First Quantum restructures debt

First Quantum Minerals (TSX: FM) says it’s restructuring its debt to take advantage of favourable bond markets. 

On Tuesday, the copper producer issued an update to its 6.875% 2027 senior notes, relaying that bond holders sold $714 million (C$989 million) back to the company, with an outstanding amount of nearly $35.4 million remaining in the market. 

First Quantum, which operates the Kansanshi copper mine in Zambia while its Cobre Panama mine in Central America remains closed under government order, also this month commenced an offer to purchase outstanding 9.375% senior secured second lien notes due in 2029 up to a maximum of $250 million.

And it issued a new bond, increasing the amount to $1 billion from the original $750 million, offering it at a rate of 7.25% with a term to 2034.

“These bond market moves are unrelated to the increased costs of maintaining Cobre Panama,” a company spokesperson said by email on Wednesday. “These costs will be met principally by the sale proceeds of the copper concentrate that we recently shipped from Cobre Panama.” 

The mine had become one of the world’s largest new copper operations but is now costing about $20 million a month to keep on care and maintenance.

Shares in First Quantum closed 1.8% weaker on Tuesday in Toronto but have gained 21% this year to $22.98 apiece, valuing the company at $19.2 billion.

Gold stream

To shore up liquidity, First Quantum has turned to a range of financing measures. Earlier this month, it sold a $1-billion gold stream from Kansanshi to Royal Gold (Nasdaq: RGLD), tapping by-product production to raise cash while preserving core copper output.

The company says its priority remains maintaining financial flexibility and supporting operations across its global portfolio as it navigates regulatory and political challenges in Panama.

On the upside, First Quantum’s primary African assets are delivering strong returns. Kansanshi generated 171,000 tonnes of copper and 105,103 oz. of gold for full-year 2024, its highest gold output since 2022. On Tuesday it began commissioning Kansanshi’s $1.25-billion S3 expansion. It includes a new processing plant nearly doubling Kansanshi’s ore-milling capacity, expands smelter throughput by a quarter, and develops a new open pit.

Sentinel, its adjacent Zambian operation, added another 231,000 tonnes of copper, bringing consolidated output to 431,000 tonnes. In the fourth quarter alone, Kansanshi produced about 48,000 tonnes of copper and nearly 30,000 oz. of gold, helping to support the company’s balance sheet in the face of mounting costs elsewhere.

An earlier version of this story incorrectly stated that First Quantum had added $714 million to its debt. The Northern Miner regrets the error.