Belo Sun getting closer at Volta Grande

Belo Sun Mining (TSX: BSX) was  close to seeing construction begin on its Volta Grande project in Brazil but due to recent events in Brazil’s Para State it will have to wait a few more weeks to see if it gets approval.

At this point it would appear that the Environmental Council of Para State (COEMA), the group charged with dispensing the license, is decidedly in favor of the project, despite delay tactics being run by one of its members.

The council is made up of 13 members, and while 12 of the members met recently, and 11 of them voted in favor of issuing the license, the process is being held up until the beginning of December. While only a simple majority vote is needed, the State public prosecutor decided to request access to all of the files relating to licensing, delaying the process.

That request meant the meeting had to be adjourned until Dec. 2. At that time all members will reconvene and be able to change their vote if they so choose.

“The outcome of the vote appears to indicate that while the Federal Prosecutor’s Office continues to have concerns regarding the project, the State remains supportive,” BMO Capital Markets analyst John Hayes wrote in his report on the company.

Hayes states that if the license is issued he would expect it to include studies into issues raised by the Public Prosecutors Office such as the mine’s effect on local communities and the cumulative effects with the Belo Monte dam project.

The Belo Monte dam is currently being built by the government and is considered to be the world’s third largest hydro damming facility. It is located 20-km upstream of Volta Grande and Belo Sun expects it to be commissioned in 2016. Once the dam is finished it will offer cheaper energy to a future mine in the range of 5.5¢ per kilowatt hour — a better deal than the 7¢ per kilowatt hour Belo Sun expects to pay during the first year of mining, as it accesses power from the nearby power line. The dam will also keep river levels in the area low and that may allow for greater access to resources at the Ouro Verde deposit.

Volta Grande has two main deposits, Ouro Verde and Grota Seca. Combined the deposits have measured and indicated resources of 93.8 million tonnes grading 1.68 grams gold for 5.1 million oz. of gold. They also have inferred resources of 45.5 million tonnes grading 1.75 grams gold for 2.5 million oz. of gold.

The project is situated roughly 60-km from the city of Altamira, which has a population of 95,000 and an airport with regularly scheduled commercial flights.

BMO’s Hayes has Belo Sun rated as ‘market perform’ but does not have a price target on the stock.

In Toronto on Nov. 19 the company’s shares were up 4%, or 2¢, to 47¢ on 113,000 shares traded.