The approval means its joint-venture partner, PetroChina, has a month to buy Athabasca's 40 per cent stake in the project for $1.32 billion, giving Athabasca a much-needed cash infusion.
Early last year, PetroChina snapped up Athabasca's interest in another jointly-operated project, MacKay River, for $680 million, making it the first oilsands development to be fully controlled by a state-owned Chinese company.
Athabasca's stock traded as high as $8.75, about 19 per cent higher than its close Tuesday. The stock closed up 75 cents at $8.12, a gain of 10 per cent.
The Alberta energy regulator said late Tuesday it would allow Athabasca to go ahead with the Dover project, which will use steam to soften the bitumen and draw it to the surface.
However, its approval comes with 10 conditions, mostly having to do with controlling emissions and odours.
The nearby Fort McKay First Nation told public hearings earlier this year that it had concerns about the project's effects on its lands. It asked for a 20-kilometre buffer zone to be established around an area it relies on for hunting and trapping. The regulator denied that request.
In a statement, Fort McKay Chief Jim Boucher said the fight is "not over" and that his community is "gearing up to mount a rigorous opposition" to the project "until a satisfactory solution is found."
“What we are asking for is no different than what the Alberta government recently granted Fort McMurray, which is a buffer zone to separate industrial sites from areas of community activity and residential development,” said Boucher, adding it's "unacceptable" the project comes within 1,200 metres of a wildlife-rich area called Moose Lake.