World’s largest new copper mine ramps up

First Quantum’s Cobre Panama plant at night, Panama. Source: First Quantum Minerals Ltd.

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First Quantum’s Cobre Panama plant at night, Panama. Source: First Quantum Minerals Ltd.

First Quantum Minerals Ltd. [FM-TSX] said 2019 will be another pivotal year for the company as it continues with the ramp up of its huge Cobre Panama project. It ranks as the world’s largest new copper mine.

The first concentrate is expected to be produced by the end of March and commercial production is anticipated by the fourth quarter of 2019.

Cobre Panama is located in the Panama jungle, about 120 km west of Panama City. The concession consists of four zones covering 13,600 acres. First Quantum recently increased its stake in the open pit project to 90%.

Proven and probable reserves stand at 3.1 billion tonnes, averaging 0.38% copper, 0.07 g/t gold, 1.3 g/t silver and 0.006% molybdenum.  That material is estimated to be sufficient to support a mining operation for 40 years.

The reserves contain 11.8 million tonnes of copper and 7.3 million ounces of gold. The operation is expected to produce up to 175,000 tonnes of copper this year, rising to between 270,000 and 300,000 tonnes in 2020.

First Quantum recently said it is examining a ruling by Panama’s Supreme Court and its potential impact on Cobre Panama. The move comes after local media in Panama reported that Panama’s Supreme Court ruled in September, 2018 that Law 9, which was used to approve a mining concession contract between the state and Minera Petaquilla in February 1997, was unconstitutional.

A report by La Prensa, that was picked up by Bloomberg News Service, said the court indicated in its decision that Panama’s National Assembly accepted a contract that didn’t follow the correct legal process and therefore contravened the constitution.

The concession rights for the Cobre Panama project were obtained in 1997 under Law 9 by Minera Petaquilla, now known as Minera Panama SA, according to First Quantum filings. Minera Panama is a majority owned subsidiary of First Quantum.

First Quantum said Minera Panama understands that the Supreme Court ruling only affects the enactment of Law 9, and does not affect the mining concession contract itself, which remains in effect, and therefore allows continuity of development of the Cobre Panama Project.

In the press release containing details of First Quantum’s fourth quarter results, there was no material update on the company’s efforts to resolve the Law 9 situation.

Aside from Panama Cobre, First Quantum has major interests in seven mining operations located in Zambia, Spain, Finland, Australia and Turkey.

The company posted earnings of $182 million or 26 cents per share in the fourth quarter of 2018. Earnings for 2018 came in at $441 million or 64 cents.

Boosted by record production at the Sentinel Mine in Zambia, First Quantum produced 158,304 tonnes of copper in the fourth quarter of 2018 at an all-in sustaining cost of US$1.68 a pound.

That brought production for the year to 605,853 tonnes at an all-in sustaining cost of US$1.74 per pound.

During the fourth quarter, the company generated cash flow of $338 million. Cash flow in 2018 was $1.98 billion.

On Friday, First Quantum shares were unchanged at $13.93 on volume of 2.33 million. The shares trade in a 52-week range of $9.45 and $23.05.


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