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Financial Analysis
Belo Sun has completed a financial analysis of the Project using a discounted cashflow model incorporating the mine production schedule, estimated capital and operating costs, Brazilian tax treatment and royalty schedules as they apply to the Project. The financial analysis has been based on a gold price of US$1,450/ounce. No allowance has been made for inflation or escalation of gold prices.
Volta Grande Project Financial Analysis Summary
----------------------------------------------------------------------------Economics @ US$1,450 Au After TaxNet Present Value @ 0% Discount Rate US$934.9 millionNet Present Value @ 5% Discount Rate US$474.2 millionInternal Rate of Return After Tax 15.2%----------------------------------------------------------------------------Assumptions: BRL/USD 2.077, Diesel US$1.0/l, Power US$0.88/kWh
Financial Gold Price Sensitivity Analysis: http://media3.marketwire.com/docs/Financial_Gold_Price_Sensitivity_Analysis.jpg
Schedule
The Company submitted its environmental assessment as part of the Project permitting process in March 2012. Engineering studies are ongoing with the objective of finalising the Volta Grande Feasibility Study in Q4 2013 and assuming positive results from the Feasibility Study, targeting a construction decision by year end with production anticipated to commence in early 2016.
Mark Eaton, President and CEO stated "We are pleased with the results of the PFS, but the Belo Sun team will continue working on opportunities to optimise the Project further as part of the Feasibility Study ("DFS"), these include:
-- The potential to include the higher grade South Block resource following updating of the resource classification based on the current drill program, this will allow feeding higher grade ore earlier in the mine life,-- Inclusion of recent drilling at Ouro Verde and Grota Seca to update the resource estimate and potentially add further mineral reserves and extend the mine life. Specifically the recently mineral resource estimate update has already increased the measured and indicated resources to 87,981 k/t with 4.7 MOz at an average grade of 1.68 g/t (see news release dated April 15, 2013) and a further modest increase is expected with an additional update scheduled to be completed by Q3 2013 and included on the DFS. Complete resource modelling at a lower cut off grade to estimate the grade of mineralization adjacent to the mining blocks to accurately assign grades to potential mining dilution which is presently assigned a zero grade value,----------------------------------------------------------------------------Volta Grande Resource Estimate (April Measured + 2013) Measured Indicated Indicated----------------------------------------------------------------------------Tonnes ('000's) 55,825 32,156 87,981----------------------------------------------------------------------------Grade (g/t Au) 1.68 1.66 1.68----------------------------------------------------------------------------Ounces ('000's) 3,021 1,719 4,741------------------------------------------------------------------------------ Further optimization of the mine plan in regards to pit sequencing and waste management facilities,-- Further optimization of the process plant design."
