A Brazilian federal court has revoked Canadian miner Belo Sun Mining's preliminary licence for the Volta Grande project in the Para state of Amazon, saying it failed to assess the impact of mining on local indigenous communities.
The $750m Volta Grande or Big Ben project located on the Xingu River in Amazon was planned to be an open pit operation.
With an estimated capacity to produce more than 300,000oz of gold a year during its ten-year lifetime, the Volta Grande project would have become the country's largest gold mine.
Judge Claudio Henrique de Pina was quoted by Reuters as saying that it was unquestionable that the mine would have a negative and irreversible impact on the quality of life and cultural heritage of the Paquiçamba, Arara da Volta Grande and Ituna / Itatá indigenous communities near the Xingu River.
Belo Sun said that it had hired Brandt Meio Ambiente in January to carry-out the study and is expecting to receive the approval from the Brazilian indigenous authority FUNAI to access the lands.
The study will be completed in five months.
However, environmental organisations fighting to protect the rainforest and rights of indigenous peoples say that the court decision to revoke the licence could be overturned, as Belo Sun has the right to appeal the decision.
The mine's proximity to the controversial Belo Monte Dam complex has raised further fears about its impact on the indigenous Indian communities.
Production at the Volta Grande project was scheduled to begin in 2016; its pre-feasibility study results were announced in May.
Belo Sun has already received the environmental impact assessment (EIA) consent from the Secretary of Environment for Pará State.