The Romanian Environment Ministry announced on Thursday that it had suspended a project by a Canadian company to start Europe's biggest open-cast gold mine in the Carpathians by using cyanide to extract gold.
Officials said the plan lacked the necessary environmental documentation.
"The moment the company presents a legal planning permission, it can go ahead", Environment Minister Attila Korodi told a news conference.
The project of Toronto-based Gabriel Resources in developing its 10.6 million ounce Rosia Montana reserves is under fire from ecologists, rights groups and historians, who fear damage to nearby archaeological sites in central Transylvania.
Gabriel Resources CEO, Alan R. Hill, said the company was disappointed "by the actions of the Ministry of Environment, which is taking upon itself the functions of a court of law - interpreting and enforcing the provisions of a law that does not have any application to the review process for the Rosia Montana exploration".
The project has been challenged by environmental groups and the Soros Foundation's Open Society Institute, and there is an ongoing legal dispute.
Gabriel Resources says it will use the latest in environmentally-friendly technology, and argues the scheme will benefit Romania by bringing the state $880 million in profits and tax revenues.
It has spent millions of dollars so far on relocating people away from the impoverished region where unemployment runs at 60 per cent.
The company said the mining project would create 2,000 jobs.
The Canadian mining company had previously criticised NGOs and even Hungary for trying to block the project.
Budapest has attacked the gold-mining project, arguing – on the basis of two earlier accidents this decade – that the use of cyanide is environmentally hazardous, and may trigger cross-border pollution of rivers.
A bill to ban the use of cyanide in mining is being discussed by the Romanian parliament. The initiative comes from a senator who represents the ethnic Hungarian party, UDMR.