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Banro considering selling diamond mine
Allan Seccombe
Posted: Fri, 11 Nov 2005

[miningmx.com] -- BANRO is considering selling its stake in a diamond company in the Democratic Republic of the Congo (DRC) to pay for building gold mines elsewhere in the central African country, said Simon Village, Banro chairman.

Toronto-listed Banro has a 36% interest in DRC Diamonds which may become one of the more significant diamond concession holders in that country, Village said.

The company reversed a decision to sell the stake in the diamond firm earlier after De Beers and BHP Billiton started kicking the tyres in the DRC. De Beers ranks the DRC just behind Botswana in terms of diamond prospectivity.

“It was our intention initially to slip DRC Diamonds out, or distribute it to shareholders by way of a free and fair dividend,” Village told delegates at the RBC Capital Markets gold conference in London.

“I certainly believe at this early stage of development in the diamond industry in the DRC that we would be wise to hold onto this. It may very well provide financing opportunity later on in the year and thereby save on further dilution,” he said.

De Beers’ spokesman Tom Tweedy said the world’s largest diamond producer did not reveal to whom it was talking until it was time to unveil a deal. “This does not imply we are talking to Banro,” he said.
we would be wise to hold onto this
Banro has access to four properties covering 2,600 square kilometres on the 210km long Twangiza-Namoya gold belt. Confirmation it has the rights to explore on a further 7,000 square kilometres of land in this belt are outstanding.

The firm has identified eight million ounces of gold comprising 5.5 million inferred ounces. The remainder of the identified gold ounces under its control fall in the measured and indicated category of resource estimates.

Banro plans to present the market with scoping studies and pit designs by the end of 2006. It will then decide how to tackle its projects.

Large gold companies would show an interest in its gold properties, a view reflected in the ownership structure of its DRC assets, Village said.

Under DRC laws, assets within a corporate entity cannot be hived off and sold without the approval of DRC’s government, which would prove onerous should Banro wish to add value to one of their projects, he said.

“From a flexibility point of view, if you were in a financing or corporate action, there wouldn’t be time to structure it appropriately and you’d have to sell off the whole package.

“We’ve put this structure together to give us the flexibility to be able to look at financing options, joint ventures and even sale options at the localised project level, thereby ensuring we don’t have to dilute investors at the top,” Village said.

Banro has also placed its exploration permits into another company. “We will get to those projects once we’ve done some more of the detailed core exploration on our four key areas.
flexibility to look at financing options, joint ventures and even sale options
In 1995, Banro bought a Belgian company that had built up 80 years’ worth of exploration data on the area.

“There are 35 tons of geological maps. We’ve only worked through seven tons of those maps. We’ve put that into a separate company because we believe it will be of value to our shareholders and Banro going forward,” he said.

Gold companies are depleting their deposits faster than they can find replacement ounces and new territories with prolific new gold belts will have to be found. One such prospective territory is in central Africa, Village said.

“Banro has benefited from being quite proactive in terms of ‘first mover advantage’ and has tied up an entire gold belt,” he said comparing it to Ghana’s Ashanti gold belt where eight mining companies and 42 exploration groups operate.

The other major known gold belt in the DRC is Kilo-Moto which has interested AngloGold Ashanti, Gold Fields and Mvelaphanda Resources.

Village sounded a word of warning to miners hoping for quick results in the DRC, scheduled to hold elections during the first half of next year.

“Investors who look at the DRC as a get-rich-quick opportunity may be sorely disappointed. The country is in reform,” Village said