The Mexican government has revoked a permit granted to gold miner New Gold Inc. to operate at the Cerro San Pedro site in central Mexico.

Three-month stock chart for New Gold on the TSX. (CBC)

On Wednesday, a Mexican court upheld a decision that nullified the mine's environmental impact statement issued in 2006. As a result of that ruling, the Mexican environmental enforcement agency issued an order requiring the company to suspend mining operations immediately.

The TSX-listed miner began operations on the site in June 2006. But the project dates back to 1999, when the government gave conditional approval to develop 374 hectares to exploit gold and silver deposits in an open pit mine.

Local residents have argued the mine would affect the aquifer of San Luis Potosi and damage the water table.

Earlier this year, several Canadian MPs voiced their opposition to the project and urged a halt to activity at the site.

"We call upon the relevant authorities to enforce this ruling and put an immediate and final halt to New Gold's operations at the Cerro de San Pedro," a letter signed by numerous parliamentarians including NDP Leader Jack Layton reads.

The Vancouver-based company said it was co-operating with Mexican officials while pursuing legal appeals in the case.

"Although mining has been suspended, gold recovery operations of existing inventory on the leach pads are continuing," New Gold noted in a news release.

The company said its Cerro San Pedro mine has been operating in full compliance with required permits and authorizations and has had an "enviable record of meeting its environmental and social responsibilities" and has filed a new environmental impact statement with Mexican authorities.

The intermediate gold miner also operates the Mesquite Mine in the United States and Peak Mines in Australia and forecasts production of between 270,000 and 300,000 ounces of gold in 2009.

The company currents extracts 100,000 ounces a year from the Cerro San Pedro site, but plans to mine 1,000,000 ounces annually across all of its sites by 2012.

With files from The Canadian Press