First Quantum strikes standstill deal with Jiangxi Copper

First Quantum Minerals Ltd. (FM-TSX) said it has reached an agreement with Jiangzxi Copper that limits the Chinese state-owned firm’s ownership of the Canadian copper miner. Details of the agreement are included in First Quantum’s second quarter, 2024, financial results, which were released after the close of trading on July 23, 2024.

First Quantum said the shareholder rights agreement prevents Jiangxi from buying more stock in the company or selling a share block of 5.0% or larger without First Quantum’s consent. The three-year agreement also gives Jiangxi the right to nominate one person for consideration by First Quantum’s governance committee to the board of directors. Jiangxi already holds an 18.5% stake in First Quantum and bought an additional $212 million worth of shares in January, 2024.

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 among the largest copper mines in Africa.

First Quantum was ordered by the Panamanian government to close its Cobre Panama copper-gold mine in the wake of country-wide protests. After a production halt in November, 2023, the mine was placed into a phase of preservation and safe management.

Cobre Panama 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 July 1, 2024, the new President of Panama, Jose Raul Mulino, was inaugurated into office. In his inauguration speech, he announced that the Government of Panama will conduct, with international experts, a strict environmental audit of the Cobre Panama mine. First Quantum said it welcomes the audit to broaden the understanding of conditions at the mine and the challenges to environmental management brought about by the abrupt mine suspension.

Meanwhile, the company said it has taken two steps towards arbitration proceedings, one under the Canada-Panama Free Trade Agreement and another under the International Chamber of Commerce pursuant to the arbitration clause of the refreshed Concessions Contract.

However, First Quantum said that arbitration is not the preferred outcome for the situation in Panama, and it remains committed to dialogue with the new government of Panama and to being part of a solution for the country and its people.

First Quantum’s second quarter operational highlights included total copper production of 102,709 tonnes, a 2.0% increase from the first quarter of 2024. Copper sales volumes totaled 94,628 tonnes, approximately 8,081 tonnes lower than production due to the timing of shipments and vessel delays at Walvis Bay, Namibia, and Dar-es-Salaam, Tanzania related to weather, port congestion and schedule disruptions.

First Quantum reported a second quarter loss of US$46 million or $0.06 per share and an adjusted loss of US$13 million or $0.02.

On Wednesday, First Quantum shares rose 3.36% or 55 cents to $16.89. The shares trade in a 52-week range of $39.13 and $9.31.