First Quantum Mired In DRC Lawsuits

First Quantum Minerals’ (FM-T, FQVLF-O) run of bad news from the Democratic Republic of the Congo continues.

A DRC court ruling has upheld the government’s cancellation of a permit at First Quantum’s Kolwezi copper-cobalt project, and ordered the company to pay $6 million in damages to three parties it filed lawsuits against after the permit was stripped in August.

First Quantum had filed suit in a DRC civil court against the government, state-run miner Gcamines and the nation’s mining regulatory agency.

Thus far, the mining contract review that was responsible for the company losing the project has only ruled against First Quantum.

All other mining contracts were ultimately upheld, with Freeport-McMoRan Copper & Gold (FCX-N) and Lundin Mining (LUN-T, LUNMF-O) still waiting for a ruling on their massive Tenke Fungurume copper project.

In all, the government review examined the details of 61 mining deals. The concern was that deals signed shortly after the 1998-2002 war didn’t secure enough revenue for the government.

First Quantum can still take its dispute to a court of international arbitration and last month, stated its intention to do so.

The exploitation permit for Kolwezi had been held 65% by First Quantum, 12.5% by Gcamines, 10% by the Industrial Development Corp. of South Africa (IDC), 7.5% by International Finance Corp. (IFC) and 5% by the DRC government.

Back in September, shortly after the government ordered the site shut down, First Quantum laid out its case for the illegality of the move.

It argued, among other things, that the general prosecutor — who ordered the sealing of the site — was not authorized to do so.

First Quantum said that two of its partners at Kolwezi — the IFC and the IDC — also believed the government’s actions had no legal basis.

The project was roughly 65% complete at the time of the shutdown, and was slated to begin commissioning next May.

Initial production rates were expected to be 35,000 tonnes copper and 7,000 tonnes cobalt per year, rising to 70,000 tonnes copper and 14,000 tonnes cobalt within two years.

In Toronto on the news, the company’s shares were off $1.73 to $74.02 on 656,000 shares traded.