Reliable Growth

At a Glance

First Quantum is a global mining company primarily producing copper, with secondary production of gold and zinc and inventories of nickel and cobalt. We operate long life mines in several countries and employ approximately 20,000 people worldwide.

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We are well known for our “can do” attitude and specialist technical, engineering, construction and operational skills, which allow us to develop and successfully run complex mines and processing plants.

After 25 years of operations we are now one of the world’s top 10 copper producers, exporting millions of tonnes of concentrate from multiple countries to customers worldwide. We are focused on providing a tangible benefit from everything we do for investors, employees and the many communities that surround our operations.

2019 Operations Performance

Cobre Panama

Colón Province, PANAMA

Ownership 90%
Primary Copper
Secondary Gold, molybdenum, silver
2019 Production Copper 147kt, Gold 60koz

Guelb Moghrein

Akjoujt, MAURITANIA

Ownership 100%
Primary Copper
Secondary Gold
2019 Production Copper 30kt, Gold 45koz

Las Cruces

Sevilla Province, SPAIN

Ownership 100%
Primary Copper
2019 Production Copper 48kt

Pyhäsalmi

Pyhäjärvi, FINLAND

Ownership 100%
Primary Copper
Secondary Pyrite, Zinc
2019 Production Copper 8kt, Zinc 12kt

Çayeli

Rize Province, TURKEY

Ownership 100%
Primary Copper
Secondary Zinc
2019 Production Copper 17kt, Zinc 5kt

Sentinel

North-Western Province, Zambia

Ownership 100%
Primary Copper
2019 Production Copper 220kt

Kansanshi

North-Western Province, ZAMBIA

Ownership 80%
Primary Copper
Secondary Gold
2019 Production Copper 232kt, Gold 145koz

Ravensthorpe

Western Australia, AUSTRALIA

Ownership 100%
Primary Nickel
Secondary Cobalt
Care and maintenance

Haquira

Apurimac Region, PERU

Haquira is an undeveloped copper deposit in Apurimac region of southern Peru.

Taca Taca

Salta Province, ARGENTINA

Taca Taca is a high-potential copper-gold-molybdenum porphyry deposit in an advanced exploration phase.

Letter from the CEO

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In the early years of First Quantum we set a goal of becoming a leading copper-focused mining and metals company and the success at Cobre Panama is a significant step toward that objective. This allowed us to deliver record production and to set a new annual record for copper production.

Philip K.R. Pascall Chairman of the Board and Chief Executive Officer

2019 was an important year for First Quantum. The Company’s largest development project to date, Cobre Panama, achieved commercial production in September, less than seven months after the introduction of first ore into the milling circuit. In the early years of First Quantum we set a goal of becoming a leading copper-focused mining and metals company and the success at Cobre Panama is a significant step toward that objective. This allowed us to deliver record production and to set a new annual record for copper production.

First Quantum was born out of a belief in the enduring value of copper. After 20 years we remain even more convinced of copper’s importance to the modern world. In 2019, we produced over 702,000 tonnes of copper and we expect growth in copper production to continue in 2020 as Cobre Panama continues its ramp-up. In 2020, we expect total copper production to be between 830,000 and 880,000 tonnes, an increase of at least 18%.

We have certainly had our share of ups and downs, but importantly we have learned from every development and continue to improve our operations. We are now running some of the finest copper mines in the world. After we bring Ravensthorpe (our nickel and cobalt mine in Australia), back into production in the first quarter of 2020, First Quantum will have eight operating mines in seven countries. We also have two significant development projects in our project pipeline.

We are determined that each of our mines and projects should be a valued partner to the community where it operates. This is part of an overall sustainability strategy, built on four key pillars: economically viable investments, technically innovative operations, environmentally sound practices, and socially responsible actions. At each project, we prioritize local community engagement as we strive to minimize our impact on the environment, and to find practical ways to improve the lives of the people we work amongst and alongside. Our environmental and social programs are developed to meet the unique requirements at every site.

Our Health & Safety systems and our Environmental Management Systems are now both well developed in the group and undergo regular external compliance audits. Since 2015, we have recorded and reported site level environmental incidents according to a proprietary five-level classification system. From 2015 to 2019 we have seen a steady and continuous reduction in environmental incidents and improvement of overall environmental compliance across the group. We have reviewed the risks and management of our tailings storage facilities and these are subjected to regular inspection and reporting by independent experts. The group safety performance also continued to show improvement in 2019, with a 0.05 rolling 12-month Lost Time Injury Frequency Rate. This is an improvement from 0.06 in 2018 and 0.11 in 2017. There were no workplace fatalities in 2019. We continue to do all we can to ensure that every employee gets home safely after every shift.

We prioritize biodiversity protection and we recognize that a focussed approach is required to meet the needs of each site. Our community enhancement, agricultural, health, education, infrastructure and other projects are undertaken to assist each community, and to help them become healthier, safer and more prosperous long after mining operations have stopped. Disclosure of these programs and the results of our safety, environmental and sustainability efforts are covered by our latest report, the 2019 Environmental, Safety and Social Data Report. This was issued during 2019 and can be found on our website.

By working together, I believe First Quantum has made a tangible, long-term difference to people in many countries around the world. I am very proud of the lives that have been improved through health, education and training delivered as a consequence of our operations; especially to the communities within which we live.

We also recognize that the composition of the Board needs to be refreshed as long-standing directors move on. In 2019, we welcomed Joanne Warner as our newest board member. She brings significant experience and a valuable skill set. Paul Brunner has indicated he will not be standing for re-election at the 2020 Annual and Special Meeting of Shareholders. We thank Paul for his huge contribution and his practical insight over a long period to the Board and its committees. We will continue to seek suitable opportunities to enhance and diversify our Board of Directors.

As urbanisation in developing countries continues to gather pace, copper use will continue to increase. As developed countries move to an increasingly connected, networked and new energy future, copper will remain in demand because of its fundamental importance to networks, electronics and energy storage and delivery.

There are not many known new projects that might help meet that demand in the future. First Quantum is well positioned with its large operating mines, and a pipeline of new potential.

The commodity markets for copper were very volatile throughout 2019 hitting a low of $2.51 per pound and a high of $2.98 per pound on the London Metal Exchange (LME). The LME average copper price for the year was $2.72 per pound, 8% lower than the average in 2018.

We achieved record production in 2019 with over 702,000 tonnes of copper marking an eighth consecutive year of growth in copper output. This represents a 16% increase over 2018. The increase from Cobre Panama offset lower production from Kansanshi and Las Cruces. The group’s 2019 unit costs remained at the low end of the industry cost curve and we expect this to continue through 2020.

Gold production for the year increased by 39% over 2018 to almost 257,000 ounces. This is largely attributed to Cobre Panama which produced just over 60,000 ounces.

We achieved record production in 2019 with over 702,000 tonnes of copper marking an eighth consecutive year of growth in copper output. This represents a 16% increase over 2018. The increase from Cobre Panama offset lower production from Kansanshi and Las Cruces. The group’s 2019 unit costs remained at the low end of the industry cost curve and we expect this to continue through 2020.

Gold production for the year increased by 39% over 2018 to almost 257,000 ounces. This is largely attributed to Cobre Panama which produced just over 60,000 ounces.

Our Las Cruces mine recovered during the year (after the January 2019 land slippage) to return to normal operations by July. The development of a proprietary process for the recovery of copper, zinc, silver, and lead from primary chalcopyrite ore remains a valued technology. The performance of this technology is now well established, and the initial underground mining has confirmed continuation of the resource. We are now working to determine the practical and commercial feasibility of a long-term underground mine.

We have an attractive pipeline of advanced exploration projects in South America. The most advanced is Taca Taca located in the Puna region of the Salta province in Argentina. Work on the Environmental Impact Assessment and other studies, along with stakeholder engagement, continues to advance the project towards a construction decision. Next is Haquira, located in Apurimac in southern Peru, adjacent to the Las Bambas operation. Our current focus is to relocate some small local communities, with whom we have recently made good progress towards obtaining agreements. Our aim is then to complete an evaluation of the deposit and advance towards a production decision.

Meanwhile our Exploration Division continues to focus on a number of very promising higher grade deposits. The objective is to develop projects without the enormous capital demands of low-grade mines.

Overall these projects provide First Quantum with great long‑term potential. However, we emphasise that our priority in the short-to-medium-term is to deleverage our balance sheet so that we can provide a reliable return to shareholders.

Our focus in 2020 will primarily be on managing our commodity risk and to establish cash flow stability amid the continuing commodity price uncertainty and volatility. We will consolidate our operations and we will continue to explore options available to us to bring in partners in some aspects that would accelerate the deleveraging. In summary, I am very positive about our outlook over the next few years.

Finally, 2019 was a year of extraordinary achievements in First Quantum. I would like, once again, to thank all our employees who made this possible. I would also like to express my appreciation to our shareholders for their continued support, particularly those who have been long-term supporters. They have believed not only in our vision, but also in our ability to deliver projects where others have struggled and to overcome challenges that others have balked at. We believe First Quantum is a strong company that is positioned well to cope with the current global uncertainties and it will thrive when economic conditions improve.

Philip Pascall Chairman and Chief Executive Officer