First Quantum Minerals Ltd.
(FM-T) C$33.21
Panamanian National Assembly To Start Debate on CP Agreement Event
We understand that the Panamanian National Assembly will start debating the new Cobre Panama concession agreement this week or next.
Impact: NEUTRAL
In early March, FM announced that it had agreed to a concession contract with the Government of Panama for the Cobre Panama mine. Formal approval of the contract requires a positive vote by the country's National Assembly and then final sign-off by the President.
We understand that the process of debating the contract by Panama's National Assembly is expected to start this week or the following. The first debate in the National Assembly is a public forum that will include commentary from various interested parties, including stakeholders of the Cobre Panama mine, such as the workforce, suppliers, and local communities, along with representatives from social and environmental organizations. This public debate is likely to generate some commentary in the media over the course of the debate, but the terms of the agreement cannot be altered by the National Assembly.
Once the first debate is concluded over the next few weeks, a second debate will occur in the National Assembly that will involve only the 71 elected members of the Assembly, or the diputados. A simple majority of 50% plus one vote would be required to pass the law that approves the Cobre Panama concession contract. While the current administration holds a minority at 34 seats in the National Assembly, there have been expressions of support from other parties.
Assuming that the National Assembly votes in favour of the Cobre Panama agreement, the President will have 30 days to sign the bill. However, given that the President played a key role in the negotiation of the agreement, the signing of the agreement could occur shortly after National Assembly approval, in our view. Once signed by the President, the legislation must be gazetted prior to becoming law.
We believe that the legislative process to sign the Cobre Panama concession agreement into law could be completed prior to the end of September, reestablishing the legal stability of Cobre Panama. The current National Assembly legislative term extends to October 31.
TD Investment Conclusion
We are maintaining our BUY recommendation and C$44.00 target price.