Ultra Lithium (TSXV: ULT) has finally responded to a recent order issued by the Government of Canada that will see the company lose a major partner for its Laguna Verde Project in Argentina. The company was the last of three firms that were targeted by the order to respond to the decision.
The order, issued Wednesday evening, demands that Zangge Mining investment (Chengdue) Co. Ltd., a Chinese-based firm, divest of its interest in the company. The Canadian government was able to demand such a divesture as a result of the investment being related to a mineral that has been deemed to be critical to supply chains by the government, following “enhanced scrutiny” that is being taken by officials suddenly.
The company appears to be taking the decision in stride, despite the impact that a divesture by Zangge will have. In June, it was announced that the Chinese company would be taking a 65% stake in Ultra’s Argentinian subsidiary, Ultra Argentina S.R.L., which it would acquire for $10 million in cash and a further $40 million in work commitments for the Laguna Verde lithium project. It was then later reported that the company intended to spend up to $290 million developing the project through to production.
With the order issued however, Ultra and Zangge have evidently agreed to mutually terminate the definitive agreement entered into in June, rather than attempt to take up a fight with the Canadian government. Instead, they acknowledged that they are “very surprised” at the policy, and “believe that the announcement has been detrimental to the company’s many Canadian shareholders,” and intend to assess their legal options going forward.
The firm continued by stating that they “encourages the federal government to actively follow through on its commitment,” by assisting in finding alternative sources of investment.
Going forward, the company has indicated that it will continue to develop its Forgan Lake and Georgia Lake properties in Northern Ontario, where it just completed a 7,000 metre drill program, while also continuing to advance the drill program in progress at Laguna Verde in Argentina.
Ultra Lithium last traded at $0.07 on the TSX Venture.
Information for this briefing was found via the Government of Canada, Sedar, and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
