The decision highlights the growing challenge faced by North American miners to develop new mining projects from precious metals, base metals to lithium given stringent environmental legislation.
The BLM had insisted that an Environmental Impact Statement (EIS) be prepared for K2's proposed phase 2 drill program at Mojave.
K2 Gold slammed that decision as "unprecedented".
"The decision to force K2 to complete an EIS for a modest drill program is absurd and points to political interference at the highest levels," said K2 Gold chairman John Robins.
"An EIS is a regulatory hurdle usually reserved for mine construction and is a sad indictment as to the future of mineral exploration and possibly mining in the US, particularly within the State of California."
An EIS would typically take in excess of at least one year and require significant cost and resources to complete, K2 Gold said.
The BLM request was unheard of in recent times for an exploration drilling program that covered just such 12.2 acres, the said.
Environmental groups have stepped up their campaign to highlight the ecological sensitivity of the Mojave area in Inyo county and surrounding areas.
Groups including the Center for Biological Diversity last month petitioned the US Fish and Wildlife Service to protect the Inyo wild daisy under the federal Endangered Species Act.
"This was an ill-conceived project in a starkly beautiful place and K2 Gold made the right decision to abandon it," said Ileene Anderson, a senior scientist at the Center for Biological Diversity. "Now that the immediate threat of exploratory drilling is behind us, our goal is to get the daisy and its remote habitat protected for good."
"The BLM made the right move to require a full environmental review before road building or exploratory drilling could begin," said Anderson.
K2 Gold bought the property in 2019.
K2 Gold said it would focus on mine projects "in jurisdictions more favourable to mineral exploration". This included Nevada.
Shares in the firm on the Toronto Stock Exchange closed 2.6% or C$0.005 lower at C$0.185.
