Banro's Congo gold saga
By: Nicole Mordant
Posted: 2003/06/01 Sun 11:15 PDT / © Mineweb 1997-2003
VANCOUVER - Banro [TSX-V: YBE] on Friday obtained long-awaited presidential decrees from the Democratic Republic of Congo (DRC), securing the Canadian gold junior's access to four gold concessions that were snatched by the government in 1998 and then returned last year. But the blessing from DRC President Joseph Kabila only checks one of the two boxes needed to be ticked before Banro can finally resume exploration on its properties in the eastern Congo. Now it is waiting for an outbreak of peace in this war-ravaged, but tantalisingly mineral-rich, region of central Africa where fighting between two ethnic groups again intensified last month.
Banro's share price rocketed 75% on Friday or C$1.93 to C$4.50 on news of the decrees. Admittedly the rise was on trade of fewer than 4,000 shares and mimics similar optimism a year ago when the share price soared to nearly C$8 after agreement was reached with the Congo government to return the properties. Excitement was shortlived: by the end of the year, the share was back below $4.
Banro has had a tough time of it in the Congo. Five years ago, its gold properties in the Kivu and Miniema provinces were expropriated out-of-the-blue by President Laurent Kabila, the self-styled rebel leader who overthrew dictator Mobutu Seso-Seko. The Toronto-based junior launched a $1 billion lawsuit, which came to nought but last year Kabila's son Joseph, who replaced his father after his murder in early 2001, handed back the properties.
According to Banro Executive Vice-President Arnold Kondrat, Friday's decrees were the last piece of a drawn-out political puzzle to secure the properties for Banro. Friday was also the day the United Nations announced it would send a 1,000-strong French-led peacekeeping force to the northeast DRC to halt fighting between two ethnic militias that has left more than 400 dead in recent weeks. Banro's properties are some 600 miles from Bunia, the current flashpoint of the renewed fighting.
Back this summer
"Our goal is to hopefully get back to the properties this summer," Kondrat told Mineweb. But uncertainty remains omnipresent and patience the watchword for doing business in the DRC. Also on Friday, the swearing in of a new transitional government in the DRC, established after five years of war between the government and rebel groups, was postponed after the two sides could not agree on the make-up of a new national army. "Congo moves two steps forward, one step back," Kondrat says.
In preparation of its plans to resume exploration, Banro has created four separate companies to house each of its four gold projects, Namoya, Lugushwa, Kamituga and Twangiza. Kondrat says the reorganisation will allow Banro to be more flexible in prioritising work on its projects and enable joint ventures to be set up more easily. Mineweb reported last August that South African gold major Gold Fields [JSE: GFI] was pouring over geological data from the four properties. Kondrat says a confidentiality agreement has also been signed with Anglogold [JSE: ANG].
A technical valuation of Banro's assets prepared by mining consultants Steffen, Robertson & Kirsten in 1998 put resources on the four properties at 5.8 million ounces of gold. But Kondrat says Banro is busy recalculating its resource position in line with new Toronto Venture Exchange rules. He expects that the Twangiza number will be posted in a few weeks.
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