Toronto-based Banro (TSX: BAA; NYSE-MKT: BAA) has published an initial reserve estimate for its new Namoya gold mine in the Democratic Republic of the Congo, pushing up company-wide reserves by 53% to 2.36 million oz.
Namoya, which is the junior’s second gold mine, now hosts reserves of 23.7 million tonnes grading 1.75 grams gold per tonne for 1.34 million oz. gold. Banro says it converted 73% of Namoya’s 1.83 million oz. gold in measured and indicated into reserves.
BMO analyst Andrew Breichmanas describes the results as “positive,” noting that reserves of 1.34 million oz. were above his 920,000 oz. estimate, although unit costs were slightly higher than predicted.
To calculate the reserves, Banro assumed unit costs of US$3.85 per tonne for mining, US$11.38 per tonne for processing and US$5.89 per tonne for general and administrative expenses. It used a cut-off grade of 0.45 gram gold per tonne and a US$1,200 per oz. gold price.
By adding Namoya the junior has bolstered its gold count, despite reserves dropping 33% to 1.03 million oz. at its nearby Twangiza gold mine in South Kivu province. The decrease resulted mainly from Twangiza lowering its gold price assumption to calculate reserves at US$1,200 per oz., down from US$1,500 per oz.
On a positive note, Twangiza’s reserve grade has improved to 2.34 grams gold per tonne from 1.87 grams gold in 2013. “The higher grade indicates that current production rates are more sustainable than previously thought,” Breichmanas notes.
Twangiza saw its production grow over each quarter last year. It churned out 22,858 oz. gold in the fourth quarter — 10% higher than the third quarter — as it expanded to boost future throughout to up to 1.7 million tonnes a year. In 2013 — its first full-year of commercial production — Twangiza delivered 82,591 oz., slightly below its guidance. The mine declared commercial production in September 2012.
Namoya couldn’t contribute much, as it poured its first gold, amounting to 320 oz., on Dec. 30. Plant construction is 98% done, with completion expected by the end of April. Hot commissioning should start in the second quarter.
Of the gold produced last year, Banro sold 80,497 oz. at an average US$1,389 per oz. for US$111.8 million in revenue. Cash costs came in at US$801 per oz. and all-in sustaining costs at US$1,026 per oz. — both lower than a year ago.
Net income totalled US$1.6 million, or US1¢ per share, up from a US$4.6-million loss, or US2¢ per share in 2012.
In 2014, Banro forecasts producing 100,000 to 110,000 oz. from Twangiza during the year at cash costs of US$650 to US$750 per oz., and 50,000 to 60,000 oz. from Namoya in the second half at cash costs of US$700 to US800 per oz.
Namoya sits 200 km southwest of the Twangiza gold mine, but both are in the 210 km long Twangiza–Namoya gold belt spanning the South Kivu and Maniema provinces. Banro also hosts the Lugushwa and Kamituga gold projects in the belt.
Banro’s total measured and indicated resources stand 8.35 million oz. gold, marking an 18% decrease over 2012, while inferred resources are 5.32 million, down 24%.
The company closed March 31 — the day the 2013 financials were released — off 5% at 53¢, within a 52-week trading range of 43¢ to $1.78.
Breichmanas has a 75¢ target price and an “underperform” rating on the stock.
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