Solaris Resources Faces Major Setback As Deal With Zijin Mining Falls Through

Puyo, Ecuador – Canada’s Solaris Resources (SLS.TO) announced yesterday that a CAD$130 million investment deal with Chinese firm Zijin Mining was dead, abruptly ending a much touted infusion of capital needed to advance its flagship Warintza project. But the announcement is just the latest in a string of setbacks for Solaris that puts the project in jeopardy.

The minority equity investment – which would have given Zijin a 15% stake in Solaris and a seat on the board of directors – was pending regulatory approval from Canada’s Ministry of Innovation, Science, and Economic Development. This ministry must approve any foreign investment in Canadian companies in the critical minerals sector under the Investment Canada Act. However, the premature termination of the deal, before the ministry had even issued a decision, highlights the ongoing problems plaguing the project.

Since the deal was first announced in January 2024, the company has been hit with multiple controversies that have contributed to a drag on the company’s stock price and raised questions about the viability of Warintza and whether Solaris has been properly disclosing the project’s risks to shareholders.

In an apparent attempt to raise some operating cash quickly, Solaris entered into a CAD$35 million bought deal offering agreement yesterday at CAD$4.90 per share. Today the market has reacted with a significant drop in its public share price, leaving the purchasers at a loss before the ink on the deal is even dry.

In March, the International Labor Organization (ILO) concluded that the Shuar Arutam People (PSHA), comprising 47 communities spread across 230,000 hectares in which the Warintza project is located, had not been consulted. The lack of consultation violates PSHA’s rights as guaranteed in ILO Convention 169 and enshrined in Ecuador’s constitution.

The ILO decision reinforced a complaint filed by PSHA in February with the British Columbia Securities Commission (BCSC) which illustrated that the lack of consultation and consent contradicts Solaris’ public claims that it had “constantly consulted” local communities and has a social license to operate. Solaris misrepresented or omitted material facts on the lack of consultation and consent in disclosures to the BCSC, misleading investors at the annual Prospectors and Developers Association of Canada (PDAC) conference in Toronto. Additionally, Solaris was forced to rectify various misleading technical claims about the project in its disclosures last week.

“Solaris is trying to pass this off as a regulatory issue, which is yet another effort by the company to mislead shareholders. The fact remains that this project is riddled with controversy, lacks a social license to operate, and will likely go the way of the many paralyzed mining projects in Ecuador,” said Mary Mijares, Fossil Finance Campaigner with Amazon Watch.

Meanwhile, conflict around the project has escalated on the ground. Unable to obtain consent from PSHA, Solaris sought to portray buy-in for the project from a different Shuar federation on the eve of the PDAC conference. But the president of the Interprovincial Federation of Shuar Centres (FICSH) had negotiated behind closed doors with the company and was later removed by democratic vote. Subsequently, violence ensued, and the headquarters of the federation were attacked with stones, dynamite, and Molotov cocktails.

“This is a major victory for us. Nobody should invest in this project because it violates our collective rights, threatens our territory, water sources, and environment, and will take a devastating toll on the Amazon and society in general. We’re tired of hearing about how mining brings development and is sustainable. Do you know what is critical? Our rainforests are critical. Our rivers are critical. Our climate is critical. Our territory, our autonomy, our rights are critical. We continue to reject this project, and our resistance will continue until this project – and the mining concessions on our ancestral lands – are canceled,” said Jaime Palomino, President of the Shuar Arutam People (PSHA).

Industrial mining for copper and gold is expanding throughout the Amazon basin, often in the name of the “green” energy transition away from fossil fuels. But the industry is taking a major toll on the region’s environmentally fragile and culturally sensitive areas and violating the rights of Indigenous peoples as the Amazon biome reaches a dangerous tipping point.

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