CA - First Quantum Minerals: A Buy Despite Cobre Panama Challenges
2024-07-12 07:25:41 ET
Summary
- First Quantum Minerals faced challenges with the suspension of mining at Cobre Panama due to protests and legal issues, impacting share price.
- Despite the uncertainty surrounding Cobre Panama, First Quantum operates other mines and has a positive outlook for copper prices.
- Q1 results showed a decline in revenue due to Cobre Panama closure, but the company took steps to strengthen its financial position.
- The market appears to be undervaluing the potential outcomes regarding the Cobre Panama mine closure.
Introduction
First Quantum Minerals (FQVLF) [TSX:FM] has faced a wild ride over the past year. A leading mining company with operations spanning Zambia, Australia, and Panama, it manages one of the largest copper mines in the world, Cobre Panama. Last July the shares reached a near-term high of $29.79. However, mining at Cobre Panama was suspended due to protests and the Panama Supreme Court ruling First Quantum's contract to operate the mine was unconstitutional, causing the share price to plunge to $6.92. Although the shares have partially recovered to $13.25 a share, mining at this key asset remains halted. With the election of a new president in Panama, rising copper prices, and ongoing expansion at other mines, is First Quantum Minerals a buy at today's price?