Regulator Earth Resources refused to renew mining licences of Kralcopic, a GBM subsidiary, last Friday due to concerns it was unable to provide surety of its finances.

Rehabilitation works could lead to the closure of an 18km-long underground tunnel running from Kangaroo Flat to Bendigo, GBM Gold CEO John Harrison said.

"If the Swan Decline is filled in, that's the end of underground exploration in Bendigo. The question that must be asked is whether that is what the people of Bendigo want," he said.

Earth Resources has exempted the site from any further mining applications until it has consulted the community and the Victorian government has given "consideration about future land uses".

More: Eight jobs at risk in Kangaroo Flat after miner refused licences

The decline was constructed by Bendigo Mining and Unity Mining and closed in 2011, six years and $350 million after it was opened with expectations of producing 600,000 ounces of gold per annum.

In 2010 it produced less than 37,000 ounces.

Earth Resources has started reaching out to residents who live near Kangaroo Flat and Woodvale to keep them informed about the latest developments, a spokesperson said, but confirmed there were no community meetings organised so far.

GBM Gold is still considering its options and its board has not ruled out legal action against the regulator following Friday's licence refusals.

The company's exploration target is to uncover 2.1 million to 6.25 million ounces from the Bendigo goldfield, parts of which the company is yet to fully explore, Mr Harrison said.

Not everyone is convinced that much gold can be found. Kangaroo Flat resident Mary Markey was a long-time member of the mine's disbanded environmental review committee.

"I'll put it this way. Bendigo Mining ... had more than a handful of geologists and expert miners and what did they find? Very little," she said.

News the regulator had refused Kralcopic's mining licences brought hope the mine site would be rehabilitated, Mrs Markey said.

The community was "pretty devastated" when the news came that GBM Gold was buying the mine, she said, as the previous owner Unity Mining had promised the rehabilitation of the site back to box-ironbark forest.

The Kangaroo Flat site had been deteriorating in the years since, Mrs Markey said. The rehabilitation of the land back to its natural state would make it an asset to Bendigo.

"It was widely used for recreation, and will be again," she said.

The planting of trees on the site, Mrs Markey said, would also prevent dust from the site blowing across the city.

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