The federal government has turned down Taseko Mines' application for a gold mine near Williams Lake for a second time, citing "environmental effects that cannot be mitigated."

The decision comes after repeated efforts by the B.C. government to lobby for the project, and a court challenge by Taseko to the federal assessment that it said did not take into account the efforts made to protect the watershed from tailings from the open-pit copper and gold project.

Cariboo-Chilcotin MLA Donna Barnett said Thursday the project would have created 1,200 construction jobs and 500 permanent jobs that would help the region recover from the decline in the forest industry from pine beetle impact.

"I think the federal government has made a big mistake," Barnett said.

Federal Environment Minister Leona Aglukkaq  late Wednesday saying the decision was made "based on the best available scientific evidence while balancing economic and environmental considerations."

said the company accepted the federal government's 2010 invitation to reapply, and committed $300 million to redesign the project in response to the first rejection.

Hallbauer said Taseko will proceed with a judicial review applied for in December, arguing that the federal review panel used the wrong design for its updated waste rock storage facility. The panel concluded that the project was likely to cause significant adverse effects on fish and fish habitat, wetlands and aboriginal interest in the Fish Lake area.

B.C. Energy and Mines Minister Bill Bennett made two trips to Ottawa since the decision to assure federal officials that the tailings control proposed for New Prosperity Mine is similar to other mines operating in B.C.

B.C. enlisted John Meech, a mine engineering professor at the University of B.C., who said the compact soil liner proposed by Taseko has been proven effective at the company's nearby Gibraltar Mine and Mount Polley Mine, operated by Imperial Metals northeast of Williams Lake.

Bennett said Thursday the question of the tailings pond will likely be resolved in court, and the province has a proven ability to regulate mines.

"We know how to make sure that the design is such that it's not going to contaminate surrounding groundwater, or a lake that's two kilometres away," Bennett said.