Solaris Resources Abandons Stake Sale to Zijin Mining Due to Canadian Regulatory Hurdles

Solaris Resources has terminated its plans to sell a minority stake to China’s Zijin Mining Group, citing concerns that the deal would not meet Canada’s stringent foreign investment standards in a timely manner, the Canadian company announced on Tuesday.

In January, Solaris revealed its intention to sell a 15% stake in the company to state-owned Zijin for C$130 million (approximately $95 million) to support the development of its Warintza copper project in Ecuador.

However, the transaction required approval under the Investment Canada Act, which was revised in late 2022 to impose stricter scrutiny on foreign investments from state-owned enterprises in the critical minerals sector.

“That this transaction cannot be completed in a reasonable time frame signals that Canada’s critical minerals policy is counterproductive in relation to foreign assets,” stated Solaris Resources’ CEO, Daniel Earle, in a press release.

Earle further noted that the company’s share price had lagged behind its peers due to the uncertainty surrounding Canadian regulatory approval, exacerbated by heightened domestic political sensitivity.

Late Tuesday morning, Solaris’ stock was down 0.4% on the Toronto Stock Exchange, while the benchmark Canadian share index saw a 0.3% rise.

RBC Capital Markets, in a research note, remarked that the cancellation of the deal eliminates regulatory uncertainty and the potential dilutive impact of the transaction.

The Canadian government has maintained a stringent stance on investments from China in critical minerals such as copper, graphite, and lithium. Earlier this year, Canada also requested SRG Mining, a graphite miner, to cancel a planned investment from China’s Carbon One New Energy Group.

SOURCE:mining.com