First Quantum Minerals Ltd. ("First Quantum" or the
"Company") (TSX:FM) today reported for the three months
ended March 31, 2021 (“Q1”) comparative earnings1 of $150 million
($0.22 per share1), net earnings attributable to shareholders of
the Company1 of $142 million ($0.21 per share1) and cash flows from
operating activities of $743 million ($1.08 per share1).
“Our operations performed very well with Cobre
Panama delivering record quarterly production. Our Zambian business
delivered in line with plan despite the heavy rains experienced in
the quarter. With our continued low costs and the strong copper
price, we generated significant cash flow, which in turn, enabled
us to further reduce our debt level,” commented Philip Pascall,
Chairman and CEO. “I continue to recognize and be thankful for the
dedication and resilience of our entire workforce as the challenges
associated with COVID-19 persist. We remain committed to protecting
our workforce, with their health and safety and that of the
surrounding communities a top priority.”
FIRST QUARTER SUMMARY:
- Operational
Highlights:
-
Total copper production2 was 205,064 tonnes in Q1, an increase of
5% from Q1 2020 as a result of record production at Cobre Panama
and consistent production in Zambia despite heavy rainfall.
-
Cobre Panama had record production of 82,042 tonnes, an increase of
46% from Q1 2020.
-
Sentinel produced 58,252 tonnes, an increase of 3% from Q1 2020
despite repair work on the ball mill limiting throughput and the
heavier rainfall in Zambia.
-
Total copper sales volumes of 210,734 tonnes exceeded production in
the quarter, driven by sales volumes at Cobre Panama and Sentinel
which increased by 33% and 45%, respectively, from Q1 2020.
-
Q1 copper production3 costs: cash cost (“C1”) of $1.24 per lb, and
all-in sustaining cost (“AISC”) of $1.72 per lb, a decrease of
$0.06 and increase of $0.08, respectively from Q1 2020. Lower C1
costs were driven by increased production, favourable foreign
exchange and lower fuel costs. AISC was impacted by higher Zambian
royalties, more than offsetting the lower C1 costs.
-
Realized copper price6 was $3.25 per lb in the quarter.
-
Total gold production was 78,048 ounces in Q1, an increase of 13%
from Q1 2020, attributable to record production of 35,898 ounces at
Cobre Panama.
-
Nickel production was 4,642 tonnes in Q1 at Ravensthorpe while
construction of Shoemaker Levy continued to advance with the
completion of 9 km of the conveyor including the erection of the
conveyer highway overpass.
|
Three months endedMarch 31 |
(U.S. dollars where applicable) |
2021 |
|
2020 |
|
COPPER |
|
|
|
|
- Production2 (tonnes) |
205,064 |
|
195,285 |
|
- Sales (tonnes) |
210,734 |
|
189,953 |
|
|
|
|
|
|
- Cost of production3 |
|
|
|
|
º AISC (per lb) |
$1.72 |
|
$1.64 |
|
º C1 (per lb) |
$1.24 |
|
$1.30 |
|
- Realized price (per lb) 6 |
$3.25 |
|
$2.56 |
|
|
|
|
GOLD |
|
|
- Production (ounces) |
78,048 |
|
68,788 |
|
- Sales (ounces)4 |
77,391 |
|
73,782 |
|
|
|
|
NICKEL |
|
|
- Production (tonnes) |
4,642 |
|
- |
|
- Sales (tonnes) |
2,357 |
|
- |
|
- Financial
Highlights
-
Gross profit of $540 million and comparative EBITDA of $811 million
for the first quarter of 2021 were significantly higher than the
first quarter of 2020, attributable to increased sales volumes at
Cobre Panama, lower cash costs and a 27% increase in the realized
copper price to $3.25 per lb.
-
Sales revenues for the quarter of $1,678 million, an increase of
$496 million or 42% from the comparable period of 2020 reflecting
increased sales volumes, an increase in the realized copper price,
and nickel sales of $29 million following the restart of
Ravensthorpe.
-
$743 million of cash flows from operating activities ($1.08 per
share1) generated during the quarter, an increase of $270 million
from the comparable period of 2020.
-
At April 27 2021, the Company had unmargined copper forward sales
contracts for 89,125 tonnes at an average price of $2.88 per lb
outstanding with periods of maturity to December 2021. In addition,
the Company has zero cost copper collar unmargined sales contracts
for 212,950 tonnes at weighted average prices of $3.10 per lb to
$3.67 per lb outstanding with maturities to March 2022. The Company
also had unmargined nickel forward sales contracts for 1,092 tonnes
at an average price of $7.13 per lb outstanding with maturities to
October 2021. In addition, the Company has zero cost nickel collar
unmargined sales contracts for 500 tonnes at weighted average
prices of $7.50 per lb to $8.55 per lb outstanding with maturities
to August 2021.
-
Net debt decreased during the quarter by $347 million to $7,062
million as at March 31, 2021 and further reduction remains a key
priority.
-
The Company ended the quarter with $988 million in net unrestricted
cash and cash equivalents and in full compliance with all financial
covenants.
|
Three months endedMarch 31 |
|
(U.S. dollars millions, except where noted otherwise) |
2021 |
|
2020 |
|
|
|
|
|
|
Sales revenues |
1,678 |
|
1,182 |
|
Gross profit |
540 |
|
147 |
|
|
|
|
|
|
Net earnings (loss) attributable to shareholders of the
Company |
142 |
|
(62 |
) |
Basic and diluted earnings (loss) per share |
$0.21 |
|
($0.09 |
) |
|
|
|
|
|
Comparative EBITDA1 |
811 |
|
434 |
|
Comparative earnings (loss)1 |
150 |
|
(79 |
) |
Comparative earnings (loss) per share1 |
$0.22 |
|
($0.11 |
) |
|
|
|
|
|
Cash flow from operating activities |
743 |
|
473 |
|
Cash flow from operating activities per share1 |
$1.08 |
|
$0.69 |
|
1 Comparative 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
quarter ended March 31, 2021 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.3 AISC and C1 costs
per pound are not recognized under IFRS. Refer to the “Regulatory
Disclosures” section in the MD&A for the quarter ended March
31, 2021 for further information. 4 Excludes refinery-backed
gold credits purchased and delivered under the precious metal
streaming arrangement. Refer to MD&A for the quarter ended
March 31, 2021.5 Adjustments to comparative EBITDA in the first
quarter of 2021 relate principally to foreign exchange revaluations
(foreign exchange revaluations in the first quarter of 2020).6
Realized metal prices are not recognized under IFRS and defined
within the “Regulatory Disclosures” section of MD&A.
GUIDANCEMarket guidance for
production, cash costs and capital expenditure remains unchanged
from expectations previously disclosed by the Company.
Guidance provided below is based on a number of
assumptions and estimates as of March 31, 2021, 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.
Production guidance
|
000’s |
|
|
2021 |
|
|
|
|
|
|
Copper (tonnes) |
|
|
785 – 850 |
|
Gold (ounces) |
|
|
280 – 300 |
|
Nickel (tonnes) |
|
|
23 – 27 |
|
|
|
|
|
Production guidance by
operation
|
Copper production guidance (000’s
tonnes) |
|
|
2021 |
|
|
|
|
|
|
Cobre Panama |
|
|
300 – 330 |
|
Kansanshi |
|
|
210 – 225 |
|
Sentinel |
|
|
230 – 250 |
|
Other sites |
|
|
45 |
|
|
|
|
|
|
Gold production guidance (000’s
ounces) |
|
|
2021 |
|
|
|
|
|
|
Cobre Panama |
|
|
120 – 130 |
|
Kansanshi |
|
|
120 – 130 |
|
Other sites |
|
|
40 |
|
|
|
|
|
|
Nickel production guidance (000’s
tonnes) |
|
|
2021 |
|
|
|
|
|
|
Ravensthorpe |
|
|
23 – 27 |
|
|
|
|
|
Cash cost and all-in sustaining
cost
|
Copper |
|
|
2021 |
|
|
|
|
|
|
C1 (per lb) |
|
|
$1.20 – $1.40 |
|
AISC (per lb) |
|
|
$1.70 – $1.85 |
|
|
|
|
|
|
Nickel |
|
|
2021 |
|
|
|
|
|
|
C1 (per lb) |
|
|
$5.00 – $5.50 |
|
AISC (per lb) |
|
|
$5.50 – $6.00 |
|
|
|
|
|
Capital expenditure
|
|
|
|
2021 |
|
|
|
|
|
|
Capitalized stripping |
|
|
250 |
|
Sustaining capital and other
projects |
|
|
700 |
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditure |
|
|
950 |
|
|
|
|
|
Capital expenditure expectation for the full
year 2021 includes spend on secondary screening at Cobre Panama,
the smelter expansion at Kansanshi, Shoemaker Levy development at
Ravensthorpe and the fourth crusher at Sentinel. Sustaining capital
expenditure is expected to be approximately $290 million including
planned maintenance at the Kansanshi smelter.
Capital expenditure for the quarter ended March 31, 2021 was
$180 million.
Interest
Interest expense
for the quarter ended March 31, 2021 was $187 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 quarter
ended March 31, 2021 was $193 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 the quarter ended
March 31, 2021 was 29%. Excluding the impact of interest expense,
the effective tax rate for the full year 2021 is expected to be
approximately 30%.
DepreciationDepreciation
expense for the quarter was $286 million. The full year 2021
depreciation expense is expected to be approximately $1,125
million.
CLIMATE CHANGE POLICYThe
Company has always been committed to extracting resources
responsibly and the sustainability strategy is an intrinsic part of
the Company’s operations. Recently, to formalize this commitment
the Company published its approach to climate change. The approach
includes the integration of climate change and energy issues and
impacts into the decision making and strategic planning.
In 2021, the Company is committed to:
- trial reporting in alignment with
the Task Force on Climate-related Financial Disclosures (“TCFD”)
framework;
- set tangible and realistic targets
with an identified pathway to achievement, for absolute emissions
levels and the carbon intensity of the Company’s operations;
and
- integrate an internal carbon price
and the expected determinant impacts on commodity prices in the
evaluation of our new projects.
Full details of the Company’s climate change
approach, 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.
COVID-19The Company continues
to maintain health and sanitary protocols and to support the
government health authorities in each jurisdiction to combat the
spread of COVID-19. These measures continue to be reviewed and
adjusted as needed.
In Panama, the Company has recently completed
the donation of a medical laboratory to the Gorgas Institute’s
Centre of Epidemiological Study. The Company works closely
with the institute, sharing its COVID-19 response data for wider
country analysis. Overall, the number of COVID-19 cases in Panama
reduced in March and April. However, the immediate province
connected to the mine site is still seeing small community
outbreaks and these communities, as well as the broader province,
have limited access to resources. The Company supports the
Provincial Government with aerial transport, food, medical supplies
and other facility-based needs. In Zambia, the Company has provided
COVID-19 testing equipment and treatment and isolation facilities
for the community. The Company has also pledged financial support
for the provision of medical logistics support in the Solwezi and
Kalumbila districts of North-Western Zambia.
In addition to increased medical facility
resilience initiatives at the mine clinics in Mauritania, Zambia
and Panama, COVID-19 protective measures to minimize
person-to-person transmission in the work place and protect
business continuity have been implemented across all
operations.
The Company has worked to manage the logistical
challenges presented by the closure of or bottlenecks at border
crossings and ports by using alternative routes where feasible. In
the fourth quarter of 2020, some sales shipments were delayed due
to COVID-19 related port restrictions, and similar delays have been
experienced to date in 2021. The Company has also experienced some
minor disruptions 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 disruptions
other than the port delays and potential for additional shipping
costs as noted above.
As cases are identified amongst the workforce,
they are contained and isolated according to the established
protocols and in coordination with local health authorities, with
limited impact to operations. The Company continues to employ
measures to ensure minimal spread of the contagion, and the health
and wellbeing of our workforce continues to be a priority.
COMPLETE FINANCIAL STATEMENTS AND
MANAGEMENT’S DISCUSSION AND ANALYSIS The complete
Consolidated Financial Statements and Management’s Discussion and
Analysis for the quarter ended March 31, 2021 are available at
www.first-quantum.com and at www.sedar.com and should be read in
conjunction with this news release.
CONFERENCE CALL &
WEBCASTThe Company will host a conference call and webcast
to discuss the results on Wednesday, April 28, 2021 at 9:00 am
(EDT).
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: |
|
4713108# |
|
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 April 28, 2021 until 11:59pm EDT on May 12, 2021.
For further information, visit our website at
www.first-quantum.com or contact:
Lisa Doddridge, Director, Investor Relations(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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