VANCOUVER – Canadian miner First Quantum Minerals headed for a one-week low after a ruling by Panama’s Supreme Court cast uncertainty over a major copper mine it’s developing in the central American country.
Local media in Panama reported that the court ruled on Monday that Law 9 – used to approve a mining concession contract between the state and Minera Petaquilla in February 1997 – was unconstitutional. Minera Petaquilla, now known as Minera Panama, is majority-owned by Vancouver-based First Quantum. Company filings show it obtained the concession rights for the Cobre Panama project in 1997 under that law.
First Quantum’s shares fell as much as 6.8%, before closing 1.5% lower at C$15.72 in Toronto, the lowest since September 17. A spike in trading of the company’s bonds also followed the news.
First Quantum said "the Supreme Court ruling only affects the enactment of Law 9, and does not affect the mining concession contract itself, which remains in effect, and therefore allows continuity of development of the Cobre Panama project," according to a statement Tuesday.
The company is in the process of obtaining and examining the ruling, and “is working with the appropriate parties to identify suitable legal remedies,” First Quantum said.
"While the ruling is being studied by all parties involved, we would expect uncertainty around the company’s mine operation," Goldman Sachs analysts led by Eugene King said in a note to clients.
La Prensa, one of Panama’s major newspapers, reported that the court indicated in its decision that the country’s National Assembly accepted a contract that didn’t follow the correct legal process and therefore contravened the constitution.