China's Zijin Mining to take 9.9% stake in Canada's Montage Gold
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 willpurchase 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 dealcomes 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 threeChinese 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 ZijinMining 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 approvedunder "the most exceptional circumstances."
Gold does notfeature in the country's critical minerals list.
As part of the deal, the Lundin Family Trust also agreed to increaseits stake in Montagefrom 17.7% to 19.9%.
Proceeds from the offering willbe 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
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