TORONTO – First Quantum Minerals Ltd. (FM-TSX) has released an update on negotiations with the Government of Panama on the framework governing the operation of the Cobre Panama mine by its subsidiary Minera Panama S.A. (MPSA).
In a press release, First Quantum said the Government of Panama and MPSA were unable to reach an agreement by the December 14, 2022, deadline imposed by the government. It said the economic package MPSA has proposed would make Cobre Panama one of the highest payers of royalties and taxes amongst the larger copper producing mines in the Americas.
“The economic package was agreed on almost all clauses and incorporated the agreements in principle made earlier this year, including a contribution of $375 million in benefits with mutually agreed protections,’’ the company said. “MPSA believes that its proposal achieves the Government of Panama’s revenue objectives and provides the necessary conditions to secure the long-term future of he mine.’’
“However, necessary legal protections on termination, stability and transition arrangements could not be agreed upon. MPSA remains available and open to further constructive dialogue.’’
First Quantum shares declined on the news, falling 5.6% or $1.83 to $30.50 on volume of 2.23 million. The shares are currently trading in a 52-week range of $45.38 and $18.67.
First Quantum is a diversified mining company that is engaged in the production of copper, nickel, gold and zinc. It has operating mines in Zambia, Finland, Turkey, Spain and Mauritania. The company’s portfolio of assets includes the Kansanshi mine in Zambia, which ranks as the largest copper mine in Africa.
The company’s chief asset is its Cobre Panama copper-gold mine in Panama, the world’s largest new copper mine.
First Quantum recently increased its stake in the open pit project to 90%. Having reached the commercial production stage in early September, 2019, Cobre Panama is expected to produce more than 300,000 tonnes of copper annually, along with gold, silver and molybdenum.
“Over the past 25 years, First Quantum and its predecessor have invested at least US$10 billion to build one of the world’s largest, safest and most advanced copper mines,’’ said First Quantum CEO Tristan Pascall. “It is the largest private investment in the history of Panama and a significant contributor to the Panamanian economy and important social programs,’’ he said. “Our goal remains to find a mutually acceptable resolution, which we believe is in the best interests of all parties, including our employees and their families and local communities, the country of Panama and the company’s investors and stakeholders.’’
Published reports say Panama’s President Laurentino Cortizo has called a cabinet meeting for Thursday to decide on a course of action after failing to reach an agreement with First Quantum in relation to the mine. Cortizo’s government lamented the company’s conduct in negotiations, including a late offer that changed a previously agreed royalty modification, according to a statement posted on a government Twitter account.