May 25 (Bloomberg) -- First Quantum Minerals Ltd. fell the most since 2008 after the copper miner said the Democratic Republic of Congo awarded rights to one of the company’s mines to an “unspecified third party.”
First Quantum dropped C$9.47, or 15 percent, to C$53.32 at 4:32 p.m. in Toronto Stock Exchange trading. That was the biggest closing decline for Vancouver-based company’s shares since Dec. 4, 2008.
“The legal challenges facing First Quantum in the DRC appear to be moving from bad to worse,” Greg Barnes, a Toronto-based analyst with TD Securities Inc., said today in a note to clients. Barnes, who rates the stock “hold,” reduced his 12-month price target to C$80 from C$88.
First Quantum and its partners in the Kingamyambo Musonoi Tailings Sarl project are aware their license has been awarded to another party, Chief Executive Officer Philip Pascall told investors yesterday on a conference call.
First Quantum also said its rights to the Frontier and Lonshi copper projects may be revoked after the nation’s Supreme Court annulled a letter from the country’s ministry of mines that originally granted the rights.
The annulment is in “retaliation” for the company’s efforts to seek an arbitrated end to a dispute with the government over the Kingamyambo tailings project, Pascall said in a statement yesterday.
“This latest news with respect to Frontier and Lonshi only seems to reflect a further escalation of FM’s challenges in the DRC,” said Barnes. Frontier is First Quantum’s second-most-important asset, after the Kansanshi copper and gold mine in Zambia, he said.
The Kingamyambo project in the Congo was shuttered in August after a 2 1/2-year review of the Central African nation’s mining contracts by the government. First Quantum in February filed suit at the International Chamber of Commerce’s International Court of Arbitration in Paris over that decision.
Sharon Loung, a spokeswoman for First Quantum, didn’t immediately return a call seeking a comment.
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