The Cobre Panama mine has been the Canadian company’s main source of profits since its opening in 2019 and is expected to account for almost a portion of global sales next year. Now, after the government announced plans to halt the $10 billion deal, First Quantum may have to cut expenses or sell assets in order to continue growing in compliance with agreements with lenders.
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The company faces debt maturities estimated at $625 million next year and $1. 8 billion in 2025, according to Citigroup Inc. Without Cobre Panama’s revenues, the company’s deals would be put to the test in 2024, said Ryan MacWilliam, First Quantum’s chief financial officer. the Bank of Nova Scotia on November 29. The bank said in a study note that with the value of the copper existing and without the mine, it expects a breach of the clauses in the fourth quarter of next year. Shares of First Quantum fell 10% to a three-year low.
First Quantum’s $8,625, equivalent to cent bonds due 2031, traded at 79. 5 cents to the U. S. dollar at Trace’s Nov. 29 offering prices. That compares with about 86. 5 cents a month earlier.
Concerns over debt deals ended six dramatic weeks in which protests erupted in Panama over the resolution to approve a new operating contract for the mine. President Laurentino Cortizo first surprised investors by pronouncing a referendum on the allocation before backtracking and waiting for a resolution. On November 28, the court unanimously ruled that the law approving the contract was unconstitutional.
It is not yet clear how serious the threat of a permanent closure of Cobre Panama is. That said, without it, First Quantum would post negative money of about $300 million per quarter, at least initially, Citigroup analysts wrote in a note. to customers.
First Quantum can partially heal the wound of Cobre Panama’s loss by slowing its spending in other regions next year.
“They can use leverage in terms of promoting non-core assets or reducing investment costs,” said Shane Nagle, an analyst at the National Bank of Canada. “The biggest monetary hurdle will be getting closer to the terms of the revolving credit facility through this time next year that Cobre Panama is operational. “
In the past, the miner had planned to spend $1. 8 billion on expansion projects in the coming years, adding $535 million in Zambia. New corporate guidance is expected to be released in January, according to a Scotiabank analyst note.
“With Esteban Duarte’s. “
Bloomberg.com
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