Replies to post #6906 on Banro Corp. fka BAA

[Techamental Logic]

Below are the original numbers. I am using the dollar estimates Banro gave us on July 9th. Hopefully KCA can fix it cheaper. I use those because I feel institutions are using those. They should not have access to numbers we don't have.

In a nutshell (31,000 ounces, $920 all-in-sustaining, $1,300 gold and $16M Q3 debt payments). It is those debt payments I'm hoping Banro can either refinance or pay off somehow.

BAA would likely hit .24/.25 if Banro waits to release how they'll finance Namoya until Q2 fins. The last we heard from Banro is that Namoya would cost $2M per month for 10 to 12 months. They also said they would need to spend $2M additional in Q3 2014 to bring Namoya up to 6,000 ounces for Q4.

Banro's financing currently costs them $8M per quarter. That cost is not in their all-in-sustaining-costs because Banro did their financing at the corporate level rather than at the project level. Banro's last announced plan (which is what institutions and funds will use to calculate risk) added $8M more in Q3. That is $2M per month plus the $2M short term plan.

Banro's last PR confirmed their production estimate from July 9th. That makes 31,000 ounces middle of the road. $16M / 31,000 = $516 Banro's last announced all-in-sustaining-costs were $1,035. That was likely due to the fact that Banro needed to weather-proof Twangiza. In Q4 their costs where $841. However Namoya in and of itself has higher costs. So let's put Twangiza back at $841 and since we know Namoya will be higher but its throughput will be less we won't go middle of the road but be optimistic and we'll go a little less than middle of the road and say $920 ($938 is middle).

The conclusion is that as far as we know Banro will pay $920 + $516 per ounce ($1,436) to mine 31,000 ounces of gold in Q3.

At $1,300 an ounce Banro loses about ($136) per ounce for a Q3 loss of ($4.2M). BAA is priced currently as a stock that loses (.01) EPS in Q3. However at ($4.2M) they would lose (.0167) and that EPS would drop them likely a little under .25 per share.

This is why Banro needs to solve their debt problem and why I believe they are hard at work doing just that. It could an asset sale or a JV. Naomi emailed me and said both of those options were on the table as well as several other options that may be available to the company. She did not specify what those options where. I shared that email with the board.

I like Banro. I have confidence in the board of directors we just voted in. I'm bullish on Banro. I'm confident we'll hear something soon. BAA Long & Strong!

[nutsyprofessor]

sman, I would totally ignore Tech's post because he has NO idea how to even calculate Net Income! First off, Net Income does not in any way shape or form include anything to do with funds for financing (in or out). That information comes from the Cash Flow. Furthermore, Net Income is used to come up with EPS, and not Cash Flow.

So if you want a good idea of what numbers to use to calculate Net Income for the coming quarter you can do the following:
1) we will use Tech's 31,000 ounces which is a reasonable number.
2) we will use a Total Operating Expense/Revenue Ratio of 0.961; this comes directly from the last quarter.
3) we will use a Gold price of $1300/ounce.

Thus, the Net Income will be as follows:
31,000 ounces x $1,300/ounce = $40,300,000 (revenue)
$40,300,000 revenue x 0.961 (tot. cost/revenue ratio) = $38,728,300 is the total cost to produce this revenue.
Net Income = $40,300,000 - $38,728,300 = $1,571,700

So in reality, they should have a small net positive income, not a loss.