West African Resources CEO Richard Hyde has sold a significant portion of his shareholding in the company, following the Burkina Faso government's decision to increase its stake in the Kiaka gold mine. The sale comes amid changes to the country's mining code that have raised concerns among investors.
CEO Sells Shares After Government Stake Increase
Richard Hyde, the managing director of West African Resources, sold 2.5 million shares in the company on Monday, netting approximately $5.4 million. The sale was disclosed in a filing with the Australian Securities Exchange. Hyde now holds about 10.5 million shares, representing a 1.1% stake in the company.
The share sale comes just days after the Burkina Faso government announced it would take an additional 15% stake in the Kiaka gold mine, bringing its total ownership to 20%. The move is part of the government's efforts to increase its involvement in the mining sector under the country's new mining code.
Impact of New Mining Code
The new mining code, which was passed in 2022, allows the government to acquire up to a 20% stake in mining projects. The code also increases royalties and taxes on mining companies. West African Resources had previously held a 90% interest in the Kiaka project, which is expected to begin production in 2024.
Analysts have expressed concern that the increased government stake could deter future investment in Burkina Faso's mining sector. However, West African Resources has stated that it remains committed to the project and is working closely with the government to ensure its success.
Company's Response and Future Plans
In a statement, West African Resources said that the CEO's share sale was a personal financial decision and not related to the company's operations or the government's stake increase. The company reiterated its confidence in the Kiaka project and its relationship with the Burkina Faso government.
The Kiaka gold mine is expected to produce an average of 250,000 ounces of gold per year over a 10-year mine life. West African Resources has secured financing for the project and is on track to begin construction in the coming months.
Market Reaction
Following the announcement of the government's increased stake, West African Resources' shares fell by 3.5% on Monday. The stock has declined by approximately 10% over the past month, reflecting investor uncertainty about the impact of the new mining code.
Despite the recent share price weakness, several analysts have maintained a buy rating on the stock, citing the strong fundamentals of the Kiaka project and the company's experienced management team. They note that the government's stake increase was anticipated and is in line with the new mining code.
West African Resources is an Australian-based gold mining company with operations in Burkina Faso. The company also holds exploration licenses in other parts of West Africa. The Kiaka project is one of the largest undeveloped gold deposits in the region.
