First Quantum Minerals (TSX: FM) has reached a take care of Panama’s authorities to extend royalty funds on the large Cobre Panama copper mine, the corporate’s flagship operation.
The Canadian miner’s subsidiary, Minera Panama, said it considered “reasonable” the US$375 million a year-figure the nation has requested for. In return, the corporate requested authorities to ensure the continuity of operations through the mine’s productive life.
The Vancouver-based miner had been in talks with Panama since September last year, a interval throughout which copper costs have traded at report ranges.
Sources near the matter instructed MINING.COM that the Central American nation’s authorities had proposed a royalty of between 12% and 16% of the mine’s gross earnings, in comparison with the beforehand agreed 2% of income. In addition they mentioned the US$375 million determine was the minimal annual quantity the corporate must pay.
The minister of commerce and industries, Ramón Martínez, mentioned in a current press convention that he additionally needed to finish a “tax vacation” that allowed First Quantum to place off taxes till the capital prices of constructing the mine had been recouped.
The official confused that the proposed settlement would place Panama in the same place than different Latin American copper producers equivalent to Chile and Peru, which cost royalties on gross earnings on high of taxes.
Jefferies analyst Christopher LaFemina mentioned the magnitude of the proposed royalty hike was a “shocker,” including that the consultancy had estimated the miner would find yourself paying 5% of revenues in royalties.
Cobre Panama, which began operations in 2019, is estimated to carry 3.1 billion tonnes in confirmed and possible reserves. It has generated some US$6.7 billion in non-public funding, and consists of two open pits, a processing facility, two energy vegetation and a port.
The mine advanced, situated about 120 km west of Panama Metropolis and 20 km from the Atlantic coast, contributes 3.5% of the Central American nation’s gross home product, in line with authorities figures. It may produce greater than 300,000 tonnes of copper per 12 months at full capability.
Minera Panama’s concession was accepted in 1997 and initially granted to Canada’s Inmet Mining Company, which was acquired by First Quantum in 2013.
First Quantum announced in a separate statement it produced 816,000 tonnes of copper final 12 months, a 5% enhance from 2020, primarily because of report manufacturing at Cobre Panama.
The mine churned out 331,000 tonnes in 2021, 125,000 tonnes greater than within the earlier 12 months. Regardless of going through Covid-19 restrictions for over three quarters of the 12 months, the corporate famous that Cobre Panama’s efficiency exceeded preliminary 2021 steerage.
The corporate, which is the world’s sixth largest copper miner and Canada’s largest producer of the metallic, mentioned throughout its digital Capital Markets Day on Jan. 18 that it plans to construct a molybdenum plant on web site subsequent 12 months, which is predicted to generate annual focus manufacturing of three,000 to 4,000 tonnes each year.
First Quantum mentioned Cobre Panama will probably be mined in 5 phases, beginning within the Botija pit and ending within the Balboa pit in 2054. The corporate is presently creating the Colina pit, with mining slated to start in 2023.