- Panamá’s government and First Quantum Minerals (FM) have agreed on the final text for a contract to operate a key copper mine
- First Quantum’s subsidiary, Minera Panamá S.A. (MPSA), had suspended ore processing operations at the Cobre Panamá mine late last month
- The proposed concession contract provides legal protections and meets the objectives outlined by the government related to revenues, environmental protections, and labour standards
- First Quantum Minerals Ltd. (FM) opened trading at C$30.00
Panamá’s government and First Quantum Minerals (FM) have agreed on the final text for a contract to operate a key copper mine.
The company’s Chief Executive Officer, Tristan Pascall said that after what he called “a lengthy and arduous negotiation process”, the finalized proposed concession contract was signed off upon and it outlines the basis for the future of Cobre Panamá.
“I am pleased that we now have a pathway to continuing our ongoing substantial investments in the country. I wish to thank our Panamanian and international employees and their families and our suppliers for their patience and resilience during this time. We now await formal approval of the Proposed Concession Contract and look forward to a long and constructive partnership with the Government of Panamá for many years to come.”
First Quantum’s subsidiary, Minera Panamá S.A. (MPSA), had suspended ore processing operations at the Cobre Panamá mine late last month.
The proposed concession contract provides legal protections and meets the objectives outlined by the government related to revenues, environmental protections, and labour standards.
Once it takes effect, the proposed concession contract will include the following principal economic terms:
- Payment by MPSA of $375 million plus an additional $20 million to cover taxes and royalties up to the year-end 2022
- Payment by MPSA starting in 2023 of an annual minimum contribution of $375 million in Government income, comprised of corporate taxes, withholding taxes and a profit-based mineral royalty of 12 to 16 percent, with downside protections
- Downside protection to the annual minimum contribution under the following conditions:
- Until the end of 2025, copper prices below $3.25 per pound
- From 2026 and beyond, a total tax contribution for that year of less than $300 million
- Applicable royalty rate at various operating margins:
| Operating Margin | Effective Royalty Rate | ||
| 0 per cent – 20 per cent | 12 per cent | ||
| >20 per cent – 30 per cent | 13 per cent | ||
| >30 per cent – 40 per cent | 14 per cent | ||
| >40 per cent – 50 per cent | 15 per cent | ||
| > 50 per cent | 16 per cent |
- Application of the general regime of income tax, including deductions for depletion and withholding taxes in Panamá
The proposed concession contract will have an initial 20-year term, with a 20-year extension option and additional extensions for the life of mine.
First Quantum Minerals’ principal activities include mineral exploration, mine engineering and construction, development, and mining operations. The firm produces copper in concentrate, copper anode, copper cathode, nickel, gold, zinc, silver, acid, and pyrite. It has operating mines located in Zambia, Finland, Turkey, Spain, and Mauritania. The firm’s projects include Guelb Moghrein, Sentinel, Kansanshi, Cobre Panama, Pyhasalmi, and Ravensthorpe, among others. Substantial revenue is generated from Cobre Panamá.
First Quantum Minerals Ltd. (FM) opened trading at C$30.00.