A
CEO change at DRC gold miner Banro knocked the share price, but an experienced
interim replacement has quickly been appointed and has issued a calming
statement on the company’s ongoing operations.
Author:
Lawrence Williams
LONDON -
News that DRC gold miner and developer Banro’s CEO, Simon Village,
was stepping down, caused the company’s stock price to dip just over 20% on
Wednesday/Thursday before recovering about half of its losses yesterday
following the appointment of John Clarke as interim President and CEO. Unusually the company gave no reason at all
for Village’s departure, which was with immediate effect.
Clarke is presumably viewed by the markets as a safe pair of hands
as the interim face of the company. He
is a Cambridge University graduate with a long association with the African
mining sector and has been on the Banro board for the past nine years – as well
as holding places on the boards of a number of other mining companies. In the past he was an executive Director of
Ashanti Goldfields, and CEO of Nevsun when it was developing its Bisha gold
mine in Eritrea. He will be assisting
Banro’s chairman, Bernard van Rooyen in finding a permanent replacement for the
CEO position.
Meanwhile, as his first task as CEO, Clarke has issued a statement
on the progress of the company’s flagship Twangiza operating gold mine in the
northeastern DRC and on its developing Namoya property situated around 250 km
to the south of Twangiza.
Clarke opens his statement to shareholders as follows: "We
want to reassure our shareholders, business partners, community stakeholders
and our employees that Banro intends to continue with business as usual
following the corporate changes which have taken place and were announced in
yesterday's press release. We are intensely focused on our operations with our
main priority of getting the Twangiza Mine up to its operating capacity and
ensuring gold production at the levels at Twangiza which we anticipated when we
undertook the decision to transition from an exploration company into a mining
company. Concurrently with our plans for Twangiza, we will continue our
aggressive schedule for the development of Namoya with the objective of first
gold before the end of 2013."
Twangiza became Banro's first producing open pit gold mine when it
entered production from its oxide ore section in October 2011. With a mill
throughput at full capacity of 1.7 million tonnes per year, Twangiza was
projected to produce some 120,000 ounces of gold each year with an expected
mine life of seven to eight years from currently-defined reserves. It is the
most advanced of Banro's five properties, with a growing deposit that currently
comprises Measured and Indicated Resources of 5.6 million ounces of gold and
Inferred Resources of 400,000 ounces. The property is located 45 kilometres
south-southwest of Bukavu in the DRC’s South Kivu province.
Clarke notes that optimization of the Twangiza plant continues as
planned with the upgrading of the plant, which has been operating below
capacity, designed to bring it up to its nameplate capacity and bring
production into the range of 100,000 - 120,000 ounces per year.
Meanwhile, development of Banro’s second gold mine at Namoya,
located some 320 kilometres south of Bukavu, has been suffering some delays –
primarily in late delivery of equipment to site because of heavy rains
adversely affecting the road systems over which heavy equipment needs to be
transported across the width of Africa from ports on the east coast. Thus the delay in delivery of plant
components has deferred first scheduled gold production to Q3 this year –
originally scheduled for the first half of the year.. The costs of repairing
the road systems is resulting in a cost overrun of up to 15% on the base cost
of US$185 million. However the funding of this amount will be included in the
proposed sale of preferred redeemable shares announced in the Company's press
release dated February 21, 2013.
When Namoya is up and running the company will be on track to
produce around 250,000 ounces of gold a year – and will then, no doubt look at
starting development work on one of its other three significant prospects along
the Twangiza-Namoya gold belt.
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