Bolivian President Evo Morales agreed to revoke the permit for a mine in the province of Potosi after meeting with leaders of an indigenous clan who kidnapped several mining company employees.

The accord was announced after a gathering at the presidential palace of Aymara Indian factions on both sides of the controversy over the Mallku Khota project, a venture of the Bolivian subsidiary of Canada-based South American Silver.

Morales, himself an Aymara, accused the mining company of provoking confrontations among the "ayllus" (clans) in the Mallku Khota area and he congratulated the Indians for having defended the principle of national sovereignty over natural resources.

A commission will be named to prepare a draft decree to revoke "all the mining concessions registered in the name of Compañia Minera Mallku Khota," Labor Minister Daniel Santalla said.

The Canadian firm has been conducting exploration work in northern Potosi - one of Bolivia' poorest regions - since 2007 to evaluate its reserves of silver and indium. The massive Mallku Khota deposit mainly contains those two minerals, although it also holds lesser quantities of gold.

The Bolivian government will take charge of all mining activity at Mallku Khota, Santalla said.

Morales decided to revoke South American Silver's concession after weeks of strife in the area, including the death of one resident in a clash with the police and the abduction of seven people, including mine employees.

All of the captives were released or escaped. EFE