September 23, 2019 / 1:28 PM / a month ago

UPDATE 2-First Quantum Minerals confirms Zambia stake sale talks

(Recasts first paragraph, adds share movement)

Sept 23 (Reuters) - Canada’s First Quantum Minerals Ltd on Monday confirmed it was in talks with China-based Jiangxi Copper Co Ltd for a potential sale of a minority interest in its Zambian copper assets.

The company, however, said it had no knowledge of any potential takeover bids, sending its shares down 10% in morning trading.

First Quantum’s shares had gained about 20% since Thursday after Bloomberg reported, citing sources, that the Canadian miner had attracted preliminary buyout interest and was working with advisers to weigh options.

The company has been embroiled in a dispute with the Zambian government after being handed a $5.8 billion bill for unpaid import duties last year.

The Zambian government’s decision to appoint a provisional liquidator to run Vedanta Resources’ Konkola Copper Mines, claiming licence breach, has added to concerns for international miners such as First Quantum.

A Jiangxi Copper source said the company had recently bought a stake of almost 10% in First Quantum on the secondary market, below the threshold for disclosure for Toronto-listed companies. Jiangxi did not respond to a request for comment.

A minority stake in First Quantum’s Zambian assets - Kansanshi and Sentinel - could fetch about $2 billion, according to Scotiabank analysts.

The company produced 605,853 tonnes of copper in 2018, with the Kansanshi and Sentinel mines accounting for more than 78% of the total production.

Shares of First Quantum, which had a market valuation of C$8.42 billion as of Friday close, were trading at C$10.94 on the Toronto Stock Exchange.

Reporting by Debroop Roy and Shariq Khan in Bengaluru and Jeff Lewis and Tom Daly; Editing by Maju Samuel and Sriraj Kalluvila

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