Belo Sun’s permits in question

Permitting issues may be brewing around Belo Sun Mining’s (TSX: BSX; TSXV: BSX) flagship Volta Grande gold project in Brazil’s northern Para state, according to recent media reports.   

The reports note that Brazilian federal prosecutors from the Public Ministry warned the Para state government on Sept. 11 that it would block Volta Grande’s licensing if concerns regarding the project’s impact on local indigenous communities are not addressed within 20 days. After that, the prosecutors could seek a court order to prevent the state’s environmental secretary office from granting a preliminary permit that is required for the project.

Some concerns brought forward by the Public Ministry prosecutors include Volta Grande being near the Xingu River and 20 km upstream from the Belo Monte hydroelectric project, where the government plans to build a dam around the same time Belo Sun will build Volta Grande, causing environmentalists and federal prosecutors to call for more assessments on gold mining’s impact on water levels and the nearby Arara and Juruna communities. Commissioning of both projects should start in 2016.

Reports indicate that prosecutors are questioning whether Belo Sun would increase the size of its mine, as recent drilling more than doubled Volta Grande’s measured and indicated gold resources to 88.1 million tonnes from the 37.8 million tonnes that were mentioned in its environmental impact statement.

The Public Ministry said it received no response after asking the company for more studies to evaluate the project’s impact, claiming the last request was made in February 2013, when Belo Sun was in the earlier stages of its preliminary licence application.  

But the Toronto-based firm could have been waiting for the request to be initiated by state officials, as they are the ones responsible for permitting projects in Brazil.

“All the permitting for our project is done at the state level, and the approvals are at the state level,” the company’s COO Ian Pritchard told Reuters. “I can’t tell you anything else.”

The company’s CEO Mark Eaton has not responded to requests for comment.

A prefeasibility study published in May envisions Volta Grande producing 313,100 oz. gold per year over a 10-year mine life.

The project, located southeast of the city of Altamira, has 2.8 million oz. gold in reserves of 59.2 million tonnes grading 1.48 grams gold. The pit was defined with a US$910 per oz. gold price and a 0.35-gram-gold cut-off grade. A feasibility study is due later this year.