First Quantum Minerals Ltd. confirmed it is in talks with Jiangxi Copper Co. Ltd. for the possible sale of a minority stake in its Zambian copper assets, while denying recent media reports about a potential takeover bid.
Bloomberg News recently reported that First Quantum was working with advisers to assess options after drawing preliminary takeover interest from global miners.
First Quantum said Sept. 23 that it has not engaged in discussions for a takeover or similar deal, and noted there was no guarantee it would complete an agreement with Jiangxi Copper over a minority interest in its copper assets in Zambia. Shares in First Quantum fell about 12% in early afternoon trading in Toronto on Sept. 23 following the news.
A minority stake in the company's Kansanshi and Sentinel copper mines may be worth about US$2 billion, Reuters said, citing Scotiabank analysts. Jiangxi Copper recently acquired nearly 10% of First Quantum on the secondary market, Reuters said, citing an anonymous Jiangxi Copper source.
First Quantum and Zambia have been at loggerheads since March 2018 when the company received a tax bill of 76.5 billion Zambian kwacha from the country's tax authority over the alleged underpayment of customs duties.
In late 2018, the miner planned to slash 2,500 jobs in the country in response to higher taxes, but decided to drop the plan in early 2019 ahead of reportedly moving to consolidate its Kansanshi ownership for US$700 million.
First Quantum also recently said that the country's planned tax regime changes may hurt project expansions.
As of Sept. 20, US$1 was equivalent to 13.20 Zambian kwacha.
