* Crucitas gold mine project stalled in court
* Company says Costa Rica discouraging investment
By Alex Leff
SAN JOSE, Costa Rica, Nov 11 Canada's Infinito Gold Ltd said on Thursday its Crucitas gold mine has been set back 23 months by legal challenges in Costa Rica and is now aiming for production in the first quarter of 2012.
Costa Rica's Supreme Court ruled in April the gold mine project could move forward, but work was immediately stalled by an appeal lodged by environmental groups who claim the open-pit mine would damage the delicate ecosystem near the site.
A tribunal will decide on Dec. 6 whether to lift the measures that have closed down the mine, which has indicated resource of 1.2 million ounces.
"(If the court allows), the next day we will be starting construction. In the best case scenario, our first ounce will be processed in February or March of 2012," Crucitas spokesman Juan Carlos Obando said.
"It's going to take a year to 14 months to finish the construction process," he said.
Infinito IG.V has already sunk $127 million into the project, largely on exploration and infrastructure including improved electricity and roads for the region, he said.
The company's debt holders have stood by the project in the face of default in the hope the legal issues will be resolved.
Gold mines are increasingly attractive to investors as prices soar to record highs. Gold prices edged up on physical demand on Thursday to $1,407.34 an ounce, after hitting an all-time high of $1,424.10 on Tuesday.
"In Canada, (the debt holders) are convinced that this discussion over Crucitas will allow the company to develop a green model for mining," Obando said.
But further court appeals of the decision in December could drag the legal hurdles out for months, he told reporters.
Costa Rica prides itself on its lush forests that attract tourists, and Congress approved a bill this week, which President Laura Chinchilla is expected to sign into law, to prohibit all new open-pit metallic mines in the country.
The law is not retroactive and would not apply to Crucitas but Obando said it would negatively affect Infinito's future expansion in Costa Rica. Infinito also has concessions in neighboring Nicaragua. (Editing by Mica Rosenberg; Editing by David Gregorio)