March 27 (Bloomberg) -- Banro Corp., a Canadian miner of gold in the Democratic Republic of Congo, tumbled after the company said it plans to raise as much as $100 million by selling shares.
Banro dropped 10 percent to C$1.78 at the close in Toronto, the biggest decline since March 7. Banro has fallen 36 percent this year and is the fourth-worst performer in the Standard & Poor’s/TSX Composite Index.
The Toronto-based company plans to sell $30 million of gold-linked preferred shares to BlackRock Inc.’s World Mining Trust, Banro said in a filing yesterday. It also plans to sell $70 million in common and preferred shares.
The proceeds will be used to develop the company’s Namoya project and other general expenses, Banro said. The financings replace previously announced plans to raise $40 million to $60 million by selling preferred shares to BlackRock, Banro said.
“The larger financing and dilutive common share component raise concerns regarding cost overruns at Namoya and near-term operational performance at Twangiza,” the company’s operating mine, Andrew Breichmanas, a London-based analyst at BMO Capital Markets, said in a note today.
Banro dropped 22 percent on March 7, the day after it announced John Clarke, a Banro director, would become interim chief executive officer, replacing CEO Simon Village. The start of production at Namoya has been delayed and the construction cost overrun is estimated at 15 percent because of unseasonably heavy rains, Banro said March 7.
Banro also today reported fourth-quarter net income of $5.87 million, or 3 cents a share, compared with a net loss of $2.88 million, or 2 cents, a year earlier.
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