A Congo Gold Mine

In 1998, DRC leaders expropriated Banro's projects a few months before a civil war among the nation's 200 ethnic groups exploded into a regional war that drew in Rwanda, Uganda, Chad and Tanzania. Kondrat sued the government for hundreds of millions of dollars, which naturally meant nothing until peace was brokered by the U.N. four years later. Banro then dropped its claims against the DRC in return for ownership of its stakes, though it lost many millions of dollars worth of looted equipment and stolen gold.

By 2004, Kondrat saw the prospect for material improvement, as the U.N. installed its largest peacekeeping force in the world -- now numbering 19,000 soldiers. Last year, Banro managed to meet all the requirements to launch an initial public offering of shares on the American Stock Exchange and Toronto Stock Exchange. Among its investors now are Los Angeles-based mutual fund giant Capital Research and Management, with a 14% stake through March 31, and the Boston-based value mavens at Wellington Management, with a 2.2% stake.

Once Burned

One reason to mention the company's major backers is that they perform a lot more due diligence than you or I are capable of doing. They're keen to get this one right after so many lost millions in the mid-1990s on a seemingly gold-plated developmental Canadian company called Bre-X, which claimed to have found a mine totaling 200 million ounces in the jungles of Borneo.

After Bre-X's stock soared on the wings of Internet chatroom fervor and the company received sizable takeover offers, further investigation by a potential acquirer revealed it was all a scam. No gold was ever discovered, and the company's chief geologist threw himself out of an airborne helicopter.

With that in mind, you can understand why Raymond James analyst Eric Zaunscherb braved a visit to the still-dangerous DRC in February to check out Banro's Twangiza, Namoya and Lugushwa projects and the company's main office and management. Banro paid for the trip, but I'll note anyway that Zaunscherb came away impressed with its staff, exploration camps, sample-preparation laboratory, documentation, communication with government and religious groups, and balance sheet.