First Quantum Boosts Capex Estimate for Cobre Panama Copper MineFirat Kayakiran
First Quantum Minerals Ltd. raised its estimate of the cost of building the Cobre Panama copper mine to $6.43 billion while boosting the production target.
The company forecast annual production of 320,000 metric tons of copper at the mine starting in the first quarter of 2018, the Vancouver-based company said in the statement today.
First Quantum acquired the project from Inmet Mining Corp. in a C$5 billion ($4.5 billion) hostile takeover last year. Inmet’s plan was to spend about $6.2 billion to produce 266,000 tons annually from 2016.
First Quantum “management’s target had always been a $1 billion cut to the budget $6.2 billion,” Patrick Jones, an analyst at Nomura International Plc said in a note today. “So we believe the market will likely take the capex change negatively.”
First Quantum estimates the life of the mine to be 34 years and the cost of production at about $17,125 a ton, it said today. The rise in production will offset the capital expenditure increase, delivering the projects “at a lower capital intensity of about $17,000 a ton vs about $23,000 a ton previously,” Jones said.
Inmet spent $913 million on the project before the takeover, First Quantum said. The new owner also spent $1.46 billion as of the end of November, it said.