TWST: What is Banro?
Mr. Cowley: Banro Corporation is a Canadian-based gold company, focused on exploration and development in one particular country - the Democratic Republic of Congo. We have four, wholly owned, major projects located on one of Africa's last remaining undeveloped gold fields. We are focused strictly on the four projects, which together encompass 2,600 square kilometers. We have also applied for exploration permits for the intervening ground between projects. This will eventually give Banro a commanding position along the entire 210 kilometer Twangiza-Namoya gold belt.
For a gold junior, we have a very large mineral resource base, which includes 2.7 million ounces of measured and indicated gold resources and 8.1 million ounces of inferred gold resources. These resources are generally close to the surface and have the potential to host low-cost, open-pit mining operations. These are very significant assets. Our objective going forward is to continue expanding this resource base, but also to advance these projects to the pre-feasibility and feasibility stages and eventually to bring them into production.
It's important to understand something of the country in which we operate. The reason why Banro has been able to acquire such significant assets is that we entered the DR Congo in the mid-1990s, at a time when the major gold companies were reluctant to get involved in the country due to its checkered past. That's also why the vast mineral resources of that country haven't been developed until now. However, over the last four years, there have been major political, social and economic improvements in the DRC that bode well for the future of the country. The most significant changes have occurred since 2002 when a government of National Unity was formed, which took in all the opposition factions in the DR Congo. For the last three to four years, the international community has also been extremely proactive and taken a great deal of interest in the DR Congo, which culminated in the country holding its first democratic elections in over 40 years. These went very well. In October, the country held a second round of presidential elections, with the incumbent Joseph Kabila winning with about 58% of the vote. The new government is expected to be installed by January 2007. The improving political and social climate in the DR Congo has created a dramatically improving investment climate, resulting in a major inflow of investment by exploration and mining companies. Some, like Banro, are investing in gold development, while other companies are developing other commodities such as diamonds, copper, and cobalt. This is a very richly endowed country.
TWST: What's the agenda for your company? What are your priorities for the next 12 to 24 months? What would make that time frame a success?
Mr. Cowley: Our current exploration program began in December 2004, and we have made considerable progress since then. The work has consisted primarily of geological mapping, exploration, and a substantial amount of drilling we expect to drill a total of 35,000 meters in 2006, and plan 60,000 meters of drilling in 2007. Drilling has been ongoing throughout most of the year on three of our four projects, Twangiza and Namoya and Lugushwa. As a result, we've reached the stage where we're starting to say, well look, these are good looking resources in the ground, but what is their economic potential? So we now have independent geological consultants undertaking scoping and pre-feasibility studies. This will give us a better gauge in terms of the economics of the projects including capital costs and operating costs, NPVs and IRRs. For an exploration company, we are moving very quickly to put meaningful economic parameters on our exploration results. That, and our ongoing exploration and drilling programs, will keep us busy over much of the next 24 months. We will be doing pre-feasibility studies up to mid-2007 and then we'll go into full feasibility studies, which will probably require another year, which would take us into mid-2008 and the green light to construct one or two mines. Construction normally takes about 12 to 15 months. So we're looking at startup in production perhaps toward the end of 2009, beginning of 2010.
TWST: What today compels investors to review Banro and include it not only as part of their current portfolios but also as part of their longer-term investment strategies?
Mr. Cowley: The tendency now is to include commodities including gold in one way or other in one's investment portfolio. For the next few years, the price of gold is expected to remain high or even increase, and this is occurring at a time when, in terms of global exploration for gold, discoveries have almost evaporated. Every year, fewer discoveries are made and there will be an increasing supply/demand deficit for the precious metal. Now that the DR Congo has stabilized and a democratic government has been put in place, the investment opportunity has accelerated dramatically in this mineral rich country. We were there at a very early stage and we have major exploration and development. Obviously this has not gone unnoticed by the major gold mining companies.