First Quantum Reports $1.4B Loss In Q4, Management Remains Optimistic About Restructuring

Canadian miner First Quantum Minerals FQVLF reported a net earnings loss of $1.44 billion for Q4 2023 and a full-year net profit of $1.29 billion. The full-year result is about $900 million less than the company earned in 2022.

The closure of the top asset, the Cobre Panama mine, was the main contributor to this result. The Panama Supreme Court suspended the open-pit copper mine in November, deeming the 20-year concession agreement unconstitutional.

One of the world's largest open-pit copper mines faced blockades and protests by environmentalists and nationalists, causing operational challenges for the company. The mine’s closure led to a 28% decrease in total copper production in the fourth quarter, totaling 160,200 tons. Specifically, Cobre Panamá’s output dropped by 30.2%, contributing to a net loss for the quarter.

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The firm estimates $15-20 million in monthly costs for maintenance for the closed site; thus, the company’s management is implementing several measures and initiatives to manage its balance sheet effectively.

"2023 closed with the Company facing one of its biggest challenges in recent history. However, I am confident in the resilience of First Quantum and the determination of our teams to work through these challenges," said CEO Tristan Pascall.

The company has suspended its dividend, reduced planned capital programs by $400 million in 2024 and $250 million in 2025, and is actively working on refinancing near-term debt maturities. At the end of 2023, First Quantum had a net debt of $6.4 billion and its earnings before interest, taxes, depreciation and amortization (EBITDA) were $2.3 billion.

Pascall highlighted the signing of a $500 million three-year prepay arrangement with Jiangxi Copper, the company’s second-largest shareholder, regarding the supply of copper anode material from the Kansanshi mine in Zambia.

"This arrangement is a reminder of the strategic nature of copper as supply challenges abound across the sector," he stated.

The company engaged in selling smaller assets and minority stakes in larger assets. The sale of the Las Cruces mine in Spain is well-advanced, with strong interest from credible counterparties due to its strategic location and processing capabilities. The Las Cruces plant efficiently processes LME-grade copper with minimal water and energy use.

Additionally, First Quantum is evaluating the possibility of a minority investment by strategic investors in its Zambian business following expressions of interest. Pascall noted Zambia's improving investment climate, emphasizing the company's commitment to the S3 Expansion at Kansanshi.

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Image created using artificial intelligence with MidJourney.