By Susan Taylor
TORONTO, July 30 (Reuters) - Base-metals miner First Quantum
Minerals FM.TO will consider delaying some work at major
development projects to preserve cash as it grapples with
slumping commodity prices and power supply cuts at facilities in
Zambia.
The Canadian company, which recently raised C$1.4 billion
($1.01 billion) in an equity offering designed to cut debt and
fund projects ID:nRSD2YHHBf , said on Thursday that cash
conservation and cost reductions remain its top priority.
"In the event of a continued and protracted weakened price
environment, we do have options available to us to protect the
balance sheet further," Chairman Clive Newall said on a
conference call with analysts.
Vancouver-based First Quantum maintained its C$1.4 billion
budget for 2015 capital expenditures, including C$600 million
for its Cobre Panama copper mine in Panama, but said 2016
spending could drop dramatically.
"Already, we have identified how we can defer a significant
amount out of our next year's Cobre Panama budget without
affecting its construction schedule," Newall said.
The company said it is studying how it can save money by
adjusting the timing of capital expenditures. At Cobre Panama,
for example, it is buying less power equipment and deferring its
use, while still keeping the project on track.
"The capital expenditure for next year, we think, will be
less than C$1 billion and probably more in the region of
C$800-C$900 million," said Chief Executive Philip Pascall.
Newell said the company could also defer expansion of a
sulphide circuit at its Kansanshi copper mine in Zambia, by "a
year or so", without affecting long-term production.
First Quantum, which primarily mines copper, but also nickel
and gold, is trying to alleviate the impact of a 24 percent
reduction in power supply in Zambia.
It shut its Sentinel copper processing development this
week, after Zambian power utility Zesco Ltd reduced power
supplies, a result of low water levels at hydro-electric plants
due to a drought. ID:nL5N10A191 ID:nL8N0ZN2LD
Rainfall doesn't typically resume until December, Pascall
said, and supply problems will likely continue through to
January February.
First Quantum, which has begun lobbying to import power,
said it was unable to update its output forecast for Sentinel,
which had been expected to produce up to 100,000 tonnes of
copper in concentrate in 2015.
Most of Sentinel's electrical supply, cut to 42 megawatts
from 55 megawatts, will be redirected to Kansashi, reduced to
117 megawatts from 153 megawatts, allowing Kansashi to operate
near full capacity, the company said.
($1=$1.30 Canadian)
(Editing by Peter Galloway)