UPDATE 1-Canada to review Taseko's new Prosperity mining plan

Mon Nov 7, 2011 9:56pm EST

* Project to undergo assessment by a federal review panel

* Review to take up to 12 months to complete

* Opponents decry gov't move to review revised mine plan

By Euan Rocha

Nov 7 (Reuters) - Canadian federal regulators on Monday ruled that Taseko Mines' revised mine plan for its Prosperity copper-gold project in British Columbia will be studied by a federal review panel.

Last year, Ottawa overruled British Columbia's provincial government and blocked the development of the controversial project, due to "concerns about the significant adverse environmental effects."

This year, Vancouver-based Taseko submitted a revised project proposal to the Canadian Environmental Assessment Agency (CEAA) that it says addresses the concerns earlier raised by regulators.

However, aboriginal groups and other opponents of the project argue that the revised proposal, if approved, would still harm the rights of indigenous groups in the area and cause damage to Fish Lake, a trout-bearing lake located beside the proposed mine.

CEAA said the government has instructed it to design a process that will thoroughly assess whether the proposal addresses the environmental effects outlined in the environmental assessment of the original Prosperity project.

The agency also said it will use information obtained during the previous assessment to the extent possible, in order to ensure a timely decision.

The government has given the agency a 12-month period in which to complete the review of the revised proposal.

Taseko argues that the approval of the project will lead to the creation of thousands of jobs and generate billions of dollars in taxes for Canada.

The Tsilhqot'in National Government, one of the groups that have most vocally opposed the project, expressed disappointment at the government's move to review the revised proposal.

"The Tsilhqot'in people are angry and frustrated that they will be dragged through another costly, foolish and divisive process when the facts show this resubmission is just a repackaged version of a previous option that has already been ruled out as worse than the original plan," said the group in a statement.

The group, however, commended the government's decision to review the project via a public review process and it called on CEAA to reappoint the same review panel members that studied the company's original proposal.

A representative of Taseko was not immediately available to comment on the CEAA announcement.

Shares of Taseko, which were trading in the C$6 to C$7 range before the federal government ruled against Taseko's original Prosperity mine proposal, have fallen sharply and not recovered ground since then.

Taseko's Canadian-listed shares ended the day at C$3.73 on Monday on the Toronto Stock Exchange, while its U.S.-listed shares ended the day at $3.66.

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