QUITO, Sept 16 (Reuters) - Tens of thousands of

residents and local leaders in Ecuador's central Azuay province

took to the streets on Tuesday to demand the suspension of a

mining project by Canada's Dundee Precious Metals, which they

say will affect a vital water reserve.

The government of President Daniel Noboa had granted Dundee

an environmental license to start building the Loma Larga gold

mine there, but as community pressure mounted, the country's

energy minister in August suspended the start of construction

work until Dundee provides an environmental management

plan.

Provincial authorities reject the project, saying it will affect

the region's 3,200-hectare Quimsacocha reserve and its

surrounding paramos - highland moors that act as giant sponges

and supply the bulk of drinking water to major cities there.

Authorities estimated that over 90,000 people marched in the

provincial capital of Cuenca on Tuesday, chanting "Hands off

Quimsacocha!" and "Water is worth more than anything!"

"We want the national government to revoke the environmental

license," Cuenca Mayor Cristian Zamora said. "The streets of

Cuenca are roaring ... and they will have to listen to us."

Dundee declined to comment on the protesters' demands.

Despite Ecuador's significant gold and copper reserves, just

two mines are operating in the country - projects owned by

Canada's Lundin Gold ( LUGDF ) and EcuaCorriente, which is held

by a Chinese mining consortium.

Noboa, meanwhile, stepped back from the project, saying

responsibility for what happens next lies with the local

authorities.

"The municipality and prefecture must take responsibility,"

he said in a radio interview on Friday, saying if Dundee takes

them to an arbitration court that would have to go.

"There is a very high probability (the project will not go

ahead), but there is also a probability that there will be

problems in the future."

Strong community opposition, environmental concerns and

legal uncertainty in Ecuador have contributed to a relative lack

of mining projects.

In Azuay, residents have rejected mining projects at the

ballot box and courts have ruled in their favor to block mining

projects in the area.