First Quantum Minerals Ltd. (“First Quantum” or “the Company”) (TSX: FM) today issued the following update regarding the status of the Cobre Panamá mine operated by its subsidiary Minera Panamá, S.A. (“MPSA”).
Engagement between First Quantum, MPSA and the Government of Panamá (“the Government”) continues regarding the long-term future of the Cobre Panamá mine. The Company remains ready to reach an agreement that is fair and equitable to both parties.
First Quantum and MPSA are prepared to agree with, and in part exceed, the objectives that the Government outlined in January 2022 related to revenues, environmental protections and labour standards. This includes a minimum of US$375 million per year in Government income, comprised of corporate taxes and a profit-based mineral royalty of 12 to 16 percent, with downside protections aligned with the Government’s position. This minimum payment structure is a benefit to the Government that First Quantum believes is both unique and unprecedented in the mining industry. Under the newly proposed profit-based royalty, the government would receive revenue that is multiple times higher than under both the existing contract and the current Panamá Mining Code. The proposed royalty rates would be amongst the highest, if not the highest, paid by copper miners in the Americas.
“We are ready to reach a mutually beneficial agreement that provides the legal certainty that we need to help promote the sustainable development of Panamá, safeguard our thriving Panamanian workforce and protect our investment,” said Tristan Pascall, Chief Executive Officer. “First Quantum and its predecessor have invested at least US$10 billion to build one of the world’s largest, safest and most advanced copper mines. This investment was enabled by the assurance and expectation that Panamá supported the project through a long-standing, comprehensive agreement from 1997 that covered taxation, including mining royalties, and other arrangements. Since we became involved, we have met all of our obligations and Cobre Panamá is now a business that provides benefits to all Panamanians. We are doing everything possible to support our employees and their families, local communities, the country of Panamá and the Company’s investors and stakeholders.”
As previously announced, MPSA is working through a number of steps to address the resolution from the National Directorate of Mineral Resources of the Ministry of Commerce and Industries requiring MPSA to suspend commercial operations at Cobre Panamá. MPSA will deliver a plan to put the mine under “care and maintenance” to the Government for review and response. At this time, the timing and impact of any care and maintenance regime enacted by the Ministry remain uncertain. In the interim, operations at Cobre Panamá continue as normal, with no disruption to production as yet.
The Company will host a conference call and webcast to discuss developments in Panamá regarding the status of the Cobre Panamá mine on Tuesday, January 10, 2023, at 8:30 a.m. (EST).
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