Banro Corporation ("Banro" or the "Company") (TSX:BAA)(NYSE
Amex:BAA)(NYSE MKT:BAA) is pleased to provide an operational update
of its projects in the Democratic Republic of the Congo (the "DRC")
and an outlook for 2013.
Highlights
-- Twangiza's expansion is underway, with US$9 million already committed to
increasing CIL and elution capacity, aiming at throughputs of 1.7Mtpa
and recoveries of 87-90%, delivering in the order of 10,000 ounces per
month by Q4 2013, with a further upgrade to 2Mtpa planned for 2014.
-- Namoya's development is on track for mid-2013 commissioning and ramp up
to peak production of 13,000 ounces per month by December 2013.
-- Exploration work during 2012 continued to delineate additional targets
on all four projects, as highlighted in the Company's press release
dated November 15, 2012, most of which are oxides and free-milling
material, with the prospect of defining additional ounces, and replacing
depleted ounces at existing production sites.
-- Continuing to move towards becoming a fully integrated gold mining
company with a reduction in contractors, rightsizing and multi-skilling
of the expat workforce, with significant cost benefits being delivered
over the past quarter.
-- Pre-feasibility studies concluded for hydro-electric power generation
projects revealing attractive, low capital cost opportunities to deliver
optimal power solution to both Namoya and Twangiza within the next two
years. This will lead to material cost reductions, potentially driving
costs below the targeted US$500/ounce, staving off industry-wide
inflation, thereby achieving Banro's goal of becoming a low cost gold
producer.
Twangiza
Since declaration of commercial production effective September
1, 2012, production at Twangiza has been approaching the current
target of 8,000 ounces of gold per month. Whilst mechanical issues
surrounding the motor for Ball Mill 1 resulted in lower than
expected production for the month of September, where only 5,123
ounces were poured, production improved to 6,534 ounces recovered
during October and this is projected to improve again for November
approaching the 8,000 ounce range. Operating costs will remain
steady at US$5.6 million per month for Q4 2012, bringing cash costs
per ounce into the US$750/ounce range and, as general operating
efficiencies improve and as the benefits of the plant upgrade
outlined below are realised, cash costs will reduce every quarter
and are targeted to be in the order of US$550/ounce by end
2013.
The engineering towards the plant upgrade, aimed at enhancing
production security and increasing plant throughput to 1.7Mtpa,
plus improving recoveries to around 90%, has largely been
completed.
The upgrade will entail: the installation of a strengthened grid
grizzly and rock breaker; the replacement of the primary crusher
(MMD mineral sizer) with a larger and more powerful unit; upgrading
the apron feeder power pack; the speeding up of conveyor belts; the
replacement of the secondary cone crusher; the installation of four
additional CIL tanks; and the installation of a second elution
circuit, including kiln and gold room. Orders have been placed for
the steel and equipment in order to achieve the above, and project
completion is anticipated during Q3 2013. Further upgrades are
planned to be undertaken in early 2014, or as cash-flows allow,
which will enable plant throughputs to be further increased to
2Mtpa.
In addition to this, Twangiza has undergone a streamlining
process in terms of the use of contractors as well as upgrading of
its operating resources. This model will form the blueprint for
future operations as the Company moves towards becoming a fully
integrated low cost gold producer. The following major initiatives
have been achieved to date:
-- The new management and supervisory team, consisting of multifaceted
specialists across the disciplines, is now largely in place, enabling
some construction skills to be transferred to Namoya, resulting in an
overall reduction of Banro and contractor expatriate numbers;
-- The switch from contractor mining to owner mining has been completed.
This has resulted in mining targets being consistently achieved and
beaten;
-- The Run-of-Mine ("ROM") pad area has been extended by approximately one
third, enabling optimum blending in terms of grade and material type;
-- The mobile fleet maintenance workshop has been moved to a location
immediately adjacent to the Twangiza Main pit, eliminating the previous
16-kilometre round trip;
-- The two million litre fuel storage facility immediately adjacent to the
power house has been fully commissioned, providing two months of on-site
capacity;
-- Raw water delivery to the metallurgical plant has been halved following
the improvement of return water pumping arrangements now established at
the Tailings Management Facility (TMF);
-- The five year toe of the TMF has been completed;
-- Relocation housing will be completed at the residential community of
Cinjira by the end of December 2012.
At Twangiza, the bulk of the exploration activities focused on
the definition drilling of the near-mine Twangiza East and West
targets with the object of replacing mineral reserves depleted
during the year.
The preliminary work carried out on the Twangiza North porphyry
material has demonstrated that the bulk of the transition and
primary porphyry material could also be processed through the
existing CIL plant. Further metallurgical and engineering studies
are underway to confirm the results of the preliminary work. The
results of the preliminary study will be published in the new-year
as part of Banro's mineral resource and mineral reserve update.
In terms of the current status of operations, Mill No 1 has been
put back into service, and both mills have demonstrated more than
enough capacity to handle planned increased tonnages. The
re-introduction of Mill No 1 resulted in an immediate improvement
in processed tonnage and gold output since September, such that
forecast production of 8,000 ounces per month should be achievable
over the current quarter. In addition, it is anticipated that
operating costs will be reduced as operating efficiencies are
improved, as reliance upon contractors is decreased, and overall
expatriate numbers diminish. As the benefits of the plant expansion
and consolidation plan are realised during 2013, cash costs per
ounce are expected to progressively decrease from in the order of
US$700/oz during Q1 2013 to in the order of US$550/ounce by Q4
2013. In terms of capital expenditure for 2013, because of the
plant expansion exercise, this will be higher than on-going
sustaining capital required for the remainder of the mine life.
Greater earnings potential exists when hydro-electric power
generating facilities are introduced, where cash costs could be
further significantly reduced.
Namoya
Development progress remains on track to commission the plant by
mid-2013, and ramp up to full production by end Q4 2013. This
timetable comes with a number of challenges in terms of critical
paths, specifically the mobilization of steelwork and plant
equipment over the next three months. To this end, significant
focus is on the improvement of the main road access to enable
timely transfer of heavy machinery and out of gauge cargo to site
in order to meet deadlines for the completion of bulk earthworks
and civil engineering works.
The Company's decision to perform a number of key functions
internally, including the purchase its own earthworks fleet, has
resulted in a higher budget than initially planned, as previously
reported. This decision provides timetable improvements and is
expected to contribute towards minimizing future operating
costs.
Specific progress at Namoya has been as follows:
-- All erection, earth moving and civil equipment for development and
operational requirements have been procured and deployed to site to
execute the project construction deliverables for the metallurgical
processing plant, heap leach pads and tailings management facility;
-- To secure the supply of sand and aggregates required for the main civil
works, a crushing, screening and washing plant has been procured and
erected on site. The source of raw material for this plant is hard rock
from a quarry situated 6 kilometres from the mine site;
-- Civil works for production infrastructure commenced in September 2012
and earthworks required prior to commencement of the construction of the
metallurgical plant are now well underway;
-- Category A civil works are scheduled for completion during Q1 2013 and
planned to be released in a phased sequence for the erection of
structural steel and the installation of mechanical equipment;
-- Procurement of all long lead mechanical and electrical equipment is now
complete and deliveries to site are expected to commence during Q4 2012;
-- Designs for 60% of the 1,000 tonnes of structural steel required for the
construction of the metallurgical plant have been completed and orders
placed with manufacturers, which will enable shipments to commence
during Q4 2012. The remaining design work is in progress and drawings
are planned to be released to manufacturers during Q4 2012, thus
enabling final deliveries to site during early Q2 2013;
-- Electrical and control system designs have been completed and orders
placed with manufacturers and suppliers. Factory acceptance testing is
current with the release of equipment scheduled to commence in Q1 2013.
Construction works are planned to be completed toward the end of
Q2 2013, followed by commissioning, and ramp up is expected to be
completed during Q3 2013. Name plate gold production is expected to
be achieved by the end of Q4 2013.
Hydroelectric Power Study
Further to the above, Banro has completed a pre-feasibility
study which examines two options for the potential generation of
hydro-electric power at Namoya. The first would be the
re-engineering and refurbishment of an existing disused facility to
provide a generation capacity of 4.5 MW and capacity factor of 60%,
at an estimated capital cost of some US$22 million. This would
potentially result in a US$59 million saving in fuel costs over
life of mine, for the first phase only. The second green-field
option would have a capacity factor of 97% and an estimated capital
cost of US$44 million. This could potentially result in fuel cost
savings over life of mine of US$77 million for the first phase
only. The construction period for both project options would be 18
months from completion of detailed engineering design. The Company
is currently looking at external funding options for the hydro,
which may determine the option selected. Given the guaranteed
off-take from Banro and the region, the Company believes such
funding can be secured within the next six months to allow this
project to be started. The attraction of hydro would be a
significant improvement of the CIL economics where a higher power
demand is required for grinding compared to the Heap Leach.
The hydro project would be capable of providing power for the
heap leach plant, with potential to upgrade generation capacity to
provide sufficient power for a further 1.5-2Mtpa CIL plant, leading
to steady state power costs of less than US$0.01 per kilowatt hour.
Based on the Company's budgeted diesel costs of US$1.65 per litre,
this would translate into a cost saving of some US$150/ounce, and
could reduce the project's total operating costs below the
US$500/ounce range, and significantly increase the returns from
this project. A report on the hydroelectric options will be
released shortly, with guidance on the funding options.
Exploration
In terms of exploration, and as press released on November 15,
2012, drilling has identified increased oxide and free-milling
material at the Namoya project, with attractive widths and grades,
these appearing to be open ended both along strike and at depth.
These new targets are not included in the current mineral resource
but are expected to add to the existing resource base. The
metallurgy of these targets is attractive, with recoveries through
a CIL plant in the order of 95%, which would justify adding a
milling circuit and additional CIL capacity.
The team is currently completing a resource update, which will
be followed by a preliminary economic assessment ("PEA"). This is
expected to be released within the next few months and will have
the advantage of using real costs from current operations. The
potential impact of adding a 1-2Mtpa milling circuit and CIL plant
will be examined, which would treat higher grade material whilst
low grade material would continue to report to the heap leach
facility.
The conversion of these additional resources into reserves will
be the focus of the exploration objectives for 2013, as well as the
completion of a full feasibility that will allow for a 2014 project
development. With the infrastructure at Namoya developed, and the
existing footprint in terms of civil works being designed to
accommodate such a plant expansion, it is likely that the proposed
CIL expansion could be constructed over 12 months, allowing for a
2014 build and 2015 production. Assuming a facility of 1-2Mtpa was
introduced this would increase production to between 300,000 and
400,000 ounces per annum.
Lugushwa
The exploration work has delineated a number of targets, some of
which have been drilled. The recent drilling has intersected a
number of high-grade zones mainly within the oxide domain which was
highlighted in the released of November 15, 2012. The drilling
program delineated extensions to the known mineralization and the
results will be used to upgrade inferred mineral resources to the
indicated mineral resource category for inclusion in the update of
the overall mineral resource anticipated for early 2013. "The wide
zones of near-surface mineralization at Lugushwa have potential to
become a bulk-mineable resource," commented Banro VP, Exploration,
Daniel Bansah. "Since 2011, we have had confirmation of the
potential for mineable oxide resources from the significant
Lugushwa resource base, which will be a catalyst for the completion
of the resource update by early 2013. Results from the resource
update will inform the decision to proceed with further exploration
to and the completion of a PEA during 2013, the exact timing of
which will be driven by continued exploration success."
The bulk of the proposed exploration work for 2013 at Lugushwa
will focus on the completion of the shallow infill and extension
drilling to assist in the completion of the PEA. There will also be
a refocus of regional exploration towards the southern part of the
concession which has the most favourable and consistent results. An
increased amount of metallurgical test work will also be carried
out during the second half of 2013. Once a positive PEA is
completed, the Company intends to undertake a feasibility study of
the Lugushwa property, and adding this project to the production
pipeline.
Kamituga
The Kamituga property has been the subject of a "fast track
results driven" exploration program since February 2011, which
explains the Companies overspend on the exploration budget for
2012, with surface and adit mapping, soil geochemistry,
trenching/channel sampling and auger, RC and diamond drilling. In
addition, ground geophysical studies (Pole-Dipole and IP survey)
were also conducted to increase geological understanding and to
identify possible extensions to the identified mineralised zone
within the property.
The drilling program in the Kamituga project was aimed at
testing and following up delineated targets from surface soil
geochemistry, trenching and auger drilling at the different
prospects, with the objective of defining the down-dip and
strike-extensions of the deposit as well as the control of
mineralization within the property. Details of the drilling results
have been published in the Company's November 15, 2012 press
release, which demonstrate the presence of extremely high-grade,
narrow widths quartz zones similar to the material mined from
underground by the previous owners and medium-high grade, wide
zones of gold mineralization that require additional drilling to
further delineate and define additional resources before
determining the full potential of the property.
Simon Village, President & CEO Banro, commented, "It is
clear that, with the work undertaken on all sites throughout 2012,
and taking cognizance of some teething problems encountered
throughout the year in terms of Twangiza's now recognized
mechanical shortfalls, Banro's prospects of becoming a significant
African gold producer are very real. It is anticipated that infill
drilling and metallurgy will confirm additional oxide and
free-milling ounces at Twangiza North, which will extend Twangiza's
mine life and underpin the current expansion exercise. We have also
identified the opportunity to add a second development phase at
Namoya to treat the high-grade resources now being drilled, and
this constitutes a change in Banro's development strategy. Rather
than embarking upon green-fields construction of new operations at
either Lugushwa or Kamituga, brownfield expansion at Twangiza and
Namoya will come first. We believe this approach will ultimately
deliver higher returns on capital already invested, as well as
provide accelerated production growth. Our ability to expand on
sites where we have established infrastructure will also allow time
to focus on increasing our resources at the other projects and
optimizing our management structures, systems and controls, which
we believe is essential to enable the optimal development of
Banro's property portfolio and establish ourselves as a low cost
producer."
Qualified Persons
Colin J.S. Belshaw, FIMMM, I.Eng., Banro Vice President,
Operations and Daniel K. Bansah, Banro Vice President, Exploration
and a Chartered Professional Member of The Australasian Institute
of Mining and Metallurgy (Aus.I.M.M), each of whom is a "qualified
person" (as such term is defined in National Instrument 43-101),
have reviewed and approved the technical information in this press
release.
Banro Corporation is a Canadian gold mining company focused on
production from the Twangiza oxide mine and development of three
additional major, wholly-owned gold projects, each with mining
licenses, 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 proven management team with extensive gold and
African experience, Banro's plans include the construction of its
second gold mine at Namoya, at the south end of this gold belt, as
well as the development of two other projects, Lugushwa and
Kamituga, in the central portion of the belt. The initial focus of
the Company is on oxides, which have a low capital intensity to
develop but also attract a lower technical and financial risk to
the Company and as such maximize the return on capital and limits
the dilution to shareholders as the Company develops this
prospective gold belt. All business activities are followed in a
socially and environmentally responsible manner.
For further information, please visit our website at
www.banro.com.
Cautionary Note to U.S. Investors
The United States Securities and Exchange Commission (the "SEC")
permits U.S. mining companies, in their filings with the SEC, to
disclose only those mineral deposits that a company can
economically and legally extract or produce. Certain terms are used
by the Company, such as "Measured", "Indicated", and "Inferred"
"Resources", that the SEC guidelines strictly prohibit U.S.
registered companies from including in their filings with the SEC.
U.S. Investors are urged to consider closely the disclosure in the
Company's Form 40-F Registration Statement, File No. 001-32399,
which may be secured from the Company, or from the SEC's website at
http://www.sec.gov/edgar.shtml.
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 estimates and/or
assumptions in respect of gold production, revenue, cash flow and
costs, estimated project economics, mineral resource and mineral
reserve estimates, potential mineralization, potential mineral
resources and mineral reserves, projected timing of future gold
production and the Company's exploration and development plans and
objectives) 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:
uncertainty of estimates of capital and operating costs, production
estimates and estimated economic return; the possibility that
actual circumstances will differ from the estimates and assumptions
used in the economic studies of the Company's projects; failure to
establish estimated mineral resources and mineral reserves;
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); uncertainties relating to the availability and costs
of financing needed in the future; changes in equity markets;
political developments in the DRC; 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; inability to attract and
retain key management and personnel; changes to regulations
affecting the Company's activities; the uncertainties involved in
interpreting drilling results and other geological data; and the
other risks disclosed under the heading "Risk Factors" and
elsewhere in the Company's annual information form dated March 26,
2012 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.
Cautionary Note Concerning Resource and Reserve Estimates
The Company's mineral resource and mineral reserve figures are
estimates and no assurances can be given that the indicated levels
of gold will be produced. Such estimates are expressions of
judgment based on knowledge, mining experience, analysis of
drilling results and industry practices. Valid estimates made at a
given time may significantly change when new information becomes
available. While the Company believes that its mineral resource and
mineral reserve estimates are well established, by their nature
resource and reserve estimates are imprecise and depend, to a
certain extent, upon statistical inferences which may ultimately
prove unreliable. If such estimates are inaccurate or are reduced
in the future, this could have a material adverse impact on the
Company.
Mineral resources are not mineral reserves and do not have
demonstrated economic viability. There is no certainty that mineral
resources can be upgraded to mineral reserves through continued
exploration.
Due to the uncertainty that may be attached to inferred mineral
resources, it cannot be assumed that all or any part of an inferred
mineral resource will be upgraded to an indicated or measured
mineral resource as a result of continued exploration. Confidence
in the estimate is insufficient to allow meaningful application of
the technical and economic parameters to enable an evaluation of
economic viability worthy of public disclosure (except in certain
limited circumstances). Inferred mineral resources are excluded
from estimates forming the basis of a feasibility study.
Contacts: Banro Corporation Simon Village President & CEO
+44 (0) 788 405 4012 Banro Corporation Arnold T. Kondrat Executive
Vice-President +1 (416) 366-2221 Banro Corporation Naomi Nemeth
Investor Relations +1 (416) 366-9189 or +1-800-714-7938, Ext.
2802info@banro.com www.banro.com