FQM Engages with Jiangxi Copper on Funding and Business Options
Executives from Canadian mining company First Quantum Minerals recently held discussions with Chinese government officials regarding funding and business strategies involving top investor Jiangxi Copper Co, according to three sources familiar with the matter.
The talks, which took place in Jiangxi province, covered various topics, including the potential for Jiangxi Copper to gain influence on First Quantum’s board decisions, the future of First Quantum’s Zambian assets, and the possibility of Jiangxi purchasing disputed copper concentrates inventory from Panama.
While shares of First Quantum rose 5% on the Toronto Stock Exchange following the news, the details of any potential new investments resulting from the meeting remain unclear.
Jiangxi has already invested approximately $745 million in First Quantum since November last year, but despite being a major shareholder, it lacks decision-making power on the board due to a standstill agreement limiting its equity stake to 20%.
The relationship between Jiangxi and First Quantum has experienced ups and downs since 2019, with speculation arising about a possible hostile takeover after Jiangxi’s initial investment of $1 billion.
However, Jiangxi has been supportive during recent challenges faced by First Quantum, providing financial assistance through bond and share purchases.
The closure of the Cobre Panama mine late last year, which accounts for a significant portion of First Quantum’s revenue, has led to market capital losses and debt rating cuts.
In response, First Quantum announced measures including equity offerings and a copper pre-payment agreement with Jiangxi.
Discussions between First Quantum and the Panama government are ongoing, with potential resolutions including the sale of copper concentrate to fund maintenance of the disputed mine.
Jiangxi Copper, a major player in China’s copper production, faces feedstock shortages like other copper smelters and is reportedly in talks to acquire a stake in First Quantum’s Kansanshi mine in Zambia, according to earlier reports by Reuters.
SOURCE:mining.com
