UPDATE 3-Canada blocks development of Taseko mining project

* Says proposed mine would have damaged environment

* Taseko shares drop 25 percent in post-market trade
(Adds comment from First nations group)

OTTAWA, Nov 2 (BestGrowthStock) – The government of Canada has
decided to block the development of Taseko Mines’ (TKO.TO: )
controversial copper-gold mine in British Columbia, Environment
Minister Jim Prentice said on Tuesday.

Ottawa’s decision — based on “concerns about the
significant adverse environmental effects” — overrules British
Columbia’s provincial government, which had granted permission
for the Prosperity project to go ahead.

The news hammered shares of Taseko Mines, which fell 25
percent to $4.89 in after-market trade in the United States.

Steve Parsons, an analyst with Wellington West, said
Ottawa’s ruling is a major blow to Taseko that potentially
diminishes the value of the company.

“I can tell you what’s left in the company and the value of
that we estimate is C$4.85 a share … It (Taseko) could trade
at a slight discount to that,” said Parsons.

The company could submit a revised proposal, said Prentice,
adding that he agreed with a federal review panel’s report
which warned that the proposed project would destroy a nearby
lake and the local ecosystem.

“(The report) was scathing in its comments about the impact
on the environment. It was, I would say, probably the most
condemning report that I’ve seen,” Prentice told a hastily
convened news conference in Ottawa.

Taseko said it plans to fully evaluate the federal
government’s decision on the project.

“We are extremely disappointed by this decision,” Chief
Executive Russell Hallbauer said in a statement.

“Our next steps will be discussions with both the federal
and provincial governments to look at options so that this
mining project can move forward and meet the criteria that the
federal government deem appropriate.”

Local aboriginal groups have opposed the mine, saying it
would infringe on their rights.

“We hope today’s decision will demonstrate the need to find
a way forward for industry and governments to work with First
Nations from the outset to identify and develop projects that
are environmentally and culturally acceptable,” said chief
Marilyn Baptiste of the Xeni Gwet’in First Nation, in a

The project, a conventional open-pit mine located about 125
km (80 miles) southwest of Williams Lake, British Columbia, was
expected to have a 20-year operational life with a production
capacity of 70,000 tonnes of mineral ore per day.

The provincial government gave its approval to the project
in January, saying the mine would not have a significant
adverse environment impact apart from the loss of a lake, which
would be replaced with a newly built lake.

But native opponents said Teztan Biny, or Fish Lake, was
critical to their culture, and federal fisheries officials had
warned the project’s backers years ago to find an alternative
way to dispose of the mine’s tailings.

Provincial officials had also praised the potential
economic impact of opening a new mine in a region hit hard by a
severe downturn in the forest industry.

Prentice also said Ottawa had approved Thompson Creek’s
(TCM.TO: ) Mt. Milligan copper-gold project in central British
Columbia. The molybdenum miner acquired the project when it
bought exploration company Terrane Metals earlier this year.
(Reporting by David Ljunggren, Euan Rocha and Allan Dowd;
editing by Rob Wilson and Jim Marshall)

UPDATE 3-Canada blocks development of Taseko mining project