Solaris ends its plan to sell its stake to Zijin Mining

Solaris ends its plan to sell its stake to Zijin Mining
Solaris ends its plan to sell its stake to Zijin Mining

They reportedly feared the deal was unlikely to timely comply with Canada’s strict foreign investment standards.

Solaris Resources scrapped plans to sell minority stake to China’s Zijin Mining Group

In January, Solaris announced plans to sell a 15% stake in the company to state-owned Zijin Mining for $95 million. The objective is to help develop its Warintza copper project in Ecuador. But the deal needed approval under the Investment Canada Act, which was renewed in late 2022 to impose additional scrutiny on foreign investments by state-owned companies in the critical minerals sector.

“The fact that this transaction cannot be completed within a reasonable time frame indicates that Canada’s critical minerals policy is counterproductive in relation to foreign assets,” Solaris Resources CEO Daniel Earle said in a statement.

The company’s share price underperformed its peers due to Canadian regulatory uncertainty “in an environment of heightened domestic political sensitivity,” Earle added.

The stock was down 0.4% on the Toronto Stock Exchange late Tuesday morning, compared with a 0.3% rise in the benchmark Canadian stock index.

Regulatory uncertainty

In a research note, RBC Capital Markets said the cancellation of the deal eliminates regulatory uncertainty and dilutive value from the transaction.

Canada’s government has taken a tough stance specifically on China’s investments in critical minerals such as copper, graphite and lithium. Earlier this year, Canada asked SRG Mining, a graphite miner, to cancel a planned investment by Chinese group Carbon One New Energy.

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