Fish Lake, in B.C.'s southern Interior, is part of a watershed system at the centre of a mining project proposal. (Council of Canadians)

A federal review panel says a proposed open-pit gold and copper mine 125 kilometres southwest of Williams Lake, B.C., would pose significant threats to the environment.

The independent panel was appointed by federal Environment Minister Jim Prentice in January 2009 to study the Prosperity Gold-Copper Mine proposed by Vancouver-based Taseko Mines Ltd.

The $800-million project would have a 20-year life and include an onsite mill, access road, and 125-kilometre-long power transmission line.

Taseko has said the project would generate hundreds of direct and indirect jobs in B.C.'s Cariboo-Chilcotin region, but the panel ruled Friday that any such benefits would come at a cost.

"The panel concludes that the project would result in significant adverse environmental effects on fish and fish habitat, on navigation, on the current use of lands and resources for traditional purposes by First Nations and on cultural heritage, and on certain potential or established Aboriginal rights or title," it said in a report submitted to Prentice.

The panel said the project could also have significant effects on grizzly bears.

B.C. approved project

Last January, the B.C. government concluded that while the project would have negative environmental effects, the mine was justified.

Prentice will now take the report to the federal cabinet for a final decision.

Conservationists applauded the review panel's report.

"The federal government would be wise to heed the findings and shut down this mine proposal entirely or face huge resistance in B.C. and across Canada," said Maude Barlow, chair of the citizens' rights organization Council of Canadians.

But B.C.'s business community had a different take on the proposed mine.

Jock Finlayson, president of the B.C. Business Council, said that given the province's declining trade balance and weak forestry sector, it needs major new investments, such as the mine, which the company calls "the Prosperity project."

"Prosperity is one of the most significant new anchors of economic development available to the province at this time," Finlayson said. "Federal government approval of Prosperity will be a significant boost for B.C.'s future proposals."

First nations opposed

John Winter, president of the B.C. Chamber of Commerce, added that communities like Williams Lake and 100 Mile House, which are suffering the effects of the mountain pine beetle, are counting on the mine.

"These communities … need the economic injection that this mine will bring to the region," he said.

The 35-square-kilometre mine site would cover part of the Teztan Yeqok, or Fish Creek, watershed.

Opponents of the project describe the watershed as a pristine ecosystem, with exceptional views, clear lakes and abundant wildlife.

The mine would wipe out a section of the Teztan Yeqok and about 90,000 rainbow trout that First Nations like the Tsilhqot'in and Secwepemc rely on.

First Nations have long opposed the project.

A new lake would be created in its place, but the panel questioned the validity of that plan.

"It is unlikely that the plan would meet the requirements for the establishment of a self-sustaining rainbow trout population, or a replacement First Nation food fishery," the panel wrote.