UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or
15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of February, 2015.
Commission File Number 001-32399
BANRO CORPORATION
(Translation of registrants name into English)
1 First Canadian Place
100 King Street West,
Suite 7070
Toronto, Ontario, Canada
M5X
1E3
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F
Form 20-F [ ]
Form 40-F [X]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1):[ ]
Note: Regulation S-T Rule 101(b)(1) only permits the
submission in paper of a Form 6-K if submitted solely to provide an attached
annual report to security holders.
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7):[ ]
Note: Regulation S-T Rule 101(b)(7) only permits the
submission in paper of a Form 6-K if submitted to furnish a report or other
document that the registrant foreign private issuer must furnish and make public
under the laws of the jurisdiction in which the registrant is incorporated,
domiciled or legally organized (the registrants home country), or under the
rules of the home country exchange on which the registrants securities are
traded, as long as the report or other document is not a press release, is not
required to be and has not been distributed to the registrants security
holders, and, if discussing a material event, has already been the subject of a
Form 6-K submission or other Commission filing on EDGAR.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
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BANRO CORPORATION |
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/s/
Kevin Jennings |
Date: February 27, 2015 |
Kevin Jennings |
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Chief Financial Officer |
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INDEX TO EXHIBITS
-3-
Banro Announces US$100 Million Financing
and
Provides Brief Operations & Corporate
Update;
Commences Consent Solicitation for
Certain Amendments to Note
Indenture
|
Banro closes first tranche of financing for US$20 million
on Twangiza gold forward sale, with US$80 million balance of financing
expected to close in April. |
|
Namoya agglomeration drum delivered to site, installed
and in operation. |
|
Banro commences consent solicitation to implement certain
amendments to its Note Indenture. |
Toronto, Canada February 27, 2015 Banro Corporation
("Banro" or the Company) (NYSE MKT - "BAA"; TSX - "BAA") announces that it has
signed definitive agreements for two gold forward sale transactions relating to
the Twangiza mine and a gold streaming transaction relating to the Namoya mine,
providing total gross proceeds to the Company of US$100 million. The purchasers
(each, a Purchaser) under these financing transactions are funded in part by
investment funds managed by Gramercy Funds Management LLC (Gramercy) which
have committed to fund the US$40 million in gold forward sales and US$50 million
of the gold stream, for a total committed funding of US$90 million. The Company
and its financial advisor, CIBC World Markets Inc., will seek to obtain
commitments for the remainder of the gold stream transaction prior to the
expected close in April.
Each of the two forward sale transactions provide for the
prepayment by the Purchaser of US$20 million for its purchase of 22,248 ounces
of gold from the Twangiza mine, with the gold deliverable over three years, at
618 ounces per month (i.e. 1,236 ounces per month for the two Twangiza forward
sales). The first US$20 million forward sale closed today. The second US$20
million forward sale is expected to close in April, with the definitive
agreement for this transaction having been signed today. The forward sales may
be terminated at any time upon payment to the Purchaser of a one-time
termination amount that would result in the Purchaser receiving an amount equal
to an IRR of 20%. The terms of the forward sales also include a gold floor price
mechanism whereby, if the gold price falls below US$1,100 per ounce in any
month, additional ounces are deliverable to ensure a realized gold price of
US$1,100 per ounce for that month.
The streaming transaction provides for the payment by the
Purchaser of a deposit in the amount of US$60 million and the delivery to the
Purchaser over time of 10% of the life-of-mine gold production from the Namoya
mine (or any other projects located within 20 kilometres from the current Namoya
gold mine). The ongoing payments to Namoya upon delivery of the gold are US$150
per ounce. The streaming transaction is expected to close in April, with the
definitive agreement for this transaction having been signed today.
As previously reported, we have been working on several
alternatives to address Banros liquidity situation and believe we have now put
in place the best option for the Company, commented Banro Board Chairman,
Richard Brissenden. We believe the Twangiza forward sales and Namoya streaming
arrangement, along with stabilized production at Twangiza and increasing
production at Namoya to commercial levels, will put Banro in a solid position to
achieve its longer term growth objectives.
The contemplated use of proceeds from the Twangiza forward
sales and Namoya streaming arrangement include:
- payment of the upcoming interest amount due on the Companys outstanding
10% senior secured notes (the Notes) issued pursuant to the Companys note
indenture dated March 2, 2012 (the Note Indenture);
- repayment of the notes issued under the liquidity backstop facility
announced in August 2014;
- payment of accrued dividends on the gold-linked preferred shares issued in
April 2013;
- significant reduction in the Companys accounts payable; and
- providing funds for ongoing capital requirements and other general
corporate purposes, including the purchase of equipment and materials to bring
the Namoya mine to commercial production rates and the drilling of known
ore-bearing structures at Namoya with high potential for short term resource
growth. Banros intent is to conduct additional limited drilling in areas at
Namoya which can begin to contribute to production before the end of Q4 2015.
The completion of the second US$20 million Twangiza forward
sale and the Namoya streaming transaction is subject to certain amendments (the
Indenture Amendments) being made to the Companys Note Indenture and related
Collateral Trust Agreement in order to secure the gold delivery obligations
under both forward sales and the streaming transaction by way of a Priority
Lien and a Parity Lien, respectively, within the meaning of the Note
Indenture. The Indenture Amendments require the consent of the holders of a
majority of the aggregate principal amount of the Notes outstanding under the
Note Indenture. The Company will be soliciting the consent of Note holders to
the Indenture Amendments pursuant to a consent solicitation statement to be
mailed to Note holders shortly. In connection with this planned solicitation,
Gramercy and funds under management by BlackRock Investment Management (UK)
Limited, which together with Gramercy control 52.4% of the aggregate principal
amount of the Notes, have entered into support agreements with the Company
pursuant to which they have agreed to consent to the Indenture Amendments in
respect of their Notes. The Companys financial advisor, CIBC World Markets
Inc., will be acting as solicitation agent with respect to the planned
solicitation.
Copies of the main transaction documents for the Twangiza
forward sales and Namoya streaming transactions will be filed on SEDAR at
www.sedar.com and EDGAR at www.sec.gov.
The previously announced transaction with Gold Holding Ltd. has
been terminated due to non-performance on the part of Gold Holding. Banro is
currently reviewing potential actions with respect to the termination of this
agreement.
The current financing transaction has been downsized from the
original US$121 million with Gold Holding due to the decision not to make the
estimated US$20 million investment in expanding the Namoya CIL circuit and the
agreement, in principle, by certain suppliers to settle their accounts by way of
gold forward sale arrangements. Brissenden commented: Management believes that
the US$100 million of capital is more than sufficient to meet the Companys liquidity needs over the next two years as it
completes the Namoya ramp-up, with a sufficient cash cushion to absorb normal
course volatility in gold prices and production.
2
Operations Update
Banro is pleased to report
that delivery and installation of the agglomeration drum required for the
conversion of the Namoya processing plant to a more traditional fully
agglomerated heap leach operation was completed earlier this month. The drum is
operating well in its early commissioning mode. It will significantly enhance
the quality of the heap leach feed and will improve leach recovery rates. With
heap leach operations taking several months of continuous percolation to fully
recover the leachable gold, the full benefits of the improvements to the heap
leach circuit are expected to build up during the second quarter of 2015. Banro
anticipates reaching commercial production levels at Namoya early in the second
half of 2015.
Twangizas production trend continues as illustrated in the
monthly gold production numbers disclosed in the Companys January 5, 2015 press
release. From this point forward, the Company will revert to its previous
practice of issuing quarterly production reports as per common industry
standards.
John Clarke, Chief Executive Officer of Banro, stated: During
the second half of 2014 the Twangiza mine consistently reached its anticipated
gold production targets. Going forward into 2015, Twangiza is expected to
maintain this successful production profile. Working through the New Year break
in December/January, the Banro DRC team excelled in delivering the Namoya
agglomeration drum to site, despite significant logistical challenges, and
installing it in to the Namoya circuit. With the drum now in operation, the
Namoya team can focus on ramping up Namoya production to match the successes at
Twangiza. Finally, with the financing, Namoya will receive the much needed
financial support to expedite the ramp up that would have occurred under normal
financial circumstances. Once both mines are in full operation, we expect
average annual gold production from both Twangiza and Namoya to total 200,000 to
220,000 ounces. At this production level we expect cash costs in the range of
US$725 to US$825 per ounce and all-in sustaining costs of US$850 to US$950 per
ounce.
Corporate Update
Banro also announces the
appointment of Richard Brissenden to the role of Executive Chairman of the
Board. Richard joined the Banro board in December 2013 as an independent
director and has been working closely with management to seek out and evaluate
solutions to the Companys liquidity situation. The board and management team
welcome Richard to this expanded role and look forward to his continued
involvement as the Company brings Namoya up to expected gold production and
reaches a financial threshold where exploration can be resumed both around the
current mines and on targets through the remainder of Banros Twangiza-Namoya
gold belt.
Forward-Looking Guidance
Banro offers new
guidance for 2015 and 2016 based on full production at Twangiza and the
continued ramp up of Namoya.
For 2015:
Twangiza annual gold production of 100,000 to
110,000 ounces averaging 9,000 ounces per month
Namoya annual gold
production of 90,000 to 100,000 ounces comprised of the following:
H1:
pre-commercial production of 30,000 to 35,000 ounces
H2: 9,000 to 11,000 ounces
per month
Capital expenditures, excluding Namoya Mine under Construction,
planned for 2015 amount to approximately $23 million, and exploration is planned
to be reduced to approximately $5 million in 2015, with additional opportunities
to be considered should gold market conditions improve.
3
For 2016:
Twangiza 115,000 to 125,000 ounces
Namoya
115,000 to 125,000 ounces
Qualified Person
Daniel K. Bansah, Head of Projects
and Operations for the Company and a "qualified person" (as such term is defined
in National Instrument 43-101), has reviewed and approved the technical
information in this press release.
Banro Corporation is a Canadian gold mining
company focused on production from the Twangiza mine, which began commercial
production September 1, 2012, and completion of its second gold mine at Namoya
located approximately 200 kilometres south of the Twangiza gold mine. The
Companys longer term objectives include the development of two additional
major, wholly-owned gold projects, Lugushwa and Kamituga. The four projects,
each of which has a mining license, are located along the 210 kilometre long
Twangiza-Namoya gold belt in the South Kivu and Maniema provinces of the
Democratic Republic of the Congo. Led by a management team with extensive gold
and African experience, the initial focus of the Company is on the mining of
oxide material, which has a low capital intensity to develop but also attracts a
lower technical and financial risk to the Company. All business activities are
followed in a socially and environmentally responsible manner.
Gramercy Funds Management LLC is a US$5 billion
dedicated emerging markets investment manager based in Greenwich, CT with
offices in London, Hong Kong, Singapore, Mexico City, and Buenos Aires. The
firm, founded in 1998, seeks to generate superior risk-adjusted returns through
a comprehensive approach to emerging markets supported by a transparent and
robust institutional platform. Gramercy invests through both alternative and
long-only strategies across all asset classes (sovereign USD and local currency
debt, investment grade and high yield corporate debt, distressed debt, equity,
private equity and special situations). www.gramercy.com.
Cautionary Note Concerning Forward-Looking Statements
This press release contains forward-looking statements. All
statements, other than statements of historical fact, that address activities,
events or developments that the Company believes, expects or anticipates will or
may occur in the future (including, without limitation, statements regarding
future gold production and costs, potential mineral resources, the closing of
the second US$20 million Twangiza forward sale and the Namoya streaming
transaction, the anticipated effect of the said transactions on the Companys
operations and financial condition, and the anticipated impact of the
agglomeration drum on gold production at Namoya) are forward-looking statements.
These forward-looking statements reflect the current expectations or beliefs of
the Company based on information currently available to the Company.
Forward-looking statements are subject to a number of risks and uncertainties
that may cause the actual results of the Company to differ materially from those
discussed in the forward-looking statements, and even if such actual results are
realized or substantially realized, there can be no assurance that they will
have the expected consequences to, or effects on the Company. Factors that could
cause actual results or events to differ materially from current expectations
include, among other things: failure to complete the second US$20 million
Twangiza forward sale and the Namoya streaming transaction; the possibility that
the benefits of the agglomeration drum at Namoya are less than expected;
uncertainty of estimates of capital and operating costs, production estimates
and estimated economic return of the Companys projects; the possibility that actual circumstances will differ from the
estimates and assumptions used in the economic studies of the Companys
projects; uncertainties relating to the availability and costs of financing
needed in the future; failure to establish estimated mineral resources and
mineral reserves (the Companys mineral resource and mineral reserve figures are
estimates and no assurance can be given that the intended levels of gold will be
produced); fluctuations in gold prices and currency exchange rates; inflation;
gold recoveries being less than those indicated by the metallurgical testwork
carried out to date (there can be no assurance that gold recoveries in small
scale laboratory tests will be duplicated in large tests under on-site
conditions or during production); changes in equity markets; political
developments in the Democratic Republic of the Congo; lack of infrastructure;
failure to procure or maintain, or delays in procuring or maintaining, permits
and approvals; lack of availability at a reasonable cost or at all, of plants,
equipment or labour; the possibility of accidents, equipment breakdowns or other
events resulting in interruptions in production; inability to attract and retain
key management and personnel; changes to regulations affecting the Company's
activities; and the other risks disclosed under the heading "Risk Factors" and
elsewhere in the Company's annual information form dated March 29, 2014 filed on
SEDAR at www.sedar.com and EDGAR at www.sec.gov. Any forward-looking statement
speaks only as of the date on which it is made and, except as may be required by
applicable securities laws, the Company disclaims any intent or obligation to
update any forward-looking statement, whether as a result of new information,
future events or results or otherwise. Although the Company believes that the
assumptions inherent in the forward-looking statements are reasonable,
forward-looking statements are not guarantees of future performance and
accordingly undue reliance should not be put on such statements due to the
inherent uncertainty therein.
For further information, please visit the Banro website at
www.banro.com, or contact:
Naomi Nemeth,
Banro Investor Relations, +1 (416) 366-9189, +1-800-714-7938, Ext. 2802,
IR@banro.com, and follow Banro on Twitter
@banrocorp.
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