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The offices of Taseko Mines in Vancouver in November, 2010.Darryl Dyck/The Canadian Press

With its flagship project rejected once more, Taseko Mines Ltd. is refusing to throw in the towel, saying it will not give up its bid for a federal judicial review of what the company calls a flawed environmental report.

"After a second lengthy and costly federal review, the federal government has once again stood in the way of the development of an important project to B.C.," Taseko president Russ Hallbauer said in a statement on Thursday, adding the company would proceed with an application for a judicial review it launched in December.

As Taseko regrouped, so did the backers and opponents of its proposed New Prosperity mine, a $1-billion open-pit gold and copper project some considered an economic lifeline for a struggling region of the province.

Provincial Liberal politicians were sharply critical of Ottawa's decision to reject the mine.

"I think the federal government has made a big mistake," said Donna Barnett, the MLA for Cariboo-Chilcotin, where the mine would have been located.

Ms. Barnett told reporters in Victoria the decision is devastating for her community, which is already suffering from a mountain pine beetle outbreak that has ravaged the forestry industry.

B.C. Mines Minister Bill Bennett, who lobbied Ottawa on behalf of the mine, said he has not given up on the project, and suggested the federal government dodged a "tough decision" that would have benefited the province.

And veteran Conservative MP Dick Harris said Ottawa's decision had shattered the hopes and dreams of his constituents.

"My immediate thought was the people of the Cariboo-Tsilhqot'in area," Mr. Harris said.

"Jobs are pretty scarce there and they've lost a few thousand people to Alberta who want to come home, and the Prosperity mine was going to be a great catalyst for getting them back and boosting the local economy."

Conservative MP for Kamloops-Thompson-Cariboo riding Cathy McLeod told Canadian Press the decision is a "huge blow" for the region.

But opponents welcomed the decision, saying two detailed reviews concluded the mine could not be built without extensive damage to the environment.

"We call on the province and Taseko to acknowledge that this is the end, to pack up their tents and go home," Xeni Gwet'in chief Roger William said on Thursday in a statement. "The company has wasted too many resources and time on a project that was first rejected in 1995. It is time to look elsewhere and leave us in peace."

The Xeni Gwet'in is one of six native communities represented by the Tsilhqot'in National Government, which fought the proposal while pursuing a land claim that has reached the Supreme Court of Canada. A decision is expected in that case later this year.

The federal government said on Wednesday that the New Prosperity project could not proceed after federal Environment Minister Leona Aglukkaq decided it would cause significant adverse environmental effects that could not be mitigated.

In 2010, the province approved the project – then known as the Prosperity Mine – concluding the damage to fish and fish habitat from the plan to drain Fish Lake was justified in the circumstances.

But in November, 2010, after a federal environment review found the adverse effects – including the loss of Fish Lake – would be significant, then-environment minister Jim Prentice said it could not proceed as designed.

Taseko came up with a new plan that would cost $300-million more to build, take up about 20-per-cent less space and retain Fish Lake, which the Tsilhqot'in consider spiritually and culturally significant.

But a second environmental review panel, which released its report on Oct. 31, concluded the plan to protect water quality in Fish Lake was unlikely to succeed in the long term.

Taseko has challenged those conclusions, and in December applied for a federal judicial review. That process, which likely would have been sidelined if Ottawa had allowed New Prosperity to move to the next stage of permitting, remains under way.

Jason MacDonald, a spokesman for the Prime Minister, said the government understands the disappointment. "But we're committed to making project decisions based on the best available scientific evidence, while balancing economic and environmental considerations," he said. "We'll continue to make responsible resource development a priority and invite the submission of another proposal that addresses the government's concerns."

With a report from Gloria Galloway in Ottawa

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