First Quantum deals Çayeli mine to Turkish group for $340M

First Quantum Minerals (TSX: FM) will sell its Çayeli mine in Türkiye to a company controlled by Cengiz Holding as the Canadian miner raises additional capital for its priority assets.

Under a binding agreement, Cengiz Insaat, the Turkish company, will buy the copper-zinc underground mine for $340 million cash, including an advance payment of $50 million, First Quantum said in a statement. The deal is expected to close during the second or third quarter of the year.

The transaction, says First Quantum’s CEO Tristan Pascall, is a reflection of “the company’s disciplined approach to portfolio management” as it focuses on its core strategic priorities, such as a restart of the Cobre Panama operation.

“For more than a decade, the performance of Çayeli within First Quantum has been underpinned by the dedication of its employees and a strong safety and operating culture,” he said in a press release on Thursday.

Cengiz Holding, one of Türkiye’s largest industrial conglomerates, has been aggressively expanding its mining portfolio this year. Last week, the group made its biggest move to date with the $1.5 billion acquisition of the Copler gold mine from SSR Mining (TSX, NASDAQ: SSRM).

Situated on the Black Sea coast of northeastern Türkiye, the Çayeli mine has been in operation since 1994. It produces copper and zinc concentrates from a volcanic hosted massive sulphide (VHMS) deposit, with a reserve base that is expected to last until 2036.

Çayeli represents the second asset sale that First Quantum has made over the past three months. In December, it sold the past-producing Cobre Las Cruces copper mine in Spain for $190 million.

First Quantum Minerals initially soared on the news, before reversing the earlier gains. By midday, its shares were down 1.7% for a market capitalization of C$27.5 billion ($20.2 billion). UBS analyst Myles Allsop nevertheless upgraded the stock to a ‘Buy’ from ‘Neutral’ with a price target of C$50, up from C$38 previously.