Shares of Belo Sun Mining (TSX: BSX; US-OTC: BSXGF) jumped by 55% on Wednesday morning after the company reported that the Supreme Court of Pará State in Brazil had overturned a suspension order related to the construction and environmental licences of its Volta Grande project.
In May, the Agrarian Court of Altamira had suspended the company’s licences until a socio-environmental study of the local riverside peoples, at a minimum distance of 10 km from the project, was carried out on both banks of the Xingu River. The order also required the company to undertake prior, free, and informed consultations and receive the consent of the riverside communities.
The State Supreme Court overturned the suspension order as there was “no evidence of damage or harm to the riverside people” and “they were properly consulted as part of the environmental studies conducted by Belo Sun,” the miner said in a press release.
Mining camp at the Volta Grande gold project. (Image taken from Belo Sun’s presentation.)
“This decision confirms our belief that Belo Sun properly consulted with all local communities, including the communities living along the Xingu River,” the company’s CEO Peter Tagliamonte said in a press release.
Located in the state of Pará, near the city of Altamira, the Volta Grande open pit mining project has proven and probable reserves of 115.9 million tonnes grading 1.02 grams gold per tonne for 3.7 million oz. gold.
Based on a 2015 feasibility study, the project is expected to produce about 268,000 oz. gold annually over the first 10 years of the mine life. At a 5% discount rate, the project would generate a post-tax net present value of US$665 million and a post-tax internal rate of return of 26%. The initial capital cost has been pegged at US$298 million.
Scotiabank analyst Ovais Habib described the latest update as positive for the company as it moved the project “closer to resuming development activities at Volta Grande.”
At press time in Toronto, shares of Belo Sun Mining closed at were trading at 32¢ , up 7.5¢ or 30%, within a 52-week trading range of 22¢ and 88¢.
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