VALLENAR, Chile (AP) -- Chile's environmental regulator blocked Barrick Gold's (NYSE: ABX ) $8.5 billion Pascua-Lama project on Friday and imposed its maximum fine on the world's largest gold miner, citing "very serious" violations of its environmental permit as well as a failure by the company to accurately describe what it had done wrong.
After a four-month investigation, Chile's environmental superintendent said all construction work on Pascua-Lama must stop until Barrick builds the systems it promised to put in place beforehand for containing contaminated water.
The fines add up to 8 billion pesos -- about $16 million -- the highest possible under Chilean law.
The regulator noted that while Barrick itself reported failures, a separate and intensive investigation by the agency's own inspectors found that the company wasn't telling the full truth.
"We found that the acts described weren't correct, truthful, or provable. And there were other failures of Pascua Lama's environmental permit as well," said the superintendent, Juan Carlos Monckeberg.
Barrick did not immediately respond to messages The Associated Press left with the binational mine's spokesmen in Chile and Argentina.
Monckeberg described the Barrick sanctions as the first since his agency was given enforcement power in December, and said they were based on a thorough investigation by agency inspectors as well as government experts in mining, farming, and water.
"This is what we have always been hoping for," said Maglene Camillay, a Diaguita Indian leader whose community downstream from the mine alleges its river has been contaminated by the construction work. "This makes us very content. Finally the state is showing its power. They never investigated this and now they're doing their job. Our valley is fragile but we're strong. The strength we get from the earth, the water and the mountains.'"
The violations include failing to build structures to contain contaminated water before mine construction began, failing to keep the agency informed about problems and changes, and failing to provide data sought by inspectors.
The sanctions don't mean the end of Pascua-Lama, however.
Barrick has committed to $30 million in remedial work, and the agency urged the company to do this quickly, starting with temporary measures to contain any runoff while it builds more permanent structures.
Still, the Diaguita Indians, who live in small towns along rivers that flow down from the mine through an otherwise completely barren Atacama Desert, were feeling powerful on Friday.
"Even though we seem so small, we could beat Barrick, which is a giant," said Osvaldina Guzman Villegas, who lives in Diaguita community of Chipasse Tamaricunga. "And with the help of our ancestors, we're going to beat them."