Portfolio company
Banro Corporation |  |
|---|
Company website | www.banro.com |
Business sector | Other |
Country of operation | Democratic Republic of the Congo |
Market | Africa |
Investment status | Current portfolio |
Investment type | Growth capital |
Date of original investment | 2005 |
Office | London, United Kingdom |
Background
Banro is a junior gold exploration and development company focused on four wholly-owned sites along a major gold belt in the Democratic Republic of the Congo (DRC). Listed on the Toronto and US AMEX stock exchanges, Banro has some outstanding assets with 100% of the mining licences at Twangiza, Kamituga, Lugushwa and Namoya, with historical production of over 2.4 million ounces of gold and further 8 million ounces of future resources.Africa is rich in natural resources and accounts for 21% of the world's gold production. Mining and exploration activity is increasing in the DRC as relative stability returns to the country.
While this was the first mining investment for Actis in the DRC, we had previous exposure there through Celtel, the pan African mobile telecommunications operator.
Actis believed that Banro management were highly impressive. The company is headed by Executive Chairman Simon Village, former Managing Director of the World Gold Council and Head of HSBC's Global Mining Division and by CEO Peter Cowley, a geologist with over 35 years' experience, mainly in Africa and former Managing Director of Ashanti Goldfields Exploration.
Their needs
As an early-stage mining operation with no cash flow, Banro needed capital to continue exploring its sites and to start the mining and extraction process. Banro was looking for a credible and reputable investor to help fund this.Our solution
Actis recognised the quality of Banro's assets and its management team. As an international investor, with teams on the ground in Africa, we understood the political risks involved in operating in DRC, but could see the potential Banro had to become a major gold producer.Actis first invested US$11.1 million in a private placement of Banro's shares, completed in October 2005. Following excellent progress at some of the sites, we invested a further US$6.9m in March 2006 in advance of a much larger third party capital raising, totaling US$51m.
Our faith in the company and management has not been misplaced. The capital has helped Banro expand its exploration and progress rapidly towards the mining and extracting stages. As a result, its share price has lifted significantly since our first investment.
Actis's added value
With our investment history going back 58 years, Actis's involvement with Banro added to the company's credibility. Our reputation as an investor that carries out thorough due diligence gave reassurance to others and helped Banro attract further investment.With our experience in the mining sector, we have also assisted Banro in more practical ways, too, through visiting the sites and providing some fresh ideas. When the company had to deal with corruption on a local level that disrupted the exploration of one of its sites, our experience with Celtel of reinforcing the links between national and local government helped to resolve the situation.
Banro is serious about its approach to Environmental, Social and Givernance (ESG) issues and is keenly aware of the need to work closely with the local community. As a result it has set up the Banro Foundation, which is aimed at improving the standard of living and prospects of the people in the Twangiza-Namoya Belt. Banro has already ear-marked S$300,000 for the Foundation, which is committed to a number of projects, including providing books and desks built by local carpenters to schools, road upgrades and equipment for hospitals, such as beds, blankets, mosquito netting and a kitchen.
Actis is seeking to assist Banro to structure and manage the Foundation, providing ideas and introducing contacts, such as non-governmental organisations, to help ensure it is run efficiently and meets the needs of the local people.