As we reported earlier this week, First Quantum (TSX: FM) has officially halted processing operations at its flagship Cobre Panama mine, which is owned by its Minera Panama subsidiary. Processing has been forced to halt due to the firms inability to ship concentrate from the mines port.
The halt of operations ultimately relates to a dispute between First Quantum and the Government of Panama, the latter of whom is working to extract higher royalties from the mine, which is the largest private investment in the country and accounts for roughly 3.5% of national GDP. When a demand to place the mine into care and maintenance was met with an appeal, the government elected to force the halt of operations via the revocation of loading permits at the mines port via the Panama Maritime Authority, by claiming that the weigh scales did not have the required certifications.
READ: First Quantum Expected To Halt Panama Operations On Thursday
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With export operations blocked, and no room left at the mine to store further concentrate, Minera Panamas has been forced to begin demobilizing its workforce and suspend processing operations. In outlining the local area impacts, the company cited that its local workforce of over 8,000 employees and contractors, as well as its weekly spend of $20 million across 2,000 Panamanian companies will feel the effects of the suspension.
First Quantum further claimed that the mine accounts for 5% of GDP and 75% of exports for Panama, while stating that directly and indirectly it supports upwards of 100,000 Panamanians – or roughly 2.2% of the population.
The suspension of operations is said to be systematic in nature, to prevent damage to equipment and preserve the integrity of the mine. Planned maintenance is expected to occur in the near term, while essential work will continue, including tailings management.
Negotiations with the government meanwhile are said to continue, and operations are said to be able to resume “within hours” if the government were to allow the resumption of shipping operations.
Separately, Franco-Nevada (TSX: FNV), who owns two precious metal streams at the mine, is expected to see its estimated 131,000 to 142,000 ounces of attributable gold equivalent ounce production for 2023 impacted by the decision to shutter the mine. The mining giant is currently viewing the suspension as a “deferral of revenue,” until operations resume.
First Quantum last traded at $25.96 on the TSX.
Information for this briefing was found via Prensa Latina and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
