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First Quantum Minerals Reports Operational and Financial Results for the Three Months Ended March 31, 2008VANCOUVER, BRITISH COLUMBIA -- (MARKET WIRE) -- May 13, 2008 -- (All figures expressed in US dollars) -
First Quantum Minerals Ltd. ("First Quantum" or the "Company") (
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Key features for the quarter Q1 2008 Q1 2007 Q1 2006
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Production t Cu 75,616 46,403 42,086
Sales t Cu 62,802 44,315 36,635
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Net sales USDM 511.5 261.3 187.2
Operating profit USDM 354.1 145.8 122.0
Net profit USDM 182.0 78.3 55.8
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Earnings per share USD $ 2.68 $ 1.16 $ 0.90
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Unless otherwise indicated, all comparisons of performance throughout this report are to the comparative period for the prior year.
- Record quarterly copper production achieved on the back of outstanding results at Kansanshi - Record quarterly operating profit, driven by copper price and strong sales volume - Copper in concentrate stockpiles increase to approximately 31,600 tonnes by quarter end - Additional tax expense of $17 million provided against change in Zambian corporate tax rate from 25% to 30% - The Company entered into a definitive agreement to acquire 100% of Scandinavian Minerals Limited Near term outlook - Expected production for 2008 remains at 310,000 tonnes - Frontier operations improving now the rainy season has ended Longer term outlook - Kansanshi expansion project and gold plant construction will drive further increases in production - Kolwezi project approved and under construction - Copper production profile over the five years 2009-2013 from existing operations is expected to average 222,000 tonnes per annum at Kansanshi, 43,000 tonnes at Guelb Moghrein and 81,000 tonnes at Frontier as a result of planned expansions - In addition, expected production increases arising from the Kolwezi and Kevitsa projects
Q1 2008 operating results
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Q1 2008 Q1 2007 Q1 2006
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NET SALES (after TC/RC charges) USD M USD M USD M
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Kansanshi - copper 373.4 218.4 120.4
- gold 8.8 4.8 4.5
Guelb Moghrein - copper 67.2 12.8 -
- gold 16.4 3.1 -
Frontier - copper 32.6 - -
Bwana/Lonshi - copper 13.1 22.1 62.1
- acid - 0.1 0.2
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Net sales 511.5 261.3 187.2
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Copper provisional pricing adjustment
included above 44.5 (17.6) 16.9
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OPERATING PROFIT USD M USD M USD M
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Kansanshi 288.0 145.0 86.6
Guelb Moghrein 54.4 10.4 -
Frontier 18.1 - -
Bwana/Lonshi (6.4) (9.6) 35.4
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Total operating profit 354.1 145.8 122.0
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COPPER SELLING PRICE USD/lb USD/lb USD/lb
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Current period sales 3.43 2.96 2.32
Prior period provisional pricing adjustment 0.32 (0.18) 0.21
TC/RC and freight parity charges (0.24) (0.19) (0.27)
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Realized copper price 3.51 2.59 2.26
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UNIT COSTS USD/lb USD/lb USD/lb
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Cash costs (C1) 0.99 1.06 0.80
Total costs (C3) 1.25 1.30 1.00
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Group operating profit driven by significant sales increase
Notwithstanding intermittent power blackouts and the effects of the rainy season, group operating profit, which was a quarterly record, rose significantly as a result of higher sales volume, an increase in the realized copper price and lower cash costs than in the comparative quarter of last year. Sales volume increased due to the 63% increase in production, a new quarterly production record. Kansanshi continued to increase its output due to facility upgrades and expansions and Frontier enjoyed its first full quarter of production. The realized copper price was 36% higher due to the increased LME copper price, which also resulted in large positive provisional pricing adjustments, unlike the comparative quarter when the LME copper price decreased. The profit margin also benefited from a reduction in the average cash unit cost of production (C1) mainly due to the increased copper output and a reduction in waste stripping. Kansanshi operating profit benefits from 48% increase in copper output Kansanshi, again, reached record production levels with its sixth consecutive quarter on quarter output increase. Against the comparative quarter of 2007 there was a 26% increase in the tonnes of copper sold. This, combined with a higher realized copper price and lower cash unit costs, contributed to Kansanshi's 99% increase in operating profits. Copper production increased due, mainly, to a combination of an increase of 15% in oxide and 61% in sulphide ore processed and an increase in the sulphide ore grade processed. The continued facility expansions enabled the increase in ore throughput while the increase in ore grades processed was the direct result of the build up of the mining fleet which had enabled higher grade sulphide ore to be mined and stockpiled over the past few quarters. This resulted in contained copper output increases of 21% from the oxide ore and 97% from the sulphide ore. As discussed in the previous quarter, operational issues at the Mufulira smelter limited tolled cathode output to approximately 8,200 tonnes. Kansanshi continued to focus on achieving a steady state of production from the high pressure leach system, which contributed approximately 1,700 tonnes of copper in concentrate to cathode production. Of the remaining balance of copper in concentrate production, approximately 9,000 tonnes were sold without further processing and approximately 5,900 tonnes were added to the inventory stockpiles. Kansanshi's average cash unit cost of production (C1) of 79 cents/lb was positively impacted by the increase in copper in concentrate output as a percentage of the total copper output as the gold credit increased and leach costs decreased. Leach costs decreased due to the lower proportionate share of oxide ore production and a decrease in the processing of high acid consuming oxide ore. In addition, the lower waste stripping, increased production and improved efficiencies all helped keep under control rising cost pressures related to increased oil-based consumables and wages. Guelb Moghrein boosted by increasing copper and gold prices and increased sales Guelb Moghrein's sales revenues were 426% higher as the sales issues of the comparative quarter were settled during the latter part of 2007. This, combined with increased copper and gold prices, a further reduction of the concentrate stockpile and an increase in copper production, all led to the significant increase in operating profit. Guelb Moghrein continued to operate above throughput design level. Copper in concentrate production increased due to a 26% increase in the tonnes of ore processed as the comparative quarter was still ramping up since achieving commercial production in late 2006. In addition to the increased gold credit, the average cash unit cost of production (C1) was positively impacted by lower TC RC and freight parity costs versus the comparative quarter as improved offtake terms were negotiated. This was partially offset by rising oil-based consumables, power and wage costs. Frontier achieves operating profit in first full quarter of operations Frontier achieved an operating profit on the back of high copper prices despite sales volumes being limited due to the constraints imposed by the operational issues of the Mufulira smelter. This resulted in approximately 9,200 tonnes of copper in concentrate production being added to the inventory stockpile by quarter end. Alternative overseas offtake arrangements were finalized late in the quarter which enabled a sale of just over 4,000 tonnes of copper in concentrate. With the open pit in its very early stage of development copper production was impacted by the heavy rain season, which caused delays in the mining of high grade ore. This resulted in the processing of mixed lower grade ores, which impacted the percentage of copper recovered in the process and contributed to an increase in the average mining unit cost of production. In addition, the sales of concentrate, which had been stockpiled on the Zambian side of the border, were assessed as being subject to the new Zambian export levy, which increased the average total unit cost of production (C3). Alternative arrangements have now been agreed for the export of concentrate directly from the mine, which ensures the Zambian levy does not apply. Bwana/Lonshi negatively impacted by DRC border closure For the entire quarter the DRC provincial government of Katanga continued to disallow any ore shipments from the Lonshi mine to cross the border into Zambia. This required the Bwana treatment plant to process low grade ore purchased from external vendors and resulted in low copper production and increased average cash unit (C1) and total (C3) costs of production. Meanwhile, mining operations continued at the Lonshi mine resulting in a stockpile of approximately 76,000 tonnes of ore at an average ore grade of approximately 5.8% at quarter end. The Company believes it has satisfied all requirements to allow the shipment of ore to Bwana from Lonshi. Discussions are ongoing but the border remains closed as of the date of this report. Provisional pricing adjustment positive following increase in copper price during final settlement periods The provisional pricing adjustments reflect the quarter's final settlement prices for prior period copper sales at an average of $3.65/lb compared to the December 31, 2007 provisional forward average LME price of $3.04/lb. As at March 31, 2008, there were 8,974 tonnes of contained copper that were provisionally priced at an average LME copper price of $3.85/lb. This revenue will be subject to future adjustments as a result of movements in the copper price. Of this amount, 6,812 tonnes had the final price determined in April at $3.94/lb resulting in a favourable provisional pricing adjustment of approximately $1.4 million, and 2,162 tonnes will be determined in May.
Q1 2008 net profit
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Q1 2008 Q1 2007 Q1 2006
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USD M USD M USD M
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Operating profit 354.1 145.8 122.0
Corporate costs and other expenses/income (11.3) (6.2) (4.9)
Derivative losses (net) (1.4) (1.1) (18.6)
Exploration (5.8) (2.6) (2.1)
Interest (net) (6.9) (4.5) (5.3)
Tax expense (98.0) (31.7) (25.0)
Minority interests (48.7) (21.4) (10.3)
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Net profit 182.0 78.3 55.8
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Earnings per share
- basic $ 2.68 $ 1.16 $ 0.90
- diluted $ 2.65 $ 1.14 $ 0.88
Weighted average shares outstanding
- basic 67.8 67.3 61.8
- diluted 68.7 68.6 63.4
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Net profit driven by outstanding operating results, hampered by Zambian tax rate increases
Net profit and earnings per share were 132% higher than the comparative quarter, which was driven by the outstanding operating results. However, the increased Zambian tax rates hampered further increases in net profit and earnings per share due to the restatement of the future income tax liability at a higher tax rate. Other expenses impacted by foreign exchange loss During the quarter an unrealised foreign exchange loss of $4.6 million was recognized on the movement in the USD against the Euro on the EIB subordinated debt facility for Kansanshi. This was offset by a gain included in net derivative losses. Exploration costs up The Company continued with its increased exploration activities over the past few quarters resulting in higher costs than the comparative quarter. Part of the increase was targeted at discovering new opportunities in Mauritania. Income tax expense up on increased earnings, future rate changes, and tax dispute settlements In addition to the increased operating profits, income tax expense was negatively impacted by the increased tax rate in Zambia and amounts related to the final settlement of prior year income tax disputes in the DRC. As a result of the Zambian government passing legislation in parliament to increase the tax rate payable by mining companies from 25% to 30%, the Company has restated its balance of future income tax liabilities to reflect the higher rate. This resulted in a charge of $17.0 million to profit during the quarter. Any receivable from the Government of Zambia for reimbursement of any increased tax charges afforded by the stability provisions of the Development Agreement has not been recognized at this point pending further clarification of the impact of the tax changes. If the tax rate used for calculating future income tax liability is kept at 25% in accordance with the provisions of the Development Agreement, the net profit for the quarter would increase to $195.6 million, earnings per share basic of $2.88 and fully diluted of $2.85. Minority interests directly impacted by increased profits at Kansanshi and Guelb Moghrein Minority interests increased directly with the increase in operating profits at Kansanshi and Guelb Moghrein as this represents the minority shareholder's portion of each operation's net income.
Q1 2008 cash flows
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Q1 2008 Q1 2007 Q1 2006
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USD M USD M USD M
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Cash inflows from operating activities
- before working capital 272.6 118.9 103.8
- after working capital 143.5 74.6 83.9
Cash inflows from financing activities 20.1 (25.8) (13.2)
Cash outflows from investing activities (94.0) (102.0) (46.1)
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Net incash flows 69.6 (53.2) 24.6
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Cash flows per share
- before working capital $ 4.02 $ 1.77 $ 1.68
- after working capital $ 2.12 $ 1.11 $ 1.36
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Cash inflows from operating activities increase on significant increase in net profit
Operating cash flows before working capital movements benefited from the Company's operating results. Non-cash related expenses that were included in the operating results including depreciation, minority interests and future tax expense were significantly higher than the comparative quarter. Operating cash flows after working capital movements for the quarter were impacted by a build up inventory of $60.5 million and an increase in accounts receivable of $100.3 million, which were offset by an increase in current taxes payable of $49.4 million. Inventory was particularly impacted by an increase in concentrate stockpiles at Kansanshi and Frontier. Current taxes increased due to the positive results and the timing of tax payments. Cash inflows from financing activities increase due to debt draw down Financing activities included a long-term debt draw down of $50.0 million and repayments totalling $25.3 million on the corporate revolving credit and term loan facility and the Kansanshi project completion facility. The funds from the draw down were used for capital investment purposes. These financing cash inflows were higher during the current quarter as there were no draw downs in the comparative quarter. Cash outflows from investing activities increase on capital investment The Company spent $64.6 million on capital upgrades at Kansanshi, Frontier and Guelb Moghrein and $30.0 million on the Kolwezi development project. In addition, $21.9 million was spent on acquiring investments in marketable securities. Capital expenditures continued at Kansanshi on sulphide expansion and the gold plant commissioning, while Guelb Moghrein continued investment in the gold plant and other expansion projects. Compared to the same quarter in 2007, the Company spent more on capital upgrades and development and less on marketable security investments during the current quarter.
Q1 2008 balance sheet
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Q1 2008 YE 2007 YE 2006
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USD M USD M USD M
--------------------------------------------------------------------------Cash 269.6 200.0 249.5
Property, plant and equipment 1,393.9 1,320.5 1,078.0
Total assets 2,917.9 2,682.7 1,719.7
Long term debt 390.3 361.2 294.9
Total liabilities 1,250.0 1,096.7 799.9
Shareholders' equity 1,667.9 1,586.0 919.8
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Net working capital 575.0 457.3 312.8
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Net debt to net debt plus equity 7% 9% 5%
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Group assets rise on positive cash flows and capital investment
The Company's positive operating cash flow enabled continued capital expenditure and investment. Working capital also rose significantly during the period. Inventory increases consisted of an additional $33.5 million in finished products, $17.5 million in consumable stores and $11.8 million in ore stockpiles. The Company had stockpiles of approximately 31,600 tonnes of copper in concentrate at quarter end, which was an increase of 13,300 tonnes during the quarter. Operational issues at the Mufulira smelter resulted in a significant reduction in the processing of concentrates from Kansanshi and Frontier. This resulted in the stockpiling of concentrates while management arranges alternative processing and offtake arrangements. Of this stockpiled total, approximately 8,000 tonnes of Kansanshi production remain stockpiled at the Mufulira smelter awaiting treatment, while 6,200 tonnes remained onsite at Kansanshi and 16,300 tonnes remained at Frontier. The total investment in marketable securities at cost amounted to $330.3 million. However, due to the current market price of Equinox, the Company recognized a fair value loss of $76.8 million through comprehensive income, thus reducing the fair value of the investment since December 31, 2007. Property, plant and equipment balances increased by $73.4 million, net of depreciation, as the Company continued capital investment in the Kansanshi sulphide circuit upgrade, the Kolwezi development project and expansions at Guelb Moghrein. Group liabilities increase on current taxes, debt draw downs and minority interest Current tax payable increased due to the positive operating results and the timing of payments. Long-term debt increased due to net draw downs during the quarter. Minority interests increased due to the positive operating results at Kansanshi and Guelb Moghrein. Shareholders' equity increases on net earnings The Company declared a dividend of 54 cents per share totalling $36.1 million during the quarter. Due to the decline in fair value of the Company's investments in marketable securities, a comprehensive loss after tax of $65.2 million was recognized during the quarter. As at the date of this report the Company has 68,378,922 shares outstanding. Growth activities Scandinavian Minerals Limited acquisition offer In April 2008, the Company entered into a definitive agreement ("Arrangement Agreement") to acquire, by way of a court-approved plan of arrangement, all of the outstanding common shares of Scandinavian Minerals Limited ("SML"), which owns the Kevitsa nickel-copper-PGE property in northern Finland. The Kevitsa nickel-copper-PGE deposit in Finland fits the Company's strategy of developing or acquiring projects to bring into commercial production and subsequent efficient operation. This acquisition is also consistent with the Company's goal of diversifying assets geographically and across commodities. The value of the transaction is approximately $282 million on the basis of CDN $9.00 in cash plus 0.01 common shares of the Company for each common share of SML. The implied value of the purchase price is CDN $9.92 per SML share based on the closing price of the Company's shares on the Toronto Stock Exchange of CDN $92.18 on May 5, 2008. First Quantum will finance the acquisition through a combination of cash-on-hand and access to existing credit facilities. The transaction is not contingent on any financing condition. The Board of Directors of SML has unanimously approved the transaction and resolved to recommend to shareholders of SML that they vote in favour of the transaction. In addition, the directors and senior offices of SML have entered into voting agreements with the Company, pursuant to which they have irrevocably agreed to vote their shares (including any shares issuable upon the exercise of options), representing approximately 13.6% of the issued and outstanding common shares of SML, in favour of the transaction. The transaction will be carried out by way of a statutory plan of arrangement pursuant to the Canada Business Corporations Act and must be approved by the affirmative vote of SML shareholders at a special meeting of shareholders to be called and held to consider the transaction and the Ontario Superior Court of Justice. The proposed transaction is expected to close in the second quarter of 2008, shortly after receipt of shareholder and court approvals. The completion of the transaction is subject to customary closing conditions, including the receipt of any required regulatory approvals. The Arrangement Agreement contains customary non-solicitation provisions, but permits SML, in certain circumstances, to terminate the arrangement and accept an unsolicited superior proposal, subject to fulfilling certain conditions. SML has agreed to pay the Company a break fee of US$8 million in such circumstances and certain other limited circumstances if the transaction is not completed. Details regarding these and other terms of the transaction are set out in the Arrangement Agreement, which has been filed by the Company and SML on the Canadian SEDAR website at www.sedar.com. Kolwezi development in DRC The Board of Kingamyambo Musonoi Tailings SARL ("KMT") (owned by First Quantum 65%, La Generale Des Carrieres et Des Mines ("Gecamines") 12.5%, Industrial Development Corporation of South Africa ("IDC") 10%, the International Finance Corporation ("IFC") 7.5% and the Government of the Democratic Republic of Congo 5% ("RDC")) committed in November 2007 to proceed with the development of the Kolwezi tailings project ("Kolwezi"). First Quantum with support from its contributing equity partners of KMT ("IDC and IFC") will finance or procure third party debt project financing totalling up to $593 million. This satisfied the obligations of First Quantum, the IDC and the IFC under the Contract of Association to complete feasibility studies, carry out an environmental impact assessment, prepare an environmental management plan, and to obtain commitments with respect to the financing of the project. Site works commenced and commercial start-up remains expected for the first quarter of 2010. The plant will commence operations at 35,000 tonnes per year copper and 7,000 tonnes per year of cobalt hydroxide at a capital cost of $553 million. The plant will be designed and constructed such that its capacity can be doubled for an incremental capital cost of $40 million. The mine life is expected to be 22 years at an annual production rate of 70,000 tonnes of copper cathode per year. The future development of a cobalt metal facility and the expansion of copper and cobalt capacity will be considered in light of practical experience on site and on commodity market conditions. Progress continued on the detailed design for the project with Lycopodium Engineering in Perth, with engineering design at approximately 52% complete and drafting at approximately 36% complete. Approximately $159.0 million of the project budget has been ordered at quarter end. Construction works are underway on site for infrastructure items which include process plant earthworks, power supply, water supply, roads access, construction camp, site housing and site buildings. Official approval was received for the construction of a new road from Zambia to Kolwezi, and consultation with officials from both countries is in progress to facilitate finalization of the new border post. The acid plant design is underway and orders have been placed for long lead equipment items. Substantial design completion is estimated for the latter part of 2008 and the project construction completion and commencement of pre-commissioning is estimated for the fourth quarter of 2009. The Government of the Democratic Republic of Congo ("DRC") announced during 2007 a review of over 60 mining agreements entered into over the last decade with foreign companies. The Kolwezi mining convention was included in this review and on February 19, 2008 formal notification of the outcome of the review was received by the Company. The notification listed a number of conditions to be met by the Company. The Company has legal advice that the convention is valid and binding and that KMT has complied with all its terms. The convention provides a dispute resolution mechanism through international arbitration. The Company through KMT responded to the letter and awaits a response from a panel set up by the DRC to manage the review process. Kansanshi sulphide expansion project construction nearing completion The construction works for the Kansanshi sulphide circuit expansion to an annual throughput in excess of 12 million tonnes are nearing completion. Pre commissioning commenced in April and will progress in a sequence from crushing to floatation and tailings, followed by milling. The SAG mill shell and ball mill heads arrived during the first quarter and the SAG mill is currently being installed. The completion of the project will occur following the SAG mill installation. The construction completion and commissioning is expected during the second quarter of 2008. Kansanshi fourth 35,000 tonne per year electrowinning tank house is progressing well Kansanshi is progressing well with the construction of a fourth 35,000 tonne per year electrowinning tank house to bring electrowinning capacity to 140,000 tonnes of copper cathode per year. Concrete works are complete and structural, mechanical and piping works are in progress. All procurement is complete and the focus is on expediting the remaining equipment deliveries to site. Construction completion is expected during the third quarter of 2008, with commissioning of the new tank house to occur subsequent to construction completion. It is not expected that Kansanshi will utilize the full tank house capacity. It will, however, provide flexibility to make up for periods of power disruptions. Guelb Moghrein plant expansion study underway Guelb Moghrein is currently finalizing a plant expansion study to increase copper output to 45,000 tonnes per year. This expansion comprises a 49% increase in mill throughput from additional milling and flotation capacity, the installation of a 20 MW power station, and dedicated saline and fresh water pipelines. Additional mining equipment is expected to arrive in the third quarter which will enable an increase in waste stripping and the exposure of more ore. Steady progress is being made on the construction of the gold flotation circuit and the CIL circuit upgrade, which is scheduled for commissioning in the third quarter. Flotation cell tanks are in place, the regrind mill foundations are ready for pouring, and the erection of the additional leach tank has commenced. The first phase of the power station expansion is underway with the installation of Engine No.5, also for commissioning in the third quarter. Production should rise in the second half of 2008 as the benefit of debottlenecking the flotation circuit is realized. Outlook Group copper production estimate for 2008 is 310,000 tonnes The Company continues to expect to produce approximately 310,000 tonnes of copper in 2008. This expected production includes approximately 181,000 tonnes from Kansanshi, approximately 84,000 tonnes from Frontier, approximately 33,000 tonnes from Guelb Moghrein and approximately 12,000 tonnes from Bwana/Lonshi. For the 2008 year, the Company anticipates group average cash unit cost of production (C1) to be in the range of $1.15 to $1.20 per pound of copper, as a result of higher leach costs from increased world sulphur prices, higher TC RC and freight parity charges for Frontier and increased diesel prices. During April, total copper production was about 25,500 tonnes sourced as follows: - Kansanshi - 15,500 tonnes; - Bwana/Lonshi - 500 tonnes; - Guelb Moghrein - 2,700 tonnes; - Frontier - 6,800 tonnes. The Company sold approximately 23,100 tonnes of copper in April. Group copper production five-year estimate The Company is investing significantly in additional capacity at its existing production facilities and as a result plans that these operations will achieve the following average production levels over the years 2009 to 2013: - Kansanshi - up 22% on 2008 planned production to 222,000 tonnes; - Guelb Moghrein - up 30% on 2008 planned production to 43,000 tonnes; - Frontier - broadly in line with 2008 planned production at 81,000 tonnes. In addition the Company expects Group production will rise even further as a result of new operations being brought on stream. Zambian budget announcement The Government of the Republic of Zambia ("GRZ") announced in January 2008 a number of proposed changes to the tax regime in the country in relation to mining companies. These changes were passed by parliament in late March and the majority of changes take effect from April 1, 2008. These changes include a new windfall tax on copper sales revenue based on trigger prices for copper above $2.50/lb; a new variable tax of 15% of taxable income where the profit margin exceeds 8% and no windfall tax applies; a concentrate export levy of 15%; an increase in the royalty rate from 0.6% to 3%; an increase in the income tax rate from 25% to 30%; and other changes including a reduction in capital allowances and quarantining of hedging losses and gains. These changes, if finally enforceable, will result in higher tax payments in that country, which will be material at current commodity prices, as well as to potentially discourage further investment in both new and existing projects. The Company has entered into Development Agreements with GRZ on existing operations which unequivocally provide for stability in the regulatory environment, including taxation, and rights of international arbitration in the event of any dispute, which the Company will pursue if necessary to protect its contractual rights. Currently, the Company is seeking mediation along with other mining companies operating in Zambia with similar agreements. The financial impact of the proposed changes on the Company is uncertain. Frontier production achieves design levels; expected to produce approximately 84,000 tonnes of copper in 2008 Frontier is now producing concentrates at design production rates, recoveries and quality. The wet season has passed allowing improved mining rates which will continue until the end of the year. Emphasis is placed on exposing a larger competent ground footprint before the end of the dry season to minimize the effect of the next wet season on the larger machines. Limited smelter capacity will open up with the construction of two smelters in Zambia which may allow for the treatment of some of the concentrates. However, the majority of concentrates will be sold without further processing for the foreseeable future with much of the groundwork being completed during the first quarter to achieve this change. This is expected to result in a significant reduction of copper in concentrate inventories later in the year. Bwana/Lonshi border issues continue to impact production The DRC border has been closed for the export of copper ores and exploration core samples from the Lonshi mine into Zambia since November 2007. The Company has been working with the DRC authorities to resolve this issue. The mining operations at the Lonshi mine continued but as the ore body reaches its end, there will be retrenchment of personnel. Mining operations at the Lonshi mine continued and ore is being stockpiled in anticipation of the ore export embargo being lifted. Capacity at Bwana is such that any production backlog should be recouped and annual targets for cathode copper are expected to be achieved. Evaluations of alternative options for the continued commercial operation of the Bwana processing facility, beyond the completion of the Lonshi oxide resource, are currently being undertaken. The planning for a trial decline at the Lonshi mine, to gather geotechnical information for the evaluation of an underground sulphide operation to augment the Frontier feed with high grade ore, is underway. On Behalf of the Board of Directors of First Quantum Minerals Ltd. G. Clive Newall Certain information contained in this news release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information under applicable Canadian securities legislation. Such forward-looking statements or information, including but not limited to those with respect to the prices of gold, copper, cobalt and sulphuric acid, estimated future production, estimated costs of future production, the Company's hedging policy and permitting time lines, involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Such factors include, among others, the actual prices of copper, gold, cobalt and sulphuric acid, the factual results of current exploration, development and mining activities, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the Company's documents filed from time to time with the Alberta, British Columbia, and Ontario Securities Commissions, the Autorite des marches financiers in Quebec, the United States Securities and Exchange Commission and the London Stock Exchange. The preceding discussion and analysis and financial review should be read in conjunction with management's discussion of critical accounting policies, risk factors and comments regarding forward looking statements contained in the unaudited consolidated financial statements for the period ended June 30, 2007. The discussion and analysis of the Company's results of operations should also be read in conjunction with the audited consolidated financial statements and related notes. Summary of quarterly and current year to date results The following unaudited table sets out a summary of the quarterly results for the Company for the last eight quarters and the current year to date:
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Statement of Operations and 2006 2006 2006 2006
Retained Earnings Q1 Q2 Q3 Q4
(millions, except where indicated)
Revenues
Current period copper
sales (1) $165.6 $295.9 $311.4 $243.7
Prior period provisional
copper adjustments (2) 16.9 60.4 11.7 (31.7)
Other revenues 4.7 6.2 5.3 4.4
Total revenues 187.2 362.5 328.4 216.4
Cost of sales 53.2 65.2 81.7 88.5
Net earnings 55.8 149.5 133.2 60.9 Basic earnings per share $0.90 $2.32 $2.00 $0.93
Diluted earnings per share $0.88 $2.27 $1.96 $0.91
Copper selling price
Current period copper sales
(per lb) $2.32 $3.14 $3.37 $2.89
Prior period provisional
adjustments (per lb) 0.21 0.57 0.11 (0.35)
Gross copper selling price
(per lb) 2.53 3.71 3.48 2.54
Tolling and refining charges
(per lb) (0.12) (0.19) (0.19) (0.08)
Freight parity charges (per lb) (0.15) (0.16) (0.12) (0.14)
Realized copper price (per lb) 2.26 3.36 3.17 2.32
Average LME cash copper price
(per lb) 2.24 3.29 3.48 3.21
Realized gold price (per oz) $563 $631 $581 $628
Average gold price (per oz) $554 $627 $622 $614
Total copper sold (tonnes)(3) 36,635 48,094 46,302 41,454
Total copper produced
(tonnes) (3) 42,086 49,180 45,480 46,531
Total gold sold (ounces) (3) 8,079 9,611 8,864 6,944
Cash Costs (C1)
(per lb) (4)(5) $0.80 $0.89 $1.00 $1.14
Total Costs (C3)
(per lb) (4)(5) $1.00 $1.09 $1.23 $1.38
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Financial Position
Working capital (restated) $106.9 $245.6 $308.0 $312.8
Copper in concentrate
inventory (tonnes)
Kansanshi 7,157 8,389 7,242 9,046
Guelb Moghrein - - 2,345 6,068
Frontier - - - -
Total copper in concentrate
inventory (tonnes) 7,157 8,389 9,587 15,114
Total assets $839.5 $1,398.1 $1,574.0 $1,719.7
Weighted average #
shares (000's) 61,808 64,564 66,615 67,287
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Cash Flows from
Operating activities
Before working capital
movements $103.8 $213.5 $176.3 $70.6
After working capital
movements 83.9 142.5 118.3 129.3
Financing activities (13.2) 32.1 (58.6) 53.1
Investing activities (46.1) (91.8) (60.1) (122.8)
Cash Flows from Operating
activities per share
Before working capital
movements $1.68 $3.31 $2.65 $1.05
After working capital
movements $1.36 $2.21 $1.77 $1.92
--------------------------------------------------------------------------
Kansanshi Production Statistics
Mining
Waste mined (000's tonnes) 2,588 5,516 6,683 7,123
Ore mined (000's tonnes) 1,382 2,552 3,220 2,380
Ore grade (%) 1.7 1.4 1.4 1.4
Processing (3)
Sulphide Ore processed
(000's tonnes) 782 1,140 1,277 1,212
Oxide Ore processed
(000's tonnes) 1,044 1,246 1,401 1,080
Contained copper (tonnes) 32,213 36,981 32,882 31,545
Sulphide ore grade processed (%) 1.9 1.6 1.2 0.9
Oxide ore grade processed (%) 1.7 1.5 1.2 1.6
Recovery (%) 92 94 95 92
Copper cathode produced
(tonnes) 15,796 17,501 17,158 17,201
Copper cathode tolled produced
(tonnes) - 1,186 3,036 1,805
Copper in concentrate
produced (tonnes) 14,572 16,924 11,984 10,015
Total copper production 30,368 35,611 32,178 29,021
Concentrate grade (%) 29.3 25.8 26.4 26.9
Combined Costs (per lb) (4)(5)
Mining $0.12 $0.14 $0.23 $0.21
Processing 0.41 0.44 0.50 0.62
Site Administration 0.03 0.04 0.04 0.04
TC RCs and freight
parity charges 0.31 0.42 0.31 0.27
Gold / Acid credit (0.07) (0.08) (0.07) (0.05)
Combined Total Cash Costs (C1) $0.80 $0.96 $1.01 $1.09
Combined Total Costs (C3) $0.95 $1.13 $1.23 $1.28
Oxide Circuit Costs
(per lb)(4)(5)
Mining $0.11 $0.13 $0.19 $0.15
Processing 0.51 0.52 0.54 0.70
Site Administration 0.03 0.01 0.02 0.04
Oxide Circuit Total Cash
Costs (C1) $0.65 $0.66 $0.75 $0.89
Oxide Circuit Total Costs (C3) $0.81 $0.84 $0.96 $1.05
Sulphide Circuit Costs
(per lb)(4)(5)
Mining $0.10 $0.13 $0.20 $0.20
Processing 0.28 0.35 0.45 0.52
Site Administration 0.04 0.02 0.02 0.04
TC RCs and freight
parity charges 0.68 0.89 0.73 0.62
Gold / Acid credit (0.16) (0.17) (0.16) (0.13)
Sulphide Circuit Total Cash
Costs (C1) $0.94 $1.22 $1.24 $1.25
Sulphide Circuit Total
Costs (C3) $1.09 $1.39 $1.47 $1.49
Revenues ($ millions) (3)
Copper cathodes $84.8 $142.3 $158.6 $110.9
Copper in concentrates 35.6 109.6 65.3 20.1
Gold 4.5 6.0 5.2 2.8
Total revenues $124.9 $257.9 $229.1 $133.8
Copper cathode sold (tonnes) 15,556 17,568 17,181 17,360
Copper tolled cathode
sold (tonnes) - 1,186 3,036 1,805
Copper in concentrate
sold (tonnes) 9,282 15,692 13,131 8,215
Gold sold (ounces) 8,079 9,611 8,864 4,428
--------------------------------------------------------------------------
Guelb Moghrein Production
Statistics
Mining
Waste mined (000's tonnes) 1,156 1,721 1,660 1,719
Ore mined (000's tonnes) 41 144 179 400
Ore grade (%) 1.9 1.9 1.8 1.5
Processing (3)
Sulphide Ore processed
(000's tonnes) - - - 334
Contained copper (tonnes) - - - 6,552
Sulphide ore grade processed (%) - - - 2.0
Recovery (%) - - - 78
Copper in concentrate
produced (tonnes) - - - 5,031
Gold in concentrate
produced (ounces) - - - 10,355
Sulphide Circuit Costs
(per lb) (4)(5)
Mining - - - $0.40
Processing - - - 0.77
Site Administration - - - 0.08
TC RCs and freight parity charges - - - 0.86
Gold / Acid credit - - - (0.15)
Sulphide Circuit Total Cash
Costs (C1) - - - $1.96
Sulphide Circuit Total Costs (C3) - - - $2.45
Revenues ($ millions) (3)
Copper in concentrates - - - $5.6
Gold - - - 1.6
Total revenues - - - $7.2
Copper in concentrate
sold (tonnes) - - - 1,308
Gold sold (ounces) - - - 2,516
--------------------------------------------------------------------------
Frontier Production Statistics
Mining
Waste mined (000's tonnes) - - - -
Ore mined (000's tonnes) - - - -
Ore grade (%) - - - -
Processing (3)
Sulphide Ore processed
(000's tonnes) - - - -
Contained copper (tonnes) - - - -
Sulphide ore grade processed (%) - - - -
Recovery (%) - - - -
Copper in concentrate
produced (tonnes) - - - -
Sulphide Circuit Costs
(per lb)(4)
Mining - - - -
Processing - - - -
Site Administration - - - -
TC RCs and freight
parity charges - - - -
Sulphide Circuit Total Cash
Costs (C1) - - - -
Sulphide Circuit Total Costs (C3) - - - -
Revenues ($ millions) (3)
Copper in concentrates - - - -
Copper in concentrate
sold (tonnes) - - - -
--------------------------------------------------------------------------
Bwana/Lonshi Production Statistics
Mining
Waste mined (000's tonnes) 3,241 5,607 5,915 4,081
Ore mined (000's tonnes) 147 183 110 80
Ore grade (%) 8.4 10.7 11.9 10.4
Processing
Oxide Ore processed
(000's tonnes) 335 314 322 294
Contained copper (tonnes) 13,401 15,625 15,011 13,037
Oxide ore grade processed (%) 4.0 5.0 4.7 4.3
Recovery (%) 87 87 89 96
Copper cathode produced (tonnes) 11,718 13,569 13,302 12,479
Acid produced (tonnes) 68,195 71,421 63,830 73,901
Surplus acid (tonnes) 937 910 508 8
Oxide Circuit Costs
(per lb)(4)(5)
Mining $0.41 $0.32 $0.50 $0.60
Processing 0.38 0.35 0.38 0.43
Site Administration 0.10 0.10 0.10 0.07
Gold / Acid credit (0.09) (0.08) (0.06) (0.09)
Oxide Circuit Total Cash
Costs (C1) $0.80 $0.69 $0.92 $1.01
Oxide Circuit Total Costs (C3) $1.10 $0.98 $1.18 $1.26
Revenues ($ millions)
Copper cathodes $62.0 $104.5 $99.2 $75.4
Copper cathodes sold (tonnes) 11,797 13,648 12,954 12,766
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Statement of Operations 2007 2007 2007 2007 2008
and Retained Earnings Q1 Q2 Q3 Q4 Q1
(millions, except where
indicated)
Revenues
Current period copper
sales (1) $270.9 $315.7 $460.2 $448.4 $441.8
Prior period
provisional copper
adjustments (2) (17.6) 22.6 3.2 (34.7) 44.5
Other revenues 8.0 12.5 20.4 29.6 25.2
Total revenues 261.3 350.8 483.8 443.3 511.5
Cost of sales 101.9 121.3 152.6 168.4 137.1
Net earnings 78.3 123.1 183.6 135.3 182.0
Basic earnings per
share $1.16 $1.83 $2.71 $2.00 $2.68
Diluted earnings
per share $1.14 $1.79 $2.66 $1.97 $2.65
Copper selling price
Current period copper
sales (per lb) $2.96 $3.28 $3.58 $2.97 $3.43
Prior period
provisional
adjustments (per lb) (0.18) 0.23 0.02 (0.21) 0.32
Gross copper selling
price (per lb) 2.78 3.51 3.60 2.76 3.75
Tolling and refining
charges (per lb) (0.06) (0.03) (0.05) (0.06) (0.05)
Freight parity
charges (per lb) (0.13) (0.10) (0.10) (0.14) (0.19)
Realized copper
price (per lb) 2.59 3.38 3.45 2.56 3.51
Average LME cash
copper price (per lb) 2.69 3.46 3.50 3.28 3.52
Realized gold price
(per oz) $661 $629 $700 $736 $868
Average gold price
(per oz) $650 $667 $681 $788 $927
Total copper sold
(tonnes)(3) 44,315 45,366 60,904 73,322 62,802
Total copper produced
(tonnes) (3) 46,403 49,979 57,565 72,746 75,616
Total gold sold
(ounces) (3) 12,004 19,422 29,182 40,081 29,071
Cash Costs (C1)
(per lb) (4)(5) $1.06 $1.12 $0.98 $0.98 $0.99
Total Costs (C3)
(per lb) (4)(5) $1.30 $1.38 $1.22 $1.19 $1.25
--------------------------------------------------------------------------
Financial Position
Working capital
(restated) $246.7 $390.8 $464.8 $457.3 $575.0
Copper in concentrate
inventory (tonnes)
Kansanshi 7,102 10,578 9,733 8,325 14,243
Guelb Moghrein 10,182 10,897 8,483 2,867 1,057
Frontier - - - 7,104 16,328
Total copper in
concentrate
inventory (tonnes) 17,284 21,475 18,216 18,296 31,628
Total assets $1,797.1 $2,035.4 $2,300.4 $2,682.7 $2,917.9
Weighted average
# shares (000's) 67,318 67,531 67,681 67,689 67,837
--------------------------------------------------------------------------
Cash Flows from
Operating activities
Before working
capital movements $118.9 $175.2 $256.9 $220.8 $272.6
After working
capital movements 74.6 40.5 201.6 224.1 143.5
Financing activities (25.8) 38.0 (42.8) 50.6 20.1
Investing activities (102.0) (114.8) (96.2) (297.3) (94.0)
Cash Flows from
Operating activities
per share
Before working
capital movements $1.77 $2.59 $3.80 $3.26 $4.02
After working
capital movements $1.11 $0.60 $2.98 $3.29 $2.12
--------------------------------------------------------------------------
Kansanshi Production
Statistics
Mining
Waste mined
(000's tonnes) 5,316 6,681 6,482 6,482 3,671
Ore mined
(000's tonnes) 2,600 3,371 4,650 4,867 5,433
Ore grade (%) 1.5 1.6 1.6 1.8 1.6
Processing (3)
Sulphide Ore processed
(000's tonnes) 1,171 1,372 1,759 1,830 1,891
Oxide Ore processed
(000's tonnes) 1,263 1,499 1,465 1,538 1,455
Contained copper
(tonnes) 38,231 36,766 41,605 51,572 55,995
Sulphide ore grade
processed (%) 0.8 1.1 1.0 1.3 1.3
Oxide ore grade
processed (%) 1.8 1.4 1.7 1.6 1.8
Recovery (%) 93 99 99 99 93
Copper cathode
produced (tonnes) 22,823 20,322 23,705 26,399 27,522
Copper cathode tolled
produced (tonnes) 5,521 12,204 14,314 16,142 8,219
Copper in concentrate
produced (tonnes) 7,056 3,727 3,140 8,471 16,562
Total copper
production 35,400 36,253 41,159 51,012 52,303
Concentrate grade (%) 25.2 26.6 27.8 28.3 27.6
Combined Costs
(per lb) (4)(5)
Mining $0.20 $0.24 $0.24 $0.20 $0.20
Processing 0.54 0.59 0.59 0.53 0.50
Site Administration 0.03 0.02 0.03 0.03 0.02
TC RCs and freight
parity charges 0.14 0.16 0.15 0.18 0.15
Gold / Acid credit (0.06) (0.06) (0.07) (0.09) (0.08)
Combined Total Cash
Costs (C1) $0.85 $0.95 $0.94 $0.85 $0.79
Combined Total
Costs (C3) $1.05 $1.17 $1.13 $0.86 $0.92
Oxide Circuit Costs
(per lb) (4)(5)
Mining $0.16 $0.22 $0.19 $0.18 $0.16
Processing 0.56 0.68 0.64 0.64 0.59
Site Administration 0.03 0.02 0.03 0.03 0.03
Oxide Circuit Total
Cash Costs (C1) $0.75 $0.92 $0.86 $0.85 $0.78
Oxide Circuit Total
Costs (C3) $0.92 $1.12 $1.02 $0.86 $0.88
Sulphide Circuit Costs
(per lb) (4)(5)
Mining $0.28 $0.26 $0.32 $0.23 $0.24
Processing 0.45 0.48 0.52 0.39 0.39
Site Administration 0.03 0.02 0.03 0.03 0.02
TC RCs and freight
parity charges 0.42 0.39 0.35 0.39 0.33
Gold / Acid credit (0.18) (0.14) (0.17) (0.20) (0.17)
Sulphide Circuit Total
Cash Costs (C1) $1.00 $1.01 $1.05 $0.84 $0.81
Sulphide Circuit Total
Costs (C3) $1.25 $1.24 $1.29 $0.86 $0.95
Revenues ($ millions)(3)
Copper cathodes $175.8 $249.1 $307.1 $268.0 $305.5
Copper in concentrates 42.6 6.9 16.0 37.2 67.9
Gold 4.8 4.7 6.3 10.2 8.8
Total revenues $223.2 $260.7 $329.4 $315.4 $382.2
Copper cathode
sold (tonnes) 22,798 20,207 24,909 27,897 29,811
Copper tolled cathode
sold (tonnes) 5,521 12,204 14,314 16,142 8,219
Copper in concentrate
sold (tonnes) 9,000 250 2,696 7,927 8,981
Gold sold (ounces) 7,764 7,118 9,862 16,053 11,995
--------------------------------------------------------------------------
Guelb Moghrein
Production Statistics
Mining
Waste mined
(000's tonnes) 1,610 1,400 1,487 1,358 1,388
Ore mined (000's tonnes) 462 539 674 650 662
Ore grade (%) 1.4 1.4 1.3 1.4 1.3
Processing (3)
Sulphide Ore processed
(000's tonnes) 410 464 509 470 517
Contained copper
(tonnes) 7,791 8,894 10,006 8,410 9,241
Sulphide ore grade
processed (%) 1.9 1.9 2.0 1.8 1.8
Recovery (%) 83 79 81 85 83
Copper in concentrate
produced (tonnes) 6,446 7,050 8,101 7,158 7,668 Gold in concentrate
produced (ounces) 13,588 12,814 14,699 13,060 14,191
Sulphide Circuit Costs
(per lb) (4)(5)
Mining $0.21 $0.17 $0.12 $0.20 $0.20
Processing 0.56 0.52 0.47 0.64 0.63
Site Administration 0.07 0.06 0.07 0.22 0.13
TC RCs and freight
parity charges 0.66 0.43 0.38 0.57 0.38
Gold / Acid credit (0.21) (0.48) (0.78) (1.26) (0.97)
Sulphide Circuit Total
Cash Costs (C1) $1.29 $0.71 $0.26 $0.37 $0.37
Sulphide Circuit
Total Costs (C3) $1.66 $1.09 $0.76 $1.05 $0.89
Revenues ($ millions)(3)
Copper in concentrates $12.8 $41.2 $74.1 $55.3 $67.2
Gold 3.1 7.6 14.1 19.3 16.4
Total revenues $15.9 $48.8 $88.2 $74.6 $83.6
Copper in concentrate
sold (tonnes) 2,332 6,336 10,514 12,774 9,757
Gold sold (ounces) 4,240 12,304 19,320 24,028 17,076
--------------------------------------------------------------------------
Frontier Production
Statistics
Mining
Waste mined
(000's tonnes) 888 2,857 3,619 2,810 2,225
Ore mined
(000's tonnes) 81 160 1,442 2,042 1,064
Ore grade (%) 1.1 0.9 1.0 1.2 1.8
Processing (3)
Sulphide Ore processed
(000's tonnes) - - - 835 1,499
Contained copper
(tonnes) - - - 11,872 18,238
Sulphide ore grade
processed (%) - - - 1.4 1.2
Recovery (%) - - - 73 74
Copper in concentrate
produced (tonnes) - - - 8,712 13,437
Sulphide Circuit Costs
(per lb) (4)
Mining - - - $0.41 $0.61
Processing - - - 0.32 0.29
Site Administration - - - 0.17 0.15
TC RCs and freight
parity charges - - - 0.39 0.65
Sulphide Circuit Total
Cash Costs (C1) - - - $1.29 $1.70
Sulphide Circuit Total
Costs (C3) - - - $1.59 $2.18
Revenues ($ millions)(3)
Copper in concentrates - - - $16.1 $32.6
Copper in concentrate
sold (tonnes) - - - 2,684 4,214
--------------------------------------------------------------------------
Bwana/Lonshi Production
Statistics
Mining
Waste mined
(000's tonnes) 2,105 3,425 2,992 1,732 898
Ore mined
(000's tonnes) 16 94 160 82 37
Ore grade (%) 7.5 6.1 6.8 6.1 4.4
Processing
Oxide Ore processed
(000's tonnes) 242 327 353 355 242
Contained copper
(tonnes) 5,007 7,653 9,819 6,787 2,279
Oxide ore grade
processed (%) 2.1 2.3 2.8 1.9 0.9
Recovery (%) 91 87 85 86 97
Copper cathode
produced (tonnes) 4,557 6,676 8,305 5,864 2,208
Acid produced (tonnes) 67,227 69,108 67,537 72,477 66,414
Surplus acid (tonnes) 586 1,483 11 - 10
Oxide Circuit Costs
(per lb) (4)(5)
Mining $1.49 $1.57 $1.04 $1.37 $1.65
Processing 1.05 0.81 0.65 0.90 2.15
Site Administration 0.20 0.15 0.21 0.35 0.58
Gold / Acid credit (0.24) (0.14) (0.09) (0.17) (0.78)
Oxide Circuit Total
Cash Costs (C1) $2.50 $2.39 $1.81 $2.45 $3.60
Oxide Circuit Total
Costs (C3) $2.92 $2.77 $2.25 $2.81 $4.13
Revenues ($ millions)
Copper cathodes $22.1 $41.2 $66.1 $37.1 $13.1
Copper cathodes
sold (tonnes) 4,664 6,369 8,471 5,898 1,820
--------------------------------------------------------------------------
(1) Recognized at the settlement price or the LME copper price at the end
of the respective period
(2) The provisional adjustment reflects the settlement or provisional
price adjustment of prior period copper sales, therefore the sum of
the periods will not equal the year to date
(3) Copper sold or produced does not include tonnes sold or produced prior
to achieving commercial production
(4) For the definition of cash and total costs, reference should be made
to the regulatory disclosures section
(5) Mining costs included in cash and total costs have been restated to
reflect the removal of the deferred stripping accounting policy and
the retroactive restatement of prior period balances
Consolidated Balance Sheets
(unaudited)
(expressed in millions of US dollars, except where indicated)
March 31, December 31,
2008 2007
Assets
Current assets
Cash and cash equivalents 269.6 200.0
Restricted cash (note 7) - 22.5
Accounts receivable 373.1 272.0
Inventory (note 3) 341.7 279.4
Current portion of other assets (note 6) 12.0 12.7
--------------------------------------------------------------------------
996.4 786.6
Available-for-sale investments (note 4) 512.1 567.0
Property, plant and equipment (note 5) 1,393.9 1,320.5
Other assets (note 6) 15.5 8.6
--------------------------------------------------------------------------
2,917.9 2,682.7
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 127.9 104.9
Current taxes payable 176.6 127.2
Current portion of long-term debt (note 7) 89.6 73.7
Current portion of other liabilities (note 8) 27.2 23.5
--------------------------------------------------------------------------
421.3 329.3
Long-term debt (note 7) 300.7 287.5
Other liabilities (note 8) 38.9 40.1
Future income tax liabilities 225.0 224.4
--------------------------------------------------------------------------
985.9 881.3
Minority interests 264.1 215.4
--------------------------------------------------------------------------
1,250.0 1,096.7
--------------------------------------------------------------------------
Shareholders' equity
Capital stock 397.2 396.0
Retained earnings 1,133.3 987.4
Accumulated other comprehensive income 137.4 202.6
--------------------------------------------------------------------------
1,667.9 1,586.0
--------------------------------------------------------------------------
2,917.9 2,682.7
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Commitments and contingencies (notes 12 and 13)
Subsequent event (note 14)
Approved by the Board of Directors
Peter St George Andrew Adams
Director Director
The accompanying notes are an integral part of these consolidated financial
statements. For a copy of the notes visit the Company's website at
www.first-quantum.com.
Consolidated Statements of Earnings and Comprehensive Income
(unaudited)
(expressed in millions of US dollars, except where indicated)
Three months ended
March 31
2008 2007
Sales revenues
Copper 486.3 253.3
Gold 25.2 7.9
Acid - 0.1
--------------------------------------------------------------------------
511.5 261.3
Cost of sales (137.1) (101.9)
Depletion and amortization (20.3) (13.6)
--------------------------------------------------------------------------
354.1 145.8Other expenses/income
Exploration (5.8) (2.6)
General and administrative (6.7) (5.7)
Interest (8.6) (7.6)
Other expenses/income (note 10) (4.3) 1.5
--------------------------------------------------------------------------
(25.4) (14.4)
--------------------------------------------------------------------------
Earnings before income taxes and minority interests 328.7 131.4
Income taxes (98.0) (31.7)
Minority interests (48.7) (21.4)
--------------------------------------------------------------------------
Net earnings for the period 182.0 78.3
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Other comprehensive income
Unrealized gain (loss) on available-for-sale
investments, net of tax of $11.6 and $(3.0) (65.2) 14.8
--------------------------------------------------------------------------
(65.2) 14.8
--------------------------------------------------------------------------
Comprehensive income 116.8 93.1
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Earnings per common share
Basic $ 2.68 $ 1.16
Diluted $ 2.65 $ 1.14
Weighted average shares outstanding (000's)
Basic 67,837 67,318
Diluted 68,728 68,601
Total shares issued and outstanding (000's) 68,180 67,470
The accompanying notes are an integral part of these consolidated financial
statements. For a copy of the notes visit the Company's website at
www.first-quantum.com.
Consolidated Statements of Changes in Shareholders' Equity
For the years ended December 31, 2007 and 2006
(unaudited)
(expressed in millions of US dollars, except where indicated)
Three months ended
March 31
2008 2007
Capital stock
Common shares
Balance - beginning of period 415.2 399.6
Stock options exercised 1.7 3.0
--------------------------------------------------------------------------
Balance - end of period 416.9 402.6
--------------------------------------------------------------------------
Treasury shares
Balance - beginning of period (34.3) (15.6)
Shares purchased (2.5) (4.0)
--------------------------------------------------------------------------
Balance - end of period (36.8) (19.6)
--------------------------------------------------------------------------
Contributed surplus
Balance - beginning of period 15.1 12.0
Compensation expense for the period 2.4 2.3
Transfers upon exercise of stock options (0.4) (0.8)
--------------------------------------------------------------------------
Balance - end of period 17.1 13.5
--------------------------------------------------------------------------
Total capital stock 397.2 396.5
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Retained earnings
Balance - beginning of period 987.4 518.8
Net earnings for the period 182.0 78.3
Dividends (36.1) (36.4)
--------------------------------------------------------------------------
Balance - end of period 1,133.3 560.7
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Accumulated other comprehensive income
Balance - beginning of period 202.6 (2.5)
Change in fair value of available-for-sale
investments (65.2) 14.8
--------------------------------------------------------------------------
Balance - end of period 137.4 12.3
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Retained earnings and accumulated other
comprehensive income 1,270.7 573.0
--------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements. For a copy of the notes visit the Company's website at
www.first-quantum.com.
Consolidated Statements of Cash Flows
(unaudited)
(expressed in millions of US dollars, except where indicated)
Three months ended
March 31
2008 2007
Cash flows from operating activities
Net earnings for the period 182.0 78.3
Items not affecting cash
Depletion and amortization 20.3 13.6
Minority interests 48.7 21.4
Unrealized foreign exchange loss 4.2 0.9
Future income tax expense 15.3 1.7
Stock-based compensation expense 2.4 2.3
Unrealized derivative instruments gain (1.8) (1.3)
Other 1.5 2.0
--------------------------------------------------------------------------
272.6 118.9
Change in non-cash operating working capital
Increase in accounts receivable and other (100.3) (7.2)
Increase in inventory (60.5) (22.7)
Decrease in accounts payable and accrued liabilities (15.2) (19.5)
Increase in current taxes payable 49.4 9.3
Long term incentive plan contributions (2.5) (4.0)
--------------------------------------------------------------------------
143.5 74.8
--------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from long-term debt 50.0 -
Repayments of long-term debt (25.3) (25.6)
Proceeds on issuance of common shares 1.3 2.2
Other (5.9) (2.4)
--------------------------------------------------------------------------
20.1 (25.8)
--------------------------------------------------------------------------
Cash flows from investing activities
Restricted cash 22.5 15.0
Payments for property, plant and equipment (94.6) (55.4)
Acquisition of available-for-sale investments (21.9) (61.6)
--------------------------------------------------------------------------
(94.0) (102.0)
--------------------------------------------------------------------------
Effect of exchange rate changes on cash - (0.2)
Increase (decrease) in cash and cash equivalents 69.6 (53.2)
Cash and cash equivalents - beginning of period 200.0 249.5
--------------------------------------------------------------------------
Cash and cash equivalents - end of period 269.6 196.3
--------------------------------------------------------------------------
--------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements. For a copy of the notes visit the Company's website at
www.first-quantum.com.
Segmented Information
(unaudited)
(expressed in millions of US dollars, except where indicated)
For the three month period ended March 31, 2008, segmented information is
presented as follows:
--------------------------------------------------------------------------
Guelb Bwana/ Corpor-
Kansanshi Moghrein Frontier Lonshi Kolwezi ate Total
--------------------------------------------------------------------------
Segmented
revenues 382.2 83.6 32.6 26.5 - 6.4 531.3
Less inter-
segment
revenues - - - (13.4) - (6.4) (19.8)
--------------------------------------------------------------------------Revenues 382.2 83.6 32.6 13.1 - - 511.5
Cost of
sales (79.8) (26.4) (13.4) (17.5) - - (137.1)
Depletion
and
amortization (14.4) (2.8) (1.1) (2.0) - - (20.3)
--------------------------------------------------------------------------
Operating
profit
(loss) 288.0 54.4 18.1 (6.4) - - 354.1
Interest
on long-
term debt (2.0) (0.6) (4.4) - - (1.6) (8.6)
Other (6.6) (2.6) 0.3 (1.5) - (6.4) (16.8)
--------------------------------------------------------------------------
Segmented
profit
before
undernoted
items 279.4 51.2 14.0 (7.9) - (8.0) 328.7
Income
taxes (86.6) - (11.8) (1.1) - 1.5 (98.0)
Minority
interests (38.7) (9.9) (0.1) - - - (48.7)
--------------------------------------------------------------------------
Segmented
profit
(loss) 154.1 41.3 2.1 (9.0) - (6.5) 182.0
--------------------------------------------------------------------------
Property,
plant and
equipment 558.2 108.8 243.0 45.1 434.6 4.2 1,393.9
Total
assets 1,022.8 225.4 363.2 128.4 444.8 733.3 2,917.9
Capital
expenditures 53.0 7.7 13.3 4.4 30.4 - 108.8
--------------------------------------------------------------------------
--------------------------------------------------------------------------
For the three month period ended March 31, 2007, segmented information is
presented as follows:
--------------------------------------------------------------------------
Guelb Bwana/ Corpor-
Kansanshi Moghrein Frontier Lonshi Kolwezi ate Total
--------------------------------------------------------------------------
Segmented
revenues 223.2 15.9 - 30.5 - 3.4 273.0
Less inter-
segment
revenues - - - (8.3) - (3.4) (11.7)
--------------------------------------------------------------------------
Revenues 223.2 15.9 - 22.2 - - 261.3
Cost of
sales (68.9) (4.1) - (28.9) - - (101.9)
Depletion
and
amortization (9.3) (1.4) - (2.9) - - (13.6)
--------------------------------------------------------------------------
Operating
profit
(loss) 145.0 10.4 - (9.6) - - 145.8
Interest
on long-
term debt (4.3) (1.4) - (0.1) - (1.8) (7.6)
Other (2.0) (0.1) - (0.4) - (4.3) (6.8)
--------------------------------------------------------------------------
Segmented
profit
before
undernoted
items 138.7 8.9 - (10.1) - (6.1) 131.4
Income
taxes (34.9) - - 2.1 - 1.1 (31.7)
Minority
interests (19.7) (1.7) - - - - (21.4)
--------------------------------------------------------------------------
Segmented
profit (loss) 84.1 7.2 - (8.0) - (5.0) 78.3
--------------------------------------------------------------------------
Property,
plant
and
equipment 424.1 104.2 149.5 46.8 391.0 0.7 1,116.3
Total
assets 691.2 161.2 150.9 133.6 391.8 268.4 1,797.1
Capital
expenditures 21.7 1.6 33.1 0.7 0.7 6.6 64.4
--------------------------------------------------------------------------
--------------------------------------------------------------------------
12g3-2b-82-4461
Listed in Standard and Poor's
Contacts: First Quantum Minerals Ltd. Clive Newall President +44 140 327 3484 +44 140 327 3494 (FAX) Email: clive.newall@fqml.com Website: www.first-quantum.com Hogarth Partnership Ltd. Harriet Pask +44 (0) 20 7357 9477 Hogarth Partnership Ltd. Sarah MacLeod +44 (0) 20 7357 9477 |
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