Canadian mining company First Quantum Minerals is considering a gold pre-payment agreement from its mines in Zambia as a new funding strategy to improve its finances, reported Reuters, citing the company’s CFO Ryan MacWilliam.
Gold streaming involves an initial payment by a buyer to a miner in exchange for the right to buy a portion of future gold production at a set price.
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This financing mechanism is becoming an increasingly attractive option for miners needing upfront capital.
The focus on gold streaming deals is in response to high gold prices and the robust market for such financial arrangements.
MacWilliam said during an analyst call on the company’s quarterly results: “We have obviously seen record-high gold prices, that means the gold pre-payment or streaming market is strong, it is obviously an active market, and that gives a variety of options from a financial perspective, in addition to those we have talked about before.”
Last year, the company considered selling a minority interest in its two Zambian mines.
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By GlobalDataHowever, First Quantum has indicated that although the potential sale remains a possibility, the current focus is on investigating gold streaming agreements from its Kansanshi mine in Zambia.
The S3 Expansion project at Kansanshi is nearing the completion of its commissioning phase, and is on track to start initial production in the latter half of 2025, while remaining within the allocated budget.
The Zambian mines are particularly significant for First Quantum following the 2023 shutdown of its Cobre Panama copper mine due to a dispute with the Panamanian Government.
The company is engaged in ongoing discussions with Panamanian officials to resolve the situation.
The closure of the mine was ordered by Panama’s top court after significant public protests, but, in June, President Jose Mulino permitted the export of copper concentrate that had been mined before the shutdown.
First Quantum has disclosed that it is incurring monthly expenses of $15m (C$20.52m) for the care and maintenance of the Cobre Panama mine. This cost is projected to increase to between $17m and $18m by the end of the year.
