First Quantum Minerals (TSX:FM) stock has been a rollercoaster for investors recently. After losing 75% of its value in 2023 as a painful production suspension loomed at its flagship Cobre Panama mine, the $15 billion copper and gold mining stock clawed back 40% in 2024. Today, the big question looms: Can the potentially undervalued company survive its Panama crisis long enough to reward patient investors with explosive recovery gains?
The good news for First Quantum Minerals: Zambia steps up
While Panama dominates headlines, First Quantum Minerals’s Zambian operations are ramping up and quietly carrying the load. In 2024, copper production powered by the Kansanshi and Sentinel mines surged 14% year-over-year to 431,000 tons, beating earlier guidance. Gold output also outperformed, hitting 139,000 ounces.
The Kansanshi S3 expansion – a US$1.3 billion ($1.9 billion) project – remains on track for mid-2025 completion. Once operational, it may add 25 million tons of annual processing capacity, boosting output and lowering costs by 2027. Sentinel, meanwhile, set mining volume records, proving its ability to partially offset Panama’s absence.
Financially, First Quantum Minerals generated two consecutive quarters of positive earnings in late 2024, with a US$99 million net income during the fourth quarter of 2024. Liquidity stands at US$1.6 billion, supported by proactive hedging (50% of 2025 copper sales locked in) and cost discipline. Management has also floated options like selling a minority stake in Zambian assets or securing streaming deals to shore up cash.
Panama: High stakes, no timelines
Cobre Panama, responsible for 45% of First Quantum Minerals’ pre-2023 revenue, remains in limbo. The government’s environmental audit and social security reforms have delayed negotiations, though CEO Tristan Pascall insists dialogue is progressing.
Monthly costs to preserve the site and keep 1,300 employees on site, and “investments” in marketing communications to educate and sway public opinion total US$13 million, a drain First Quantum can’t sustain indefinitely.
While arbitration proceedings are pushed to 2026, the company prefers a diplomatic resolution. Success here could reignite the stock: Cobre Panama’s 350,000-ton annual copper output would dramatically improve cash flow. But with no clear timeline, investors are left guessing.
Debt management: Strategic levers for stability
First Quantum Minerals’ US$6.9 billion net debt remains its Achilles’ heel. Major maturities – US$2.4 billion ($3.4 billion) due in 2027 –loom large. While refinancing and asset sales could help, the company needs Panama’s revival to avoid a crunch. For now, Zambia’s contributions and copper price hedging provide breathing room, but annual financing costs (US$709 million in 2024) eat into operating earnings.
Buy, Sell or Hold? Speculative potential meets real risk
First Quantum Minerals stock is a binary bet. If Cobre Panama reopens, the stock could soar as production rebounds and debt fears ease. Analysts project 17% year-over-year revenue growth through 2026, though earnings per share (EPS) may slump due to high interest costs. Conversely, prolonged Panama suspension or political roadblocks could trigger liquidity crises or equity dilution.
For risk-tolerant investors, today’s depressed stock price (still 60% below 2023 peaks) trading at a price-to-tangible book value multiple of 0.7 offers a potentially high-reward entry point. The Kansanshi expansion and Zambia operations resilience provide a floor, while Panama’s resolution remains a free option for upside. However, the lack of visibility in Panama and a huge debt overhang make First Quantum Minerals stock a volatile hold.
Foolish bottom line
First Quantum Minerals stock isn’t for the faint-hearted. It’s a gamble on Panama’s politics and copper prices. If you believe in management’s ability to navigate these risks – and can stomach turbulence –accumulating shares ahead of potential catalysts (Kansanshi ramp-up, Panama progress) makes sense. For others, watching from the sidelines until clarity emerges might be wiser. In 2025, First Quantum Minerals stock remains a high-stakes game of patience.
