Nikolay Tomov
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Belo Sun Mining Corp. (CVE:BSX), (PINK:VNNHF) Is in Retreat After the Recent High

by Nikolay Tomov May 4, 2011
For most stocks, it is normal to take a step back after noting a peak in their performance. Likewise, the shares of Belo Sun Mining Corp. (CVE:BSX), (PINK:VNNHF) are currently in a retreat, shortly after they marked a seven-year price record on the TSX Venture Exchange (CVE).

0Belo_Sun_Minig_-_Logo.pngPerhaps, it is more disturbing for the company's managers that the stock is declining on rising volumes, which seems to be a bearish sign. Yesterday's turnover of 2.67M shares beats about four times the average from the last 30 days. During the session, BSX dropped 2.5% down. Over the last two days, the stock has lost 7% from its value.

The downfall actually began in April, when the shares had climbed to a high of $1.54. Back then, the market capitalization of Belo Sun was more than $350M. Compare this figure with the $20M net worth of the company, as evident from the latest financial reports. You will easily arrive at the conclusion that Belo Sun was rather overvalued a month ago.

Belo_Sun_Minig_-_Chart_-_4_May_2011.jpgMaybe, this is among the reasons for the negative move in the share price. It would have been a real surprise if Belo Sun had managed to retain such a highly inflated price and such overestimation for long.

What is more, with its current market cap of $238M, the company still looks overvalued. This might be a hint that the share price could go further down, as it is seemingly not quite backed up by the fundamentals.

On the other hand, several positive developments, duly announced in April, could be a support for the stock and its price. Among them:
  • A 23% rise in the Indicated Mineral Resources (IMR) at the Volta Grande gold project in Brazil. The IMR reached 1.3M ounces of gold;
  • The "positive", as the company claims, drilling results from the diamond drilling program at Volta Grande. These were disclosed last Thursday;
  • The steady financial state of Belo Sun - at the end of 2010 it reported a $7.1M cash position.
Unfortunately, the financial statements contain several not so pleasing figures too. The net loss for 2010 was $4.7M, almost 540% higher than that for 2009.

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