A Romanian court invalidated a key permit for an opencast gold mine planned by Canadian company Gabriel Resources in Rosia Montana, a setback for the controversial project.

The Alba Iulia appeal court upheld a previous ruling invalidating a general urbanism plan delivered by the Rosia Montana council in northwestern Romania in 2009.

"This decision sends the company back to square one from a legal point of view," lawyer Marius Harosa, who represented in court several environmental groups opposing the project, told AFP.

He stressed that an earlier document, delivered in 2002, had already been invalidated by a court which found that several local councillors were also employees of Rosia Montana Gold Corp., which is 80 percent owned by Gabriel Resources and 20 percent by the Romanian state.

Gabriel Resources CEO Jonathan Henry acknowledged in a press release that the court's decision was "irrevocable", but he claimed that the 2002 urbanism plan was "still valid and legal."

"The company confirms that the existing permitting procedures, which are well advanced, will continue in accordance with legal provisions," he said.

But the Alburnus Maior environmental group sent a letter to Prime Minister Mihai Razvan Ungureanu, who is also interim environment minister, calling on him to observe the court's ruling.

"The Environment Ministry can no longer continue the Rosia Montana environmental impact assessment procedure," Alburnus Maior wrote.

Rosia Montana Gold Corp. plans to use of cyanide to extract some 300 tonnes of gold in the village of Rosia Montana, thought to hold Europe's largest single deposit.

The company promises to invest $1.7 billion (1.2 billion euros) and says the mine will respect all European standards on environmental protection.

Environmentalists, archaeologists, historians and international organisations oppose the project claiming the mine threatens the environment and priceless Roman-era mining galleries.