After Two Tumultuous Decades, Congo Gold Miner Is Back From the Brink

(Bloomberg) -- In the past 23 years, Banro Corp. had its Democratic Republic of Congo gold assets seized, got them back, built two mines, closed one after attacks by militants and sought bankruptcy protection. Now, controlled by its former creditors, the company has a plan to make another go of it.

Banro will split its assets in a move to give each mine the best chance at success, Chief Executive Officer Brett Richards said in an interview. Chinese state-controlled Baiyin International Investments, which owns 32% of the company, will assume full control of the Twangiza mine, while Banro will retain the Namoya operation and a portfolio of exploration prospects, he said.

Banro, which has been present in eastern Congo since the 1990s, has had a challenging run that nearly ended in bankruptcy two years ago. The government confiscated its licenses during a civil war before returning them in 2002 as the conflict drew to a close. The company constructed Twangiza in South Kivu province and Namoya in neighboring Maniema province, which together produced nearly 200,000 ounces in 2016.

Armed Groups

Congo's east is riven by insecurity, with well over a hundred armed groups active in the region, while infrastructure such as roads and power plants is dilapidated and inadequate, in contrast to the more peaceful, better-serviced southeastern Katanga region. There, numerous state-of-the-art copper and cobalt mines are owned by companies including Glencore Plc and China Molybdenum Co.

Banro's business was on the cusp of failing after militants attacked Namoya and its trucks on several occasions in 2017, leading to the closure of the mine.

“Banro spent $1 billion in capital since 2003 and it went bankrupt,” Richards said. “Namoya was shut down and Twangiza was declining.”

A Canadian court approved a rescue plan in early 2018, enabling the company's main creditors to become its senior shareholders. Besides Baiyin, the other big investor is Connecticut-based Gramercy Funds Management LLC, which brought in Richards to head Banro.

The transaction is expected to result in more funding from Baiyin to develop Twangiza's resources and sustain the mining operation, Baiyin General Manager George Lu said by email.

“We believe it is a good solution for the company to overcome the difficulties in DRC,” he said.

“New Banro” is keeping Namoya, which recently restarted production, and several untapped permits. Should the security situation remain calm, the company hopes to export about 100,000 ounces from Namoya next year as well as raise some money for exploration, Richards said.

To contact the reporter on this story: William Clowes in Kinshasa at wclowes@bloomberg.net

To contact the editors responsible for this story: John McCorry at jmccorry@bloomberg.net, Liezel Hill, Paul Richardson

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