China's Zijin Mining to buy 15% stake in Canada's Solaris

(Reuters) -Solaris Resources said on Thursday that Chinese mining firm Zijin Mining Group plans to acquire a 15% stake in the Canadian miner for about C$130 million ($96.99 million), in a deal that would test Canada's new foreign investment rules.

The deal is the first investment by a Chinese miner since November 2022, when Canada ordered three Chinese companies to divest their investments in Canadian critical minerals, citing national security.

Canada has in recent years tightened its Investment Canada Act (ICA), under which deals involving a foreign company are reviewed to safeguard national security.

A spokesperson for Canada's industry minister said the government is aware of the transaction and would not hesitate to take action on transactions that would be injurious to the country's national security.

Under the terms of the agreement, Solaris will issue about 28.5 million shares at C$4.55 per share to a unit of Zijin, representing a 14% premium to the stock's close on Wednesday.

Shares of Solaris were up more than 5% on Thursday.

The deal would also permit Zijin to nominate a member to the Solaris board for as long as the Chinese firm held at least a 5% stake.

Solaris said it would use the proceeds of the transaction for the development of its Warintza copper-gold project in Ecuador.

Brokerage Eight Capital said in a note that it was a "good deal for Zijin Mining and a strong endorsement of the Warintza exploration strategy."

($1 = 1.3404 Canadian dollars)

(Reporting by Divya Rajagopal in Toronto and Kabir Dweit in Bengaluru; Editing by Shailesh Kuber)