Gladys Berejiklian’s comments come a day after the state government announced a deal had been reached with the Chinese company, which was widely panned by farmers as a “half measure” that would change nothing to change the threat of the coal mine.

Ms Berijiklian said the government “looked at every legal option we had” in an interview with Alan Jones on 2GB Radio.

“The company had demonstrated time and time again that in that eight year period, they had attempted to mine, the reason they hadn't been able to is because we had stopped them at every turn,” she said.

“If you speak to any lawyer, anyone in town, they will tell you we had no option under the circumstances. This was the only option we had.

“That is why we were not able to reduce the amount for taxpayers.”

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However, Labor’s Shadow Resource Minister, Adam Searle, said the Premier’s statement was “complete nonsense”.

“The lease has expired – the government can decide to renew, in whole or part, or refuse any renewal,” Mr Searle said.

“Nothing obliges the state to lay almost the whole purchase price for a half share of an expired license.”

“The Premier’s statement about the legal situation is complete nonsense – unless her government has withheld important information from the public about this matter.”

A condition in Shenhua’s exploration licence said the company had to start “substantial development” within eight years – that deadline past in October last year, giving the NSW government the power to cancel the licence with no legal or financial repercussions.

Ms Berijiklian stood behind the government’s decision and reiterated that the deal did not mean Shenhua had a mining licence.

“The farmers have welcomed this, it’s a step in the right direction,” Ms Berijiklian said.

“Is there more to do? Of course there is.”