It was subsequently allowed to resume production of minced meat, sausages and ready-to-eat meals. The firm is not allowed to stock frozen meats.
French sanitary inspectors said the contraband lamb, found in February before the sanitary ban was imposed, was furnished by Dutch supplier Draap Trading, which has also been implicated in the scandal.
The lamb was made of meat scraped off the bone – a process banned for meat of European origin since the mad cow disease scandal.
"They don't have the right to import meat from Europe processed under those conditions," said Antoine Leroy, the prosecutor of the southern Carcassone region, where the Spanghero factory is located.
French junior food minister Guillaume Garot said the company had been ordered to withdraw all products made with the meat, including sausages.
The scandal of horsemeat being passed off as beef has engulfed a string of European countries, with millions of ready meals being pulled from supermarket shelves.
The row has embroiled major international corporations including Swiss food giant Nestlé, which recently recalled lasagnes destined for restaurants in Portugal.