Belo Sun Mining (BSX-T)

They have some issues with locals. They re-submitted an indigenous document and so we have to see what happens. It is a leveraged play in the Amazon.

An explorer/developer. It certainly hasn’t performed the same as Continental Gold. Has shown more volatility. Brazil obviously can be a difficult environment. He thinks they are appealing an injunction on their deposit. In South America, the social license is very difficult, and he thinks that is the overhang with the stock. He has avoided this.

They want to build a mine in Brazil, but there are some environmental controversies. They have the Volte Grande project which is over 6.1 million ounces in all categories, and a grade over a gram a ton. In early years, they can have higher grades, so you get a really robust payback. From a technical perspective, everything is great.

In February they finally got approval. Brazil has been hard to get permits in because of the bureaucracy. We are waiting for cash flow to start and for gold to go up.

He likes the people and he likes the project, but is a little afraid of the political and social risks of Brazil, but mostly the stock gave him everything he wanted in a fairly short period of time. He sold his holdings.

The Volta Grande project had a feasibility study done last year. Agnico- Eagle (AEM-T) put in $15 million to go through the permitting cycle. Doesn’t know how long it will take in permitting. This project also has substantial exploration potential. At current gold prices, that asset is worth putting into production. Expects this company will be absorbed in the not too distant future.

Thinks the large gold deposit in Brazil works and that it is a decent deposit. The people running it know what they are doing. There have been some issues with the local natives. If they can get their final mining permit, this is a good project and is something worth owning.

He sold a couple of years ago. They addressed the issue since and he thinks now that they can build the project.

A large gold deposit in Brazil. Have redone the feasibility study, so it is a much smaller staged project. It has an $80 million market cap and will need to raise in excess of $300 million. That is the issue they are going to face. This is something that a major could buy. What they need to deal with right now is getting their final construction permit, which has been a hassle all along. Until they get it, he wouldn’t buy this.

The issue is that it is in Brazil. Agnico-Eagle (AEM-T) owns 17% of the company. There have been management changes. There is a debate over whether they can get permitted, and he thinks the odds are that they will. A nice little deposit and low cost. If it gets in the fortunate position of getting permitted, it may be a take out or Agnico-Eagle could sell their holdings.

This has gone through a lot of turmoil. Brazil has created some unique problems. It seems to be a really difficult country. For this company there is a lot of concern on permitting on federal levels and environmental approval. A great resource with a high grade open pit, so he likes the optics of the project, but they’ve been saddled by jurisdiction and uncertainty about ultimate permitting that has weighed down on the price.

(Top Pick Mar 5/13, Down 53.47%) He was wrong about the deposit. The company published an accurate feasibility study that was disappointing to him. There were social challenges in the area.

(A Top Pick March 5/13. Down 53.47%.) This one was a mistake. He had a view as to what the front-end capital costs would be and what the pit would look like. He was wrong and sold his holdings. He would not buy this. He likes the people and there are some things about the deposit that he likes. It won’t work at $1250 gold.