First Quantum Minerals could be forced to slow spending next year and face a potential breach of debt covenants if Panama follows through on plans to close a copper mine that generated roughly $1-billion in profit last year.

The Cobre Panama mine has been the Canadian firm’s top money maker since its 2019 opening and was expected to account for almost half of worldwide sales next year. Now, after the government announced plans to shutter the $10-billion operation, First Quantum may have to trim spending elsewhere or sell assets in order to remain in compliance with lender agreements.

The company is facing an estimated $625-million in debt maturities next year and another $1.8-billion in 2025, according to Citigroup. Without Cobre Panama’s revenue, the company’s debt covenants would be tested in 2024, First Quantum CFO Ryan MacWilliam told a conference hosted by Bank of Nova Scotia on Wednesday. The bank said in a research note that at current copper prices and without the mine, it expected a covenant breach in the fourth quarter of next year. First Quantum shares dropped 10% to a three-year low.

First Quantum’s $1.3-billion of 8.625% bonds due 2031 was quoted at 79.5 cents on the dollar, according to Trace bid prices Wednesday. That compared with around 86.5 cents a month earlier.

Concern over debt covenants capped a dramatic six weeks during which protests erupted in Panama over a decision to approve a new operating contract for the mine. President Laurentino Cortizo initially shocked investors by announcing a referendum on the project before backtracking to await a ruling by the Supreme Court. On Tuesday, the court unanimously ruled the law approving the contract was unconstitutional.

It’s as-yet unclear how serious the risk is of a permanent closure of Cobre Panama. That said, First Quantum would post negative free cash flow of about $300-million a quarter without it — at least initially, Citigroup analysts wrote in a note to clients.

First Quantum could partially salve the wound of Cobre Panama’s loss by slowing spending in other regions next year.

“There are levers they can pull in terms of non-core asset sales or capital cost reductions,” said National Bank of Canada analyst Shane Nagle. “The biggest financial hurdle will be coming close to the covenants on the revolving credit facility by this time next year without Cobre Panama in operation.”

The firm had previously planned to spend $1.8-billion on expansion projects in coming years, including $535-million in Zambia. New corporate guidance is expected to be disclosed in January, according to a Scotiabank analyst note.