If you look at fellow miner Duluth Metals, their stock plunged to 7 cents Canadian on Friday despite a massive resource, as they had a payment due that Friday, and no ability to pay it.
We learn today that Antafogasta (?) bought them out at 45 cent per share.
This seems the norm to me -- a miner can fall far lower than you can ever imagine, but if it has a good resource that will one day be very profitable, it will get acquired before the lights go out.
This is capitulation time, and there's a good reason why it will end this Friday, as that's the last day of "tax loss selling" for most hedge funds, etc. As such, I think NUGT is likely a great call by the end of the day on Friday.
For most funds, their tax selling ends at the end of October. If this is capitulation time, as Rick Rule seems to think, then the start of November may be around the time when a lot of miners have found their bottom (already much lower than I personally imagined).
Personally, I want a profit, and care less about the company. There's always other ridiculously oversold miners to buy if this one has the good fortune of getting bought out. There were buyout rumors in March (from the company its current CEO came from), and God bless it if those rumors turned out true. Am baffled that it doesn't even rise from these lows on today's respectable press release, but I still think it could ascend to 25 cents in fairly rapid fashion.
TORONTO, ONTARIO--(Marketwired - Sept. 22, 2014) - Banro Corporation ("Banro" or the "Company") (NYSE MKT:BAA) (TSX:BAA) wishes to comment on the unusual market activity and volatility of its common shares experienced on both the Toronto and New York (MKT) stock exchanges on Friday September 19. The Company continues with the plans set out in its August 18, 2014 press release and has no news pending at this time and no material changes to report.
It came to the attention of the Company that there was a rebalancing of the GDXJ Index (ETF). A market announcement regarding this was made early in the week of September 15, 2014 and the Company understands that the transaction(s) closed on Friday September 19, 2014. The Company also understands that this ETF held approximately 25.6 million Banro common shares prior to rebalancing.
VGZ went from 90 cents to 30 cents between September 2013 and OCtober 2013 on mostly no news except being removed from GDXJ. It quickly rebounded to 60 cents in January 2014. It's done little since, but even at its lows, it's never come close to approaching 30 cents again.
The 26 million shares were dumped on a technicalityy by VAN ECk, which had 26 million shares of BAA in its GDXJ fund. Next Friday, you will see that BAA has been removed from the GDXJ holdings, if not sooner than that.
As the dump comes one week after the "event" (where BAA was under 75 million market cap at the time of the next indexing), some entities definitely knew about it and prepared for this temporarily negative event.
While there's no reason to guarantee this as a buying opportunity next week, it most likely will be.
Best of luck to all... Goldquest has been fairly easy profit after its ridiculous collapse a week or two ago, and I personally expect this will follow suit. And though it may be gone from the GDXJ, it may still be held by Van ECK, or else sold to Sun Valley Gold or some other rich hedge fund.
3 million ounces and cash which makes up almost half its market cap... along with a doable capex, and a very respected management team who've taken mines all the way to the production stage.. Not my favorite miners -- but perhaps my favorite miner at the current share price (ie sub 20 cent canadian)...
I don't doubt the change -- thanks! -- though find it surprising. Am frustrated too that I can't find the change indicated anywhere.
This is from the Van ECK GDXJ SEC filing from 2009: "Constituent stocks for the Junior Gold Miners Index must have a market capitalization of greater than $150 million on a rebalancing date to be eligible for the Junior Gold Miners Index. Stocks whose market capitalization falls below $75 million as of any rebalancing date will no longer be eligible for the Junior Gold Miners Index. Stocks must have a three-month average daily trading volume of at least $1 million to be eligible for the Junior Gold Miners Index and issuers of such stocks must have traded at least 250,000 shares each month over the last six months. Only shares that trade on a recognized domestic or international stock exchange may qualify (e.g., National Stock Market stocks must be “reported securities” under Rule 11Aa3-1 of the Exchange Act. Similar criteria and standards apply to stocks with foreign listings)."
I know this market cap minimum was in place this past June, as Belo Sun was removed then for having fallen under the 75 million market cap. They have not recovered too quickly -- but ATAC and VGZ each had fairly rapid reversals soon after putting out press releases that vaguely alluded to the GDXJ removal.
It's done quarterly. The last one was in June (the deadline date was a Friday, with shares removed from the GDXJ index on the following Friday). Van ECK is responsible for the GDXJ, and the precise date should be on their site (though I apologetically cannot find it). Those with funds on the sidelines should definitely view the re-indexing as a prelude to a buying event, as this is a temporary drop that miners normally recover quickly from.
Needs to reach a 75 million market cap before the next GDXJ re-indexing -- or else it will be removed from the GDXJ fund, which could create some temporary selling pressure on the stock.
Article covers the financing, with title as follows: "Banro finds 'relief' in new financing plan". Those who have yet to read an article from the Northern Miner site this week get one free article. (I unfortunately read another article earlier in the week, so will be unable to post.)
drilling results should be coming soon too, etc
The 100-share trader seems to be accumulating a position -- so the stock will eventually move up strong, IMO, but I think there's effort to keep it under 75 million market cap until the next GDXJ reindexing (September). If it's under 75 million on a reindexing date, then VAn ECK would have to dump its shares and another hedge fund (perhaps the 100 share trader) could acquire a significant chunk of shares for quite cheap. Anyway, I am invested, so hope am wrong, but think it's premature to make a huge gaamble/investment here...
Their low last year was 17 cents. Then they put out a press release saying they were drastically undervalued, and it's been a great story for its investors more or less from that day on.
That said, they seem to have been high-grading their deposit the past year. It's a gamble that seems to have worked for its current investors, so far, but I think their market cap is still lower than the price they paid to acquire one of their mines a few years ago.
Personally see this as rising in the short term. BAA announced an equity raise after it last ascended to the 70 cents range, and I'd personally play this very conservatively once the stock gets above 40-50 cents this time.
Long-term, totally agree. And stock could feasibly even do well at the financing stage if they were able to attract some of the big names in the mining investment world (Giustra, etc). Don't see the latter happening, but one can hope.
This is analysis that made sense to me (from a site called gold silver data), and which explained the risk-reward fairly well with this stock:
Summary (from last analysis - 05/17/2014)
Banro Corp is a growing mid-tier producer. Other than political risk (Democratic Republic of Congo) and debt issues, this stock is a slam dunk 5 to 10 bagger. They have an incredible amount of gold (possibly 20 million oz) and production just began in 2011. Thus, this company is going to be growing rapidly over the next 5 years. By 2018 they should have 4 producing mines and 350,000 to 400,000 oz of production.
Also, they have project on top of project to explore (500,000 acres), and the mineralization is 1 to 2 gpt surface mining, which is very low cost in Africa. This company has the potential to a major, with a market cap over $3 billion. I could be wrong that they will reach that lofty valuation, but if gold goes over $2500 and they hit their production target of 500,000 oz, this will be a very valuable company.
The biggest red flag besides the location is their balance sheet ($175 million in debt and only $4 million in cash). If they ever have to stop mining, the stock price is going to crash because of their debt burden. This might be a good speculation stock. If gold prices spike this year, they could improve their balance sheet and jump in value. With a FD market cap of only $120 million, their future reserves are selling for about $12 per oz.