West African Resources : Half Yearly Accounts

West African Resources Limited

ABN 70 121 539 375

Interim Financial Report

31 December 2016

West African Resources Limited

(ABN 70 121 539 375)

Directors

CORPORATE INFORMATION

Mark Connelly (Non-Executive Chairman) Richard Hyde (Managing Director)

Simon Storm (Non-Executive Director)

Company Secretary

Simon Storm

PRINCIPAL PLACE OF BUSINESS 14 Southbourne Street Scarborough WA 6019 Ph: [phone] Fax: [phone]	SOLICITORS Allion Legal Level 2 50 Kings Park Road West Perth WA 6005 Tel: [phone]
REGISTERED OFFICE 14 Southbourne Street Scarborough WA 6019 Ph: [phone] Fax: [phone]	SECURITY EXCHANGE AUSTRALIA Australian Securities Exchange Ltd Level 40, Central Park 152-158 St George's Terrace Perth WA 6000
WEBSITE www.westafricanresources.com	STOCK EXCHANGE CANADA TSX Venture Exchange The Exchange Tower 130 King Street West Toronto, ON M5X 1J2
LOCAL OFFICE Secteur 27, Quartier Ouayalghin, Parcelles 07/08, Lot 22, Section SL, Ouagadougou Burkina Faso Ph [phone]	SHARE REGISTRY AUSTRALIA Computershare Investor Services Pty Ltd Level 11, 172 St George's Terrace Perth WA 6000 T: 1300 850 505
AUDITORS HLB Mann Judd Level 4, 130 Stirling Street Perth WA 6000 Ph: [phone] Fax: [phone]	SHARE REGISTRY CANADA Computershare 510 Burrard Street, 3rd Floor Vancouver, British Columbia V6C 3B9 T: 604 661 9436

Your directors submit their report for the Group for the half-year ended 31 December 2016. In order to comply with the provisions of the Corporations Act, the directors report as follows:

Directors

The names of directors who held office during or since the end of the half-year and until the date of this report are as follows. Directors were in office for this period unless otherwise stated.

Mark Connelly - Non- Executive Chairman Richard Hyde - Managing Director

Simon Storm - Non- Executive Director and Company Secretary

Dividends

No dividends have been paid or declared since the start of the half-year and the directors do not recommend the payment of a dividend in respect of the half-year.

Principal Activities

The principal activity of the Group during the half-year was mineral exploration and feasibility study work focussing primarily on the Tanlouka (now known as Sanbrado) Gold project in Burkina Faso.

There have been no significant changes in the nature of this activity during the financial period.

Review of results and operations

The operations and results of the Group for the financial half-year are reviewed below. This review includes information on the financial position of the Group, its operational activities for the half-year and its future business strategies.

Operating results for the year

The net loss of the Group for the half-year ended 31 December 2016 was $6,164,996 (2015: $3,891,964).

Revenue

Revenue comprised interest received. Interest was $151,086 (2015: $1,316) up significantly on the previous corresponding period as a consequence of higher cash holdings.

Expenses

During the half-year, the Company continued exploration activities at its main exploration project, Sanbrado, with expenditure on exploration increasing 90% to $3,986,991 (2015: $2,101,720). In addition work continued on the open pit feasibility study of the Sanbrado deposit with expenditure increasing 124% to $1,556,141 (2015: $693,740) The share based payments expense increased 90% to $67,291 (2015: $35,490) due to the options issued in the 2016 financial year.

Cash flows

Cash and cash equivalents at 31 December 2016 increased by 62% to $18,475,959 (30 June 2016: $11,376,615). The increase in cash and cash equivalents during the six months ended 31 December 2016 arose due to the following reasons:-

Operating cash flows

Net cash outflows from operating activities increased 109% to $6,352,991 (2015: $3,042,564) and this increase arose mainly because of increased drilling and assay expenditure on Sanbrado and increased engineering feasibility expenditure on this Gold Project. The outflows were reduced by interest received of $158,638 during the half-year.

Investing cash flows

Net cash outflows from investing activities increased by 268% to $34,744 (2015: $9,440) due mainly to the acquisition of exploration equipment.

Financing cash flows

Net cash inflows from financing activities increased by 560% to $13,313,253 (2015: $2,016,924) which comprised the issue of 70,000,000 shares at 30 cents per share in August 2016, net of share issue costs and the conversion of 5 million options at 8.45 cents in October 2016. This was offset by the repayment of $6,756,756 for the USD5 million convertible loan facility with the Metals & Energy Capital Division of Macquarie Bank Limited.

Statement of financial position Current assets

Current assets increased by 62% to $18,770,276 (30 June 2016: $11,576,135) mainly due to cash and cash equivalents increasing 62% to $18,475,959 (30 June 2016: $11,376,615) mainly as a result of the August 2016 capital raising and option conversion in October 2016.

Non-current assets

Non-current assets decreased by 6% to $75,675 (30 June 2016: $80,497) due to the ongoing depreciation of plant and equipment.

Current liabilities

Current liabilities decreased by 80% to $1,683,786 (30 June 2016: $8,466,730), due to the repayment of the USD5 million Macquarie Bank Limited's loan.

Operational activities for the half-year Exploration

The Company's activities on its 100%-owned and 100%-earning gold and copper-gold projects in Burkina Faso, West Africa, for the half-year ending 31 December 2016 included:-

During the September 2016 Quarter:-

• continued drilling (7,150 m):-

  • at M1 South with the aim of extending mineralisation beneath the current resource, with significant results including:-

    • TAN16-DD052: 4m at 32.04 g/t Au from 122m Au and 10m at 18.33g/t Au from 172m

    • TAN16-DD055: 9m at 11.17 g/t Au, from 197m and 16m at 69.11 g/t Au from 209m; and

  • at M5 to upgrade mineralisation from Inferred to Indicated category for inclusion in the CIL open-pit mining studies;

• completion of a maiden mineral resource for M1 & M3 deposits and updated estimate for M5 deposit; and

• progressed the Permitting & Feasibility Study with the completion of a Resettlement Action Plan (RAP) and the Environmental and Social Impact Assessment (ESIA) approved by Burkina Faso's Ministry of Environment, Green Economy and Climate Change.

  During the December 2016 Quarter:-

• continued drilling (9,261m):-

  • diamond drilling undertaken at the M1 South prospect aimed to extend mineralisation beneath the current resource, with significant results including:-

    • TAN16-DD063 5m at 30.28 g/t Au from 216m, including 1m at 104.95 g/t Au

    • TAN16-DD063 14m at 11.82 g/t Au from 224m, including 1m at 131.80 g/t Au

  • at M5 Prospect aimed at improving the resource category - previous drilling had been suspended due to heavy rains as well as water ingress in some holes. However, during the quarter the Company used its own rigs to extend these holes.

  • at M3 Prospect further resource drilling was completed, which aimed to upgrade shallow oxide mineralisation, currently all contained in the Inferred category, to Indicated category.

    Permitting & Feasibility Study

• The Burkina Faso Ministry of the Environment, Green Economy and Climate Change approved the Environmental and Social Impact Assessment ("ESIA") for the project and subsequent to half-year the mining permit application was approved for the Sanbrado Gold project.

• In addition, the Sanbrado open pit Definitive Feasibility Study was completed on 20 February 2017.