First Quantum Minerals Ltd. (TSX-FM) and Franco Nevada Mining Corp. [TSX, NYSE-FNV] both issued statements Tuesday saying they have noted the announcement by Panamanian President Laurentino Cortizo who has said his country will hold a referendum to decide whether to scrap a contract with the Canadian miner following days of protests by opponents of First Quantum’s open pit copper mine.
Cortizo has said the vote will take place on December 17, 2023. Subsequent reports say that under Panamanian law, referendums are non-binding. The reports also suggest that the Electoral Tribunal in Panama doesn’t think it can affect a referendum.
First Quantum said it has contacted the government in order to understand the details in respect of the popular consultation.
First Quantum said it has always been an advocate of Panama and its people and is committed to the rule of law with the objective to achieve benefits for the country, its citizens, the company and its stakeholder.
“We are proud to be a significant contributor to the Panamanian economy and to create employment and empowerment opportunities for tens of thousands of Panamanians and sponsor a wide range of social, cultural and biodiversity programs across the country,’’ the company said.
“We are fully committed to operating in an environmentally sensitive manner, by meeting all the environmental compliance obligations and by supporting Panama’s biodiversity through our reforestation, species conservation, and protected area plans,” it said in a press release.
“We remain committed to reforesting almost double the area that we mine. The protected areas and national parks that we support represent more than 30 times the footprint of our mine.’’
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.
On March 8, 2023, First Quantum and the government of Panama reached an agreement covering terms and conditions for a refreshed concession contract at Cobre Panama. Panama’s government and the mining company agreed on a contract which would guarantee the Central American nation annual income of US$395 million while allowing First Quantum’s local unit to operate the Cobre Panama project, an open pit copper mine for at least 20 years.
However, protesters have criticized both the deal and the mine’s environmental costs, even after Cortizo on October 27, 2023, rejected all new mining projects.
Cobre Panama contributes to approximately 5.0% of Panama’s GDP, makes up 75% of the country’s export goods and has created at least 40,000 jobs, directly and indirectly, that supports an estimated 100,000 or more Panamanians.
Franco Nevada is a Toronto based royalty and streaming company. It recently garnered 15% of its revenue in a single quarter from Cobre Panama. Franco-Nevada bears no cost for the production that isn’t delivered the company has said.
On October 30, 2023, First Quantum shares fell 28.4% or $7.96 to $20 on volume of 9.92 million. The shares trade in a 52-week range of $39.13 and $19.36.
On the same day, Franco-Nevada fell8.4% or $16.19 to $194.47 on volume of 844,240.