Colombian court lets Zonte Metal sue authorities over gold permit rejection

Canadian junior explorer Zonte Metals’ (TSX-V: ZON) chances of opening one of the first modern commercial scale gold mines in Colombia regained strength Tuesday after a special court granted the company rights to proceed with a lawsuit against local authorities over a permit rejection.

Shares soared on the news and were trading up 11.29% to 3.45 Canadian cents at 9:49AM EST, boosting this year's gains to 2.6 cents.

The Halifax-based miner first announced its plans to sue Colombia’s Department of Antioquia as well as the National Mining Agency last year, arguing the bodies did not process its exploration application in accordance with the country’s mining code.

Zonte wants to mine an area that sits on top of a now halted AngloGold Ashanti and B2Gold’s Gramalote gold project.

The court decision comes almost four years after Zonte first spotted — and applied for — a licence to mine an area that sits on top of partners’ AngloGold Ashanti (NYSE: AU) and B2Gold’s (TSX: BTO) Gramalote gold deposit.

According to Antioquia’s secretary of mines, the area in dispute — which measures less than 30 hectares — was too small to become a mine, and Zonte’s application would have interfered with AngloGold and B2Gold’s project, which has been frozen since 2014.

Zonte argues there is no minimum size on land applications specified anywhere in Colombia’s mining code and that there have been several applications accepted where the total area of exploration was significantly smaller, including a recently issued title covering less than 0.1 hectares.

Zonte first considered applying for a Colombian land title in 2013, after identifying a number of narrow gaps between title areas — otherwise known as “fractional” claims — sitting across Gramalote, once touted as Colombia’s first modern commercial scale gold project.

After the rejection, Zonte sought the help of a legal counsel headed by a former director at Colombia’s secretary of mines and in December last year it announced it was proceeding with legal actions.

The company has high hopes for its project, as the adjacent Gramalote, located 110km northeast of Medellin, in the department of Antioquia, is said to hold 2.69 million ounces of gold within 132.7 million measured and indicated tonnes grading 0.63 g gold per tonne, and 3.36 million ounces of the precious metal within 239.7 million inferred tonnes grading 0.44 g gold.