TORONTO - Canadian miner First Quantum Minerals is exploring a rights issue as it seeks to strengthen its balance sheet, following the closure of a key mine in Panama last month that accounted for about 40% of its revenue, two sources familiar with the matter told Reuters.

The company has not finalized the terms or timing of the potential rights issue - an invitation to existing shareholders to purchase additional new shares in the company - but it has discussed the option with some shareholders, the people added.

Separately, the company has hired BMO Capital markets to sell some of its smaller mines such as Las Cruces in Spain, one of the sources said.

The sources declined to be identified as the discussions are confidential.

First Quantum Minerals declined to comment on both matters. BMO Capital did not respond to a request for comment.

First Quantum said this week that it was exploring all options to "manage its balance sheet," which included selling smaller mines, bringing strategic investors into its larger mines and evaluating a range of options across capital markets to raise funds.

The Canadian miner is dealing with the fallout of the sudden closure of its flagship Panama mine last month. The company has lost more than half its market value since public protests against its Panama mine started in October.

First Quantum Minerals shares were up 0.6% at C$12.53 late on Friday afternoon.

First Quantum has said it plans to cut costs by $400-million in 2024. It recently suspended its dividend and shut down its nickel mine in Australia.

Reuters reported this month that China's Jiangxi Copper, First Quantum's biggest shareholder, was in talks with the Canadian miner to pick up a minority stake in its Zambian mines.

The company is open to offloading between 10-30% of equity, one of the sources said.

Since November last year First Quantum has lost C$11-billion ($8.2-billion) of its market value due to the Panama protests. Cobre Panama contributed $2.2-billion or 40% of the company's total revenue for the nine months ending September 2023.

In December, Fitch warned that if the Cobre Panama mine were permanently shut, First Quantum's net debt leverage ratio in 2024 would increase to more than five times earnings before interest, tax, depreciation and amortization, which could result in a covenant breach.