Ecuador's government has revoked the environmental license granted to Canadian mining company DPM Metals for the development of Loma Larga, a gold project in an environmentally sensitive area, the government said on Saturday.

The decision follows strong opposition from residents and local authorities in Azuay province, where Loma Larga is located, who argue that its development would affect the Quimsacocha water reserve, posing significant health risks to local communities.

Ecuador's Environment and Energy Ministry said in a statement the decision resulted from technical reports submitted by authorities in Cuenca and Azuay that are responsible for the area's drinking water and irrigation systems.

"The national government reaffirms its commitment to the rights of nature, the defence of water sources, and, under the precautionary principle, the protection of the health and well-being of the people of Cuenca and Azuay," it said.

Cuenca Mayor Cristian Zamora, one of the leading voices opposing the mine, spoke at a public event thanking the authorities for listening and revoking the license for the project that he said would seriously threaten levels of water available for local residents.

"It has been a decades-long struggle," he said.

DPM, which acquired the project in 2021, did not immediately respond to a request for comment.

The Loma Larga project was expected to receive investments of $419-million for an average annual production of about 200,000 ounces of gold during its first five years of operation, according to DPM.

In August, the Ecuadorean government had already suspended activities related to the project until the company released an environmental management plan, despite having granted it a license a month earlier to begin construction.

Despite having significant gold and copper deposits, Ecuador has halted mining projects due to recent legal rulings and local opposition. Currently, only two mining companies operate in the country.

The Quimsacocha Reserve spans more than 3,200 hectares and encompasses the Andean "paramo" ecosystem, a type of highland moor. Its springs form one of the main water sources in the South American country.