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First Quantum Minerals Reports Second Quarter 2018 Results

07/30/2018

(In United States dollars, except where noted otherwise)

TORONTO, July 30, 2018 /CNW/ - First Quantum Minerals Ltd. ("First Quantum" or the "Company", TSX Symbol "FM") today reported comparative earnings1 of $128 million ($0.19 per share1), net earnings attributable to shareholders of the Company1 of $135 million ($0.20 per share) and cash flows from operating activities of $407 million ($0.59 per share1) for the three months ended June 30, 2018.  The results include a $45 million loss realized under the copper sales hedge program for which no tax credit is available.

First Quantum Minerals Ltd. (CNW Group/First Quantum Minerals Ltd.)

SUMMARY:

  • Solid Operations: Record Quarterly Copper Sales of 152,403 tonnes; Low Unit Cost of Production Maintained
    • Produced 150,950 tonnes of copper2:
      • 28% increase year-over-year at the Sentinel mine.
      • Maintenance shutdown at Las Cruces deferred to the third quarter while Kansanshi commenced its previously announced maintenance shutdown of its high pressure leach circuit.
    • Unit cost of copper production3: All-in sustaining cost ("AISC") = $1.76 per pound; Cash cost ("C1") = $1.28 per pound; Total cost ("C3") = $2.11 per pound.
  • Strong Operating Cash Flows and Liquidity
    • Generated $407 million of cash flows from operating activities. Almost double that of the comparative quarter in 2017 on a higher realized copper price and sales volume.
    • Extended the copper hedge program: 25,000 tonnes of unmargined copper forward sales contracts at an average price of $3.15 per lb with periods of maturity to December 2018; 98,000 tonnes of zero cost collar unmargined sales contracts at weighted average prices of $3.04 per lb to $3.45 per lb with maturities to June 2019.
    • Ended the quarter with $682 million in net unrestricted cash and cash equivalents, $1,500 million of committed undrawn facilities and in full compliance with all financial covenants.
  • Key Milestones Achieved at the Cobre Panama Project Towards Phased Commissioning in 2018
    • Synchronized set 1 of the power station and started supplying power into the national grid.
    • Started receiving and unloading full coal shipments at the port.
    • Began first commissioning activities at the process plant.
    • Recorded over 10 million continuous hours worked without incurring a Lost Time Injury.
  • Other
    • In July 2018, the Company's Zambian operations were advised by the country's state-run power company of its plans to reduce power supply to the Kansanshi complex and Sentinel for about a 31-day period, beginning late July, to facilitate maintenance and upgrades to the electricity network. Plans are in place at both sites to optimally manage operations during this period. Market production guidance is currently unchanged.
    • Further to the assessment, received in March 2018, from the Zambia Revenue Authority ("ZRA") regarding import duties, the Company has provided to the ZRA the relevant documentation in its rebuttal of the assessment and remains engaged with the agency and committed to ensuring transparency in all discussions between the parties.
    • On June 1, 2018, ZCCM International Holdings PLC sought to amend its application for additional grounds on which to challenge a February 22, 2018 Arbitral Tribunal's ruling that denied it permission to continue Arbitration proceedings against Kansanshi Holdings Limited and Kansanshi Mining PLC. A hearing on the application is expected to take place in the first quarter of 2019.
  • Corporate Developments:
    • Elected, with Northern Dynasty Minerals, to terminate the framework agreement, announced on December 15, 2017, in accordance with its terms after being unable to reach agreement on the contemplated option and partnership transaction on the Pebble project.
    • Declared an interim dividend of CDN$0.005 per share, in respect of the financial year ending December 31, 2018.

 

1  Net earnings (loss) attributable to shareholders of the Company has been adjusted to exclude items which are not reflective of underlying performance to arrive at comparative earnings (loss). Comparative earnings (loss), comparative earnings (loss) per share, comparative EBITDA and cash flows per share are not measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. The Company has disclosed these measures to assist with the understanding of results and to provide further financial information about the results to investors. Refer to the "Regulatory Disclosures" section in the MD&A for the quarter ended June 30, 2018 for further information.


2 Production is presented on a copper contained basis, and is presented prior to processing through the Kansanshi smelter.


3 AISC, C1 and C3 costs per pound are not recognized under IFRS. Refer to the "Regulatory Disclosures" section in the MD&A for the quarter ended June 30, 2018 for further information.

 

CEO'S COMMENTS

"We are pleased with the results for the quarter and first six months of the year. Our operations performed well and in line with plan while several important milestones were achieved at Cobre Panama," noted Philip Pascall, Chairman and CEO. 

"The start of power supply into the national grid from the first of two generating sets at the power station is significant as it will eventually provide the requirements for that entire operation. Equally important is the project's safety record. Throughout our Company, one of our top priorities is to continually strengthen and improve our safety culture. We are heartened to see this fully embraced by the predominately Panamanian workforce at Cobre Panama.

"While metal prices are being negatively affected by global political concerns, demand for copper remains robust. We continue to sell all of our production into a market where there is excess demand. This supports our belief that the pressure on the copper price is not driven by fundamentals. Nevertheless, in light of current conditions, we think it is prudent to extend our copper sales hedge program on a limited basis. The intent is to ensure a certain level of cash flow during Cobre Panama's commissioning and ramp-up phases that precede commercial operations," Mr. Pascall concluded.

OPERATING HIGHLIGHTS





Three months ended

June 30

Six months ended

June 30

(U.S. dollars where applicable)

2018

2017

2018

2017

COPPER





-

Production (tonnes)  

150,950

141,912

296,308

274,268

-

Sales (tonnes)

152,403

139,521

290,424

279,331

-

Cost of production:







o  AISC (per lb)

$1.76

$1.50

$1.74

$1.54



o  C1 (per lb)

$1.28

$1.12

$1.28

$1.19



o  C3 (per lb)

$2.11

$1.95

$2.13

$2.00

-

Realized price (per lb)

$2.95

$2.24

$2.85

$2.22

 

GOLD





-

Production (ounces)

46,467

50,040

92,396

100,619

-

Sales (ounces)

48,172

52,020

96,987

98,924

 

FINANCIAL HIGHLIGHTS





Three months ended

June 30

Six months ended

June 30

(U.S. dollars millions, except where noted otherwise)

2018

2017

2018

2017

 

Sales revenues

 

1,049

 

782

 

1,934

 

1,548

Gross profit

271

66

452

135






Net earnings (loss) attributable to shareholders of the Company

135

(35)

182

(149)

Basic earnings (loss) per share

$0.20

($0.05)

$0.27

($0.22)

Diluted earnings (loss) per share

$0.20

($0.05)

$0.26

($0.22)






Comparative EBITDA

466

267

829

532

Comparative earnings (loss)

128

(18)

177

(47)

Comparative earnings (loss) per share

$0.19

($0.03)

$0.26

($0.07)






Cash flow from operating activities

407

205

1,203

444

 

CONFERENCE CALL & WEBCAST

Conference call and webcast details are as follows:

Date:

July 31, 2018

Time:

9:00 am (EDT); 2:00 pm (BST); 6:00 am (PDT)



Webcast:

www.first-quantum.com



Dial in: 

North America: (toll free) (877) 291-4570


North America and international: 1 (647) 788-4919


United Kingdom: (toll free) 0-800-051-7107    



Replay:

Available from noon (Eastern) on July 31, 2018 until 11:59 pm (Eastern) on August 14, 2018


North America: (toll free) (800) 585-8367


North America and international: 1 (416) 621-4642



Passcode: 

6282328

 

COMPLETE FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS

The complete consolidated financial statements and Management's Discussion and Analysis for the quarter ended June 30, 2018 are available at www.first-quantum.com and should be read in conjunction with this news release.

On Behalf of the Board of Directors of First Quantum Minerals Ltd.        
G. Clive Newall
President

For further information visit our website at www.first-quantum.com

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

Certain statements and information herein, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. The forward-looking statements include estimates, forecasts and statements as to the Company's expectations of production and sales volumes, and expected timing of completion of project development at Cobre Panama and Enterprise and are subject to the impact of ore grades on future production, the potential of production disruptions, capital expenditure and mine production costs, the outcome of mine permitting, other required permitting, the outcome of legal proceedings which involve the Company, information with respect to the future price of copper, gold, nickel, zinc, pyrite, cobalt, iron and sulphuric acid, estimated mineral reserves and mineral resources, First Quantum's exploration and development program, estimated future expenses, exploration and development capital requirements, the Company's hedging policy, and goals and strategies. Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

With respect to forward-looking statements and information contained herein, the Company has made numerous assumptions including among other things, assumptions about continuing production at all operating facilities, the price of copper, gold, nickel, zinc, pyrite, cobalt, iron and sulphuric acid, anticipated costs and expenditures and the ability to achieve the Company's goals. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. These factors include, but are not limited to, future production volumes and costs, the temporary or permanent closure of uneconomic operations, costs for inputs such as oil, power and sulphur, political stability in Zambia, Peru, Mauritania, Finland, Spain, Turkey, Panama, Argentina and Australia, adverse weather conditions in Zambia, Finland, Spain, Turkey, Mauritania and Panama, labour disruptions, potential social and environmental challenges, power supply, mechanical failures, water supply, procurement and delivery of parts and supplies to the operations, and the production of off-spec material.

See the Company's Annual Information Form for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information. Although the Company has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actual results, performances, achievements or events not to be anticipated, estimated or intended. Also, many of these factors are beyond First Quantum's control. Accordingly, readers should not place undue reliance on forward-looking statements or information. The Company undertakes no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information made herein are qualified by this cautionary statement.

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SOURCE First Quantum Minerals Ltd.