First Quantum Minerals Announces $2.7 Billion Refinancing Deal


Vancouver-based junior miner First Quantum Minerals has been making news over the past couple of weeks, most notably related to an offer to buy a major portion of Africa’s largest copper mine. Today saw a number of announcements and developments related to the company. Most notably, First Quantum Minerals announced they had finalized a new financing deal worth $2.7 billion to help expand their existing operations.

The loan in question, underwritten by three separate banks, can be increased to up to $3 billion before the end of 2019 should the company wish for more credit. The refinancing deal breaks down to a $1.5 billion loan as well as a $1.2 billion revolving credit arrangement, both maturing on December 31st, 2022.

This influx of capital comes as the junior miner intends to make major international expansions. Earlier this week, First Quantum grabbed the international spotlight when it offered to buy the Zambian government’s 20 percent ownership in Kansanshi, Africa’s largest copper mine, for around $700 million. The company also owns 80 percent of the mine, while state-owned investment companies holding the rest. For First Quantum, Kansanshi represents their biggest mine and revenue source, accounting for over half of the company’s figures in recent years.

The proposed deal would also see Zambian government dropping a $1.4 billion legal claim against the company over a loan. While many see the mine as a strategic strength for the company, there have been significant conflicts between the local government that is raising questions among the investment community. The Zambian government’s revenue authority gave the company a $7.9 billion tax bill and demanded an increase in royalties, with the company announcing they would fire 2,500 workers in response. First Quantum has backtracked on this plan since then.

“Following detailed analysis and after having considered various factors resulting from the new taxes, First Quantum has decided to reduce only those elements of its workforce in Zambia associated with Capital Projects,” the company said last week.

At the same time, other recent news developments include a major land slippage issue within their major open-pit mine, Cobre Las Cruces, in Spain. In response, many research analysts released reports today on First Quantum. While some, such as CIBC, upgraded their rating of First Quantum from hold to buy, most analysts cut their target price down to lower levels.

The beginning of 2019 has been strong for precious metals as well as their respective mining companies. Many minerals such as Nickel, Palladium, and Zinc have seen double-digit growth in January alone, with copper seeing a modest gain during the period. However, copper did slip today as worries over slowing global growth continued to effect investor confidence. In response to all the news, shares of First Quantum stayed relatively the same.

First Quantum Minerals Company Profile

First Quantum Minerals Ltd. is a well-established and growing metals and mining company producing mainly copper, gold, nickel and zinc. With a geographically diversified portfolio of tier-one operations expected to produce approximately 570,000 tonnes of copper in 2017 and a large-scale, advanced-stage development project, First Quantum is poised to become one of the largest widely-held, pure-play coppers producers in the world. The Company was first incorporated in 1983 under the name Xenium Resources. On July 18, 1996, it changed its name to First Quantum Minerals Ltd. Since its acquisition of the Bwana facility in 1996, First Quantum has grown into a leading copper producer with significant nickel production. –First Quantum Minerals