FIRST QUANTUM MINERALS REPORTS FOURTH QUARTER 2017 RESULTS (In United States dollars, except where noted otherwise)
NEWS RELEASE
18-05
February 12, 2018
www.first-quantum.com
FIRST QUANTUM MINERALS REPORTS FOURTH QUARTER 2017 RESULTS
(In United States dollars, except where noted otherwise)
First Quantum Minerals Ltd. (“First Quantum” or the “Company”, TSX Symbol “FM”) today announced a
comparative loss1 of $36 million ($0.05 per share1), a net loss from continuing operations attributable to shareholders
of the Company 1 of $115 million ($0.17 per share) and cash flows from continuing operating activities of $203
million ($0.30 per share1) for the three months ended December 31 , 2017. The results include a $188 million loss
realized under the copper sales hedge program for which no tax credit is available and $79 million for impairments
and other comparative adjustments.
Results for the full year 2017 are a comparative loss1 of $111 million ($0.16 per share1), a net loss from continuing
operations attributable to shareholders of the Company 1 of $316 million ($0.46 per share) and cash flows from
continuing operating activities of $914 million ($1.33 per share1). The results include a loss realized under the sales
hedge program of $568 million for which no tax credit is available, and impairments and other costs and comparative
adjustments of $205 million.
FOURTH QUARTER 2017 SUMMARY2
• Continued Strong Operations:
- Set new quarterly records for c opper production 3 and sales at 154,319 and 151,905 tonnes ,
respectively:
Sentinel mine recorded its highest performance to date despite the onset of the wet season
Kansanshi mine and smelter and the Las Cruces mine all turned in solid results
- Maintained low unit cost of copper production4: All-in sustaining cost (“AISC”) = $1.76 per pound;
Cash cost (“C1”) = $1.30 per pound; Total cost (“C3”) = $2.16 per pound
• A Strengthened Balance Sheet And Good Liquidity:
- Ended the year with $702 million in net unrestricted cash and cash equivalents , $390 million of
committed undrawn facilities and in full compliance with all financial covenants
- The Cobre Panama project financing process has advanced to the documentation phase with signed
commitment letters from an international group of banks. Completion and drawdown are expected
in the second quarter of 2018
- At February 12, 2018, the copper sales hedge program consisted of 66,500 tonnes of unsettled and
unmargined copper forward sales contracts at an average price of $ 2.63 per pound with periods of
maturity to September 2018, zero cost collar unmargined sales contracts for 120,000 tonnes at a
spread of $2.56 per pound to $3.44 per pound with maturities to December 2018. In addition, there
were put options for 49,500 tonnes at a strike price of $3.10 per pound with maturities to April 2018
- Developments subsequent to year-end:
Put in place a new $230 million five-year term facility agreement in the subsidiary that owns
the Sentinel mine. Repayments are scheduled to start in December 2019
Committed to repay the $175 million outstanding balance on the Kansanshi senior term loan
• Cobre Panama Development Advanced to 70% Completion; Capacity Expansions Approved:
- Commissioning of the first generating set of the power station and construction at the process plant
and mine site all continue to progress well
First Quantum Minerals Q4 2017 Financial and Operating Results 18-05
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- An initial 15% expansion to the throughput capacity was approved along with several other
initiatives aimed at achieving a smooth and efficient commissioning and ramp-up
- Capital estimate revised to $6.3 billion
- Completed the acquisition of an additional 10% indirect interest in the project
• Three-Year Guidance Issued Including Estimates F or The Ramp-up Of Cobre Panama
(details provided on page 4)
• Corporate Developments:
- Framework Agreement With Northern Dynasty Ltd.:
Finalizing the details of a four -year, $150 million option agreement that will entitle First
Quantum to earn a 50% interest in the Pebble Limited Partnership, the owner of the Pebble
project in Alaska, by investing an additional total amount of $1.35 billion
Paid t he Early Option Price Instalment of $37.5 million on the option agreement on
December 15, 2017
- Declared a final dividend of CDN$0.005 per share, in respect of the financial year ended December
31, 2017
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 year ended December 31, 2017 for further information.
2 On June 1, 2016 the sale of the Kevitsa mine was completed. In accordance with the requirements of IFRS 5 - Non-current
assets Held for Sale and Discontinued Operations, the financial and operating information of 2016 was presented to exclude
Kevitsa. On October 1, 2017, Ravensthorpe was placed on care and maintenance.
3 Production is presented on a copper contained basis, and is presented prior to processing through the Kansanshi s melter.
4 AISC, C1 and C3 costs per pound are not recognized under IFRS. Refer to the “Regulatory Disclosures” section in the MD&A
for the year ended December 31, 2017 for further information.
CEO’S COMMENTS
“2017 was a nother successful year for First Quantum . O ur achievements were realized through the continued
dedication and efforts of our entire workforce and partners,” noted Philip Pascall, Chairman and CEO.
“We made significant progress on our copper growth objective. Sentinel’s ramp -up over the year accounted for a
good part of that progress as did the continued strong performances at the Kansanshi complex and Las Cruces. While
our smaller operations are managing the challenges of being in the la tter part of their lives, they do make good
contributions both in production and providing unique training and experience for our valuable workforce. 2017
marked the sixth consecutive year that we have increased our copper production. This is an achievement we are
proud of especially in light of the tough conditions faced by our industry over the past few years.
“2018 is an important year for us with the start of the critical phased commissioning of our largest project to date –
Cobre Panama. We believe the project will enter operations at a time when the fundamentals for copper will be at
their strongest. This has informed our decision to bring forward an expansion and increase our ownership interest.
“Through this period of significant growth for our Company , we are also committed to deleveraging the balance
sheet and providing some return to our shareholders who hav e been supportive of our vision and strategy ,” Mr.
Pascall concluded.
First Quantum Minerals Q4 2017 Financial and Operating Results 18-05
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OPERATING HIGHLIGHTS
Three months ended
December 31
Year ended
December 31
(U.S. dollars where applicable)
2017
2016 2017 2016
COPPER
- Production (tonnes)
154,319 146,101 573,963 539,458
- Sales (tonnes)
151,905 136,265 580,130 535,613
- Cost of production:
o AISC (per lb)
$1.76 $1.71 $1.65 $1.46
o C1 (per lb)
$1.30 $1.22 $1.23 $1.06
o C3 (per lb)
$2.16 $1.91 $2.05 $1.83
- Realized price (per lb)
$2.50 $2.18 $2.33 $2.26
NICKEL
- Production (contained tonnes)
-
6,206
17,837
23,624
- Sales (contained tonnes)
865 6,073 18,683 25,882
- Cost of production:
o AISC (per lb)
($0.51)
$5.03
$5.29
$5.29
o C1 (per lb)
($0.61) $4.46 $4.45 $4.66
o C3 (per lb)
($0.51) $6.16 $6.17 $6.34
- Realized price (per payable lb)
$5.37 $4.50 $4.67 $4.25
GOLD
- Production (ounces)
51,904 54,234 199,736 214,012
- Sales (ounces)
50,723 45,620 201,376 232,783
FINANCIAL HIGHLIGHTS
Three months ended
December 31
Year ended
December 31
(U.S. dollars millions, except where noted otherwise)
2017
2016 2017 2016
Sales revenues
885
689
3,310
2,673
Gross profit 117 52 335 339
Net earnings (loss) from continuing operations attributable to
shareholders of the Company
(115)
12
(316)
222
Net loss from discontinued operations - - - (267)
Net earnings (loss) per share from continuing operations
attributable to shareholders of the Company
Net earnings (loss) per share5
($0.17)
($0.17)
$0.02
$0.02
($0.46)
($0.46)
$0.32
($0.07)
Basic and diluted earnings (loss) per share5 ($0.17) $0.02 ($0.46) ($0.07)
Comparative EBITDA 318 218 1,154 964
Comparative earnings (loss) (36) 27 (111) 165
Comparative earnings (loss) per share ($0.05) $0.04 ($0.16) $0.24
Cash flows from continuing operating activities
203
93
914
914
5 2016 figures include discontinued operations.
First Quantum Minerals Q4 2017 Financial and Operating Results 18-05
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THREE-YEAR GUIDANCE
Capital Expenditures 6
(U.S. dollars millions) 2018 2019 2020
Total Cobre Panama 7 1,180 382 -
Third-party contribution 8 (354) (89) -
First Quantum’s share 9 826 293 -
Capitalized stripping 200 200 200
Sustaining capital and other projects
360 400 400
Total net capital expenditures 1,386 893 600
6 Excludes capitalization of any net pre-commercial production costs, revenue and interest.
7 Reflects the revised total capital expenditure estimate of $6.3 billion.
8 Third-party contributions are from the pro-rata funding under a $1 billion precious metals stream agreement and KORES’ 10% indirect
interest in the project.
9 Based on the current 90% ownership.
.
Production
(000’s)
2018
2019 2020
Copper – excluding Cobre Panama (tonnes) 590 595 610
Nickel (contained tonnes) - - -
Gold – excluding Cobre Panama (ounces) 200 200 195
Zinc (tonnes) 20 17 5
Cobre Panama 10 – copper (tonnes) - 150+ 270 - 300
10 Assumes the following:
a) Start of commissioning in fourth quarter 2018.
b) Continued ramp-up in 2019 with copper production estimated at a minimum of 150,000 tonnes.
c) Further ramp-up in 2020 with copper production between 270,000 and 300,000 tonnes.
Copper AISC and C1 Cost 11
(Per pound)
2018
2019 2020
AISC $1.65 - $1.85 $1.65 - $1.80 $1.65 - $1.80
C1 $1.20 - $1.40 $1.20 - $1.40 $1.20 - $1.40
11 Does not include estimates for Cobre Panama which are projected at $1.20 per pound C1 and $1.50 per pound AISC, net of a by-product
credit of $0.25 per pound at steady-state.
First Quantum Minerals Q4 2017 Financial and Operating Results 18- 05
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CONFERENCE CALL & WEBCAST
Conference call and webcast details are as follows:
Date: February 12, 2018
Time: 9:00 am (EST); 2:00 pm (GMT); 6:00 am (PST)
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 (EST) on February 12, until 11:59 pm (EST) on February 19, 2018
North America: (toll free) (800) 585-8367
North America and international: 1 (416) 621-4642
Passcode: 4089109
COMPLETE FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS
The complete audited consolidated financial statements and Management’s Discussion and Analysis for the year
ended December 31, 2017 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
North American contact: Sharon Loung, Director, Investor Relations
Tel: (647) 346-3934 Fax: (604) 688-3818 Toll Free: 1 (888) 688-6577 E-Mail: [email protected]
United Kingdom contact: Clive Newall, President
Tel: +44 140 327 3484 Fax: +44 140 327 3494 E-Mail: [email protected]
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 perm itting, the
outcome of legal proceedings which involve the Company, information with respect to the future price of copper,
gold, nickel, zinc, pyrite, cobalt 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 action s, 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
First Quantum Minerals Q4 2017 Financial and Operating Results 18-05
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price of copper, gold, nickel, zinc, pyrite, cobalt 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 , the United States and Australia, adverse weather
conditions in Zambia, Finland, Spain, Turkey, Mauritania and Panama, labour disr uptions, 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 a fter the date hereof except as may be required by law. All
forward-looking statements and information made herein are qualified by this cautionary statement.