Banro (BAA-T, BAA-X) says it was nothing more than a rumor but whatever its merit an unspecified document sent the company’s shares surging over a three-day period.
While the company would offer no direct information as to the nature of the rumor, it did acknowledge that a certain document was in circulation that it did not come from the company.
“While it is Banro’s general policy not to comment on market activity or rumors, the Company is in preliminary discussions only,” Banro remarked somewhat cryptically in a press release.
The logical inference from the statement is that the document was about a possible takeover of the company.
Banro also says it has no knowledge of the document’s source.
If the document was merely a hoax cooked up by a shareholder looking to get a boost in the price of Banro shares, it looks to have been a successful piece of deception.
Banro shares were trading for just $2.35 on April 13, but since then have shot up 36% and were trading for $3.21 in Toronto on April 19.
“The Company has not entered into any formal agreement and there is no assurance that any such agreement will be entered into or that any transaction will be pursued or completed,” was all Banro had to say on the matter.
Moving over to the operational side of things, the company recently announced that phase 1 of construction at its flagship Twangiza project is proceeding on schedule with roughly 60% of the work completed.
Commercial production at the mine is set to begin in the fourth quarter of this year.
Banro is currently holding US$94 million in cash, with total capex at Twangiza expected to come in at US$69 million.
The balance of the funds will be used to cover overhead costs and to fund the production ramp- up at Twangiza, as well as exploration programs at its four gold projects.
Those four projects stretch across the 210 km-long Twangiza-Namoya gold belt in the South Kivu and Maniema provinces of the Democratic Republic of the Congo.
Banro’s big plan is to take cash flows generated from Twangiza and use them to fast-track the second mine development project at Namoya, at the southern end of the gold belt. The company says it can have a mine at Namoya running within the next two years.
If all goes well with the two mines it should generate enough cash flow to construct a hydro-electric project which is needed for the larger Twangiza phase 2 project and for the development of the rest of the gold belt.
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