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yeah I had the same dream last night
Anyone know what percentage of the company is owned by John Winfield ? TIA
Great article thanks. Shows that Banro CEO John Clarke has what it takes to succeed in mining in Africa.
Why does BB prompt me for a password when I read posts ?
Congo, thanks for sharing your conversation with IR. I was very tempted to bottom fish in MDW, but now I think I will stay away. $30 million shortfall is a lot as it is more than the current market cap.
This 2011 presentation has some interesting details that are not there in the newer ones:
http://www.banro.com/i/pdf/2011-June-BAA.pdf
>> April 2002 Banro gains 100% ownership of properties under 25 year renewable mining convention
–
one of only a few companies to be granted this unique consideration
Each of Banro’s properties has its own 25 year convention allowing it a 10 year tax holiday & exemption from surface rights taxes for 25 years <<
Congo Mining, $350/oz cash costs at both mines would make Banro the lowest cost gold miner on the planet. Why do you think this is possible ? Personally I think that is an unrealistically low target for cash costs due to inflation, poor infrastructure in Eastern Congo, etc.
Improving margins for gold miners:
http://www.acting-man.com/?p=37043
Agreed. Banro IR if you are reading this BB please hold off on the press release for a couple of weeks in order to give the weak hands time to do what they do best, which is to sell low now before the news so that they can buy back in high after the pop on news. As an added bonus we will shake off some impatient penny flippers and those pretending to be long term investors.
If they meet their sales targets, the gold watch will consume 1.7 million ounces in 2015 which is less than 2% of global mine supply. So hardly "huge" news.
Hope no news release until next monday, so that I can buy a few more cheapies ...
It seems this was not an insider buy, but rather the shares were issued as a dividend payment ?
1. The Common Shares reported herein were issued to INV-MID, LLC, a Delaware limited liability company ("INV-MID"), as a dividend payment on the Series A Preferred Shares of the Issuer held by it and were approved in advance by the Issuer's board of directors in the manner prescribed by Rule 16b-3(d).
By what % was the drop ? Also can you provide a link please to back up this assertion of yours ?
plus GDXJ is up nearly 5% eventhough gold is down $10. This move in GDXJ is a leading indicator that gold is about to turnaround back up.
Once both mines are in full operation, we expect average annual gold production from both Twangiza and Namoya to total 200,000 to 220,000 ounces. At this production level we expect cash costs in the range of US$725 to US$825 per ounce and all-in sustaining costs of US$850 to US$950 per ounce."
http://finance.yahoo.com/news/banro-announces-us-100-million-183537876.html
I don't think Peter Schiff meant to buy Banro since it has Congolese gold mines but no Canadian gold mines.
Interesting article on the blow up in the "sure thing" carry trade of borrowing in swiss francs (ie. short the swiss franc) and long assets in other currencies:
http://www.economicpolicyjournal.com/2015/01/understanding-swiss-central-bank-move.html
It wouldn't take a leap of faith to assume the same thing was going on in gold. ie. to borrow gold at near zero interest rates and go long assets in other currencies, especially the nikkei:
http://www.gata.org/files/FulcanelliReport-Mylchreest-Nikkei-Gold.pdf
After all everyone knew there was a gold/USD peg or at least a tight trading range around $1200. So may be the gold carry trade is unravelling as we speak. The beauty of these carry trades is that they are extremely leverage and it only takes a small move in the wrong direction to force selling.
Even better news, apparently Nagoya can be high-graded for way more than 2 years by increasing the cutoff grade:
by increasing the cutoff to 1.25 g/ton, the total resource is reduced by 20% to 1.35 million oz at 3.15 g/ton average grade. This is still enough for 8 years of mine life!
http://news.banro.com/press-releases/banro-increases-oxide-and-free-milling-ounces-of-g-tsx-baa-201301310850341001
The grade tonnage curve for the Namoya In-pit M&I Mineral Resources is illustrated in Figure 2, and demonstrates that the Namoya project can be mined at a significantly higher grade than the Resource grade without impacting significantly on the contained gold. This is based on the fact that if one increases the cut-off from 0.5g/t Au to 1.00g/t Au, grades increase from 2.04g/t Au to 2.79g/t Au, with contained gold reducing by only some 12% and could even be increased above 3.0g/t Au without compromising the mine life significantly. This indicates that high-grading the deposit is a feasible option and mine planning could focus on a higher grade, lower tonnage mine design in times of a falling metal market without destroying the economics of the project. The Namoya In-pit M&I Mineral Resources at the various cut-off grades are summarized in Table 3.
Geologic Resource partners has recently purchased 10 million shares or 4% stake in Banro:
http://stockzoa.com/fund/geologic-resource-partners-llc/
From this 2012 interview with one of the principals of this fund it looks like they have the capacity to do their own due diligence and not just rely on what management or IR tells them. Yet they decided to buy their stake in Banro after the Namoya delay to commercial production was announced:
http://www.mining.com/never-mistake-intelligence-for-a-bull-market-george-ireland/
It looks like the Mwendaboko pit has the highest grade resources at Namoya. There is 280koz of resource in the measured category at 3 g/ton grade, which is indeed very high grade for an open pit mine. So there is 2 years worth of high grade material that will be mined first with very low cash costs, allowing for faster payback of the debt that was incurred to build the Namoya mine.
Do you have any reason to be optimistic that a mutually beneficial deal can be struck soon between Nevsun and Banro ? It seems these discussions have been going on for over a year now
In order to do away with the need for the streaming deal Banro will need to sell enough future production forward at the $1300 price if/when we get there so as to lock this price in. It is not enough to hope that the spot price stays over $1300 as it is very volatile and this could just be a dead cat bounce in the POG on the way back down to $1000.
Barrick use to be an expert on gold hedging and hopefully this new CFO who use to work at Barrick will earn his high pay and the recent grant of 1.5 million share options by finding a creative non-dilutive resolution to Banro's cash shortfall.
I think lot of money flows that use to go into the energy sector is now looking for a new home and some of it will go into gold stocks. Energy sector is much much bigger than the gold sector so it won't take much to make an impact. Also it should make raising money a little easier for Banro as there is less competition for money now from the energy sector and the industrial commodities where prices have been hit harder than gold.
The institutions paid much higher prices (> $1) to buy their shares. They have been liquidating their shares here in the pennies into year end 2014 and so this is a negative. But net/net it is a positive IMO that they ever bought in the first place since they would have done their due diligence and the fundamentals for Banro have arguably gotten better despite the Institutions liquidating. Now why would institutions be selling when they should actually be buying ? I can only speculate: tax loss selling, rules regarding minimum market cap and/or share price, forced selling due to redemptions, avoiding the embarrassment of holding a position that is down > 90% and that is in the most despised sector of the market, etc.
>>High mining cost companies become more attractive when the price of gold increases.<<
This is only relevant when the high cost mining company has declined much more than the low cost mining company. In our case the 3 year weekly chart shows that Banro share price has declined 90% relative to GSS over the last 3 years but has only recovered modestly since the bottom in last August/September. So I think Banro has much more upside relative to GSS:
http://stockcharts.com/freecharts/gallery.html?BAA:gss
It looks like the BlackRock SEC filing is to report a decline in their ownership in Banro. They use to own much more than 10%.
Per morningstar BlackRock has reduced their holdings by 5%:
http://investors.morningstar.com/ownership/shareholders-overview.html?t=BAA
The good news is they still own 10%. The bad news is that they can still sell their position down to zero. But hopefully this was distressed selling due to fund redemptions rather than due to a change in their outlook on Banro's prospects.
agreed. I am constantly on the lookout for a gold stock that is a better buy than Banro. Haven't found one yet. I took a look at GSS and dismissed it as I just can't see it being bought out by a larger gold company as it doesn't have world class assets on the scale of Banro.
>>Now, your point about fuel costs being lower and therefore benefiting users of energy is obviously correct and a logical argument but the chart you attached has nothing to do with this argument. The actual amount of fuel savings to Banro is yet to be determined and I'm sure they will mention something about it in the next quarterly financial report. <<
This gold/oil ratio chart has EVERYTHING to do with my point, which is that margins will increase and thus positively impact the share price. Revenues track the price of gold. Expenses track their input costs for which industrial commodity prices are a reasonable proxy. Diesel makes up around 40% of Banro's input costs. If the price of crude oil declines by 50% this will eventually feed into significantly lower diesel costs. May be not 50% lower but much lower. This will feed straight into the bottom line as it will increase margins.
http://kingworldnews.com/gold-silver-soaring-global-stock-markets-plunge/
>> This 70-year Gold/Oil Ratio chart is an incredibly important one because it explains why the mining sector has started to perform so well, even as the stock market has begun to decline. 1/3 of mining input costs are energy-related and the collapse in the price of oil is creating tremendous cash flows straight to the bottom line of the high quality producers in both gold and silver.
I don't think people fully comprehend how positive this is for gold and silver producers and the underlying shares. The high energy costs vs the gold price can clearly be seen on the chart above, particularly on both sides of the 2006 zone (see chart above). Well, now that situation has reversed in a massive way in favor of gold.
Right now the ratio is blowing out in favor of gold. The all-time high is 34/1. We are currently at over 24/1 as you can see on the right hand side of the chart. Well, I think the high of 34/1 will easily be taken out before this is over because gold as a monetary metal is coming into its own as these paper currencies are being systematically destroyed.
So the fact that the Gold/Oil ratio is blowing out in favor of gold is an enormous positive for the shares. Nobody owns the shares and they remain historically underpriced and I can't encourage people enough to buy them at these prices, even though they have rallied a bit here.” <<
Banro has $200+ million in debt and the market is very worried whether or not this debt burden can be managed in such a way that equity shareholders won't be wiped out. While anxiety over the debt burden is definitely warranted, it is probably overblown with sentiment now at record levels of negativity with regard to gold and gold stocks. Here in lies the potential 100 bagger opportunity over a 5 year time frame for the risk averse and gutsy investor who is able to do their own due diligence. I think the odds are better than 50/50 that if gold price stays above $1100 that shareholders will not get wiped out.
Interesting read: Why an American investor is building malls in the Congo
The city of Lubumbashi has not been on the radar of international companies outside of miners but all that is changing
Dianna Games
21 October 2014
YOU’RE building a shopping centre where?" Property developer Preston Haskell says he fields this question often from acquaintances around the world when he talks about his latest investment in Africa.
The shopping centre in question is part of Haskell’s Luano City project, a 220ha, $1.4bn multifaceted property development on the outskirts of Lubumbashi, in the Democratic Republic of Congo. It includes smart office blocks, residential units and the Congo’s first modern retail centre.
I bumped into Haskell, chairman of Forum Properties Africa, a few weeks ago at the sod-turning ceremony for the shopping centre, which will be anchored by Shoprite — the group’s second Congo supermarket.
Lubumbashi is one of the places in Africa that has piqued the interest of US magnate Haskell. He successfully invested in Russian property in the 1990s and has now found another frontier market of huge potential.
Lubumbashi has not been on the radar of international companies outside of miners. The city has just a few small local supermarkets and one international-quality hotel.
Yet the city is the nearest urban centre of size to operations of some of the world’s biggest mining companies and is the capital of a region that generates more than 60% of the country’s revenues.
Haskell, whose Congo journey began with a chance meeting with Katumbi in Johannesburg some time back, is just such an investor. The property developer saw a gap in the market for quality real estate at a time when the city was still characterised by its colonial inheritance.
Katanga province, within which Lubumbashi falls, has attracted $25bn in new investment in just less than a decade, but most of it in mining. Katanga’s provincial governor, Moise Katumbi, guest of honour at the Luano City sod-turning, reckons that since he took over in 2006, the population of the city of Lubumbashi has grown from 1.6-million people to nearly 4-million.
The sprawling city, like many other fast-growing towns in Africa, has limited opportunity for development within its original infrastructure, which was built for a much smaller, colonial-era population.
For all the potential, investing in the Congo is still risky. Sporadic outbreaks of conflict are just part of the story. The region remains commodity dependent and is a high-cost, structurally inefficient market. So it takes a bold investor to lay down large investments there.
Haskell, whose Congo journey began with a chance meeting with Katumbi in Johannesburg some time back, is just such an investor. The property developer saw a gap in the market for quality real estate at a time when the city was still characterised by its colonial inheritance.
Interest is growing in Luano City’s offerings. Mining companies have already snapped up smart office blocks and work is under way on housing and the shopping centre, which is already almost fully let.
Haskell says he prefers, where possible, to put money into building something new rather than investing in what others have built. Congo offers fertile ground in this regard — as do many other resource-rich parts of Africa where new towns are growing.
These boom towns undermine the theory that resources are a curse because of their limited linkages to broader economies. Africa’s growing urbanisation, much of it happening in resource-rich areas, is driving demand for everything from food to air-conditioners and myriad other consumer goods.
It shows you certainly don’t have to be a big multinational to profit from Africa’s growth.
http://www.rdm.co.za/business/2014/10/13/why-an-american-investor-is-building-malls-in-the-congo
Add 2 Dirt-Cheap Gold Mining Stocks, See Them Shine - Analyst Blog
https://finance.yahoo.com/news/add-2-dirt-cheap-gold-180906368.html
This Year's Losers, Winners in 2015
Below we highlight two gold-mining stocks which have lost more than 50% of their value year to date. However, backed by a favorable Zacks Rank and upward estimate revision, we believe these stocks have the potential to turn around and it is a good idea to add them to one’s portfolio. Moreover, these stocks are dirt-cheap today.
Banro Corporation (BAA)
Based in Toronto, Canada, Banro is engaged in the exploration, development and mining of gold properties. The company holds a 100% interest in 4 gold properties, including Twangiza, Namoya, Lugushwa and Kamituga comprising 13 exploitation permits encompassing an area of approximately 2,612 square kilometers in the South Kivu and Maniema provinces of the Democratic Republic of the Congo.
Banro Corp currently carries a Zacks Rank #2 (Buy). The stock has lost 76.6% of its value year to date. Shares of Banro hit a 52-week low of 12 cents on Dec 23.
However, the Zacks Consensus estimate for fiscal 2015 has moved up with one positive revision over the last 60 days. Banro is currently trading at a P/E (ttm) of 6.5x, much lower than the peer group average of 25.04x.
Higher grades at depth does not necessarily translate into higher quality orebody. One would need to see evidence such as assessments by independent mining and metallurgical experts that support the claim of higher quality. I haven't even seen claims by Banro managment to this effect. Have you seen such claims or is it just your enthusiasm for Banro letting your imagination have a free reign ?
The following article seems to indicate that the lowest cost ores at Namoya are found near surface and are being mined NOW. They will switch to underground mining at depth only after first exhausting the low cost open pit resources near surface. But they have enough resources near surface to last for at least another 8 years:
http://spintelligentpublishing.com/Digital/Mining-Review-Africa/issue1-2014/files/26.html
while the grades can get better at depth, the ore also transitions into being non-oxidized at depth and so is more costly to process. Non-oxidized ore cannot be heap leached. I couldn't find anything published by Banro that would indicate that the deeper ores would have a lower overall cost to mine and process. If you have seen this, would appreciate it if you could share. I think that they are already mining now the lowest cost portions of their ore bodies.
>> The deeper they dig, the better the quality and grade of gold <<
very well said. couldn't agree more.