First Quantum mulls development delays to conserve cash

Thu Jul 30, 2015 1:48pm EDT
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By Susan Taylor

TORONTO, July 30 (Reuters) - Base-metals miner First Quantum Minerals will consider delaying some work at major development projects to preserve cash as it grapples with slumping commodity prices and power supply cuts at facilities in Zambia.

The Canadian company, which recently raised C$1.4 billion ($1.01 billion) in an equity offering designed to cut debt and fund projects, said on Thursday that cash conservation and cost reductions remain its top priority.

"In the event of a continued and protracted weakened price environment, we do have options available to us to protect the balance sheet further," Chairman Clive Newall said on a conference call with analysts.

Vancouver-based First Quantum maintained its C$1.4 billion budget for 2015 capital expenditures, including C$600 million for its Cobre Panama copper mine in Panama, but said 2016 spending could drop dramatically.

"Already, we have identified how we can defer a significant amount out of our next year's Cobre Panama budget without affecting its construction schedule," Newall said.

The company said it is studying how it can save money by adjusting the timing of capital expenditures. At Cobre Panama, for example, it is buying less power equipment and deferring its use, while still keeping the project on track.

"The capital expenditure for next year, we think, will be less than C$1 billion and probably more in the region of C$800-C$900 million," said Chief Executive Philip Pascall.

Newell said the company could also defer expansion of a sulphide circuit at its Kansanshi copper mine in Zambia, by "a year or so", without affecting long-term production.   Continued...