Mr. Tristan Pascall reports

FIRST QUANTUM MINERALS ANNOUNCES 2023 PRELIMINARY PRODUCTION, 2024-2026 GUIDANCE AND BALANCE SHEET INITIATIVES

First Quantum Minerals Ltd. has provided preliminary production for the three months (Q4) and year ended Dec. 31, 2023, guidance for production, capital expenditures and costs for the years 2024 to 2026, and has provided an update on balance sheet initiatives.

"With the suspension of production at Cobre Panama, we are taking decisive action to conserve capital, lower costs and strengthen our financial position. This will enable the continued development of the Kansanshi S3 expansion, which will further strengthen our cash flows when commissioned next year. In parallel, we are advancing several initiatives to give us optionality and flexibility in respect to our balance sheet," commented Tristan Pascall, chief executive officer of First Quantum. "We remain committed to Zambia with the improved investment climate. The strong progress of the S3 expansion project is a reflection of this. It is also pleasing that recent discussions in Panama have been constructive regarding the responsible environmental stewardship of the mine."

Highlights

• Q4 and 2023 production: First Quantum achieved annual copper production of 708,000 tonnes, a 9-per-cent reduction from 2022. After the successful completion of the CP100 expansion project, Cobre Panama delivered annual copper production of 331,000 t before halting operations in November and placing the mine into a phase of preservation and safe management (P&SM). Zambian production of 349,000 t was 10 per cent lower than 2022 due to a combination of lower throughput at both sites and lower grades at Kansanshi. Copper production in Q4 2023 was 160,000 t, 22-per-cent lower than Q4 2022 and 28 per cent lower than Q3 2023 mainly attributable to the ramp down of operations at Cobre Panama in November.
• Three-year guidance: When referring to future and prior year production figures, guidance is presented excluding Cobre Panama. Two thousand twenty-four copper production guidance is between 370,000 to 420,000 t, and is expected to increase to between 400,000 to 460,000 t in 2025 and 2026 as the S3 expansion at Kansanshi comes on line. Total C1 and AISC (all-in sustaining costs) unit cost ranges are in line with prior-year guidance when excluding Cobre Panama. Improvements in operating costs such as fuel, maintenance, contractors and labour mitigate the impact of lower byproduct credits from Kansanshi and lower production at Sentinel. Guidance for gold production has been revised at Kansanshi, in line with an improved understanding of the sources of sulphide copper-gold mineralization at depth. Nickel production guidance for Ravensthorpe has been reduced in response to weak nickel market conditions.
• Balance sheet initiatives: The company has suspended its dividend as a result of Cobre Panama being in a phase of P&SM. Additionally, planned capital programs have been reduced or rephased by approximately $400-million in 2024 and $250-million in 2025. This reflects a halt in capital spend at Cobre Panama and proactive initiatives to offset capital inflation in the Zambian business. The company has commenced discussions with its banking partners to address and extend its bank loan facilities. The company is further evaluating a range of options to maintain a robust financial position and preserve value for its shareholders, including exploring the sale of smaller mines and interests in its larger mining assets.

Cobre Panama update

Cobre Panama currently remains in a phase of P&SM with production halted. Approximately 1,400 workers remain on site to run the P&SM program. Further reductions to a headcount below 1,000 workers may follow depending on environmental stewardship programs. Previous illegal blockages around the mine have been cleared, allowing for the delivery by road and at port of necessary supplies to conduct the P&SM program.

In January, the company and Panama's Ministry of Commerce and Industries (MICI) had preliminary discussions related to the P&SM program and the associated funding of P&SM costs. These costs are expected to range from $15-million to $20-million per month and further reductions could follow depending on environmental stewardship programs. On Jan. 11, Cobre Panama hosted a large delegation, including the Ministers from MICI and the Ministry of the Environment, as well as other government departments and a broad range of civil society organizations, to demonstrate the measures that are being undertaken as part of the P&SM program. At the request of MICI, Cobre Panama will deliver a preliminary draft for the first phase of P&SM on Jan. 16. This will be an initial plan that will require regular adjustments and updates to address additional subsequent project phases and steps as the planning and preparation requirements evolve.

2023 preliminary production

First Quantum achieved annual copper production of 708,000 t in 2023, which was 68,000 t lower than in 2022. Copper production in Q4 2023 was 160,000 t, 46,000 t below Q4 2022 and 62,000 t below Q3 2023. Copper production for the full year and Q4 2023 was impacted by the ramp down of operations at Cobre Panama in November with the operation placed in a phase of P&SM. Production guidance for Cobre Panama was duly suspended.

Copper production at Cobre Panama of 331,000 t for the full year was 19,000 t lower than 2022. Cobre Panama achieved record copper production of 310,000 t to the end of October before ramping down operations in November and entering a phase of P&SM. Copper production in Q4 2023 of 63,000 t was a 27,000 t decrease from Q4 2022 and 50,000 t lower than Q3 2023. Approximately 121,000 dry metric tonnes of copper concentrate remains unsold following disruptions at the Punta Rincon port.

Kansanshi copper production of 135,000 t for the full year was 11,000 t lower than 2022 due to lower feed grades and lower throughput on the sulphide circuit, particularly from the highly competent ore from lower elevations of M11 in the main pit. The variability of grades in ore stockpiles also impacted grades. Copper production in Q4 2023 was 32,000 t, a 3,000 t reduction from Q4 2022 and 8,000 t lower than Q3 2023. Kansanshi production for 2023 was within the revised guidance range of 130,000 to 140,000 t.

Sentinel copper production of 214,000 t for the full year was 28,000 t lower than 2022. Production in Q1 was impacted by excessive rainfall that resulted in the accumulation of water in the high-grade area of the stage 1 pit, which was subsequently cleared by mid-May, 2023. Mining volumes and mill throughput improved in H2 2023 but were lower than anticipated due to the mining of very hard rock in the lower levels of the pit. Q4 2023 copper production of 60,000 t was 13,000 t below Q4 2022 and 4,000 t lower than Q3 2023. Sentinel production for 2023 of 214,000 t was lower than the revised guidance range of 220,000 to 230,000 t.

Other sites achieved consolidated copper production of 28,000 t for the full year, a 10,000 t reduction from 2022 reflecting declining production from short life mines. Copper production at the Cobre Las Cruces mine in Spain ceased in Q2 2023. All permits are now in place for the underground development project at Cobre Las Cruces.

The production and sales figures provided herein are preliminary and subject to final adjustment. The final production and sales figures will be confirmed in the company's financial results for the fourth quarter and year ended Dec. 31, 2023.

2024 to 2026 guidance

Guidance is based on a number of assumptions and estimates as of Dec. 31, 2023, including among other things, assumptions about metal prices, and anticipated costs and expenditures. Guidance involves estimates of known and unknown risks, uncertainties and other factors, which may cause the actual results to be materially different.

Guidance for 2024 to 2026 is presented excluding Cobre Panama.

Kansanshi copper production in 2024 is in line with prior year guidance and is higher in 2025 from prior year guidance, reflecting the continued strong progress of the S3 expansion project. Through the course of 2023, the project achieved key milestones of commissioning approximately 30 per cent of the fleet, progressing 80 per cent of the engineering, and earthworks and civil works are ahead of schedule. The progressive increase in copper production over the three-year guidance period is attributable to the S3 expansion, which is expected to come on line during the second half of 2025. A proportion of the initial feed for S3 will be sourced from lower grade stockpiles in order to fill the concentrator, reducing feed grade. Production is expected to increase from 2027 as increased ore from the South East dome deposit at in-situ grades is fed into the plant, replacing the stockpile feed. Gold production at Kansanshi has been revised from prior year's guidance, in line with an improved understanding of the sources of sulphide copper-gold mineralization at depth.

Sentinel copper production has been adjusted to ensure a more even mining sequence for ore and waste movement and sustaining capital requirements, in particular the continuing opening up of the pit at phase 3 in 2024 and looking ahead to phase 4 in future years. This approach provides for improved mining productivities, trolley assist and waste dump profiles, and also improves storm-water management and the sequencing of in-pit crusher moves. As such, year-on-year guidance for Sentinel is based on an optimal and sustainable balance of grades and volumes, with slightly lower grades expected in 2025 and 2026 than 2024.

Guelb Moghrein gold production reflects the commissioning of the carbon-in-leach plant in the first half of 2024. Gold production in 2024 for other sites is in line with prior-year guidance.

At Ravensthorpe, weak nickel prices, lower payabilities and high operating costs have resulted in significant margin pressure leading to the decision to scale back operations. The priority is to improve margins while still maintaining asset integrity to avoid compromising the future operation of the mine at full capacity. Mining at Shoemaker-Levy will be suspended and both high-pressure acid leach circuits will be bypassed. Existing ore stockpiles will be processed through the atmospheric leach circuit. This will substantially reduce mining and processing costs, albeit at slightly lower recoveries in the process plant. Stockpiles are sufficient for 18 months of production, after which time Hale Bopp and Halley's orebodies will be mined. The change in strategy results in a decrease in nickel production guidance with grades and recoveries impacted, while at the same time preserving the higher-grade Shoemaker Levy orebody until nickel prices recover and operating margins improve.

C1 copper cash cost guidance has increased as a result of the production impacts from the suspension of operations at Cobre Panama. Excluding Cobre Panama, C1 cash costs for 2024 are in line with prior year as current inflationary pressures, lower copper production from Sentinel and reduced byproduct gold credits from Kansanshi are offset by cost-saving initiatives, lower fuel prices and a weaker Zambian kwacha.

AISC cash cost guidance has increased to reflect the volume impact of the absence of Cobre Panama production, coupled with higher royalties in line with increased copper price assumptions. The higher AISC in 2025 reflects increased capital expenditures for fleet replacement at Kansanshi before normalizing in 2026 as production increases.

Unit cost guidance assumes a gold price of $1,800 per ounce, average Brent crude oil price of $90 per barrel, Zambian kwacha/Uninted States dollar exchange rate of 21 and royalties based on consensus copper prices. Unit cost guidance assumes a sulphur price of $150 per tonne at Ravensthorpe.

Total nickel unit cost guidance excludes Enterprise in 2024. Enterprise nickel unit cost guidance is included from its expected first full year of commercial production in 2025 with C1 nickel cash costs of $4.00 to $6.00 per lb (pound) and $3.50 to $6.00 per lb in 2026. Commercial production is expected during 2024.

Capital expenditure continues to experience inflationary cost increases driven by higher shipping rates, steel prices, power costs, labour rates and general inflation. Guidance reflects these cost increases as well as additional scope increases and the timing of expenditures, including approximately $235-million of expenditure carried over from 2023 related mainly to the S3 expansion and smelter expansion projects at Kansanshi, in-pit crusher relocations at Sentinel, as well as other sustaining capital mostly related to mobile fleet replacements. However, strategic measures have been implemented to offset the impact of these inflationary increases and deferred expenditure through optimizing and prioritizing capital expenditure.

Total capital expenditure for the S3 expansion project remains unchanged at $1.25-billion, with approximately $215-million spent to date. The S3 expansion includes the development and construction of the S3 process plant circuit and mining fleet acquisitions. Across the three-year guidance period, capital expenditure for the S3 expansion project is expected to be approximately $780-million with the majority of the spend planned over 2024 and 2025. Prestrip activities for the South East dome pit are expected to continue through 2025, of which $220-million is included in the S3 project capital within the guidance period. First production from S3 continues to be expected in H2 2025.

In addition to the S3 expansion project, project capital in the three-year guidance period includes approximately:

• $200-million at Kansanshi for the expansion of the smelter, expansion of the tailings facility and the relocation of an in-pit crusher;
• $130-million in capital expenditures at Sentinel for the relocation of in-pit crushers;
• $100-million for La Granja development, with a majority of the spending occurring in the back end of the guidance period, predominantly on community engagement, metallurgical and feasibility studies;
• $45-million for additional trolley line installations across Kansanshi and Sentinel.

The three-year guidance includes capital expenditure that is expected to drive better sustainability performance as well as improving the cost structures and productivity of the business. These include:

• Upgrade of the Kansanshi smelter to increase processing capacity, which reduces downstream greenhouse gas emissions from the transport and refining of copper concentrate produced by Kansanshi and Sentinel;
• Expansion of trolley assist infrastructure across the Zambian operations to lower diesel consumption and associated mine fleet greenhouse gas emissions, as well as offering the potential for future integration with battery mining trucks;
• Relocation and installation of in-pit crushers at the Zambian operations to optimize haul cycle efficiency and reduce mine fleet diesel consumption;
• Investments at Trident to enhance the social infrastructure serving both the company's work force and local communities;
• Water initiatives at various operations for the management of water quality and reuse by operations;
• Community engagement in relation to the La Granja development project in Peru.

Sustaining capital expenditure ranges between $260-million and $480-million over the guidance period with an increase at Kansanshi in 2025 reflecting increased fleet replacement programs.

Capital expenditure guidance excludes capitalized precommercial production results.

Balance sheet initiatives

With Cobre Panama in a phase of P&SM, First Quantum is employing a number of measures to prudently allow for the planned capital spending for the S3 expansion project at Kansanshi to continue, while comprehensively addressing the company's leverage. The company has a number of options that it is actively pursuing in this regard. These initiatives include:

• Dividend suspension: The board has suspended the semi-annual dividend. The board will review the company's financial policy on a continuing basis and adjust the dividend approach when appropriate.
• Capital expenditure reductions: Planned capital programs across the company have been reduced or rephased by approximately $400-million in 2024 and $250-million in 2025. This reflects a halt in capital spend at Cobre Panama and pro-active initiatives to offset capital inflation in the Zambian business. The company remains committed to delivering the S3 Expansion project at Kansanshi in H2 2025.
• Operating costs and other reductions: Following a detailed review of all operating and administrative costs, the company has identified savings which will offset the inflationary impact on operating costs. The cost-savings initiatives include a change in strategy at Ravensthorpe to temporarily remove higher cost production.
• Working capital: The company is also targeting reductions in its working capital requirements and savings in the procurement of materials, supplies and third party service costs where possible.
• Asset and stake sales: A process is currently under way to sell some of the company's smaller mining assets. Following a number of inbound expressions of interest, the company is also evaluating the possibility of investments by strategic investors in its larger mining assets.
• Financing activity: The company is taking a proactive approach to managing its balance sheet and the refinancing of its near-term debt maturities. The company has commenced constructive discussions with its banking partners to address and extend its bank loan facilities. The company will continue to evaluate a range of options across the capital markets to maintain a robust financial position and preserve value for its shareholders.

We seek Safe Harbor.