Ottawa is ordering a formal national security review of state-owned Chinese miner Shandong Gold Mining Co. Ltd.’s proposed acquisition of TMAC Resources Inc., injecting more uncertainty into a deal that had already generated a national debate about sovereignty in Canada’s Far North.
In May, Shandong proposed an all-cash acquisition of TMAC for $1.75 a share, valuing the Toronto-based junior gold miner at $207.4-million, or about 4 per cent more than its market price at the time. Shareholders of TMAC voted overwhelmingly in favour of the deal in June and it received regulatory approval in China.
The enhanced security review by the federal government, which comes at a time of increased tension between China and Canada, raises doubts about whether the transaction will be successful, and at the very least pushes out the timeline for it to close to the first quarter of next year.
TMAC’s Doris gold mine is situated in Hope Bay, Nunavut, near tidewater in the Northwest Passage, a highly strategic shipping route connecting the Atlantic Ocean to the Pacific.
“I’m glad they’re doing it,” Michael Byers, Canada Research Chair in Global Politics and International Law at the University of British Columbia, said of Ottawa’s review.