First Quantum Minerals Ltd., a Canadian mining company, is implementing a series of measures to address its financial position after being forced to close its $10 billion copper operation in Panama. The closure of the Cobre Panama mine, which accounted for a significant portion of the company’s operating profit, has caused First Quantum to experience a sharp decline in market value and uncertainty surrounding its finances.
To free up cash, First Quantum plans to reduce capital spending by $400 million this year, with a focus on slowing spending on Cobre Panama and implementing cost-cutting measures at its Zambian mines. Additionally, the company intends to sell stakes in larger mining assets, as it has received expressions of interest from potential buyers.
The closure of Cobre Panama is expected to have a significant impact on First Quantum’s copper output, with production projected to nearly halve compared to the previous year. In 2023, the company produced 708,000 metric tons of copper, while it anticipates producing between 370,000 tons and 420,000 tons in 2024.
In an effort to alleviate the financial strain caused by the closure, First Quantum is exploring a range of capital-market options and working with banks to address its loan facilities. The company is also considering suspending its dividend payments.
The crisis at First Quantum has caught the attention of Barrick Gold Corp., a rival mining company. Barrick Gold has reportedly approached some of First Quantum’s top shareholders to determine their support for a potential takeover.
Despite these challenges, First Quantum remains committed to Panama and has launched a campaign to highlight the benefits of the mine ahead of a crucial presidential election in May. Cobre Panama is recognized as one of the world’s largest and newest copper operations, contributing around 1.5% of the global supply before its closure.
The closure of the Cobre Panama mine has undoubtedly posed significant financial obstacles for First Quantum Minerals. As the company seeks to navigate this challenging situation, it remains determined to preserve its financial stability through various cost-cutting measures and exploration of potential options. The future of First Quantum will likely hinge on its ability to adapt and overcome the setbacks caused by the mine closure.
The source of the article is from the blog aovotice.cz