First Quantum preparing for post-election talks in Panama

TORONTO — First Quantum is preparing for post-election negotiations in Panama in the hopes a solution can be reached for its currently shuttered Cobre Panama mine, said chief executive Tristan Pascall on Wednesday.

Speaking on an earnings call, Pascall declined to speculate on the outcome of the May 5 vote, saying the company is prepared to work with whichever party is elected.

“Our job at the moment in Panama is to be listening, to understand the voices that speak on the mine and the future mining in Panama.”

The Toronto-headquartered mining company suspended production at the open-pit copper mine in Panama in November following widespread protests and a court ruling that found the agreement with the government covering the mine was unconstitutional. 

The mine is now in care and maintenance at a cost of about US$15 million to US$20 million a month as the company waits for progress on talks.

Pascall says that while a faster mine restart would make it easier to carry out, the company isn’t planning on a quick resolution of the issue.

“There’s a lot to come in terms of our discussion leading up to the election, and then working with whoever comes through in the election about solving the challenges for the country, solving the challenges around the mine, and working that through, listening to the people of Panama, to resolve the situation.”

The mine’s shutdown has weighed on First Quantum’s recent financial results. 

For its first quarter, the company reported a US$159 million loss after markets closed on Tuesday, down from profits of US$75 million a year earlier. Last quarter it reported a $1.04-billion loss related to the mine shutdown. 

The company is still waiting on approval to export about 121,000 tonnes of concentrate from the mine. Pascall said he had been told it could happen before the election, but that is looking less likely.

“It’s in the context of election politics, and strong debates around that, so the balance of probability, it probably spills over after the election.”

Along with readying itself to work with whoever is elected president, the company also continues to move forward on two arbitration cases on the mine. 

The company has consistently stated that arbitration is not its preferred outcome, and it remains committed to the country and being part of a long-term solution, said Pascall.

While the company has faced significant challenges, its balance sheet has been significantly strengthened from more than US$2-billion in financing measures carried out in the last quarter, said Pascall.

Besides Panama, First Quantum is also facing issues in Zambia after the country declared a state of emergency related to drought conditions that have affected power supplies.

First Quantum is expecting reduced power supplies and so is working to secure additional power from neighbouring countries, though at higher rates.

Over the longer term, the company is advancing a 430-megawatt solar and wind project with TotalEnergies and Chariot Energy, though commissioning isn’t expected until 2026 and 2027, respectively. 

Revenues for the latest quarter were US$1.04 billion, down from US$1.56 billion a year earlier.

Loss per diluted share was 21 cents US, compared with earnings of 11 cents for the same quarter last year.

This report by The Canadian Press was first published April 24, 2024.

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Ian Bickis, The Canadian Press