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Peyal Laceese, of the Chilcotin First Nation in Williams, Lake, B.C., dances during a protest against Taseko Mines Ltd.'s proposed Prosperity Mine, in Vancouver, Friday December 13, 2013. The proposed gold and copper mine 125 kilometres southwest of Williams Lake has undergone two environmental reviews and the company is now awaiting a federal government decision.DARRYL DYCK/The Canadian Press

Ottawa has turned down the proposed New Prosperity mine in the B.C. Interior, marking the second time the federal government has rejected the project and rebuffing a last-ditch lobbying effort from B.C. to see it go ahead.

In a statement Wednesday, federal Environment Minister Leona Aglukkaq said she had concluded the mine is likely to cause "significant adverse environmental effects that cannot be mitigated" and that the government had determined those effects "are not justified in the circumstances," thereby ruling out the project.

That could spell the death knell for the billion-dollar project, which Vancouver-based Taseko Mines has pursued for more than a decade and that the company redesigned after Ottawa turned down an earlier proposal on environmental grounds.

B.C.'s mines minister, Bill Bennett, called the decision disappointing but understandable.

"We are extremely disappointed," he said Wednesday. "This is a wonderful opportunity for the region, for the province, with literally hundreds of jobs at stake."

However, he said he accepts that the federal cabinet had little choice.

"I really do understand why federal politicians would feel obligated to follow the advice of their panel."

He said he still disagrees with the federal panel's conclusion that the mine posed a significant risk to the environment.

"Unfortunately, it has come down to the company having to challenge the recommendation of this federal panel."

Opponents heralded the decision.

"Awesome news, been long 24-year battle we won," Xeni Gwet'in Chief Roger William said in a posting on Facebook.

The Xeni Gwet'in are part of the Tsilhqot'in Nation, which has fought the project for years.

Much of the debate around the mine focused on the fate of Fish Lake, a picturesque spot that has been used in provincial tourism campaign images.

In January, 2010, the B.C. government approved a mine plan – known then as Prosperity – that would have drained Fish Lake and used it to store waste rock.

In November of that year, Ottawa ruled the project as it was then designed could not go ahead because of significant adverse environmental impacts including the loss of Fish Lake.

Taseko then reworked its design to relocate tailings facilities and retain Fish Lake and that revised project went to a federal review panel.

On Oct. 31 of this past year, the panel released a report that found "several significant adverse environmental effects" and said the company's plans to preserve the lake were not likely to succeed. That left the final decision up to Ottawa.

Taseko has argued that the panel erred in its report and misunderstood the mine design.

Taseko will consider its options in light of Ottawa's decision, company spokesman Brian Battison said on Wednesday.

"We fundamentally disagree with the decision made by the government of Canada," Mr. Battison said. "The project is just too important to the people of British Columbia, too important to the Cariboo – the logic and common sense supporting this project are overwhelming."

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