Guinea cancels Aredor diamond mining license

CONAKRY (Reuters) - Guinea has canceled a diamond mining license held by Aredor, which is 85 percent owned by Toronto-listed Azure Resources Corp AZU.V, the government said on Saturday.

Aredor is the largest diamond mining operator in the West African country but the government accused it earlier this year of having stopped all activities for three years despite promising various ministers it would restart its operations.

"The cabinet unanimously approved the decision," said government spokesman Tibou Kamara.

Guinea's government is reviewing a number of minerals contracts in an effort to maximize state revenues. Guinea is the world's top exporter of the aluminum ore bauxite, making mining the impoverished country's main source of foreign exchange.

A senior official at the Minerals Ministry said the decision would have to be rubber-stamped by a vote in the National Assembly.

Azure, which changed its name this year from Trivalence Mining, owns 85 percent of Aredor, which has a concession in the center of the country, some 400 km (250 miles) north of the capital, Conakry. The Guinean government owns the remaining 15 percent of the company.

Before it stopped operations, Aredor was producing between 12,000 and 38,000 carats a year, mines ministry officials said.

Guinea's official diamond reserves are estimated at more than 25 million carats, not including as yet unmapped kimberlite fields.

Diamond output in 2007 totaled 500,000 carats, according to Mines Ministry data.