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bullforever, thank you for that enlightening post from someone like yourself who understands the chinese perspective.
The washout in Banro already happened at the end of 2014, so may have to wait a very long time for another.
The fed news is also puff news, so it is fitting to counter with the same
Thanks fazlice I will check Fidelity out for International trading.
Who is your broker ? My broker is TD Ameritrade and I can trade Canadian stocks. I also have Fidelity for my IRA where I can also trade Canadian there.
fazlice, does your international trading allow you to trade Australian or London listed stocks ?
Looks like there are 8.4 million broker warrants expiring in 2017 at $6.65 strike price. This number is as good as zero as there is no way they will get exercised unless they get repriced.
2012 Debt Financing
In March 2012, the Company closed a brokered private placement
debt financing for total gross proceeds of US$175 million. The financing was conducted by a syndicate of investment
dealers comprising GMP Securities and BMO Capital Markets (as co-lead managers and co-book-runners) and CIBC World Markets Inc.
, Cormark Securities Inc. and Dundee Securities Ltd. as co-managers.
This debt financing involved an offering by the Company of 175,000 units consisting of US$175,000,000 aggregate principal amount of senior secured notes with an interest rate of 10% and a maturity date of March 1, 2017 and 8,400,000 warrants to purchase an aggregate of 8,400,000 common shares of the Company. Each
such unit consisted of US$1,000 principal amount of notes and 48 warrants, with each such warrant entitling the
holder to purchase one common share of the Company at a price of US
$6.65 for a period of five years from the date of issuance of the warrant.
Nice breakdown of the wall street journal. I agree that this article good publicity. It seems like a very good thing when a prestigious paper such as this takes the trouble to write such an extensive article on a $50 million market cap gold mining junior.
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You are spot on about Klaus Eckhof being a serial scam artist.
IMO that is why (along with the large debt) Banro is now the most undervalued gold producer. It is a 200k+/yr low cost gold producer selling for $50 million market cap with the potential to organically grow production to 500-700k oz/yr due to its huge land position on a very prospective gold belt. Banro also has great management and 10 year tax holiday on their 4 mining permits. The CFO of Banro is the ex-CFO of Acacia. The CEO is the former CEO of Nevsun.
To turnaround the share price Banro not only needs to declare commercial production on Namoya, but to also show that it is on track to paying down its debt over time or being able to refinance when it comes due March 2017.
>>While it gives much skepticism, I believe the Share price already reflects the reluctance. Once commercial begins, it should be when gold is back on the rise. <<
Its taken double the time to get to commercial production and triple the cost.
From your perspective, what are the challenges confronting the mining sector in the region?
http://www.ipad-drc.com/Pages/Detail/22423
- The current review of the DRC Mining Code: Considering the current worldwide trend of national resources nationalism among politicians, their drive to maximise tax revenues in the short term, and the very high and sometimes unrealistic expectations from the various stakeholders, mining operators are facing an economic context that is more and more uncertain and difficult, characterised by a reduction in mining grades, an increase in production costs as well as low metal prices. It is important that the Congolese State, in its review of mining contracts, guarantee both the stability of benefits offered to investors, in addition to adequate tax incentives and transparency in their application, which will have the effect of attracting the much needed large investments to develop the country.
- The current deficit of electricity available for mining projects: Since the current energy deficit is enormous in the DRC, it is important that we collectively look beyond the current short term arrangements to rehabilitate existing infrastructures or buy electricity from neighbouring countries, and that we truly commit to creating new energy production infrastructures.
- The poor and insufficient basic infrastructure: In a country that is 80 times the size of Belgium, the lack of adequate infrastructures such as roads, railways, ports, airports, etc. leads to very high logistics costs, which results in high operational costs and lower profit margins for operators, and reduces our country’s competitiveness. It is crucial that the Congolese State pay particular attention to this issue and mobilise the resources necessary to develop adequate infrastructures.
- Artisanal mining challenge: Whilst the Congolese State is allowing some areas to be exploited by artisanal miners in an attempt to try and reduce unemployment and community distress, the negative impacts of these activities (landslides causing fatalities, high rates of school drop outs and low levels of education, high rates of early pregnancies, high rate of sexually transmitted diseases, high incidence of criminality and prostitution, environmental impacts, etc.) and the risk of sterilization of vast areas with high mineralogical potential (the presence of thousands of artisanal miners on a potentially rich site has the effect of stopping any large investment) should encourage all parties of the mining sector, in addition to the Congolese State and civil society, to look for alternative solutions in order to create employment and business opportunities in lieu of forfeiting long term potential grow of the economy.
- The enigmatic trilogy between the State/Government, mining companies/investors and civil society/local populations: These three parties are often stuck in fruitless talks, since their respective expectations don’t seem to be addressed. It is essential that each party clearly understands and play its own role in the first place: the State is responsible for ensuring security, stability and the transparency of laws/regulations, and for offering tax incentives to attract investments. Mining companies are responsible for bringing in capital and technology, developing projects in strict compliance with applicable laws including social and environmental requirements, paying taxes and ensuring an adequate transfer of knowledge. Local communities are responsible for taking ownership of employment and business opportunities generated by investments, engaging in a constructive way with mining operators to find solutions to various issues and acting in a responsible manner in the provision of labour and other services.
- The 2015-2016 electoral timetable and its associated measures, as well as the splitting of provinces into new ones: The available information still lacks clarity: the latest development is that the national independent electoral commission, or CENI (Commission Electorale Nationale Indépendante), indefinitely postponed the elections for the governors and deputy governors of the newly created provinces in the face of legal, logistical and other constraints. Governance of the new provinces, without a clear administration in place (governors, deputy governors, etc.), is a problem;
- Lack of security in some areas due to the presence of uncontrolled armed elements.
Hope you are right, I would like to add a few more shares around 18 cents.
Banro is doing just fine by focusing on execution and ignoring marketing for now. Marketing now before the disaster at Namoya has been rectified would be premature.
$1250 gold price is needed to confirm new bull market in gold:
http://kingworldnews.com/richard-russell-says-americans-are-scared-to-death-as-he-declares-what-will-confirm-new-bull-market-in-gold/
Besides weakening USD as a driver for gold prices, there are some very important developments coming out soon from China related to the Shanghai gold fix that can also do the same:
http://www.usagold.com/publications/NewsViewsJuly2015SpecialReport.html
Gold Forecaster's Julian Phillips, who has analyzed activity in the gold market for a number of years, points out that the seminal changes taking place in the gold market centering around Shanghai "will allow Chinese banks to participate in the gold market on a global basis." It will be a market, he says, "that is not distorted by the banks, their proprietary trading, or control of the gold distribution system globally. China will hold these reins."
Gold as a wealth building asset – East and West
In short, the physical flow of metal – its purchase and sale in real terms – will govern pricing in Shanghai, not leveraged paper trades, as is the case in the West. This emphasis on physical pricing in Shanghai, particularly when the new Shanghai Fix comes into play later this year, could signal the birth of a whole new gold market unlike anything we have experienced since the United States detached the dollar from gold in 1971.
I think this is just catchup for yesterday when Canadian markets were closed ?
Michael Belkin of The Belkin Report, and the new Belkin Gold Stock Forecast for individual investors, makes his show début.
http://radio.goldseek.com/nuggets/belkin06.02.15.mp3
He is advising institutional clients / hedge funds to rotate out of US equities and into his hand picked gold stocks.
The gold market has bottomed and the major US equities indexes are forming a key top.
Many of his gold / silver stock candidates have soared 100-300% in 2015, not just penny stocks, but bellwether companies as well.
The gold stock guru generously shares several ticker symbols of his favorite gold / silver stocks.
His models indicate a forceful gold stock rally is imminent, after which investors will pile into the market via technical buy signals.
Takeaway point: the bear market in gold / silver equities is over.
Michael Belkin of The Belkin Report, and the new Belkin Gold Stock Forecast an economical service for individual investors has established a respected 23 year record of forecasting success. Our guest outlines his models that show the gold market has bottomed and the major US equities index bubble is forming a key top. The former Solomon Brothers analyst / quant thinks the Fed is following the same path that lead to the market peak of 2007 and the subsequent 2 year crash, but this time conditions are far more perilous for investors due to excessive “QE Kool-Aid.” He is advising his institutional clients / hedge funds to rotate out of US equities and into hand picked gold stocks. Why is he so bullish on gold stocks when most eyes are on tech stocks? Although the gold stock indexes are consolidating, individual gold equities are diverging sharply, staging impressive rallies. Despite the sluggish sector performance, many of the gold / silver stock candidates are higher by 100-300% in 2015, not just penny stocks, but bellwether companies, too. The gold stock guru generously shares several of his favorite gold / silver stock ticker symbols. His models indicate a forceful gold stock rally is imminent, after which investors will pile into the market as technical indicators trigger buy signals followed by a positive sea change in institutional sentiment. Takeaway point: the bear market in gold / silver equities is over.
Peak gold is not bad news for Banro. It is actually good news that the overall mining supply is shrinking, while Banro production is growing.
This interview is a worthwhile listen:
http://kingworldnews.com/michael-belkin/
To the contrary it very much has bearing on BAA, as it make BAA a more likely acquisition target by a major.
http://business.financialpost.com/news/mining/for-many-miners-theres-no-avoiding-the-gold-production-cliff-now
The cliff appears to be imminent. According to numerous professional estimates, gold output will top out in 2015 or 2016 and then go into decline for several years at least. Using consensus figures, Goldcorp estimates that global production will drop six per cent in the next three years, and almost 18 per cent in the next nine years.
Celebrating now would be premature since gold price has not yet managed to break out over 200 DMA
It is close but no death cross yet.
Due to the important conference on Oct 15/16th, I am not expecting any news release until Oct 14th after the market close. In this way there will be exciting and breaking news that will create buzz at the conference. BAA will get more media attention this way and I hope the company understands this and won't let this great opportunity for publicity go to waste. They just won't get the same buzz and coverage if they do the Namoya going commercial PR a week before the conference.
Of course 700,000 won't happen anytime soon, but it is realistic over a 5 year time frame. This growth potential is not currently priced into the stock, but it should be.
Please back up your unsubstantiated opinions with links
This refinancing does NOT include the $175 million in debt that is due march 2017.
Chart Watcher: Gold, Miners ‘Tantalizingly Close’ To Bull Rally
http://blogs.barrons.com/focusonfunds/2015/10/05/chart-watcher-gold-miners-tantalizingly-close-to-bull-rally/?mod=yahoobarrons&ru=yahoo
By Chris Dieterich
October 5, 2015, 2:05 P.M. ET
Carter Worth at Cornerstone Macro doesn’t write about gold and gold miners very often.
On Monday, however, the former longtime Oppenheimer technical analyst loudly banged the drum for gold and gold-mining stocks.
“To our eye, gold is tantalizingly close to breaking above the downtrend line it has been descending the past three years. As such we are buyers of the SPDR Gold Shares ETF (GLD).
And gold mining stocks as a group, as a theme, also are judged likely to move higher in the days/weeks ahead. To that end, the report focuses on the Philadelphia Stock Exchange Gold and Silver Index and makes the case for buying the Market Vectors Gold Miners ETF (GDX).”
The idea is that gold is threatening to dart above its bearish pattern that began roughly four years ago. Gold prices inched lower by 0.1% to $1,136 an ounce in recent trading, while GDX added 3.5%. Here’s more from Worth:
“Gold Bullion is flirting with the prospects of moving above the downtrend line in effect since October 2012. Gold closed at $1.137.10 an ounce on Friday… and has been acting well … since touching a 4-year low of $1.072.30/oz in late July.
Any day-to-day strength above the $1,170+/- level (~+2.5% from where we are now) and gold will have breach its 4-year downtrend line. We think its going to happen and are buyers of gold here.
Importantly, not only is gold at an important juncture on a day-to-day basis (vis a vie the downtrend line depicted in the daily chart on the preceding page)… gold is also at an important long-term juncture. Specifically, after 4 years of unrelenting weakness, gold has managed to stop going down almost precisely at the midpoint between its trough of $257/oz in 2001 and its $1.920/oz peak in 2011.
Otherwise known as a 50% retracement, it is hugely telling that gold stabilized in late July of this year and has been inching higher ever since.
Meanwhile, during the past 4 years while gold bullion has retraced half of its epic move from $257 to $1920… gold mining stocks (as measured by the Philadelphia Gold and Silver Index (XAU) have retraced THEIR ENTIRE MOVE of 2001-2011.
Importantly, tellingly, gold miners – like gold bullion – have stabilized at a non-random, key level. Indeed, the XAU got with a point and half of its 2000 low and started to stop going down. And the XAU has been inching higher ever since.
For the GDX, Worth says that the upside price objective is roughly $17. The exchange-traded fund rose 3.8% to $15.04 in recent trading.
A massive increase in shorting at these prices would be most welcome. Since Banro does not need to do an equity financing any time soon, the shorts will have to eventually buy their shares back on the open market.
Shares outstanding is 252 million. This is unchanged since the last equity financing almost 2 1/2 years ago on April 25th, 2013 which was done at C$1.35. I think it speaks to the strength of the underlying assets of Banro that it was able to raise an additional $155 million without diluting existing shareholders, while the vast majority of other juniors have diluted the heck out of their shareholders during this very difficult period for financing for junior miners.
You do realize that Banro does not have to pay taxes for the first 10 years ? I think the main value derived from taking this writeoff on Namoya prior to going commercial is that it will reduce the AISC. My understanding is that AISC includes sustaining capex. And since one of the components of sustaining capex is depreciation, this writeoff will reduce depreciation.
No need to whine about absurd posters, just use the ignore button
Very true, so why only 2 of your last 50 posts are facts and the remaining are stories LOL ?
When gold prices shoot over $2000 many gold miners in the poorer countries such as DRC will be subjected to tax/royalty increases. I believe Banro will be exempted from these tax increases production from their 13 exploitation permits:
On July 11, 2002, the DRC State enacted a Mining Code (the "Mining Code ") to govern all the exploration and exploitation of mineral resources in the DRC. Holders of mining rights who derived their rights from previously existing mining conventions had the option to choose between being governed, either exclusively by the terms and conditions of their own mining convention with the DRC State or by the provisions of the Mining Code. Pursuant to this right of option which is prescribed in Section 340 paragraph 1 of the Mining Code, the Company elected to remain subject to the terms and conditions of its Mining Convention with respect to its 13 exploitation permits it acquired before the enactment of the Mining Code. Nevertheless, the 14 exploration permits (which were acquired by the Company after the implementation of the Mining Code) are exclusively governed by the provisions of the Mining Code and related mining regulations.
http://fastlaneinvesting.blogspot.ca/p/banro-gold-corp-baa.html
DCF Implied Price: 2.34 USD
Current Price: 0.24 USD
Implied Price Rise to reach fair valuation: 975%
From Blackrock world mining trust update to its shareholders:
http://www.euroinvestor.com/news/2015/08/13/blackrock-world-mining-trust-plc-half-yearly-report/13204547
Banro gold-linked preference shares and 10% senior secured note (2.4% of the portfolio)
In April 2013, the Company purchased gold-linked preference shares from Canadian-listed Banro Corporation. The preference shares provide exposure to the gold price as well as to production growth, with the principal moving in line with the gold price and the coupon ranging between 10% and 15% depending on Banro’s overall level of production. As at the end of June 2015, the Company had received a total of US$6.6 million in dividends, US$1.9 million of which were received in the first half of 2015.
In 2014 a series of operational issues during the commissioning of Banro’s second mine, Namoya, necessitated the securing of additional financing in the second half of 2014. A difficult financing market for junior gold companies, combined with uncertainty over the closing of Banro’s previously announced financing deal with Gold Holdings, resulted in the Board, based on a recommendation from BlackRock’s Pricing Committee, concluding that it was appropriate to hold the Banro gold-linked preference shares at a 30% discount to the implied gold price used in the valuation of these preference shares. In addition, given the lack of trading in Banro’s 10% senior secured note (March 2017), and reflecting the unquoted nature of the security, combined with ongoing financing uncertainty, the Board concluded that it was also prudent to apply a 25% discount to its last traded price.
In the year to date we have been encouraged by the operational improvements at Banro with Twangiza delivering three consecutive quarters of improving production and now hitting nameplate capacity. Namoya continues to ramp-up targeting Q3/Q4 to hit its nameplate capacity. Furthermore, following the US$90 million financing completed in February 2015, the company has sufficient funds to meet all near term liquidity needs. Post completion of the financing, both the equity and the bonds have rallied sharply. Increased liquidity in the senior secured note and a recommendation from BlackRock’s Pricing Committee has resulted in the discount previously applied to the senior secured note being reduced to nil. As the senior secured note continues to trade at a discount to par value, a 15% discount on the valuation of the gold-linked preference shares remains in place. In light of the new guidelines surrounding unquoted investments, the Investment Manager has reduced the Company’s exposure to the Banro senior secured note following its upwards revaluation to ensure that the Company’s total exposure to Banro is below 3%.
More than one third of Banro's input costs are from diesel:
http://www.bloomberg.com/news/articles/2015-09-23/china-commodity-deluge-extends-to-diesel-as-glut-shrinks-profits
Anyone know if the new high grade resource is in significant quantity, ie. more than 100,000 oz or 1 yrs worth of production at Namoya ?
It is probably to early to know whether there is enough high grade open pittable ore material here above the current Namoya average grade:
Commenting on the drilling results at Namoya, John Clarke, President and CEO of the Company, said: "We are pleased with the positive results from the ongoing near mine exploration at Namoya. These results have confirmed our previous interpretation of potential zones of mineralization in the footwall of the Namoya Summit, which is open-ended to the northwest
Thanks for that Silveristhenewgold. After you pointed this out I did some research and came to better appreciate the significance of gross earnings:
http://www.investopedia.com/articles/investing/062113/understanding-profit-metrics-gross-operating-and-net-profits.asp
As can be seen by the languishing share price, it looks like only the more sophisticated investor types understand this company profit metric. I for one am glad, as should all long term investors also be, that the company took the net income hit now rather than later as it gets this out of the way prior to the earnings shooting up once Namoya comes online. Namoya should in time (after it hits peak efficiency) effectively double the gross earnings from what is already an impressive level from just Twangiza alone. Also as an additional bonus we managed to get rid of the parasitic short term trader types and so longer term investors can continue to accumulate at even cheaper prices.