CIBC
Wednesday April 1, 2015 10:50 AM
Belo Sun Mining Corp.’s (TSX:BSX) feasibility study of its Brazil-based Volta Grande project should turn some favorable looks at the company, as it betters the Preliminary Economic Assessment (PEA) put out in early 2014, analysts at CIBC say. Average annual production increases to 205,000 ounces of gold over its 17-year life of mine with all-in sustaining costs of $779 per ounce. Belo Sun used a $1,200 gold price, giving the project a base case after tax net present value (NPV) of 5% and an internal rate of return (IRR) of 26%. “One of the highlights of the study is an increased production profile; the feasibility delivers an average annual gold production of 205,000 ounces vs. the PEA at 167,309 ounces; and with higher grades will reach a range of 250,000 to 300,000 ounces during the first 10 years of production,” they say. “In our view, increased returns and larger production profile should draw back investor attention to the Volta Grande project.” They add “an after-tax IRR of 26% in the feasibility study is a significant improvement from 16% in the company’s PEA and this despite a 100 per ounce decrease in the company’s gold price assumption.”