Despite delays and two separate downward revisions to its gold production target at Namoya this year, Banro Corp. (TSX: BAA; NYSE: BAA) managed to pour the first gold at its newest mine in the Democratic Republic of the Congo on Dec. 30.
The company produced 320 oz. gold during the hot commissioning of the heap leach loaded carbon, elution and electrowinning operation on the Twangiza-Namoya gold belt, about 210 km southwest of the company's Twangiza gold mine.
Initially Banro had targeted production of 16,000-22,000 oz. at Namoya in 2013. That target was cut to 7,000-10,000 oz. when the company released its second-quarter financial results. The outlook was trimmed further to up to 3,000 oz. in mid-November when the company published its third quarter results.
Namoya is Banro's second gold mine to come into production in just over two years. Twangiza began production in October 2011 and reached commercial production the following September.
Namoya will transform Banro from a one-mine company with less than 100,000 oz. gold production a year to a two-mine company targeting more than 225,000 oz. gold each year.
Commercial production at Namoya is scheduled to start before the end of the second quarter in 2014 after the company completes construction of the plant. The open-pit operation has a hybrid gravity/carbon in leach (CIL) and heap-leach extraction process.
However, Andrew Breichmanas of BMO Capital Markets commented in a research note that while the first gold pour "is a significant achievement," Banro's "failure to update progress on other milestones expected by year-end suggests potential for further delays with plant construction. The company had expected to complete the primary jaw crusher by Dec. 14, the rotary scrubber and cone crushers by Dec. 28, and the primary product stockpile by Dec. 30."
The London-based analyst also pointed out that although Namoya "should establish a solid foundation in a prospective region and complement existing operations at Twangiza," he has concerns "regarding the company's ability to fund the production ramp-up."
As of Sept. 30, Banro reported US$14.8 million in cash and a working capital deficit of US$25.2 million, Breichmanas notes, "with an additional US$10 million loan secured subsequent to quarter-end."
The Namoya property lies at the southern end of the Twangiza-Namoya gold belt in Maniema province, about 225 km southwest of Bukavu and covers 174 sq. km.
Measured and indicated resources stand at 24.77 million tonnes grading 1.99 grams gold per tonne for 1.58 million oz. of contained gold and inferred resources add 9.47 million tonnes grading 1.44 grams gold per tonne for 440,000 oz. of contained gold. The resource was based on a cut-off grade of 0.4 gram gold per tonne.
Mineralization at Namoya is structurally controlled by a 2.5 km, northwest trending shear zone within sericite schists, which hosts a series of quartz stockwork deposits. The gold-bearing vein systems outcrop at the summits of Mt. Mwendamboko, Mt. Namoya, Mt. Kakula, and Mt. Muviringu. Mineralized stockwork outcrops have also been found on eight other hills in the general area, the company states on its website.
In addition to the Namoya and Twangiza mines, Banro is developing two other projects on the 210-km-long Twangiza-Namoya gold belt in the South Kivu and Maniema provinces of the DRC: Lugushwa and Kamituga.
At presstime Banro was trading at 61¢ per share in Toronto within a 52-week trading range of 43¢-$3.09.
Breichmanas of BMO has a target price of 90¢ per share.
The company has about 252 million shares outstanding.
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