Mr. Tristan Pascall reports

FIRST QUANTUM MINERALS REPORTS SECOND QUARTER 2023 RESULTS

First Quantum Minerals Ltd. has released results for the three months ended June 30, 2023, of net earnings attributable to shareholders of the company of $93-million (13-cent earnings per share) and adjusted earnings (1) of $85-million (12-cent adjusted earnings per share (2)). (Dollar amounts are in U.S. dollars except where noted otherwise.)

"After a challenging start to the year, it is pleasing to see the improvements at our three largest operations. During the second quarter, Sentinel achieved its highest monthly production for the year in May, and Cobre Panama and Kansanshi achieved the same records in June. We remain well on track for a stronger performance in the second half of the year. Our brownfield projects achieved important milestones during the quarter with the Enterprise project producing first nickel concentrate and both Enterprise and the CP100 expansion periodically demonstrating nameplate capacity," commented Tristan Pascall, chief executive officer. "While we expect the positive operational momentum to continue into the second half of the year, we are cognizant of the global economic slowdown. I believe that we are well positioned to navigate through the near-term challenges with our focus on improving productivity and unit costs."

Second quarter 2023 summary

In Q2 2023, First Quantum reported gross profit of $265-million, EBITDA (earnings before interest, taxes, depreciation and amortization) (1) of $568-million, net earnings attributable to shareholders of 13 cents per share, and adjusted earnings of 12 cents per share (2). Relative to the first quarter of this year, second quarter financial results benefited from higher copper sales volumes and lower input costs, which were partially offset by lower realized copper and nickel prices.

Total copper production for the second quarter was 187,175 tonnes, a 35-per-cent increase from Q1 2023. The quarter-over-quarter increase in production was attributable to an improvement in grades at Cobre Panama, Kansanshi and Sentinel and higher throughput at Cobre Panama and Sentinel.

Copper C1 cash cost (2) of $1.98 per pound for Q2 2023 was 26 cents per pound lower than Q1 2023. The improvement in copper C1 cash costs (2) was related to improved production volumes and lower fuel and explosive costs.

Production at the three major copper operations is expected to be higher in the second half of the year. Guidance for copper, gold and nickel production remains unchanged; however, full-year production for each metal is expected to be toward the lower end of guidance to reflect year-to-date production. C1 cash cost (2) and all-in sustaining costs (2) for both copper and nickel remain unchanged. Unit cash costs (2) are expected to decrease in the second half of the year with higher production and are expected to be toward the upper end of guidance for the full year.

(1) EBITDA and adjusted earnings are non-generally accepted accounting principle financial measures. These measures do not have a standardized meaning prescribed by international financial reporting standards and might not be comparable with similar financial measures disclosed by other issuers.

(2) Adjusted earnings per share, copper C1 cash cost and all-in sustaining costs are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable with similar financial measures disclosed by other issuers.

Q2 2023 operational highlights

Total copper production for Q2 2023 was 187,175 tonnes, up from the 138,753 tonnes reported in Q1 2023 as each of the company's three largest operations reported improved grades during the period. Copper sales volumes in Q2 2023 totalled 177,362 tonnes, 9,813 tonnes lower than production.

• Cobre Panama produced 90,086 tonnes of copper in Q2 2023, an increase of 24,659 tonnes from the previous quarter, as the current quarter saw improved grades and higher tonnes milled from the continued successful ramp-up of the CP 100 expansion project. Copper C1 cash cost of $1.71 per lb was six cents per lb higher than the previous quarter due to lower gold byproduct credits. Two thousand twenty-three production guidance for Cobre Panama remains unchanged at 350,000 to 380,000 tonnes of copper and 140,000 to 160,000 ounces of gold. For full-year 2023, grades and recoveries are expected to be broadly consistent with 2022 regardless of the increased processing throughput, with some fluctuation from quarter to quarter. Ramp-up of the CP100 expansion continues, with the expansion facilities periodically demonstrating nameplate capacity during the second quarter, and the expansion to 100 million tonnes per annum remains on schedule for the end of 2023. Significant progress has been made on the prestrip work for the Colina pit and earthworks for the associated overland conveyor and in-pit crushing facility. The first crusher at Colina is expected to be commissioned in 2024. Construction of the molybdenum recovery circuit is progressing well with completion of construction and commencement of commissioning expected by the end of 2023 with first molybdenum concentrate production to commence in the first quarter of 2024.
• Kansanshi's copper production of 34,657 tonnes in Q2 2023 was 5,974 tonnes higher than the previous quarter. Kansanshi production improved in the second quarter with mining cutbacks at elevated benches with historically higher grades, which will continue to be the focus for the rest of the year. Copper C1 cash cost (1) of $2.36 per lb was 52 cents lower than Q1 2023 mainly due to lower fuel costs and improved production volumes. Production in 2023 is expected to be at the lower end of the guidance range of 130,000 to 150,000 tonnes of copper and 95,000 to 105,000 ounces of gold. Mining fleet deployment changes over the past six months have enabled the operation to open up mining areas, placing less reliance on low-grade ore stockpiles. Additionally, mining will focus on cutbacks M15 and M17 at upper elevations in the main pit, where mineralization is predominantly disseminated in stratigraphy and with wider veins and, therefore, higher grades. This will continue to be a focus for the rest of the year, which will benefit production through the rest of 2023.
• Sentinel reported copper production of 54,045 tonnes in Q2 2023, 17,813 tonnes higher than the previous quarter, as the operation saw steady improvement after the impact of record heavy rains experienced in the first quarter. Mining activities continued to be impacted by excess water in the pit until mid-May, when dewatering activities reduced water levels in the pit, allowing operations to regain access to higher-grade ore. Copper C1 cash cost (1) of $2.04 per lb was 66 cents per lb lower than the preceding quarter, reflecting lower fuel costs and higher production volumes. As a result of the challenges encountered at the start of the year, copper production for 2023 is expected to be toward the lower end of guidance of 260,000 to 280,000 tonnes. A drilling contractor will be deployed from July alongside the company's own drill rigs to increase stocks of broken material. The focus will remain on blast quality to improve fragmentation and mine-to-mill optimization. Production is expected to continue to improve in the second half of the year with improved milling rates in line with the comparable period in 2022 and with groundwater now under control, providing full access to high-grade ore. Grade improvement is expected to continue for the rest of the year.
• At Enterprise, first production of nickel concentrate was achieved in the second quarter, with nameplate capacity of the process plant temporarily demonstrated during the second quarter, and first concentrate sale is expected in the third quarter of 2023. The ramp-up continues to commercial production and full plant throughput in 2024. Oxide material is impacting recoveries of the plant, and the ore profile has been updated to reflect the classification of material. Two thousand twenty-three production for Enterprise is expected to be at the lower end of guidance of 5,000 to 10,000 contained tonnes of nickel.

(1) C1 cash costs is a non-GAAP ratio which does not have a standardized meaning prescribed by IFRS and might not be comparable with similar financial measures disclosed by other issuers.

Cobre Panama update

On March 8, 2023, the company and the government of Panama reached an agreement in respect of the terms and conditions for a refreshed concession contract, which is subject to approval by law. The refreshed concession contract provides for an initial 20-year term with a 20-year extension option and possible additional extensions for life of mine. The refreshed concession contract was signed by the GOP and the company on June 26, 2023, having completed the public consultation process, and is currently under the ordinary course of business review by the national comptroller prior to its countersignature. Once counter signed by the comptroller, it is expected to be presented before the National Assembly of Panama during the current legislative term that commenced on July 1, 2023.

Once the agreement is signed and passed into law as expected, payments to cover taxes and royalties up to the year-end 2022 of approximately $395-million are expected to be made within 30 days of the refreshed concession contract being enacted into law. In addition, past due amounts payable for 2023 corporate tax instalments, withholding taxes and quarterly royalty payments will also be due 30 days after being enacted, without penalty or interest. It is intended that the charge relating to taxes and royalties up to the year-end 2022 be excluded from 2023 adjusted earnings. The expected taxes and royalties to the GOP relating to 2023 are $375-million.

Brownfield projects

Construction work for the CP100 expansion project was completed and commissioned in the first quarter. With the expansion facilities periodically demonstrating nameplate capacity in the second quarter, the ramp-up to a throughput rate of 100 Mtpa remains on schedule for the end of 2023.

At the S3 expansion, detailed design is progressing well. Long-lead mining fleet and long-lead process plant equipment have been ordered with deliveries expected to commence in the second half of 2023. Overall project procurement is approximately 33 per cent committed as at the end of the quarter. The majority of the capital spend on the S3 expansion is expected in late 2023 and 2024.

At Enterprise, nameplate capacity of the process plant was temporarily demonstrated during the second quarter. First production of nickel concentrate was achieved in the second quarter, and first concentrate sale is expected in the third quarter of 2023. The ramp-up continues to commercial production and full plant throughput in 2024.

At Las Cruces underground project, work continues to advance with the release of the National Instrument 43-101 technical report on reserves and resources expected later in the year. The proposed underground project involves supplementing the existing copper facilities at Las Cruces with additional processing capacity for zinc, silver and lead. Las Cruces underground project is awaiting board approval, which is not expected before the end of 2023 and will take into consideration prevailing economic conditions and the company's debt reduction objectives.

Greenfield projects

The primary environmental and social impact assessment for Taca Taca was submitted to the Secretariat of Mining of Salta Province in 2019, and supplementary information on tailings and waste management was filed to the authority during 2022. As a part of the revision process, in June, 2023, the company received a second set of observations to the ESIA and is currently working to provide the requested information. Approval of the ESIA is expected in 2023. The phase 3 groundwater exploration campaign concluded during the second quarter of 2023, with 18 pumping wells constructed and tested obtaining positive results. The initial water use permit applications were submitted during the second quarter of 2023, and the remaining will be submitted progressively in 2023.

At Haquira, negotiations for land access to support a drill program were resumed during the second quarter, and agreements were reached with three local communities. The company is working on upgrading camp facilities, preparing required logistics, including local suppliers and workers, renewing and/or progressing applicable environmental permits, and formalizing access contracts, with the aim of starting an infill drilling campaign at Haquira East deposit during the second half of 2023. The company hopes to resume land access discussions with the remaining communities to extend the drilling program into Haquira West and other targets in the area of the project.

Financial highlights:

• Gross profit for the second quarter of $265-million was 5 per cent lower than Q1 2023 due to higher depreciation while EBITDA of $568-million for the same period was 10 per cent higher due to higher sales volumes, partially offset by lower realized metal prices.
• Cash flows from operating activities of $719-million ($1.04 per share) for the quarter were $420-million higher than Q1 2023 due mainly to working capital movements related to trade and other receivables and trade and other payables.
• Net debt (1) decreased by $130-million during the quarter, taking the net debt (1) balance to $5.65-billion as at June 30, 2023. As at June 30, 2023, total debt was $6,528-million (March 31, 2023, total debt was $6,878-million). The decrease in net debt (1) and total debt (1) was attributable to the favourable timing of working capital cash flows.
• On May 17, the company announced an offering of $1.3-billion of senior notes due 2031. Proceeds from the offering were used toward the repayment of $970-million of the company's existing revolving credit facility and a $300-million redemption of the company's outstanding senior notes due 2025.
• On July 25, the company announced an interim dividend of eight Canadian cents per share in respect of the financial year ended Dec. 31, 2023 (July 26, 2022: 16 Canadian cents per share), to be paid on Sept. 19, 2023, to shareholders of record on Aug. 28, 2023.

(1) EBITDA is a non-GAAP financial measure, and net debt is a supplementary financial measure. These measures do not have a standardized meaning prescribed by IFRS and might not be comparable with similar financial measures disclosed by other issuers.

2023 guidance

Production at the three major copper operations is expected to be higher in the second half of the year following a challenging start to the year. Guidance for copper, gold and nickel production remains unchanged; however, full-year production for each metal is expected to be toward the lower end of guidance to reflect year-to-date production.

C1 cash cost and AISC for both copper and nickel remain unchanged; however, full-year costs are expected to be toward the upper end of guidance. Unit cash costs are expected to decrease in the second half of the year with higher production.

Any non-profit-based top-up tax to meet the minimum contribution at Cobre Panama is expected to be recognized within operating profit and AISC. The AISC range remains unchanged and is able to accommodate the expected impact of between nil per lb to five cents per lb.

Guidance for total capital expenditure remains unchanged at $1.6-billion. Guidance excludes any capitalized precommercial production costs. Capital expenditure for the three and six months ended June 30, 2023, was $321-million and $586-million, respectively. Expenditure on the S3 expansion project to date is approximately $76-million, with $35-million spent this year.

Interest expense on debt for full-year 2023 is expected to be approximately $510-million and excludes interest accrued on related-party loans to Cobre Panama and Ravensthorpe, a finance cost accreted on the precious metal streaming arrangement, capitalized interest expense, and accretion on asset retirement obligation. Cash outflow on interest paid is expected to be approximately $505-million for full-year 2023.

The full-year 2023 depreciation expense is expected to be between $1.25-billion to $1,275-million.

At current consensus pricing, the adjusted effective tax rate for the company for full-year 2023 is expected to be between 35 per cent and 40 per cent. It is anticipated that the effective tax rate for the group in the second half of the year will be higher than this rate as the income tax expense is adjusted to the full-year rate under the refreshed concession contract when the agreement is passed into law, rather than the Law 9 basis used in the current quarter.

Environment, social and governance

The company published its primary sustainability report and the 2022 ESG report, as well as the 2022 tax transparency and contributions to governments report, in May, 2023. The latest reports can be found in the ESG analyst centre on the company's website. These include the Task Force on Climate-related Financial Disclosures aligned climate change reports, ESG reports, and tax transparency and contributions to government reports, as well as the company's sustainability policies. Following the publication of the 2022 ESG report, the company hosted its inaugural virtual ESG day in June, 2023. A replay of the webcast can be found on the presentations and events page of the company's website.

Complete financial statements and management's discussion and analysis

The complete consolidated financial statements and management's discussion and analysis for the three and six months ended June 30, 2023, are available at the First Quantum website and at SEDAR, and should be read in conjunction with this news release.

Conference call details

The company will host a conference call and webcast to discuss the results on Wednesday, July 26, 2023, at 9 a.m. ET.

Conference call and webcast details

Toll-free North America:  1-800-319-4610

Toll-free international:  1-604-638-5340

Webcast:  on the company's website

A replay of the webcast will be available on the First Quantum website.

We seek Safe Harbor.