Dec 11 (Reuters) - Arbitration proceedings between

Canadian miner Franco-Nevada ( FNV ) and Panama over the Cobre Panama

copper mine entered a new phase this week with the formation of

a tribunal to hear the case, according to legal disclosures

filed by the parties.

Investors are awaiting Panama President Jose Raul Mulino's

decision over the future of the mine, which was shut down last

year due to public unrest. Cobre Panama is the flagship mine of

Canadian miner First Quantum Minerals ( FQVLF ), which is also

seeking damages from Panama.

Franco-Nevada ( FNV ) had a streaming agreement with First

Quantum to buy gold and copper from Cobre Panama in return for

financing mine operations.

Franco-Nevada ( FNV ) is seeking $5 billion in damages from Panama under

the Canada-Panama free-trade agreement.

In 2023, Franco-Nevada ( FNV ) took a $1-billion charge due to the

mine's closure. First Quantum has sought damages of at least $20

billion and Orla Mining ( ORLA ), which had its separate mining

contract canceled last year, is claiming at least $400 million

from Panama. The next stage is formal arbitration proceedings in

which the parties present their arguments.

Cobre Panama has become a flashpoint in the mining industry as

its closure has removed 1% of global copper supply. Mulino has

said his government will decide the mine's fate early next year,

even as the arbitration cases proceed.

Rating agency Moody's cut Panama's outlook to negative in

November and pointed out potential credit risks due to the

ongoing litigation.

"Absent measures to address this risk, including reopening

negotiations with the mine's operators, the government's credit

profile could face a severe financial shock in case of an

adverse ruling," Moody's said.

Franco-Nevada ( FNV ) did not respond to a request for comment.

First Quantum declined to comment.

Shares of Franco-Nevada ( FNV ) were down 1.7% in Toronto and First

Quantum dipped 0.5%.