Costa Rica court rules to reopen gold mine project

SAN JOSE, April 16 (Reuters) - The Costa Rican Supreme Court ruled on Friday that a small Canadian mining company can proceed with its open-pit gold mine, striking down complaints from environmental groups that the project was destroying virgin forest.

The ruling reversed an October 2008 order from the high court to halt construction on the Crucitas mine near the border with Nicaragua and mine owner Infinito Gold Ltd (IG.V: Quote) claimed the ruling as a victory.

Environmentalists had complained that the miner was breaking the law by cutting down trees in forests that are home to such wildlife as the endangered great green macaw and other precious birds.

"After reviewing the official studies we did not find that this mining project will negatively affect the environment. So the project will go ahead," Vanlly Cantillo, a court spokeswoman said.

Crucitas will be Costa Rica's first major gold mine with a capacity to produce 85,000 ounces of gold annually. An investment of up to $66 million is required to start the mine with an indicated resource of 1.2 million ounces of gold, according to the company's website.

Infinito Gold's President John Morgan lauded the court's decision and said the company was committed to moving forward with the project.

"Now we must show Costa Rica that Crucitas will be a model of sustainable mining," Morgan said in a statement.

With approximately half of its surface cloaked in lush forest, Costa Rica is a world famous eco-travel paradise.

President Oscar Arias reversed a moratorium on open pit mining after taking office and declared the Crucitas project of "national interest," angering environmentalists.

His government said in a statement on Friday it would stand by the court's decision to allow the mine to reopen.

Laura Chinchilla, the country's president-elect who will take office in May, is a protege of Arias and is expected to follow closely the policies of his government. (Reporting by Alex Leff; Editing by Richard Chang)