The Canadian Government has rejected to allow the sale of TMAC Resources and its Hope Bay gold mine to Chinese state-owned company Shandong Gold Mining.

An order has been issued by the Governor in Council under the Investment Canada Act (Canada) directing Shandong and its affiliate not to implement the plan of arrangement.

In May, Shandong had offered C$230m ($179m) to purchase TMAC Resources, which was accepted by the shareholders of the latter.

TMAC Resources president and CEO Jason Neal said: “The transaction whereby Shandong would acquire 100% of TMAC, as announced on 8 May 2020 and approved by 97% of our shareholders on 26 June 2020, did not receive Canadian regulatory approval and will not proceed.

“While we are disappointed with the outcome, we are very pleased that TMAC achieved significant operational improvements at Hope Bay.”

The company has developed and is currently evaluating mining and processing plant alternative scenarios to reduce capital expenditures and financing requirements.

As of 30 September, TMAC Resources had a $71.5m cash balance and is generating positive cash flow.

Neal concluded: “I would like to thank the TMAC employees and contractors for their hard work and dedication this year as we have dealt with the unprecedented Covid-19 pandemic and the uncertainties of the transaction, while concurrently improving our safety performance and productivity.”

The Hope Bay property in Nunavut, Canada, is an 80km x 20km Archean greenstone belt that has been explored by BHP, Miramar, Newmont and the company for more than 30 years.