Banro Corp

MAY 2019

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BANRO CORP LTD.

A PHOENIX RISES

INSPIRED BY YOUR SUCCESS

A PHOENIX RISES Banro Corp. Ltd. chevron-square-right www.banro.com

Bouncing back from periods of challenge takes more than sheer grit; it requires connections and trust within the industry, careful restructuring and an informed level of market awareness, all of which the Banro Corporation is aptly demonstrating in 2019. We spoke with Dirk Lourens, Group Head of Supply Chain Management for Banro, to catch up with the company following a challenging couple of years, and to discuss their successful turnaround for the year to come.

Written by Alice Instone-Brewer

A

gold mining company that operates within the Democratic Republic of Congo, Banro Corporation has experienced its fair share of difficulties, but it also has its impressive claims to fame. From 2006 to 2014, the company was at the height of a 20-year presence in the African gold mining industry, having become the largest gold mining company in the DRC. The company still has more resources in its portfolio than any of its competitors in Africa; the company offers a 1.0Moz reserve and 8.5M oz Au global resources, with potential for a further 10Moz in identified projects in an otherwise largely unexplored land package. These resources include two operational mines, found in South Kivu and Maniema, as well as 17 exploration licences and a number of mining licences. However, things have not always been as positive as they are now.

November 2017 was a difficult time for Banro, but the company is making a strong return that is not only fuelled by optimism and effort, but has been carefully considered. This strategy addresses both an improved operational efficiency moving forwards, as well as improved communication, and a responsible approach

BANRO CORP. LTD.

to preventing repeats of the difficulties that occurred in the past.

A challenging year To understand Banro’s regrowth and its new strategy for success, one must first understand what happened in November 2017. We spoke with Dirk Lourens, who was upfront in explaining: “Banro came under financial stress in 2017 due to security issues at its Namoya operations, as well as historical community matters at the Twangiza operation.” These security issues tragically left people vulnerable to attack from violent local groups during late 2017 and early to mid 2018, as well as Banro’s sites experiencing attempted robberies and other security threats. During this time, Banro went into financial distress in Q3 of 2017, and through a bankruptcy proceeding in November that year.

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Dirk continued; “Under the guidance of Brett Richards, Chairman and CEO, Banro emerged from its bankruptcy process with a financial restructuring and embarked on a major rehabilitation project to re-establish the company as a premier central Africa gold mining company.” This emergence began in 2018, and continue into 2019, and will come into effect over the next few months.

Whilst some companies might seek to bury the past, Banro is instead fully transparent, acknowledging the issues that occurred and showing that it is ready to not only recover, but come back better and stronger, both in the issue of security and as a wider business. The company has learnt from its mistakes and has embraced this chance for change not only in the way it structures its operations and financial decisions, but also in its communication with local communities, and in strengthening and re-building links with its partners and suppliers.

It takes a certain kind of determination and commercial intelligence to bring a company back from financial difficulty, and it takes an open honesty and ability to come back stronger after incidents that could have shaken local bonds.

Banro has focused on repairing and improving those local bonds through increased communication with the traditional leaders in its communities, and an emphasis on cooperation between themselves, these groups and their security teams. As well as working with these groups to rebuild, however, the company also needed to turn to its supply chain and the effects of its period of bankruptcy.

Strong connections Banro has been in operation for 20 years, and those two decades of business ties meant that when it hit financial stress, all was not lost – strong relationships prevailed. Even so, these financial challenges, and the challenges that surrounded them, meant that confidence needed to be rebuilt. Banro may have been blessed with loyal suppliers and partners, but it didn’t want to take this good fortune for granted. “Challenges are evident in cases such as these, but maintaining supplier confidence

2018/08/06 3:16:31 PM

GBE DRC, sarl.

Catering to the DRC's fuel needs since 2006

General Business Entreprises (GBE) is a Congolese owned company. Since 2006, we have been supplying petroleum products (Diesel, Gasoline, Jet A1 & LPG); as well as lubricants and greases for vehicles and heavy machinery to clients throughout the Democratic Republic of Congo.

Through our fuel supply channel, the oil & gas products supplied by GBE are directly sourced from the Arab Gulf through the Tanzanian Bulk Procurement System.

GBE strives to insure its operations are fully compliant with HSSEQ regulations and with the local laws of countries in which we operate. Our commitment to customer satisfaction coupled with the high quality of our service delivery has allowed us to become one of the leading suppliers in the DRC. Through our sister company “GBE Logistics�, we have invested in transport logistics by acquiring robust trucks in order to support fuel delivery to BANRO/Namoya Mining SA. Our clients include Locals, NGOs as well as international companies such as BANRO Corporation.

Our commitment to customer satisfaction coupled with the high quality of our service delivery has allowed us to become one of the leading suppliers in the DRC.

Contact us: E. contact@gbe.cd www.gbe.cd

Phone: +243 81 788 8031 | +243 81 313 2043 Office: 56, Blvd Kanyamuhanga, Goma-NK

BANRO CORP. LTD. and trust is key in overcoming obstacles.”

Preserving these relationships went both ways – suppliers were flexible with Banro when it came to their payments, and in kind, Banro made absolutely sure that they were paid in as timely a way as possible. Some of these key partners and suppliers include Engen, Banro’s primary energy supplier, Total Mining (Pty) Ltd, LTG Freight, and the largest single-site precious metals complex and smelting company in the world, Rand Refinery.

A reliable, efficient and trustworthy supply chain can benefit a company greatly, beyond the obvious benefits of receiving the goods and services that they need. A good chain can reduce input costs through effective pricing negotiations and the efficiency of the supply processes. It can also reduce how much working capital is tied up in inventory; instead of stockpiling goods that aren’t needed, careful collaborative demand planning can keep the communication of stock needs clear, and through reliable

logistics, have items stocked as and when they’re needed.

Therefore, it is Banro’s goal to create a seamless supply chain, combining loyal companies from the past with new ones.

Dirk’s end-goal is to create a chain that “professionally supports Banro’s goals with standardized levels of performance excellence across the group.” A part of establishing this network has been focused on fostering human connections, as these relationships are as important to Banro as a wellnegotiated deal.

Collaboration within a supply chain is critical in managing the chain beyond traditional or transactional methods. It involves rethinking the way your business is managed, both internally and externally, and the ways in which employees and partners relate to each other.

“There must be someone in charge with full responsibility for what happens within the supply chain across the extended business,” Dirk explained. “I report directly to the CEO and

A PHOENIX RISES have the full support of Senior Management and CFO.” “It’s not a question of how much is spent on supply chain improvement, but how wisely.”

Supplier Relationship Management (SRM) is a comprehensive approach to procurement managing and capturing the post contract value from key business relationships. SRM enables procurement to operate at a strategic level, by adopting a more collaborative approach and developing a closer relationship, which generates more value from the relationship in terms of innovation and efficiency. However, this does involve more time; therefore, an assessment should be carried out as to whether the potential value is greater than the cost of the time required.

“Frequent interactions and close relationships with our suppliers have proven to have had a positive effect on the exchange and flow of information and knowledge, improving processes and performance, creating value and improving levels of efficiency and effectiveness.”

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We take every challenge in our stride to set skilled in developing local-to-source up and supply our clients’ camps. supply chains within client communities resulting in over 90% local procurement and a 95% localANYHOW. employment rate in our Remote camps often start asBanro a mere GPS operations. In co-ordinate. partnership with We establish reliable supply chains andATS developis dependable local Mining Corporation, currently support to link these sites to the world. looking to improve water treatment facilities while conducting a feasibility study to create ANYWHERE. a plastic recycling plant and a small bottling plant business ATS has cross-continental reach. No matter how limited the existing infrastructure or owned and operated by the community. supply connections, we find a way to make African investment a return.

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ENGEN FOR A HARDWORKING INDUSTRY We understand that the African mining conditions can be harsh. Our range of lubricants are tested under extreme conditions, ensuring that your equipment runs smoother, for longer. Our distribution network accross the continent ensures that our products and services are always on hand.

OUR CORE BUSINESS Engen DRC is a subsidiary company of Engen Petroleum Limited, an Africa-based energy company focusing on the refining of crude oil, marketing of primary refined petroleum products and the provision of convenience services via an extensive retail network.

PRODUCTS AND SERVICES • •

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Fuels: Petrol; Diesel; Kerosene Special Products including environmentally friendly degreaser Aviation: Jet A-1 Fuel oil and Bitumen High quality lubricants: Automotive; Hydraulic; Industrial

• • •

DIRECT CONTACT Charles Nikobasa Managing Director T +243 81 700 55 00 M +243 81 276 75 07 E charles.nikobasa@engen.cd

Marie-Claire Mubanga Commercial Manager T +243 81 700 55 90 M +243 99 99 32 230 E marie-claire.mubanga@engen.cd

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Engen is a member of the PETRONAS group

ABOUT ENGEN IN THE DRC The Engen brand is in the DRC from 2007. ENGEN DRC is Number 1 among the majors and owns 65 service stations through the country.

CORPORATE SOCIAL INVESTMENT •

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Financing education for underprivileged students in many schools Platinum Member in the Health Smile project.

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Sponsorship to the Center of Excellence of Banro Mining Twangiza and Namoya Medical and sport sponsorship

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BANRO CORP. LTD.

LTG Logistics Transport Globally (Pty) Ltd. is a leading South African freight management company offering a service experience that exceeds all client requirements.

The company specializes in air & sea freight, cross border as well as cross country, both on imports and exports.

Offering outstanding service solutions which are cost efficient with excellent rates has resulted in LTG being a favourable logistics company within the automotive and mining industries.

A change for the better To learn from the past and sufficiently prepare for the future, Banro has many plans.

The company’s updated operating ethos centres around two concepts - uniformity and standardisation. Dirk broke the company’s plans down for us: “The company seeks to transform its supply chain in a way that reduces costs and increases efficiency, whilst also rebuilding relationships. This process includes a new emphasis on “effective and accurate demand planning” that better couples works with stakeholder demand, both internally and externally. It also involved a complete restructuring of Banro’s operations, from its staff to its processes and systems, seeking to standardise its practices and to increase the communication and effective collaboration between its supply chain and line management.

Most key was the objective to integrate Banro’s operations in a way that increased visibility.”

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A service experience that is both professional and personal

Dirk Lourens Group Head of Supply Chain Management Banro Corporation

BANRO CORP. LTD.

Banro isn’t just looking to recover – it’s looking to grow, and to keep going. The company is seeking, in the coming months and years, to not only sustain and maintain its current capital, but to acquire new capital via plant upgrades and other physical improvements. It also seeks to carry out focussed exploration across its projects, whilst simultaneously attempting to reduce its mining overheads by 20%. All of this is a tall order. The strategy will involve scaling back in certain areas, and closing parts of the company’s operations that are no longer valueadding. Therefore, the Canadian company plans to close its Toronto office, and must also part with some staff at the Kinshasa office.

However, these decisions allow for growth in other places that need the input.

“The last seven months were difficult to manage through, with challenges and negative forces coming at us from every area of the business; from external forces to internal forces, all working against Banro and trying to disable

the business in their own way. These forces were compounded by the state of disrepair of the operational equipment required by us to perform to expectation and to our full potential.”

Having secured a substantial financial injection, as well as saving on areas that needed to be pruned or slimmed down in the name of efficiency, Banro is able to invest in these key areas of the business: “The capital injection creates a working/ operating environment and mine plan (access to ore) that is sustainable for the respective life of our mine(s). This operating environment will deliver near capacity production and c.$700$750 cash costs at both mines.”

The right people for the job Integrity cannot stay at leadership level - a company needs excellence throughout its staff from the ground up in order to conduct its operations at the greatest standards. Banro’s people are as important to it as ever, and as greater steps have been taken to protect its operations, it is also continuing to invest in its people’s talents, as well as their involvement with the company. “At Banro, we live by values to create a sustainable future for our host communities and all stakeholders by developing and investing in our people, applying our processes and leading with integrity.”

You might think that with gold mining being such a competitive industry, quantity of staff would overtake the desire for quality, but Banro is actively rejecting this recruitment model.

In fact, Banro is seeking out the crème de la crème of mining professionals and rewarding them appropriately: “We have approximately 1800 team members, most of whom are labour hire. Banro has a philosophy of continued development of employees: the supply chain department, in particular, has a well designed, developed and implemented training programme, mainly based on the best practice scenarios of the Chartered Institute of Procurement and Supply Chain Professionals (CIPS). Promotion from within is encouraged, for value adding and a confident employee base.”

A PHOENIX RISES

By instilling a sense of pride in each and every member of staff, Banro is building a sense of community deep within its operating style. Everybody has a role to play and nobody is surplus to requirements, with those that commit to the approach being promoted and elevated. That’s a winning formula for happy, motivated and loyal staff.

Future plans Skyborne Hospital is proud to celebrate Consider for a moment where Banro has 10 years of providing medical support risen from and you’ll understand how critical to Banro Corporation. these benefits are, and why having experienced and confident people in charge of such Through our partnership with AMREF endeavours is vital. Dirk himself has only been Flying Doctors, we can evacuate our with the company for nine months, one of the patients from remote locations and DIRECTOR: John Mwanzia fresh faces with a new outlook that came in themR.Dto ADDRESS UVIRA: 06 Av. Lumumba,transport Kavinvira, Kilomani, Sud-Kivu, Congodestinations where CALL BUKAVU: 7522411,243890014208 and helped existing leaders like EMERGENCY Brett to go +243 99they EMERGENCY CALL UVIRA: +243974564474 can receive extra care. Our medical back to the drawing board and improve upon Email: skybornehospital@gmail.com facilities are located in Bukavu, Twangiza, Web: www.skybornehospital.com Banro’s set-up as it was at the time. Dirk comes Namoya, and Uvira, all providing medical from a background in the mining industry, but support to clients like Banro. in response to Banro’s situation, and in fact all

Proud to support BANRO CORP for over 10 Years

Proud to support BANRO CORP for over 10 Years DIRECTOR: John Mwanzia, +243995942800 ADDRESS BUKAVU: 061 Av. Maniema, Commune d’Ibanda, Sud-Kivu, R.D.Congo.

EMERGENCY CALL BUKAVU: +243 99 7522411,243890014208 EMERGENCY CALL UVIRA: +243974564474 Email: skybornehospital@gmail.com, skyramjsm@yahoo.com Web: www.skybornehospital.com

BANRO CORP. LTD.

strategizing when it comes to leadership, he feels that there is no magic cure-all solution: “There is no right answer; there is strategy, execution, and iteration.” This ability to try, learn and try again is what Banro is now executing. Dirk also promotes “mindfulness”, “honesty and integrity, self-awareness, vision and courage,” all of which it takes to march forwards with plans that are ambitious yet insightful and aware of where one must grow.

This vision combined with this self-awareness is a formidable combination, and it is competitors without such insight that should beware being overtaken.

This said, Banro does have a clear plan for the future. Long-term, Banro is looking to continue its planned growth, and in particular to develop its slew of exploration contracts. The company has traditionally focussed its exploration efforts on bulk tonnage, low grade oxide deposits, enjoying notable success in this area with the development of the aforementioned 8.5Moz

in mineral resources at Namoya, Twangiza, as well as its newest development project at Lugushwa. On top of these, there has also been the exciting discovery of a new and potentially larger deposit at Kihazi, which has Banro feeling hopeful. However, the region has been underexplored, with Banro’s boots only stepping on 40% of its vast landholding to date. With its past difficulties behind it, and the company more efficient and organised than ever, the way forwards seems bright and rich with reward; the company sees huge exploration potential in its near future, and plans are already in place to explore the rest of its landholding in the coming years.

If this weren’t exciting enough, Banro has discovered that its permits host more than these large oxide gold targets. Recent work has identified numerous other deposit styles, including very high-grade tourmaline-sulphide breccias, which present a whole new mining opportunity for the company.

Banro’s exploration efforts for 2019 will focus on growing the Namoya mining operation and progressing the Lugushwa project through a Scoping Study to Feasibility. This ambition means they are once again courting investors, and they are bringing a strong pitch to the table: their portfolio is vast and the potential within it is rich. Meanwhile, the company’s geology team is going through the same reformation as the procurement department, by expanding into new technologies and creating a leaner and meaner team that will be the recipient of several training programmes design to leverage future exploration successes. From all of this to its smooth and efficient supply chain to the sheer fact of its impressive come-back, Banro has a lot to bank on.

The Namoya gold mine’s restart of operations and production on the 1st of April 2019 proved to be even more successful than before, with record numbers of material mined in excess of 23 tons (or 32%) day-to-day, vs the same period in 2018. The processing plant stacked ore by up to 16%. Moving forwards, the company plans to focus on six areas to improve their mining efforts: technology, infrastructure,

A PHOENIX RISES

environment, finance, human resources and operations.

It’s been quite a journey for Banro, through some challenging lows but, now, increasingly impressive and promising highs, with even greater things on the horizon. As Dirk has learnt, mining is rarely a straight-forward industry, but it is in these unexpected challenges that the real opportunities for growth occur: “Growing up, I always believed that if I followed the perfect, straight and narrow path, I’d ultimately be happy. As I experienced more of life’s messy, unexpected twists and turns, including the unpredictable and amazing journey that is mining, I’ve come to realize that putting my energy into gratitude versus trying to control every inevita§ble imperfection has freed me, and fuels the positivity that is required to move a department forward.

Gratitude allows me as a senior manager to embrace abundance instead of lacking in times of doubt, and for that, I am thankful.

1. Transportation to Harsh Locations.

2. Bulk, Containers, Abnormal Moves.

3. Customs Clearance and Fowarding.

4. Contractual Mining.

5. Procurement and Supply of Reagents.

Established in 2008, Simba Logistics has continued to grow its presence in the freight forwarding market for the past 11 years.

During this time, its focus has remained on servicing various mines throughout the DRC. In 2014, Simba and Banro started their first venture together. Since this time, Simba has continued to support and grow with Banro through its various mines, and has built a strong presence as a reliable and efficient partner. We are very happy to continue working with Banro into the future, and look forward to increased success together.