Chile's environmental regulator has blocked Canada-based Barrick Gold Corporation's multi-billion dollar mining project and imposed its maximum fine, citing "serious" environmental violations.

After a four-month investigation, Chile's Environmental Superintendent said on Friday that all construction work on the Pascua-Lama mine must stop until Barrick builds the systems it promised to put in place for containing contaminated water.

Chile's government also imposed a fine of eight billion pesos ($16.36m), the highest possible under Chilean law.

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 regulator noted that while Barrick itself reported the failures, a separate and intensive investigation by the agency's own inspectors found that the company wasn't telling the full truth.

The Pascua-Lama gold mine straddles the Andean border with Argentina.

People from the Diaguita indigenous group whose community lives downstream from the mine allege that their water supply and glaciers have been contaminated by the construction work.

The Diaguita people who live in small towns along rivers that flow down from the mine were feeling a sense of victory on Friday.

"Even though we seem so small, we could beat Barrick, which is a giant," said one community member Osvaldina Guzman Villegas.

The sanctions don't mean the end of the Pascua-Lama mining project.

Barrick has committed to 30 million US dollars 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.

Source: Al Jazeera and agencies