If an agreement is not reached on that day, the government said it will "pursue an alternative path forward for the operation of the mine."

The government said that any new contract must faithfully reflect the agreement reached in January 2022, but said the new contract discussions "have not advanced sufficiently and are at an impasse".

In January, the government gave First Quantum an ultimatum to agree to pay more taxes or lose its right to extract copper from the Cobre Panama mine. The government wants to increase royalty payments on gross profits from 2% to 16%, as well as demanding it pays income tax. The government also wants to eliminate other tax benefits agreed in a previous contract as it seeks to generate more than US$400 million a year from the mine.

Cobre Panama produced more than 300,000t of copper in 2021 with a throughput rate of about 85Mtpa, and with eyes on expansion to 100Mtpy in 2023. This will lift production to 330,000-360,000t in 2022 and 350,000-380,000t in 2023.

Contract negotiations mark a baptism by fire for Tristan Pascalkansl, who was promoted to chief executive in May. At the start of the month, the company agreed to convert ZCCM Investments Holdings dividend rights on First Quantum's Kansanshi copper-gold mine in Zambia to a 3.1% revenue royalty.

Production guidance at Kansanshi for this year was previously lowered from 175,000-195,000t to 140,000-150,000t. Over, First Quantum has guided the production of 790,000 to 855,000t of copper and 285,000 to 310,000oz of gold in 2022.

Shares in First Quantum are trading at C$32.68, valuing the company at C$22.6 billion.