Big vote of confidence for promoter of Brazil's largest gold project

Defying a very weak gold sector on Thursday, Belo Sun Mining (TSE:BSX) soared  14% in heavy volume as investors take big bets the Toronto company's Brazilian gold project.

Positive momentum has been building  for Belo Sun and its 7.6 million ounce Volta Grande project in the Amazon basin, with insiders continuing to pick up shares on the open market.

Mark Eaton, CEO, this week picked up an additional 228,500 shares this week bringing to almost 1.8 million the number shares purchased by insiders since May, while no-one has offloaded any holdings.

In afternoon dealings the explorer was trading up 13.9% at $0.45 on the Toronto big board, near its highs for the day and matching the price of  latest insider purchase. More than 575,000 shares versus usual daily volume of 340,000 shares had changed hands by 3.30pm EST on Thursday.

The $101 million company has not escaped the carnage among junior miners and is still down more than 70% since the start of year, however.

Volta Grande is Brazil's largest gold project under development and the October 4 resource update increased by 24% or 1 million ounces the contained measured and indicated ounces over the December 2012 estimates which formed the basis of the company's May 2013 pre-feasibility study.

Belo Sun is considered an attractive takeover target as the economics of the Amazon basin project improves thanks to higher grades, a fall in the value of the Brazilian real and approvals for the contentious project draw closer.

A definite feasibility study are expected in the fourth quarter or early 2014 and a preliminary licence for the $750 million project on the Xingu river is expected later this year.

Volta Grande which close to a  government hydro-electricity project under construction is still being assessed by the Secretary of Environment (SEMA) of Pará state after Brazil's Federal Public Ministry (MPF) recommended further impact studies earlier this year.

The 100%-owned project, expected to produce more than 313,000 ounces per annum over its 10-year life, is also facing fierce opposition from civil society groups given its location close to the indigenous territory of Paquiçamba where a reserve for the Juruna indians are in the process of being established.

In September last year after reports about a federal investigation into the project that found inconsistencies in the environmental assessment – Belo Sun withdrew and then quickly re-instated a $50 million financing deal provoking bewilderment from investors.

Another potential stumbling block could be the 2,000 miners working illegally at three unlicensed gold mines in the area who would not welcome the Canadian firm, particularly if it gets the lion share of the local resources.