SRG Mining’s move to UAE would avoid national security review on Chinese investment in Canada

SRG Mining (TSXV:SRG) said on Monday it is redomiciling to the Abu Dhabi Global Market in the United Arab Emirates (UAE).

The redomiciliation, SRG said, will provide the company with expanded “strategic optionality” as the UAE has a double taxation treaty and a bilateral investment treaty with the Republic of Guinea, West Africa, where SRG’s main asset, the Lola Graphite project, is located.

The move will also avoid a national security review into its financing deal with China’s Carbon ONE New Energy Group (C-ONE), the Globe and Mail reported.

The Canadian government has scrutinized Chinese investment in the country’s junior mining sector, and in 2022 asked three Chinese companies to sell their stakes in Toronto-listed lithium explorers after a national security review, a move that raised questions about the future of other Chinese investments in the Canadian mining sector.

Canada’s Energy and Natural Resources Minister Jonathan Wilkinson told Reuters last year that the Canadian government would not force Chinese state investors to divest their stakes in large mining companies, including Teck Resources, Ivanhoe Mines and First Quantum Minerals, to avoid policy uncertainty.

C-ONE, a private anode materials company based in China, announced in July 2023 it planned to invest C$16.9 million ($12.7 million) into SRG in exchange for 19.4% of SRG’s share capital, matching La Mancha’s stake in the company upon exercise of its anti-dilution right. The deal established C-ONE as one of SRG’s largest shareholders ─ La Mancha Resource Fund is the largest.

The funds will be used to advance SRG’s large-scale mine development project in the Republic of Guinea ─ the Lola graphite project ─ as well as the development of an anode material plant, the location of which is yet to be determined.

The company said at the time the transaction is subject to registration with Chinese regulatory agencies as well as the Canadian Government, pursuant to a voluntary notification filing pursuant to the Investment Canada Act.

The company said it has met with other strategic partners who have expressed interest in becoming a Tier One supplier to the Western battery end markets and has been advancing discussions with multiple parties who have expressed interest in providing financing to advance SRG towards first production.

Located approximately 1,000 km southeast of Conakry, the capital of Guinea, the Lola deposit boasts a large mineral reserve of 42 million tonnes at a grade of 4.17% graphitic carbon (Cg). Over an estimated mine life of 29 years, it is expected to produce 54,600 tonnes of natural flake graphite annually.

SRG is currently updating the project’s feasibility study to confirm the capital and operating costs for a target initial production of 100,000 tonnes per annum, double from the initial 50,000 tpa envisioned in the 2019 feasibility study.

SRG said it aims to develop a fully integrated source of battery anode material to supply the European lithium-ion and fuel cell markets.