Jacob Lorinc
Tue, January 16, 202
(Bloomberg) -- First Quantum Minerals Ltd. will cut spending, pause its dividend and put smaller mines up for sale in a sweeping effort to free up cash after it was ordered to shutter its $10 billion copper operation in Panama.
The Canadian miner said Monday that it’s considering a range of capital-market options to maintain its financial position and is working with banks to “address and extend” its bank loan facilities. It’s also considering selling stakes in larger mining assets after receiving expressions of interest from potential investors.
Shares of First Quantum fell 2.2% to C$13.11 at 9:32 a.m. in Toronto.
First Quantum is reeling from the fallout of Panama President Laurentino Cortizo’s abrupt orders to shutter its biggest asset late last year, following a ruling from the Supreme Court that invalidated the mine’s operating contract. The closing of Cobre Panama, which accounted for 78% of First Quantum’s operating profit in the first nine months of 2023, has wiped out more than half of the miner’s market value and cast the company’s finances into uncertainty as billions of dollars of its debt mature in the coming years.
First Quantum plans to cut capital spending by $400 million this year — to a range of $1.2 billion to $1.4 billion — in part from slowed spending on Cobre Panama, as well as moves to combat cost growth at its Zambian mines.
Without Cobre Panama operating, the company also said it expects copper output to fall by nearly half from last year. The company produced 708,000 metric tons of copper in 2023 and expects to produce 370,000 tons to 420,000 tons in 2024.
The strategy released on Monday “doesn’t have all the answers yet — and that could be modestly disappointing to the market — but we continue to believe that First Quantum will manage through this difficult situation,” Bank of Montreal analyst Jackie Przybylowski said in a Tuesday note to investors.
First Quantum had previously announced plans to pause mining operations at its Australian nickel mine. Bloomberg also reported last week that the company has started a process to sell a copper mine in Spain.
The crisis has drawn attention from rival Barrick Gold Corp., which Bloomberg reported earlier this month has approached some of First Quantum’s top shareholders to gauge support for a potential takeover.
Read More: Barrick Said to Gauge First Quantum Holders on Possible Bid
In Monday’s statement, First Quantum said it has held discussions this month with Panama’s ministry of commerce and industries related to the mine’s current status of suspension, which it described as “preservation and safe management.” The costs to maintain the site are estimated at $15 million to $20 million per month, the company said. It is due to present an initial plan to the government on Jan. 16.
First Quantum has said it is still “committed” to Panama despite the setbacks, and has embarked on a campaign to advertise the mine’s benefits ahead of a key presidential election in May that could determine the project’s fate.
Cobre Panama is one of the world’s newest and largest copper operations, and generated about 1.5% of the world’s supply of the metal before it halted operations last year because of protests that blocked access to key supplies.
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First Quantum Halts Australian Nickel Mine on Weak Metal Price
Jacob Lorinc
Mon, January 15, 2024
(Bloomberg) -- First Quantum Minerals Ltd. said it will halt mining at its nickel and cobalt operation in Australia and cut a third of the workforce in response to weaker metal prices and higher costs.
The Canadian mining company said the suspension at the Ravensthorpe Nickel Operation, located in Western Australia, reflects a three-year plan to stop mining activity at the site and produce nickel concentrate from existing stockpiles.
“The decision results from the significant downturn in the nickel price experienced during 2023, combined with currently higher operating costs in Western Australia, and a requirement to improve the financial viability of RNO at current nickel prices,” the company’s Australian unit said in a statement on Monday.
The new operating model would allow the plant to continue producing and exporting nickel from stockpiles, while the company would be able to resume mining activities when prices improved, it said.
Nickel dropped 45% last year, weighed down by a flood of cheap supply from Indonesia, where new techniques to produce battery-grade material are threatening to disrupt the industry. The plunge across battery metals has forced mining companies to stall projects, abandon deals and scramble for cash.
First Quantum is also facing pressure to cut costs following orders from Panama’s government to permanently shutter its flagship copper mine, Cobre Panama, which generated 78% of the company’s operating profit in the first nine months of last year. The company initiated a process to sell a copper mine in Spain in December after Panama’s sudden directives left the company facing financial uncertainty.
The suspension of mining will reduce the facility’s direct workforce by approximately 30%, with contractors to be redeployed by their employers, the company said.
Bloomberg Businessweek
Jacob Lorinc
Mon, January 15, 2024
(Bloomberg) -- First Quantum Minerals Ltd. said it will halt mining at its nickel and cobalt operation in Australia and cut a third of the workforce in response to weaker metal prices and higher costs.
The Canadian mining company said the suspension at the Ravensthorpe Nickel Operation, located in Western Australia, reflects a three-year plan to stop mining activity at the site and produce nickel concentrate from existing stockpiles.
“The decision results from the significant downturn in the nickel price experienced during 2023, combined with currently higher operating costs in Western Australia, and a requirement to improve the financial viability of RNO at current nickel prices,” the company’s Australian unit said in a statement on Monday.
The new operating model would allow the plant to continue producing and exporting nickel from stockpiles, while the company would be able to resume mining activities when prices improved, it said.
Nickel dropped 45% last year, weighed down by a flood of cheap supply from Indonesia, where new techniques to produce battery-grade material are threatening to disrupt the industry. The plunge across battery metals has forced mining companies to stall projects, abandon deals and scramble for cash.
First Quantum is also facing pressure to cut costs following orders from Panama’s government to permanently shutter its flagship copper mine, Cobre Panama, which generated 78% of the company’s operating profit in the first nine months of last year. The company initiated a process to sell a copper mine in Spain in December after Panama’s sudden directives left the company facing financial uncertainty.
The suspension of mining will reduce the facility’s direct workforce by approximately 30%, with contractors to be redeployed by their employers, the company said.
Bloomberg Businessweek
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