First Quantum ‘cautiously optimistic’ about Panama mine restart
Canada鈥檚 First Quantum Minerals (TSX: FM) remains cautiously optimistic about its prospects in Panama as the government weighs how and when to reopen the shuttered Cobre Panam谩 copper mine.
Legal discussions are ongoing as authorities explore the path forward for First Quantum to release stockpiled concentrate and restart the site鈥檚 power plant. These talks follow First Quantum鈥檚 decision to withdraw its international arbitration cases against Panama in early April.
President Jos茅 Ra煤l Mulino has signalled interest in a new partnership model that reinforces national ownership of the mine, but he cautioned that a full closure could take up to 15 years given the project鈥檚 scale and economic impact. The mine directly and indirectly supports tens of thousands of jobs.
鈥淟et鈥檚 be smart and get the most benefit as Panamanians from a mine we already have,鈥 Mulino said.
Originally launched as an environmental audit, the review may now expand to include financial terms. BMO Capital Markets analyst Matt Murphy, who attended the annual AGM dinner in Toronto last week, sees this as a potential benefit, suggesting that parallel reviews could speed up a resolution.
Fiscal negotiations have not yet started, and it鈥檚 unclear whether Panama has secured legal experts with mining-specific experience. According to BMO, the previously negotiated terms are likely obsolete. 鈥淭he priority now is to develop new terms that position Panama as a competitive destination for global mining investment鈥, Murphy wrote.
There is precedent for restarting the mine through a state-private mechanism that would bypass the need for National Assembly approval. BMO also sees no current threat to Franco-Nevada鈥檚 streaming agreement.
Despite recent unrest, the administration has shown a firm commitment to upholding the rule of law, and illegal blockades of roads and ports are unlikely to be tolerated. Public sentiment may also be shifting.
First Quantum hosted some 300,000 virtual site visits in Panama, helping to improve the mine鈥檚 public image. President Mulino聽swiftly halted the tours, saying the company had not consulted the government and that no meaningful progress had been made toward resolving the dispute. He stressed that First Quantum should not give the impression the site is operational.
Cobre Panam谩, Central America鈥檚 largest open-pit copper mine, produced more than 330,000 tonnes of copper in 2023 before operations halted. The $10-billion project was on track to hit an annual output of 100 million tonnes by the end of 2024, which would place it among the top copper producers globally.
Zambia boost
First Quantum continues to advance its $1.3-billion S3 expansion at the Kansanshi copper mine in Zambia. Scheduled to open later this year, the upgrade will increase ore processing capacity from 30 million to 55 million tonnes annually and extend the mine鈥檚 life by over 20 years.
At its Sentinel mine in Zambia, the company has identified the cause of a recent mill failure鈥攁 stress concentration point in a flange bolt 鈥 and is currently implementing a fix.
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