Franco-Nevada Scales Back Guidance With Reduced Operations at Cobre Panama Mine

By Robb M. Stewart

Franco-Nevada scaled back its production guidance for the year as the Cobre Panama mine west of Panama City again ramped down operations in the face of protests that have blocked supplies.

The Canadian company, which has a streaming deal for partner First Quantum's Cobre Panama, said Monday that with the curtailment of activity at the big copper mine it now expects between 480,000 and 500,000 precious metal gold-equivalent ounces and 620,000 to 640,000 total gold-equivalent ounces for 2023 where it previously was targeting 490,000 to 530,000 and 640,000 to 700,000, respectively.

The shift by the gold-focused royalty and streaming company comes after First Quantum said operations at Cobre Panama have been reduced to one processing line amid an ongoing blockade of small boats at the Punta Rincon port that is preventing the delivery of supplies needed to operate the mine's power plant. The mining company, the majority owner of Cobre Panama, said that without shipment to the port, it expects to run out of supplies for the on-site power plant this week.

First Quantum, which a week earlier ramped down ore processing to two of the three processing trains at the mine, said local law-enforcement authorities are present and continue to monitor and assess the situation in order to achieve a return to normal maritime operations. If the illegal actions continue to prevent the delivery of supplies for the power plant, the company said it will ramp down the remaining processing train this week and temporarily halt production.

Uncertainty over the future of Cobre Panama has built in recent months after Panamanian President Laurentino Cortizo, who has faced public criticism for approving continued mining of Cobre Panama, said a national vote would be held in December on whether to revoke First Quantum's license.

Panama's government has faced protests since Cortizo in October signed off on an agreement reached earlier in the year between the government and the mining company covering the terms and conditions of a refreshed concession contract for the Cobre Panama operation, providing a further 20-year term and options for extensions. The mine temporarily closed last year when talks between First Quantum and the government broke down over payments the government sought.

Lawsuits have been admitted by the Supreme Court of Panama alleging the unconstitutionality of Law 406, which First the revised concession contract for First Quantum's subsidiary in Panama. The company said the Secretary General of the Supreme Court has stated that plenary sessions of the court will sit from Friday and remain in session until a ruling is delivered in the shortest possible timeframe.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

November 20, 2023 07:23 ET (12:23 GMT)

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