First Quantum, Franco Nevada rally on Panama news

First Quantum Minerals Ltd. (FM-TSX) shares rallied Wednesday after the company said its Panamanian subsidiary MPSA has agreed and finalized the draft of a concession contract with the Government of Panama, related to its Cobre Panama mine.

First Quantum said the proposed concession contract meets the objectives outlined by the Government in January 2022, related to government revenues, environmental protections and labour standards. It also provides legal protections necessary to both parties to ensure durability and stability.

The contract as proposed is subject to a 30-day public consultation process and approvals by the Panamanian Cabinet, Comptroller General and the Republic and National Assembley.

It will have an initial 20-year term, with a 20-year extension option and additional extensions for the life of the mine.

Additionally, the Panama Maratime Authority has confirmed that it will issue a resolution today for MPSA to resume concentrate loading operations at the Punta Rincon port. Ore processing is expected to resume and restore the mine to full production levels over the next several days.

First Quantum shares advanced on the news, rising 4.4% or $1.31 to $31.10 on volume of 1.31 million. The shares are trading in a 52-week range of $45.38 and $18.67.

Franco Nevada shareholders also welcomed the news, sending the shares up 3.0% or $5.38 to $184.38 on volume of 383,890. The shares currently trade in a 52-week range of $216.32 and $151.07.

“I am pleased that we now have a pathway to continuing our onging substantial investments in the country [Panama],’’ said First Quantum CEO Tristan Pascall.

First Quantum is a diversified mining company that is engaged in the production of copper, nickel, gold and zinc. It has operating mines in Zambia, Finland, Turkey, Spain and Mauritania. The company’s portfolio of assets includes the Kansanshi mine in Zambia, which ranks as the largest copper mine in Africa.

Cobre Panama is First Quantum’s flagship operation. It is a huge open-pit copper project located in the Panama jungle, about 120 kilometres west of Panama City and ranks as First Quantum’s key asset.

Wednesday’s announcement follows the resolution of a tax dispute between the company and the Government of Panama which recently forced MPSA to suspend ore processing, a move that impacted 8,000 employees and contractors.

It attributed the decision to the Panama Maritime Authority’s refusal to permit copper concentrate loading operations at the mine’s port, Punta Rincon

Cobre Panama contributes to approximately 5.0% of Panama’s GDP, makes up 75% of the country’s export goods and has created at least 40,000 jobs, directly and indirectly, that supports an estimated 100,000 or more Panamanians.

Franco Nevada, the Toronto based royalty and streaming company, garnered 15% of its revenue from Cobre Panama in the third quarter. Franco-Nevada bears no cost for the production that isn’t delivered the company has said.

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