West African Resources Ltd (ASX: WAF) shares have tumbled more than 5% today after the Aussie miner's latest quarterly update.
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Why are West African Resources shares under pressure?
West African Resources provided an activities and cash flow update for the quarter ended 31 March 2021 (Q1 2021). Positively, production guidance for FY2021 was maintained during the first quarter thanks to "sound management" of COVID-19.
The Aussie miner reported no significant social, health or safety incidents for the quarter over more than 6 million hours worked. Gold production jumped 11% to 55,823 ounces at an all-in sustaining cost of US$957 per ounce.
Unhedged gold sales for the quarter totalled 56,780 ounces at an average price of US$1,800 per ounce. West African Resources shares have tumbled lower despite upgrading its FY2021 production outlook.
The Aussie miner is expecting 250,000 to 280,000 ounces produced for the full year at an AISC of US$720 to US$7800 per ounce. Mineral Resources as of 31 December 2020 were 81 megatonnes (Mt) at 2.0 grams per tonne for 5.1 million ounces of gold. Ore reserves were estimated at 20 megatonnes at 2.3 grams per tonne for 1.5 million ounces of gold.
West African Resources' 10-year production outlook is now 216,000 ounces per annum from 2021 to 2030. The increased reserves and production estimates weren't enough to stop the West African Resources shares from tumbling lower today.
The big news was the miner's production from its underground operations. West African Resources reported underground mined ounces were down 30% on December quarter numbers. Ore tonnes were down 6.7% with 7.7 grams per tonne versus 10.3 grams per tonne in the previous quarter.
Foolish takeaway
West African Resources shares are under pressure today following the company's latest quarterly update. That's despite reporting increased production levels and lower all-in sustaining cost of production for the March quarter.
The group reported a "healthy financial position" with $94 million cash on hand and strong operating cash flow for the quarter.
