GBM Gold (ASX:GBM) has lashed out at the Victorian government after it pulled three mining licences, unconvinced the company could fund remediation work.

Yesterday the mining company told its shareholders that MIN5344, MIN5364 and MIN4878 licenses near Bendigo had been yanked, as regulator Earth Resources said it had no confidence in the company’s ability to raise cash.

However, GBM had only recently launched a fresh $6.7m underwritten rights issue — but this was after a previous underwriter had pulled out of a rights issue arrangement with the company.

With the company’s shares in suspension since October, the regulator said GBM subsidiary Kralcopic had not provided enough assurances that it would have the cash to undertake key remediation work.

“I have concluded that Kralcopic is not likely to be able to finance its operations and meet its obligations at its Bendigo sites,” executive director at Earth Resources, Anthony Hurst, said in a statement.

“Kralcopic was given every opportunity to demonstrate it has the finance, but the company has been unable to provide the necessary detail.”

The company is still on the hook for rehabilitation work at its Woodvale and Kangaroo Flat sites, while GBM also said a 60MW solar project wasn’t in doubt — but it was considering appealing the decision, and it’s fair to say the company wasn’t pleased with it.

“GBM Gold considers that this sets a bad precedent and sends a negative signal to the market on the risk for any junior exploration company contemplating gold mining in Victoria,” it said in a statement to shareholders.

Earth Resources, responding to the GBM criticism put to it by Stockhead, said it didn’t accept the charge that the decision to pull GBM’s licences would dissuade other junior gold players from Victoria.

“The prospects for junior exploration companies in Victoria are positive,” Hurst said.

“There’s renewed interest in gold throughout the state due to its high price, the success at Fosterville and the ground release scheduled for later this year in north-central Victoria.

“In Victoria we also have the Target Minerals Exploration Grants in place, which is particularly useful to junior exploration companies.”

The Victorian government has been somewhat under fire from the gold sector this year, with a 2.75 per cent royalty on gold production announced during the government’s budget drawing ire from the sector.

The industry sounded the alarm on projects such as Castlemaine Goldfields’ mine in Ballarat, which is a marginal operation.

“We can’t run it any slower otherwise we would fold – I call it treading water,” the mine’s general manager, Stephen Jeffers, was quoted by local paper The Courier as saying.

“It doesn’t take much of a wave to swamp us, we’re not that robust in terms of standing shocks or if something goes wrong with the ore body – then we’re in strife.”

The Association of Mining and Exploration Companies has also been contacted for comment on the GBM decision.