By Stephan Kueffner and Alex Emery

April 18 (Bloomberg) -- Ecuador revoked mining concessions and will suspend most mining of metals such as gold and copper for as long as 180 days while lawmakers prepare legislation to regulate the industry.

Mining companies with stakes in Ecuador declined, with Aurelian Resources Inc. dropping 32 percent in Toronto trading. Dynasty Metals & Mining Inc. fell 34 percent, and Corriente Resources Inc. sank 11 percent before trading was halted.

The freeze, which comes as the administration of President Rafael Correa moves to win greater control over natural resources and boost the government's share of profits, may be shorter than six months. The Energy and Mines Ministry expects the new regulatory proposal to be ready for debate by late May.

``The government sees the margin expansion for mining companies because of the prices, and they're saying `Let's get our hand in the cookie jar, too,''' said Tom Winmill, president of Midas Management Corp., which owns Aurelian shares.

Ecuador's Constitutional Assembly, which is drafting a new charter for the country, voted 95 to 1 in favor of the rules, with 25 members abstaining.

The move cancels 80 percent of the more than 5,000 mining concessions in Ecuador, including all those handed out in protected areas or where water sources are threatened. It also declares a moratorium on new concessions before a new constitution is drafted.

Correa has said Ecuador has mineral reserves amounting to about $220 billion. Mining or exploration is taking place at about 7 percent of the concessions, according to the Energy and Mines Ministry.

`Devastating'

The ruling could halt millions of dollars in investments in Ecuador's mining industry by about 40 international companies, Dynasty spokesman William McCartney said. Companies including Dynasty plan talks with the government in Quito next week, he said.

``On the face of it, it's devastating and could affect everybody,'' McCartney said in a telephone interview from Vancouver. ``We've just had millions of dollars of market capitalization wiped out.''

Iamgold Corp. will continue working on a pre-feasibility study for Quimsacocha, a deposit with 4 million ounces in gold resources, spokeswoman Lisa Doddridge said.

``The situation is not all clear,'' Doddridge said in a telephone interview from Toronto. ``We weren't given any notice.''

Iamgold fell 25 cents, or 3.4 percent, to C$7.13.

Future at Stake

The mining bill passed today calls on the government to renegotiate terms with mining companies. Correa's government is in talks with oil companies to modify contracts so that the government gets about 70 percent of revenue from the extracted crude, instead of about 30 percent now.

``What's at stake here is to define the future of large- scale metallic mining in Ecuador,'' Alberto Acosta, the assembly's president and a member of Correa's Alianza Pais party, said in a speech before the vote. ``The new mining law will favor serious entrepreneurs, not the speculators.''

Constitutional Assembly members allied with Correa said that current mining laws favor speculators over companies that would create work for the country's citizens. The assembly was elected last year to write a new constitution for the South American country

``Concessions were handed out for the price of a sick chicken,'' said Aminta Buenano, a member of Correa's party.

New Mining Law

The Energy and Mines Ministry is preparing the new law to regulate mining and has begun to discuss the terms, including environmental protection and royalties, with mining companies.

Ecuador also plans to create a state-owned mining company loosely based on the example of Chile's Corporacion Nacional del Cobre. A draft will be presented to the industry on April 21, Energy and Mines Minister Galo Chiriboga said in an e-mailed statement today after the vote.

Opposition delegates -- most of whom decided to abstain or weren't present for the vote -- said that there was no proof that the bill would stimulate investment.

``No technical studies have been made regarding its legal or economic impact,'' opposition assemblywoman Mae Montano said during the debate. Other delegates said that the bill would eliminate tens of thousands of mining-related jobs.

To contact the reporter on this story: Stephan Kueffner in Quito at skueffner@bloomberg.net; Alex Emery in Lima at aemery1@bloomberg.net.