Oct 5 (Reuters) - First Quantum Minerals Ltd FM.TO FQM.L
said it has revised its deal with Franco-Nevada Corp FNV.TO
for its flagship copper-gold Cobre Panama project in Central
America after reviewing the costs.
Under the new precious-metal stream agreement with the
Vancouver-based miner, royalty firm Franco-Nevada will have to
pay an initial contribution of $330 million to $340 million to
First Quantum in October.
First Quantum's chairman and chief executive, Philip
Pascall, said the company is acting "to ensure that
profitability and cash flow from our mining operations are
maximized and protected in these volatile market conditions and
sustained lower commodity prices and second, that cash outflows
are limited to essential and economically attractive projects so
that our balance sheet integrity is maintained."
The Canadian base metals miner acquired the project in
Panama in a hostile takeover of rival Inmet Mining Corp for
C$5.1 billion ($4.8 billion) in 2013.
First Quantum said it now estimates that the total project
cost for the open-pit Panama mine, which is 35 percent complete,
will be $5.95 billion, about 7 percent below earlier estimates.
The project, which has cost $2.62 billion to date, is
scheduled for process commissioning and first concentrate
production in late 2017, First Quantum said. It expects the mine
to produce about 320,000 tonnes of copper, 100,000 ounces of
gold and 1.8 million ounces of silver a year on completion.
Remaining costs for project completion will be met by $666
million from the Korea Panama Mining Corp, $1 billion payable by
Franco-Nevada under the agreement and $1.663 billion by First
Quantum.
Capital costs for the project were reduced with better
construction efficiency and lower costs for equipment and bulk
materials such as rebar and structural steel, First Quantum
said.