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Workers from Colquiri mine who support Bolivian President Evo Morales participate in a march in La Paz. Thousands of farmers arrived in La Paz to support Morales after the police mutinied over low wages and sparked a political crisis that lasted five days, according to local media.

ENRIQUE CASTRO-MENDIVIL/Reuters

Bolivia's President Evo Morales is in favour of revoking a Canadian mining company's licence in the wake of violent protests against the project, a government minister said Sunday.

Farmers and mine workers, some armed with explosives, last month forcibly occupied South American Silver's mine in the community of Malku Khota, located about 340 kilometres south of the capital La Paz.

The government denied on Friday that a local farmer who was killed had died in an explosion connected to the protests, insisting that the blast was an unrelated accident.

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But the death after months of demonstrations at the site appears to have forced a government rethink of demands by indigenous leaders calling on the Bolivian government to expropriate the facility.

"The President agrees with the reversal" of the mining licence, Labour Minister David Santalla told reporters, but he added that it could prove "difficult to enact an immediate reversal of a Supreme Decree" that sanctioned it in the first place.

The demonstrators took seven hostages during the standoff, including five Bolivians employed by the company. Four of the captives have since escaped, but three others – a police officer and two engineers employed by the mine – continue to be held.

In a statement released Sunday, Greg Johnson, CEO of South American Silver, said the company looks forward to "a constructive dialogue with regional and national governments along with the local indigenous authorities after this situation is resolved in order to agree on an approach to development that is inclusive of all communities in the project area."

The Malku Khota project boasts one of the world's largest untapped resources of silver and indium, a rare metal used in flat-screen LCD televisions. South American Silver has invested more than $50-million into the mine since 2007.

A subsidiary of the Canadian firm has managed the mine since 2007.

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