Jiangxi owns an 18.2% stake in First Quantum. Credit: RHJPhtotos/Shutterstock.com.

Canadian mining company First Quantum Minerals is in discussions to divest a stake in its copper mines in Zambia to one of its shareholders, Jiangxi Copper, Reuters reported.

In Zambia, First Quantum fully owns the Sentinel mine and holds an 80% stake in the Kansanshi mine, while the remaining 20% stake is held by the Zambian Government.  

These two Zambian mines are claimed to have generated $943m in revenue and $210m in operating profit in the third quarter of last year. It is estimated that these assets could be valued at nearly $6bn, based on their earnings. 

Jiangxi Copper, First Quantum’s largest shareholder, could acquire either one of the mines or a portion of one, noted the news agency, citing a person privy to the development. 

However, the details are not yet confirmed, and the possibility of a deal materialising is still uncertain, the news agency stated.  

These talks with the Chinese state-owned enterprise began after First Quantum faced a setback in Panama, where it was ordered to halt operations at its Cobre Panama mine.  

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The company saw a substantial decline in market value, after losing around C$10.3bn since protests against its Cobre Panama mine began in late October.  

The Panama mine contributed around 40% of the company’s revenues. 

This incident has raised concerns about the potential impact on the borrowing capacity of First Quantum. 

The company faces a maturing debt of $1.05bn early next year. 

Previously, in 2019, First Quantum and Jiangxi engaged in similar negotiations concerning the Zambian mines, which resulted in Jiangxi acquiring a significant minority stake in First Quantum rather than in the mines themselves.  

Presently, Jiangxi holds an 18.2% stake in First Quantum, and a standstill agreement is in place, preventing the Chinese company from increasing its stake beyond 20%. 

Recently, Bloomberg reported that Barrick Gold is in talks with some of the key investors in First Quantum around a potential takeover. 

The talks have not led to a clear indication of whether Barrick will make a bid.   

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