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First Quantum Minerals Ltd. will cut spending, pause its dividend and put smaller mines up for sale in a sweeping effort to free up cash after it was ordered to shutter its US$10-billion copper operation in Panama.
The Canadian miner on Jan. 16 said it’s considering a range of capital-market options to maintain its financial position and is working with banks to “address and extend” its bank loan facilities. It’s also considering selling stakes in larger mining assets after receiving expressions of interest from potential investors.
First Quantum is reeling from the fallout of Panama President Laurentino Cortizo’s abrupt orders to shutter its biggest asset late last year, following a ruling from the Supreme Court that invalidated the mine’s operating contract. The closing of Cobre Panama, which accounted for 78 per cent of First Quantum’s operating profit in the first nine months of 2023, has wiped out more than half of the miner’s market value and cast the company’s finances into uncertainty as billions of dollars of its debt mature in the coming years.
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First Quantum plans to cut capital spending by US$400 million this year — to a range of US$1.2 billion to US$1.4 billion — in part from slowed spending on Cobre Panama, as well as moves to combat cost growth at its Zambian mines.
Without Cobre Panama operating, the company also said it expects copper output to fall by nearly half from last year. The company produced 708,000 metric tons of copper in 2023 and expects to produce 370,000 tons to 420,000 tons in 2024.
First Quantum had previously announced plans to pause mining operations at its Australian nickel mine. Bloomberg also reported last week the company has started a process to sell a copper mine in Spain.
Jacob Lorinc, Bloomberg
Stocks fell and bond yields rose, with traders wading through bank earnings and awaiting clues on United States Federal Reserve policy amid speculation bets on aggressive rate cuts are overdone.
The S&P 500 lost traction, following last week’s advance. Goldman Sachs Group Inc. topped earnings estimates as its equities-trading unit posted a jump in revenue, while Morgan Stanley’s traders fell short again, dragging down profit at the firm. Treasury 10-year yields topped four per cent, while the U.S. dollar hit a one-month high.
In Canada, the S&P/TSX composite fell 0.71 per cent in early trading.
Bloomberg
Canada’s annual rate of inflation rose 3.4 per cent in December, Statistics Canada said Tuesday.
Airfares, vehicles and rent all contributed to the rise in inflation.
Food prices increased 4.7 per cent, matching the pace of increase in November.
Economists were widely expecting the rise due to a sharper decline in gasoline prices in December 2022 compared to last month.
In November, the inflation rate was 3.1 per cent.
Statistics Canada said the annual average inflation rate for 2023 was 3.9 per cent, down from a 40-year high of 6.8 per cent in 2022. Price growth in 2023 slowed in six out of eight components of the consumer price index compared to the previous year.
Financial Post, The Canadian Press
Restaurant Brands International Inc. says it has signed a deal to buy Carrols Restaurant Group, the largest Burger King franchisee in the United States, in a deal worth US$1 billion.
Under the agreement, Restaurant Brands, which own the Burger King brand as well as Tim Hortons, Popeyes Louisiana Kitchen and Firehouse Subs, will pay US$9.55 per share in cash.
Carrols has 1,022 Burger King restaurants in 23 states as well as 60 Popeyes restaurants in six states.
RBI said the deal is part of a plan at Burger King plan to accelerate sales growth and drive franchisee profitability.
Burger King expects to invest about US$500 million to remodel about 600 of the acquired restaurants to bring them in line with its latest design.
The company ultimately plans to refranchise the vast majority of the portfolio to new or existing smaller franchise operators.
The Canadian Press
Global stocks retreated and the dollar rose to a one-month high as central bank officials pushed back against bets on aggressive interest rate cuts.
U.S. futures slid, while the Stoxx Europe 600 index headed for a five-week low. The MSCI Asia Pacific Index lost 1.5 per cent, the most in three months. Two-year Treasury yields rose six basis points to 4.2 per cent. An index of the dollar climbed 0.6 per cent.
Bloomberg
Prime Minister Justin Trudeau will make a speech at the Chamber of Commerce of Metropolitan Montreal, followed by a moderated exchange with Michel Leblanc, CEO of the Chamber.
Inflation numbers for December will be released this morning. Economists expect the consumer price index reading to have ticked up again. Also on tap are Canadian housing starts for December, and the U.S. Empire State manufacturing survey.
Morgan Stanley and Goldman Sachs Group Inc. report earnings today.
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Additional reporting by The Canadian Press, Associated Press and Bloomberg
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