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Banro Corporation
  Wed Aug 10, 2016
Banro Announces Q2 2016 and Half-Year Financial Results

 

TORONTO, ONTARIO--(Marketwired - Aug. 10, 2016) - Banro Corporation ("Banro" or the "Company") (NYSE MKT:BAA)(TSX:BAA) today announced its financial and operating results for the second quarter of 2016.

HIGHLIGHTS

  • Q2 2016 consolidated (combined Twangiza and Namoya) gold production of 49,673 ounces, an increase of 45% from Q2 2015, with a consolidated cash cost of $735 per ounce

  • Namoya achieved record quarterly production of 23,455 ounces of gold in Q2 2016 with a cash cost of $782 per ounce, rising to 9,200 ounces of gold produced in the month of June

  • Q2 2016 EBITDA of $19 million, as Namoya achieves steady state production levels in June

  • H1 2016 consolidated (combined Twangiza and Namoya) gold production of 93,865 ounces with a cash cost of $750 per ounce, combined mine site all-in sustaining cost of $880 per ounce, and total all-in sustaining cost of $976 per ounce, in-line with 2016 production guidance

All dollar amounts in this press release are expressed in thousands of dollars, except per share and per ounce amounts, and, unless otherwise specified, in United States dollars.

"The continued ramp up of Namoya to steady state levels is evident in the improving quarter on quarter results, in line with expectations for the first half of 2016," said Banro President and CEO John Clarke. "We continue to focus on delivering improving results in the second half of the year, driven by higher production, as indicated in our 2016 guidance. Continuous delivery in-line with expectations along with the positive benefits of the current gold environment are expected to support a continually improving financial position for the Company."

(i) FINANCIAL

Effective January 1, 2016, commercial production was declared at Namoya. As such, the financial results for the three and six-months ended June 30, 2016, reflect the activity of both Twangiza and Namoya. The table below provides a summary of financial and operating results for the three and six-month periods ended June 30, 2016 and 2015 as well as the three-months ended March 31, 2016:

Q2 2016 Q2 2015 Change % Q1 2016 H1 2016 H1 2015 Change %
Selected Financial Data
Revenues 59,649 42,597 40 % 46,540 106,189 83,600 27 %
Total mine operating expenses1 (52,042 ) (28,068 ) 85 % (44,408 ) (96,450 ) (52,349 ) 84 %
Gross earnings from operations 7,607 14,529 (48 %) 2,132 9,739 31,251 (69 %)
Net loss (13,486 ) (48,666 ) (72 %) (23,134 ) (36,620 ) (41,886 ) (13 %)
EBITDA 18,571 16,904 10 % 9,992 28,563 36,946 (23 %)
Basic net (loss)/earnings per share ($/share) (0.04 ) (0.19 ) (77 %) (0.09 ) (0.13 ) (0.17 ) (24 %)
Key Operating Statistics
Average gold price received ($/oz) 1,201 1,194 1 % 1,109 1,159 1,201 (4 %)
Gold sales (oz) 49,681 35,665 39 % 41,967 91,648 69,621 32 %
Gold production (oz) 49,673 34,325 45 % 44,192 93,865 70,268 34 %
All-in sustaining cost per ounce ($/oz) 901 701 29 % 855 880 643 37 %
Cash cost per ounce ($/oz) 735 587 25 % 767 750 558 34 %
Gold margin ($/oz) 466 607 (23 %) 342 409 643 (36 %)
Financial Position
Cash including restricted cash 24,408 9,270 25,029 24,408 9,270
Gold bullion inventory at market value2 7,645 1,875 7,231 7,645 1,875
Total assets 899,191 879,510 897,240 899,191 879,510
Long term debt 192,464 165,591 190,489 192,464 165,591
(1) Includes depletion and depreciation.
(2) This represents 5,788 ounces of gold bullion inventory shown at June 30, 2016 closing market price of $1,321 per ounce of gold.
  • Revenues for the three and six-months ended June 30, 2016 were $59,649 and $106,189, respectively, 40% and 27% increases compared to the corresponding prior year periods of $42,597 and $83,600, respectively. During the second quarter of 2016, ounces of gold sold increased by 39% to 49,681 ounces compared to sales of 35,665 ounces during the second quarter of 2015 due to the contribution of sales from Namoya partially offset by lower production at Twangiza. The average gold price per ounce sold during the second quarter of 2016 was $1,201 compared to an average price of $1,194 per ounce obtained during the second quarter of 2015. The average realized price for the second quarter of 2016 was lower than the average spot market price due to lower implied prices for stream revenues recognized.

  • Mine operating expenses, including depletion and depreciation, for the three and six-months ended June 30, 2016 were $52,042 and $96,450, respectively, compared to the corresponding prior year periods of $28,068 and $52,349, respectively. The increase is a result of the operating expenses attributable to Namoya which were treated as capitalized development costs throughout 2015. With the contribution of two operating mines, the increase in mine operating expenses attributable to depletion and depreciation was $8,404 and $14,249 for the three and six-months ended June 30, 2016, respectively.

  • Gross earnings from operations for the three and six-months ended June 30, 2016 were $7,607 and $9,739, respectively, compared to $14,529 and $31,251 for the corresponding periods of 2015. The 40% and 27% increases in revenue for the three and six month periods ending June 30, 2016 were offset by 85% and 84% increases in mine operating expenses, respectively, as a result of the contribution from two mines, which were in-line with management expectations of the progressive ramp up of Namoya to steady state production and Twangiza's production profile being weighted to the second half of the year.

  • Consolidated EBITDA for the six-months ended June 30, 2016 was $28,563 compared to $36,946 for the corresponding period of 2015, reflecting the lower production levels at Twangiza. The EBITDA at Twangiza was $11,721 for the second quarter of 2016 compared to $18,724 for the corresponding prior year period reflecting lower production levels, which is expected to improve in H2 2016. Namoya's EBITDA of $7,920 was lower than the contribution from Twangiza as Namoya focused on higher levels of production in its mining and stacking operations coupled with the lagging effect of gold produced through the heap leach process. As a result, the consolidated EBITDA for the second quarter of 2016 was $18,571 as compared to $16,904 for the second quarter of 2015.

  • Cash costs per ounce on a sales basis for the first half of 2016 were $750 per ounce of gold, in line with guidance of $700 to $800 per ounce of gold, representing a 34% increase from $558 per ounce of gold in the first half of 2015. Cash costs per ounce on a sales basis for the second quarter of 2016 were $735 per ounce of gold, a 25% increase from $587 per ounce of gold in the second quarter of 2015. Cash costs for the second quarter of 2016 were higher than the corresponding prior year period mainly due to the contributions from Namoya having a high cost per ounce as the operation ramps up to full production levels. Higher per ounce costs were also recorded at Twangiza due to higher mining costs from increased waste movement and lower production levels due to the processing of lower grade ore. This situation is expected to improve in H2 2016.

  • Net loss for the three and six-months ended June 30, 2016 of $13,486 and $36,620, respectively, were driven by the combination of non-cash items totaling approximately $5,900 and $15,300, respectively, relating primarily to fair value losses on mark-to-market derivative liabilities such as the gold forward sale agreements, and preferred shares, driven by improvements in the gold price environment and warrants driven by the increase in the share price of the Company, that were outside the normal course of operating activities in the quarter.

  • Mine site all-in sustaining costs for the first half of 2016 were $880 per ounce (compared to $643 per ounce of gold in the first half of 2015) driven by higher cash costs and higher levels of sustaining capital expenditures per ounce. Mine site all-in sustaining costs for the second quarter of 2016 were $901 per ounce (compared to $701 per ounce of gold in the second quarter of 2015) driven by higher cash costs and higher levels of sustaining capital expenditures per ounce. The higher sustaining capital per ounce was driven by the decrease in production at Twangiza from Q2 2015.

(ii) Operational - Twangiza

  • During the second quarter of 2016, Twangiza experienced no loss time injury ("LTI").

  • During the second quarter of 2016, the plant at the Twangiza Mine processed 414,829 tonnes of ore (compared to 428,661 tonnes during the second quarter of 2015). Ore was processed during the second quarter of 2016 at an indicated head grade of 2.75 g/t Au (compared to 3.01 g/t Au during the second quarter of 2015) with a recovery rate of 75.7% (compared to 82.2% during the second quarter of 2015) to produce 26,218 (compared to 34,325 during the second quarter of 2015) ounces of gold. Gold production at Twangiza was in line with the mine plan where production is heavily weighted to the latter half of 2016 with more mining faces available and increased throughput from the fine crusher expansion project.

(iii) Operational - Namoya

  • Namoya gold production increased from 17,554 ounces in the first quarter of 2016 to 23,455 ounces in the second quarter of 2016, in line with our guidance to deliver steady state gold production in H2 2016. Namoya reached 9,201 ounces of gold poured in June 2016 with improved stacking and gold recoveries. Subsequent to quarter end, the operation delivered record stacking rates of 216,000 tonnes for the month of July, reaching design capacity.

  • During the second quarter of 2016, Namoya experienced no LTIs relating to employees and 1 LTI relating to contractors for a LTI frequency rate of 0.096.

  • During the second quarter of 2016, the plant at the Namoya Mine stacked 485,319 tonnes of ore (compared to 330,267 tonnes during the second quarter of 2015). Ore stacked during the second quarter of 2016 had an indicated head grade of 2.03 g/t Au (compared to 1.53 g/t Au during the second quarter of 2015). Namoya produced 23,455 ounces of gold during the second quarter of 2016 (compared to 10,525 ounces of gold during the second quarter of 2015).

(iv) Exploration

  • During the second quarter of 2016, exploration activities were limited to low level regional exploration and the preparation for increased activity during the third quarter focusing on near mine exploration.

(v) Corporate Development

  • During the second quarter of 2016, the Company advanced planning and analysis on its potential hydro power projects relating to operations at both Twangiza and Namoya. It is expected that the hydro power projects would provide significant savings in power generation costs, reducing overall operating costs throughout the life of mine.

(vi) Subsequent Event

  • In July 2016, the Company entered into a gold dore purchase agreement (the "Dore Agreement") in connection with a $10,000 loan facility with Baiyin International Investment Ltd ("Baiyin"), an affiliate of RFW Banro Investments Limited ("RFWB"). RFWB currently owns approximately 16.5% of the outstanding common shares of Banro. The loan facility is funded in two equal tranches, the first tranche was funded in July and the second tranche is to be funded on September 1, 2016. Under the Dore Agreement, Baiyin will purchase approximately 50% of the gold dore produced by Twangiza starting October 1, 2016 and 50% of the gold dore produced by Namoya from December 1, 2016 until the date the loan facility is repaid. The gold dore purchases under the Dore Agreement are at market prices.

  • The benefits of the Dore Agreement and related loan facility include:

    • Securing debt with a maturity of up to 4 years in contrast to short-term amortizing loans often with maturities of less than 2 years;

    • Diversifies the Company's offtake arrangements with an additional refinery at no additional cost; and

    • Reduces selling costs associated with approximately 50% of the Company's gold production.

Qualified Person

Daniel K. Bansah, the Company's Head of Projects and Operations and a "qualified person" as such term is defined in National Instrument 43-101, has approved the technical information in this press release.

Non-IFRS Measures

Management uses cash cost, all-in sustaining costs, average gold price received, gold margin, and EBITDA to monitor financial performance and provide additional information to investors and analysts. These measures do not have a standard definition under International Financial Reporting Standards ("IFRS") and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. As these measures do not have a standardized meaning, they may not be comparable to similar measures provided by other companies. However, the methodology used by the Company to determine cash cost per ounce is based on a standard developed by the Gold Institute, which was an association which included gold mining organizations, amongst others, from around the world.

The Company defines cash cost, as recommended by the Gold Institute standard, as all direct costs that the Company incurs relating to mine production, transport and refinery costs, general and administrative costs, movement in production inventories and ore stockpiles, less depreciation and depletion. Cash cost per ounce is determined on a sales basis. The Company defines all-in sustaining costs as all direct costs that the Company incurs relating to mine production, transport and refinery costs, general and administrative costs, movement in production inventories and ore stockpiles, less depreciation and depletion plus all sustaining capital costs (excluding exploration). All-in sustaining cost per ounce is determined on a sales basis.

Q1 2016 Q1 2015 Q4 2015
Twangiza Namoya Consolidated Twangiza Twangiza
Mine Operating Costs ($000s) 22,367 22,041 44,408 24,281 25,232
Depreciation ($000s) (6,241 ) (5,990 ) (12,231 ) (6,386 ) (6,416 )
Cash Costs ($000s) 16,126 16,051 32,177 17,895 18,816
Sustaining Capital ($000s) 2,906 797 3,703 1,825 4,507
All-In Sustaining Cost - Mine Site ($000s) 19,032 16,848 35,880 19,720 23,323
General and Administrative Costs and Other ($000s) 3,929
All-In Sustaining Cost - Total ($000s) 39,809
Ounces Sold 25,224 16,743 41,967 33,956 31,303
Cash Cost per Ounce $/oz 639 959 767 527 601
All-In Sustaining Cost per Ounce - Mine Site $/oz 755 1,006 855 581 745
All-In Sustaining Cost per Ounce - Total $/oz 949
Q2 2016 Q2 2015
Twangiza Namoya Consolidated Twangiza
Mine Operating Costs ($000s) 25,137 26,905 52,042 28,068
Depreciation ($000s) (6,767 ) (8,762 ) (15,529 ) (7,125 )
Cash Costs ($000s) 18,370 18,143 36,513 20,943
Sustaining Capital ($000s) 4,166 4,059 8,225 4,074
All-In Sustaining Cost - Mine Site ($000s) 22,536 22,202 44,738 25,017
General and Administrative Costs and Other ($000s) 4,916
All-In Sustaining Cost - Total ($000s) 49,654
Ounces Sold 26,492 23,189 49,681 35,665
Cash Cost per Ounce $/oz 693 782 735 587
All-In Sustaining Cost per Ounce - Mine Site $/oz 851 957 901 701
All-In Sustaining Cost per Ounce - Total $/oz 999
H1 2016 H1 2015
Twangiza Namoya Consolidated Twangiza
Mine Operating Costs ($000s) 47,504 48,946 96,450 52,349
Depreciation ($000s) (13,008 ) (14,752 ) (27,760 ) (13,511 )
Cash Costs ($000s) 34,496 34,194 68,690 38,838
Sustaining Capital ($000s) 7,072 4,856 11,928 5,899
All-In Sustaining Cost - Mine Site ($000s) 41,568 39,050 80,618 44,737
General and Administrative Costs and Other ($000s) 8,845
All-In Sustaining Cost - Total ($000s) 89,463
Ounces Sold 51,716 39,932 91,648 69,621
Cash Cost per Ounce $/oz 667 856 750 558
All-In Sustaining Cost per Ounce - Mine Site $/oz 804 978 880 643
All-In Sustaining Cost per Ounce - Total $/oz 976

The Company defines gold margin as the difference between the cash cost per ounce disclosed and the average price per ounce of gold sold during the reporting period.

EBITDA is intended to provide additional information to investors and analysts to determine cash earnings before financing and taxes. Banro calculates EBITDA as net income or loss for the period excluding: interest, income tax expense, depreciation and amortization, and other non-cash charges. EBITDA does not have any standardized meaning prescribed by IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. EBITDA excludes the impact of cash costs of financing activities and taxes, and the effects of changes in operating working capital balances, and therefore is not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate EBITDA differently. A reconciliation between net profit for the period and EBITDA is presented below:

Q1 2016 Twangiza Namoya Total Mine Corporate Consolidated
$000s $000s $000s $000s $000s
Net Loss (1,786 ) (7,287 ) (9,073 ) (14,061 ) (23,134 )
Finance Expenses 3,059 917 3,976 7,442 11,418
Other non-cash charges 2,835 1,433 4,268 5,155 9,423
Share-based payments 4 2 6 35 41
Depletion and Depreciation 6,241 5,990 12,231 13 12,244
EBITDA 10,353 1,055 11,408 (1,416 ) 9,992
Q2 2016 Twangiza Namoya Total Mine Corporate Consolidated
$000s $000s $000s $000s $000s
Net Loss 1,504 (2,623 ) (1,119 ) (12,367 ) (13,486 )
Finance Expenses 798 1,506 2,304 7,736 10,040
Other non-cash charges 2,631 260 2,891 3,284 6,175
Share-based payments 21 15 36 263 299
Depletion and Depreciation 6,767 8,762 15,529 14 15,543
EBITDA 11,721 7,920 19,641 (1,070 ) 18,571
H1 2016 Twangiza Namoya Total Mine Corporate Consolidated
$000s $000s $000s $000s $000s
Net Loss (282 ) (9,910 ) (10,192 ) (26,428 ) (36,620 )
Finance Expenses 3,857 2,423 6,280 15,178 21,458
Other non-cash charges 5,466 1,693 7,159 8,439 15,598
Share-based payments 25 17 42 298 340
Depletion and Depreciation 13,008 14,752 27,760 27 27,787
EBITDA 22,074 8,975 31,049 (2,486 ) 28,563
Q1 2015 Twangiza Namoya Total Mine Corporate Consolidated
$000s $000s $000s $000s $000s
Net Income/(Loss) 14,556 (98 ) 14,458 (7,678 ) 6,780
Finance Expenses 172 98 270 5,434 5,704
Other non-cash charges 464 - 464 280 744
Share-based payments 60 - 60 343 403
Depletion and Depreciation 6,386 - 6,386 25 6,411
EBITDA 21,638 - 21,638 (1,596 ) 20,042
Q2 2015 Twangiza Namoya Total Mine Corporate Consolidated
$000s $000s $000s $000s $000s
Net Income/(Loss) 8,528 (50,299 ) (41,771 ) (6,895 ) (48,666 )
Finance Expenses 1,391 99 1,490 4,545 6,035
Other non-cash charges 1,665 50,200 51,865 368 52,233
Share-based payments 15 - 15 139 154
Depletion and Depreciation 7,125 - 7,125 23 7,148
EBITDA 18,724 - 18,724 (1,820 ) 16,904
H1 2015 Twangiza Namoya Total Mine Corporate Consolidated
$000s $000s $000s $000s $000s
Net Income/(Loss) 23,084 (50,397 ) (27,313 ) (14,573 ) (41,886 )
Finance Expenses 1,563 197 1,760 9,979 11,739
Other non-cash charges 2,129 50,200 52,329 648 52,977
Share-based payments 75 - 75 482 557
Depletion and Depreciation 13,511 - 13,511 48 13,559
EBITDA 40,362 - 40,362 (3,416 ) 36,946

Q2 2016 Financial Results Conference Call Information

Banro will host a conference call at 11:00AM EST on August 11, 2016. Please use the following dial in numbers:

Q2 2016 Financial Results Conference Call Information

Toll Free (North America): +1 877-291-4570 Conf ID: 56372533

Toronto Local & International: +1 647-788-4919 Conf ID: 56372533

Q2 2016 Financial Results Conference Call REPLAY

Toll Free Replay Call (North America): +1 800-585-8367 Conf ID: 56372533

Toronto Local & International: +1 416-621-4642 Conf ID: 56372533

The conference call replay will be available from 2:00PM EST on August 11, 2016 until 11:59 PM EST on August 25, 2016.

For further information regarding this conference call, please contact Banro Investor Relations or visit the Company website, www.banro.com.

Banro Corporation is a Canadian gold mining company focused on production from the Twangiza mine, which began commercial production September 1, 2012, and on production at its second gold mine at Namoya, where commercial production was declared effective January 1, 2016. The Company's longer term objectives include the development of two additional major, wholly-owned gold projects, Lugushwa and Kamituga. The four projects, each of which has a mining license, are located along the 210 kilometre long Twangiza-Namoya gold belt in the South Kivu and Maniema provinces of the Democratic Republic of the Congo (the "DRC"). All business activities are followed in a socially and environmentally responsible manner.

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, 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 potential hydro power projects, estimates and/or assumptions in respect of future gold production (including the timing thereof), costs, cash flow and gold recoveries, mineral resource and mineral reserve estimates, potential mineral resources and mineral reserves and the Company's production, development and exploration 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 of the Company's projects; 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 (the Company's mineral resource and mineral reserve figures are estimates and no assurance can be given that the intended levels of gold will be produced); fluctuations in gold prices and currency exchange rates; inflation; gold recoveries being less than expected; 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 28, 2016 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.

 

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