CIBC: $2.75 target and Sector Outperform - Belo Sun Mining Corp.


                        
                             According to CIBC World Markets:
 Stock Rating: Sector Outperformer
 12-18 mo. Price Target $2.75
 Belo Sun Mining Corp.
 Improved Gold Recoveries At Volta Grande
 - Belo Sun has released updated metallurgical results for the Volta Grande (VG) project. The results indicate an average gold recovery of 94%, exceeding our initial expectation of 92%. The stated recovery estimates are based on ore material sourced from both Ouro Verde and Grota Seca.
 - The positive impact from improved recoveries in our model is partially tempered by ore hardness, as test work indicates a high work index for VG ore. We have increased our model processing costs by 15% and, as a result, our total processing cost increases by $1.65/tonne to $28.70/tonne.
 - We have also elected to increase our assumption for pre-production capital expenditures (capex) at Volta Grande from $600M to $700M. Our decision is in light of continued inflation globally and belief that a more robust grinding circuit could drive capex for a processing facility at the project upward.
 - Refreshing our model results in a marginal decrease in our 8% discounted NAV to $3.76/share from $3.80/share. We believe the slight drop in valuation does not warrant a change in PT. We maintain our PT of $2.75, derived by applying a multiple of ~0.7x to our 8% discounted NAV.