6th Oct 2015 07:53
LONDON (Alliance News) - First Quantum Minerals Ltd on Tuesday said it has finalised the revised terms of its previous metals stream deal with Franco-Nevada Corp and said the power situation in Zambia is stabilising, as it cut its copper production guidance and cost expectations for the year.
First Quantum, a Canadian mining and metals company, said it has revised its precious metals stream agreement with Franco-Nevada, a Canadian mining royalties company, for the Corbe Panama project. Under the revised deal, First Quantum expects Franco-Nevada's first contribution to the project of USD330-340 million to be paid in October.
The company has also revised the cost of capital for the Cobre Panama copper project in Panama, First Quantum's flagship asset, and now estimates the total cost will be USD5.95 billion, around 7% below previous estimates and with the potential to further improve this. The cost of the project has been reduced due to better construction efficiency, continued design optimisation and low costs for equipment and bulk materials.
The copper project is around 35% complete and First Quantum said it remains very confident on its forecasts for the total project costs. It remains on track for commissioning and first concentrate production in late 2017.
In Zambia, the company said the power situation in the country is stabilising. Earlier this year, the company's Kansanshi and Sentinel projects were hit after Zambia's state-run power company, ZESCO, reduced power supplies to the north west of the country.
This has caused the ramp-up at Sentinel to be slowed, but First Quantum said progress has been made on fixing the problem. A second power line for the site to be connected soon, allowing Sentinel to ramp-up to commercial-level production by the end of the year. First Quantum expects full production at both Kansanshi and Sentinel to occur after it concludes talks with ZESCO on tariffs for the supplementary power mining projects have been asked to use.
As a result of the slower ramp-up at Sentinel, however, the company said its copper production guidance for the full-year has been revised down to 385,000 to 410,000 tonnes, down from 410,000 to 440,000 tonnes previously. The group did, however, cut its cost guidance for its copper production to USD1.20 to USD1.35 per pound, down from USD1.25 to USD1.40 per pound previously.
Shares in First Quantum were up 10% to 305.46 pence on Tuesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
FQM.L