Lithium Chile Challenges Canadian Review of China Deal

Lithium Chile (TSXV:LITH,OTCPL:LTMCF) is challenging the Canadian government’s jurisdiction over a national security review that threatens to stall the sale of its Argentine subsidiary to China Union Holdings.

The Calgary-based exploration company announced it is evaluating legal and transactional alternatives after receiving a formal notice under the Investment Canada Act.

The pending transaction, initially announced on December 22, 2025, involves China Union acquiring all outstanding shares of Argentum Lithium. Argentum's sole asset is a 62.2 percent stake in ARLI S.A., the operator of the Arizaro lithium project in Argentina’s Salta Province.

On August 17, Lithium Chile and China Union received a notice under subsection 25.2(1) of the legislation. The document stated the Director of Investments has reasonable grounds to believe the sale could be injurious to Canadian national security and warned that a deeper review order may follow.

Lithium Chile immediately contested the federal intervention, arguing the divestment falls entirely outside the purview of Innovation, Science and Economic Development Canada.

In correspondence sent to the regulator on January 7, 2026, the company detailed that Argentum operates no business in Canada, maintains no Canadian offices, employs no Canadian residents, and owns no domestic assets.

Despite proactively notifying the government in January, Lithium Chile received no response prior to the mid-August intervention.

The company criticized the extensive regulatory silence, noting that investors assessed the transaction and made decisions based on the reasonable understanding that no federal review had been initiated.

Management stated that allowing the market to rely on the absence of regulatory action for more than seven months before suddenly intervening creates severe uncertainty and threatens to undermine investor confidence across Canada’s capital markets.

The delay also stalls Lithium Chile’s broader corporate strategy, which hinges on reinvesting the transaction proceeds into its 106,136-hectare portfolio of high-potential projects in Chile.

Despite the regulatory roadblock, Lithium Chile and China Union remain committed to closing the transaction. Executives and legal advisors from both firms are coordinating a defense while evaluating alternative deal structures to monetize the Arizaro project in compliance with applicable laws.

“Our message to shareholders is straightforward: China Union remains committed to this Transaction, Lithium Chile remains committed to this Transaction, and we are working together to determine the most effective path forward,” Lithium Chile President and CEO Steve Cochrane said.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.