China’s RFW in $98 million Banro private placement (DRC)

By Staff Writer | Africa Capital Digest January 4, 2016

Publicly listed gold mining company Banro Corporation has announced that it has signed definitive agreements with Chinese mining investment fund Resource FinanceWorks in a combined equity private placement, term loan facility and gold streaming transaction related to the publicly-listed firm’s Twangiza mine worth $98.75 million. The transaction, which is subject to customary conditions and regulatory approvals is expected to closed in January 2016.

Of the three components of the deal, the Twangiza-related streaming transaction provides the Canadian company with the largest proceeds, requiring the payment by RFW of a $67.5 million deposit in return for an entitlement percentage of the life-of-mine gold production from the mine.

The term loan facility represents an $22.5 million loan with an uinitial maturity y ate of November 30, 2016 with an option to extend for another 3 years provided certain financial tests are met. The private placement for the issuance by Banro of 50,000,000 common shares plus 2.5 million Warrants for total gross proceeds of $8.75 million.

Proceeds of the capital raise will be used to pay dividends, repay debt and forward sale agreements as well as for working capital purposes and capital expenditures to expand the mine’s crushing capacity.

“We believe the long-term nature of the Twangiza streaming arrangement and private placement, along with the committed strategic relationships involved, will provide Banro with a solid base to achieve its longer term growth objectives as well as the refinancing requirements in 2017,” commented Richard Brissenden, Banro’s Board Chairman.

According to the firm’s website (banro.com), Twangiza became Banro’s first producing open pit gold mine in 2011 and commenced commercial production in September 2012. With an expected life of 14 years, the mine was anticipated to produce between 115,000 and 125,000 ounces of gold in 2015.

The investment is being made through Baiyin Stream Partnership I, a mining investment fund managed by Resource FinanceWorks. The fund is the investment vehicle for Baiyin Nonferrous Group, a strategic Chinese mining group based in Gansu, China.

“Baiyin’s investment in Banro through our offshore direct investment fund is consistent with our strategy to invest in low cost mines with large gold endowments and substantial growth opportunities,” commented Baiyin Chairman, Liao Ming. “We will support Banro in unlocking the considerable potential of the Twangiza-Namoya Gold Belt.”

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