Goldcorp Canada's No 2 gold miner, said environmental permit approval for its El Morro copper-gold project was suspended by the Supreme Court of Chile.
Sociedad Contractual Minera El Morro, which is 70% owned by Goldcorp and rest by New Gold, suspended all field work at the project, the companies said.
The permit was cancelled on Friday on the grounds that the environmental agency had not adequately consulted nor compensated the indigenous people.
Miners in Chile have been hit by protests by indigenous communities demanding stricter environmental protections and wider distribution of the benefits of a long mining boom.
Goldcorp had approached the Supreme Court against the striking down of its permit by a lower court in February. The approval for the permit was issued on March 14, 2011.
El Morro, which holds reserves of 6.1-million pounds of copper and 8.4-million ounces of gold, is expected to cost $3.9-billion to develop.
The companies will meet with environmental officials to confirm the scope of permitted activities pending compliance with the court's decision.
The company's shares, which have fallen over 5% since it reported its a lower profit last week, closed at C$38.38 on Friday on the TSX.