First Quantum Minerals Reports First Quarter 2018 Results

TORONTO, April 26, 2018 /PRNewswire/ --

(In United States dollars, except where noted otherwise)

First Quantum Minerals Ltd. ("First Quantum" or the "Company", TSX Symbol "FM") today reported comparative earnings^[1] of $49 million ($0.07 per share^[1]), net earnings attributable to shareholders of the Company^[1] of $47 million ($0.07 per share) and cash flows from operating activities of $796 million ($1.16 per share^[1]) for the three months ended March 31, 2018. The results include a $121 million loss realized under the copper sales hedge program for which no tax credit is available.

SUMMARY: 

• Solid Operations; 145,358 Tonnes of Copper^[2] Produced; Low Unit Cost of Production Maintained
  • 39% increase in production year-over-year at the Sentinel mine.
  • 350,591 tonnes of concentrate processed by the Kansanshi smelter; exceeded the annualized design rate of 1.2 million tonnes.
  • Unit cost of copper production^[3]: All-in sustaining cost ("AISC") = $1.72 per pound; Cash cost ("C1") = $1.27 per pound; Total cost ("C3") = $2.16 per pound.
• Executed Several Proactive Measures to Strengthen the Balance Sheet and Improve Liquidity  
  • Completed a $1.85 billion senior notes offering comprised of $850 million due 2024 and $1 billion due 2026 bearing interest of 6.50% and 6.875%, respectively. Proceeds were used to repay in full and cancel the Term Loan component of the senior debt facility, repay the outstanding balance of the senior revolving credit debt facility, which remains available to be drawn, pay transactions fees associated with the offering and for general corporate purposes. Following the completion of this transaction, the process to secure project financing for the Cobre Panama project was discontinued.
  • Put in place a new $400 million five-year term facility agreement in the subsidiary that owns the Sentinel mine. Repayments are scheduled to start in December 2019.
  • Repaid and cancelled the $175 million outstanding balance on the Kansanshi senior term loan.
  • As a result of these and previous measures, management believes there is sufficient liquidity through the next year to carry out its operating and capital expenditure plans and remain in full compliance with financial covenants.
  • Ended the quarter with $810 million in net unrestricted cash and cash equivalents, $1,670 million of committed undrawn facilities and in full compliance with all financial covenants.
  • The copper sales hedge program continued to unwind and the Company will now receive revenue more closely aligned with the prevailing spot price of copper.
• Achieved Key Milestones at the Cobre Panama Project Towards Phased Commissioning in 2018  
  • Successful steam blows of the set 1 generating boiler and started commissioning on set 2.
  • Started mechanical installation for the primary crusher units in the mine.
  • First operations of the ultra-class mining fleet.
  • Mobilized key commissioning personnel for the process plant.
  • Development activities in some areas were affected for about six weeks by industrial action which has been resolved.
• Other  
  • ZCCM International Holdings Plc ("ZCCM") was denied permission to proceed with an Arbitration, filed in October 2016, against the Company. As a result, ZCCM is liable for all costs incurred relating to the proceeding.
  • In a related Statement of Claim filed in the Lusaka High Court, all parties have mutually consented to a stay of proceedings pending resolution of an appeal of the Court's decision to reserve judgment on the point that the claims were filed beyond the statute of limitations.
  • An assessment was received from the Zambia Revenue Authority ("ZRA") for 76.5 billion Zambian kwacha (approximately $8 billion) for import duties of $150 million and associated interest and penalties of $8 billion. The assessment is in regard to the import of capital items, consumables, and spare parts for use at the Sentinel mine from January 2013 to December 2017. The Company, an external international accounting firm and shipping agent are working to provide to the ZRA all relevant documentation in its rebuttal of the assessment. The process is approximately two-thirds complete by value and has not identified any material errors. The Company unequivocally refutes the assessment, is committed to transparency and continued engagement with the ZRA on the issue.
  • Finalized the previously reported additional precious metals stream agreement with a subsidiary of Franco-Nevada Corporation and proceeds of $356 million were received.