First Quantum Minerals Ltd. ("First Quantum" or the
"Company") (TSX:FM) today reported for the three months
ended December 31, 2020 (“Q4”) comparative earnings1 of $53 million
($0.08 per share1), net earnings attributable to shareholders of
the Company1 of $9 million ($0.01 per share1) and cash flows from
operating activities of $533 million ($0.77 per share1). For the
full year 2020, the Company reports a comparative loss1 of $46
million ($0.07 per share1), a net loss attributable to shareholders
of the Company1 of $180 million ($0.26 per share1) and cash flows
from operating activities of $1,613 million ($2.34 per share1).
CEO’S COMMENTS“2020 was a very
challenging and unprecedented year as a result of the COVID-19
pandemic. Despite the challenges, the Company achieved its
highest ever annual copper production. Sentinel performed
exceptionally well and was a big contributor to that record
production. Cobre Panama experienced a period of preservation
and safe maintenance related to the virus, but still performed very
well, ramping back up to full production in early August. We expect
our 2021 copper production to grow this year to more than 785,000
tonnes. This makes First Quantum one of the top global copper
producers with one of the largest Mineral Reserve bases,“ said
Philip Pascall, Chairman and CEO. “Our success in meeting the
challenges of the year was directly attributable to the dedication
and resilience of our workforce and their adaptability to the new
way of working.”
“We continue to prioritize the health and safety
of our workforce and extend all efforts to protect our operations
from COVID-19 and help mitigate the spread through the
communities. I am very proud of the efforts of our
entire First Quantum team in this regard. In addition, we recently
published our policy on climate change which formalizes and further
demonstrates our commitment to the environment and reducing
emissions across the business,” he said. “Our focus in 2021
continues to be on debt reduction to enable us to plan for returns
to shareholders and future growth.”
FOURTH QUARTER AND FULL YEAR 2020
SUMMARY:
- Operational Highlights:
- Total copper production2 was
203,171 tonnes in Q4 and 778,911 tonnes for the full year, annual
production increased 11% from 2019.
- Sentinel produced 251,216 tonnes of copper for the year, a
record for annual production and a 14% increase from 2019 as a
result of a significant increase in annual throughput to 57 million
tonnes.
- Cobre Panama copper produced5 65,520 tonnes in Q4 and 205,548
tonnes for the full year, a significant increase from Q4 and full
year 2019, despite the mine operating for most of 2020 under strict
protocols related to COVID-19, and the planned 7-day shutdown of
the SAG mills during Q4.
- Q4 copper production3 costs: cash
cost (“C1”) of $1.28 per lb, total cost (“C3”) of $2.20 per lb, and
all-in sustaining cost (“AISC”) of $1.77 per lb. Costs slightly
increased from Q4 2019.
- Q4 costs benefitted from lower C1 costs at Kansanshi and
Sentinel of $1.01 and $1.44 per lb, respectively, resulting from
favourable foreign exchange rates and lower fuel costs. C1 costs at
Cobre Panama were $1.34 per lb inclusive of approximately $10
million in costs for increased health and safety protocols.
- 2020 copper production3 costs: C1
of $1.21 per lb, C3 of $2.11 per lb and AISC of $1.63 per lb.
- C1 costs for the year were the lowest in four years and $0.10
per lb lower than 2019 driven by record low C1 costs at Sentinel of
$1.40 per lb and C1 cost of $1.09 per lb at Kansanshi, both better
than the previous year. C1 costs at Cobre Panama across the year
were in line with expectation despite the impact of COVID-19
disruptions and additional costs.
- Realized copper price8 was $2.97
per lb for Q4 and $2.74 per lb for the full year.
- Gold production of 68,747 ounces in
Q4 and 265,112 ounces for the full year including 84,667 ounces
produced at Cobre Panama.
- Nickel production was 5,603 tonnes
in Q4 and 12,695 tonnes for the full year as Ravensthorpe continued
to ramp up through the year after the re-start of operations in Q1
2020.
|
Three months endedDecember
31 |
Full year ended December 31 |
(U.S. dollars where applicable) |
2020 |
2019 |
2020 |
2019 |
COPPER |
|
|
|
|
- Production2, 5 (tonnes) |
203,171 |
204,270 |
778,911 |
702,148 |
- Sales4,5 (tonnes) |
217,041 |
205,964 |
764,471 |
689,386 |
|
|
|
|
|
- Cost of production3, 5: |
|
|
|
|
o AISC (per lb) |
$1.77 |
$1.73 |
$1.63 |
$1.78 |
o C1 (per lb) |
$1.28 |
$1.24 |
$1.21 |
$1.31 |
o C3 (per lb) |
$2.20 |
$2.07 |
$2.11 |
$2.16 |
- Realized price (per lb) 8 |
$2.97 |
$2.62 |
$2.74 |
$2.70 |
GOLD |
|
|
|
|
- Production (ounces) |
68,747 |
77,789 |
265,112 |
256,913 |
- Sales (ounces)5, 6 |
70,905 |
79,409 |
277,291 |
254,785 |
NICKEL |
|
|
|
|
- Production (tonnes) |
5,603 |
- |
12,695 |
- |
- Sales (tonnes) |
5,343 |
- |
12,120 |
- |
- Financial Highlights
- Net debt decreased by $266 million
in 2020 with $136 million of that reduction in Q4.
- $1,613 million of cash flows from
operating activities ($2.34 per share1) generated for the full year
of 2020, a $724 million increase from 2019, with $533 million of
cash flows from operating activities ($0.77 per share1) generated
in Q4.
- $5,199 million of sales revenues
for the full year, including Q4 sales revenues of $1,601 million,
were 28% higher than 2019 as a result of higher sales volumes and
higher realized copper and gold prices.
- Gross profit of $443 million for Q4
and $1,077 million for the full year.
- Comparative EBITDA1 for Q4 of $725
million and $2,152 million for the year.
- Comparative earnings1 of $53
million ($0.08 per share1) in Q4, an increase of $0.03 from Q4 2019
and net earnings attributable to shareholders1 of $9 million ($0.01
per share1).
- Comparative loss1 of $46 million
($0.07 per share1) for the full year and net loss attributable to
shareholders1 of $180 million ($0.26 per share1).
- Capital expenditure was $610
million in 2020, significantly below 2019 levels and $65 million
below guidance.
- Ended the quarter and year with
$914 million in net unrestricted cash and cash equivalents, $600
million of committed undrawn senior debt facilities and in full
compliance with all financial covenants.
- Final dividend declared of CDN
$0.005 per share in respect of the 2020 year-end; total dividends
for the year totaled CDN $0.01.
- At February 16, 2021, the Company
had unmargined copper forward sales contracts for 128,625 tonnes at
an average price of $2.86 per lb outstanding with periods of
maturity to December 2021. In addition, the Company has zero cost
copper collar unmargined sales contracts for 198,500 tonnes at
weighted average prices of $2.93 per lb to $3.25 per lb outstanding
with maturities to December 2021. This represents approximately 40%
of the Company’s expected sales for the next 12 months. In January
2021, the Company realized unmargined copper forward sales
contracts for 23,500 tonnes and zero cost copper collar unmargined
sales contracts for 15,900 tonnes, at an average price
of $2.91 per lb.
|
Three months endedDecember
31 |
Full year endedDecember 31 |
(U.S. dollars millions, except where noted otherwise) |
2020 |
2019 |
2020 |
2019 |
|
|
|
|
|
Sales revenues |
1,601 |
1,284 |
5,199 |
4,067 |
Gross profit |
443 |
259 |
1,077 |
790 |
|
|
|
|
|
Net earnings (loss) attributable to shareholders of the
Company |
9 |
(115) |
(180) |
(57) |
Basic and diluted earnings (loss) per share |
$0.01 |
($0.17) |
($0.26) |
($0.08) |
|
|
|
|
|
Comparative EBITDA1, 7 |
725 |
511 |
2,152 |
1,609 |
Comparative earnings (loss)1 |
53 |
35 |
(46) |
249 |
Comparative earnings (loss) per share1 |
$0.08 |
$0.05 |
($0.07) |
$0.36 |
|
|
|
|
|
Cash flow from operating activities |
533 |
400 |
1,613 |
889 |
Cash flow from operating activities per share1 |
$0.77 |
$0.58 |
$2.34 |
$1.29 |
1Comparative earnings (loss) have been adjusted
to exclude items from the corresponding IFRS measure, net earnings
(loss) attributable to shareholders of the Company, which are not
considered by management to be not reflective of underlying
performance. 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, 2020 for further information. The use of
comparative earnings (loss) and comparative EBITDA represents the
Company’s adjusted earnings (loss) metrics.2 Production is
presented on a copper contained basis and is presented prior to
processing through the Kansanshi smelter.3AISC, 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, 2020 for further information. C1, C3 and AISC costs exclude
third-party concentrate purchased at Kansanshi. 4Copper sales
exclude the sale of copper anode produced from third-party
concentrate purchased at Kansanshi. Sales of copper anode
attributable to third-party concentrate purchases were nil for year
ended December 31, 2020 (nil and 1,182 tonnes for the three months
and year ended December 31, 2019, respectively). 5Cobre Panama
declared commercial production effective September 1, 2019. Copper
production volumes includes pre-commercial production from Cobre
Panama of nil and 67,704 tonnes for the three months and year ended
December 31, 2019, respectively. Copper sales volumes include
pre-commercial sales from Cobre Panama of nil and 48,967 tonnes for
the three months and year ended December 31, 2019, respectively.
Gold production volumes includes pre-commercial production from
Cobre Panama of nil and 24,120 ounces for the three months and year
ended December 31, 2019, respectively. Gold sales volumes include
pre-commercial sales from Cobre Panama of nil and 18,659 ounces for
the three months and year ended December 31, 2019, respectively.
Pre-commercial production and sales volumes at Cobre Panama are not
included in earnings, C1, C3 and AISC calculations.6Excludes
refinery-backed gold credits purchased and delivered under the
precious metal streaming arrangement refer to page 35 of
MD&A.7Adjustments to comparative EBITDA in 2020 relate
principally to foreign exchange revaluations (foreign exchange
revaluations and impairment of assets in 2019).8Realized metal
prices are not recognized under IFRS and defined within the
“Regulatory Disclosures” section from page 40 of MD&A.
OTHEROn October 1, 2020, the
Company completed the offering of $1.5 billion of Senior Notes due
2027, and the proceeds of the offering were used towards the
partial repayment of the Company’s existing revolving credit
facility, and the redemption in full of the Company’s outstanding
Senior Notes due 2022. On October 19, 2020, the redemption of the
notes, at par, was completed.
COVID-19 UPDATEThe Company
continues to maintain defensive health and sanitary protocols and
to support the government health authorities in each jurisdiction
according to the needs across all of its sites and operations to
combat the spread of COVID-19. As the pandemic has worsened
globally, the Company has identified cases amongst the
workforce. All of the cases have been effectively contained
and isolated, according to the established protocols and in
coordination with local health authorities, with limited impact to
operations. The Company will continue to employ measures to ensure
minimal spread of the contagion and the health and wellbeing of our
workforce continues to be a priority.
The Company is working to manage the logistical
challenges presented by the closure of trade borders, using
alternative routes where feasible. Some sales shipments were
delayed in the fourth quarter due to COVID-19 related port
restrictions and similar delays have also been experienced to date
in 2021. The Company has also experienced some disruption and
additional costs on freight shipments out of Asia. The Company has
not experienced any other major disruptions to supply chains and
product shipments since the onset of the pandemic and has no
immediate expectation of further disruption other than port delays
and additional shipping costs noted above.
CLIMATE CHANGE POLICYThe
Company has always been committed to extracting resources
responsibly and our sustainability strategy is an intrinsic part of
everything we do. Recently, to formalize this commitment we have
published our approach to climate change. The approach
includes the integration of climate change and energy issues and
impacts into our decision making and strategic planning. Over the
next years, we will be setting progressive and realistic targets
with an identified pathway to achievement.
Full details of our climate change approach, our
commitments to climate change, and other ESG related programs,
policies and data can be found at
https://www.first-quantum.com/English/sustainability/default.aspx.
2021 – 2023 GUIDANCEGuidance
provided below is based on a number of assumptions and estimates as
of December 31, 2020, including among other things, assumptions
about metal prices and anticipated costs and expenditures. Guidance
involves estimates of known and unknown risks, uncertainties and
other factors which may cause the actual results to be materially
different. The unprecedented challenges presented by COVID-19 pose
some additional risk to the accuracy of forward looking
information. Production guidance and cost guidance includes current
assumptions on the impact of COVID-19 on operations. (Please see
the Company’s release dated January 26, 2021 and the December 31,
2020 Management Discussion and Analysis for additional detail.)
Production Guidance
|
000’s |
2021 |
2022 |
2023 |
|
|
|
|
|
|
Copper (tonnes) |
785 –
850 |
805 –
860 |
820 –
880 |
|
Gold (ounces) |
280 –
300 |
280 –
300 |
290 –
310 |
|
Nickel (contained tonnes) |
23 –
27 |
25 –
30 |
27 –
32 |
|
|
|
|
|
Production guidance by operation
Copper
|
000’s
tonnes |
2021 |
2022 |
2023 |
|
|
|
|
|
|
Cobre Panama |
300 –
330 |
310 –
340 |
330 –
360 |
|
Kansanshi |
210 –
225 |
200 –
210 |
210 –
220 |
|
Sentinel |
230 –
250 |
265 –
280 |
270 –
290 |
|
Other sites |
45 |
30 |
10 |
|
|
|
|
|
Gold
|
000’s
ounces |
2021 |
2022 |
2023 |
|
|
|
|
|
|
Cobre Panama |
120 –
130 |
135 –
145 |
145 –
155 |
|
Kansanshi |
120 –
130 |
115 –
125 |
115 –
125 |
|
Other sites |
40 |
30 |
30 |
|
|
|
|
|
Nickel
|
000’s
tonnes (contained) |
2021 |
2022 |
2023 |
|
|
|
|
|
|
Ravensthorpe |
23 –
27 |
25 –
30 |
27 –
32 |
|
|
|
|
|
Cash cost and all-in sustaining cost
Copper
|
|
2021 |
2022 |
2023 |
|
|
|
|
|
|
C1 (per lb) |
$1.20 – $1.40 |
$1.20 – $1.40 |
$1.20 – $1.40 |
|
|
|
|
|
|
AISC (per lb) |
$1.70 – $1.85 |
$1.70 – $1.85 |
$1.70 – $1.85 |
|
|
|
|
|
Nickel
|
|
2021 |
2022 |
2023 |
|
|
|
|
|
|
C1 (per lb) |
$5.00 - $5.50 |
$4.40 - $4.90 |
$4.20 - $4.70 |
|
|
|
|
|
|
AISC (per lb) |
$5.50 - $6.00 |
$4.90 - $5.40 |
$4.70 - $5.20 |
|
|
|
|
|
Capital expenditure
|
|
2021 |
2022 |
2023 |
|
|
|
|
|
|
Capitalized stripping |
250 |
250 |
250 |
|
Sustaining capital and other projects |
700 |
700 |
800 |
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditure |
950 |
950 |
1,050 |
|
|
|
|
|
|
|
|
|
|
Capital expenditure of $950 million is expected
in 2021 and 2022, which includes $40 million in each year on the
smelter expansion at Kansanshi. 2021 and 2022 also includes a total
of approximately $100 million in capital expenditures deferred from
2020. Other projects in 2021 include Shoemaker Levy development at
Ravensthorpe and some spend on the fourth crusher at Sentinel.
In 2023, capital expenditure is expected to be
$1,050 million and includes $270 million for the proposed S3
expansion at Kansanshi. This project is subject to board approval
and the timing could be accelerated or delayed depending on capital
availability, commodity prices and the Zambian fiscal regime.
Project capital expenditure across the three
years also provides for the expansion to 100 million tonnes per
annum at Cobre Panama. The majority of this capital is for
pre-strip and mine fleet for Colina pit and process plant upgrades
including the secondary crushing screening plant and the sixth ball
mill.
Sustaining capital expenditure is on average
approximately $250 million per year, but is expected to be up to
$40 million higher in 2021 with planned maintenance of the
Kansanshi smelter.
Interest
Net interest expense for the year ended
December 31, 2020, was $738 million. A significant proportion of
the Company’s interest expense is incurred in jurisdictions where
no tax credit is recognized. Interest expense for the full year
2021 is expected to range between $740 million and $780 million.
This includes interest accrued on related party loans to Cobre
Panama and a finance cost accreted on the precious metal streaming
arrangement.
Cash outflow on interest paid for the year ended
December 31, 2020 was $574 million and is expected to be
approximately $525 million for the full year 2021. This figure
excludes interest paid on related party loans to Cobre Panama.
TaxExcluding the impact of
interest expense, the effective tax rate for 2020 was 33%.
Excluding the impact of interest expense, the effective tax rate
for 2021 is expected to be approximately 30%.
DepreciationDepreciation
expense for the year ended December 31, 2020 was $1,217 million.
The full year 2021 depreciation expense is expected to be
approximately $1,125 million.
CONFERENCE CALL AND WEBCASTThe
Company will host a call and webcast to discuss the results on
Wednesday, February 17, 2021 at 9:00 am (ET).
Conference call and webcast
details:
Toll-free North America: |
1-800-952-5114 |
Toronto Local and International: |
416-406-0743 |
Toll-free UK: |
00-80042228835 |
Passcode: |
8775774# |
|
|
Webcast: |
www.first-quantum.com |
Conference call replay:
Toll-free North America: |
1-800-408-3053 |
Toronto Local and International: |
905-694-9451 |
Passcode: |
8666906# |
The conference call replay will be available from February 17,
2021 until 11:59pm ET on March 3, 2021.
COMPLETE FINANCIAL STATEMENTS AND
MANAGEMENT’S DISCUSSION AND ANALYSISThe complete
Consolidated Financial Statements and Management’s Discussion and
Analysis for the year ended December 31, 2020 are available at
www.first-quantum.com and at www.Sedar.com and should be read in
conjunction with this news release.
For further information visit our website at
www.first-quantum.com
Contact: Lisa Doddridge, Director, Investor
Relations Tel: (416) 361-3400 Toll free: 1 (888) 688-6577E-Mail:
info@fqml.com
CAUTIONARY STATEMENT ON FORWARD-LOOKING
INFORMATIONCertain 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 (including but not limited to the
temporary suspension of labour activities at Cobre Panama
implemented in April 2020), 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. 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 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
and Australia, adverse weather conditions in Zambia, Finland,
Spain, Turkey, Mauritania, Australia and Panama, 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.
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 after the date
hereof except as may be required by law. All forward-looking
statements and information made herein are qualified by this
cautionary statement.
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