First Quantum to explore “smaller” mine sales, cuts dividend

First Quantum Minerals CEO, Tristan Pascall

FIRST Quantum will explore selling smaller mines in its portfolio and stakes in its larger mining assets, but it scotched rumours it planned to sell a stake in the company or whole mines, especially in Zambia where it remained committed.

These measures are a response to the closure of Cobré Panama following a dispute with the Panama government. The government ruled in December the mine’s licence contravened numerous articles of the country’s constitution.

First Quantum has debt of $1.05bn which comes up for maturity in early 2025. Ratings agency Fitch warned that if the Cobré Panama mine were permanently shut, First Quantum’s net debt leverage ratio in 2024 would increase to more than five times earnings before interest, tax, depreciation and amortisation resulting in a covenant breach.

Commenting in its production report for the 12 months ended December today, First Quantum said the dividend would also be suspended as it sought to protect the balance sheet.

In addition, it plans to cut spending by $400m this year — to a range of $1.2bn to $1.4bn partly owing to reduced spending on Cobre Panama, as well as moves to combat cost growth at its Zambian mines.

It would also reduce its workforce to below 1,000 workers from about 1,400 workers at the Panama mine, depending on environmental stewardship programs, and cut production at its Australian nickel mine due to a “significant” downturn in prices of the metal last year, resulting in a 30% reduction in the operation’s workforce.

“Recent discussions in Panama have been constructive regarding the responsible environmental stewardship of the mine,” CEO Tristan Pascall said in a statement.

Toronto-based First Quantum’s fourth quarter copper production dropped 22% to 160,000 metric tons, said Reuters in a report.

The Canadian miner said it now expected between 370,000 and 420,000 tons of copper production for the current year, excluding the Panama mine, down from 708,000 tons last year.

The crisis at Cobré Panama 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.