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First Quantum's (T.FM) Cobre Panama to produce 20% more copper

Stockhouse Editorial
0 Comments| January 29, 2014

First Quantum Minerals Ltd. (TSX: T.FM, Stock Forum) said Tuesday that its Cobre Panama project in Central America should produce 20% more copper than previously planned. However, production will start later than expected and development costs will be higher than initially forecast.

The company said that after reviewing the project, it now expects output at 320,000 tonnes a year, with a capital cost estimate of $6.4 billion, and that production would start in late 2017, almost two years later than Inmet Mining Co. [a company acquired by First Quantum last year] had expected.

Other specific details from the Cobre Panama review included:

1. Measured and indicated resources, inclusive of reserves of 3,271 m tonnes vs previous 4,203 m tonnes;
2. Life of mine strip ratio of 0.71:1 vs previous 0.58:2 and,
3. Mine life of 34 years vs previous 31 years.

Also on Tuesday, First Quantum announced a refinancing package and a bond swap proposal to Inmet noteholders. First Quantum is exchanging two Inmet notes for US$1.5 billion and US$0.5 billion to be reissued as two FM notes for US$1.14 billion each.

Lowering interest rates on both from 8.75% and 7.5% to 6.75% and 7.0%, respectively. First Quantum has signed term sheets to refinance US$2.5 billion, including a new five-year term loan of US$1 billion and US$1.5 billion revolving credit facility.

First Quantum shares fell 0.86% to $20.18 on Wednesday, leaving a market cap of $11.9 billion, based on 590.8 million. The 52-week range is $21.95 and $14.22.


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