Banro Corp. fka BAA

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PDAC 2016 Trip Report



My apologies for the delay but I didn’t have my personal computer with me and didn’t want to write this up on my smartphone. I got back late last night and my day job has precedence.

1. After the Banro presentation on Monday (See notes below), I spoke with both John Clarke (President & CEO) and Laurie Behen (Office Administrator, Corporate Communications). Although they can’t speak to any material information that is not public, some of this may be of interest to a few of you. I will start with my notes from talking with John and Laurie first:

John:

• He has been in this business a long time and he has never seen had such intense and thorough due diligence and vetting as the Chinese did for their recent financial deal with Banro.
• In his view, the commitment to increased visibility for Banro will be that he and CFO will going on a roadshow this year. I am not sure how much of that will result in direct PRs, but I assume this will be with analysts and large investors.
• The wet weather will continue until at least to the end of the month. Note this season had the heaviest rains they have seen in recent years.
• He is very confident regarding the Namoya numbers as a result of new Caterpillar heavy machinery delivered in December which is making a significant difference. The Caterpillar 777 mining fleet moved over 700,000 tons during the month of December, compared with an average of approximately 360,000 tons for the first 11 months of 2015. In one of the magazines at the show, I saw a quote that Namoya’s gold production in the first quarter of 2016 to realize the benefit of the higher-grade material of 2.3 grams/ton. I got the impression that things will be doing well when the dry weather hits but still did decent considering the heavy rains this season. He had some interesting stories on how complicated it is getting delivery of heavy machinery through the “middle-men” distribution channels in that part of Africa. As we already know, the goal at Twangiza and Namoya this year is to reduce unit costs through the efficient use of existing equipment and infrastructure. In the magazine article referenced above, I also saw a statement that underground mining potentials are being investigated at both Twangiza and Namoya.
• The exploration objective at Lughuswa is to increase the oxide resource base. Plans to achieve this include undertaking a preliminary economic assessment, which will be completed in 2016. This will then be followed by a prefeasibility study. The development of Lughuswa will however be determined by gold market conditions. By the end of 2016, they would like to be in the position to determine with development mode to follow, either developing it alone or as a joint venture opportunity,
• Keep in mind that John’s price for the shares he has purchased is .47. He has some skin in this game besides being just being the President and CEO.
• I found it interesting when he introduced me to some others on the team there, he said that as an investor, I was one of people that they work for.

Laurie:

• Weather has been worse this season than have seen in recent years. Surprised the numbers were as good as they were considering the bad weather.
• Reiterated the optimism of John regarding what the CAT 777’s have done at Namoya since their arrival in December.
• The earnings and Q&A call will be held later this month.

Personal observations:

• Although they can’t directly comment on AMEX de-listing or the quarterly, I got the impression that de-listing isn’t a near term concern at this point in time, and that the quarterly will likely be in April rather than March.

2. On Monday morning, Banro gave a presentation as part of the “Collaborative projects for Indigenous community development – Canadian and international experiences” Session. Willy Halisi Mushagalusa, Chairman, Banro Foundation, Banro Corporation gave a talk on promoting community development in the eastern Democratic Republic of the Congo. My notes follow:

Tackling the Challenge of Rural Development

Banro, Banro Foundation, NGO’s, communities and local government working together to:

• Create capacity-building Congolese and local jobs and support skills development
• Promote agriculture and other sustainable livelihoods
• Reposition artisanal miners
• Support education at all levels
• Improve access to health care
• Undertake social infrastructure projects
• Provide humanitarian assistance as required

Banro’s Goal

• To create a company that is 95% Congolese from top to bottom
• 92.1% of Banro’s 1473 DRC employees are Congolese (Dec 31 2015)
• 98% of 1647 contract and labor hire employees are Congolese (Dec 31 2015)
• Additional notes from presentation:

Other notes from the presentation:

• Twangiza is at 2,600 meters and Namoya is essentially on a prairie. Although the locals in both areas speak Swahili, the areas represent two distinct cultures with their own distinct indigenous languages.
• They are providing training opportunities to the displaced artisanal miners in each area for new jobs, and I some cases, as corporate miners. For example, the Cinjara Ag Project has trained over 600 artisanal miners as farmers.
• All Banro Ex-Pats have succession plans that pass on knowledge top locals.
• They have built several schools, a university dormitory, health care facilities, market places, and I believe a wing of a hospital and aid to refugee camps in the area. The also build roads and bridges but these are just as important to Banro as they are the locals. In short, they provide what the government can’t (or won’t).
• There was an interesting picture of a tent type structure with plastic over poles for cover that was passed off by a unnamed NGO as a school. Banro came in and built a real structure and school.

This may be of interest to some of you as well:

“A clear sense of industry confidence was evident as more than 22,000 attendees from more than 100 countries gathered at the annual PDAC convention where investors, analysts, mining executives, geologists, government officials and students gathered for the largest exploration and mining event in the world.”

http://www.marketwired.com/press-release/pdac-2016-convention-exceeds-22000-attendees-2104528.htm