FQM Initiates Strategic Measures Following Cobré Panama Closure
First Quantum has announced plans to explore the sale of smaller mines in its portfolio and stakes in larger mining assets as part of strategic measures to address challenges arising from the closure of Cobré Panama.
The company, however, dismissed rumors of selling a stake in the company or whole mines, particularly in Zambia, where it remains committed.
The closure of Cobré Panama resulted from a dispute with the Panamanian government, which ruled in December that the mine’s license violated several articles of the country’s constitution.
First Quantum faces a debt of $1.05 billion maturing in early 2025, and Fitch has warned of a potential covenant breach if the Cobré Panama mine remains permanently shut, leading to a significant increase in the net debt leverage ratio.
In response to these challenges, First Quantum has decided to suspend dividends to protect its balance sheet. The company also plans to cut spending by $400 million in the current year, with a spending range of $1.2 billion to $1.4 billion.
This reduction is partly attributed to decreased spending on Cobre Panama and efforts to control cost growth at its Zambian mines.
Workforce reduction is another aspect of the company’s cost-cutting measures, with plans to decrease the number of workers to below 1,000 from approximately 1,400 at the Panama mine.
The Australian nickel mine will experience production cuts due to a significant downturn in metal prices last year, leading to a 30% reduction in the operation’s workforce.
First Quantum CEO Tristan Pascall stated that recent discussions in Panama have been constructive regarding the responsible environmental stewardship of the mine.
In its production report for the 12 months ending December, the company revealed a 22% drop in fourth-quarter copper production to 160,000 metric tons.
For the current year, First Quantum anticipates copper production between 370,000 and 420,000 tons, excluding the Panama mine, down from 708,000 tons in the previous year.
The crisis at Cobré Panama has attracted attention from rival Barrick Gold Corp., which has reportedly approached some of First Quantum’s top shareholders to assess support for a potential takeover.
