Project

The start of construction for the Volta Grande Project depends on lifting the construction license suspension and, relatedly, on FUNAI's approval of the PBAi ( Basic Environmental Plan- Indigenous Component) work plan. Since the construction license was suspended by the Brazilian courts in 2017, the Company has been working diligently to have the suspension lifted. This has proved to be and continues to be a protracted, complex, and litigious process involving the courts, multiple state and federal agencies, and other stakeholders. While the Company cannot control the timing of ongoing reviews of its construction license by various agencies, it continues to work with its advisors to have these reviews concluded as soon as possible and remains confident that the suspension will be lifted. The Company expects to start preconstruction activities at the site as soon as the suspension is lifted, and all the Governmental agencies have provided Belo Sun with the authority to proceed. If Belo Sun is allowed to proceed and the Company has the required capital funding in place, it expects to initiate activities within a matter of months. Construction is expected to take 24 to 36 months, depending on the availability of critical path equipment, contractors, and the completion of the detailed engineering.

The estimated lifespan of the Volta Grande Project is a minimum of 17.2 years.

The Project will be powered through a connection to the Xingu Altamira Equatorial substation.

The project will foster local development by prioritizing local suppliers and generating local employment opportunities. It includes vocational training programs in partnership with local entities, providing education and health facilities for local communities, and employing professionals from these areas. Additionally, Belo Sun's consistent engagement with affected communities, including consultation sessions and the establishment of information centers, reflects its commitment to inclusive growth.

The workforce will primarily be from the region, with lodgings built near the site for any workers from outside. These structures will later serve as offices or be dismantled.

The Company takes its responsibility for environmental stewardship seriously and is designing and engineering the mine to minimize the environmental impact of the operation.

All water used at the mine will be sourced through rainwater capture and will be permanently recycled onsite between the tailing facility and the processing plant. Consequently, the mine will not take water from the Xingu River or other bodies of water in the region and will not affect the level, quality or flow of water in the river.

The tailings dam will be an engineered facility using a downstream design, the safest design available in the industry. The facility will be constructed on highly stable solid rock in a natural valley. The tailings dam will be built to meet the highest international standards and best practices in construction, monitoring, maintenance, risk management, and mitigation.

The Company is a designee for certification under the International Cyanide Management Code, a globally recognized certification program developed to enhance the protection of human health and the environment in the production, transportation and use of cyanide in the gold and silver mining industries.

The Company is committed to working with local governments and other stakeholders on helping to mitigate and reverse the environmental damage caused by illegal mining and illegal logging in the region.

Moreover, The Company is considering methods for reducing Volta Grande‘s carbon emissions footprint and minimizing noise and dust emissions. Belo Sun has been evaluating near-pit crushing and conveyor transport of mine waste to reduce truck requirements, reduce costs and minimize carbon footprint. For mine truck haulage, the Company is evaluating the use of alternative fuels to reduce the carbon footprint and lower operating costs. Incorporating high-pressure grinding rolls and secondary crushing rather than semi-autogenous grinding (“SAG”) milling is being considered to lower power consumption and reduce operating costs and the Company’s carbon footprint.

Belo Sun's Closure Plan, developed in collaboration with Brandt, outlines a comprehensive strategy for restoring the mining site post-project. The plan, complying with legal requirements, focuses on safely closing the mine, restoring environmentally degraded areas, and engaging with local communities to minimize residual liabilities. Key objectives include selecting future site uses through participative processes, ensuring environmental recovery, and integrating socio-economic aspects. The plan incorporates various programs for waste management, restoration and reforestation, aimed at returning the site to agricultural use. The detailed actions, timelines, and responsible parties for each program are elaborated in Belo Sun's Closure Plan documentation.

The Volta Grande Project is designed to have minimal impact on the Xingu River's water levels and quality. Belo Sun has replaced the initial plan of using river water with a system that utilizes rainwater collected in containment lakes. This water is then used and recycled within the operational processes, negating the need for river water extraction. This approach aligns with the company's commitment to sustainable water management and environmental protection, ensuring the preservation of the Xingu River.

The tailings dam of the Volta Grande Project is constructed with a focus on stability and safety. It has a capacity of 35.43 million cubic meters, equivalent to one-third of the Fundão dam in Mariana (MG). The dam is located in a geologically stable area, featuring a downstream raising system, and is situated in an area of extremely solid rock within a natural valley. This design ensures greater stability and safety throughout the lifespan of the project and beyond. The company adheres to national and international safety standards and best practices for tailings dams. It includes advanced safety features in the design and engages in continuous monitoring and maintenance, aligning with the best national and international practices in dam safety.

Belo Sun plans to monitor and report its social and environmental impact through a robust Environmental Management System (EMS). Key components of the EMS will include environmental policy formulation, impact analysis, action implementation and operation, monitoring and corrective action, managerial review, and continual improvement. The EMS will be in place during both the construction and operational phases of the project, ensuring comprehensive environmental and social impact monitoring and reporting.

The Volta Grande Project is expected to have a significant economic impact both locally and nationally. Since its establishment in the area, the company has been making substantial local purchases, averaging $60,000 annually. The Project will foster local development by prioritizing local suppliers and generating employment opportunities. It includes vocational training programs in partnership with local entities, providing education and health facilities for local communities, and employing professionals from these areas. Additionally, Belo Sun's consistent engagement with affected communities, including consultation sessions and the establishment of information centers, reflects its commitment to inclusive growth. The Project is also projected to substantially boost the GDP of Senador José Porfírio and increase tax revenues, benefiting both the local and national economy.

The Volta Grande Project is poised to create a substantial number of jobs, with an estimated 10,000 direct and indirect positions available during the installation phase. During the operational phase, the project will generate approximately 600 direct jobs and an additional 1,500 indirect jobs. This influx of employment opportunities will significantly impact the local employment rate. In addition to job creation, the Project is committed to enhancing workforce skills through various training programs, contributing to the overall skill development in the region.

Belo Sun is confident in Brazil’s economic future and wants to be a part of the country’s evolution as a major player in the global mining industry. The Company believes the federal and state governments recognize that as a $400 million project, VGP, in addition to the operation's direct economic, financial and employment benefits, will support social development and economic diversification of the central-western region of the state of Pará.

Belo Sun has professional and transparent relationships with federal and state Ministries and agencies involved in the regulation of the Project and enjoys positive and constructive relationships with the host government, local communities, and indigenous neighbours, all of whom support the development of VGP.

Currently, the Company is focused on two critical issues that must be resolved to have the suspension lifted.

The first of these stems from the TRF1 Court’s decision in September 2023 that going forward, the Federal Brazilian Institute of the Environment (“IBAMA”), not SEMAS (Secretaria de Estado de Meio Ambiente e Sustentabilidade (Secretariat of Environment and Sustainability of the State of Pará, Brazil will be the competent authority for the environmental permitting process of VGP.

While the TRF1 ruling affirmed the validity of VGP’s SEMAS-issued Preliminary License (LP) and construction license permits, the Court directed IBAMA to conduct a review of both permits. The Company has made initial contact with regional departments of IBAMA and has requested formal meetings with IBAMA to start the review process. Given regulatory and other changes since the grant of the construction license in 2017, the Company anticipates that IBAMA will do a complete review of the LP and construction licenses obtained by the Company. It may be possible that new requirements and studies could be added to the 79 initial conditions that were attached to the original grant of the construction license in 2017. There can be no assurance of a time frame for IBAMA to initiate and complete their review of the LP and construction license.

The second issue is FUNAI’s review of the Indigenous component (IC) of the Company’s basic environment plan (PBA). The Company filed its PBA-I with FUNAI at the end of March 2023 and was hopeful that FUNAI would complete its review in a timely manner. However, the Company was subsequently advised by FUNAI in September 2023 that they are currently reviewing the status of an Indigenous Community application to establish an Indigenous land in an area called Sao Francisco, which is located near the Volta Grande Project and within 10 km of the area of the project. This could delay how quickly the PBA process advances.

In addition, because IBAMA has been designated as the competent regulatory authority for VGP going forward, IBAMA, not SEMAS, will now have to determine whether the Company has met the conditions set out in its ECI (indigenous study) as directed by the TRF1 court.

While the Company is trying to meet with IBAMA and FUNAI to advance these reviews, there can be no assurance of when these reviews will be concluded, no assurance that either or both will result in an outcome that allows for the lifting of the construction license suspension nor is it assured that a positive outcome would not give rise to further legal challenges by opponents of the project.

As it works through these reviews, the Company will continue to ensure that it has the resources in place to defend its position, diligently work through the process, press the case for the compelling economic, social and employment benefits of the project and maintain the broad and deep community support the project enjoys.