TORONTO, July 3 /PRNewswire-FirstCall/ -- Banro Corporation
("Banro" or the "Company") (AMEX - "BAA"; TSX - "BAA") is pleased
to announce completion of its Preliminary Economic Assessment of
its wholly-owned Namoya project, located on the Twangiza-Namoya
gold belt in the Democratic Republic of Congo (the "DRC").
Highlights include - Average annual production of 194,000 ounces of
gold per annum during initial 5 years of operations (average
165,000 ounces of gold per annum over the currently defined 8 year
mine life). - Operating total cash costs of US$217 per ounce for
the initial 5 year mine life (average US$238 per ounce over 8 year
mine life). - Project post tax net present value ("NPV") of US$204
million based on a 5% discount rate and a gold price of US$600 per
ounce. - Project post tax internal rate of return ("IRR") of 37%,
with a 2.3 year payback on project capital expenditures from the
start of production. - Project net cash flow after tax and capital
spending of US$290 million. The Preliminary Economic Assessment has
been prepared with input from a number of independent consultants
including SRK Consulting, Cardiff (mining and environmental), SGS
Lakefield, Johannesburg (metallurgical testwork), Knight Piesold
Ltd., Vancouver (power) and SENET, Johannesburg (processing and
infrastructure). SENET also undertook the preliminary economic
valuation and report compilation. "The results of this Preliminary
Economic Assessment, which highlight the robust economics of our
Namoya project, are very encouraging," said Peter Cowley, Banro's
President and CEO. "Namoya has the potential to generate
significant cash flow based on its projected low cash operating
costs. Our focus now is on further improving Namoya's economics by
expanding the resource base, completing feasibility studies and
moving Namoya along the development path and up the value curve.
"We are also finalizing the scoping study on our larger Twangiza
project, which should be completed later this month." Cautionary
Statement: The Preliminary Economic Assessment is preliminary in
nature and includes Inferred Mineral Resources that are considered
too speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as Mineral
Reserves. There is no certainty that the conclusions reached in the
Preliminary Economic Assessment will be realized. Mineral Resources
that are not Mineral Reserves do not have demonstrated economic
viability. Namoya Project Overview The Namoya project, which is
100% wholly-owned by Banro, is situated at the south-western end of
the Twangiza-Namoya gold belt in Maniema Province of the eastern
DRC and covers an area of 174 square kilometres. Exploration
commenced in December 2004 and to date, 106 diamond drill holes
have been completed together with extensive re-sampling of old mine
adits along the 2.5 kilometre long, northwest trending mineralized
zone which hosts the four main deposits of Mwendamboko, Kakula,
Namoya Summit and Muviringu. Exploration is continuing to assess a
number of other prospects on the Namoya project. Mineral Resources
The Namoya project's attributed Mineral Resources (which are set
out in the following table) have been derived from resource
drilling and assays received before June 2007 and are as reported
in the Company's press release dated June 8, 2007. These Mineral
Resource estimates were prepared in accordance with National
Instrument 43-101 based on information compiled by Banro's Mineral
Resources Manager, Daniel Bansah, who is a "qualified person" as
such term is defined in National Instrument 43-101. Namoya Mineral
Resources
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Indicated Inferred
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Tonnes Au Ounces Tonnes Au Ounces (g/t) (g/t)
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Oxide 6,409,000 3.07 632,300 1,407,000 2.06 93,100
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Transitional 2,152,000 3.50 242,100 2,040,000 2.22 145,800
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Fresh rock 364,000 5.50 64,400 3,627,000 3.28 382,600
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Total 8,925,000 3.27 938,800 7,074,000 2.73 621,500
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(Using a 1.0 g/t Au cut-off). Mine Plan SRK Consulting (UK) Ltd.
(Cardiff office) undertook a mine plan based on Banro's Indicated
and Inferred Mineral Resources delineated to date. Pit
optimizations were undertaken on the four principal deposits at
Namoya based on the following parameters: Gold price:
............................................US$600 per ounce Diesel
fuel price: ........................................US$0.91/litre
Mining dilution: .......................................5% at zero
grade Mining recovery:
....................................................95% Pit slopes:
......................................minus 40 to 50 degrees
Metallurgical recovery:..................................oxides
(93.6%), transitional (91.8%), fresh rock (91.4%) The following
Mineral Resources were estimated to be contained in an engineered
pit design, optimum for the hydroelectric power alternative: Namoya
Open Pit Mineral Resources
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Tonnes Au (g/t) Ounces Strip Ratio
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Oxide 7,653,000 2.85 701,000
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Transitional 2,854,000 3.08 283,000
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Fresh Rock 502,000 3.36 54,000
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Total 11,009,000 2.93 1,038,000 5.6
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Economic open pit cut-off grades are estimated at 0.83 g/t Au for
oxide, 0.95 g/t Au for the transitional and 1.09 g/t Au for the
fresh rock ores. In addition, the topography at Namoya is
favourable for underground mining below the open pits. A Mineral
Resource of 3,000,000 tonnes grading 3.54 g/t Au (equivalent to
341,400 ounces of gold) was estimated to be contained in
underground stoping designs below the open pits. Preliminary pit
optimization studies were also determined for a diesel fuelled
power alternative and resulted in estimated open pit mineable
resources of 8,970,000 tonnes grading 3.28 g/t Au (equivalent to
947,000 ounces of gold) together with estimated underground
mineable resources of 3,000,000 tonnes grading 3.54 g/t Au
(equivalent to 341,400 ounces of gold ). The mine schedule proposes
the sequential mining of oxides, transitional and fresh rock ores
from the open pits followed by underground mining. Underground
mining of 1.0 million tonnes per annum ("Mtpa") of fresh rock is
proposed to be extracted via a decline and existing adit using an
open stoping mining method. Low grade stockpiles will also be
processed during the mining and processing of the underground ores.
Processing Metallurgical testwork, including recovery and
comminution studies, has been completed for the oxide, transitional
and fresh rock (sulphide) ore categories by SGS Lakefield in
Johannesburg. These results indicated that excellent metallurgical
recoveries, averaging 93.6% for oxides, 93% for the transitional
and 92.6% for the fresh rock, could be achieved for the low to
medium competency ores. Based on this testwork, SENET of
Johannesburg scoped a conventional Gravity-CIL (carbon-in-leach)
processing facility with annual throughput of 2.5 Mtpa for oxides,
2.0 Mtpa for transitional and 1.5 Mtpa of fresh rock and low grade
stockpiles, resulting in a currently defined mine life of eight
years. Power Studies have been undertaken using hydroelectric and
diesel power sources for the project. Although capital costs are
higher for the hydroelectric alternative, operating costs and
subsequent project economics are better than a diesel powered
generation alternative. Back up diesel power for essential
processing plant equipment has been included in the project's
capital cost. Knight Piesold Ltd. of Vancouver undertook studies on
a number of potential hydroelectric sites along the Twangiza-Namoya
belt. Follow-up site investigations including the installation of
flow gauges and detailed hydrology studies are ongoing. The
hydroelectric power scheme also has the potential to obtain carbon
credits that could reduce capital costs for this power alternative.
Capital Costs and Infrastructure The following table summarizes
expected capital costs for the Namoya project estimated by the
independent consultants and include preliminary discussions with
equipment providers, and also knowledge gained from current
projects in Africa. Costs currently assume an owner operated mining
fleet. Additionally, an assumption is made that a dedicated
hydro-electric facility would be developed by Banro utilizing one
of the sites selected by the Company's consultant hydrologist,
Knight Piesold Ltd. Namoya Project Capital Costs
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Mining US$ million
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Plant & Equipment 29.91
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Haul Roads 1.81
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Prestrip 5.99
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Other 1.25
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Process Plant
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Earthworks and Civil 6.43
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Mechanical, Structural & Piping 27.56
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Electrical & Instrumentation 3.91
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Tailings Dam 3.00
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Other 9.26
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Infrastructure
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Power Plant (hydro electric power) 31.77
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Buildings and Accommodation Facilities 5.29
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Access Roads 7.09
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Vehicles and Mobile Plant 2.12
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Other 7.56
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Owner's Costs 4.24
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Other (EPCM, transport, working capital) 18.18
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Contingency 21.18
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Total Project Initial Capital Costs 186.55
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Ongoing Capital 27.48
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Operating Costs The following operating costs were estimated and
incorporated into the financial analysis: Open Pit Total Operating
Costs ------------------------------
------------------------------------------- Ore Tonne Ore Tonne
------------------------------------------- (US$/tonne) (US$/ounce)
------------------------------------------- Mining 10.25 116.38
------------------------------------------- Processing 5.45 61.92
------------------------------------------- G & A 3.24 36.74
------------------------------------------- Refining 0.18 2.07
------------------------------------------- Total 19.12 217.11
------------------------------------------- Life of Mine Total
Operating Costs ----------------------------------
------------------------------------------ Ore Tonne Ore Tonne
------------------------------------------- (US$/tonne) (US$/ounce)
------------------------------------------- Mining 10.19 119.73
------------------------------------------- Processing 6.23 73.26
------------------------------------------- G & A 3.68 43.18
------------------------------------------- Refining 0.18 2.07
------------------------------------------- Total 20.36 238.24
------------------------------------------- The estimated total
open pit mine operating cost of US$10.25 per tonne of ore is
equivalent to US$1.28 per tonne of material moved. The preliminary
underground mining study estimated underground mining costs of
US$15.49 per tonne of ore. Project Economics and Financial Analysis
SENET has produced a cash flow valuation model for the Namoya
project based upon the geological and engineering work completed to
date and incorporating the hydroelectric power source. The
financial model also reflects the favourable fiscal aspects of the
Mining Convention governing the Namoya project, which include 100%
equity interest and a 10 year tax holiday from the start of
production. An administrative tax of 5% for the importation of
plant, machinery and consumables has been included in the projected
capital and operating costs. The Base Case was developed using a
long-term gold price of US$600 per ounce. Calculated sensitivities
show the significant upside leverage to gold prices and robust
nature of the projected economics to operating assumptions. Gold
Price Senstivities
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Gold Price IRR NPV (US$ M)
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US$/oz (%) 0% 5% 10%
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550 30% 224 151 100
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600 37% 290 204 142
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650 45% 356 256 185
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Other Senstivities
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Capital Costs
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+ 10% 32% 269 184 124
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- 10% 44% 312 224 161
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Operating Costs
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+ 10% 34% 259 179 123
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- 10% 40% 321 228 161
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The above financial analysis does not take into account ongoing
exploration, feasibility, financing or interest costs. Project
economics were also run for the diesel power alternative. This
resulted in the following: - Average annual production of 198,000
ounces of gold per annum during initial 5 years of operations
(average 175,000 ounces of gold per annum over 7 year mine life). -
Operating cash costs of US$ 265/oz for the initial 5 years (average
US$286/oz over 7 year mine life). - Project NPV of US$145 million
based on a 5% discount rate and gold price of US$600 per ounce. -
Project IRR of 41% with a 1.6 year payback on project capital
expenditures from the start of production. - Project net cash flow
after tax and capital spending of US$197 million. Accessibility and
Transport SENET has undertaken preliminary analysis of access
routes to the Namoya project for plant and equipment as well as
ongoing production materials and consumables. Access to site is
available predominantly by rail from Dar es Salaam on the coast in
Tanzania or via road from Mombassa in Kenya. The national road (N2)
running from Bukavu to Kasongo will pass within approximately 30 km
of the project. This road is currently being upgraded through a
World Bank initiative. Environmental and Social Aspects SRK
Consulting is implementing a pre-feasibility, environmental base
line study at Namoya which will include ecological, hydrological
and socio-economic assessments. There are a number of settlements
in and around the mine project area that could provide labour for
the operation. Project Opportunities Banro is actively pursuing a
number of alternatives for enhancing and increasing the economics
and financial returns relating to the Namoya project. These include
delineating additional resources at Namoya within economic hauling
distances and also targeting new near surface prospects that would
allow deferral of underground mining to much later in the mine
life. The regional exploration potential is encouraging. The
property was recently covered by a helicopter borne magnetic &
radiometric survey, which is being analyzed and anomalies will be
tested later in the year. Development Timetable Banro is currently
working toward completion of a formal pre-feasibility study in the
fall of 2007. This will largely involve the inclusion of a further
resource update, pit optimization and engineering studies including
the incorporation of further metallurgical and geotechnical
investigations. Banro has also initiated baseline environmental
studies. It is expected that the pre-feasibility work will progress
directly to a definitive, full feasibility study in the later part
of 2007, with completion targeted for the second half of 2008.
During this period, Banro will initiate discussions with potential
project finance lenders, including both multilateral agencies and
commercial banks. Full details of the Preliminary Economic
Assessment in the form of a National Instrument 43-101 technical
report will be filed on SEDAR within the next 45 days. Additional
information with respect to the Namoya project is contained in the
technical report of Michael B. Skead (who is the Company's Vice
President, Exploration and a "qualified person" as such term is
defined in National Instrument 43-101) dated March 30, 2007, and
entitled "Third NI 43-101 Technical Report, Namoya Project, Maniema
Province, Democratic Republic of the Congo." A copy of this report
can be obtained from SEDAR at http://www.sedar.com/. Qualified
Person ---------------- The Preliminary Economic Assessment was
prepared under the supervision of James Hollywood, Managing
Director of SENET and a "qualified person", as such term is defined
in National Instrument 43-101. Mr. Hollywood has reviewed and
approved the contents of this press release. Banro is a
Canadian-based gold exploration company focused on the development
of four major, wholly-owned gold projects along the 210
kilometre-long Twangiza-Namoya gold belt in the South Kivu and
Maniema provinces of the DRC. Led by a proven management team with
extensive gold and African experience, Banro's strategy is to
unlock shareholder value by increasing and developing its
significant gold assets 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 Registration Statement,
File # 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 estimates and/or assumptions in respect of
production, revenue, cash flow and costs, estimated Namoya project
economics, mineral resource estimates, potential mineralization,
potential mineral resources and the Company's exploration and
development plans and objectives with respect to its Namoya
project) 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; the possibility that
actual circumstances will differ from the estimates and assumptions
used in the Namoya Preliminary Economic Assessment and mine plan;
failure to establish estimated mineral resources; fluctuations in
gold prices and currency exchange rates; inflation; gold recoveries
for Namoya being less than those indicated by the metallurgical
testwork carried out to date (there can be no assurance that gold
recoveries in small scale laboratory tests will be duplicated in
large tests under on-site conditions or during production); changes
in equity markets; political developments in the DRC; changes to
regulations affecting the Company's activities; uncertainties
relating to the availability and costs of financing needed in the
future; 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 30, 2007 filed on SEDAR at
http://www.sedar.com/. 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. Cautionary Note Concerning Resource
Estimates --------------------------------------------- The mineral
resource figures referred to in this press release are estimates
and no assurances can be given that the indicated levels of gold
will be produced. Such estimates are expressions of judgment based
on knowledge, mining experience, analysis of drilling results and
industry practices. Valid estimates made at a given time may
significantly change when new information becomes available. While
the Company believes that the resource estimates included in this
press release are well established, by their nature resource
estimates are imprecise and depend, to a certain extent, upon
statistical inferences which may ultimately prove unreliable. If
such estimates are inaccurate or are reduced in the future, this
could have a material adverse impact on the Company. Due to the
uncertainty that may be attached to inferred mineral resources, it
cannot be assumed that all or any part of an inferred mineral
resource will be upgraded to an indicated or measured mineral
resource as a result of continued exploration. Confidence in the
estimate is insufficient to allow meaningful application of the
technical and economic parameters to enable an evaluation of
economic viability worthy of public disclosure, except in the case
of the Preliminary Economic Assessment. Inferred mineral resources
are excluded from estimates forming the basis of a feasibility
study. DATASOURCE: Banro Corporation CONTACT: please visit our
website at http://www.banro.com/, or contact: Peter Cowley,
President and C.E.O., United Kingdom, Tel: (44) 790-454-0856;
Arnold T. Kondrat, Executive Vice-President, Toronto, Ontario, or
Martin Jones, Vice-President, Corporate Development, Toronto,
Ontario, Tel: (416) 366-2221 or 1-800-714-7938
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