The closure of Cobre Panama wiped out 60% of First Quantum’s value. Credit: T. Schneider/Shutterstock.com.

First Quantum Minerals will receive a $500m (C$672.83m) injection from Jiangxi Copper, the Canadian miner’s largest shareholder, in an attempt to shore up its finances as it struggles with the fallout from the closure of its flagship copper mine in Panama.

Under the three-year prepay arrangement with Jiangxi, First Quantum will deliver 50,000 tonnes of copper anode per year to the Chinese miner. The material will be extracted from the Kansanshi mine in Zambia and is payable at market prices.

Tristan Pascall, CEO of First Quantum, said: “This arrangement is a reminder of the strategic nature of copper as supply challenges abound across the sector. Constructive discussions with our lenders for an amendment and extension of our loan facilities, which are an important component to our fulsome solution, are well-advanced and there is a high degree of alignment among all parties. We continue with sales processes for some of our smaller assets and minority stake sales in our larger assets, with strong interest from highly credible counterparties for both.”

The Canadian miner has faced financial difficulty since the closure of its Cobre Panamá mine last year, which was responsible for around 40% of its revenue. Its net debt increased to $6.42bn at the end of December and almost 121,000 dry tonnes of copper at the closed mine remained unsold.

Vast debts are set to mature in the coming years, resulting in “material uncertainty” that could threaten the company’s “ability to continue”.

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First Quantum is also seeking $20bn from Panama in a free trade arbitration case. Pascall said in an earnings call on Wednesday that “although arbitration is not our preferred outcome, we do have [a] strong case”. He claimed the $20bn reflects the estimated fair market value of the company’s initial investment “but in reality, with damages and interest, the award could be very much higher”.