Potential 10 bagger Belo Sun Mining is undervalued and a potential 10 bagger. They have a very large advanced open pit project in Brazil called Volta Grande (330,000 acres). It is a 7.5 million oz open pit project. The pre-feasibility study released in 2013 calls for a $750 million capex with production at 300,000 oz annually. Cash costs are projected to be $700 per oz. I would estimate all-in costs per oz to be around $1100 per oz. That would make this a cash flow machine at $2,000 gold. However, because of the high capex, the IRR isn’t that great. In fact, the after-tax IRR is only 10% at $1300 gold, which could cause problems getting financing.
At higher gold prices, Volta Grande is much more economic. If they do get financing, production should begin in 2016. The low IRR might be a boon to investors, because it is less likely for a takeover. Most mid-tier and major companies want at least a 30% after-tax IRR. Belo Sun also has another large property (Patrocino) on 50,000 acres that has past historical mining. I would expect them to find a second mine. This stock is cheap because of the high capex and low IRR, with future reserves valued at $21 per oz. If I were confident they could get financing, I would consider buying it at this value. I consider this a high risk speculation stock because financing will not be easy.