First Quantum Minerals Reports Second Quarter 2022 Results
First Quantum Minerals Ltd. (“First Quantum” or “the Company”)
(TSX: FM) today reports results for the three months ended June 30,
2022 (“Q2 2022”) of net earnings attributable to shareholders of
the Company of $419 million ($0.61 earnings per share) and adjusted
earnings1 of $337 million ($0.49 adjusted earnings per share2). As
at June 30, 2022, First Quantum had achieved its debt reduction
target of $2 billion, from the peak in Q2 2020, and, as previously
announced, continues to target a further $1 billion reduction in
debt in the medium term.
“While the restrictions from the global pandemic
have largely eased, the macro environment has become more
challenging due to a combination of continued high inflation and
the emerging global economic slowdown. Our debt reduction over the
last several years has placed our balance sheet in a better
position for this turn of events. In order to build further
resilience through these uncertain times, our focus will be on
driving consistent operational performance, successful execution of
our brownfield projects and discipline with our capital
investments,” commented Tristan Pascall, Chief Executive Officer.
“It is the determination and commitment of our workforce that has
enabled us to surmount the unprecedented obstacles that we have
faced in recent years and means that we can tackle these new
challenges with confidence. I thank the team for their continued
commitment and efforts.”
Q2 2022 SUMMARY
In Q2 2022, First Quantum reported gross profit
of $629 million, EBITDA1 of $906 million, net earnings attributable
to shareholders of $0.61 per share, and adjusted earnings of $0.49
per share2. Relative to the first quarter of this year (“Q1 2022”),
second quarter financial results were impacted by a declining
copper price, inflationary pressures on costs and lower sales
volumes of copper, gold and nickel.
Total copper production for the second quarter
was 192,668 tonnes, a 6% increase from Q1 2022. The
quarter-over-quarter increase in production was entirely
attributable to Cobre Panama, which achieved quarterly records in
mining volumes, throughput, and production. At both Kansanshi and
Sentinel, lower grades continued into Q2 2022, which contributed to
lower copper production relative to the preceding quarter for both
operations. Total copper production guidance for 2022 remains
unchanged at 790,000 to 855,000 tonnes with full year production at
Sentinel and Kansanshi expected to be towards the lower end of the
guidance range.
Copper C1 cash cost2 of $1.74 per lb for Q2 2022
was $0.13 per lb higher than Q1 2022. While global inflationary
pressures were present in the first quarter of this year, second
quarter costs were further impacted by higher energy and commodity
prices resulting from the conflict in Ukraine. Costs for fuel,
explosives, freight, mill balls, reagents and other consumables
represent almost half of the Company’s operational production cost
base and unit costs in these areas continued to increase throughout
the second quarter and rose above levels assumed in current
guidance. Copper C1 unit costs were also impacted by lower
production in Zambia. Copper C1 cash cost2 guidance range remains
unchanged at $1.45 to $1.60 per lb. Unit costs over the next six
months will be dependent on market rates for fuel and other key
supplies, the market price of gold and other by-products, as well
as production levels.
1 EBITDA and adjusted earnings are non-GAAP
financial measures. These measures do not have a standardized
meaning prescribed by IFRS and might not be comparable to similar
financial measures disclosed by other issuers. Adjusted earnings
and EBITDA were previously named comparative earnings and
comparative EBITDA, respectively, and the composition remains the
same. See “Regulatory Disclosures”.2 Adjusted earnings per share
and copper C1 cash cost (copper C1) are non-GAAP ratios which do
not have a standardized meaning prescribed by IFRS and might not be
comparable to similar financial measures disclosed by other
issuers. See “Regulatory Disclosures”.Q2 2022 OPERATIONAL
HIGHLIGHTS
Total copper production for Q2 2022 was 192,668
tonnes, up from the 182,210 tonnes reported in Q1 2022, as Cobre
Panama achieved record quarterly production while Kansanshi
experienced lower production. Global logistical challenges
persisted into the second quarter as a result of the flooding in
parts of South Africa that affected the Port of Durban, the
challenges posed by COVID-19 lockdowns in China, and the continued
disruptions in marine traffic flow related to the Ukraine conflict.
As a consequence of these constraints, copper sales volumes in Q2
2022 totaled 187,642 tonnes, approximately 5,000 tonnes lower than
production during the quarter.
Copper C1 cash cost1 averaged $1.74 per lb in Q2
2022, up from $1.61 per lb in Q1 2022. Various inputs and
operational costs continued to increase further during the second
quarter. These include costs for fuel, explosives, sulphur,
freight, reagents, liners and steel. Global inflationary pressures
have been impacted by the COVID-19 pandemic as well as supply chain
disruptions. Second quarter costs were further impacted by the
wide-reaching sanctions imposed upon Russia due to the conflict in
Ukraine.
- Cobre Panama
delivered record copper production of 90,778 tonnes in Q2 2022,
representing a 16% increase over production levels in the previous
quarter. Cobre Panama saw an improvement in truck availability and
increased grades in the second quarter. In addition, record mill
throughput of 21.2 million tonnes was achieved in the second
quarter, attributable to increased plant stability and continuous
improvement projects. Copper C1 cash cost1 of $1.54 per lb was
$0.11 per lb lower than the previous quarter as higher production
volumes offset the impact of inflationary pressures for key
consumables including explosives, fuel, steel for grinding media
and liners, and higher freight charges. A collar structure for coal
purchases continues to be in place with the ceiling price already
exercised for July 2021 onwards, thereby limiting exposure to
further increases in the thermal coal price until the end of
2023.
- Kansanshi’s
copper production of 39,719 tonnes in Q2 2022 was 2,180 tonnes
lower than the previous quarter as a result of lower feed grades
caused by current mining conditions. After an extended rainy
season, higher than anticipated water levels in the M12 cutback
restricted mining deployment, which led to supplementary plant feed
from low grade stockpile. Water from this area is expected to be
removed by the end of the third quarter of 2022, which will provide
access to the scheduled oxide and mixed ore. In the quarter, a
higher than normal proportion of sulphide feed came from
narrow-veined regions as a result of the current mine layout and
mining sequence. Recent detailed updates of the geological model
confirm that a relatively small proportion, 20% of the sulphide
ores, comprise vein-hosted areas and 80% from dominant stratiform
mineralization. Ongoing reconciliation enhancements have elevated
understanding of such areas, which will allow near-term mine plans
and sequences to be improved and optimized. Copper C1 cash cost1 of
$1.83 per lb was $0.37 higher than Q1 2022 due to price increases
in key consumables and lower production.
- Sentinel’s
copper production of 52,447 tonnes in Q2 2022 was 28 tonnes lower
than the previous quarter. Sentinel’s mine production of ore and
waste remained behind the planned schedule in the second quarter of
2022, although progress has been made on preparing the pit for an
improved second half of the year. As well, low truck availability
and a backlog of truck maintenance continued from the first
quarter. This was a direct impact of labour restrictions and
resources during the COVID-19 pandemic, which is now subsiding.
Copper C1 cash cost1 of $1.88 per lb was $0.27 per lb higher than
the preceding quarter reflecting higher employee, freight, fuel,
explosives, and consumable costs.
- Ravensthorpe
payable nickel production of 4,348 tonnes was 395 tonnes lower than
the first quarter as production was impacted by wet weather,
especially during April when heavy rainfall was experienced, which
impacted materials handling and reduced beneficiation throughput in
addition to low pre-leach extractions and limestone availability.
Nickel C1 cash cost1 was $10.08 per lb, a $3.30 per lb increase as
a result of higher processing costs due to increases in sulphur and
fuel prices.
1 Copper C1 cash cost (copper C1) and Nickel C1
cash costs (nickel C1) are non-GAAP ratios which do not have a
standardized meaning prescribed by IFRS and might not be comparable
to similar financial measures disclosed by other issuers. See
“Regulatory Disclosures”.
CONSOLIDATED OPERATING
HIGHLIGHTS
|
Q2 2022 |
Q1 2022 |
Q2 2021 |
Copper production (tonnes)1 |
192,668 |
182,210 |
199,689 |
Copper sales (tonnes)8 |
187,642 |
196,702 |
203,790 |
Gold production (ounces) |
74,959 |
70,357 |
81,375 |
Gold sales (ounces)2 |
69,998 |
76,195 |
85,291 |
Nickel production (contained tonnes) |
4,853 |
5,122 |
4,543 |
Nickel sales (contained tonnes) |
2,892 |
4,350 |
6,910 |
CONSOLIDATED FINANCIAL
HIGHLIGHTS
|
Q2 2022 |
Q1 2022 |
Q2 2021 |
Sales revenues3 |
|
1,904 |
|
|
2,163 |
|
|
1,782 |
|
Gross profit |
|
629 |
|
|
908 |
|
|
625 |
|
Net earnings attributable to shareholders of the Company |
|
419 |
|
|
385 |
|
|
140 |
|
Basic earnings per share |
$ |
0.61 |
|
$ |
0.56 |
|
$ |
0.20 |
|
Diluted earnings per share |
$ |
0.60 |
|
$ |
0.56 |
|
$ |
0.20 |
|
Cash flows from operating activities |
|
904 |
|
|
666 |
|
|
679 |
|
Net debt6 |
|
5,339 |
|
|
5,815 |
|
|
6,751 |
|
EBITDA4,5 |
|
906 |
|
|
1,180 |
|
|
902 |
|
Adjusted earnings4 |
|
337 |
|
|
480 |
|
|
173 |
|
Adjusted earnings per share7 |
$ |
0.49 |
|
$ |
0.70 |
|
$ |
0.25 |
|
Cash cost of copper production (C1) (per lb)8 |
$ |
1.74 |
|
$ |
1.61 |
|
$ |
1.29 |
|
Total cost of copper production (C3) (per lb)8 |
$ |
2.73 |
|
$ |
2.65 |
|
$ |
2.21 |
|
Copper all-in sustaining cost (AISC) (per lb)8 |
$ |
2.37 |
|
$ |
2.27 |
|
$ |
1.91 |
|
Realized copper price (per lb)7 |
$ |
4.19 |
|
$ |
4.45 |
|
$ |
3.55 |
|
Net earnings attributable to shareholders of the Company |
|
419 |
|
|
385 |
|
|
140 |
|
Adjustments attributable to shareholders of the Company: |
|
|
|
Adjustment for expected phasing of Zambian value-added tax (“VAT”)
receipts |
|
106 |
|
|
22 |
|
|
22 |
|
Total adjustments to EBITDA4 excluding depreciation5 |
|
(238 |
) |
|
103 |
|
|
28 |
|
Tax and minority interest adjustments |
|
50 |
|
|
(30 |
) |
|
(17 |
) |
Adjusted earnings4 |
|
337 |
|
|
480 |
|
|
173 |
|
1 Production is presented on a contained basis,
and is presented prior to processing through the Kansanshi
smelter.2 Excludes refinery-backed gold credits purchased and
delivered under the precious metal streaming arrangement (see
“Precious Metal Stream Arrangement” within the Management’s
Discussion and Analysis). 3 Delivery of non-financial items
(refinery-backed gold and silver credits) into the Company’s
precious metal stream arrangement have been netted within sales
revenues rather than included in cost of sales. The quarter ended
June 30, 2021 has been revised to reflect this change. Sales
revenues and cost of sales for the quarter ended June 30, 2021 have
been reduced by $65 million compared to the previously reported
values (see “Precious Metal Stream Arrangement” within the
Management’s Discussion and Analysis).4 EBITDA and adjusted
earnings are non-GAAP financial measures, which do not have a
standardized meaning under IFRS and might not be comparable to
similar financial measures disclosed by other issuers. Adjusted
earnings and EBITDA were previously named comparative earnings and
comparative EBITDA, respectively, and the composition remains the
same. Adjusted earnings have been adjusted to exclude items from
the corresponding IFRS measure, net earnings attributable to
shareholders of the Company, which are not considered by management
to be reflective of underlying performance. The Company has
disclosed these measures to assist with the understanding of
results and to provide further financial information about the
results to investors and may not be comparable to similar financial
measures disclosed by other issuers. The use of adjusted earnings
and EBITDA represents the Company’s adjusted earnings metrics. See
“Regulatory Disclosures”. 5 Adjustments to EBITDA in 2022 relate
principally to foreign exchange revaluations and non-recurring
costs relating to previously sold assets (2021 - foreign exchange
revaluations).6 Net debt is a supplementary financial measure,
which does not have a standardized meaning under IFRS, and might
not be comparable to similar financial measures disclosed by other
issuers. See “Regulatory Disclosures”.7 Adjusted earnings per
share, realized metal prices, copper all-in sustaining cost (copper
AISC), copper C1 cash cost (copper C1), and total cost of copper
(copper C3) are non-GAAP ratios which do not have a standardized
meaning prescribed by IFRS and might not be comparable to similar
financial measures disclosed by other issuers. See “Regulatory
Disclosures”.8 Excludes purchases of copper concentrate from third
parties treated through the Kansanshi smelter.
FINANCIAL HIGHLIGHTS
- Gross profit of
$629 million and EBITDA1 of $906 million for the second quarter
were 31% and 23% lower, respectively, than Q1 2022 with the decline
mainly attributable to lower metal prices, lower sales volumes and
higher inflationary pressures on costs.
- Cash flows from
operating activities of $904 million ($1.31 per share2) for the
quarter were $238 million higher than Q1 2022 with a favourable
movement in receivables working capital balance at the end of the
quarter.
- Net debt1
decreased by $476 million during the quarter, bringing the net
debt1 balance down to $5,339 million as at June 30, 2022. As at
June 30, 2022, total debt was $7,164 million (March 31, 2022, total
debt was $7,763 million). As at June 30, 2022, First Quantum had
achieved its debt reduction target of $2 billion, from the peak in
Q2 2020, and, as previously announced, continues to target a
further $1 billion reduction in debt in the medium term.
- During the
second quarter, the Company redeemed at par an aggregate of $1,000
million principal amount of the senior unsecured notes due 2023.
$500 million was redeemed on each of April 5, 2022, and June 7,
2022. No senior unsecured notes due 2023 remain outstanding post
the redemptions.
- On July 26,
2022, the Company declared an interim dividend of CDN$0.16 per
share in respect of the financial year ended December 31, 2022
(July 27, 2021: CDN$0.005 per share) to be paid on September 20,
2022 to shareholders of record on August 29, 2022.
2022 GUIDANCE
Total copper production guidance of 790,000 to
855,000 tonnes and total gold production guidance of 285,000 to
310,000 ounces remains unchanged.
- Cobre Panama
year-to-date copper production of 169,115 tonnes is aligned to be
within the full year guidance range of 330,000 to 360,000
tonnes.
- At Kansanshi,
water from the M12 area is expected to be removed by the end of the
third quarter of 2022, which will provide access to the scheduled
oxide and mixed ore. Extensive work has been conducted on a new
geological approach to narrower and lower mineralized veins that
comprise around 20% of the sulphide ores at Kansanshi, which is
expected to improve optimization of the mine plan in the near term.
Kansanshi is tracking towards the lower end of the guidance range
of 175,000 to 195,000 tonnes.
- Grades at
Sentinel are expected to return to planned levels over the coming
months with an improved grade profile in the second half of 2022
compared to the first six months, resulting in improved production
levels over the course of the year. Full year production at
Sentinel is tracking towards the lower end of the guidance range of
250,000 to 265,000 tonnes of copper.
Copper C1 cash cost2 guidance range remains
unchanged at $1.45 to $1.60 per lb. Copper C1 cash cost2 recorded
for the second quarter and for first six months of the year at
$1.74 per lb and $1.67 per lb, respectively, are above the top end
of current guidance. Costs for fuel, explosives, freight, mill
balls, reagents and other consumables represent almost half of the
Company’s operational production cost base and unit costs in these
areas continued to increase throughout the second quarter and rose
above levels assumed in current guidance. Copper C1 unit costs have
also been impacted by lower production at both Zambian operations.
Unit costs over the next six months will be dependent on market
rates for fuel and other key supplies, the market price of gold and
other by-products as well as production levels.
1 EBITDA is non-GAAP financial measure and net
debt is a supplementary financial measure. These measures do not
have a standardized meaning prescribed by IFRS and might not be
comparable to similar financial measures disclosed by other
issuers. Adjusted earnings and EBITDA were previously named
comparative earnings and comparative EBITDA, respectively, and the
composition remains the same. See “Regulatory Disclosures”.2 Cash
flows from operating activities per share and copper C1 cash cost
(copper C1) are non-GAAP ratios which do not have a standardized
meaning prescribed by IFRS and might not be comparable to similar
financial measures disclosed by other issuers. See “Regulatory
Disclosures”.
Copper AISC1 cost guidance range remains
unchanged at $2.15 to $2.30 per lb. Copper AISC1 cost for the
second quarter and first six months of the year at $2.37 per lb and
$2.32 per lb, respectively, are above the top end of the guidance
range. Royalties cost included within AISC1 is dependent on the
market price of copper and has therefore been relatively high for
the first six months of the year.
Ravensthorpe nickel production and nickel C1
cash cost1 and AISC1 remains unchanged. The spot price for sulphur
has fallen sharply in July 2022 compared to levels experienced in
the first six months of 2022.
Guidance for total capital expenditure remains
unchanged at $1,250 million. In July, the Board approved the
expansion of the Kansanshi smelter, which is included in the
Company’s three-year capital expenditure guidance issued in January
2022.
PRODUCTION GUIDANCE
000’s |
|
|
2022Current Guidance |
Copper (tonnes) |
|
|
790 – 855 |
Gold (ounces) |
|
|
285 – 310 |
Nickel (contained tonnes) |
|
|
25 – 30 |
PRODUCTION GUIDANCE BY
OPERATION2
Copper production guidance (000’s
tonnes) |
|
|
2022Current Guidance |
Cobre Panama |
|
|
330 – 360 |
Kansanshi |
|
|
175 – 195 |
Sentinel |
|
|
250 – 265 |
Other sites |
|
|
35 |
Gold production guidance (000’s
ounces) |
|
|
|
Cobre Panama |
|
|
135 – 150 |
Kansanshi |
|
|
120 – 130 |
Other sites |
|
|
30 |
Nickel production guidance (000’s
contained tonnes) |
|
|
|
Ravensthorpe |
|
|
25 – 30 |
CASH COST1
AND ALL-IN SUSTAINING COST1
Copper |
|
|
2022Current Guidance |
C11 (per lb) |
|
|
$1.45 – $1.60 |
AISC1 (per lb) |
|
|
$2.15 – $2.30 |
|
|
|
|
Nickel |
|
|
2022Current Guidance |
C11 (per lb) |
|
|
$6.25 – $7.00 |
AISC1 (per lb) |
|
|
$7.50 – $8.50 |
At this stage, guidance assumes no change in
royalties in Panama.
1 C1 cash cost (C1), and all-in sustaining cost
(AISC) are non-GAAP ratios, and do not have a standardized meaning
prescribed by IFRS and might not be comparable to similar financial
measures disclosed by other issuers. See “Regulatory Disclosures”.2
Production is stated on a 100% basis as the Company consolidates
all operations.
PURCHASE AND DEPOSITS ON PROPERTY, PLANT
& EQUIPMENT
|
|
|
2022Current Guidance |
Capitalized stripping1 |
|
|
250 |
Sustaining capital1 |
|
|
310 |
Project capital1 |
|
|
690 |
Total capital expenditure |
|
|
1,250 |
1 Capitalized stripping, sustaining capital and
project capital are non-GAAP financial measures which do not have a
standardized meaning prescribed by IFRS and might not be comparable
to similar financial measures disclosed by other issuers. See
“Regulatory Disclosures”.
ZAMBIAN VAT
During the second quarter, the Company reached
an agreement with the Government of Zambia for repayment of the
outstanding VAT claims based on offsets against future corporate
income tax and mineral royalty tax payments, which commenced July
1, 2022.
PANAMA LAW 9 UPDATE
In recent days, Panama has experienced civil
unrest, largely focused on temporary blockades to transport routes
in the main cities. Production at Cobre Panama has been undisrupted
and the Company continues to monitor the situation closely. The
Company remains in contact with the Government of Panama regarding
Law 9, but recognize that their attention is, quite properly,
focused on resolving the civil disturbances. First Quantum and the
Government of Panama remain committed to a swift conclusion of the
Law 9 discussions on the basis of the agreed principles and on
ensuring that the new contract and legislation are both durable and
sustainable with downside copper price and production
scenarios.
Once an agreement is concluded and the full
contract is documented, it is expected that the newly drafted
legislation would be put to the Panamanian National Assembly. The
Company welcomes the transparency of the robust ministerial
commission process and is hopeful that this matter can be concluded
shortly.
ENVIRONMENT, SOCIAL AND GOVERNANCE
At the Company’s Annual General Meeting on May
5, 2022, Clive Newall, co-founder of the Company, retired from the
Board of Directors and Philip Pascall, co-founder and Chief
Executive Officer (“CEO”) since 1996, retired from the CEO role.
Philip Pascall will continue to serve as Chairman of the Board.
On May 6, 2022, the Board of Directors appointed
Tristan Pascall to the role of CEO. Tristan Pascall has also joined
the Board. In addition, the Board announced the appointment of
Alison Beckett as an independent director of the Board of
Directors.
In May 2022, the Company published its principal
annual Environment, Social and Governance (“ESG”) report, the 2021
ESG Report, setting out the Company’s performance in a range of
environmental, health and safety, social and governance metrics
against the Global Reporting Initiative and Sustainability
Accounting Standards Board frameworks.
The Company’s approach to sustainability in host
communities is consistent with the United Nations Sustainable
Development Goals and these are mapped against disclosures
provided. The 2021 ESG Report provides further information on the
range of social infrastructure and community development
initiatives undertaken in the Company’s host communities.
During the second quarter of 2022, the Company
published the 2021 Tax Transparency and Contributions to Government
Report. In 2021, the Company contributed $1.6 billion to host
governments through taxes, royalties and other payments, an
increase of 44% from 2020.
The Company strongly supports the various
transparency initiatives which provide all stakeholders with clear
information of the contributions which are made to host governments
by the Company. The report is intended to meet Canada’s Extractive
Sector Transparency Measures Act reporting obligations as well as
Chapter 10 of the EU Accounting Directive.
The 2021 ESG Report, the 2021 Tax Transparency
and Contributions to Government Report, policies and related
programs, including the Taskforce on Climate-related Financial
Disclosure-aligned Climate Change Report, can be found at:
https://www.first-quantum.com/English/sustainability/default.aspx
COMPLETE FINANCIAL STATEMENTS AND MANAGEMENT’S
DISCUSSION AND ANALYSIS
The complete Consolidated Financial Statements
and Management’s Discussion and Analysis for the three months and
six months ended June 30, 2022 are available at
www.first-quantum.com and at www.sedar.com and should be read
in conjunction with this news release.
CONFERENCE CALL DETAILS
The Company will host a conference call and
webcast to discuss the results on Wednesday, July 27, 2022 at 9:00
am (EDT).
Conference call and webcast
details:Toll-free North America: 1-800-319-4610Toll-free
International: +1-604-638-5340Webcast: www.first-quantum.com
A replay of the webcast will be available on the First Quantum
website.
For further information, visit our website at
www.first-quantum.com or contact:
Bonita To, Director, Investor Relations (416)
361-6400 Toll-free: 1 (888) 688-6577E-Mail: info@fqml.com
REGULATORY DISCLOSURES
Non-GAAP and Other Financial
Measures
EBITDA, ADJUSTED EARNINGS AND ADJUSTED EARNINGS
PER SHARE
EBITDA, adjusted earnings and adjusted earnings
per share exclude certain impacts which the Company believes are
not reflective of the Company’s underlying performance for the
reporting period. These include impairment and related charges,
foreign exchange revaluation gains and losses, gains and losses on
disposal of assets and liabilities, one-time costs related to
acquisitions, dispositions, restructuring and other transactions,
revisions in estimates of restoration provisions at closed sites,
debt extinguishment and modification gains and losses, the tax
effect on unrealized movements in the fair value of derivatives
designated as hedged instruments, and adjustments for expected
phasing of Zambian VAT receipts.
|
QUARTERLY |
|
Q2 2022 |
Q1 2022 |
Q2 2021 |
Operating profit |
856 |
|
782 |
588 |
Depreciation |
288 |
|
295 |
286 |
Other adjustments: |
|
|
|
Foreign exchange (gain) loss |
(239 |
) |
56 |
23 |
Other expense |
2 |
|
461 |
4 |
Revisions in estimates of restoration provisions at closed
sites |
(1 |
) |
1 |
1 |
Total adjustments excluding depreciation |
(238 |
) |
103 |
28 |
EBITDA |
906 |
|
1,180 |
902 |
1 Other expenses includes a charge of $40
million for non-recurring costs in connection with previously sold
assets
|
Q2 2022 |
Q1 2022 |
Q2 2021 |
Net earnings attributable to shareholders of the Company |
|
419 |
|
|
385 |
|
|
140 |
|
Adjustments attributable to shareholders of the Company: |
|
|
|
Adjustment for expected phasing of Zambian VAT |
|
106 |
|
|
22 |
|
|
22 |
|
Total adjustments to EBITDA excluding depreciation |
|
(238 |
) |
|
103 |
|
|
28 |
|
Tax and minority interest adjustments |
|
50 |
|
|
(30 |
) |
|
(17 |
) |
Adjusted earnings |
|
337 |
|
|
480 |
|
|
173 |
|
Earnings per share as reported |
$ |
0.61 |
|
$ |
0.56 |
|
$ |
0.20 |
|
Adjusted earnings per share |
$ |
0.49 |
|
$ |
0.70 |
|
$ |
0.25 |
|
REALIZED METAL PRICES
Realized metal prices are used by the Company to
enable management to better evaluate sales revenues in each
reporting period. Realized metal prices are calculated as gross
metal sales revenues divided by the volume of metal sold in lbs.
Net realized metal price is inclusive of the treatment and refining
charges (TC/RC) and freight charges per lb.
OPERATING CASHFLOW PER
SHARE
In calculating the operating cash flow per
share, the operating cash flow calculated for IFRS purposes is
divided by the basic weighted average common shares outstanding for
the respective period.
NET DEBT
Net debt comprises unrestricted cash and cash
equivalents, bank overdrafts and total debt.
CASH COST, ALL-IN SUSTAINING COST, TOTAL
COST
The consolidated cash cost (C1), all-in
sustaining cost (AISC) and total cost (C3) presented by the Company
are measures that are prepared on a basis consistent with the
industry standard definitions by the World Gold Council and Brook
Hunt cost guidelines but are not measures recognized under IFRS. In
calculating the C1 cash cost, AISC and C3, total cost for each
segment, the costs are measured on the same basis as the segmented
financial information that is contained in the financial
statements.
C1 cash cost includes all mining and processing
costs less any profits from by-products such as gold, silver, zinc,
pyrite, cobalt, sulphuric acid, or iron magnetite and is used by
management to evaluate operating performance. TC/RC and freight
deductions on metal sales, which are typically recognized as a
component of sales revenues, are added to C1 cash cost to arrive at
an approximate cost of finished metal.
AISC is defined as cash cost (C1) plus general
and administrative expenses, sustaining capital expenditure,
deferred stripping, royalties and lease payments and is used by
management to evaluate performance inclusive of sustaining
expenditure required to maintain current production levels.
C3 total cost is defined as AISC less sustaining
capital expenditure, deferred stripping and general and
administrative expenses net of insurance, plus depreciation and
exploration. This metric is used by management to evaluate the
operating performance inclusive of costs not classified as
sustaining in nature such as exploration and depreciation.
For the three months ended June 30, 2022 |
Cobre Panama |
Kansanshi |
Sentinel |
Guelb Moghrein |
Las Cruces |
Çayeli |
Pyhäsalmi |
Copper |
Corporate & other |
Ravensthorpe |
Total |
Cost of sales1 |
|
(478 |
) |
|
(274 |
) |
|
(293 |
) |
|
(48 |
) |
|
(30 |
) |
|
(13 |
) |
|
(7 |
) |
|
(1,143 |
) |
(36 |
) |
|
(96 |
) |
(1,275 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
155 |
|
|
48 |
|
|
66 |
|
|
3 |
|
|
- |
|
|
4 |
|
|
1 |
|
|
277 |
|
1 |
|
|
10 |
|
288 |
|
By-product credits |
|
49 |
|
|
55 |
|
|
- |
|
|
31 |
|
|
- |
|
|
1 |
|
|
7 |
|
|
143 |
|
- |
|
|
5 |
|
148 |
|
Royalties |
|
16 |
|
|
38 |
|
|
47 |
|
|
2 |
|
|
1 |
|
|
3 |
|
|
- |
|
|
107 |
|
- |
|
|
3 |
|
110 |
|
Treatment and refining charges |
|
(34 |
) |
|
(6 |
) |
|
(12 |
) |
|
(2 |
) |
|
- |
|
|
(1 |
) |
|
- |
|
|
(55 |
) |
- |
|
|
- |
|
(55 |
) |
Freight costs |
|
- |
|
|
1 |
|
|
(10 |
) |
|
- |
|
|
- |
|
|
(2 |
) |
|
- |
|
|
(11 |
) |
- |
|
|
- |
|
(11 |
) |
Finished goods |
|
(3 |
) |
|
(32 |
) |
|
(15 |
) |
|
1 |
|
|
3 |
|
|
(3 |
) |
|
(2 |
) |
|
(51 |
) |
- |
|
|
(25 |
) |
(76 |
) |
Other1 |
|
3 |
|
|
13 |
|
|
7 |
|
|
(1 |
) |
|
5 |
|
|
(1 |
) |
|
(1 |
) |
|
25 |
|
35 |
|
|
4 |
|
64 |
|
Cash cost (C1)1 |
|
(292 |
) |
|
(157 |
) |
|
(210 |
) |
|
(14 |
) |
|
(21 |
) |
|
(12 |
) |
|
(2 |
) |
|
(708 |
) |
- |
|
|
(99 |
) |
(807 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation (excluding depreciation in finished goods) |
|
(156 |
) |
|
(56 |
) |
|
(68 |
) |
|
(3 |
) |
|
- |
|
|
(4 |
) |
|
(1 |
) |
|
(288 |
) |
- |
|
|
(12 |
) |
(300 |
) |
Royalties |
|
(16 |
) |
|
(38 |
) |
|
(47 |
) |
|
(2 |
) |
|
(1 |
) |
|
(3 |
) |
|
- |
|
|
(107 |
) |
- |
|
|
(3 |
) |
(110 |
) |
Other |
|
(3 |
) |
|
(4 |
) |
|
(2 |
) |
|
(1 |
) |
|
1 |
|
|
- |
|
|
- |
|
|
(9 |
) |
- |
|
|
(1 |
) |
(10 |
) |
Total cost (C3)1 |
|
(467 |
) |
|
(255 |
) |
|
(327 |
) |
|
(20 |
) |
|
(21 |
) |
|
(19 |
) |
|
(3 |
) |
|
(1,112 |
) |
- |
|
|
(115 |
) |
(1,227 |
) |
Cash cost (C1)1 |
|
(292 |
) |
|
(157 |
) |
|
(210 |
) |
|
(14 |
) |
|
(21 |
) |
|
(12 |
) |
|
(2 |
) |
|
(708 |
) |
- |
|
|
(99 |
) |
(807 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
(11 |
) |
|
(6 |
) |
|
(8 |
) |
|
- |
|
|
- |
|
|
(1 |
) |
|
- |
|
|
(26 |
) |
- |
|
|
(3 |
) |
(29 |
) |
Sustaining capital expenditure and deferred stripping |
|
(38 |
) |
|
(41 |
) |
|
(42 |
) |
|
(1 |
) |
|
- |
|
|
- |
|
|
- |
|
|
(122 |
) |
- |
|
|
(7 |
) |
(129 |
) |
Royalties |
|
(16 |
) |
|
(38 |
) |
|
(47 |
) |
|
(2 |
) |
|
(1 |
) |
|
(3 |
) |
|
- |
|
|
(107 |
) |
- |
|
|
(3 |
) |
(110 |
) |
Lease payments |
|
(1 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(1 |
) |
- |
|
|
- |
|
(1 |
) |
AISC |
|
(358 |
) |
|
(242 |
) |
|
(307 |
) |
|
(17 |
) |
|
(22 |
) |
|
(16 |
) |
|
(2 |
) |
|
(964 |
) |
- |
|
|
(112 |
) |
(1,076 |
) |
AISC (per lb) 1 |
$ |
1.88 |
|
$ |
2.85 |
|
$ |
2.76 |
|
$ |
2.49 |
|
$ |
3.78 |
|
$ |
2.46 |
|
$ |
0.74 |
|
$ |
2.37 |
|
- |
|
$ |
11.78 |
|
|
Cash cost – (C1) (per lb) 1 |
$ |
1.54 |
|
$ |
1.83 |
|
$ |
1.88 |
|
$ |
2.02 |
|
$ |
3.53 |
|
$ |
1.86 |
|
$ |
0.81 |
|
$ |
1.74 |
|
- |
|
$ |
10.08 |
|
|
Total cost – (C3) (per lb) 1 |
$ |
2.46 |
|
$ |
3.00 |
|
$ |
2.94 |
|
$ |
2.81 |
|
$ |
3.61 |
|
$ |
2.96 |
|
$ |
1.25 |
|
$ |
2.73 |
|
- |
|
$ |
12.05 |
|
|
1 Excludes purchases of copper concentrate from
third parties treated through the Kansanshi Smelter
For the three months ended June 30, 2021 |
Cobre Panama |
Kansanshi |
Sentinel |
Guelb Moghrein |
Las Cruces |
Çayeli |
Pyhäsalmi |
Copper |
Corporate & other |
Ravensthorpe |
Total |
Cost of sales |
|
(416 |
) |
|
(239 |
) |
|
(279 |
) |
|
(64 |
) |
|
(18 |
) |
|
(18 |
) |
|
(7 |
) |
|
(1,041 |
) |
- |
|
(116 |
) |
(1,157 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
140 |
|
|
46 |
|
|
68 |
|
|
14 |
|
|
- |
|
|
5 |
|
|
1 |
|
|
274 |
|
- |
|
12 |
|
286 |
|
By-product credits |
|
55 |
|
|
48 |
|
|
- |
|
|
39 |
|
|
- |
|
|
3 |
|
|
7 |
|
|
152 |
|
- |
|
7 |
|
159 |
|
Royalties |
|
17 |
|
|
42 |
|
|
51 |
|
|
3 |
|
|
- |
|
|
2 |
|
|
- |
|
|
115 |
|
- |
|
5 |
|
120 |
|
Treatment and refining charges |
|
(27 |
) |
|
(6 |
) |
|
(14 |
) |
|
(3 |
) |
|
- |
|
|
(2 |
) |
|
- |
|
|
(52 |
) |
- |
|
- |
|
(52 |
) |
Freight costs |
|
(2 |
) |
|
- |
|
|
(12 |
) |
|
- |
|
|
- |
|
|
(3 |
) |
|
- |
|
|
(17 |
) |
- |
|
- |
|
(17 |
) |
Finished goods |
|
8 |
|
|
(17 |
) |
|
7 |
|
|
9 |
|
|
1 |
|
|
2 |
|
|
(2 |
) |
|
8 |
|
- |
|
25 |
|
33 |
|
Other |
|
10 |
|
|
2 |
|
|
3 |
|
|
(1 |
) |
|
- |
|
|
1 |
|
|
- |
|
|
15 |
|
- |
|
1 |
|
16 |
|
Cash cost (C1) |
|
(215 |
) |
|
(124 |
) |
|
(176 |
) |
|
(3 |
) |
|
(17 |
) |
|
(10 |
) |
|
(1 |
) |
|
(546 |
) |
- |
|
(66 |
) |
(612 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation (excluding depreciation in finished goods) |
|
(134 |
) |
|
(53 |
) |
|
(66 |
) |
|
(10 |
) |
|
- |
|
|
(6 |
) |
|
(1 |
) |
|
(270 |
) |
- |
|
(8 |
) |
(278 |
) |
Royalties |
|
(17 |
) |
|
(42 |
) |
|
(51 |
) |
|
(3 |
) |
|
- |
|
|
(2 |
) |
|
- |
|
|
(115 |
) |
- |
|
(5 |
) |
(120 |
) |
Other |
|
(2 |
) |
|
(3 |
) |
|
(2 |
) |
|
(1 |
) |
|
(1 |
) |
|
- |
|
|
- |
|
|
(9 |
) |
- |
|
(1 |
) |
(10 |
) |
Total cost (C3) |
|
(368 |
) |
|
(222 |
) |
|
(295 |
) |
|
(17 |
) |
|
(18 |
) |
|
(18 |
) |
|
(2 |
) |
|
(940 |
) |
- |
|
(80 |
) |
(1,020 |
) |
Cash cost (C1) |
|
(215 |
) |
|
(124 |
) |
|
(176 |
) |
|
(3 |
) |
|
(17 |
) |
|
(10 |
) |
|
(1 |
) |
|
(546 |
) |
- |
|
(66 |
) |
(612 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
(11 |
) |
|
(6 |
) |
|
(9 |
) |
|
- |
|
|
(1 |
) |
|
(1 |
) |
|
- |
|
|
(28 |
) |
- |
|
(3 |
) |
(31 |
) |
Sustaining capital expenditure and deferred stripping |
|
(26 |
) |
|
(59 |
) |
|
(32 |
) |
|
(1 |
) |
|
- |
|
|
(1 |
) |
|
- |
|
|
(119 |
) |
- |
|
(6 |
) |
(125 |
) |
Royalties |
|
(17 |
) |
|
(42 |
) |
|
(51 |
) |
|
(3 |
) |
|
- |
|
|
(2 |
) |
|
- |
|
|
(115 |
) |
- |
|
(5 |
) |
(120 |
) |
Lease payments |
|
(1 |
) |
|
- |
|
|
- |
|
|
- |
|
|
(1 |
) |
|
(1 |
) |
|
- |
|
|
(3 |
) |
- |
|
(1 |
) |
(4 |
) |
AISC |
|
(270 |
) |
|
(231 |
) |
|
(268 |
) |
|
(7 |
) |
|
(19 |
) |
|
(15 |
) |
|
(1 |
) |
|
(811 |
) |
- |
|
(81 |
) |
(892 |
) |
AISC (per lb) |
$ |
1.57 |
|
$ |
2.18 |
|
$ |
2.26 |
|
$ |
0.95 |
|
$ |
2.94 |
|
$ |
1.82 |
|
$ |
0.27 |
|
$ |
1.91 |
|
- |
$ |
9.52 |
|
|
Cash cost – (C1) (per lb) |
$ |
1.25 |
|
$ |
1.13 |
|
$ |
1.50 |
|
$ |
0.77 |
|
$ |
2.68 |
|
$ |
1.28 |
|
$ |
0.17 |
|
$ |
1.29 |
|
- |
$ |
8.01 |
|
|
Total cost – (C3) (per lb) |
$ |
2.14 |
|
$ |
2.09 |
|
$ |
2.50 |
|
$ |
1.77 |
|
$ |
2.80 |
|
$ |
2.22 |
|
$ |
0.47 |
|
$ |
2.21 |
|
- |
$ |
9.48 |
|
|
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 Enterprise
and post-completion construction activity at Cobre Panama and are
subject to the impact of ore grades on future production, the
potential of production disruptions, potential production,
operational, labour or marketing disruptions as a result of the
COVID-19 global pandemic, 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, silver, iron, cobalt, pyrite, zinc 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; plans, targets and
commitments regarding climate change-related physical and
transition risks and opportunities (including intended actions to
address such risks and opportunities), greenhouse gas emissions,
energy efficiency and carbon intensity, use of renewable energy
sources, design, development and operation of the Company’s
projects and future reporting regarding climate change and
environmental matters; the Company’s expectations regarding
increased demand for copper; the Company’s project pipeline and
development and growth plans. 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, silver, iron, cobalt, pyrite, zinc and
sulphuric acid, anticipated costs and expenditures, the success of
Company’s actions and plans to reduce greenhouse gas emissions and
carbon intensity of its operations, 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 Panama, Zambia,
Peru, Mauritania, Finland, Spain, Turkey, Argentina and Australia,
adverse weather conditions in Panama, Zambia, Finland, Spain,
Turkey, Mauritania, and Australia, labour disruptions, potential
social and environmental challenges (including the impact of
climate change), power supply, mechanical failures, water supply,
procurement and delivery of parts and supplies to the operations,
the production of off-spec material and events generally impacting
global economic, political and social stability. For mineral
resource and mineral reserve figures appearing or referred to
herein, varying cut-off grades have been used depending on the
mine, method of extraction and type of ore contained in the
orebody.
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 as 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 made and information contained herein are qualified by
this cautionary statement.
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