First Quantum and Petaquilla reach $60m deal to split up Panama projects
Panama-focused miners Petaquilla Minerals (TSX:PTQ) and First Quantum’s (TSX:FM) (LON:FQM) have reached a new agreement to separate their projects in the province of Colon, which will see Petaquilla receive $60 million for transferring a range of assets and property rights.
First Quantum subsidiary Minera Panama’s $6.4 billion Cobre Panama copper-gold-silver mine is located next to Petaquilla’s Molejon gold mine, which has triggered lengthy disputes in the past, especially while Cobre belonged to Inmet, a company First Quantum took over in a hostile $5 billion deal in March last year.
The deal is the second amendment to an agreement signed by both Canadian firms last year, at about the same time that Vancouver-based First Quantum began its hostile takeover bid for Inmet.
As part of the accord, Minera Panama agreed to pay Petaquilla $3.3 million for accepting the deal, with an additional $46.7 million if PTQ meets specific deliverables before early July.
An additional $5 million will be payable after one year conditional on certain approvals being granted with a final $5 million payable 30 days after the first ore shipment from the Cobre Panama project, provided PTQ has fulfilled all of the obligations and achieved all milestones set out.
Mining has become one of the fastest growing sectors in the Panamanian economy, and it is expected to expand even quicker following the government announcement in January that it has identified mineral reserves estimated at $200 billion, at current prices.
Cobre Panama is one of the largest of a slew of massive greenfields copper projects to enter production over the next few years.
Codelco’s 160,000 tonnes-plus Ministro Hales mine in Chile, MMG’s Las Bambas project in Peru, expansion at other Codelco properties and at BHP Billiton’s Escondida, will increase supply of the red metals by some 4% annually through 2016.
Image of infrastructure construction around Cobre Panama project April 2013 by Enstoa