The pending congressional approval of a new contract agreed between First Quantum Minerals (TSX: FM) and the Panamanian government over the Canadian company’s giant Cobre Panama copper mine continues to weigh on the company.
The Canadian miner completed last week the pricing for a US$1.3 billion offering of senior notes, with proceeds earmarked for debt repayment.
Analysts did not seem impressed by the move, with credit ratings agency Fitch giving First Quantum’s notes, which are due in 2031, a ‘B+’ with a negative outlook.
“Following a recent agreement reached in principle between First Quantum Minerals and the government, we expect to resolve the [negative outlook] once the agreement has been formalized,” Fitch said in the statement.
Production at the company’s Cobre Panama was halted in February amid a dispute with authorities over tax and royalty payments. During the weeks the mine remained shut, First Quantum said it lost US$8 million a day in terms of costs that would never be recovered.
First Quantum reached a new deal with Panama in March, with mining operations ramping up to full production levels within two days and five shipments of copper sailing during the month.
Lawmakers are expected to formalize the agreement between the company and Panama during the term starting July 1. They will only be able to do so after a period for public comment concludes and all permits are acquired.
First Quantum’s earnings in the first quarter of the year fell by more than 80% to US$75 million from the US$385 million recorded in the same period of 2022.