Belo Sun (TSX:BSX) dropped by as much as 7.5% on Thursday after Brazil’s federal authorities ordered further environmental and social impact studies for the company’s Volta Grande project in Pará state.
According to reports Brazil’s Federal Public Ministry (MPF) this week sent two recommendations to the Secretary of Environment of Pará (SEMA) to warn that no license be granted without prior environmental impact studies and consultations with the local indigenous people.
While these studies are not out of the ordinary in the licensing process for this kind of project, Volta Grande, Brazil’s largest gold mine in development, has attracted intense scrutiny from Brazil’s federal authorities recently.
In September – also after reports about a federal investigation into the project that found inconsistencies in the environmental assessment – Toronto-based Belo Sun withdrew and then quickly re-instated a $50 million financing deal provoking bewilderment from investors.
The $366 million company has lost close to 19% of its value of the Toronto stock exchange over the last month perhaps indicating waning confidence in the timetable set for the project.
Belo Sun was hoping to receive a preliminary licence from SEMA-PA, the competent permitting authority, this quarter.
The market cap losses come despite Belo Sun’s announcement in December expanding the resource at Volta Grande to 4.1 million ounces of gold (and another 2.8m oz inferred) in December.
The $1 billion project is now in the definitive feasibility stage and construction start-up as early as the third quarter of the year is envisaged.
Belo Sun owns 100% of Volta Grande and increased its property position from 195 sq. km to 1,305 sq. km a year ago.
The controversial mine in the Volta Grande do Xingu area is to be built near lands of the indigenous Xingu people and 14 km away from the Belo Monte hydroelectric dam, an equally environmentally sensitive project now under construction.