New Developments at Cobre Panama Mine

The Cobre Panama mine, operated by First Quantum Minerals Ltd. (FQVLF), has recently faced obstacles in its operations due to an ongoing illegal blockade of small boats at the Punta Rincon port. As a result, the delivery of essential supplies has been hampered, posing a potential risk to the power plant’s operations.

To address the supply shortage, First Quantum’s subsidiary, Minera Panama S.A. (“MPSA”), has taken measures to mitigate the impact. However, if shipments do not arrive at the Punta Rincon port in a timely manner, MPSA may need to temporarily suspend production. Currently, operations have been reduced to only one ore-processing train, with plans to ramp down further if the illegal blockade persists.

Franco-Nevada Corporation (FNV), a partner of First Quantum Minerals, has adjusted its expectations for 2023 in response to the curtailed operations at Cobre Panama. The company now anticipates producing between 480,000 and 500,000 Precious Metal GEOs, compared to the previous estimate of 490,000 to 530,000 GEOs. Additionally, the total GEOs for 2023 are projected to be in the range of 620,000 to 640,000, down from the earlier forecast of 640,000 to 700,000 GEOs.

Despite the challenges faced by the Cobre Panama mine, Franco-Nevada reported positive financial results for the third quarter of 2023. The company’s adjusted earnings per share reached 91 cents, surpassing the Zacks Consensus Estimate of 88 cents and marking a 10% increase compared to the previous year. Additionally, Franco-Nevada generated $310 million in revenues for the quarter, benefiting from increased GEOs from its Precious Metal assets and higher gold prices.

While Franco-Nevada’s shares have declined by 11.4% over the past year, the industry as a whole has experienced growth of 8.3%. As investors evaluate their options, analysts suggest considering other stocks within the basic materials sector. Ryerson Holding Corporation (RYI), with a Zacks Rank #1, and Universal Stainless & Alloy Products, Inc. (USAP), carrying a Zacks Rank #2, are among the better-performing stocks in the industry.

Q: What is the current status of operations at Cobre Panama mine?
A: Due to an ongoing illegal blockade, operations at Cobre Panama have been reduced to one ore-processing train, with the possibility of further ramp-downs if the blockade persists.

Q: How has Franco-Nevada adjusted its expectations for 2023?
A: Franco-Nevada now expects to produce 480,000 to 500,000 Precious Metal GEOs and 620,000 to 640,000 total GEOs in 2023, reflecting the curtailed operations at Cobre Panama.

Q: How did Franco-Nevada perform in the third quarter of 2023?
A: Franco-Nevada reported adjusted earnings of 91 cents per share, surpassing expectations, and generated revenues of $310 million, benefiting from increased GEOs and higher gold prices.