First Quantum halts Australian nickel mine

First Quantum Minerals Ltd. (FM-TSX) said it will halt mining at its Ravensthorpe open pit nickel operation in Western Australia. The move is the latest development after the company was recently ordered by the Panamanian government to close its Cobre Panama copper-gold mine in the wake of country-wide protests.

In addition, First Quantum has released three-year operating guidance, excluding Cobre Panama, while announcing a new plan to improve the balance sheet and corporate liquidity via potential asset sales and other initiatives, including the suspension of the dividend.

First Quantum shares eased 2.6% or 35 cents to $13.05 on volume of 322,860. The shares trade in a 52-week range of $39.13 and $9.31.

Cobre Panama is First Quantum’s flagship operation. It is a huge open-pit copper project located in the Panama jungle, about 120 kilometres west of Panama City and ranks as First Quantum’s key asset.

In Zambia, First Quantum wholly owns the Sentinel mine and 80% of the Kansanshi mine, with the balance owned by the Zambian government. It has operating mines in Finland, Turkey, Spain, Australia and Mauritania.

First Quantum achieved annual copper production of 708,000 tonnes, a 9.0% reduction from 2022. After the successful completion of the CP100 Expansion project, Cobre Panama delivered annual copper production of 331,000 tonnes before halting operations in November and placing the mine into a phase of preservation and safe management.

Zambian production of 349,000 tonnes was lower than 2022 due to a combination of lower throughput at both sites and lower grades at Kansanshi. Copper production in the fourth quarter of 2023 was 160,000 tonnes, 22% lower that the fourth quarter of 2022, and 28% lower than the third quarter of 2023 respectively. This was mainly due to the ramp down of operations at Cobre Panama in November, 2023.

Meanwhile, excluding Cobre Panama, First Quantum is guiding investors to anticipate copper production of 370,000 to 420,000 tonnes in 2024, increasing to 400,000 to 460,000 tones in 2025 and 2026 as the S3 Expansion at Kansanshi comes on line.

At Ravensthorpe, weak nickel prices, lower payabilities and high operating costs have resulted in significant margin pressure leading to the decision to scale back operations. The company said it aims to preserve the higher-grade Shoemaker Levy orebody until nickel prices recover and operating margins improve.

In the fourth quarter of 2023, First Quantum reported 7,000 tonnes of nickel production. The company has previously said it was aiming to produce 30,000 tonnes of contained nickel on an annual basis at Ravensthorpe.

First Quantum President and CEO Tristan Pascall said the company is taking steps to conserve capital and lower costs. “This will enable the continued development of the Kansanshi S3 Expansion, which will further strengthen our cash flows when commissioned next year.

Pascall said recent discussions in Panama have been constructive regarding the responsible environmental stewardship of the mine.