Court suspension stalls permit for Brazilian gold project with 3.8 million ounces in reserves
Key Facts
Belo Sun said Brazil's Superior Court of Justice temporarily suspended the effects of a ruling that reinstated the installation licence for its Volta Grande gold project, leaving the licence suspended pending judicial approval of the company's agreement with the National Indigenous Peoples Foundation, known as Funai. The decision affects a project for which the company reports proven and probable gold reserves of 3.8 million ounces, based on a historical feasibility study. The company said it had submitted the agreement to the Federal Regional Court for approval. It added that judicial approval of the agreement remained pending. Commenting on the legal development, the Brazilian subsidiary said "the decision does not constitute a final ruling on the project's viability."
The installation licence had been suspended since 2017 before the ruling reinstating it, according to an earlier Belo Sun announcement on the project's legal proceedings. Judge Flavio Jardim issued the interim relief order individually, while the company said the appeal would subsequently go before the Sixth Panel for review after the opposing parties had been given an opportunity to respond. On the regulatory front, the company said the reissued licence included updated conditions aligned with current regulatory requirements. During negotiations, the company gave a court undertaking not to begin physical work related to implementing the project at the site. The Brazilian subsidiary said this commitment applied during negotiations under the undertaking it had submitted to the court.
Objections to the project include its environmental impact and its relationship with Indigenous communities in the Xingu region, according to accounts from parties to the dispute reported by the Associated Press. Federal prosecutor Felicio Pontes Junior said the project's cumulative impact alongside the Belo Monte dam was a central issue in the dispute. Speaking to the agency, Pontes described these effects as "a central issue." The agency also reported that the region's Juruna and Arara Indigenous communities had expressed their position on the project in an open letter. The communities said in the letter that they "never approved the project."
The project's published reserve estimates date back to the feasibility study completed in March 2015, according to Belo Sun's website. The average reserve grade in that study was 1.02 grams of gold per tonne. The original feasibility study announcement estimated initial capital costs at about US$298 million, including pre-production costs. The study also estimated average cash operating costs at US$618 per ounce. The original study estimated all-in sustaining costs at US$779 per ounce, as part of the project's economic calculations announced by the company at the time.
On financing, Belo Sun announced the closing of a private placement that raised gross proceeds of US$30 million. The announced proceeds were equivalent to C$41.3 million, according to the company's statement on the placement's closing. Belo Sun said it had earmarked the funds for working capital needs. The stated uses of proceeds also include general corporate purposes, according to the same statement. Through its participation in the placement, La Mancha became a controlling investor as defined by the Toronto Stock Exchange, according to Belo Sun's announcement on the financing's effect on the investor's status.
On its next steps, the Brazilian subsidiary said it was considering appropriate appeals against the decision with its legal advisers. It also said future stages of the project were conditional on submitting supplementary technical studies and environmental assessments, and meeting applicable regulatory conditions and approvals. The announced technical work schedule had targeted completion of the gap analysis in the third quarter of 2026. In earlier guidance, the company set a target of early 2027 for completing the definitive feasibility study update. But in a subsequent update, it said it would provide further guidance on the scope and timing of the study update after completing the technical gap analysis.