The Australian Foreign Investment Review Board is allow a Chinese company to buy a stake in Kagara. Guangdon will buy 20% of the base metal miner for $A57 million.
Kagara has mines in Western Australia and Mount Garnet in far north Queensland.
Guangdon is to take a 20% stake in Kagara worth $A57 million, helping reduce Kagara's debt.
The ABC reports the announcement was made amid a diplomatic row over an Australian Rio Tinto employee detained in Shanghai.
Kagara says it does not believe there will be any long-term fallout from the incident.
Chairman Kim Robinson says the situation is being politicised and Chinese investment in Australian miners will continue regardless.