First Quantum Minerals announces capital restructuring to reduce debt

FILE PHOTO: A view of Cobre Panama mine of Canadian First Quantum Minerals, one of the world’s largest open-pit copper mines, during a media tour, in Donoso, Panama, January 11, 2024. REUTERS/Tarina Rodriguez/File Photo

By Divya Rajagopal

TORONTO (Reuters) -First Quantum Minerals on Wednesday announced a series of capital restructuring measures that would strengthen its balance sheet and cut debt, a move that will help the Canadian miner deliver on its “operational objectives.”

The company has lost over half its market value after Panama’s surprise order in November to shut the Cobre Panama copper mine, one of the world’s largest and First Quantum’s flagship mine that accounted for about 40% of its revenue.

As part of the capital restructuring, First Quantum has extended its $2.2 billion corporate bank loan and extended its maturity to April 2027. It also announced a $1 billion common share offering to under writers led by RBC Capital Markets, BMO Capital Markets, and Goldman Sachs, and launched a private offering of senior notes worth $1.6 billion due in 2029.

“Today’s actions result in a capital structure that will enable us to deliver the S3 Expansion (mine in Zambia), which will return the company to a position of strong free cash flow generation,” First Quantum CEO Tristan Pascall said in a statement.

The company also said it is seeking $20 billion through international arbitration after Panama’s top court ruled First Quantum’s contract was unconstitutional following nationwide protests against its operation.

“We have provided a minimum value sought in those proceedings of $20 billion, reflecting an estimated fair market value of initial investment,” Pascall said on an earnings call, adding the company could potentially get much higher amount in damages and interest.

However, Pascal said that arbitration is not the preferred outcome for the company.

“We would really rather come to a resolution with the state of Panama that results in the best outcome for the people and for the company.

First Quantum has filed arbitration as part of the free trade agreement between Canada and Panama. The company separately has also filed a case at the International Chamber of Commerce (ICC) arbitration process, under the termination clause in the ICC contract.

For the quarter ending Dec.31, First Quantum reported a net loss of $1.45 billion. The stock closed at C$11.91 up by 2.5% at the Toronto Stock Exchange on Wednesday.

(Reporting by Divya Rajagopal, writing by David LjunggrenEditing by Marguerita Choy)