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Belo Sun shares dive after cancelling financing, Brazilian tension

Investors might also have been given venture jitters after Brazilian federal prosecutors on Monday opened an investigation into the development by Belo Sun of the country’s largest gold mine, accusing Belo Sun of endangering indigenous communities in the Amazon rainforest.

Belo Sun, which planned to start a definitive feasibility study for the Volta Grande project, in the state of Pará in the north of the country, on Tuesday tried to allay investor concerns, saying it was normal-course action by the federal prosecutor to open an investigation proceeding when an environmental-impact assessment (EIA) was filed with the local authorities.

Belo Sun CEO Mark Eaton reiterated that the company was indeed “honoured and pleased” with the participation and interest of the public prosecutor office in the Volta Grande project.

“The company wishes to emphasise that the federal public prosecutor office in the State of Pará opens an investigation proceeding for each and every environmental licensing process in the State. The investigation proceeding regarding the project does not imply any irregularity or particular concern regarding the environmental licensing process for the project,” Eaton said in a statement.

The federal prosecutor carrying out the investigation, Thais Santi, said it was “very worrying that the project does not make any mention of its full impact,” according to a Financial Times report.

Belo Sun denied this allegation, saying the EIA it had filed with the environmental secretary of the state of Pará on February 27, addressed the “synergy of the impacts” of both the Volta Grande project and the Belo Monte hydroelectric dam complex on the Xingu river – which was recently halted by the Brazilian federal court – and included an analysis related to the indigenous lands located in the region of the project.

Brazil’s government was preparing to review the country’s aged mining legislation that could potentially place Amazonian communities at greater risk.

Since drilling started in 2010, Belo Sun had established a measured and indicated resource of 2.85-million ounces of gold, grading 1.69 g/t, as well as inferred resources of 1.96-million ounces gold grading 1.70 g/t.

The company’s stocks closed at C$1.37 apiece on Tuesday, being the most traded stock on the TSX.

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