First Quantum Minerals (Zambia) Q1 2021 results

By Published On: July 26th, 2021Categories: Corporate announcement, Earnings

First Quantum Minerals (FQMZ.zm) Q12021 Interim Report

TORONTO, Ontario (April 27, 2021) – First Quantum Minerals Ltd. (“First Quantum” or the “Company”) (TSX:FM) today reported for the three months ended March 31, 2021 (“Q1”) comparative earnings of $150 million ($0.22 per share), net earnings attributable to shareholders of the Company of $142 million ($0.21 per share ) and cash flows from operating activities of $743 million ($1.08 per share).

“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 production 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 production 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.
  • 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 share) 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.

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.

Tax

Excluding 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%.

Depreciation

Depreciation expense for the quarter was $286 million. The full year 2021 depreciation expense is expected to be approximately $1,125 million.

CLIMATE CHANGE POLICY

The 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-19

The 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.</