It may be all but over for First Quantum’s (TSX: FM) mining operation in Panama. The Supreme Court of Justice in Panama has declared that Law 406, which approved the concession contract for the Cobre Panama mine, is unconstitutional.
The ruling leaves the future of the mine, which accounts for 5% of the country’s GDP, up in the air. First Quantum for its part has indicated it is reviewing the ruling, and continues to reserve its local and international rights related to the project.
But what really put the nail in the coffin for the mine, at least for the immediate future, is illegal blockades of both the associated Punta Rincon port, from where the operation exports its minerals, as well as the roads leading to the mine site. With the blockade in place and ships unable to enter or exit the port, the mine has ran out of room to operate and has been forced to suspend commercial production, while enacting a program of what it calls “preservation and safe maintenance”.
Panama’s president meanwhile stated yesterday that the mine would be shut down after the contract was declared unconstitutional, with the shutdown slated to occur after the ruling is published in the official gazette.
Franco-Nevada (TSX: FNV), whom has a streaming agreement in place for the mine, confirmed the suspension of operations this morning, while noting that its revised guidance had already excluded further contributions from the mine given the current political situation in Panama.
First Quantum last traded at $12.64 on the TSX.
Information for this briefing was found via Sedar, Bloomberg, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
