Belo Sun’s Volta Grande keeps getting bigger

Belo Sun Mining (BSX-T) is continuing its impressive string of resource updates at its wholly owned Volta Grande gold project in Brazil.

The latest estimate is based on 72 extra holes and moves more inferred resources to the measured and indicated category.

Volta Grande’s global resources have increased 5% since the previous estimate, and stand at an impressive 7.2 million oz. gold.

The company has boosted measured and indicated tonnage by 19%, although adding more rock caused a 3% drop in average grade.

Measured and indicated resources now total 88.1 million tonnes averaging 1.68 grams gold per tonne for 4.8 million oz. gold.

The increase in measured and indicated is largely based on a conversion of inferred resources, which as a result fell by 12% to 39.6 million tonnes grading 1.93 grams gold for 2.46 million oz. gold.

And while most of the mineralization occurs within an envisioned open pit, roughly 16,000 oz. gold from the indicated category and 228,000 oz. gold from the inferred category comprise underground resources.

Now that the deposit is better defined, Belo Sun will focus on projected economics at Volta. The company is on the verge of releasing a second prefeasibility study , with the first having been released in 2009, when the company was known as Verena Minerals. The new study will incorporate drill results from 2012.

Activity will continue at the Volta Grande camp after the study is released, with the company planning to release another resource update before September.

This continues a trend of consistent upgrades over the last four years that have steadily built-up the tonnage.

The company has released five resource updates since September 2009, building on the initial estimate with tonnage and grade. The initial estimate outlined indicated resources of 845,000 oz. gold at an average grade of 0.87 gram gold.

BMO Capital Markets analyst John Hayes writes that Belo Sun’s shares are trading at a 27% discount to its net asset value estimate of US$1.09 at a 10% discount rate.

Hayes notes that this is a larger discount than other emerging producers covered by BMO, which trade on average at a 20% discount.

Hayes labelled the resource update as “slightly positive,” and rates Belo Sun as “outperform.”

In Toronto on April 16, the day the news was released, the company’s shares were up 5% — or 4¢ to 85¢ — on 810,000 shares traded.

Over the last 52-week period they have fluctuated between 74¢ and $1.83, and they traded at $1.04 at press time.
The company has 265.9 million shares outstanding.

Volta Grande is located 60 km southwest of Altamira in northern Brazil’s Para state, along the northern boundary of the Carajas-Iricoume block of the eastern Amazonian Craton.

The property follows a major ductile deformation zone within the west- to northwest-trending Tres Palmeiras greenstone belt.

It is underlain by west–northwest trending and steeply south-dipping gneiss of meta-sedimentary and metavolcanic origin, and syntectonic diorite.