Noah Zivitz

Managing Editor, BNN Bloomberg

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The proposed takeover of TMAC Resources Inc. by China’s Shandong Gold Mining Co. has been blocked by the federal government, according to a release from the Toronto-based miner.

“TMAC Resources Inc. has been informed that the Governor in Council has issued an order under the Investment Canada Act directing Shandong Gold Mining Co., Ltd. and its affiliate not to implement the plan of arrangement. As a result, the transaction between TMAC and Shandong will not proceed,” TMAC said in its release late Monday.

A spokesperson for Industry Minister Navdeep Bains was not immediately available for comment Tuesday.

This development puts an end to the plan that was announced in May, when TMAC revealed it had agreed to be purchased by Shandong for $1.75 per share. At the time, it was framed as an opportunity to bring the necessary financial heft to fully develop TMAC’s sprawling Hope Bay gold mine property in Nunavut.

However, the proposed deal sparked some concern about China’s access to key metals and its presence in Canada’s far north. In mid-October, TMAC announced that the transaction was being subjected to a national security review under the Investment Canada Act.

With the takeover deal now dead, TMAC President and CEO Jason Neal said in the release that his company may not have sufficient resources to repay debt that is scheduled to mature at the end of June.

“While we are disappointed with the outcome (of the federal review), we are very pleased that TMAC achieved significant operation improvements at Hope Bay. We will continue to build on these improvements while considering options to manage our balance sheet,” Neal said, while noting his company had a cash balance of $71.5 million as of the end of September.

TMAC also announced Monday that Chief Operating Officer Gil Lawson has stepped down from his position.