(Bloomberg) -- First Quantum Minerals Ltd. reached an agreement on a new concession contract with Panama’s government over a giant copper mine, potentially ending a months-long dispute that’s halted ore processing and shipments.

The draft deal, which is subject to public consultation and government approvals, would resolve a dispute that erupted after First Quantum and Panama failed to reach a tax agreement late last year for the Cobre Panama mine. The operation is First Quantum’s biggest asset, an economic engine for Panama and accounts for about 1.5% of global copper production.

Shares of the Vancouver-based mining company rose 3.5% to C$30.82 at 10:19 a.m. trading in Toronto, its biggest intraday jump in a week. Franco-Nevada Corp., which has a streaming deal for Cobre Panama, jumped 2.5%.

Panama’s maritime authority will allow First Quantum to resume exporting copper concentrate, and processing at the mine is set to resume in coming days, the company said Wednesday in a statement. 

The 20-year deal includes a $375 million payment and an additional $20 million to cover taxes and royalties up to the end of the year, followed by an annual minimum contribution of $375 million, made up of taxes and a profit-based mineral royalty of 12% to 16%. The company also secured downside protections if copper falls below $3.25 a pound before the end of 2025 with a total tax contribution of less than $300 million from 2026 and beyond.

The breakthrough provides relief for First Quantum’s shareholders and the tight global copper market, while Panama maintains its reputation as an investor-friendly jurisdiction. The development also follows a resumptions of operations at Freeport-McMoRan Inc.’s Grasberg mine in Indonesia and an easing of tensions that had disrupted mining in Peru, the second-largest copper producing country. 

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First Quantum and Panama have been negotiating new tax terms for more than a year. Talks failed to produce an accord by Panama’s Dec. 14 deadline, putting the two sides at an impasse. Negotiations resumed in late December.

(Adds shares in third paragraph.)

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