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Chinese investors in Vancouver juniors ordered to divest

Two of three exploration companies with Chinese investors are based in Vancouver
lithium_concept_shutterstock
Lithium, used to make rechargeable batteries, is considered a critical mineral. | Shutterstock

The Canadian government has ordered three Chinese companies to divest from Canadian junior exploration companies in the critical minerals space – including two Vancouver-headquartered companies.

The Canadian government ordered the divestment on national security grounds.

“While Canada continues to welcome foreign direct investment, we will act decisively when investments threaten our national security and our critical minerals supply chains, both at home and abroad,” François-Philippe Champagne, minister of Innovation, Science and Industry, said in a press release today.

The three Chinese companies are: Sinomine Rare Metals Co. Ltd., Zangge Mining Investment Co. Ltd., and Chengze Lithium International Ltd.

The three Canadian companies they are invested in are: Power Metals (TSX-V:PWM, OTCQB:PWRMF) and Ultra Lithium Inc. (TSX-V: ULT), both based in Vancouver, and Lithium Chile Inc. (TSX-V:LITH, OTC:LTMCF), based in Calgary.

Power Metals owns three exploration prospects in Ontario, one of which, Case Lake, is a lithium prospect which the company says also contains cesium and tantalum, which are rare earth metals.

Earlier this year, Power Metals announced $3 million in financing from Sinomine -- $1.5 million in equity financing and another $1.5 million in private placements. Power Metals lists Zhiwei (Frank) Wang, vice president of Sinomine, as a director.

Ultra Lithium owns two brine lithium projects in Argentina, and three projects in North America – two in Ontario and one in Nevada.

In June, Ultra Lithium announced Zangge Mining would invest in Ultra Lithium’s Laguna Verde Brine lithium project in Argentina. Under the agreement, Zangge would pay Ultra Lithium US$10 million, and invest US$40 million in the Laguna Verde project, which would give Zangge a 65% stake in the project.

It appears Ultra Lithium may have been anticipating that the Canadian government might start cracking down on Chinese investments in Canadian critical minerals companies and projects.

On October 13, Ultra Lithium announced that a previously announced $5 million investment from another Chinese company, Ya Hua International Investment and Development Co., was being cancelled, by mutual agreement.

Ya Hua had offered $5 million for an equity stake in Ultra Lithium. Cancellation of the investment was mutually agreed to, Ultra Lithium said in an October 13 press release.

“Based on the parties’ assessment of the current international environment and its potential impact on the mine development cycle the parties determined that it would be in the best interest of their shareholders to terminate the investment."

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