China Union and Lithium Chile Receive Notice Under The Investment Canada Act

Lithium Chile Inc. and China Union Holdings Ltd. announced on August 17, 2026, that they received a notice under subsection 25.2(1) of the Investment Canada Act regarding the proposed sale of all outstanding shares of Argentum Lithium S.A. to China Union. The notice indicates that the Director of Investments has reasonable grounds to believe the transaction could be injurious to national security and that an order for further review may be made under subsection 25.3(1).

Lithium Chile had previously written to Innovation, Science and Economic Development Canada on January 7, 2026, arguing that Argentum is not a Canadian company, does not own Canadian assets, has no employees or place of business in Canada, and does not satisfy the criteria under paragraph 25.1(c) of the ICA. The company stated it received no response to that correspondence prior to receiving the notice.

Lithium Chile and China Union are currently reviewing the notice with legal advisors. Lithium Chile maintains that the sale of a foreign asset falls outside ISED jurisdiction and intends to forcefully advance that position while seeking all available legal remedies.

Lithium Chile Inc. (LITH) faces a significant regulatory hurdle that threatens the US$175 million sale of its Arizaro project, a transaction previously valued at approximately C$248 million. Against a market capitalization of roughly C$111.6 million, this deal represents the dominant value event for the company. The sale had progressed with 96% shareholder approval secured in May 2026 and a US$5 million deposit received from China Union. The closing was originally targeted for June 2026, but on June 18, 2026, the drop-dead date was extended 60 days to August 20, 2026, with a possible further extension to October 19, 2026.

The arrival of the ICA notice just two days before the current drop-dead date materially increases the risk of delay, renegotiation, legal proceedings, or outright termination. While previous public updates focused on Chinese outbound investment approval, shareholder approval, Salta regulatory approval, and TSXV approval, a formal Canadian federal national-security review presents a more serious and less predictable obstacle.

If the transaction is blocked or significantly delayed, Lithium Chile loses the near-term liquidity expected to fund a Substantial Issuer Bid and future exploration, likely forcing the company to seek additional capital on less favorable terms. This regulatory threat is particularly concerning given the company’s financial fragility. Prior-period context shows that Q1 2026 net loss was C$6,417,190, with no revenue, cash of C$5,937,947, and modest operating cash consumption.

Lithium Chile Inc. is a lithium exploration and development company with assets in Chile and Argentina. The company’s portfolio comprises 11 properties covering 106,136 hectares in Chile and 29,245 hectares on the Salar de Arizaro in Argentina. An investor presentation describes a slightly larger Chilean package of 113,038 hectares across 12 salars.

The flagship asset is the Arizaro project in Salta Province, Argentina, which holds an NI 43-101 resource estimate of 4,122,000 tonnes LCE. A prefeasibility study indicates an after-tax NPV of US$2.8 billion and an after-tax IRR of 36.3% at a long-term lithium carbonate price of US$30,513 per tonne, with capital expenditures of US$1,055 million. These are project-level figures.

Lithium Chile has agreed to sell Arizaro through the sale of Argentum Lithium S.A. to China Union Holdings Ltd. for US$175 million. If the sale closes, the company intends to return a majority of net proceeds to shareholders through a Substantial Issuer Bid.

Other assets include:

• Coipasa: 19,200 hectares in Chile, one of six projects prioritized by the Chilean government for a Special Lithium Operation Contract.
• Block IV: 8,445 hectares in Argentina, retained after the Arizaro sale.
• Molle Verde, Helados, Laguna Blanca, Turi, and other early-stage Chilean salars.