A controversial recommendation to reject a bid for uranium exploration in the Thelon River Basin will hurt the Northwest Territories, mining industry players say.

The Mackenzie Valley Environmental Impact Review Board recently recommended that Indian and Northern Affairs Minister Jim Prentice turn down an application by Ur Energy Inc. to explore for uranium about 300 kilometres east of Lutselk'e.

It said the potential for adverse cultural impacts was too significant to justify the project, located in the eastern Northwest Territories.

But, Gordon Clarke, of North Arrow Minerals, says not allowing the company to proceed could result in the industry going elsewhere.

"You need to find guidelines," he told CBC News. "Basically the federal government needs to go sort out its land claim issues so that everybody that comes to the table knows what the rules are."

Clarke suggests First Nations and environmentalists are using the board as a political tool to quash exploration activity.

Vancouver-based Strongbow Exploration says it's worried the board's decision will jeopardize its $3-million nickel exploration project in the same region.

Board fulfilling its mandate: CPAWS

Meanwhile, the N.W.T. branch of the Canadian Parks and Wilderness Society supports the board's decision, saying it's simply doing its job.

The board is supposed to consider the environmental impact of proposed developments while taking the concerns of aboriginal people and the general public into consideration, says Daryl Sexsmith who is with the organization.

"It appears that the review board has done that," he told CBC News.

Ur Energy Inc., which has headquarters in Colorado and Ontario, had wanted to drill up to 20 holes on its mineral lease.

It is up to Prentice to accept or reject the board's recommendation.

The decision marks the second time in the board's history that it has decided against a development proposal.