A post I made today on a different forum: You have correctly pointed out that $BAA is trading as a distressed situation. Many distressed situations end up having the debts restructured with the common shareholders getting wiped out. That is the risk here. I don't have a crystal ball but the signs are there that $BAA will be able to refinance their debts and therefore survive until gold price recovers enough for them to repay their debts. What are the signs ? 1) They have 3 big shareholders (Baiyin, Blackrock and Gramercy who have been supportive up to now. Baiyin owns 50 million common shares of Banro and acquired this stake earlier this year after doing months of extensive due diligence. They are a Chinese State Owned Entity and so have access to Chinese financing. When they got involved they expressed an interest in helping Banro to develop the gold belt that they control. This was less than 12 months ago and there is no reason to think that they changed their mind since. There is a $22 million loan due to Baiyin end of November and this along with statements from the company lead me to believe that the refinancing of their $175 million debt will happen by end of this month.The $175 million debt comes due March 1 2017 so there is definitely some urgency here. The current loan is at 10% interest rate and I think they will be able to knock of a few percentage points on the new loan. 2) EBITDA has been rising significantly of late: $4.3 million in Q4 2015, $10 million in Q1 2016, $18.6 million in Q2 2016, $24 million in Q3 2016. This is a significant positive trend in EBITDA that shows the fundamentals of the business are improving. Annualized EBITDA is almost $100 million and looks to me sufficient to demonstrate they are a going concern with the ability to refinance. Note that Banro has a 10 year tax holiday on their mines and so there are no taxes on their EBITDA. So except for interest, this EBITDA is a close approximation of actual cash flow. 3) Their asset base is second to none for an under $100 million market cap junior. They have 2 producing world class mines with another 2 permitted undeveloped projects in their pipeline. Their next mine Lugushwa has around 5+ million oz of open pit resources. They have the biggest land position in the DRC which is renowned to be one of the most if not the most prospective geologic provinces in the world. Their land position in DRC is comparable in size and in prospectivety to the entire Ashanti gold belt. I think worst case they would be able to sell themselves to their Chinese partner Baiyin for enough to pay off their debts and a small premium on the current share price. So downside appears to be limited with huge upside. Banro has invested over $800 million into their properties. Market cap is now around $75 million fully diluted for a 200,000+ oz per year low cost gold producer with a third mine in the pipeline that should take total production up to around 360,000 oz per year by 2020.
