The Market Online - At The Bell

Join our daily newsletter At The Bell to receive exclusive market insights

  • Winsome Resources (WR1) acquires Hong Kong-based Sinomine Rare Metals Resources’ shares in TSX-V-listed Power Metals
  • This comes after the Canadian Government ordered Sinomine and two other Chinese companies to sell their investments in Canadian critical minerals amid a national security review
  • As such, Winsome is acquiring the shares in Power Metals for C$2 million (A$2.2 million) in cash as well as Sinomine’s offtake rights in Power’s Case Lake project in Ontario
  • Winsome says this is an “exciting opportunity” and has begun strategic discussions with Power Metals
  • WR1 shares are up 2.73 per cent to trade at $1.13 at 1:31 pm AEDT

Following recent changes to Canadian law, Winsome Resources (WR1) has agreed to acquire Sinomine Rare Metals Resources’ shares in TSX-V-listed Power Metals.

The Canadian Government recently ordered three Chinese companies, including Sinomine, to divest their investments in Canadian critical minerals.

The ban reportedly came after Canada announced a tougher policy on foreign investments in the minerals sector amid the rise in demand for a cleaner economy.

Minister of Innovation, Science and Industry François-Philippe Champagne issued a statement last month regarding national security.

“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,” he said.

As a result, Winsome will acquire the shares that Sinomine owns in Power Metals, as well as Sinomine’s offtake rights for lithium, caesium and tantalum from Power’s Case Lake project in Ontario, Canada.

Winsome’s Managing Director Chris Evans said this is an “exciting opportunity” to expand in the Canadian critical minerals space.

“The minerals are all in high demand within North America and the rights to the offtake agreement are another positive step in the Winsome journey. We look forward to working with Power Metals to assist in developing this impressive project,” Mr Evans said.

“However, it is important to note our current plans are for this to remain a passive investment with potential to generate longer term returns,” he stated as the company’s immediate focus will remain on its Cancet and Adina projects.

Winsome will acquire Sinomine’s total interests in Power Metals and its project for C$2 million (A$2.2 million) in cash and will fund this from existing cash reserves.

As per the original offtake terms, Winsome will pay to Power for all lithium, caesium and tantalum 95 per cent of their market value, as determined with reference to the Asian Metal Market.

However, if the company chooses not to purchase the lithium, caesium or tantalum, Power Metals may sell those materials to a third party.

The term of the agreement will remain in effect for three years from March 17, 2022 which is when it was first signed, and shall continue so long as Winsome holds at least 2.5 per cent of the issued and outstanding common shares of Power Metals on a non-diluted basis.

Winsome and Power have now begun strategic discussions on the development of the Case Lake project and are also discussing Winsome assuming the position currently held by Sinomine on Power Metals’ board.

The companies expect the acquisition will be complete on December 2.

WR1 shares were up 2.73 per cent to trade at $1.13 at 1:31 pm AEDT.

WR1 by the numbers
More From The Market Online
The Market Online Video

Market Close: Consumer stocks drag market lower; Alara starts copper production in Oman

The ASX200 has closed the day down 0.15 per cent at 7724 points.
The Market Online Video

Orcoda welcomes Maree Adshead as Non-Executive Director

Orcoda (ASX:ODA) has welcomed Maree Adshead as an independent Non-Executive Director.

Cynata Therapeutics advances Phase 2 trial for high-risk aGvHD treatment

The market has responded favourably to Cynata Therapeutics' announcement regarding its Phase 2 clinical trial on…
The Market Online Video

Market Update: ASX trades flat as materials leads the market

The ASX200 is trading flat this afternoon, up just .10 of a per cent in line…