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This agreement with Mwenga looks to be significant and may unblock development of the 3rd gold mine forward:
Interactive map shows Mwenga territory is a big chunk of South Kivu:
http://www.ipisresearch.be/mapping/webmapping/drcongo/v4/#-3.039040312065463/28.773193359374996/8/terrain,1,4,5/2013,2014,2015,2016,au,ca,ta,wo,dia,tou,cu,am,mo,dig,gal,gar,py,ag,au_me,au_cy,au_no,a_no,a_lo,a_fo,a_fa,a_fr,s_s,s_d,s_i,s_t,q_g,q_y,q_r,q_n,50less,50plus,500plus,d_au,d_ca,d_ta,t_pr,t_pe,t_zea,t_zin/
Page 33 discusses Mwenga:
http://ipisresearch.be/wp-content/uploads/2016/10/Mapping-minerals-in-eastern-DR-Congo_v005.pdf
$1250 looks to be an important level for the gold price:
https://www.ceo.ca/@goldfinger/seriously-this-is-the-most-important-level-for-gold
Not sure, but I think legally it is up to to the majority of note holders to extend or not. But Banro may be able to induce them to extend by a year or so by throwing in some free warrants. They can also force the company to have their notes converted into 90-95% stake in the company. I think Baiyin with their 20% stake in the notes would probably be willing to extend. I also think the original note holders would also go along with an extension. But vulture bond investors if they were able to buy the notes at distressed prices would probably want to trigger a "default" and force a conversion to equity at these cheap prices so that they can reap significant capital gains. I don't know what proportion of the 80% of notes not owned by Baiyin are still owned by the original investors. I also don't know what the probabilities are for an unfavorable outcome VS. a favorable restructuring/refinancing outcome. But with Baiyin/Gramercy/Blackrock as big shareholders/stakeholders of the company, I don't think the outlook is as bleak as the share price would suggest...
BAA will continue to underperform until we get a meaningful update from the company on the refinancing.
There have been so many gold miner implosions (Allied Nevada, Gran Colombia gold, Aureus mining, Besra, etc ...) investors will be wary of getting caught in another one
45 days to D day and counting down ...
Thank you bullforever, very glad to hear that you are still planning to hold half your position. I may also consider selling half if we don't get a decent update soon on the progress with the notes refinancing.
long but interesting read on how the chinese are on the verge of setting up a pathway for oil producers to sell oil in exchange for yuan which can then be traded for gold:
http://www.tfmetalsreport.com/blog/8067/guest-post-death-petrodollar-and-what-comes-after-grant-williams
Baiyin is committed to not competing with gold one in the gold mining business (see page 228):
http://www.hkexnews.hk/app/SEHK/2016/2016091406/a8908/EGOLDONE-20160914-19.PDF
South African gold producer Gold One Group has filed an initial public offering application with the local bourse as it seeks to raise up to US$200 million (HK$1.56 billion).
State-owned Baiyin Group, a joint venture of Gansu State-Owned Assets Supervision and Administration Commission and CITIC Guoan Group Gold One Group, holds 59.2 percent of the IPO applicant. China-Africa Development Fund holds a 29.6 percent stake.
http://www.thestandard.com.hk/section-news.php?id=174181
I don't see how Baiyin can let Banro's refinancing fail as it would have negative repercussions on the upcoming Gold One IPO.
From the looks of the following Competent Persons Report on Gold One International (59% owned by Baiyin), it would seem that Gold One is prepping for an IPO in Hong Kong:
http://www.hkexnews.hk/app/SEHK/2016/2016091406/a8908/EGOLDONE-20160914-31A.PDF
Wonder if this IPO has any impact on Baiyin's timing for Banro refinancing ?
Below links are for subscribers only:
http://www.globalcapital.com/article/b10c0fpnhp3xz7/datang-seals-hk$2bn-ipo-as-gold-one-eyes-$200m-float
http://www.globalcapital.com/article/zly65xwx8mkk/citic-backed-gold-one-digs-for-hong-kong-listing
http://www.ifrasia.com/equities-south-africas-gold-one-plans-hong-kong-ipo/21263251.article
It is now 2017 and still no news on the refinancing, and I am starting to get a bad feeling. Martin did say there would be news before the end of November and the CEO has been saying for months that refinancing the debt is his primary focus, yet there is no progress to show, not even a memorandum of understanding outlining the rough parameters of a deal. It is time to start considering the possibility that things are not going well on this front and so it may be time for the company to work on plan B, which is to sell the entire company to the highest bidder. In the case of an outright sale, hopefully us shareholders will be left with more than the current share price after paying off the very substantial debts. The real owners of the company are the note holders and every day that goes by without any news on the refinancing brings us one day closer to march 1, when the note holders get to take over the company assets, leaving us equity holders holding the bag. Sorry for the negativity, but this is how I feel after the company's latest PR which addressed this concern in the most brief manner.
http://www.aljazeera.com/news/2016/12/deal-finalised-peaceful-political-transition-drc-161231182050153.html
POLITICSDR CONGO NEWS2 HOURS AGO
Deal finalised on peaceful political transition in DRC
Government and opposition agree that President Joseph Kabila will step down after elections are held next year.
Kabila's refusal to step down has prompted protests in parts of DRC [Robert Carrubba/Reuters]Kabila's refusal to step down has prompted protests in parts of DRC [Robert Carrubba/Reuters]
Joseph Kabila will step down as president of the Democratic Republic of Congo after elections are held before the end of 2017, under an agreement apparently finalised by the government and the opposition.
The deal was concluded on Saturday in the capital Kinshasa, according to negotiators ending a lengthy stalemate in the country.
"We have reached agreement on all points," said Marcel Utembi, the bishop who chairs the Episcopal Conference (CENCO) overseeing the talks.
Opposition activists detained in DRC
Alexis Thambwe Mwamba, justice minister, confirmed that a deal had been reached, saying: "Everything is settled."
The negotiations, launched on December 8, took place under the aegis of the influential Catholic Church, which had initially set Christmas Day as a deadline for a deal.
The draft deal was made on Friday, but the finalisation of the agreement was delayed due to new demands.
Al Jazeera's Fahmida Miller, reporting from Kinshasa, said one of the sticking points was the issue of a referendum.
"The government representatives said they wanted to reserve the constitutional right provided by Article 5 to have a referendum before elections are held next year. But they didn't say what the vote would be about," she said.
"The opposition said they wanted to remove any loopholes from this agreement. They of course opposed the referendum and said the government was trying to keep President Kabila in power."
Kabila has been holding on to power although his second and final five-year term ended on December 20.
'Political transition'
The deal envisages a "political transition" with fresh presidential elections to be held at the end of 2017.
The vote was supposed to be organised in late 2016. The government had previously said it was impossible for it to be held before April 2018.
Growing tensions in DRC as President Kabila's term nears end
A transitional government will be put in place by March next year.
The agreement also guarantees that Kabila will not seek a third mandate and lays the groundwork for a "national transition council" charged with carrying out the agreement.
In return, the opposition headed by Etienne Tshisekedi, 84, would accept that Kabila can stay in power until he hands over to an elected successor.
It had previously demanded his immediate departure from public life.
In May 2016, Kabila managed to get a court to rule that he could remain in power until a successor was chosen.
The deadline for his departure from office unleashed clashes that have left between 56 and 104 people dead, according to divergent tolls.
If the deal is followed, it will be DRC's first peaceful transfer of power since independence in 1960.
Western and African powers feared the failure to secure a peaceful transition of power could lead to a repeat of conflicts seen between 1996 and 2003 in eastern DRC in which millions died, mostly from starvation and disease.
Assuming 400 million shares fully diluted, the ownership by the top 3 institutions in Banro is:
http://www.gurufocus.com/ownership/AMEX:BAA
Baiyin/RFWB => 20% (after adding 31.5 million shares from preferred share conversion)
Gramercy => 10% (after adding 31.5 million shares from preferred share conversion)
Blackrock (3 different funds) => 7%
Total stake owned by the above deep pocketed and prestigious 3 institutions is 37%. In addition Baiyin owns 23% of the 2017 notes.
I highly doubt these 3 big shareholders will allow the note refinancing to fail as it will ding their reputations. After all they have done extensive due diligence prior to making their investments in Banro and a failure in refinancing will reflect badly on all of them. The only issue is the terms and how much share dilution will be needed to make a deal. I am sure Baiyin is keen on increasing their ownership stake from 20% to the 35-40% range. This is their chance to up their ownership stake by helping out with making the refinancing happen. There is a mutually beneficial deal to be had here. With Baiyin already owning $40 million of notes, we are only talking about $135 million in additional financing needed for the remaining notes.
I am not concerned about earnings, as long as EBITDA continues to holding up or rise. When most gold miners are breaking even at current gold prices, I don't believe gold stock investors are focussed on earnings. But they do want to know that the company will survive without severe share dilution until gold prices move up significantly. In Banro's case successfully refinancing the 2017 notes is absolutely key to this perception.
https://www.bloomberg.com/news/articles/2016-03-07/china-expands-control-of-congo-copper-as-western-miners-retreat
http://www.mining.com/fresh-wave-of-chinese-firms-go-after-congos-riches-report/
Fresh wave of Chinese firms to go after Congo’s riches — report
Cecilia Jamasmie | Jul. 22, 2016, 8:00 AM | 3,845 | 0
PEOPLEMINE FACEBOOK LINKEDIN TWITTER EMAIL PRINT
Lundin's agonizing Congo decision
Tenke Fungurume could be global top five copper mine (Image courtesy of Freeport-McMoRan)
First was Latin America, now Africa. No matter where the projects are located, if they are promising copper or gold assets, Chinese investors are coming for it.
The imminent acquisition of Freeport-McMoRan’s Tenke Fungurume mine in the Democratic Republic of Congo is just the latest sign of a growing trend, as analysts expect the Asian nation to continue its quest for a steady supply of metals, mainly copper, cobalt and gold.
According to a report released Friday by BMI Research, the DRC will remain the destination of choice for Chinese mining investors in the coming years, thanks to the country’s low production costs and the largest undeveloped high-grade (2-3% compared to global average of 0.8%) copper deposits in the world.
Fresh wave of Chinese firms go after Congo’s riches — report
The analysts argue that China's slowing gold production growth as a result of depleting domestic reserves and rising production costs will also boost the presence of Asian investors in the DRC's largely untapped gold sector:
DRC's growing economy — with an average annual real GDP growth rate of 7.9% during 2011-2015, and the mining industry accounting for 10.9% of GDP in 20 15 — will increasingly absorb most foreign investment in the African region with South Africa's production costs on the rise.
Infrastructure boost
In many ways, China is repeating a known strategy for those in the mining industry. At the turn of the millennium, the country moved to secure supplies of traditional commodities, such as oil and industrial metals, sometimes through acquisitions, other times through investments and loans-for-oil deals with nations including Angola and Venezuela, which held big deposits of the raw materials.
In Africa, they are now also investing in infrastructure, but the experts at BMI say it will take years for those ventures to benefit the region’s mining sector.
Fresh wave of Chinese firms go after Congo’s riches — report
As an example, they mention a $6 billion loan in place since 2009 between Exim Bank of China and the DRC, which is expected to improve Congolese infrastructure and boost the development of mines in return for control over some copper deposits.
Progress on the matter continues. Last month, the Congolese government awarded a $660 million contract to a consortium of Chinese investors to build a 240 mega watt hydroelectric project at Busanga, near the location of the Sicomines copper project, which is a joint venture between DRC-owned Gecamines S.A., China Sinohydro and the China Railway Group Ltd.
Fresh wave of Chinese firms go after Congo’s riches — report
However, BMI’s report acknowledges that regulatory uncertainty in the country, mostly linked to a potential revision of its mining code and upcoming presidential elections, will remain a key barrier to the resource sector's long-term growth. They place the country in the 59th position for mining risks out of the 61 countries they list in their Mining Risk/Reward Index.
BMI also warns that the lack of substantial infrastructure and power are two other factors that will weigh on investors decisions in years to come.
Any thoughts on what it would mean if there is no refinancing news before end of feb ? The bonds come due march 1.
The chairman of the board also has a finance background and would also have been able to help with properly vetting the new CFO:
Richard Brissenden is a mining executive and corporate director with over thirty years of experience in the resource sector. A Chartered Professional Accountant (CPA, CA) and Certified Director (ICD.D), he serves on the board and audit committee for several mining companies, including McEwen Mining, Ryan Gold Corp., and Corona Gold Corporation. As chairman and president of Excellon Resources Inc. from 1991 to 2008, he led the company through the discovery, development and production stages of a high-grade silver/lead/zinc mine in Northeastern Mexico. He has also been a director of HudBay Minerals Inc., as well as president of a gold producer in Alaska, and president of a mine finance house with interests in over fifty junior mining companies. He is a member of the Institute of Chartered Accountants of Ontario and the Institute of Corporate Directors.
The top 2 factors for Banro's future are:
1) The price of gold
2) being able to refinance their debt due march 1, 2017
Regarding #2, keep in mind that Baiyin did extreme vetting and due diligence on Banro before deciding to getting involved:
http://africacapitaldigest.com/chinas-rfw-in-98mln-banro-private-placement/
“We believe the long-term nature of the Twangiza streaming arrangement and private placement, along with the committed strategic relationships involved, will provide Banro with a solid base to achieve its longer term growth objectives as well as the refinancing requirements in 2017,” commented Richard Brissenden, Banro’s Board Chairman.
“Baiyin’s investment in Banro through our offshore direct investment fund is consistent with our strategy to invest in low cost mines with large gold endowments and substantial growth opportunities,” commented Baiyin Chairman, Liao Ming. “We will support Banro in unlocking the considerable potential of the Twangiza-Namoya Gold Belt.”
One of Banro's directors Derrick Weyrauch has a finance background and I am sure was involved in vetting the new CFO for Banro. The new CFO was also vetted by Banro's CEO Dr. John Clarke who was previously the CEO of Nevsun. Whose judgement regarding the CFO should I trust more ? The above 2 gentleman whose track record is out there in the public domain for all to see or a respected but anonymous poster with no track record whose alias was fairly recently created on IHUB and who thought North American Palladium was a good investment ? Please advise as I am in a quandary on whom to believe, LOL.
Derrick Weyrauch is a Chartered Professional Accountant (“CPA”) and a Chartered Accountant (“CA”) with over 25 years of experience that includes corporate financial management, financings, strategic planning and merger & acquisition transactions. Currently, he serves on the Audit, Health & Safety Committee and Chairs two Special Committees for the board of directors of Jaguar Mining Inc. Prior to its sale in 2013, Mr. Weyrauch served as the Chief Financial Officer of Andina Minerals Inc. Mr. Weyrauch earned his CA designation in 1990 while working at KMPG and he is a member of the Institute of Chartered Accountants of Ontario, the Institute of Corporate Directors and he holds a Bachelor of Arts degree in Economics.
http://relationshipscience.com/derrick-h-weyrauch-p4029928#
Derrick H. Weyrauch
Ontario CPA - in 1990 with KPMG LLP - BA - York University
President at Weyrauch & Associates Inc. (a consulting company Stouffville, Ontario, Canada) from May 2010 to present
CFO of Jaguar Mining Inc. from April 2014 to February 2016 (Director since from June 10, 2013 to April 22, 2014)
Director of Minera IRL Ltd. from June 21, 2016
Director of Banro Corporation from December 11, 2013 (RFW Banro Investments Limited)
Director of Eco Oro Minerals Corp. from June 2016
CFO of Temex Resources Corp. from January 2014 to June 2014
CFO of Andina Minerals Inc. from November 2010 to January 2013
CFO, Secretary & Head-Investor Relations by Andina Minerals, Inc.
CFO by Arapaho Capital Corp.
Finance Director & Treasurer by Gabriel Resources Ltd.
Chief Financial Officer by Malbex Resources, Inc.
Vice President-Finance by Prism Medical Ltd.
BTW, North American Palladium had a long track record as a hyped up money losing dog.
Avi Gilbert November 29, 2016 - 6:54 pm at 6:54 pm
First published Sat Nov 26 for members of ElliottWaveTrader.net: In my mid-week night-time update, I generally noted what I am seeing in the market:
The metals markets are all now hitting the downside retracement targets for support we have been speaking of and focusing upon since the market confirmed this pullback months ago. The market has positive divergences at the lows we are striking. The sentiment readings are at the levels when we struck the lows this past January. Anyone who is not a perma-bull has just about thrown in the towel. Most in the market are pointing to the exact same heads and shoulder break down and looking for the market to now drop to lower lows – which I warned you about months ago. The only type of rally people think is possible is a corrective bounce. I see people cursing out other analysts that told then to buy at much higher levels.
These types of indications are usually seen as markets bottom. Yet, many traders in the market are now pressing their shorts after the neckline of the “clear” heads and shoulders pattern has broken, and this is something I also warned about weeks ago. But, if the entire market sees this “clear” heads and shoulders pattern, and discusses it ad nauseam as we see today, do you think it will play out as the majority of the market believes? Moreover, do you know what happens when a heads and shoulders pattern fails? We see a violent move in the opposite direction.
I am going to digress for a moment, and note that I have received many dozens of messages from members at Elliottwavetrader.net over the last 6 months telling me that they have become “new” millionaires due to the analysis we have provided, especially in the metals complex. Most of them bought in the “buy box” I had provided at lower levels. But, what is interesting about those that bought at lower levels was that they bought when the pervasive “market-think” suggested that the market was heading even lower. And, when they entered the market by taking a contrarian stance, even though it was very difficult, they were handsomely rewarded. Today, we have the same opportunity, yet the upside is even greater on a percentage basis, assuming we are able to hold support. But, most are still persuaded by the overall bearish sentiment prevailing in the market, just as it was back at the end of 2015 and early 2016, and afraid to even make an attempt.
So as long as we remain over support, my primary perspective will not change. Since I am not a prophet, I can certainly be wrong in my expectations. But, as long as the market remains over support, I have to maintain my expectations, especially with the general sentiment in the market hitting levels of extreme bearishness. And, as Baron Rothschild famously said, “the time to buy is when there is blood in the streets, even if it is your own.” This is what successful investing is all about. Do not be afraid to be wrong, and just accept that you will be wrong at times. But, do not fear being right as well, and recognize when the time comes that you need to act.
Again, I must reiterate something I noted in my mid-week update that one must not fear being wrong in the market, as we are all wrong at one time or another. Rather, one must fear being wrong in the market only when you remain in a position that is clearly wrong in the market. You want to invest your money when the market moves into a region of support, and if that support breaks, then you stop out so you do not remain in a wrong position. But, when the risk/reward favors you as the market drops into a support region, that is usually the time to place your money to work, especially when you have a small window within which you may be wrong.
So, as we are now striking the support regions we were looking towards back in September, I think we have a small window left for the bulls to be stepping forward. If we are correct that the market is now bottoming out, then you have an opportunity to buy into the market at prices you may not again see in your lifetime.
However, if we are wrong, and are forced to stop out, and the market drops to levels below the lows seen in December and January, offering us another “sale” in the market, I view that as a huge opportunity for metals investors, and not something to be feared. So, to be honest, is there really any downside in either of these situations for long term metals investors? For those that really understand the long-term opportunity in the complex, the answer is a clear “no.”
For now, my primary expectation is that the markets are bottoming, and are going to begin their next bull market phase in the near term. As long as silver holds 16, GLD holds the 111/112 region, and GDX holds 19.80, then there is nothing to worry about. However, as I have noted many times, the metals may spike below their ideal supports, and then strongly reverse, which often happens in markets, as it shakes out those counting on support to hold and then turns back up. This is why one should always place their stops just under their ideal support regions.
So, I will note that there is a 15.75 level of secondary support below in silver and 18.70 in GDX, below which the bears can very well take control of the market again to drop it to levels lower than those seen this past December and January. A break below 18.70 in GDX will then set us up for a test of 16.50-17, which if broken, points to as low as 7-9 in the GDX. Again, this is not my primary expectation at this point in time, but I always have to understand the risk in the market at any point in time so that I am seeing the market as it is rather than as I hope it to be.
I have been told many times that when I begin to discuss the alternative counts in a bit more depth, that is usually when the market is just about to turn and confirm my primary bias. I expect this time will be no different. But, as I have quoted Ben Franklin many times, “by failing to prepare, you are preparing to fail.” So, as an investor, you have a responsibility to make a plan which fits your risk profile, especially when we are in such a pivotal region. And, no matter which way the market turns in this region you must act on your plan, rather than rely on “hope.” For, as I have written so many times before, “hope” kills more investment accounts than stupidity.
See charts illustrating the wave counts on the GDX, GLD and Silver (YI) at https://www.elliottwavetrader.net/scharts/Charts-on-GDX-GLD-Silver-201611291425.html .
Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (http://www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.
All Banro needs to do is to survive until higher gold prices cause the value of the company's assets to increase to over $1 billion. Banro IR seems to believe they can refinance without too much equity dilution. If they succeed in doing so then it is game on. With the hard impending deadline of march 1 2017, we should soon know either way.
What do you think the entire company is worth if it were to be sold today ?
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.
November 23, 2016 - 12:10 am at 12:10 am
Time For The Gold Bulls To Step Up – If There Are Any Left
by Avi Gilburt, ElliottWaveTrader.net
First published Sat Nov 19 for members of ElliottWaveTrader.net: Two weeks ago, I noted that we had a completed pattern to the downside in the equity market and it was time for the equity market bulls to step up. And, boy, did they ever. Now, it is time for the metals bulls to do the same. But, it seems I cannot find them.
Last weekend, I noted that the bulls have gone into hiding. This past week, they were scared even further into their shell. Yes, bullish sentiment in the complex has dropped to almost nothing. For those that review market sentiment readings, you will know that we have almost no bulls left in this market, or at least bulls who are willing to admit it. That is often a strong indication that we are bottoming, and not collapsing.
I also noted in my last weekend report that, if our pattern was going to hold for potential bottoming in the complex, we would need to see a “bounce” early in the week, which would then likely lead to a lower low later in the week. The market has followed through quite nicely with this bottoming pattern thus far.
Moreover, the positive divergences we are seeing on all time frames is quite stark and strongly suggestive of waning selling pressure. If we review the silver charts, we see positive divergences on all time frames from 5 minutes up to daily. Our 144-minute chart, which has given us the strongest indications of impending tops and bottoms in this complex all year, is strongly suggesting that we are now bottoming. Will it be the first false signal we have seen all year? I cannot answer that. All I can do is work on probabilities and the probabilities are strongly in favor of us bottoming very soon.
In fact, there is potential for the GDX to having already bottomed. We have what can be considered a “micro” 5 wave structure off the last low struck in the GDX. And, when silver and gold made lower lows, GDX has only pulled back correctively thus far. While I still need to see us take out last week’s high and move through the 24 region to confirm this potential, I have to at least note the potential we are seeing on the chart.
While I have been noting that support in the GDX is 19.80, and we have held it rather well thus far, IF we do see more weakness in this complex, a spike below that level which is reversed rather quickly will likely be a st1rong indication of a bottom being struck. But, the market will have to strongly break below 16 in silver and 111/112 in GLD to take the probabilities much higher that lows below the ones seen in December and January can be broken. Until such time, I still maintain the perspective that the low has been struck in this complex with an estimated 70% probability and the set-up is now in place to see a strong reversal. But, since I do not control the market, it’s time for the bulls to either step up or else we may have to modify our perspective over the next 6 months.
To add to the potential that the market is bottoming, several of our analysts at Elliottwavetrader.net have come to similar conclusions, but based upon other methodologies.
First, I want to introduce you to Princely Mathew. For those of you that do not know him, Princely finished 2nd in the World Cup Trading Championship last year, so he is clearly quite an accomplished trader who we feel fortunate to have in our trading room directing our members. Princely runs The Smart Money service at Elliottwavetrader.net, wherein he utilizes a collection of proprietary indicators which provide insight into how the ’smart money’ or institutional money is positioning themselves. He also provides timing cycle analysis in our Trading Room for the gold market. Based upon his analysis, Princely also sees the gold market as bottoming in the very near term.
Next, Victor Nguyen, who runs our Quant Index Signals service at Elliottwavetrader.net, uses a fractal algorithm to identify turning points in the market, and has issued a “daily buy” signal for the gold market. Lastly, Dr. Cari Bourette of Marketmood.net also sees the gold market bottoming imminently, based upon her algorithm which tracks market sentiment.
And, in case you are asking yourself the question, yes, all these analysis methodologies supported our wave counts that the equity market was bottoming two weeks ago. So, we have several different analysis methodologies all pointing to the same conclusion now in the gold market. Therefore, I still believe the probabilities rest in our favor that the market is bottoming in the near term.
So, now is not a time for “hope.” Now is a time to have a plan and take action. As Ben Franklin has said, “by failing to prepare, you are preparing to fail.” And, as long as we remain over cited support, I am looking up.
See charts illustrating the wave counts on the GDX, GLD and Silver (YI) at https://www.elliottwavetrader.net/scharts/Charts-on-GLX-GLD-Silver-YI-201611201415.html .
Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net(www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.
When comparing Banro with Gran Colombia:
Both companies are extremely undervalued.
Banro has great CEO but CFO is of dubious merit.
Gran Colombia has pretty good CFO but dubious management/CEO.
CEO is much more important than CFO, so If I had to choose between these 2, I will go with the company with a great CEO (Banro). For many years Banro had a native Congolese CFO including when they financed Namoya. I think my preference would be this new CFO over the Congolese CFO:
https://www.linkedin.com/in/davidlangille
IMO negative EPS and 6 months delay on the new equipment is all irrelevant IF:
-EBITDA continues on an uptrend as it has for the last few quarters
-They successfully refinance their project debt which has been promised for end of Nov timeframe.
Nice chart!. It looks like it would have touched the bottom rail today.
It looks 2 US Global Funds own US$17 million in debs between them and that could convert into approx. 130 million shares:
U.S. Global Investors Gold & Precious Metals Fund (USERX): $4.2 million 2018 debs + $3.2 million 2020 debs:
http://portfolios.morningstar.com/fund/holdings?t=userx
https://fundresearch.fidelity.com/mutual-funds/summary/911478105
US Global Investors Global Resources Fund: $4.3 million in 2018 debs + $6.9 million in 2020 debs
https://fundresearch.fidelity.com/mutual-funds/summary/911476208
Top 10 Holdings 7 tool-tip tool-tip
AS OF 6/30/2016
Ended
30.72%
TOP 10 HOLDINGS
Klondex Mines Ltd
6.47%
Gran Colombia Gold Cv 6%
6.31%
Gran Colombia Gold Cv 1%
3.92%
I wonder how the search for a CEO is going ?
Following is 9 months old but indicates that GCM has been searching for a new CEO:
http://www.mining.com/web/u-s-globals-ralph-aldis-on-the-life-changing-magic-of-an-asset-allocation-plan/
TGR: Let's talk about some of the specific gold mining companies in your portfolio that are doing well or have significant catalysts coming up.
RA: Gran Colombia Gold Corp. (GCM:TSX) is one that we've been involved with for a number of years. The challenge of operating in Colombia isn't as much the narcotics drug lords as it is the socialist slant of the government. We have seen a restructuring of the board members, and Gran Colombia is kicking off a CEO search. Rodney Lamond, Mark Ashcroft and Mark Wellings are three new board members. Wellings was one of the people who ran GMP Securities for a very long time for Griffiths McBurney & Partners. He's highly respected on the Street. All three people have a great track record. Gran Colombia has also formed a technical committee of the board. Having a plan and executing on that plan will be important for Gran Colombia going forward. With these new board members and the right CEO, I think we could have great opportunity on this one.
The common share price is very cheap. The real play right now is to buy the depressed debt securities because those will see the rerating first. The silver notes have a 1% coupon, but the gold notes will have a 6% coupon. The yields of 25% to 30% are very attractive in this market. So once the market gets some clarity on how Gran Colombia is going to be led, that could be a game changer for the company.
TGR: In addition to the changes on the board, Gran Colombia also just completed a debt restructuring. How important is that for reducing costs?
RA: That's a big deal because bringing down the interest payments will free up a lot of cash flow to do more things. It will give the company a lot of flexibility on the operating side.
Plus the Colombian peso has fallen quite a bit. That is another example of where a company benefits from paying its labor with the Colombian peso, but profiting from a higher gold price.
Voters in a referendum in Colombia have rejected a landmark peace deal with Farc rebels in a shock referendum result, with 50.24% voting against it.
http://www.bbc.com/news/world-latin-america-37537252
looks overvalued to me:
-C$153 million Market cap and zero revenues
-insiders got in for pennies and retail investors bear all the risk for small upside
-Still owe $60 million to Barrick for purchase.
-If this project is world class, why did Barrick sell it ? The conclusion is obvious ...
-Papua Guinea is one of the worse countries in terms of risk
-looks like a small time producer to me:
>>AIM mining study 200,000 tpa @ 7.5-8 g/t; ~94% recovery rate. Poteintially producing 45K oz Au/yr.<<
Nothing wrong with the computer just with your search.
Here is the correct query:
https://www.google.com/search?client=safari&rls=en&q=colombia&ie=UTF-8&oe=UTF-8#q=colombian+peso+to+us+dollar
at 3000 pesos to the dollar, 30 billion pesos is closer to $10 million
With such large losses, how come there is no panic selling of shares ?
Easier said than done. So why didn't they do a JV for Namoya instead of taking on so much debt and mine startup expenses that it nearly bankrupted them ? The only thing that has changed is that thanks to Baiyin they now how a chance to do a JV with a Chinese partner.
Excellent article that provides background and rationale on the ongoing illegal mining cleanup operations that started at Buritica a few months ago and that has now come to Segovia. This is all very good news for legal, tax paying, environmentally sound miners like Gran Colombia:
http://www.medellinherald.com/expcorn-2/companies/item/299-antioquia’s-legal-gold-miners-expanding,-getting-help-from-colombian-police
ANTIOQUIA’S LEGAL GOLD MINERS EXPANDING, GETTING HELP FROM COLOMBIAN POLICE
by Roberto Peckham APRIL 26 2016
The multi-billion-dollar business of gold mining in Antioquia has suffered enormously from decades of violence, land invasions, murders, extortions, environmental destruction, illegal and “informal” mining, as well as the intromission of guerrilla and “paramilitary” groups.
But some hopeful signs are starting to emerge as Colombia’s National Police announced April 25 their first-ever seizure of 61,884 grams of illegally trafficked gold, worth an estimated COP$5 billion (US$1.7 million).
The criminal investigation unit (DIJIN) of the National Police and Interpol jointly seized the gold -- originally mined in Buritica, Antioquia, and then transferred to Medellin’s downtown Olaya Herrera airport, the point of capture, according to police.
The seizure followed DIJIN’s discovery that the company in charge of shipping failed to prove legal origin of the gold.
Subsequent investigation by DIJIN’s money-laundering investigative unit discovered that criminal gangs were behind the production and shipment of the gold. These gangs employ heavy mining equipment and use toxic mercury at unlicensed mining sites in Antioquia, according to police.
The gangsters had planned to sell the gold to buyers in the USA and Switzerland, according to DIJIN.
Seeking to evade detection, these gangs often collaborate with commercial establishments and falsify documentation in order to launder illegal gold as legal gold obtained from small-scale producers in Antioquia, according to DIJIN.
Continental: Crackdown on Criminal Mining
On a related front, Toronto, Canada-based Continental Gold announced April 25 that the Colombian government, the Antioquia departmental government and the municipal government of Buritica just launched a “major joint operation” to shut-down illegal and criminal mining operations within Continental’s licensed mining areas.
“The intervention is a direct result of the national government’s initiative to eliminate illegal mining, through which there have been several similar interventions recently in other parts of the country,” according to Continental.
The crackdown “also reflects the newly-elected state government of Antioquia’s full alignment with the national government’s agenda to support legal, private sector mining as well as the formalization of small-scale local traditional miners.
“These efforts respond as well to the January 20, 2016, Resolution No. VSC-055 issued by the National Mining Association of Colombia (ANM) in which illegal mines at Buritic were ordered to be permanently closed, due to significant safety concerns generated by unsafe and non-technical practices.
“The company expects that the current operation by the Colombian authorities will pave the way for increased territorial control by the government in the region.
“The increased control, in conjunction with the substantial investment currently being made in the economic and social development of the region and in key environmental conservation initiatives by the company, strategic non-government organizations, the government and the private sector, will further strengthen the process of permitting, constructing and operating a mine at the company’s multi-million-ounce, high-grade Buritic project.”
On a related front, the Mayor of Buritica -- Humberto Antonio Castao -- announced April 25 that Colombian Police so far have shut-down 13 illegal mines operating in the area.
According to a report from Medellin-based daily newspaper El Colombiano, those mines were among some 21 operations ordered shut by the National Mining Agency, although more than 20 other illegal mines in the area have yet to be shuttered.
Some 2,000 illegal miners – many of them “drifters” that roam around Colombia invading areas previously licensed to legal, tax-paying gold-mining companies – are affected by the shut-downs in Buritica, according to the report.
However, many of these illegal miners potentially could be “formalized” – that is, newly affiliated with legal mining operations such as those operated by Continental, according to the report.
Antioquia: Huge Mining Expansions
On another front, the Colombian business newspaper Portafolio reported April 24 that major mining companies including South Africa-based AngloGold Ashanti, Canada-based Red Eagle Colombia, Canada-based Gran Colombia Gold, Continental Gold and Medellin-based Mineros SA are developing projects (mainly in Antioquia) that total some US$3 billion in investment.
The resulting gold production will net the Colombian government more than COP$200 billion (US$68 million) in taxes and royalties annually, according to the report. By contrast, the thousands of “informal” and illegal miners in Colombia don’t pay any taxes or royalties -- and are a convenient source of money-laundering by violent criminal and guerrilla groups.
AngloGold Ashanti is developing its “Gramalote” gold mine at San Roque, Antioquia, with an investment totaling some US$2.2 billion and aiming to produce some 450,000 ounces of gold each year when the mine starts-up in five years, according to the report.
As for Continental Gold, this company is already producing 9,000 ounces per year of gold -- and with upcoming expansions, it would employ another 1,500 legal mining workers. The mining area is estimated to have reserves exceeding 13 million ounces of gold.
As for Mineros SA, this long-established Antioquian company plans to double gold output at its underground mine at “La Ye” in Bajo Cauca, Antioquia, over the next four years – to some 500,000 ounces per year, according to the report.
Red Eagle Colombia likewise plans to invest US$120 million in expansions and will start producing some 50,000 ounces per year of gold over the next eight years at a mining site near Santa Rosa de Osos, Antioquia.
For its part, Gran Colombia Gold is investing some US$90 million in order to boost its gold output in Antioquia (Segovia) and Marmato (Caldas) to some 150,000 ounces per year by 2020, according to the report.
The only good news that will really help IMO is that they have successfully refinanced their loan that is due March 2017 which is only 6 months away.
Promoting before then will be wasted
Morningstar's entry for 66,373,488 shares owned by BlackRock Fund Managers Ltd. is wrong.
If you look at this document of blackrock world mining trust you will see why:
https://www.blackrock.com/uk/individual/literature/interim-report/blackrock-world-mining-trust-plc-half-yearly-financial-report-interim-report.pdf
Blackrock world mining trust's investment in Banro consists entirely of gold-linked preference shares and zero common shares. But morningstar is erroneously treating this holding as if it were in common shares.
So why do you think Metanor is better investment than Gran Colombia ?
My thinking is that most of the 2018 and 2020 debentures will end up getting converted into common shares. The company needs time (ie. couple of years) to accumulate enough "excess cashflow" to make a significant dent in reducing the outstanding debentures thru buybacks.
But what I see happening is that there will be periodic spikes in the share price above US 13 cents as gold stock buyers rush into the stock during rallies in the gold mining stocks sector. This will fuel the conversions firstly of all the silver debentures by arbitrageurs who will buy the debs at a discount to what they would get if they were to convert to shares and then immediately sell for a risk free arbitrage profit.
Once all the silver debs are out of the way, the arbs will move on to doing he same thing with the 2020 gold debs. This will require a higher share price, say above US 17 cents, to compensate the holders for the 6% coupon rate of the gold debs.
Also I understand that the company is not allowed to buy back debs at prices over face value, so if the share price rises enough so that the debs trade over face value, the company buybacks will come to a halt I think.
Since we are in a extremely bullish rising gold stock environment, most of the debs will end up getting converted and probably long before 2020, IMO.
Primero Announces Appointment of Kevin Jennings as C.F.O.
TORONTO, ON--(Marketwired - September 01, 2016) - Primero Mining Corp. ("Primero" or the "Company") (TSX:P.TO) (PPP) today announced the appointment of Kevin Jennings as Chief Financial Officer effective September 19, 2016.
Mr. Jennings is an experienced international mining finance executive with an extensive background in financial management and reporting, international corporate transactions, strategy development, restructuring and turnarounds. He successfully led the African Barrick Gold initial public offering as C.F.O. and has held senior financial executive roles with Barrick Gold, (Vice President, Corporate Development), Xstrata Nickel, (Director, Business Optimization), Falconbridge (Director, Business Development), American Racing Equipment (C.F.O.), Sun Gold (C.F.O.) and most recently Banro Corporation (C.F.O.). Kevin is a Chartered Accountant with a BA in Administrative studies (Honours Accounting) from York University and a BA in Economics from the University of Western Ontario.
Mr. Jennings will replace Ms. Wendy Kaufman who is leaving the Company effective September 6, 2016 to pursue other opportunities.
While I very much agree that BAA has tremendous potential, it is not true that they have drastically reduced their debt. Can you provide evidence to back up this statement of yours ?
Does this mean that for whatever dore is going thru the Baiyin off take agreement, Banro is getting spot gold price for its gold dore and paying zero for the refining costs ?