Banro increases resource at Twangiza

Banro (BAA-T, BAA-x) has grown its resource at Twangiza in the Democratic Republic of the Congo by 49.7% to 5.6 million oz. gold and says it will have a full feasibility study on the project out in the next two weeks.

The updated estimate indicates measured and indicated resources, at a 0.5 gram gold per tonne cut-off, of 107.5 million tonnes grading 1.6 grams gold per tonne. Those figures surpass an estimate in the pre-feasibility study released in July 2008 of 59.2 million tonnes grading 1.96 grams gold per tonne for total contained gold of 3.74 million ounces.

“This is a very large and promising deposit, which is pretty close to surface,” Martin Jones, Banro’s vice president of corporate development told The Northern Miner, adding that the whole project is suitable for an open pit operation at a very low strip ratio of between 2:1 and 3:1.

The new resource estimate incorporates all three deposits: Twangiza Main, which contains 85% of the total mineral resource; Twangiza North, which contains 13% of the total resource; and the Twangiza “Valley Fill” deposit, which contains 2% of the total resource. Twangiza Main and Twangiza North are both open at depth.
The mineral resources have been restricted to an optimum pit shell using a US$1,000 per oz. gold price.

The infill drilling program at the Twangiza Main and North deposits completed over the last nine months has targeted inferred resources within the pre-feasibility limiting pit shell and confirmed the geometry of the mineralized bodies.

The infill drilling and the inclusion of 20 holes, which were drilled by CME Consulting in 1997 and 1998 but were left out of the previous estimates, has also boosted confidence in the estimates at depth, Banro says.

SRK Consulting’s updated model is a little wider than the pre-feasibility model incorporating additional low grade material and therefore produced a slightly lower grade than the previous model.

The increased resource at Twangiza Main is primarily in the indicated fresh rock material. Reconciliation work between the pre-feasibility model and the current estimates shows that the significant increase in the resources is due to the infill drilling program intercepting additional high grade intersections at depth, which has resulted in material being transferred from the inferred and unclassified categories into the indicated mineral resource category.

News of the latest resource estimate did little to boost Banro’s share price, which dropped a penny to close at $1.48 per share. The company has a 52-week trading range of 80¢-$12.35 per share.

The humanitarian disaster unfolding in the DRC hasn’t helped Banro’s share price. Intense fighting between the forces of rebel general Laurent Nkunda and Congolese army soldiers and their allied militia has caused 250,000 people to flee their homes since late August. Since the civil war broke out in 1998, more than 5 million people, mostly civilians, have been killed.

Banro’s Twangiza project is about 250 km south of the fighting. “If you were to visit our sites you’d be astounded at how peaceful they are, even now,” Jones said. “It’s a terrible humanitarian disaster but it should be understood that it is a localized conflict within a small geographic area in a country the size of Western Europe. The issues that are being fought over are endemic to North Kivu and don’t affect the rest of the Congo.”

Jones describes the conflict area as stretching 70 km in length and occurring within two thin bands of just a few km. “There’s very little transportation infrastructure between where the fighting is and where Bukavu is, and we’re about 45 km south of Bukavu, the capital of South Kivu,” Jones says, adding it’s a conflict “that is unlikely to spread.”

The government’s treatment of foreign mining companies is another matter that weighs on Banro’s share price.  Management is still waiting to meet with the government to discuss the issue of nonpayment of surface taxes on the company’s four exploitation claims. Last year the country’s minister of mines said the taxes were a concern.

“We’ve already presented our case and we believe they understand that under the mining convention we have with the central government, our exploitation permits are exempt from surface taxes,” Jones explains.

Banro’s properties in the DRC are not among those the government is reviewing, he adds. A government edict in late 2007 ordered a review of all mining contracts in the country and a renegotiation of some 60 contracts is now underway.

“We’re not part of this review of mining contracts that is going on in the Congo because we have no mining contracts with any of the state-owned companies,” Jones explained.

Banro is developing four wholly-owned gold projects, about 200 km apart, along the Twangiza-Namoya gold belt in the DRC’s South Kivu and Maniema provinces.