Ottawa rejects TMAC Resources sale to China’s Shandong Gold after security review

Ottawa rejects TMAC Resources sale to China’s Shandong Gold after security review

CALGARY — The CEO of TMAC Resources Inc. says there’s a “silver lining” to news that Ottawa will not allow the sale of his mining company to China’s Shandong Gold Mining Co. Ltd.

The company announced Tuesday it had been informed the $230-million sale of TMAC, whose main asset is a gold mining project at remote Hope Bay in Nunavut, would be blocked following a review under the Investment Canada Act.

“The government not approving the transaction, to me, is also in a way saying that what we’ve done at Hope Bay is important to Canada,” said CEO Jason Neal in an interview.

“It’s not just important to the community, it’s not just important to the employees that we work with, but it’s important to Canada that there’s established industry in the Arctic.”

A spokesperson for Innovation, Science and Economic Development Canada verified the government’s decision on Tuesday but declined to give specific reasons and said no one was available for an interview.

“Under the Investment Canada Act, all foreign investments are subject to national security review,” said Yara El Helou in an email.

“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.”

The government has not told TMAC specifically why the decision was made either, Neal said, although he assumes the grounds were national security based as opposed to its assessment of the project’s net benefit to Canada, which he said is substantial.

He added he suspects there are political motivations behind denying the deal as well.

“It’s just a fact that relations between Canada and China are not strong right now. I wasn’t surprised that it wasn’t approved,” he said.

TMAC shares closed down 10 cents at $1.20 on the Toronto Stock Exchange after trades as low as $1.05 and as high as $1.32 per share earlier in the day.

Shandong announced the deal in May to buy TMAC for $1.75 per share in cash.

The friendly deal had received Chinese regulatory approvals and TMAC shareholders voted 97 per cent of their shares in favour of it in June.

However, the federal cabinet ordered a national security review of the proposed sale in October.

“The company we’re doing work with, Shandong, they operate very much, in Canada at least, as a western company,” said Neal.

“I think Shandong was trying to do things the right way because they want to grow internationally and doing things right with us is a part of establishing a template from which they can work.”

The sales deal with Shandong followed a strategic process launched in early 2020 by debt-laden TMAC to improve its financial position through alternatives including a possible sale or merger, taking on a partner or other long-term financing alternatives.

Neal said he plans to use learnings from the strategic process to identify TMAC’s financial options going forward, adding the company is stronger now, with cash of $71.5 million as of Sept. 30 and positive cash flow from operations.

He said it will have enough funds to pay for its “sealift” bulk supply deliveries next fall but not enough to fully repay maturing debt recently extended to June 30, 2021. Its debt is about $170 million.

The end of the transaction won’t trigger a “break fee” payout by TMAC to Shandong, said Lisa Wilkinson, TMAC’s vice-president of investor relations.

In August, Shandong reported the appointment of Barrick Gold Corp. veteran Mark Wall as CEO of Streamers Gold Mining Corp. Ltd., its wholly owned subsidiary in Canada.

This report by The Canadian Press was first published Dec. 22, 2020.

Companies in this story: (TSX:TMR, TSX:ABX)

Dan Healing, The Canadian Press


Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

An ice sculpture of a bee with a timely message was created near the Ross Street Patio. It’s party of a Downtown Business Association initiative to draw more people downtown to support local businesses. (Photo by LANA MICHELIN/Advocate staff).
Ice sculptures created to draw more people to downtown Red Deer

Three sculptures can be seem at various venues

(Black Press file photo)
Police seeking suspects in Bowden armed robbery

Man was beaten and robbed of his wallet

Many students and staff at St. Joseph High School are in COVID-19 quarantine. (File photo by Advocate staff)
COVID cases: Red Deer school reverts back to at-home learning

Majority of students under COVID-19 quarantine

Red Deer RCMP say Alexander King was last seen about a month ago. (Contributed)
Red Deer teen reported missing

RCMP ask for public’s assistance

Prime Minister Justin Trudeau speaks in the in the House of Commons on Parliament Hill in Ottawa on Thursday, Dec. 3, 2020. THE CANADIAN PRESS/Justin Tang
Payette shouldn’t get same benefits as other ex-governors general: O’Toole

OTTAWA — Conservative Leader Erin O’Toole says it’s not appropriate for former… Continue reading

Terrance Josephson of the Princeton Posse, at left, and Tyson Conroy of the Summerland Steam clash during a Junior B hockey game at the Summerland Arena in the early spring of 2020. (John Arendt - Summerland Review)
QUIZ: How much do you know about hockey?

Test your knowledge of Canada’s national winter sport

Red Fraggle, one of Jim Henson Company’s Fraggle Rock characers, is shown at Time To Play Holiday Show, Tuesday, Sept. 28, 2010, in New York. The Jim Henson Company says production has officially started in Calgary on a reboot of the original 1980s children’s puppet series, which was filmed in Toronto.THE CANADIAN PRESS/AP/Mark Lennihan
‘Fraggle Rock’ children’s puppet series reboot starts production in Calgary

A spokesperson says the new series will stream on Apple TV plus

Too many new pet owners, not enough vets make getting animal care a problem

CALGARY — Dr. Liz Ruelle says it was a difficult decision to… Continue reading

RCMP. (Phil McLachlan - Black Press Media)
RCMP officer in Alberta charged with off-duty sexual assault in Edmonton

EDMONTON — Alberta’s police watchdog says an RCMP officer has been charged… Continue reading

Canada’s 29th Governor General Julie Payette looks on alongside Prime Minister Justin Trudeau in the Senate chamber during her installation ceremony, in Ottawa on Monday, October 2, 2017. THE CANADIAN PRESS/Adrian Wyld
Trudeau says GG vetting process needs improvement after Payette resigns

OTTAWA — Prime Minister Justin Trudeau’s admission Friday that he might have… Continue reading

NDP member of Parliament Lindsay Mathyssen speaks during a press conference on Parliament Hill in Ottawa on Thursday, Nov. 26, 2020. THE CANADIAN PRESS/Sean Kilpatrick
NDP warns of long delays in equal pay for women in federal pay equity rules

OTTAWA — The federal New Democrats say new rules to close a… Continue reading

President Joe Biden waves as he departs after attending Mass at Holy Trinity Catholic Church, Sunday, Jan. 24, 2021, in the Georgetown neighborhood of Washington. Less than a week after the economic gut punch of cancelling Keystone XL, Canada is bracing for more bad news today from the White House. THE CANADIAN PRESS/AP/Patrick Semansky
U.S. president to sign executive orders enacting stringent new Buy American regimen

WASHINGTON — Less than a week after the economic gut punch of… Continue reading

Black Press file photo
Wetaskiwin RCMP investigate fatal pedestrian collision

A 37-year-old man from Maskwacis has died in hospital as a result of his injuries.

The Pfizer-BioNTech COVID-19 vaccine is administered to a personal support worker at the Ottawa Hospital Tuesday December 15, 2020 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Canadian provinces push back vaccination plans as Pfizer deliveries grind to a halt

Some Canadian health-care workers are being told they’ll have to wait longer… Continue reading

Most Read