Voters backed prohibition on mining in Ecuador city of Cuenca, mayor says

QUITO, Feb 8 (Reuters) - Voters in the Ecuadorean city of Cuenca backed a prohibition on mining activities in areas close to watersheds via a referendum held on Sunday, the mayor said on Monday, in a move that may spook foreign investment sought by the South American nation.

The proposal, which was on the ballot for some 435,000 Cuenca residents during Sunday's presidential and legislative elections, asked if the city should block mining in areas near the rivers that cross through Cuenca.

"We share good news with citizens: in Cuenca, the water won," mayor Pedro Palacios wrote on Twitter. "Thank you for joining this proposal, which motivates us to continue working to care for nature."

The mayor later told reporters that the announcement was based on preliminary results, estimating that more than 80% of voters supported the initiative.

The National Electoral Council in the province of Azuay said in a statement that it had reviewed 44.5% of votes in the referendum as of early Monday morning, without elaborating.

Election authorities may be tied up for several days as they continue tallying up presidential and legislative votes.

City residents were asked five questions regarding the prohibition of large-scale metals mining in the area of the Tarqui, Yanuncay, Machangara, Tomebamba rivers, and prohibition of medium scale mining near the Norcay River.

Ecuador's Constitutional Court approved the referendum last year, but noted that it would only affect future projects.

Industry leaders understand that to mean that it will not affect key projects such as Rio Blanco, led by Chinese consortium Ecuagoldmining, and Loma Larga, being developed by Canada's INV Metals Inc.

"This will (be in effect) in the future," Patricio Vargas, president of the Azuay Mining Chamber. "It is a heavy blow to the credibility of the country." (Reporting by Alexandra Valencia, writing by Brian Ellsworth Editing by Marguerita Choy)