A Romanian village where a Canadian firm is planning a controversial open-cast goldmine has been declared a site of historical interest, granting it protection from mining activity.

“Rosia Montana village has been designated a place of historic site of national interest which has a radius of two kilometres [just over a mile],” said Adrian Balteanu, the Romanian culture ministry’s adviser on cultural heritage.

“At such a site, all mining activity is prohibited,” he said on Thursday.

The step is a new blow for Canada’s Gabriel Resources which has been trying for 15 years to get an environment ministry permit to extract 300 tonnes of gold from the picturesque village in a project it claims would create hundreds of jobs and boost Romania’s economy.

But experts say the project, which would use thousands of tonnes of cyanide, would pose a pollution risk, level four mountains in a historic area of western Transylvania and would also damage Roman-era mining shafts.

The plans have sparked widespread anger, bringing tens of thousands of people on to the streets in a scale of protest not seen in Romania since the 1990s.

Activists hailed the decision to declare the village a protected area.

“The culture ministry has finally decided to protect our cultural heritage,” said history professor Ioan Piso, one of the main opponents of the project.

“If this mine opens, Romania would lose both a historic monument unique for the gold it contains while the site would have turned into a moonscape,” he said.

“This is an important step, we must now make sure this classification is respected,” said Eugen David, head of the Alburnus Maior Association which has been fighting the project for years.

Gabriel Resources, which holds an 80% stake in the Rosia Montana Gold Corporation, declined to comment on the move.

Last July, the company filed a request for international arbitration to obtain compensation from Bucharest over the delays to the project.

Initially in favour of the mine, Romania’s former leftwing government abruptly changed its position in 2013 following a wave of unprecedented protest across the country.