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First Quantum eyeing May restart at Cobre Panamá

Bnamericas Published: Tuesday, April 28, 2020
First Quantum eyeing May restart at Cobre Panamá

First Quantum Minerals is eyeing a May restart at its mammoth Cobre Panamá copper mine in Panama following a suspension related to the COVID-19 pandemic.

But the company is preparing for the possibility that disruption will run into July as the government battles to bring the virus under control, according to mine general manager Tristan Pascall.

Panama’s health ministry ordered First Quantum to suspend Cobre Panamá on April 6 after a subcontracted worker died with COVID-19.

The country is among the hardest hit in Latin America, with more than 6,000 confirmed cases and 160 deaths in a population of around four million.

MAY RESTART?

Because of the pandemic, First Quantum lowered 2020 guidance for Cobre Panamá to 210,000-235,000t copper and 90,000-100,000oz gold from 285,000-310,000t and 120,000-130,000oz originally.

The revised figures are based on the assumption that operations restart by end-May.

“We are saying at the low end of the bounds [production] might start in May, but then [the suspension] might impact production through to the end of June, but at the upper end we are talking about mid-July,” Pascall told the company's Q1 earnings call.

A mid-July lifting of the suspension would allow the company to ramp up to the quarterly production levels of 75,000t copper in Q4, with throughput returning to the 85Mt/y target in 2021, he added.

Costs at Cobre Panamá during the suspension are estimated at US$4-6mn per week, CFO Hannes Meyer told the call.

COLLABORATIVE APPROACH

The decision on the timing of the Cobre Panamá restart will be made by the government and depend on conditions at the mine as well as the spread of the virus locally and nationally.

“We don’t think we are going to see a massive green light or anyone come down from the temple mount to say everything is opening to business,” Pascall added.

“What we have got is a very collaborative approach with the ministry of health and the government...the priority being the health and safety of the workforce and...a clean and safe site to do business.”

Cobre Panamá would be a good candidate for a restart due to its separation from the rest of the country, allowing personnel to be managed onsite under strict ministry of health protocols, according to Pascall.

FINANCIAL RESULTS

The company recorded a US$62mn net loss for Q1, compared to US$53mn of net earnings in the same quarter last year.

Revenue increased to US$1.18n from US$857mn on higher copper and gold sales, partly offset by lower copper prices.

Companywide production was 195,285t of copper and 68,788oz gold, up from 136,969t and 49,357oz, reflecting output from Cobre Panamá, which began commercial production last September.

Cobre Panamá produced 56,240t copper in the quarter.

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