Replies to post #38599 on Banro Corp. fka BAA

[bostonseb]

I completely concur. One note regarding book value though. In my opinion, it is not a compelling reason to invest in this company, lured by the apparent value of the assets. Namoya is still capitalized for 390 M on the book. That is a joke. I had run a DCF model based using the assumptions of the Deloitte analysis updated with the new production schedule, and the value of this mine at current gold price is under 200M. That does not even take into account a massive discount for the DRC location and risk premium.
Honestly, in a liquidative event, common shareholders are likely to recover zero if assets are put for auction.
The fact that they have raised a net 60+ M in the first half in new financing and have essentially already entirely spent it (50+20+20+10-40 for backstop = 60 net) says something about the concern they have for the cash balance. They are pushing investment and ops at all costs, regardless of the dire liquidity situation, and this worries me that they have little concern for the shareholders. They are basically all in, "if it goes and we can avoid running out of cash, great, if it breaks and we have to file, that's ok, we'll restructure, wipe the commons, keep our cushy jobs, and operate the mines with a leaner capital structure".
The only saving grave, I feel, is a sustained and significant rally in gold prices needed extremely soon (like yesterday), and there are less risky miners out there with much less leverage that would also see similar upside in that scenario, with much less downside risk if gold prices stay depressed for longer. Just my opinion, but I feel there are better opportunities in the mining sector. I bought CDE a couple days ago under $3.00 and have been lucky to see a nice bounce back. Also, IAG under 1.20 was a great opportunity to benefit from a rebound in gold prices, although I missed that one.

[badge0913]

Then I assume you will be selling and leaving this board.

[investorwisdom]

bye bye, nice knowing you, do us all a favor king realist, sell and act like a tree and leave. We can handle all the highly distressed assets without your help.

[nagoya1]

BAA- Namoya soon to be commercially mining.

Fantastic news. Twangiza still humming at over 100% and Namoya didn't blow up and is still ramping up. Earnings in a month and hopefully news that Namoya is a go not too long after. Cheers to the longs.

You're forgetting what the AISC is in regards to. It is PER OZ.
AISC PER OZ. The cost is high because production is low. Less production to meet fixed overhead costs. Double production and your cost per oz gets cut in half, when looking at it in the most simplistic way possible. Namoya is doing 3k ozs/month right now. The stated goal is ~9k ozs/month which is 3x higher than what they are doing now. $1581/3 = $527. I think AISC will be about 50-60% higher than that figure on an ongoing basis once it's in full commercial production, which will be right around Dr. Clarke's goal of ~$800 AISC.

Too much going on right now to peg a continuously sustainable number. They need to bring namoya online first. Either way, they are in a much better position than most when it comes to $$ to pull gold out of the ground. BUT, as with everything, timing of inflows and outflows of cash is what will matter most when times get tough and they are running lean. Interest expense is not variable. To paraphrase Goodfellas, "Price of gold went down? F*&^ you, pay me. Namoya blew up again? F*&^ you, pay me. Rainy season wreaked havoc on the ore piles? F*&^ you, pay me."

WOW, quite the turnaround...