltd
Channel Resources (Cayman II) Ltd
Channel Resources Ltd
Volta II Ltd
Kiaka Gold SARL
Total
Provision for impairment
Consolidated
2021
$'000
2020
$'000
Parent Entity
2021
$'000
2020
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
105,788
25,647
12,784
9,451
3,956
(101)
15
(161)
104,595
180
262,154
(50,950)
211,204
40,496
23,926
12,784
16,950
3,457
56
59
1
-
-
97,729
(56,230)
41,499
Further information with respect to related party transactions are included in note 26.
74
West African Resources Limited||6633
64|West African Resources Ltd
75
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
23 INTEREST IN SUBSIDIARIES (CONTINUED)
25 AUDITORS’ REMUNERATION
B. SUMMARISED FINANCIAL INFORMATION FOR KIAKA SA BEFORE INTRAGROUP ELIMINATIONS
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
Revenue
Profit for the year:
Attributable to owners of the parent
Attributable to non-controlling interest
STATEMENT OF FINANCIAL POSITION
Assets
Current assets
Non-current assets
Liabilities
Current liabilities
Non-current liabilities
Equity
Attributable to owners of the parent
Attributable to non-controlling interest
STATEMENT OF CASH FLOWS
Net cash from operating activities
Net cash used in investing activities
Net cash used in financing activities
2021
$'000
-
(5)
(1)
(6)
5
84,191
84,196
4
85,212
85,216
(918)
(102)
(1,020)
(1)
-
-
(1)
This is the first year that Kiaka SA was consolidated into the Group and therefore no comparative amounts are provided.
24 SUBSEQUENT EVENTS AFTER THE BALANCE DATE
On 24 January 2022 a military group led by Lieutenant-Colonel Paul-Henri Sandaogo Damiba, assumed control of the Burkina Faso
government and on 1 March 2022 established a transitionary government with a signed charter committing to return to a
democratically elected government within three years in which senior members of the transitionary government are ineligible to be
elected. The Directors are pleased to advise that the Group’s Sanbrado Gold Operations in Burkina Faso are continuing to operate as
usual, and the Company’s observation is that the government bureaus are continuing to function, and no controversial legislative
changes have been proposed.
Aside from the above event, there has not arisen in the interval between the end of the reporting period and the date of this report,
any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect
substantially the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial
years.
The auditor of West African Resources Limited is HLB Mann Judd
Audit or review of the financial statements
Amounts received or due and receivable by non HLB Mann Judd
audit firms
Audit or review of the Burkina Faso financial reports
26 DIRECTORS AND EXECUTIVE DISCLOSURES
A. DETAILS OF KEY MANAGEMENT PERSONNEL
2021
$'000
80
80
17
17
2020
$'000
53
53
19
19
Non-Executive Directors
Rod Leonard
Nigel Spicer
Stewart Findlay
Libby Mounsey
Executive Directors
Richard Hyde
Lyndon Hopkins
Other Executives (KMPs)
Non-Executive Director and Lead Independent Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Chairman and CEO
Executive Director and COO
Appointed
September 20191
September 2019
29 May 2020
29 May 2020
September 2006
September 20192
Resigned
-
-
-
-
-
-
Padraig O’Donoghue
Matthew Wilcox
Chief Financial Officer and Company Secretary
Chief Development Officer
June 20183
September 2018
-
January 2021
1 Date appointed as Lead Independent Director was February 2021 (NED since September 2019).
2 Date appointed a Director (employed since January 2017).
3 Date appointed as Company Secretary was May 2020 (employed since June 2018).
B. COMPENSATION OF KEY MANAGEMENT PERSONNEL
Short-term employee benefits
Post-employment benefits
Share-based payments
2021
$'000
1,893
110
2,001
4,004
2020
$'000
1,938
145
1,723
3,806
C. COMPENSATION BY CATEGORY OF KEY MANAGEMENT PERSONNEL FOR THE YEAR
Consulting fees were paid to Directors, details of which are included in the Remuneration Report in the Directors’ Report. Salaries were
paid to the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Chief Development Officer, details of which are
included in the Remuneration Report in the Directors’ Report.
76
West African Resources Limited||6655
West African Resources Limited||6677
77
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
26 DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED)
28 FINANCIAL RISK MANAGEMENT (CONTINUED)
D. LOANS TO KEY MANAGEMENT PERSONNEL
There were no loans provided to Key Management Personnel during the year (2020: nil).
E. OTHER TRANSACTIONS AND BALANCES WITH KEY MANAGEMENT PERSONNEL
There were no other transactions and outstanding balances with key management personnel for the year ended 31 December 2021
that are not already included in the Remuneration Report in the Directors’ Report.
27 FINANCIAL INSTRUMENTS
Financial assets
Cash and cash equivalents (note 7)
Trade and other receivables (note 8)
Financial assets
Financial liabilities
Trade and other payables (note 13)
Loans and borrowings (note 14)
Lease liabilities (note 15)
2021
$'000
183,374
42,507
39
225,920
(106,072)
(13,118)
(12,687)
(131,877)
2020
$'000
95,027
22,635
39
117,701
(40,479)
(239,781)
(15,807)
(296,066)
28 FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk, and price risk), credit
risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of the Group.
A. MARKET RISK
(i)
Interest rate risk
The Group’s main interest rate risk arises from its cash balances. Cash held at variable rates expose the Group to cash flow interest rate
risk while cash deposits at fixed rates expose the Group to fair value interest rate risk. During the year, the Group’s cash deposits at
variable rates were denominated in Australian Dollars (‘AUD’), United States Dollars (‘USD’), Euros (‘EUR’), and Communaute Financière
Africaine Francs (‘CFA’), being the currency of Burkina Faso.
A. MARKET RISK (CONTINUED)
(i)
Interest rate risk (continued)
The tables below analyse the Group's financial assets and financial liabilities into maturity groupings based on the remaining period at
the reporting date to the contractual maturity date.
Consolidated
Fixed Interest Rate Maturing
Weighted
Average
Effective
Interest
Rate
Floating
Interest
Rate
$’000
Within
Year
$’000
1 to 5
Years
$’000
Over 5
Years
$’000
Non-
interest
bearing
$’000
Total
$’000
0.7%
0.0%
1.0%
0.00%
7.62%
6.50%
0.4%
0.0%
0.5%
0.00%
9.75%
6.50%
63,464
-
-
63,464
-
-
39
39
-
-
-
-
-
-
-
-
-
133,672
4,581
-
108,253
11,225
138,253
119,478
159,512
-
-
159,512
-
-
39
39
-
-
-
-
-
-
-
-
-
1,289
5,591
6,880
-
13,641
7,096
20,737
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,563
22,635
-
95,027
22,635
39
54,198
117,701
40,479
-
-
40,479
241,925
15,806
40,479
298,210
23,862
42,507
-
183,374
42,507
39
66,369
225,920
106,072
-
106,072
14,930
-
12,687
106,072
133,689
31 December 2020
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total financial assets
Financial liabilities
Trade and other payables
Loans and borrowings
Lease liabilities
Total financial liabilities
31 December 2021
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total financial assets
Financial liabilities
Trade and other payables
Loans and borrowings
Lease liabilities
Total financial liabilities
78
West African Resources Limited||6677
68|West African Resources Ltd
79
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
28 FINANCIAL RISK MANAGEMENT (CONTINUED)
28 FINANCIAL RISK MANAGEMENT (CONTINUED)
A. MARKET RISK (CONTINUED)
(ii)
Interest rate sensitivity
A. MARKET RISK (CONTINUED)
(iv) Exchange rate sensitivity
At 31 December 2021, if variable interest rates for the full year were -/+ 0.5% from the year-end rate with all other variables held
constant, pre-tax profit for the year would have moved as per the table below.
A 10 per cent strengthening or weakening of the AUD against the following currencies at 31 December would have increased
(decreased) net assets by the amounts shown in the below table. This analysis assumes that all other variables, in particular interest
rates, remain constant. The analysis is performed on the same basis for the year ended 31 December 2020.
+0.5%
-0.5%
2021
$'000
707
(707)
2020
$'000
447
(447)
The sensitivity is calculated using the average cash position for the year ended 31 December 2021. The interest income in note 3 of
$602,635 (31 December 2020: $605,024) reflects cash balances in the year that ranged between $39,759,579 and $133,134,574 (31
December 2020: $40,878,483 and $73,476,229).
(iii) Foreign currency risk
USD
CFA
EUR
(v) Price risk
+10%
2021
$'000
2,968
(49,123)
(2)
2020
$'000
19,019
(34,862)
1,958
-10%
2021
$'000
(3,627)
60,040
2
2020
$'000
(23,245)
42,609
(2,394)
The Group operates internationally and is exposed to foreign exchange risk primarily arising from costs denominated in CFA and USD,
and loans and borrowings denominated in USD.
The Group is exposed to commodity price risk on its future gold production. This risk is estimated by management using forecasts of
the quantity and cost of future gold production. While the Group’s price risk could be partially managed using a range of different types
of hedging instruments, the Group did not have any open hedge instruments at 31 December 2021 (2020: nil).
The Group also has transactional currency exposures. Such exposure arises from purchases by an operating entity in currencies other
than the functional currency.
B. CREDIT RISK
The Group does not have a policy to enter into forward contracts or other hedge derivatives.
At 31 December, the Group had the following exposure to CFA, EUR, and USD foreign currencies expressed in AUD equivalents:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Loans and borrowings
Lease liabilities
Tax liabilities
2021
$'000
162,974
37,876
200,850
195,053
13,002
12,460
19,967
240,482
2020
$'000
82,172
21,456
103,628
72,362
236,848
15,491
41,590
366,291
Credit risk arises mainly from
•
the Group’s cash and cash equivalents held with financial institutions (the banks the Group uses for cash deposits and transactions
are limited to high credit quality financial institution);
receivables related to gold sales (all gold sales have been carried out with MKS PAMP SA); and
value added tax receivable from the government of Burkina Faso.
•
•
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised at the beginning
of this note.
C.
LIQUIDITY RISK
Liquidity risk is the risk the Group will not be able to meet its financial obligations as they fall due. Liquidity risk management involves
maintaining sufficient cash on hand or undrawn credit facilities to meet the operating requirements of the business. This is currently
managed through cash and cash equivalents ($183,374,000 as at 31 December 2021) and prudent cash flow and financial commitment
management. The tables below analyse the Group's financial assets and liabilities into maturity groupings based on the remaining
period at the reporting date to the contractual maturity date.
80
West African Resources Limited||6699
West African Resources Limited||7711
81
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
28 FINANCIAL RISK MANAGEMENT (CONTINUED)
Maturity analysis of financial assets and liabilities based on management's expectation
29 SHARE-BASED PAYMENTS
A. RECOGNISED SHARE-BASED PAYMENTS
Consolidated
The expenses recognised for services received during the year are shown in the table below:
31 December 2020
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total financial assets
Financial liabilities
Trade and other payables
Loan and borrowings
Lease liabilities
Total financial liabilities
Net maturity
31 December 2021
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total financial assets
Financial liabilities
Trade and other payables
Loans and borrowing
Lease liabilities
Total financial liabilities
Net maturity
<6 months
$'000
6-12 months
$'000
1-5 years
$'000
>5 years
$'000
Total
$'000
95,027
22,635
39
117,701
(40,479)
(58,600)
(2,524)
(101,603)
16,098
183,374
42,507
39
225,920
(106,072)
(639)
(3,206)
(109,917)
116,003
-
-
-
-
-
-
-
-
-
(89,151)
(2,524)
(91,675)
(91,675)
-
(116,252)
(12,101)
(128,353)
(128,353)
-
-
-
-
-
-
-
-
-
(650)
(3,206)
(3,856)
(3,856)
-
(13,641)
(7,932)
(21,573)
(21,573)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
95,027
22,635
39
117,701
(40,479)
(264,003)
(17,149)
(321,631)
(203,930)
183,374
42,507
39
225,920
(106,072)
(14,930)
(14,344)
(135,346)
90,574
Share-based payments to Directors
Share-based payments to employees
Share-based payments to third party
2021
$'000
1,603
818
71
2,492
2020
$'000
1,254
955
133
2,343
The share-based payment plans are described below. There have been no cancellations or modifications to the plan during the year.
B. TRANSACTIONS SETTLED USING SHARES
No transactions were settled in the current year using shares.
C. EMPLOYEE SHARE AND OPTION PLAN
Under the Incentive Options and Performance Rights Plan (‘Incentive Plan’), grants are made to senior executives and other staff
members who have made an impact on the Group’s performance. Grants are delivered in the form of options or performance rights
which vest over periods as determined by the Board of Directors.
D. PERFORMANCE RIGHTS
Performance rights are granted under the Incentive Plan for nil consideration and are subject to vesting conditions as determined by
the Board of Directors. Any performance rights that do not vest by their expiry date will lapse. Upon vesting, these performance rights
will be settled in ordinary fully paid shares of the Company.
(a)
Summary of performance rights granted under the Incentive Plan
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Lapsed/cancelled during the year
Outstanding at the end of the year
Exercisable at the end of the year
*WAEP = weighted average exercise price
2021 Number
2021 WAEP*
2020 Number
2020 WAEP*
12,557,727
1,925,989
(3,141,048)
(1,628,419)
9,714,249
540,234
-
-
-
-
-
-
2,287,295
10,636,406
(303,794)
(62,180)
12,557,727
2,027,779
-
-
-
-
-
-
The performance rights outstanding at the end of the year had a weighted average remaining contractual life of 1,003 days (31
December 2020: 1,200 days)
82
West African Resources Limited||7711
West African Resources Limited||7733
83
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
29 SHARE-BASED PAYMENTS (CONTINUED)
D. PERFORMANCE RIGHTS (CONTINUED)
(b) Fair value of performance rights granted
The fair value of the performance rights granted during the year was determined using the Black-Scholes, Monte Carlo Simulation and
Binomial pricing methods.
Number
issued
44,554
44,554
82,942
174,478
69,306
69,306
626,496
402,103
402,102
10,148
Grant date
22-Jan-21
22-Jan-21
22-Jan-21
9-Apr-21
9-Apr-21
9-Apr-21
20-May-21
20-May-21
20-May-21
11-Jun-21
Original
expiry
period
2 years
2 years
3 years
3 years
5 years
4 years
3 years
5 years
4 years
3 years
Dividend
yield
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Expected
volatility
64%
61%
61%
63%
67%
60%
63%
65%
59%
63%
Risk-free
interest rate
0.08%
0.08%
0.10%
0.10%
0.69%
0.39%
0.10%
0.70%
0.40%
0.14%
Exercise
price
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
Share price
on grant
date
$0.7950
$1.0200
$0.9750
$0.9650
$0.9650
$0.9650
$1.0350
$1.0350
$1.0350
$1.0950
E. OPTIONS
Options are issued for nil consideration. The exercise price, vesting conditions and expiry date are determined by the Board of Directors.
Any options that are not exercised by the expiry date will lapse. Upon vesting, these options will be settled in ordinary fully paid shares
of the Company.
(a)
Summary of options granted by the Group
2021 Number
2021 WAEP*
2020 Number
2020 WAEP*
Outstanding at the beginning of the year
4,841,719
$0.4228
Granted during the year
Exercised during the year
Lapsed/cancelled during the year
Outstanding at the end of the year
Exercisable at the end of the year
*WAEP = weighted average exercise price
-
(2,828,419)
-
2,013,300
2,013,300
-
$0.3685
-
$0.4991
$0.4991
11,873,828
1,117,891
(7,900,000)
(250,000)
4,841,719
4,841,719
$0.3163
$0.6486
$0.2998
$0.2400
$0.4228
$0.4228
The share options outstanding at the end of the year had a weighted average remaining contractual life of 116 days (31 December
2020: 374 days).
(b)
Fair value of options granted
There were no options granted during the period (31 December 2020: 867,891).
84
74|West African Resources Ltd
)
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6
7
87
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
30 PARENT ENTITY FINANCIAL INFORMATION
The individual financial statements for the parent entity show the following aggregate amounts:
STATEMENT OF FINANCIAL POSITION
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
PROFIT FOR THE REPORTING PERIOD
Income tax benefit
Total comprehensive profit
Parent
2021
$'000
46,921
248,450
295,371
1,157
203
1,360
294,011
335,334
12,535
(53,858)
294,011
23,415
-
23,415
2020
$'000
16,579
82,620
99,199
990
272
1,262
97,937
165,263
9,948
(77,274)
97,937
37
-
37
Contingent liabilities of the parent entity
As at 31 December 2021, the parent entity had contingent liabilities as guarantor under each of the royalty agreements detailed
in note 22(c)(ii) and as guarantor under the US$45 million convertible note detailed in note 13 (2020: nil).
Commitments of the parent entity for the acquisition of property, plant and equipment
As at December 2021, the parent entity had nil contractual commitments for the acquisition of property, plant and equipment
(2020: nil).
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88
78|West African Resources Ltd
89
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
DIRECTORS’ DECLARATION
In the opinion of the Directors:
a.
The financial statements, notes and the additional disclosures included in the Directors’ Report, designated as audited, of the
consolidated entity are in accordance with the Corporations Act 2001 including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its performance for the year
then ended; and
complying with Australian Accounting Standards and Corporations Regulations 2001.
b.
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
c.
The financial statements also comply with International Financial Reporting Standards as disclosed in note 1A.
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of West African Resources Limited
for the year ended 31 December 2021, I declare that to the best of my knowledge and belief, there
have been no contraventions of:
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section
295A of the Corporations Act 2001 for the year ended 31 December 2021.
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
This declaration is signed in accordance with a resolution of the Board of Directors.
b)
any applicable code of professional conduct in relation to the audit.
RICHARD HYDE
Executive Chairman & CEO
30 March 2022
Perth, Western Australia
30 March 2022
B G McVeigh
Partner
90
80|West African Resources Ltd
91
Auditor’s Independence Declaration |80
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
To the members of West African Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of West African Resources Limited (“the Company”) and its
controlled entities (“the Group”), which comprises the consolidated statement of financial position
as at 31 December 2021, the consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 31 December 2021 and of
its financial performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters. We have determined the
matters described below to be the key audit matters to be communicated in our report.
Key Audit Matter
How our audit addressed the key audit matter
Acquisition of Kiaka Tenements
Note 12 to the financial report
On 30 November 2021,
completed
Tenements.
the acquisition of
the Group
the Kiaka
This acquisition was accounted for as an
asset acquisition as the activities of the entity
did not constitute a business.
We considered this to be a key audit matter
due to the size of the impact on the financial
statements and its important to users of the
financial statements.
Our audit procedures included but were not limited to
the following:
• Considering
the
transaction under the requirements of AASB 3
Business Combinations.
the possible application of
• Reviewing the sale and purchase agreement to
understand key terms and conditions.
• Agreeing the fair value of the consideration paid
to supporting information.
• Obtaining audit evidence that the acquisition
date assets and liabilities of acquiree were fairly
stated.
• Considering the allocation of the excess of the
value of the consideration over the net assets
acquired
evaluation
expenditure.
exploration
and
to
• Ensuring appropriateness
the
resultant exploration and evaluation asset at
balance date.
recognise
to
• Assessing
the adequacy of
the Group’s
disclosures in the financial report with respect to
this asset acquisition.
Revenue recognition
Note 3 to the financial report
The Group generates revenue predominantly
from the sale of gold. The Group recognised
sales revenue of $712.1 million for the year
(2020: $311.2 million).
Our audit procedures included but were not limited to
the following:
• Understanding the Group’s process for revenue
and controls in place around gold sales.
Revenue recognition is considered to be a
key audit matter given the significance of
revenue to the Group’s results as well as the
fraud risk around cut-off including:
• An overstatement of revenues through
or
revenue
premature
recording of fictious revenues.
recognition
• Revenue not being recognised when
control is transferred to the customer,
resulting in it not being recognised in the
correct accounting period.
is recognised when control
Revenue
is
transferred to the buyer and the amount of
revenue can be reliably determined. This
occurs for the Group when the refining
process
is
transferred.
is completed and ownership
• Testing all gold sales transactions during the
year to invoice and receipt of cash.
requirements of
• Assessing the Group’s policies for recognition of
the
the
revenue against
accounting standards and checked these were
adequately disclosed in the financial statements.
• Sales cut-off procedures focussing on sales in
December 2021 and January 2022, testing a
sample
underlying
documentation and assessing the period in
which they were recognised.
transactions
of
to
• Matching gold produced against gold sold for the
year.
92
West African Resources Limited||8811
82|West African Resources Ltd
93
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
Recoverability of mine assets
Note 10 to the financial report
As at 31 December 2021 the Group had
mine development assets of $100.3 million.
Assessing the recoverability and carrying
value of this balance was considered to be a
key audit matter due to the judgements and
estimations involved.
These estimations and judgements surround
two areas being impairment indicators and
the amortisation and depreciation associated
with this asset.
Impairment
future
recoverability of the asset.
Amortisation and depreciation involves using
estimated reserves and resources (used as
the denominator in a “units-of-production””
calculation) of the mines.
involve assessing
judgement around
indicators
forecasts and
Our audit procedures included but were not limited to
the following:
• Testing impairment indicators to ensure that no
is
indicators exist at amortisation
such
progressing at an appropriate rate.
• Reviewing future plans for the mine assets and
the
support
plans
ensuring
that
recoverability of the mine.
such
• Assessing the current carrying value of the mine
development assets and ensuring
items
capitalised during the period were appropriate to
capitalise.
• Assessing
resources
comparing
statement and underlying mining records.
the application of reserves and
the amortisation models by
in
latest published
them
the
to
• Testing
the mathematical accuracy of
the
amortisation models.
• Assessing
the adequacy of
the Group’s
disclosures relating to amortisation.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 31 December 2021, but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial report, or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
Group to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole
is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Australian Auditing Standards will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
-
-
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
-
We communicate with the directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
94
West African Resources Limited||8833
84|West African Resources Ltd
95
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended
31 December 2021.
In our opinion, the Remuneration Report of West African Resources Limited for the year ended
31 December 2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
30 March 2022
B G McVeigh
Partner
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The
information is current as at 10 March 2022.
DISTRIBUTION OF SHARES
Distribution
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,000 – 100,000
100,001 – and over
Total
Number of holders
766
1,421
753
1,316
335
4,591
Securities held
421,696
3,989,120
5,980,407
43,584,598
967,053,922
1,021,029,743
The number of shareholdings held in less than marketable parcels is 226.
SUBSTANTIAL SHAREHOLDERS
An extract of the Company’s Register of Substantial Shareholders (who hold 5% or more of the issued capital) is set out below.
1
Shareholder Name
VANECK GLOBAL (NEW YORK)
Total
TWENTY LARGEST SHAREHOLDERS
Shareholder Name
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
2
CITICORP NOMINEES PTY LIMITED
3
4
CS THIRD NOMINEES PTY LIMITED
5 BNP PARIBAS NOMS PTY LTD
6 AIGLE ROYAL CAPITAL PTY LTD
7 NATIONAL NOMINEES LIMITED
8 BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
9 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
10 B2GOLD CORP
11 ZERO NOMINEES PTY LTD
12 MR RICHARD HYDE
13 STICHTING LICHFIELD US\C
14 BNP PARIBAS NOMINEES PTY LTD
15 BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
16 MR PHILLIP RICHARD PERRY
17 UBS NOMINEES PTY LTD
18 GAMS-MINING F&I LTD
19
MR GRAEME JOHN HAINES + MRS SHARNI GAY HAINES + MR MALCOLM ARNOLD
HAINES
20 LUJETA PTY LTD
Total
No. of shares held
120,703,684
120,703,684
% Holding
11.82%
11.82%
No. of shares held
319,397,545
123,401,105
75,086,485
57,840,762
39,959,550
30,800,000
28,221,427
23,747,883
23,092,352
22,190,508
19,350,000
17,003,433
13,250,000
12,781,605
10,880,605
10,130,834
6,297,564
4,931,224
% Holding
31.28%
12.09%
7.35%
5.66%
3.91%
3.02%
2.76%
2.33%
2.26%
2.17%
1.90%
1.67%
1.30%
1.25%
1.07%
0.99%
0.62%
0.48%
4,739,700
0.46%
3,846,154
846,948,736
0.38%
82.95%
96
West African Resources Limited||8855
97
West African Resources Limited||8877
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
STOCK EXCHANGE LISTING
Listing has been granted for the ordinary shares (ASX code: WAF) of the Company on the Australian Securities Exchange Limited
(‘ASX’) with 1,021,029,743 ordinary shares on the Company’s register.
VOTING RIGHTS
All shares carry one vote per unit without restriction.
UNLISTED OPTIONS
11,656,743 options and performance rights are held by 29 option holders.
Neither options nor performance rights carry a right to vote.
98
West African Resources Limited||8877
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WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
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101
WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021WEST AFRICAN RESOURCES LIMITED ANNUAL REPORT 2021
ASX:WAF
WEST AFRICAN
RESOURCES LIMITED
ACN 121 539 375 ABN 70 121 539 375
T: + 61 8 9481 7344
E: info@westafricanresources.com
W: westafricanresources.com
PO Box: PO Box 1412, Subiaco WA 6904
Principal Office: Level 1, 1 Alvan Street, Subiaco WA 6008