A $230-million deal for a Chinese company to purchase a gold mine project in Nunavut is off.
TMAC Resources Inc. made the announcement in a news release posted to its website Monday.
The company states that the Government of Canada rejected the proposal to sell all TMAC Resources shares and its Hope Bay gold mining project to Shandong Gold Mining Co. Ltd. The deal was approved by 97 per cent of TMAC shareholders on June 26.
The deal, according to TMAC president and CEO Jason Neal, “did not receive Canadian regulatory approval and will not proceed.”
Shandong Gold Mining is a state-owned Chinese gold mining company. The deal was subject to a national security review of investments under the Investment Canada Act.
On Tuesday, a media relations person with Innovation, Science and Economic Development Canada — the federal department responsible for the Investment Canada Act — stated in an email to CBC that “under the Investment Canada Act, all foreign investments are subject to national security review. Reviews are conducted on a case-by-case basis as part of a rigorous and evidence-based process. Due to the confidentiality provisions of the Investment Canada Act, the Government cannot comment further.”
On June 21, TMAC Resources stated in a news release that some regulatory hurdles to the sale had been cleared: the Ontario Superior Court of Justice had approved the transaction, and the Commissioner of Competition had not filed an objection, and had terminated a waiting period early, which satisfied “the Competition Act approval requirement.”
The Hope Bay gold project is in Nunavut’s Kitikmeot region, about 125 kilometres southwest of Cambridge Bay.
The area’s gold deposits could produce nearly 150,000 kilograms of gold and have been owned by three different mining companies since they were first identified more than 30 years ago.
In 2012, TMAC acquired it from Newmont Mining and, three years later, signed a 20-year land tenure agreement with the KIA and the territorial Inuit land claim organization Nunavut Tunngavik Inc.
The property produced no gold for commercial sale until 2017, and in the time since its purchase, TMAC has poured more than $450 million into developing the deposits.
A pre-feasibility study published last March explored the possibility of more than doubling its output of ore, estimating the cost of expanding operations at more than $683 million.
On May 8, TMAC announced a “definitive agreement” to sell to Shandong Gold Mining for around $230 million.
The deal valued TMAC at $1.75 per share — about 30 cents more per share than its listed price before the announcement. On June 26, when the deal was approved by a majority of TMAC shareholders, company stock closed at $1.65 per share.
As of 2 p.m. ET, Tuesday TMAC shares were listed at $1.26 on the Toronto Stock Exchange.