FIRST QUANTUM PROVIDES UPDATE
March 24 2020 - 09:05AM
First Quantum Minerals Ltd. ("First Quantum" or the
"Company") (TSX:FM) today announced that its production
and sales remain stable in the current environment and maintains
its production guidance for the year.
“Our key priorities are the health of our
employees and to ensure the business remains robust in the midst of
a challenging commodity price environment,” stated Philip Pascall,
CEO. “We are doing everything we can to care for our staff, their
families and the communities around us in relation to the COVID-19
pandemic. It is also our responsibility that we continue our
contribution to the economies of the countries in which we operate
and supply the products on which our customers depend. We will
continue to operate our mines responsibly, providing employment and
generating revenues, and we will ensure that our business
withstands this period of downturn.”
COVID-19 update
Several members of the contractor workforce at
the Cobre Panama operation have been confirmed as having contracted
the COVID-19 virus. The affected personnel are being cared for in
the public healthcare system as per the Panama Ministry of Health
requirements. Cobre Panama has already implemented the appropriate
control, isolation and quarantine measures in line with Government
guidelines and its site-specific conditions. On Friday March 20,
the Government of Panama by means of Executive Decree 500 clarified
that Cobre Panama is specifically authorized to continue operating,
albeit with strict adherence to the protocols established by the
Ministry of Health which will require a reduced labour force
operating on 12 hour shifts.
Similarly, on other mine sites the Company is
prepared for control, isolation and quarantine as necessary. As
more countries take action to manage and mitigate the impact of
COVID-19, First Quantum is managing the necessary
country-by-country restrictions in order to assist in the
protection of those most vulnerable.
Production and sales
The Company has not experienced any significant
disruption to sales, supply chains and product shipments since the
onset of the COVID-19 pandemic. The Company’s production and cost
expectations as previously guided remain current [see Company
release dated January 9, 2020].
Year-to-date operations in Zambia have been
slightly better than expected with good grades and recoveries
within the mixed and sulphide ores at Kansanshi and improved mining
volumes and ore grades at Sentinel. Following the announcement of
heightened restrictions in South Africa, including controls on
ports and transit routes, the Company is managing the export of its
Zambian production through alternate routes.
Cobre Panama continues to ramp-up and
expectations for 2020 copper production remain unchanged at 285,000
– 310,000 tonnes. However, as a result of the implementation of the
health protocols at the operation, the pace of ramp-up may be
slightly slower than originally planned and will impact first half
production. At this stage, it is expected that the annual
production expectation can still be met with better than planned
second half production levels. The Punta Rincon international port
at Cobre Panama remains open for import and export.
The restart of operations at Ravensthorpe has
continued with the first shipment expected to be within the first
half of the year. At Las Cruces in Spain, the focus is on mining
out the remaining in-pit ore which is progressing to plan. All
other operations are operating normally.
Cost management
The Company continues to actively manage all
site operating costs while focusing on productivity and cost
efficiency and is preparing for an extended period of health
protocols and travel restrictions, and commodity prices that could
remain depressed into 2021. Capital spending is being reviewed
companywide with the potential to defer some capital spending
originally planned for this year. Operating costs at all sites are
being reviewed to identify opportunities to further reduce
costs.
As part of its immediate cost reduction efforts
the Company has implemented a temporary salary reduction of 20% for
certain senior staff including the CEO.
Liquidity and funding
The Company had $523 million in net
unrestricted cash at December 31, 2019. Following the successful
bond issuance in January 2020, the Company repaid (without
cancelling) the senior Revolving Credit Facility resulting in
approximately $700 million available in undrawn committed credit
facilities and no near term debt maturities following the repayment
of the remaining outstanding bonds due February 2021 giving the
Company a total of $1.2 billion in pro-forma cash and available
credit. Additionally, the Company has mitigated some of the copper
price volatility in the near term with a solid copper hedge
position of 343,025 tonnes of copper sales to January 2021 using
both unmargined copper forward sales and unmargined zero cost
collar sales contracts. 174,700 tonnes in Q2 are currently hedged
at an average floor price of $2.61 per pound, 75,825 tonnes in Q3
are hedged at an average floor price of $2.62 per pound, and 60,000
tonnes in Q4 are hedged at an average floor of $2.66 per pound. The
Company also has 4,183 tonnes of nickel in H1 2020 hedged at an
average floor price of $6.78 per pound and 5,938 tonnes of nickel
in H2 2020 hedged at an average floor price of $6.76 per pound. The
commitment to deleveraging the balance sheet remains and a plan is
in place to deleverage and manage debt in the current commodity
price environment.
“We remain committed to deliver growth in copper
production at low costs and to de-lever our balance sheet,” stated
Philip Pascall, CEO. “These times are unprecedented, they require
adaptability and flexibility which are part of the culture we’ve
built at First Quantum. We are well positioned to execute our plans
through this period of uncertainty and continue to believe in the
long-term fundamentals of copper.”
The Company will continue to provide updates as
required.
For further information visit our website at
www.first-quantum.com
North American contact: Lisa Doddridge,
Director, Investor Relations Tel: (416) 361-6400 Toll-free: 1 (888)
688-6577 United Kingdom contact: Clive Newall, President Tel: +44
7802 721663E-Mail: info@fqml.com
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