First Quantum Minerals Ltd. (FM-TSX) said its Cobre Panama copper mine in Panama is running as normal. The company also said it has resumed talks with the Government of Panama in a bid to resolve a dispute of the huge mining operation, which is operated by First Quantum subsidiary Minera Panama S.A. (MPSA). The two sides have been discussing a deal that would increase annual tax payments to the country to at least US$375 million.
“Formal discussions between First Quantum, MPSA and the Government of Panama resumed on December 26, 2022 regarding the long-term future of the Cobre Panama mine,’’ First Quantum said in a press release containing an update on the discussions. It said the talks continued on December 27, 2022, and are ongoing. “The company remains committed to seeking a mutually beneficial agreement as soon as possible,’’ First Quantum said in the release.
First Quantum shares advanced on the news, rising 3.3% or 91 cents to $28.76 on volume of 536,760. The shares are currently trading in a 52-week range of $45.38 and $18.67.
“We appreciated the Government of Panama’s constructive engagement this week,’’ the company said. “The preferred option for both sides is to achieve a balanced agreement that will benefit all parties for many years to come. We have ambitious plans for Cobre Panama and strongly believe that an agreement would pave the way for additional investment in Panama and its people.’’
Meanwhile, the company said operations at Cobre Panama continue as normal with no disruptions to production. However, it said MPSA received formal notification from the government on December 21, 2022, of a resolution requiring MPSA to submit a plan within 10 working days of such notification to suspend commercial production at Cobre Panama and put the mine under care and maintenance.
“MPSA is working through a number of steps to respond to the resolution, of which impact and timing are uncertain, and in-order to address the complex practicalities of reducing operations of the size and scale of Cobre Panama,’’ the company said.
“First Quantum continues to do everything possible to support the Cobre Panama workforce and protect its investment in the mine,’’ it said.
First Quantum went on to say that MPSA has initiated precautionary legal measures in the Panamanian courts and through arbitration under the existing Concession Contract. “First Quantum has also notified the Government of its intent to initiate international arbitration under the Canada-Panama Free Trade Agreement.’’
First Quantum is a diversified mining company that is engaged in the production of copper, nickel, gold and zinc. 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.