West African Resources Ltd (ASX: WAF) shares are having a day to forget on Monday.
In afternoon trade, the ASX 200 gold stock is down 16% to $1.39.
This is an improvement from earlier in the day when the African-focused gold miner's shares were down as much as 29% to $1.18.
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Why is this ASX 200 gold stock being sold off?
Investors have been rushing to the exits today amid concerns that the company's operations in Burkino Faso could be under threat.
West African Resources owns the Sanbrado Gold Mine and the Kiaka Gold Project in Burkino Faso.
Over the weekend, Reuters reported that Burkina Faso's military junta is planning to withdraw mining permits from some foreign companies. Instead, it will seek to produce more of its own gold according to junta leader Ibrahim Traore.
In an address to mark two years since he seized power in a coup, Traore said:
We know how to mine our gold and I don't understand why we're going to let multinationals come and mine it. In fact, we are going to withdraw mining permits.
Though, the junta leader did not specify which permits he planned to withdraw nor provide further detail.
Gold miner responds
After a brief trading halt, the ASX 200 gold stock put out a response to the speculation.
It revealed that it doesn't believe the government is planning to withdraw its mining permits. It said:
WAF is not aware of any plans by the government of Burkina Faso to withdraw any of its mining permits. President Traore has spoken previously about taking action against miners who have not adhered to the Mining Code and also regulating the semi-mechanised and artisanal mining sectors.
The government remains supportive of WAF's position in Burkina Faso as demonstrated by recent positive interactions between WAF and the government last month, with WAF being awarded the Best Mining Company Award at SAMAO for the second consecutive year, and the constructive and open dialogue that WAF has been engaged in with government around the new Mining Code announced earlier this year.
Though, it is continuing to monitor the situation in Burkina Faso and will provide more updates when appropriate.
As things stand, operations at Sanbrado and construction at Kiaka are progressing without interruption. This leaves the company on track to achieve its annual production guidance of 190,000 to 210,000 ounces of gold at an AISC of less than US$1,300 per ounce.
