First Quantum Minerals ( OTCPK:FQVLF ) will place its vast Cobre Panama copper project into "care and maintenance" if Panama's government does not offer certain legal protections, CEO Tristan Pascall told the Financial Times Tuesday.
Panama has said First Quantum ( OTCPK:FQVLF ) must pay corporate tax of at least $375M/year plus a profit-based mineral royalty of 12%-16%, compared with just $61M the miner paid to the government on a project that amassed $1.4B of gross profit in 2021.
First Quantum ( OTCPK:FQVLF ) plans to appeal the government's ruling last month that gave the company 10 business days to submit a plan for halting Cobre Panama.
The government has said it was obliged to renegotiate the project's original 1997 contract after the supreme court declared it unconstitutional.
Pascall told FT the company needs legal guarantees on the stability of the tax regime, protections against expropriation or early termination of the deal, security of rights to the concession area, and thresholds in the copper price at which the minimum payment would be adjusted.
Franco Nevada's ( FNV ) royalty and streaming agreement with Cobre Panama comprises 18% of its revenues, but the stock is "no longer worth its high price tag," Gold Mining Bull writes in an analysis published recently on Seeking Alpha .
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First Quantum threatens to shut Cobre Panama mine over tax dispute