Caerus Mineral Resources has been told that it will not be able to renew the Kalavasos East licence AE4811 in Cyprus.
Any further exploration has also been blocked by the Cyprus Ministry of Defence (MOD) due to the proximity to military installations.
The Mines Service Department said it has not been able to waive the conditions imposed by the MOD (including the maintenance of a buffer zone), and further, it has been decided that licence AE4811 is unable to be renewed.
Subsidiary NCC will appoint external advisers for the purposes of undertaking a review of the decision of the MOD and to determine the company's legal position.
Charles Long, Caerus chief executive, added: "This is an extremely frustrating development where we have been seeking clarification from the authorities since the new board became aware of the issue in June.
“We believe it is eminently possible to operate at Kalavasos East without disturbing or presenting any security risk to the MOD's nearby installations. This includes the exploration, construction and most importantly the production phase.”