Mining Deal Solidified
First Quantum Minerals Ltd., a Vancouver-based mining company, has reached a new concession contract with Panama’s government for its Cobre Panama mine. The draft deal, subject to public consultation and government approvals, will end a dispute that erupted after the company and Panama failed to reach a tax agreement in late 2022. The Cobre Panama mine is First Quantum’s biggest asset, accounting for about 1.5% of global copper production and an economic engine for Panama.
The new 20-year agreement includes a $375 million payment and an additional $20 million to cover taxes and royalties up to the end of the year. The company will then make an annual minimum contribution of $375 million, consisting of taxes and a profit-based mineral royalty of 12% to 16%. If copper prices fall below $3.25 a pound before the end of 2025, First Quantum will be entitled to downside protections with a total tax contribution of less than $300 million from 2026 onwards.
The agreement will allow First Quantum to resume exporting copper concentrate and processing at the Cobre Panama mine is set to resume in the coming days. The breakthrough will provide relief for First Quantum’s shareholders and the tight global copper market, while Panama maintains its reputation as an investor-friendly jurisdiction.
Negotiations between First Quantum and Panama began more than a year ago but failed to produce an accord by Panama’s deadline in December 2022, putting the two sides at an impasse. Negotiations resumed in late December. The development follows a resumption of operations at Freeport-McMoRan Inc.’s Grasberg mine in Indonesia and an easing of tensions that had disrupted mining in Peru, the second-largest copper-producing country.
FM Stock Price Forecast & Analysis
According to 29 analysts, the average target price for First Quantum Minerals Ltd over the next 12 months is CAD 28.55. The average analyst rating for the company is Hold, and Stock Target Advisor’s own analysis is Slightly Bullish based on 9 positive signals and 6 negative signals. As of the last closing, the company’s stock price was CAD 29.79, which has changed by -0.07% over the past week, +8.29% over the past month, and -19.07% over the past year.
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