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What a wild month for First Quantum

The morning of October 4 capped off a spectacular downward spiral for shares of First Quantum Minerals Ltd.

Just three months earlier, the copper miner's shares were worth around $29 each. But on that October morning, they traded around $12.75, marking a 56 per cent drop as the seasons changed from summer to fall.

The next month was even more wild. Since hitting that October 4 low, First Quantum's stock has rallied, flying back up to about $23 per share. That means in just 30 days the stock has climbed 80 per cent.

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Highly volatile copper prices and a new Zambian government have been behind the wild ride. After peaking around $4.50 (U.S.) per pound in late July, copper plunged all the way down to about $3.05 in late October. Although First Quantum is developing some nickel projects, copper is by far its most important commodity.

More importantly, First Quantum's biggest project, the Kansanshi mine, is in Zambia, and the African nation elected long-time opposition leader Michael Sata as its new leader on September 20. Since taking office, he has implemented some scary reforms, such as temporarily suspending metal export permits, as well as threatening to take bigger stakes of its copper projects. (Copper comprises about 80 per cent of the country's exports.)

To clear the air, First Quantum's chief executive officer Philip Pascall met with Mr. Sata in mid-October, but very little has been reported about their meeting other than the typical 'everything is fine' comments.

First Quantum's shares have stormed back since that meeting, in part buoyed by rising copper prices, and the stock seems to have stabilized for the time being. That means management can finally breathe, because for them, it sure was a wild month.

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About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

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