Canada blocks development of Taseko mining project

Tue Nov 2, 2010 7:53pm EDT
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OTTAWA (Reuters) - The government of Canada has decided to block the development of Taseko Mines' 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.   Continued...