How a BlackRock Bet on African Gold Lost Its Luster – by Justin Scheck and Scott Patterson (Wall Street Journal – November 3, 2015)

http://www.wsj.com/

Fund manager Evy Hambro wagered on Congo gold, a play conservative investors once avoided

Luhwindja, Congo and London – Evy Hambro came to the 2013 Mining Jamboree hunting for more gold.

At the conference, featuring lingerie models strutting before a South African sunset, the BlackRock Inc. fund manager scouted for a mining company needing financing. His search led him to double down on an earlier bet—a gold miner named Banro Corp. he knew had troubled operations in a troubled African country.

Mr. Hambro is discovering just how troubled.

Falling gold prices have battered Banro, as have operational setbacks. It has faced sometimes-violent unrest around its mines in the Democratic Republic of Congo and questions about payments it made to entities controlled by a government official. Local residents blame it for several deaths.

Mr. Hambro’s 2013 deal was part of a largely overlooked facet of the commodities boom-turned-bust. Eager for exposure to rising prices, conservative investors who once shied away from large bets on small miners in volatile places piled in.

Those wagers sometimes came with risks that exacerbated the pain of falling markets.

Banro’s biggest investor was BlackRock, through funds that London-based Mr. Hambro managed. In exchange for a cash investment, the Canada-based miner in 2013 agreed to pay a dividend to a BlackRock trust—separate from the funds—which he co-managed and whose investors include Yale University and the Ohio Public Employees Retirement System.

Two weeks after Banro announced the deal, it ousted its chief executive, who had raised corporate-governance concerns and suggested investigating Banro’s finances, including payments Banro made to entities controlled by a Congolese official, say people familiar with the episode.

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