By Ketki Saxena
Investing.com – First Quantum Minerals (TSX:FM) Ltd. announced it has reached an agreement to settle its dispute with the government of Panama over profit-sharing at the Canadian miner's Cobre Panama mine.
Under the concession agreement, First Quantum is proposing payment of US$375 million plus an additional US$20 million to cover taxes and royalties up to the end of 2022. Starting in 2023, the deal provides for a minimum of US$375 million a year in government income, including corporate taxes, withholding taxes and a profit-based mineral royalty of 12 to 16% with downside protections.
First Quantum has said that Panama’s maritime authority, which previously had refused the permit it needed to copper for export, has agreed to issue a resolution that would allow First Quantum to resume operations.
The Panamanian government in a statement said that the contract guarantees “equitable distribution of royalties and taxes” - which has been a key sticking point between the parties.
Tristan Pascall, the company’s CEO said in a press release, “After a lengthy and arduous negotiation process … I am pleased that we now have a pathway to continuing our ongoing substantial investments in the country.”
Ore processing, which had been suspended since late February, is now expected to resume and restore the mine to full production levels over the next several days. The deal is set to have an initial 20-year term, with a 20-year extension option and additional extensions for the life of mine.