The 19-year-old Croatia striker has been training with City for the last few months and the Premier League champions were keen to sign him on a permanent deal.
But the former Hadjuk Split forward was denied a work permit and he has now returned to his homeland to sign for Slaven Belupo, but he remains hopeful he will one day be able to sign for City.
Mario Jelavic: "Roberto Mancini told me that everything is sorted out, that we have an agreement and that I will stay at City," he told Sportske Novosti.
"But than it became clear that there will be problems with the work permit. They say that they will keep watching me so I really hope that everything is not dead yet.
"I had a great time over there, everybody helped me so much. It was great experience and I hope that one day I will have the luck to play for such a great club."
Source: Manchester City MAD