Western Australia's environmental watchdog has knocked back a proposed uranium mine in the state's Goldfields, at the site of Australia's largest uranium deposit.

Key points: Uranium mine near WA's Wiluna would threaten subterranean fauna, EPA finds

Uranium mine near WA's Wiluna would threaten subterranean fauna, EPA finds But company proposing the mine, Cameco, says risks can be mitigated

But company proposing the mine, Cameco, says risks can be mitigated Landowner spokesman says area sacred, and mine should not go ahead

The Environmental Protection Authority (EPA) said Cameco Australia's Yeelirrie Uranium project could not meet one of the nine key environmental factors.

The Canadian company sought to mine up to 7,500 tonnes of uranium oxide concentrate per year from the Yeelirrie deposit, about 420 kilometres north of Kalgoorlie-Boulder and 70km south-west of Wiluna.

The facility was to include two open pits, processing facilities, roads, accommodation, stockpile and laydown areas.

It would have transported the uranium oxide by road for export through the Port of Adelaide.

The authority's chairman, Dr Tom Hatton, said the assessment process was extensive and involved public consultation and a site visit.

EPA Chairman Tom Hatton says Cameco had put forward well considered management strategies for the site but there was too much risk to the area's subterranean fauna.

"The project happens to be located in a particular place that is very rich in underground, stygofauna we call it, the animals that live in the groundwater," he said.

"And in the case of three of those species in particular, the risk to their viability as a species was just too great for us to recommend the project go ahead."

Environmental concerns can be 'managed'

In a statement, Cameco said it believed it could overcome the EPA's concerns.

"We believe that with further sampling and research, subterranean fauna can be appropriately managed at Yeelirrie and we will work with government agencies and stakeholders to find a way forward," Cameco Australia managing director Brian Reilly said.

"Cameco believes the long-term fundamentals of the nuclear industry are strong and we are taking prudent steps to prepare our uranium projects for improved market conditions."

Traditional owner Kado Muir in a previous march against uranium mining at Yeelirrie. ( Supplied: Conservation Council of WA )

The proposal had attracted protests, including from traditional owner and Chair of WA nuclear free alliance Kado Muir, who argued there was no broad community support for uranium mining in Western Australia.

Mr Muir said the decision was "great news" for local Aboriginal groups fighting against mining at Yeelirrie for 46 years.

"The message that we have is by standing strong for country, we're able to show that mining industry doesn't always win and that Aboriginal people who stand up for their country can succeed, as well as working with the environmental movement on protecting important species," he said.

Mr Muir said Cameco's argument that it could manage the species was not possible.

"If you destroy a habitat, and that's where this entire species has evolved and continued to live in isolated pockets beneath the earth, there's no way in the world that you can manage and take them elsewhere and introduce them elsewhere," he said.

Leader of the Koara people, Richard Evans, said he was ecstatic about the decision because the area was a sacred site.

"The place is not a go-zone for anybody and yet foreign people going in there," he said.

"They're wanting to mine it but we're very happy that they're not going to mine it now."

The EPA put the proposal up for public comment for 12 weeks, attracting 169 responses and a further 2,946 pro forma submissions.

A final decision on the proposal rests with the Environment Minister.

The EPA gave a proposal for Western Australia's first uranium mine the green light in 2012, the first to be approved since the lifting of a state ban on uranium mining in 2008.

But the project, put forward by South Australian mining company Toro Energy, has stalled on the back of falling demand and global prices for the commodity.