FM.TO · 2011-03-15

First Quantum Minerals Reports Operational and Financial

Resource Estimates Production Results Financials

NEWS RELEASE 11-05 March 15, 2011 www.first-quantum.com

FIRST QUANTUM MINERALS REPORTS OPERATIONAL AND FINANCIAL RESULTS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2010

(All figures expressed in US dollars, unless otherwise noted)

First Quantum Minerals Ltd. (“First Quantum” or the “Company”, TSX Symbol “FM”, LSE Symbol “FQM”) today announced its results for the three months and year ended December 31, 2010. The complete financial statements and management discussion and analysis are available for review at www.first-quantum.com and should be read in conjunction with this news release.

EARNINGS AND COMPARATIVE EARNINGS


(USD millions unless otherwise noted)	2010	2009	2010	2009
Earnings attributable to shareholders of the Company Add (deduct): Asset impairments (net of tax and non controlling interests) Impairment Zambian tax receivable (net of non controlling interests) Acquisition transaction costs Gain on sale of investments Reversal of inventory impairment	455.3	227.2 - - - (9.6) (15.5)	(123.4)	463.4 - - - (18.6) (25.4)
	(0.7)		933.9
	210.7		239.2
	-		18.5
	(510.8)		(510.8)
	-		-
Comparative earnings	154.5	202.1	557.4	419.4
Earnings (loss) per share as reported Comparative earnings per share	$5.61	$2.91 $2.58	$(1.54)	$6.14 $5.55
	$1.90		$6.94

Earnings attributable to shareholders of the Company have been adjusted to remove the effect of unusual items to arrive at comparative earnings. Comparative earnings and comparative earnings per share are not measures recognized under GAAP and do not have a standardized meaning prescribed by GAAP. The Company has disclosed these measures to assist with the understanding of results and to provide further financial information about the financial results to investors.

SUMMARY OPERATING AND FINANCIAL DATA


(USD millions unless otherwise noted)	2010	2009	2010	2009	2008
Production – copper (tonnes) Production – gold (ounces) Sales – copper (tonnes) Realized copper price (per lb) Average copper unit cash cost of production (C1)1 (per lb) Net sales Operating profit Net earnings (loss) Earnings (loss) per share Cash	75,920	98,528 62,679 98,171 $2.73 $0.97 $644.8 $383.3 $227.2 $2.91 $959.5	323,017	373,940 193,288 366,581 $2.16 $0.96 $1,864.2 $969.1 $463.4 $6.14 $959.5	334,415 116,177 334,787 $2.22 $1.23 $1,740.4 $743.5 $45.9 $0.67 $216.5
	48,564		191,395
	76,290		311,560
	$3.51		$2.98
	$1.06		$1.18
	$700.8		$2,378.2
	$381.0		$1,211.9
	$455.3		$(123.4)
	$5.61		$(1.54)
	$1,385.2		$1,385.2

Unless otherwise indicated, all comparisons of performance throughout this report are to the comparative periods for 2009

Q4 HIGHLIGHTS AND SIGNIFICANT ITEMS

Record quarterly copper production of 66,232 tonnes at Kansanshi as a result of ongoing circuit optimizations
Investment in Equinox Minerals Limited (“Equinox”) shares sold for net proceeds of $646.5 million resulting in a gain of $510.8 million
Advanced the development of Ravensthorpe and Kevitsa and exploration at Trident
23% decrease in total copper production resulting from the forced suspension of operations at Frontier and lower ore grades at Guelb Moghrein
23% decrease in total gold production resulting from lower gold grades at Guelb Moghrein and Kansanshi
Acquisition of Antares Minerals Inc. (“Antares”) for $609.0 million. Antares‟ principal asset is the 100% owned Haquira project in Peru, one of the world‟s major undeveloped copper deposits
Continued strong cash and working capital position notwithstanding significant cash investments in Ravensthorpe, Kevitsa and Trident

RECENT DEVELOPMENTS AND OUTLOOK

During Q4, the Company continued its growth strategy with significant exploration activities and continued optimization of output from operating mines. As recently announced, over the 2011 – 2015 timeframe, the Company expects to invest approximately $2 billion in continuing to advance its growth and diversification strategy. Assuming the growth projects currently underway and those contemplated achieve their targeted completion dates, First Quantum expects to be producing approximately 470,000 tonnes of copper and 55,000 tonnes of nickel annually in 2015. These estimates do not include assumptions for production from the Sentinel and Haquira deposits.

Kansanshi copper and gold operation, Zambia

An expansion to the treatment capacity of the oxide circuit is currently underway with completion scheduled for Q4 2011. The project is expected to increase annual production capacity to 285,000 tonnes of copper and build in added operational flexibility.
An evaluation of recent near mine drilling has indicated the strong potential to further increase the mineral resource. Intensive resource and reserve delineation drilling is now in progress and is planned to continue through to 2012.

1 C1 cost is a non-GAAP measure. See “Regulatory disclosures – non-GAAP measures” for further information Results from this drill program will assist in the design for the expansion program to increase the operation's annual production capacity to 400,000 tonnes of copper.

An evaluation study is underway on building a copper smelter close to Kansanshi to process the expected increase in production.

Guelb Moghrein copper and gold operation, Mauritania

Ongoing optimization of the autogenous circuit, including mill feed control systems, pebble crushing, and high pressure grinding rolls to achieve design throughput was started in Q4 and will continue into 2011. Gold circuit optimization will continue through oxygen management and a recently commissioned falcon concentrator to maximize gold recovery.

Kevitsa nickel/copper/PGE project, Finland

Construction works at Kevitsa have advanced well during Q4, with progress being achieved on the tailings dam and water reservoir. Site earthworks are substantially complete and concrete installation is on schedule. Key infrastructure has been completed including the access road and power supply line.
Design works have been finalized and installation of mechanical equipment is in progress. The main mining equipment has been selected and supply contracts awarded during Q4 to allow deliveries by Q3 2011.

Ravensthorpe nickel project, Australia

The refurbishment of the processing facilities at Ravensthorpe has advanced significantly during Q4 2010. The new crusher installations have progressed with completion expected in Q1 2011.
The re-commissioning of various components of the fixed plant has commenced with certain sections being handed over to operations in February 2011.
Grade control drilling has continued and detailed scheduling for the re-commencement of operations has started. The build up of the operational teams continues and site based activities are allowing for the planning of detailed recommissioning work scheduled for Q2 2011.

Trident project, Zambia

Significant exploration activities at the Sentinel copper deposit and Enterprise nickel target continued during Q4. A further internal update of the Sentinel geological model has identified a significant continuous zone of mineralization. An economic assessment including metallurgical test work, engineering and geotechnical studies is underway. Environmental studies were completed and the Environmental Impact Assessment (“EIA”) was submitted in January 2011.
Subject to results of the on-going resource and mine studies, securing all relevant permits and approval by the Company‟s Board of Directors, the Company expects that the initial design and construction phases could commence during 2011with commercial production from Sentinel in early 2014.

Haquira project, Peru

In December 2010, the Company acquired all of the issued share capital of Antares Minerals Inc. (“Antares”) for $609.0 million. Antares‟ principal asset is the 100% owned Haquira project located in southern Peru. Haquira is one of the world‟s major undeveloped copper deposits with excellent potential for the development of a large-scale copper mine. Haquira currently has reported measured and indicated resources of 3.7 million tonnes of contained copper equivalent and inferred resources of 2.4 million tonnes of contained copper equivalent.
The Company commenced integration of the Haquira exploration project in Peru after the acquisition was completed. Drilling with four core rigs commenced in February 2011 and will be expanded later in the year. The initial focus will be on growing the secondary copper resources which are currently open in several areas.

Production Guidance

The Company‟s 2011 production outlook is 300,000 tonnes of copper and 200,000 ounces of gold.
Estimated average C1 cost for 2011 is $1.10 per pound of copper.
The Company also expects nickel production to commence with the commissioning of the Ravensthorpe project in the second half of 2011.

REVENUES

NET SALES (after provisional pricing and realization charges)
(USD millions unless otherwise noted)	2010	2009	2010	2009
Kansanshi - copper - gold Guelb Moghrein - copper - gold Frontier - copper Bwana/Lonshi - copper - acid Corporate	462.9	380.3 29.1 45.4 24.2 165.8 - - -	1,542.5	1,151.1 74.4 115.7 81.6 439.2 0.4 1.8 -
	33.1		115.5
	74.7		186.2
	21.3		79.1
	47.4		265.3
	3.5		51.3
	-		-
	57.9		138.3
Net sales	700.8	644.8	2,378.2	1,864.2
Copper provisional pricing adjustment included above	4.9	5.5	(4.8)	40.0
COPPER SELLING PRICE		USD/lb		USD/lb
	USD/lb		USD/lb
Current period sales Sales contract derivatives Prior period provisional pricing adjustment Treatment charges/refining charges (“TC/RC”) and freight parity charges	3.93	3.00 - 0.02 (0.29)	3.35	2.35 - 0.05 (0.24)
	(0.20)		(0.09)
	0.03		(0.01)
	(0.25)		(0.27)
Realized copper price	3.51	2.73	2.98	2.16

The Q4 2010 average realized copper price was significantly higher than Q4 2009 due to an increase in the average LME copper price. The Company has a policy seeking to minimize the impact of copper price fluctuations on revenues by hedging quotational period price movements using derivative futures contracts. In Q4, the realized copper price was impacted by derivative adjustments of $34.4 million which partially offset the increase in LME copper price during the period.

Copper sales volumes for Q4 decreased 22% to 76,290 tonnes due to the forced suspension of operations at Frontier at the end of August 2010. Sales volumes from Kansanshi were lower than production reflecting the timing of recognition of sales through the Company‟s metal marketing division. Sales volumes from Guelb Moghrein, Frontier and Bwana exceeded production due to the sale of copper held in inventory as at September 30, 2010.

The Q4 positive provisional pricing adjustment resulted from the finalization of contracts totalling 16,024 tonnes of copper at an average price of $3.79 per pound ($8,355 per tonne). These contracts were provisionally priced at $3.65 per pound ($8,054 per tonne) at September 30, 2010 and were finalized during October and November 2010.

At December 31, 2010, 9,284 tonnes of copper provisionally priced at $4.40 per pound ($9,693 per tonne) remain subject to final pricing in Q1 2011. Refer to the „Outlook‟ section for further discussion.

Gold revenues increased by 2% over Q4 2009 to $54.4 million. The increase resulted from a higher realized gold price which offset lower sales volumes in Q4 2010. Sales volumes were impacted by lower production at Kansanshi and Guelb Moghrein in Q4 2010.

Metal marketing division

A metal marketing division was established in Q1 2010 to improve the management of copper and gold sales from the Company‟s operations and manage the Company‟s exposure to provisional pricing. Prior to the establishment of the division, revenues were recognized by operations when title transferred to third party buyers, usually at the mine gate. Copper and gold sales managed by the metal marketing division are now recognized when title has transferred to the final third party offtaker resulting in reduced sales volumes and higher inventory for the year. The impact on 2010 sales volumes is a reduction of total copper sold by 9,197 tonnes. These tonnes remained in the finished copper inventory balance of the metal marketing division at December 31, 2010.

In addition to marketing the Company‟s production, the metal marketing division purchases and sells metal from external parties. During Q4, the division had revenues of $57.9 million and finished goods inventory of $26.0 million related to external purchases and sales.

SEGMENTED OPERATING RESULTS

Kansanshi Copper and Gold Operation
	2010	2009	2010	2009
Production (tonnes) Copper cathode Copper in concentrate Copper cathode tolled Total copper production (tonnes) Copper sales (tonnes) Gold production (ounces) Sulphide ore tonnes milled (000‟s) Sulphide ore grade processed (%) Sulphide copper recovery (%) Mixed ore tonnes milled (000‟s) Mixed ore grade processed (%) Mixed copper recovery (%) Oxide ore tonnes milled (000‟s) Oxide ore grade processed (%) Oxide copper recovery (%) Cash costs (C1) (per lb)1 Total costs (C3) (per lb)1 Gross operating profit (USD M)		21,535 16,017 24,901 62,453 62,417 32,476 2,777 0.8 93 1,566 1.4 64 1,478 2.2 83 $0.96 $1.28 $231.2		92,044 65,920 87,015 244,979 239,578 99,936 11,994 1.0 93 3,588 1.4 65 5,661 2.2 83 $0.99 $1.27 $610.4
	24,921		86,682
	14,925		46,941
	26,386		97,501
	66,232		231,124
	58,704		225,189
	28,982		109,629
	2,699		10,382
	0.8		0.8
	93		93
	1,636		5,462
	1.3		1.3
	70		67
	1,521		5,674
	2.4		2.2
	84		86
	$1.07		$1.10
	$1.29		$1.31
	$326.2		$997.8

Kansanshi‟s Q4 copper production achieved a record 66,232 tonnes, surpassing the previous quarterly record of 62,453 tonnes from Q4 2009. The increased production resulted from strong throughput and recoveries across the circuits. Mine production also improved significantly from the prior year benefitting from new equipment commissioned in Q2 and Q3 2010.

Q4 sulphide circuit production was consistent with the comparative quarter as only minor variances were experienced in throughput, grade and recovery. The sulphide circuit improvements of 2010 are ongoing and some circuit downtime was experienced due to crusher optimization work conducted early in Q4 2010.

The mixed ore circuit achieved record quarterly production in Q4 2010 due to improved throughput and recovery of higher grade sulphide and oxide ore. Throughput benefitted from exceptional milling performance and minimal circuit downtime in Q4. The average recovery of 70% benefitted from ore mined from the northwest pit, which contains an optimal blend of sulphide and oxide ore for processing in the mixed ore circuit.

Q4 oxide circuit production also achieved a quarterly record as a result of improved circuit throughput and high total copper recovery. The benefits from the circuit improvements conducted in 2010, aimed at achieving higher recoveries were seen in Q4 2010.

Gold circuit improvements have significantly increased recovery of gold contained in ore feed, however the gold grade was 35% lower in Q4 2010 resulting in lower total gold production compared to Q4 2009.

Kansanshi‟s cash unit cost of production (C1) increased from Q4 2009 due to higher ore costs and higher processing costs. This was partially offset by an increased gold credit. The cost of ore processed was 11% higher than Q4 2009, despite a decrease in total mining costs per tonne of mined material, due to the impact of higher waste stripping on the cost per ore tonne mined. Processing costs were higher as a result of increased consumable costs and maintenance expenses incurred on the sulphide circuit. The increased gold credit resulted from a higher realized gold price in Q4 2010.

Guelb Moghrein Copper and Gold Operation
	2010	2009	2010	2009
Production – copper in concentrate (tonnes) Copper sales (tonnes) Gold production (ounces) Sulphide ore tonnes milled (000‟s) Sulphide ore grade processed (%) Sulphide copper recovery (%) Cash costs (C1) (USD per lb)1 Total costs (C3) (USD per lb)1 Gross operating profit (USD M)	9,687	11,816 9,330 30,203 769 1.7 92 $0.63 $1.02 $41.0	36,969	36,608 35,436 93,352 2,287 1.8 89 $0.44 $0.83 $94.6
	10,700		32,932
	19,582		81,766
	748		2,796
	1.4		1.5
	91		91
	$1.03		$0.90
	$1.79		$1.65
	$40.9		$118.3

Guelb Moghrein‟s Q4 copper production was lower than Q4 2009 as a result of lower grade ore sources available. Tonnes milled were consistent with Q4 2009, however, throughput was negatively affected by downtime of the crusher and mill circuit for maintenance and circuit optimization work in Q4 2010.

Gold production was 35% lower than Q4 2009 due to lower gold grade processed, offset partially by increased recovery and throughput. Gold grades contained in ore mined are correlated with the decrease in copper ore grades available in Q4 2010.

Guelb Moghrein‟s average cash cost of production (C1) was higher compared to Q4 2009 due to increased ore costs and processing costs incurred on lower grade ore and circuit downtime. Fuel prices also increased in Q4 2010 impacting mine operations as well as power generation costs. The gold credit benefitted from higher realized gold price Q4 2010.

Guelb Moghrein‟s Q4 2010 operating profit was consistent with the comparative period as an increased copper price offset the higher operating costs and depreciation expense incurred on plant expansions from 2010.

Frontier Copper Operation
	2010	2009	2010	2009
Production – copper in concentrate (tonnes) Copper sales (tonnes) Sulphide ore tonnes milled (000‟s) Sulphide ore grade processed (%) Sulphide copper recovery (%) Cash costs (C1) (USD per lb)1 Total costs (C3) (USD per lb)1 Gross operating profit (USD M)	-	24,259 26,424 2,280 1.2 91 $1.32 $1.52 $104.1	47,508	92,353 91,567 8,068 1.2 92 $1.13 $1.30 $270.0
	6,381		46,024
	-		5,425
	-		1.0
	-		90
	-		$1.77
	-		$2.10
	$14.7		$101.0

There was no copper production in Q4 at Frontier following the forced shut down of operations on August 27, 2010 by the République Démocratique du Congo (“RDC”) Government. Q4 copper sales and operating profit resulted from the sale of inventory held in the Company‟s metal marketing division at September 30, 2010. At present, the Company does not have physical access to the Frontier copper operation. See “Other items” for further discussion.

Bwana/Lonshi Copper Operation
	2010	2009	2010	2009
Production – copper cathode (tonnes) Copper sales (tonnes) Oxide ore tonnes milled (000‟s) Oxide ore grade processed (%) Oxide copper recovery (%) Cash costs (C1) (USD per lb)1 Total costs (C3) (USD per lb)1 Gross operating profit (loss) (USD M)	-	- - - - - - - $7.0	7,415	- - - - - - - $(5.9)
	505		7,415
	-		327
	-		2.5
	-		91
	-		$1.28
	-		$1.43
	$1.2		$2.9

The Bwana Mkubwa copper SX/EW plant was placed on care and maintenance in Q3 2010. During 2011 some of the plant and equipment will be relocated to Kansanshi as part of the oxide circuit expansion project currently underway. Bwana Mkubwa sold 505 tonnes of copper cathode in Q4 from the inventory held at September 30, 2010.

COSTS AND EXPENSES

	Three months ended December 31			Year ended December 31
(USD millions unless otherwise noted)		2010	2009		2010	2009
Gross operating profit General and administrative Acquisition transaction costs Other income Gain on sale of investments Derivative instrument adjustments Exploration Assets impaired Interest Income taxes Non-controlling interests		381.0	383.3 (5.3) - (4.3) 9.6 3.6 (10.3) - (18.3) (88.6) (42.5)		1,211.9	969.1 (25.3) - 7.6 18.6 (135.9) (25.9) - (60.4) (200.3) (84.1)
	(18.4)			(44.6)
	-			(18.5)
	(4.5)			5.1
	510.8			510.8
	(1.0)			1.1
	(15.6)			(47.5)
	0.7			(1,119.3)
	(14.8)			(58.8)
		(390.3)			(494.6)
		7.4			(69.0)
Net earnings (loss) attributable to shareholders of the Company			227.2			463.4
		455.3			(123.4)
Earnings (loss) per share - basic (USD per share) - diluted (USD per share)1 Weighted average shares outstanding - basic (number of shares – millions) - diluted (number of shares – millions)1			2.91 2.67 78.2 87.9			6.14 5.92 75.5 81.0
		5.61			(1.54)
		5.14			(1.54)
		81.2			80.3
		90.1			80.3

General and administrative costs increased in Q4 2010 due to elevated legal costs related to the RDC impairments. Additionally, increased support of new global projects and acquisitions impacted Q4 2010 costs.

The derivative instrument adjustments in Q4 2010 relate to derivatives entered into to manage the Company‟s exposure to interest rate and currency risk. In 2010, the Company also entered into derivatives to manage the risk of copper price fluctuations on individual sales contracts over the specific quotational periods for copper sales. These gains and losses are recognized with the revenue to which the derivatives relate in accordance with the Company‟s accounting policy. In 2009, derivative instrument losses were incurred on copper derivative positions entered into to protect against the Company‟s general commodity price risk in the uncertain economic outlook of early 2009.

In Q4 2010, the Company sold its investment in Equinox for net proceeds of $646.5 million. The resulting gain on sale of investments was $510.8 million which was recorded in other income.

Exploration expenses in Q4 include $12.1 million incurred at the Trident project representing a significant increase in exploration activity. See “Development activities” for further discussion

Interest expense decreased from Q4 2009 due to a decrease in LIBOR and lower outstanding debt balances.

Q4 income taxes include a $263.4 million impairment of the Zambian taxes receivable. See “other items” for further discussion on Zambian taxes. Normalized income taxes increased from Q4 2009 due to increased profitability and a decrease in the proportionate earnings contribution from Guelb Moghrein, which is operating under a tax holiday.

Non-controlling interests decreased in Q4 2010 as 20% of the Zambian tax impairment was attributable to noncontrolling interests, totalling $52.7 million. In February 2010, the Company acquired the remaining 20% ownership

1 As the Company has incurred a loss, pursuant to Canadian GAAP, the convertible bonds and stock options are excluded from the computation of diluted loss per share.

interest in Mauritanian Copper Mines SARL, which owns Guelb Moghrein, resulting in no further non-controlling interests in this operation.

FINANCIAL POSITION AND LIQUIDITY


(USD millions unless otherwise noted)	2010	2009	2010	2009	2008
Cash flows from operating activities - before changes in working capital - after changes in working capital Cash flows from financing activities Cash flows from investing activities		269.9 270.1 (47.5) (111.1)		678.1 562.6 547.0 (366.6)	636.6 765.4 (24.2) (765.0)
	326.6		899.8
	290.3		761.3
	(88.9)		(110.0)
	510.7		(225.6)
Net cash flows Cash balance	712.1	111.5 919.2	425.7	743.0 919.2	(23.8) 176.2
	1,344.9		1,344.9
Total assets Total long term liabilities	5,258.6	4,564.6 1,687.7	5,258.6	4,564.6 1,687.7	3,004.5 1,290.6
	2,129.5		2,129.5
Available credit facilities - Corporate revolving credit and term loan facility - Corporate revolving loan and short-term facility - Short-term borrowings Cash flows from operating activities per share (basic) - before working capital (USD per share) - after working capital (USD per share)		50.0 250.0 - $3.45 $3.45		50.0 250.0 - $8.98 $7.45	- 200.0 - $9.33 $11.23
	50.0		50.0
	-		-
	54.3		54.3
	$4.02		$11.21
	$3.58		$9.49

Operating cash flows before changes in working capital were 21% higher than Q4 2009 due to significantly higher copper prices in the current period. This was offset partially by an increase in the average cash cost of production and the loss of Frontier‟s contribution in Q4 2010. Working capital movements during Q4 2010 include an increase in accounts receivable of $91.9 million as a result of a significant increase in copper price and an increase in accounts payable due to increasing project development activity at Ravensthorpe and Kevitsa.

Cash outflows from financing activities resulted in a reduction in short-term debt of $41.9 million which relates to the timing of financing by the metal marketing division in Q4 2010. Financing activities also include an increase in restricted cash of $40.3 million pursuant to the requirements of the Company‟s corporate revolving and term loan facility.

Cash flows from investing activities include $646.5 million in net proceeds on the sale of Equinox shares in Q4 2010. The Company invested $44.2 million on the plant at Ravensthorpe and $28.9 million at Kevitsa as development was advanced at both projects. Kansanshi invested $49.3 million on additional mining equipment and the secondary crusher during the period.

The Company undertook significant investing activities in early 2010 including;

the acquisition of the Ravensthorpe nickel project for $338.8 million, of which $34.0 million was paid in 2009,
the acquisition of Kiwara PLC for $133.2 million in net cash and $137.2 million in common shares of the Company,
the acquisition of Antares for $4.6 million in net cash and $603.9 million in common shares of the Company and,
the acquisition of the 20% non-controlling interest in Mauritanian Copper Mines for $63.0 million.

In addition to the Company‟s significant cash reserves, additional sources of funding available include $50.0 million under the corporate revolving credit and term loan facility and $54.3 million under short-term borrowings. Subsequent to year end, the Company signed a $250.0 million project loan secured over the assets and offtake agreements of the Kevitsa project.

As at December 31, 2010, the Company had the following contractual obligations outstanding:

(USD millions)

Total

Less

1 – 2

2 – 3

3 – 4

4 – 5 years

Thereafter

than 1

years

year

Term debt Convertible bonds Accounts payable Deferred payments Finance leases Commitments Asset retirement obligations

161.0 500.0 776.2 7.7 30.5 279.7 55.9

140.8 - 776.2 0.4 1.8 279.7 1.3

4.2 - - 0.3 2.0 - 1.3

4.0 - - 0.3 2.1 - 1.3

4.0 500.0 - - 2.2 - 1.3

4.0 - - - 2.3 - 0.5

4.0 - - 6.7 20.1 - 50.2

INVENTORY

		Copper (tonnes)		Gold in dore (ounces)
Kansanshi Guelb Moghrein Frontier	28,023 7,079 1,651		3,813 2,037 -
Total	36,753		5,850

The Company‟s finished copper inventory decreased by 289 tonnes in Q4 to 36,753 tonnes as at December 31, 2010 with an average cost of approximately $1.33 per pound ($2,936 per tonne). Frontier‟s inventory balance represents finished copper held in transit to final offtakers through the metal marketing division. Approximately 16,900 tonnes of Kansanshi copper in concentrate was in the process of being treated or stockpiled for treatment at the Mufulira smelter as at December 31, 2010. Included in the total finished goods inventory balance, but not in the table above, is 2,721 tonnes of third party material purchased for resale by the metal marketing division.

Contained gold in dore inventory increased to 5,851 ounces due to timing of shipments in Q4. Gold contained in copper in concentrate is not included in the inventory balances noted above.

COMPREHENSIVE INCOME

During Q4 2010, the Company sold its investment in Equinox, resulting in a gain of $510.8 million and a corresponding reclassification from other comprehensive income. A portion of the Equinox gain was recognized in other comprehensive income during 2009 and accordingly the full reclassification amount in Q4 2010 has resulted in a comprehensive loss of $350.6 million for the year ended December 31, 2010.

EQUITY

The Company issued 5,481,963 shares pursuant to the acquisition of Antares in Q4 2010. At the date of this report the Company has 86,179,019 shares outstanding.

DEVELOPMENT ACTIVITIES

During Q4, the Company continued its growth strategy with significant exploration activities and continued optimization of output from operating mines. Over the 2011 – 2015 timeframe, the Company expects to invest approximately $2 billion in continuing to advance its growth and diversification strategy. Assuming the growth projects currently underway and those contemplated achieve their targeted completion dates, First Quantum expects to be producing approximately 470,000 tonnes of copper and 55,000 tonnes of nickel annually in 2015. These estimates do not include assumptions for production from the Sentinel and Haquira deposits.

Ravensthorpe nickel project, Australia

In February 2010, the Company acquired the Ravensthorpe nickel project for $338.8 million.

Ravensthorpe is located in Western Australia, approximately 550 kilometres southeast of Perth. It is an open pit mine and hydrometallurgical process plant that uses proven technology to recover nickel and cobalt to produce a mixed nickel cobalt hydroxide intermediate product. Ravensthorpe‟s development was completed in 2007, however, operations were suspended in January 2009 after the LME nickel price dropped to as low as $8,810 per tonne in late 2008.

Multi-discipline engineering, design and procurement activities for the Ravensthorpe process plant are now nearing completion. Construction work is approaching peak levels for crushing, conveying, storage, reclaim and rejects plant areas. The environmental and project management approval processes continue to be managed with one outstanding approval for the sands impoundment facility expected in March 2011.

Re-commissioning of the existing plant continues with the first areas handed over to operations in February 2011. Major mechanical equipment deliveries have proceeded well, and more minor equipment deliveries are being prioritized to maintain target completion dates. Upgrade and modification work scheduling indicates that process plant areas will commence systematic pre–commissioning during Q2 2011, and this will be followed by approximately six months of plant commissioning and ramp-up.

The operations recruitment program is continuing and is on schedule. Ravensthorpe expects to produce an average of 39,000 tonnes of nickel annually for the first five years after recommencement of operations. The expected average annual production is 28,000 tonnes over the total life of mine of 32 years.

Kevitsa nickel/copper/PGE project, Finland

Detailed design activities are close to complete for specific engineering disciplines and overall the detailed design for the project is at 70% completion. Equipment deliveries to site have commenced and will increase during the first half of 2011.

There are approximately 300 construction workers on site, and this will gradually increase to a planned peak in excess of 400. Construction activities are focusing on earthworks, concrete and process plant buildings.

The process plant earthworks are largely complete. Approximately 50% of the project concrete has been poured and the milling and flotation buildings are in the process of being erected. Key infrastructure has been completed including the access road and power supply line. Mechanical erection commenced in Q1 2011.

Kevitsa has an initial production target of 10,000 tonnes of nickel and 20,000 tonnes of copper. Commercial production is targeted for mid 2012 with mine life estimated at more than twenty years. An expansion is proposed for 2014 subject to relevant approvals.

Trident project, Zambia

In January 2010, the Company acquired all of the issued share capital of Kiwara PLC (“Kiwara”) which owned 85% of Kalumbila Minerals Limited (“Kalumbila”) and holds mineral property licences on the periphery of the Kabombo Dome in North Western Province, Zambia. Under the terms of the Kiwara acquisition agreement, the Company acquired a further 10% interest in Kalumbila in February 2010, 1% in May 2010, and the remaining 4% in November 2010 bringing its ownership interest to 100%.

The Trident project includes the Sentinel copper deposit and the Enterprise and Intrepid targets.

Environmental applications have been completed and submitted to the Environmental Council of Zambia and preliminary investigations for the infrastructure requirements at Trident were started.

Although a NI-43-101 compliant resource for the Sentinel deposit is not expected until mid-2011, based on drilling and other work to date, the Company‟s internal study has been updated since first reported in October 2010. The internal study now assumes a resource of at least 700 million tonnes, head grade in the range of 0.65% to 0.80% copper and annual throughput rate of 40 million tonnes of ore for annual production of approximately 250,000 tonnes of copper. Both mining and processing conditions continue to appear to be relatively straightforward supporting the assumption that the unit cash cost of production is likely to be in the range of the Kansanshi mine. Results from the ongoing drill program may lead to an expansion of the resource base and allow the possibility of further production expansion.

Subject to results of the on-going resource and mine studies, securing all relevant permits and approval by the Company‟s Board of Directors, the Company expects that the initial design and construction phases could commence during 2011with commercial production in early 2014. See “Exploration” for further discussion on the Company‟s exploration program at the Trident project.

It should be noted that the potential quantities and grades and other technical parameters presented in this document in relation to the Sentinel deposit are conceptual in nature only. There has been insufficient exploration to define a NI-43- 101 compliant resource and it is uncertain whether further exploration will result in the Sentinel deposit being delineated as a mineral resource and whether the Sentinel deposit will be developed into a mine.

Antares Minerals Inc.

In December 2010, the Company acquired all of the issued share capital of Antares for $609.0 million. Antares‟ principal asset is the 100% owned Haquira project located in southern Peru adjacent to Xstrata Copper‟s Las Bambas copper-gold project. It is one of the world‟s major undeveloped copper deposits with excellent potential for the development of a large-scale copper mine. Haquira currently has reported measured and indicated resources of 3.7 million tonnes of contained copper equivalent and inferred resources of 2.4 million tonnes of contained copper equivalent. See “Exploration” for further discussion on the Company‟s exploration program at the Haquira project.

Kansanshi copper/gold operation, Zambia

At the Kansanshi operation, an expansion project is underway to expand annual copper production capacity from the current 250,000 tonnes to 400,000 tonnes of copper in 2015. The project will be implemented in two phases. Phase 1, which is currently underway, is expected to increase annual production capacity to approximately 285,000 tonnes. It is focused on expanding the treatment capacity of the oxide circuit by about 20% to 8.5 million tonnes and building in flexibility to allow for the mixed and sulphide circuits to be switched as needed to suit mining activity. The expansion will include the use of relocated equipment from the recently closed Bwana Mkubwa copper SX/EW plant as well as new installations. This phase of the expansion project is scheduled for Q4 2011.

Construction of Phase 2 is expected to start in the second half of 2012 with commissioning targeted for the first half of 2014. This phase of the expansion will focus on the construction of a new concentrator with a planned annual throughput of 25 million tonnes of ore. As a result, Kansanshi‟s total annual production capacity is expected to increase to approximately 400,000 tonnes of copper. The capital budget for Phase 2 is expected to be in the range of $350 million.

Potential copper smelter, Zambia

Currently, Kansanshi‟s concentrate production is treated by smelters in Zambia, but from time to time, due to limited capacity, some copper concentrate is sold to third parties for export sale. Due to the substantial increase in production expected from the Kansanshi mine and together with anticipated new production in Zambia including from the Sentinel deposit, an evaluation is currently underway to determine the economics and options for building and operating a copper smelter nearby Kansanshi. The evaluation is expected to be completed in the second half of 2011.

Guelb Moghrein copper/gold operation, Mauritania

Ongoing optimization of the autogenous circuit, including mill feed control systems, pebble crushing, and high pressure grinding rolls to achieve design throughput will continue in 2011. Gold circuit optimization will continue with oxygen management and a recently commissioned falcon concentrator to maximize gold recovery.

Exploration

Exploration activities continued at a high rate during Q4 2010 with nearly 30 drill rigs active on the Company‟s projects despite seasonal rains in Zambia.

Sentinel

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