Mr. Clive Newall reports

FIRST QUANTUM MINERALS UPDATES ON KEY DEVELOPMENTS AND ACTIONS

First Quantum Minerals Ltd. has provided an update on key developments and actions in response to the low commodity prices and market volatility (in U.S. dollars, except where noted otherwise).

In outlining the actions completed or under way, Philip Pascall, chairman and chief executive officer, said: "We have taken clear and decisive actions to protect First Quantum in the current market conditions. Our focus has been clear. It is first to ensure that profitability and cash flow from our mining operations are maximized and protected in these volatile market conditions and sustained lower commodity prices, and, second, that cash outflows are limited to essential and economically attractive projects so that our balance sheet integrity is maintained.

"Additional initiatives to further strengthen the balance sheet are being prioritized and are under active review. We will report further on these as appropriate."

Key developments and initiatives:

• Terms of a replacement Cobre Panama precious-metal stream agreement finalized; capital costs estimate lowered:
  • A revised precious-metal stream agreement has been agreed with Franco-Nevada Corp. Under the revised agreement, it is expected that Franco-Nevada's initial contribution of between $330-million to $340-million will be paid to First Quantum during October. Additional details are contained in a separate joint news release.
  • The estimated capital cost of the company's flagship project, Cobre Panama, has been reviewed in detail and reappraised. It is now estimated that the total project cost will be $5.95-billion, approximately 7 per cent below previous estimates, with potential for further improvements.
  • Capital costs have been reduced due to better construction efficiency, continued optimization of detailed design, and lower costs for equipment and bulk materials such as rebar and structural steel.
  • Over all the project is approximately 35 per cent complete, and experience to date allows greater confidence in forecasting total project costs. The project remains on track for process commissioning and first concentrate production in late 2017.
  • The port is now fully operational and has received direct international shipments.
  • Early priority is being given to the completion of the power station, taking advantage of virtually all required materials being available on site. Mechanical installation works are progressing well.
  • Project costs incurred to date amount to $2,621-million, of which First Quantum's partner in the project, KPMC, has contributed $524-million. The remaining estimated costs to completion will be met by an additional contribution from KPMC of $666-million, $1-billion payable by Franco-Nevada under the precious-metal streaming agreement and $1,663-million by First Quantum.
• Zambian power stabilizing; Sentinel anticipates commercial-level production by end of 2015:
  • The Zambian power situation is stabilizing. Full power of 153 megawatts is currently being provided to the Kansanshi mine and smelter, and 55 MW to the one power line currently connected to the Sentinel mine.
  • Sentinel's ramp-up to date has been affected by the limited power supply. Despite this, good progress has been made. Construction of the second power line connecting Sentinel to Lusaka West is complete and scheduled to be energized shortly. Once the second power line is connected and energized, Sentinel will be entitled to its full power requirement of 160 MW. This will allow for the mine to ramp up toward commercial-level production expected by the end of 2015.
  • Zesco, the state-run power company, has requested the mining industry to use supplementary power for 30 per cent of its requirements. Discussions are currently under way regarding the related tariffs for this supplementary power. The company expects full production at both Kansanshi and Sentinel through the purchase and sharing of this power.
  • It is expected that the country's generating capacity will improve following the rainy season starting in November. In addition, approximately 400 MW of new power-generation capacity is expected on-line in Zambia in 2016 from projects nearing completion (300 MW thermal and 100 MW hydro).
• Production and cost guidance for 2015 revised:
  • Copper production for 2015 is now expected to be between 385,000 and 410,000 tonnes, excluding Sentinel precommercial commissioning production of between 30,000 and 50,000 tonnes.
  • The C1 cost estimate is lowered to between $1.20 and $1.35 per pound.
• Management is employing a number of measures to enhance the company's capital position and maintain financial stability:
  • With borrowings at elevated levels during a period of development project expenditure, the maintenance of available project financing, the strengthening of the company's balance sheet and further cost reductions remain key priorities;
  • Initiatives to strengthen and protect cash flow include:
    • In addition to the reduction in capital for Cobre Panama, other planned capital programs across the company have been reduced or rephased by approximately $700-million;
    • Hedged approximately 170,000 tonnes of copper production at an average price of $2.411 per pound ($5,316 per tonne) over the balance of 2015 and well into 2016;
    • Reduced the work force by 644 and lowered salaries by up to 20 per cent, which, when combined with a detailed review of all other operating costs, have led to annual savings of approximately $420-million;
    • Realized $215-million from the settlement of the ENRC promissory note, with a further $85-million to be received in October;
  • A commitment to reduce net debt by over $1-billion through a combination of asset sales and other strategic initiatives by the end of first quarter 2016;
  • With Sentinel moving toward commercial production, Cobre Panama will be the only significant development project. Even at current commodity prices, Cobre Panama remains economically highly attractive. The initiatives now being undertaken are aimed at protecting against disruption to the planned time table to completion for Cobre Panama, and, importantly, the current strong support of the company's lenders is maintained. Progress and more details on these specific initiatives will be announced at the appropriate time.

We seek Safe Harbor.