Bonds News

Canada orders security review of Shandong bid for Arctic gold mine

TORONTO, Oct 15 (Reuters) - Canada has ordered a national security review of Shandong Gold Mining Co Ltd’s bid to acquire a gold mine in the Canadian Arctic, the mine’s owner said on Thursday.

The review comes amid a diplomatic rift between Canada and China over the 2018 arrest by Canadian police of Huawei Technologies Co Ltd’s chief financial officer, Meng Wanzhou.

Shandong Gold, one of China’s biggest gold producers, in May offered C$230 million ($165 million) for struggling TMAC Resources.

TMAC shareholders approved the deal in June but it still requires Canadian government signoff.

In a statement, TMAC said it and Shandong believe the transaction provides a “strong overall net benefit to Canada and does not pose a security risk.” However it said closing could be delayed beyond Feb. 8, 2021 owing to extended timelines under the review.

A TMAC spokesman declined further comment. Canada’s department of Innovation, Science and Economic Development, which oversees foreign investment, did not immediately respond to a request for comment.

TMAC operates the Hope Bay mine in Canada’s northern territory of Nunavut, a region of growing strategic importance as climate change makes shipping lanes and resources more accessible.

For that reason Canada could block the acquisition, lawyers and security analysts have said.

Canada-China relations froze in late 2018 after Meng’s arrest on a U.S. warrant. China subsequently arrested Canadian citizens Michael Kovrig, a former diplomat, and businessman Michael Spavor and later charged them with espionage.

Hope Bay started production in 2017 and had proven and probable mineral reserves totaling around 3.54 million ounces of gold at the end of 2019, according to the company’s website. It produced 18,420 ounces of gold in the third quarter.

Shandong unit Streamers Gold Mining Corp has previously said it is keen to revitalize the mine, which has underperformed expectations. (Reporting by Jeff Lewis; Editing by David Gregorio)