First Quantum shareholder SailingStone told miner about 'missed opportunities' (updated)

ABx

23/01/2024 17:07

(Adds context in paragraph 9, details of asset sale in
paragraph 10, updates shares)
    By Divya Rajagopal
       TORONTO, Jan 22 (Reuters) - SailingStone Capital
Partners, a shareholder in First Quantum Minerals  FM.TO , said
on Monday it had told the Canadian miner about historic "missed
opportunities" in the management of its balance sheet and a
range of options to bring down its leverage.
    "We have expressed our view to the company on the range of
options that are (there) and some of the missed opportunities
around how they managed the balance sheet and their hedge book
and what the priorities are ...," MacKenzie Davis, a managing
partner at the investment firm, told Reuters in an interview.
    First Quantum is dealing with the fallout from the sudden
closure of its flagship Panama copper mine, which accounted for
about 40% of its revenue. It has lost more than half its market
value since public protests over that mine started in the
Central American nation last October.
    It announced a series of measures last week to bring down
costs, and said it was exploring several options to raise funds,
including the sale of smaller mines and bringing in strategic
investors for its large mines.
    SailingStone Capital Partners owns 0.2% of First Quantum
shares, according to a regulatory filing.
    First Quantum did not offer an immediate comment.
    Davis said First Quantum's guidance on debt management from
last week was not specific, but added that SailingStone is
confident the mining firm is reviewing all of its options. He
said First Quantum has the ability to navigate through some
tight windows in the debt market.
    First Quantum has a debt repayment worth $1.05 billion due
in April 2025. 
    When asked if SailingStone as a shareholder would support
asset sales, Davis said: "Tell me the price and I will give you
an answer, tell me what assets are being sold and the price and
we will think about it."
    Last week Reuters reported that the company was exploring a
rights issue - an invitation to existing shareholders to
purchase additional new shares in the company - and hired BMO
Capital Markets to sell some of its smaller mines such as Las
Cruces in Spain.
    First Quantum has lost C$11 billion ($8.2 billion) of its
market value since last November due to its problems in Panama.
As of Monday, it had net debt of C$7.5 billion and a market
value of C$8.70 billion.
    Ratings firm Fitch warned last December that if the mine in
Panama were permanently shut, First Quantum's net debt leverage
ratio in 2024 would increase to more than five times its
earnings before interest, tax, depreciation and amortization,
which could result in a covenant breach. 
    First Quantum shares were trading down 0.6% on the Toronto
Stock Exchange on Tuesday. 
 ($1 = 1.3454 Canadian dollars)

 (Reporting by Divya Rajagopal; Editing by Denny Thomas, Paul
Simao and Jonathan Oatis)
 ((divya.rajagopal@thomsonreuters.com;))