Welcome to the board. Congo has a better handle on this than me, but heres my opinion. There are many ways to value a company. Usually a company will show up cheap on one measure, but not so much on another. This is the unusual thing about this company - it is undervalued on EVERY metric. As the CEO said last year, Banro is a junior with abnormal assets. They have drilling rights on a vast swathe of the Twangiza Nayoya gold belt. Despite discovering over 12 million oz indicated and inferred, they have only drilled 12 % of the land! To my mind this is incredible. It suggests potentially 100 million oz - on a par with Barrick. Finally achieving commercial status on the second mine gives BAA an additional $100 million revenue this year. This revenue can be used to pay down debt, and, with the Chinese loan, bring the next two mines into production in the coming years. Potential production this year is up to 250K oz, putting us firmly in mid tier territory. Add to this, the impressively low AISC of around $600 per ounce, and you start to get an idea of where this is going. With POG where it is, BAA could well make a net profit of 120 million this year. Well, on per earnings of 10, the company will be fairly valued at 1.2 billion on that basis - making a SP of around $6. Then there is the gold equivalent metric ie EV/ resources. So EV is around 350 million, and discoved resources are 12 million oz. So you are paying $30 for every oz of gold! In a gold bull, expect to pay up to $500 per oz, depending on POG. Book value currently is up near $2. Given the major de-risking going on recently (Chinese deal, scrapping of mining code) , I personally think fair value is minimum $1 right now. This would account of geopilitical risk and lowish POG. Regarding debt, we are around industry average of 0.4, so to me this is manageable - especially bacause of the recent deal with the Chinese, which allows for the payments in 2017. Congo has more on this side of things. To conclude, I do genuinely believe this to be the most indervalued fold miner in the world today
AI
