Banro Continues to Face Liquidity Threats
Banro is a mid-level gold maker, working two mines in the Democratic Republic of Congo. The principal mine, Twangiza, ought to convey around 120 thousand ounces of gold in 2016. The second mine, Namoya, initiated its business operations in January this year. Banro expects that Namoya ought to create 100-110 thousand ounces of gold in 2016.
Amid the development period of Namoya, the organization had experienced various specialized issues. These issues were amplified by low gold costs.
Therefore, the organization entered a couple of strange business arrangements to fund Namoya’s development. Analysts concur that at that hard time Banro did not have an excessive number of other options to discover money to complete Namoya’s development.
Nonetheless, analysts imagine that the choices taken by the administration will negatively affect the organization’s execution in the years to come (for instance, because of gold forward understandings, Banro is set to offer its gold at lower costs than those offered by the business sector). The outcomes conveyed in 1Q 2016 affirm this postulation.
The substantial obligation is putting extreme requirements on the organization’s future execution. For instance, in March 2017, Banro will need to pay off the terminating obligation offering of around $170 million. It would seem that the organization, to cover this risk, ought to need to discover new financing sources rapidly.
Next thing – regardless of starting business operations at Namoya, in 1Q 2016, Banro was not ready to report positive income from operations. Aside from the diminished income (because of gold forward offering understandings), the organization reported the expanded generation costs at both operations. Give me a chance to examine this issue now.
Its shares are currently trading around 0.32 a share with an average daily volume of 754,911 shares. Its market capitalization is around 94 million, while outstanding shares are around 252 million and authorized shares are at 420 million.