November 6, 2015 / 12:23 AM / 4 years ago

Exclusive: First Quantum hires Jefferies to sell nickel assets - sources

TORONTO/LONDON (Reuters) - First Quantum Minerals has retained Jefferies to explore a sale of its two nickel mines as the Canadian base metal miner looks to trim debt levels and double down on its bets in copper, three sources familiar with the matter said

The sources, who declined to be named as details of the plan are not public, said the move to sell the assets would help the company achieve its goal of reducing its debt levels by over $1 billion.

A spokeswoman for First Quantum declined to comment on the plan. A spokeswoman for Jefferies was not immediately reachable.

Two of the sources said the assets on the block are Kevitsa, a nickel-copper-platinum mine in Finland and Ravensthorpe, a nickel mine located in Western Australia that the company bought back in 2010.

In a recent note, Cormark Securities analyst Alec Meikle had pegged the net asset values of Kevitsa and Ravensthorpe at $840 million and $372 million, respectively.

The three sources said that a data room is currently being set up and first round bids for the assets are expected by next month. The process is likely to be concluded in the first quarter of 2016.

One of the sources stated the company may consider retaining an interest in Ravensthorpe, but a decision on that would depend on the bids tendered.

The three sources said the sale process is likely to attract the interest of rivals like Lundin Mining, Royal Nickel Corp, Anglo American PLC, Boliden and other private equity backed players in the sector.


Toronto-based First Quantum and its peers globally have been squeezed by sharp declines in the prices of copper and nickel. It said last month that it planned to take “clear and decisive actions” to protect itself given the weakening metal prices.

Copper slid to its lowest in a month on Thursday and nickel hit a six-week low on prospects of a December U.S. interest rate hike, which boosted the greenback.

LME nickel prices are languishing around six-year lows amid concerns of waning steel demand and a ballooning global surplus.

First Quantum, which is developing the massive Cobre Panama project that it acquired via its takeover of Inmet Mining, has seen its share price slide some 56 percent in the last year as the metal price pullback has hurt earnings.

This has raised some concern the company could run into issues specifically on a covenant tied to its net debt to earnings before interest, taxes depreciation and amortization (EBITDA) ratio.

One of the sources said the reason First Quantum is looking to sell its nickel assets, instead of some of its older copper assets is because of the nickel assets generate less EBITDA than those copper assets right now. A sale of the copper assets would therefore negatively impact its net debt to EBITDA ratio, more so than a sale of the nickel assets.

Shares in First Quantum closed 6.8 percent lower at C$7.13 on Thursday on the Toronto Stock Exchange.

Additional reporting by Susan Taylor in Toronto and Nicole Mordant in Vancouver; Editing by Andrew Hay

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