BANRO’s Twangiza mine, Kivu, eastern Democratic Republic of the Congo. Despite its location, Banro has a heavyweight investor base, including BlackRock and Ruffer’s Baker Steel. Local observers are sceptical of any peace deal with rebel gunmen, the M23: “Two years later, the accord won’t be respected and the war will start again.”

BANRO’s Twangiza mine, Kivu, eastern Democratic Republic of the Congo. Despite its location, Banro has a heavyweight investor base, including BlackRock and Ruffer’s Baker Steel. Local observers are sceptical of any peace deal with rebel gunmen, the M23: “Two years later, the accord won’t be respected and the war will start again.”

Banro Battles to Contain Costs in the Congo

Issue 34, March 2013

The resignation last week of Banro Corp’s chief executive caught markets offguard, sending shares 22 per cent lower on heavy volume in a single day. The news however lends weight to reports Global Mining Observer has had from inside the country that Congo focused Banro is operating on an overstretched budget, exacerbated by cost overruns at its Namoya project and prolonging serial delays at its flagship Twangiza mine, South Kivu.

At the time of its first gold pour in October 2011, Twangiza was expected to produce 120,000 gold ounces during 2012, versus output in the final quarter of 20,000 ounces, the company’s peak to date. The impact on cash flow has forced Banro to suspend exploration, not reported by the company, holding employees idle on full salaries.

Despite Twangiza’s proximity to the Congo’s M23 rebels and an unpublicised episode in which a Banro helicopter was forced to land on militia controlled land (officially ending in negotiations), security has not contributed to project delays. Banro vehicles are not typically escorted by armed guard, whilst roads the company has built have safely opened routes along which traffic was previously routinely attacked.

“I cannot say that the Congo is not dangerous,” said a local source close to operations at Twangiza, “but some reports are exaggerated. Kivu province is safer than many other areas of Africa which benefit from good investment.”

Speaking on the basis of anonymity, he said that Banro’s presence has greatly improved local stability. Whilst fighting at Twangiza was previously a weekly occurrence, since the mine’s construction there has not been a “big incident” for almost a year. “During exploration it is difficult to measure the impact, but when mine building starts you can feel it.”

Despite its setbacks, Banro’s 17m gold ounce resource base and C$412m ($401m) market capitalisation are indicative of the region’s potential, with Banro its frontrunner. “The potential is huge but the challenges also. There is opportunity for doing good business in the mining sector in Congo."

“Major companies underestimate what they are to the Congolese people. People are waiting for them. Kivu still has space for around 5 to 7 [mining] companies; those who are ready should come and they will be welcomed.”

“There is opportunity for doing good business in the mining sector in Congo.”
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