Belo Sun shines more light on Volta Grande

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

The latest estimate is based on 72 additional holes and converts more inferred resources up into the measured and indicated category, as well as adding some marginal growth.

Volta Grande’s global resources are now 5% larger than the previous estimate and stand at an impressive 7.2 million ounces.

The company managed to increase measured and indicated tonnage by 19%, although adding more rock came at a cost of a slight decrease in average grade, which is down 3% from the previous estimate.

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

As alluded to, that increase in measured and indicated was 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. of gold.

And while the bulk of that mineralization is within an envisioned open pit, roughly 16,000 oz. of gold from the indicated category and 228,000 oz. from the inferred category are underground resources.

With the deposit now better defined for the market, Belo Sun will next look to enlighten investors on the latest projected economics at Volta. The company is on the verge of releasing a second pre-feasibility study — the first was released back in 2009 when the company was known as Verena Minerals. The new study will incorporate drill result as of the end of last year.

The activity will continue at the Volta Grande camp after the study is released as the company plans to have yet another resource update out in the third quarter of this year. That will continue a trend of consistent upgrades over the last four years that have steadily built up the tonnage.

Since September of 2009 the company has released five resource updates, significantly building on the initial estimate in terms of both tonnage and grade. That initial estimate outlined indicated resources of 845,000 oz. of gold at an average grade of 0.87 grams 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 (calculated using at 10% discount rate). That is a larger discount than other emerging producers being covered by BMO Hayes says, which trade, on average, at a 20% discount.

Hayes labeled the resource update as “slightly positive” and has Belo Sun rated as ‘outperform’.

In Toronto on Apr. 16, 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 76¢ and $1.83 and the company has 265.9 million shares outstanding.

Volta Grande sits roughly 60-km southwest of Altamira in northern Brazilian state of Para along the northern boundary of the Carajas-Iricoume block of the Eastern Amazonian Craton.

More specifically the property is situated along a major ductile deformation zone within the west-northwest trending Tres Palmeiras greenstone belt. It is underlain by west northwest trending and steeply south dipping gneisses of meta-sedimentary and metavolcanic origin and syntectonic diorite.