China's Zijin Mining to take 9.9% stake in Canada's Montage Gold (updated)

Montage Gold

16/07/2024 19:50

(Adds details on regulatory requirement in paragraph 4 and
additional funding in last paragraph)
    By Seher Dareen and Divya Rajagopal
       July 16 (Reuters) - Canadian miner Montage Gold  MAU.V 
on Tuesday said Chinese mining firm Zijin Mining Group
 601899.SS  would take a 9.9% strategic stake in the company
through its brokered private placement.
    Zijin Mining will purchase 32.7 million shares out of nearly
97.1 million common shares of the Vancouver, Canada-based
company at C$1.75 per share, coming to nearly C$57.3 million
($41.90 million) upon completion of the offering by Aug. 12.
    The deal comes as Canada seeks to tighten its Investment
Canada Act, under which deals involving a foreign company are
reviewed to safeguard national security. 
    Montage said it believes the investment does not require
approval from the Canadian government because Zijin will own
less than 10% of Montage upon closing of the transaction, gold
is not listed as a critical mineral by the Canadian government,
and Montage's assets are outside of Canada. 
    In 2022, Canada ordered three Chinese companies to divest
their investments in Canadian critical minerals, citing national
security.
    Earlier this year, copper miner Solaris Resources  SLS.TO 
reported that Chinese state-owned Zijin Mining was planning to
acquire a 15% stake in the Canadian miner, but scrapped the
plans as it feared the deal was unlikely to meet the foreign
investment standards.
    Canada has told the mining industry that any major deals
targeting the country's producers of critical minerals would
only be approved under "the most exceptional circumstances."
    Gold does not feature in the country's critical minerals
list.
    As part of the deal, the Lundin Family Trust also agreed to
increase its stake in Montage from 17.7% to 19.9%.
    Proceeds from the offering will be used for development
expenditures and exploration at Montage's Kone Project in Ivory
Coast.
    Montage said the investment will help it raise additional
capital. It plans to have its additional financing in place
before the 2025 first quarter when it will start construction of
the Kone mine. 

($1 = 1.3676 Canadian dollars)

 (Reporting by Seher Dareen in Bengaluru and Divya Rajagopal in
Toronto; Editing by Vijay Kishore and Leslie Adler)
 ((Seher.Dareen@thomsonreuters.com; If in India call +91 74832
70128;))