Banro Corporation (NYSE MKT:BAA) (TSX:BAA) announces that it has closed the US$70 million balance of its previously announced financing such balance includes a US$20 million gold forward sale transaction relating to the Twangiza mine and a US$50 million gold streaming transaction relating to the Namoya mine. The purchasers under these transactions are funded by investment funds managed by Gramercy Funds Management LLC and affiliated accounts. The Company closed on February 27, 2015 the first tranche of the Financing, involving a US$20 million gold forward sale transaction relating to the Twangiza mine such that the total gross proceeds from the Financing are US$90 million.
Each of the two forward sale transactions provide for the prepayment by the Purchaser of US$20 million for its purchase of 22,248 ounces of gold from the Twangiza mine, with the gold deliverable over three years, at 618 ounces per month (i.e. 1,236 ounces per month for the two Twangiza forward sales). The forward sales may be terminated at any time upon payment to the Purchaser of a one-time termination amount that would result in the Purchaser receiving an amount equal to an IRR of 20%. The terms of the forward sales also include a gold floor price mechanism whereby, if the gold price falls below US$1,100 per ounce in any month, additional ounces are deliverable to ensure a realized gold price of US$1,100 per ounce for that month.
The streaming transaction provides for the payment by the Purchaser of a deposit in the amount of US$50 million and the delivery to the Purchaser over time of 8.33% of the life-of-mine gold production from the Namoya mine (or any other projects located within 20 kilometres from the current Namoya gold mine). The ongoing payments to Namoya upon delivery of the gold are US$150 per ounce.
“We believe that with the proceeds from these financing transactions, the Company is fully funded, and along with stabilized gold production at Twangiza following its third consecutive record quarterly production and ramping up production at Namoya, Banro is in a solid position to achieve its growth objectives,” commented Banro Board Chairman, Richard Brissenden.
The contemplated use of proceeds from the second Twangiza forward sale and from the Namoya streaming arrangement, both of which closed today, include:
-- significant reduction in the Company's accounts payable;
-- repayment of the notes issued under the liquidity backstop facility
announced in August 2014;
-- repayment of certain of the DRC bank debt;
-- payment of accrued dividends on the gold-linked preferred shares issued
in April 2013; and
-- general corporate purposes, including the payment of bank and legal fees
in relation to the Financing.
Banro Corporation is a Canadian gold mining company focused on production from the Twangiza mine, which began commercial production September 1, 2012, and completion of its second gold mine at Namoya located approximately 200 kilometres south of the Twangiza gold mine. 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”). Led by a management team with extensive gold and African experience, the initial focus of the Company is on the mining of oxide material, which has a low capital intensity to develop but also attracts a lower technical and financial risk to the Company. All business activities are followed in a socially and environmentally responsible manner.
Gramercy Funds Management LLC is a US$5 billion dedicated emerging markets investment manager based in Greenwich, CT with offices in London, Hong Kong, Singapore, Mexico City, and Buenos Aires. The firm, founded in 1998, seeks to generate superior risk-adjusted returns through a comprehensive approach to emerging markets supported by a transparent and robust institutional platform. Gramercy invests through both alternative and long-only strategies across all asset classes (sovereign USD and local currency debt, investment grade and high yield corporate debt, distressed debt, equity, private equity and special situations).
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