JOHANNESBURG (miningweekly.com) – Major shareholders of TSX- and NYSE MKT-listed Banro Corporation have agreed to support the company’s recapitalisation, which will see it refinance $207.5-million of outstanding debt, equitize outstanding preferred shares and raise $45-million by way of a gold forward sale.
The recapitalisation is expected to reduce debt, improve liquidity and position the company to optimise its operations and enhance its substantial gold mining assets in the Democratic Republic of the Congo (DRC).
Banro owns two operational mines – Twangiza and Namoya – and two advancing gold exploration projects – Lugushwa and Kamituga – in the DRC.
“We are pleased to have reached agreement with our key stakeholders on the terms of a recapitalisation that will strengthen the company and enhance the long-term viability of our business without impacting our continued operations.
“The recapitalisation will result in an improved balance sheet and position us to improve working capital, continue optimising the current operations and advance the development projects, all of which are expected to contribute substantially to the long-term value of the company,” said president and CEO Dr John Clarke.
The recapitalisation is expected to be completed by April 14, 2017, but it remains subject to Banro obtaining the required approvals.
GOLD FORWARD SALE
Banro’s forward sale transaction with RFW-Gramercy will see it make a $45-million prepayment to Banro in exchange for the supply of 51 879.96 oz of gold from the Namoya mine over a 36-month period starting in July 2017.
Banro will deliver 1 441.11 oz of gold a month to RFW-Gramercy.
The forward sale may be terminated at any time, subject to the payment in cash or gold to provide an internal rate of return of 15% to RFW and Gramercy.
Further, the deal is also subject to a gold floor price mechanism. Should the gold price fall below $1 100/oz in any month, additional ounces will be delivered to RFW-Gramercy to ensure an effective realised gold price of $1 100/oz for that particular month.