Serabi Gold (LON: SRB) (TSX: SBI) shares fell on Thursday after a Brazilian judge ruled that the company should not be granted future licenses or ownership until it was proved that its Coringa gold project would not harm indigenous tribes or consulted them.
The miner said that in its view, the ruling did not mean a suspension of the project, adding that it continued to implement the current project development plan in Coringa.
Serabi also stated that its advisers considered that the local court had not followed proper legal procedures and was in the process of submitting legal documents to reconsider the decision.
The company noted that Thursday's decision will not affect the current expected timetable for granting installation licenses to the project.
The gold miner said it was preparing a consultation and impact report for state environmental agencies on indigenous communities near Colinga.
In the past few years, mine permits in Brazil, especially in the waste storage sector, have become more difficult after two major tailings dam collapses in Brazilian iron mines.
Serabi's local subsidiary was sued by the federal prosecutor's office in 2017 to revoke an operating license granted by the state environmental agency. The lawsuit was dismissed in April 2018 and any right of appeal against the decision was denied in the ruling.
Federal prosecutors insisted on a new request last year, which ended on December 6th, when the appeal judge ruled that Serabi should not be granted further licenses or ownership in connection with its Coringa project.
Coringa, located in the north of the country 200km (125miles) from Serabi's Palito gold complex, is expected to double its gold production once it is up and running at full speed.
Palito's combined gold production is currently about 40000 ounces a year. The average output of the Coringa project is expected to be 38000 ounces when it goes into production.
The project is located in the Tapajos region of the Brazilian state of Para, which is reported to be the third largest impulse fund field in the world.
According to Serabi Gold, the area is a major and underdeveloped mineral province, as historical data show that artisanal miners known as "garimpeiros" have mined about 3000 million ounces of gold since the 1970s, mainly from alluvial and surface weathered bedrock deposits in the area.
Serabi's shares fell nearly 10 per cent in London on the news, last trading at 60.33. The company has a market capitalization of 45.77 million pounds.
