Banro's Preliminary Assessment of its Namoya Heap Leach Gold Project Indicates Annual
Production of 124,000 Ounces at Average Total Cash Costs of Us$359 per
Ounce over the 7 Year Mine Life
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News Release in PDF Format
TORONTO, January 24, 2011 - Banro
Corporation ("Banro" or the
"Company") (NYSE AMEX - "BAA"; TSX -
"BAA") is pleased to announce completion of a Preliminary
Assessment of its Namoya heap leach project,
located on the Twangiza-Namoya gold belt in the
Democratic Republic of the Congo (the "DRC").
Highlights include:
- Average
annual production of 124,053 ounces of gold per annum over 7 year
mine life.
- Average
total cash operating costs (including royalties) of US$359/oz with
initial two year's production of 266,500 oz averaging US$304/oz.
- Initial
capital costs of US$118.2 million and ongoing capital of US$15.1
million.
- Post
tax NPV of US$270 million based on a 10% discount rate and a gold
price of US$1,100 per ounce.
- Post
tax IRR of 62.6%, with a one year payback on project capex from the start of production.
- Project
net cash flow after tax and capital spending of US$472 million.
The Preliminary Assessment has been prepared
with input from a number of independent consultants including SRK
Consulting, Cardiff (mining and environmental), SGS Lakefield,
Johannesburg (metallurgical testwork), Kappes Cassiday and
Associates in Reno, Nevada (heap leach metallurgical testwork),
AMEC, London (heap leach pads and ponds) and SENET, Johannesburg
(processing and infrastructure). SENET also undertook the preliminary
economic valuation and report compilation.
"The positive results of this study highlight the economic benefits
of advancing Namoya using heap leach as an
initial phase of mining the Namoya deposit,
which would essentially double the gold production expected to be
generated by Twangiza's Phase I project within
a year to around 250,000ozs per annum." said Simon Village, Banro's Chairman. "It is envisaged that Banro would fully fund Namoya
through cash-flows generated by Twangiza Phase
I. The combined cash-flows of both Twangiza and
Namoya would then allow the Company to fund the
hydro-electric plant which is required to support the larger expansion of
the proposed 5Mtpa Twangiza Phase II project.
This expansion would result in Banro being able
to target production of up to 500,000ozs per annum, which reflects the 5
year growth path for the Company. For now, though, our focus is to
successfully deliver on Twangiza Phase I and
complete the necessary work to prepare the Namoya
project for development in Q1 2012, and production some 12 months
thereafter."
Cautionary
Statement:
The Preliminary
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 Assessment will be realized.
Mineral Resources that are not Mineral Reserves do not have demonstrated
economic viability.
This Preliminary Assessment follows on from the 2007 Preliminary
Assessment of Namoya which assumed a CIL
(carbon-in-leach) only processing route for the Mineral Resources. This
current Preliminary Assessment, which assumes a heap leach only
processing route, was undertaken to assess a lower capital cost
alternative to the previous CIL option.
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 the Maniema
Province of the eastern DRC and covers an area of 174 square kilometres. Exploration commenced in December 2004
and to date, 209 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 including drilling is continuing to assess the current
prospects as well as a number of new 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 October 10, 2010. These
Mineral Resource estimates were prepared in accordance with National
Instrument 43-101 based on information compiled by Banro's
Vice President, Exploration, Daniel Bansah, who
is a "qualified person" as such term is defined in National
Instrument 43-101. Independent consultants, SRK Consulting (UK) Ltd.
("SRK"), determined in a report prepared for Banro in March 2009 that all fieldwork undertaken at Namoya by Banro between
2004 and 2009 was compliant with National Instrument 43-101 and provided
updated Mineral Resource estimates for Namoya
(reference is made to Banro's March 11, 2009
press release). Following a closed space shallow core drilling and
sampling of the regolith material, Banro
undertook updated in-house Mineral Resource estimates for Namoya, which are set out in the table below. At a
cut-off grade of 0.4 g/t gold, there is 26% less material but with 17.5% higher
grade, resulting in 4% less gold content in this in-house model relative
to the previous SRK 2009 estimates. The higher grade but lower tonnage of
the in-house model relative to the previous SRK model is a function of
tighter wireframe modeling of the mineralization. This has resulted in
higher grades particularly in the Inferred model.
Namoya Mineral Resources (effective
date: January 24, 2011)
|
Measured
|
Indicated
|
Inferred
|
|
Tonnes
|
Au
(g/t)
|
Ounces
|
Tonnes
|
Au
(g/t)
|
Ounces
|
Tonnes
|
Au
(g/t)
|
Ounces
|
Oxide
|
2,860,847
|
3.03
|
279,064
|
4,726,560
|
1.99
|
302,544
|
3,021,195
|
1.54
|
149,448
|
Transitional
|
1,409,819
|
2.20
|
99,905
|
3,163,990
|
2.44
|
248,460
|
2,511,713
|
1.85
|
149,388
|
Fresh rock
|
-
|
-
|
-
|
2,414,945
|
2.68
|
208,332
|
3,419,254
|
2.22
|
244,290
|
Total
|
4,270,666
|
2.76
|
378,969
|
10,305,495
|
2.29
|
759,336
|
8,952,162
|
1.89
|
543,126
|
(Using a 0.4 g/t Au cut-off).
Mine Plan
SRK reviewed Banro's Mineral Resource estimates
as set out above and determined the underlying model to be fit for the
purposes of this Preliminary Assessment given that classification
boundaries do not affect the Preliminary Assessment and that an open pit
constraint is applied in the Preliminary Assessment process; however some
recommendations are proposed going forward.
SRK undertook a mine plan based on Banro's
Measured, Indicated and Inferred Mineral Resources delineated to date as
set out above. Pit optimizations were undertaken on the four principal
deposits at Namoya based on the following
parameters:
Gold price: .......................US$1,000 per ounce
Diesel fuel price: ...............US$1.20/litre
Mining dilution: ..................5% at zero grade
Mining recovery: ...............95%
Pit slopes: ........................minus 40 to 50 degrees
Metallurgical recovery: ........Oxides (86%), Transitional (84%)
The following Mineral Resources for the oxide and transitional material
were determined to be contained in an engineered pit design, optimum for
owner operated mining:
Namoya Open Pit Mineral Resources (Oxide and
Transitional Material Only)
Year
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
Total
|
Ore (x1,000t)
|
1,991
|
2,000
|
2,000
|
2,001
|
2,000
|
2,001
|
1,236
|
13,230
|
Grade (g/t)
|
2.60
|
2.23
|
2.04
|
2.27
|
1.95
|
2.07
|
3.25
|
2.29
|
Waste (x1,000t)
|
3,291
|
3,757
|
6,046
|
7,574
|
8,855
|
7,981
|
3,096
|
40,600
|
Strip
Ratio
|
1.65
|
1.87
|
3.00
|
3.78
|
4.42
|
3.99
|
2.5
|
3.07
|
Low
Grade
Ore(x1,000t)
|
30.6
|
50.1
|
39.2
|
27.7
|
42.6
|
47.7
|
11.3
|
249.2
|
Grade
|
0.42
|
0.43
|
0.46
|
0.54
|
0.52
|
0.55
|
0.61
|
0.49
|
Total
Tonnage to
to Plant
(x1,000t)
|
1,991
|
2,000
|
2,000
|
2,001
|
2,000
|
2,001
|
1,485
|
13,479
|
Grade
|
2.60
|
2.23
|
2.04
|
2.27
|
1.95
|
2.07
|
2.79
|
2.26
|
Economic open pit cut-off grades are estimated at 0.46 g/t Au for oxide
and 0.67 g/t Au for the transitional materials.
The mine schedule proposes the sequential mining of oxides and
transitional ores from the open pits. Low grade stockpiles will also be
processed at the end of the mine.
Processing
Previous metallurgical testwork, including
recovery and comminution studies, has been
completed for the Namoya 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 for a gravity and CIL plant,
could be achieved for the low to medium competency ores. For the heap
leach testwork, two bulk samples of oxide and
transitional material were submitted to Kappes Cassiday and Associates in Reno, Nevada. These
results demonstrated high metallurgical recoveries at minus 10mm crush
with moderate to low cement requirements for heap stability and
percolation. Based on this testwork, SENET
estimated final metallurgical recoveries for a heap leach operation to average
86% for the oxides and 84% for the transitional ore types.
SENET scoped a 2.0MTPA heap leach processing facility with an up-front,
three stage crushing system to produce minus 10 millimetre
material which will be agglomerated and transported and stacked on a
permanent leach pad via a series of conveyors. The mine site terrain at Namoya is well suited for a heap leach facility with
the gentle slopes away from the small range of hills that contain the
four pits, favourable for the location of leach
pads and ponds.
The proposed mine processing plant production schedule is as follows:
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Total
|
Tonnes
processed
(x1,000 t)
|
1,991
|
2,000
|
2,000
|
2,000
|
2,001
|
2,002
|
1,485
|
13,479
|
Grade
(g/t Au)
|
2.60
|
2.23
|
2.04
|
2.27
|
1.95
|
2.07
|
2.79
|
2.26
|
Met.
Recovery (%)
|
86
|
86
|
85.7
|
85.6
|
85.3
|
84.9
|
84
|
85.4
|
Production
(oz)
|
142,953
|
123,556
|
112,619
|
124,938
|
106,838
|
113,299
|
111,867
|
836,070
|
Total Cash
Costs(US$/oz)
|
281
|
330
|
382
|
369
|
449
|
419
|
309
|
359
|
Power
The total installed power for the mine is estimated at 4 MW and will be
provided by diesel generators.
Capital Costs and Infrastructure
The following table summarizes expected capital costs for the Namoya project as projected by the independent
consultants and includes preliminary discussions with equipment
providers, and also knowledge gained from current projects in Africa
including Banro's Twangiza
project where SENET is the overall EPCM contractor.
Mining
|
US$
million
|
Plant & Equipment
|
15.27
|
Haul Roads
|
1.96
|
Facilities
|
1.81
|
Sub
Total
|
19.04
|
|
|
Process
Plant
|
|
Machinery & Equipment
|
7.00
|
Earthworks and Civil
|
5.56
|
Platework, Structural & Piping
|
4.43
|
Electrical & Instrumentation
|
2.10
|
Heap Leach Aggl.
& Stacking Equip.
|
8.14
|
Heap Leach Pads & Ponds
|
5.76
|
Transportation
|
4.69
|
Sub
Total
|
37.68
|
|
|
Infrastructure
|
|
Power Plant & Fuel Farm
|
3.14
|
Buildings and Accommodation Facilities
|
5.29
|
Off Site Access Road
|
8.83
|
Vehicles and Mobile Plant
|
1.87
|
Transportation
|
1.20
|
Other
|
3.13
|
Sub
Total
|
23.46
|
|
|
Owner's Pre-Production Costs
|
3.04
|
|
|
EPCM
|
9.55
|
|
|
Other
(compensation, plant pre-prod.,
insurances)
|
7.17
|
|
|
Working
Capital
|
5.19
|
|
|
Contingency
|
13.11
|
|
|
Total
Project Initial Capital Costs
|
118.24
|
|
|
Ongoing
Capital
|
15.1
|
|
|
Operating Costs
The following total life of mine cash operating costs were determined and
incorporated into the financial analysis:
|
Ore Tonne
|
Ore Tonne
|
|
(US$/tonne)
|
(US$/ounce)
|
Mining
|
10.03
|
161.66
|
Processing
|
8.10
|
130.62
|
G & A
|
3.14
|
50.61
|
Royalty & Refining Costs
|
0.99
|
16.00
|
Total
|
22.26
|
358.89
|
Project Economics and Financial Analysis
SENET has produced a cash flow valuation model for the Namoya project based on the geological and
engineering work completed to date using diesel generating power and with
owner mining. The financial model also reflects the favourable
fiscal aspects of the Namoya project's Mining
Convention, which includes 100% equity interest and 10 year tax holiday
from the start of production. An administrative tax of 5% for the
importation of plant, machinery and consumables, a 1% royalty on gold
sales and a 4% community net profits tax have been included in the
projected capital and operating costs. The Base Case was developed using
a long-term gold price of US$1,100 per ounce.
Calculated sensitivities show the significant upside leverage to gold
prices and robust nature of the projected economics to operating
assumptions.
Gold Price
Sensitivities
GoldPrice
|
IRR
|
|
NPV(US$ M)
|
|
US$/oz
|
(%)
|
5%
|
10%
|
15%
|
1,000
|
54.1%
|
289
|
216
|
163
|
1,100
|
62.6%
|
355
|
270
|
207
|
1,200
|
70.6
%
|
421
|
324
|
251
|
Other Sensitivities
|
Capital
Costs
|
|
|
|
|
-10%
|
69.4%
|
368
|
282
|
218
|
+10%
|
56.8%
|
342
|
258
|
195
|
|
|
|
|
|
Operating
Costs
|
|
|
|
|
-10%
|
65.3%
|
379
|
289
|
222
|
+10%
|
59.8%
|
331
|
251
|
191
|
The above financial analysis does not take into account ongoing
exploration, feasibility, financing or interest costs.
Other Scoping Scenarios
Scoping project economics and financial analysis were also run on a
number of other scenarios with the following results:
Contract Mining Heap Leach Scenario
- Total
processed oxide and transitional ores of 12.2 million tonnes grading 2.31g/t (908,000 oz)
- Life
of mine gold production of 776,600 ounces of gold
- Average
annual production of 127,000 ounces of gold per annum over 6.1 year
mine life.
- Initial
capital costs of US$106 million and ongoing capital of US$9 million
- Average
total cash operating costs of US$463 per ounce
- NPV
of US$244 million based on a 10% discount rate and gold price of
US$1,100 per ounce.
- Project
IRR of 66.7%, with a 1 year payback on project capex
from the start of production.
- Project
net cash flow after tax and capital spending of US$408 million.
Combined Owner Mining Heap Leach and 0.5 MTPA CIL(carbon-in-leach processing)
Pit optimisations were also run on the oxide,
transitional and fresh rock ores and a combined heap leach and a 0.5 MTPA
CIL processing plant added to process the fresh rock ores as well as the
higher grade oxide and transitional ores. Results
for this scenario are as follows:
- Total
processed oxide, transitional and fresh rock ores of 15.1 million tonnes grading 2.36 g/t (1,146,000 oz)
- Life
of mine gold production of 996,000 ounces
- Average
annual production of 132,000 ounces of gold per annum over 7.5 year
mine life.
- Initial
capital costs of US$163 million and ongoing capital of US$21 million
- Average
total cash operating costs of US$387 per ounce
- NPV
of US$314 million based on a 10% discount rate and gold price of
US$1,100 per ounce.
- Project
IRR of 55.1%, with a 1.3 year payback on project capex
from the start of production.
- Project
net cash flow after tax and capital spending of US$557 million.
Combined Contract Mining Heap Leach and 0.5 MTPA
CIL(carbon-in-leach processing)
Pit optimisations were also run on the oxide,
transitional and fresh rock ores and a combined heap leach and a 0.5 MTPA
CIL processing plant added to process the fresh rock ores as well as the
higher grade oxide and transitional ores using contract mining. Results for this scenario are as follows:
- Total
processed oxide, transitional and fresh rock ores of 13.4 million tonnes grading 2.38 g/t (1,027,000 oz)
- Life
of mine gold production of 879,000 ounces
- Average
annual production of 131,000 ounces of gold per annum over 6.7 year
mine life.
- Initial
capital costs of US$146 million and ongoing capital of US$9 million
- Average
total cash operating costs of US$481 per ounce
- NPV
of US$242 million based on a 10% discount rate and gold price of
US$1,100 per ounce.
- Project
IRR of 54.6%, with a 1.2 year payback on project capex
from the start of production.
- Project
net cash flow after tax and capital spending of US$414.5 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 Bukavu is available predominantly via tar road from
the port of Mombasa in Kenya. From Bukavu, it
is proposed to use the N5 road to Uvira/Fizi and then upgrade the secondary road to Namoya.
Environmental and Social Aspects
Data collection and reporting for the pre-feasibility environmental and
socio-economic baseline study at Namoya by SRK
Consulting were largely completed by the end of 2009. Going forward,
these will be updated as well as the water studies which remain to be finalised.
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 from the known deposits as well
as from a number of new prospects.
Development Timetable
Based on the results of this Preliminary Assessment, Banro
will now commence a full feasibility study on Namoya
for completion by the end of 2011. This will involve additional
exploration including drilling to further increase the Mineral Resources,
pit optimizations and engineering studies including the incorporation of
further bulk metallurgical testwork and
geotechnical investigations. Banro will also
complete the additional required environmental studies.
Full details of the Preliminary Assessment in the form of a National
Instrument 43-101 technical report will be filed on SEDAR within the next
45 days.
Qualified Persons
The Preliminary Assessment was prepared under the supervision of Neil
Senior, who is Joint Managing Director of SENET and a "qualified
person" (as such term is defined in National Instrument 43-101). Mr.
Senior has reviewed and approved the contents of this press release.
Sean Cremin, who is a Principal Mining Engineer
at SRK and a "qualified person" (as such term is defined in
National Instrument 43-101), is responsible for the mining aspects of the
Preliminary Assessment (including pit optimizations). Mr. Cremin has reviewed and approved the contents of this
press release.
Daniel K. Bansah, who is a Member and Chartered
Professional of The Australasian Institute of Mining and Metallurgy (Aus
I.M.M.), the Company's Vice President, Exploration and a "qualified
person" (as such term is defined in National Instrument 43-101), is
responsible for the current Mineral Resource estimates for the Namoya project, as disclosed in this press release.
Mr. Bansah has reviewed and approved such
disclosure.
Banro is a Canadian-based gold exploration and
development company focused on the development of four major,
wholly-owned gold projects, each with mining licenses, 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, the Company is constructing "Phase I"
of its flagship Twangiza project. 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 No. 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 gold production, revenue, cash
flow and costs, estimated Namoya project
economics, mineral resource estimates, potential mineralization,
potential mineral resources, projected timing of gold production and the
Company's exploration and development plans and objectives) 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 Assessment and mine plan disclosed in this press release;
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; lack of infrastructure; failure to procure or maintain, or
delays in procuring or maintaining, permits and approvals; lack of
availability at a reasonable cost or at all, of plants, equipment or labour; inability to attract and retain key
management and personnel; 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 29, 2010 filed on
SEDAR at www.sedar.com and EDGAR at www.sec.gov. 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. There
is no certainty that mineral resources can be upgraded to mineral
reserves through continued exploration.
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
Assessment. Inferred mineral resources are excluded from estimates
forming the basis of a feasibility study.
---------------------------------------------------
For further information, please visit our website at www.banro.com, or
contact: Simon Village, Chairman, United Kingdom, Tel: +44 1959 569 237,
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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