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
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.