First Quantum may shut Panama copper mine on Feb 20

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First Quantum Minerals Ltd. [FM-TSX] has warned that it may be forced to suspend mining operations at its flagship Cobre Panama copper-gold mine in Panama on February 20, 2023, due to ongoing government impediments that are restricting its ability to ship concentrate.

The warning is contained in a press release that details the company’s fourth quarter and year-end 2022 results as well as forecasts for 2023.

In the fourth quarter of 2022, First Quantum posted a gross profit of US$361 million, EBITDA (earnings before interest, tax, depreciation and amortization) of US$647 million, net earnings attributable to shareholders of $0.017 per share , and adjusted earnings of $0.22 per share.

Total copper production for the fourth quarter was 206,007 tonnes, a 6% increase from the third quarter of 2022

Relative to the third quarter [Q3 2022], fourth quarter financial results benefitted from higher realized metal prices, partially offset by lower gold sales volumes. The company reported fourth quarter cash costs of US$1.86 per pound, an increase of US$0.04 per pound from Q3, 2022.

The company said three-year guidance on production, cash costs, all-in-sustaining costs and capital expenditures that was previously disclosed on January 16, 2023, remain unchanged.

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 operation is Cobre Panama, the world’s largest new copper mine where the company is locked in a tax dispute with the Panama government.

In a recent update, the company received a resolution, issued by the Panama Mining Authority (AMP) requiring the suspension of concentrate loading operations at the Cobre Panama port, Punta Rincon, until evidence is provided that the process of certification of the calibration of the scales by an accredited company has been initiated.

“The resolution is part of a series of escalating attempts by the Government to pressure the company into accepting a refreshed concession contract on the Government’s terms,’’ First Quantum has said.

Cobre Panama operation is operated by First Quantum subsidiary Minera Panama S.A. (MPSA). The company and government have been discussing a deal that would increase annual tax payments to the country to at least US$375 million.

First Quantum says it is working on a plan for how to operate Cobre Panama under care and maintenance, but hopes to avoid this outcome.

“As previously reported, if AMP’s measures persist, it may become necessary to shut down the Cobre Panama mine if concentrate is not shipped by approximately February 20, 2023, due to limited storage capacity at the site,’’ the company said.

On February 14, 2023, when First Quantum shares closed at $27.21. The shares are currently trading in a 52-week range of $45.38 and $18.67.

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