TORONTO, May 21 (Reuters) - Solaris Resources ( SLSR )

has scrapped plans to sell a minority stake to China's Zijin

Mining Group because it feared the deal was unlikely

to meet Canada's stringent foreign- investment standards in a

timely manner, the Canadian company said on Tuesday.

In January, Solaris announced plans to sell a 15% stake in

the company to state-owned Zijin for C$130 million ($95

million)to help develop its Warintza copper project in Ecuador.

But the deal needed approval under the Investment Canada Act,

which was revamped in late 2022 to bring additional scrutiny on

foreign investments from state-owned enterprises in the critical

minerals sector.

"That this transaction cannot be completed in a reasonable

time frame signals that Canada's critical minerals policy is

counterproductive in relation to foreign assets," said Solaris

Resources' ( SLSR ) CEO, Daniel Earle, in a statement.

The company's share price had underperformed compared with

its peers due to the overhang of Canadian regulatory uncertainty

"in an environment of heightened domestic political

sensitivity," Earle added.

The stock was down 0.4% on the Toronto Stock Exchange late

on Tuesday morning, compared with 0.3% rise in the benchmark

Canadian share index.

In a research note, RBC Capital Markets said the scrapping

of the deal removes regulatory uncertainty and the dilutive

value of the transaction.

Canada's government has taken a tough stance specifically on

investments from China in critical minerals such as copper,

graphite and lithium. Earlier this year, Canada asked SRG Mining ( SRGMF )

, a graphite miner, to call off a planned investment from

China's Carbon One New Energy Group.

($1 = 1.3641 Canadian dollars)