stockwatch.com Globe says First Quantum a victim of populist politics
2023-12-05 07:57 ET - In the News
The Globe and Mail reports in its Tuesday, Dec. 5, edition that last Tuesday, the Panamanian Supreme Court ruled that a contract enabling First Quantum Minerals to extend its operations in the Central American country was unconstitutional, and authorized a process to shut down the $10-billion (U.S.) mine. The Globe's guest columnist Greg Mills writes that the government of Panama will now face lawsuits north of $60-billion (U.S.) to account for lost income by the company and its suppliers and investors. On Monday, Reuters reported that Panama was forecasting a decline in 2024 economic growth of up to 4 percentage points. Mr. Mills says the crisis has become a master class in populist politics, hapless and ailing leadership, the peddling of falsehoods and cynical opportunism, a coming election, an opposition seeking a populist message, and smelling the ruling party's blood. The arguments against the deal are being made on several spurious grounds. These included the idea that the country only got 2 per cent of the proceeds, which was clearly not the case. Absent reasonable returns and the related ability to derisk investments, companies will very likely kiss Panama goodbye and go to more stable jurisdictions.
Globe says First Quantum Minerals kept at "neutral"
2023-12-05 08:02 ET - In the News
The Globe and Mail reports in its Tuesday, Dec. 5, edition that Eight Capital analyst Ralph Profiti has reaffirmed his "neutral" recommendation for First Quantum Minerals. The Globe's David Leeder writes in the Eye On Equities column that Mr. Profiti slashed his share target back by $15 to $16. Analysts on average target the shares at $22.44. Mr. Profiti is now expecting a restart of production at First Quantum's Cobre Panama in the first quarter of 2025, "coinciding with a six-month process after the May 2024 general elections in Panama." Mr. Profiti says, "We believe increased balance sheet concerns of an extended Cobre-Panama closure will bring forward concerns over liquidity and debt covenants as well as the debt carrying capacity of the existing operating assets (primarily Zambia)." However, Mr. Profiti says the Vancouver-based miner has "historically been very successful in international arbitration." Mr. Profiti says in a note: "Latin American risks highlight why North American-exposed copper miners should trade at a premium. Our valuation methodology places a premium on relative jurisdictional exposure, a successful track record in building operational consistency [and] strong governance practices.