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Banro Corp. considers share issue
David McKay
Posted: Mon, 27 Feb 2006

[miningmx.com] -- BANRO Corporation, the junior mining firm digging for gold in the Democratic Republic of Congo (DRC), will consider issuing shares for cash in the first quarter of 2007.

“If it goes well with our projects, the company will need a bigger budget in 2007,” said Banro president and CEO, Peter Cowley, in an interview with Miningmx.

Banro has renewable 25-year mining licenses to four properties in the so-called Twangiza-Namoya gold belt, situated in the eastern border of the DRC. Following a mining convention signed with the state-owned mining firm, Gecamines, in 2002, Banro has 100% ownership of the properties. Banro has applied for additional tenements in the Twangiza-Namoya gold belt.

A potential fund-raising exercise would improve share liquidity. Banro has only 32 million shares in issue (37 million shares fully diluted). The company approved a 2:1 share split on 14 December, 2004, but has since acknowledged liquidity is tight.

“The listing of Banro on Amex has helped improve the liquidity. But it is a problem,” said Cowley.

However, it’s not impossible to acquire shares. The addition of Capital and Actis to the shareholder register has contributed towards a tripling of Banro’s share price since July 2005. It was last trading at C$12.38/share. According to RBC Capital Markets, the share could record further gains.

Mark Smith, an analyst at RBC, has set Banro a 12-month price target of C$16.30 (from an earlier price target of about C$10/share) assuming a long-term gold price of $560/oz. The share price upgrade is also based on likely additions to the company’s gold resources. Banro had created a platform for resource expansion in the past 12 months, Smith said.

“We are confident that Banro will leverage off this platform in terms of resource expansion during the next 12 months, creating a value-uplift in the stock,” he said.

Cowley said that Banro ought to take gold resources to about 12 million oz of gold by the end of the calendar year. Currently, there are 8 million oz of gold in the measured, indicated and inferred category. “Already, this is a significant resource for a junior mining company,” Cowley said.
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Speaking the Indaba Mining Conference in February, Simon Village, chairman of Banro, said it was possible the company might seek assistance in developing its gold resources.

There had been interest from major mining firms in the company’s DRC properties, Cowley said. So far, requests to visit the gold exploration sites in the DRC had been turned down.

“We have been approached by major mining companies. But it’s a bit premature at this stage. We would like the asset to be maximised first,” said Cowley. He did not discount Banro developing and mining the projects itself.