West African Resources' (ASX:WAF) production is expected to increase in the coming quarters helped by improvements in underground grades at Sanbrado and Kiaka, Euroz Hartleys said in a note on Thursday.

The company reported first-quarter group production of 107,700 ounces and operating cash flow of AU$440 million, leading to a record cash and bullion balance of AU$1.06 billion.

It also maintained its 2026 production guidance at 430,000 ounces to 490,000 ounces, in-line with Euroz Hartleys' forecast of 470,500 ounces.

The investment firm believes the miner is "materially undervalued" in light of its production profile and cash generation, especially after the Burkina Faso government's move to acquire a 25% stake in its Kiaka mine for AU$175 million, removing a key source of uncertainty.

Prevailing gold prices and the company's strong cash flow are expected to support early debt repayment and ongoing capital returns, with the recent special dividend of AU$0.15 seen as first of many.

Euroz Hartleys reiterated a speculative buy rating on West African Resources and raised its price target to AU$5.55 from AU$5.50.