Mr. Tristan Pascall reports

FIRST QUANTUM MINERALS REPORTS FOURTH QUARTER AND YEAR-END 2023 RESULTS

First Quantum Minerals Ltd. has released its results for the three months ended Dec. 31, 2023 (Q4 2023 or the fourth quarter), of a net loss attributable to shareholders of the company of $1,447-million ($2.09 loss per share) and an adjusted loss of $259-million (37 cents adjusted loss per share). For the year ended Dec. 31, 2023, the company reported a net loss attributable to shareholders of the company of $954-million ($1.38 basic loss per share) and adjusted earnings of $261-million ($0.38 adjusted earnings per share) (in United States dollars, except where noted otherwise).

"Two thousand twenty-three closed with the company facing one of its biggest challenges in recent history. However, I am confident in the resilience of First Quantum and the determination of our teams to work through these challenges. The company continues to take a pro-active approach to managing its balance sheet and addressing its liquidity in a fulsome and disciplined manner. As a continuation of these efforts, it is pleasing to share that since the reporting period, the company has signed a $500-million copper prepay arrangement at competitive terms with Jiangxi Copper. This arrangement is a reminder of the strategic nature of copper as supply challenges abound across the sector. Constructive discussions with our lenders for an amendment and extension of our loan facilities, which are an important component to our fulsome solution, are well advanced and there is a high degree of alignment among all parties. We continue with sales processes for some of our smaller assets and minority stake sales in our larger assets, with strong interest from highly credible counterparties for both," commented Tristan Pascall, chief executive officer of First Quantum. "In Zambia, we continue to be confident in the investment climate in the country and, as such, we remain committed to our investment in the S3 expansion, which is expected to generate significant free cash flow once operational in the second half of 2025. At Cobre Panama, the blockades around the mine have dissipated, allowing for critical supply deliveries by port and by road. We continue to work closely with local authorities in order to ship the concentrate stockpile from the site, which is required to fund critical environmental work. We remain focused on the preservation, safe and responsible stewardship of Cobre Panama. Finally, I would like to thank everybody at First Quantum for their continued perseverance and hard work in these challenging times."

Q4 2023 summary

In Q4 2023, First Quantum reported gross profit of $87-million, EBITDA (earnings before interest, taxes, depreciation and amortization) of $273-million, a net loss attributable to shareholders of $2.09 per share and an adjusted loss per share of 37 cents. Relative to the third quarter of 2023 (Q3 2023), fourth quarter financial results were negatively impacted by the disruptions experienced at the Cobre Panama mine which led to the mine being placed in a phase of preservation and safe management (P&SM). In addition, disruptions at the mine's port prevented the shipment of concentrates since the beginning of November last year.

Total copper production for the fourth quarter was 160,200 tonnes, a 28-per-cent decrease from Q3 2023. The quarter-over-quarter decrease in production was attributable to lower production at all three of the company's main operations, mainly Cobre Panama. Copper C1 cash cost of $1.82 per pound (lb) for Q4 2023 was 40 cents per lb higher than in Q3 2023 due to lower production and higher electricity costs at the Zambian operations following the signing of the new ZESCO agreement, mitigated by lower maintenance costs.

Three-year guidance on production, copper C1 cash costs, copper all-in sustaining costs (AISC) and capital expenditures that were previously disclosed on Jan. 15, 2024, remain unchanged and exclude Cobre Panama. For 2024, copper production is forecast to be 370,000 to 420,000 tonnes while copper C1 cash costs are guided to be $1.80 to $2.05 per lb. Capital cost guidance for 2024 is expected to be between $1,250-million and $1,400-million.

Q4 2023 operational highlights

Total copper production for the fourth quarter was 160,200 tonnes, a 28-per-cent decrease from Q3 2023. The quarter-over-quarter decrease in production was impacted by the ramp-down in operations at Cobre Panama to a phase of P&SM due to illegal blockades around the mine site while lower production at Kansanshi and Sentinel also contributed to the decline. Copper sales volumes in Q4 2023 totalled 127,721 tonnes, approximately 32,479 tonnes lower than production, mainly due to port disruptions at Cobre Panama that prevented the shipment of copper concentrates.

• Cobre Panama produced 62,616 tonnes of copper in Q4 2023, a decrease of 50,118 tonnes from the previous quarter as production was suspended at the end of November, 2023, due to illegal blockades at the Punta Rincon port and at the roads to the site that prevented the delivery of supplies that were necessary to operate the power plant. Prior to the disruptions from the illegal blockades, Cobre Panama operated at an annualized throughput rate of 93 million tonnes for the month of October. This, combined with higher grades and improving recoveries, allowed the operation to achieve monthly record production of 41,543 tonnes. Copper production for the full year 2023 was 330,863 tonnes, down from 350,438 tonnes in 2022. Copper C1 cash cost of $1.45 per lb was 26 cents per lb higher than the previous quarter due to lower copper production volumes and lower gold byproduct credits. Two thousand twenty-four production guidance for Cobre Panama has been suspended as the site currently remains in a phase of P&SM. At the request of the Ministry of Commerce and Industries (MICI), Cobre Panama delivered a preliminary draft for the first phase of P&SM on Jan. 16, 2024. Previous illegal blockages around the mine have dissipated, allowing for the delivery by road and at port of necessary supplies to conduct the P&SM program. The associated costs for the program are estimated at $15-million to $20-million per month and further reductions could follow depending on environmental stewardship programs. Approximately 121,000 dry metric tonnes of copper concentrate remains on site following disruptions at the Punta Rincon port. The sale of this concentrate will result in a net cash inflow of approximately $225-million at current market prices.
• Kansanshi's copper production of 31,887 tonnes in Q4 2023 was 7,713 tonnes lower than the previous quarter as a result of lower throughput, grades and recoveries across all three circuits. Lower throughput was primarily due to mining constraints in M17 resulting in slower mining rates and the stockpiling of material from M15 and M17 due to acid volume restrictions. Kansanshi's production for 2023 of 134,827 tonnes was within the revised guidance range of 130,000 to 140,000 tonnes. Copper C1 cash cost of $2.43 per lb was 80 cents higher than Q3 2023 mainly due to lower copper production volumes. Production guidance for 2024 is expected to be 130,000 to 150,000 tonnes of copper and 65,000 to 75,000 ounces of gold.
• Sentinel reported copper production of 59,964 tonnes in Q4 2023, 3,841 tonnes lower than the previous quarter mainly due to lower throughput as production continued to be impacted by the mining of very hard rock from the lower levels in stages 1 and 2 of the open pit. Mining productivity, however, continued to improve during the quarter with improved blast fragmentation and reduced congestion with the commencement of the stage 3 (Western Cut-back) mining. Sentinel copper production for 2023 of 214,046 tonnes was lower than the revised guidance range of 220,000 to 230,000 tonnes. Copper C1 cash cost of $1.85 per lb was 20 cents per lb higher than the preceding quarter, reflecting higher electricity prices. Copper production guidance for 2024 is 220,000 to 250,000 tonnes. The major focus for 2024 at Sentinel will be on the development of Stage 3 (Western Cut-back) in order to enable improved mining productivities and increased availability of softer material from higher elevations. The wet weather preparations and improved storm water management processes have been implemented to mitigate the risk of water accumulation as experienced in previous raining seasons.
• Enterprise produced 2,751 tonnes of nickel during the fourth quarter, an increase from 1,556 tonnes in Q3 2023 as the operation continues to ramp-up. Production guidance in 2024 for enterprise is 10,000 to 20,000 contained tonnes of nickel. Commercial production and full plant throughput is expected in 2024.
• At Ravensthorpe, as previously announced, a decision was made subsequent to the year-end to scale back mining operations and associated processing activities as a result of continued low nickel prices. A new operating plan has been developed under which Ravensthorpe aims to maintain production from ore stockpiles and suspend mining from the Shoemaker Levy orebody. The high-pressure acid leach circuit will also be bypassed and ore will be exclusively processed through the atmospheric leach circuits. Production from existing ore stockpiles is expected for 18 months after which time, mining at Hale Bopp and Halley's orebodies is expected to commence.

Financial highlights

Compared with Q3 2023, fourth quarter financial results were considerably weaker due to the suspension of production at the Cobre Panama mine at the end of November, 2023, when the mine was placed in P&SM. Financial results were also impacted by approximately 121,000 dry metric tonnes of copper concentrate that remains unsold from Cobre Panama as a result of the disruptions at the Punta Rincon port. An impairment charge of $900-million was recognized which includes $854-million at Ravensthorpe as a result of significant margin pressure due to weak nickel prices, lower payabilities and high operating costs. Impairment expenses also include $46-million in respect of exploration assets.

The company's total and net debt increased during the fourth quarter due to a one-time payment of $567-million to the government of Panama on Nov. 16, 2023, in respect to taxes and royalties for the period from December, 2021, to October, 2023.

• Gross profit for the fourth quarter of $87-million was 87 per cent lower than in Q3 2023, while EBITDA of $273-million for the same period was 72 per cent lower.
• Cash flows used by operating activities of $185-million (27 cents per share) for the quarter were $779-million lower than Q3 2023.
• Net debt increased by $783-million during the quarter, taking the net debt balance to $6,420-million as at Dec. 31, 2023. As at Dec. 31, 2023, total debt was $7,379-million (total debt was $6,892-million at Sept. 30, 2023).
• An interim dividend of eight Canadian cents per share, in respect of the financial year ended Dec. 31, 2023, was paid on Sept. 19, 2023, to shareholders of record on Aug. 28, 2023. On Jan. 15, 2024, the company announced that it has suspended its dividend as a result of Cobre Panama being in a phase of P&SM.

The current situation at Cobre Panama has impacted the EBITDA generating potential of the company, putting at risk the company's ability to meet the net debt to EBITDA ratio covenant as defined in its current senior banking facilities. Current forecasts for 2024, before taking into account future balance sheet initiatives, indicate the company may breach the prevailing net debt to EBITDA ratio covenant during the coming 12 months, and failure to address this would result in the existence of a material uncertainty that may cast a significant doubt about the company's ability to continue as a going concern. Accordingly, disclosure of this material uncertainty has been made in the notes to the consolidated financial statements.

Management has a strong expectation that the balance sheet initiatives initiated earlier this year will be realized in the near term. The disclosure of material uncertainty does not include potential changes in the company's covenants, which are materially advanced in discussions with the company's banking partners nor the financing initiatives described in more detail herein, which would significantly reduce the risk of breaching covenants if realized.

Balance sheet initiatives

With Cobre Panama in a phase of P&SM, the company is employing a number of measures to prudently allow for the planned capital spending elsewhere across First Quantum's business, most notably the S3 expansion at Kansanshi, which will further strengthen cash flows when it is commissioned in 2025. The company is advancing several initiatives in 2024 to give optionality and flexibility:

• Copper prepayment agreement: After the reporting period, the company signed a $500-million three-year prepayment agreement with Jiangxi Copper at competitive rates. The agreement provides for the delivery of 50,000 tonnnes of copper anode per annum from Kansanshi payable at market prices. The prepaid amount will reduce in line with deliveries over the second and third years of the prepayment agreement. Proceeds will be used towards general corporate purposes and to increase liquidity.
• Dividend suspension: On Jan. 15, 2024, the board 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 were reduced or rephased by approximately $400-million in 2024 and $250-million in 2025. The company remains committed to delivering the S3 expansion project at Kansanshi in 2025.
• Operating costs and other reductions: Following a detailed review of all operating and administrative costs, the company has identified savings which will offset recent inflationary pressures. 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 working capital requirements and savings in the procurement of materials, supplies and third party service costs where possible.
• Assets and stake sales: A sales process for the Las Cruces mine in Spain is well advanced with strong interest given the strategic location and processing capabilities of the project. Following a number of inbound expressions of interest, the company is evaluating the possibility of a minority investment by strategic investors in the company's Zambian business.
• Financing activity: The company continues to take a pro-active approach to managing its balance sheet and the refinancing of its near-term debt maturities. A continuing process between the company and its banking partners is materially advanced, with a high degree of alignment regarding amendment and extension. A conclusion on these amendments is expected in the near term. The company is also assessing a range of alternatives across the capital markets to maintain a robust financial position and preserve value for its shareholders.

2024 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.

Production, cash cost and capital expenditure guidance for 2024 to 2026 remain unchanged from the news release "First Quantum Minerals Announces 2023 Preliminary Production, 2024-2026 Guidance and Balance Sheet Initiatives" dated Jan. 15, 2024, and is presented excluding Cobre Panama as the mine remains in a phase of P&SM with production halted. The associated funding of P&SM is expected to range from $15-million to $20-million per month and further reductions could follow depending on environmental stewardship programs.

Two thousand twenty-four copper production guidance is between 370,000 to 420,000 tonnes and is expected to increase to between 400,000 to 460,000 tonnes in 2025 and 2026 as the S3 expansion at Kansanshi comes on line. For 2024, copper C1 cash costs are guided to be $1.80 to $2.05 per lb. Total copper C1 cash costs and copper 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 mitigated the impact of lower byproduct credits from Kansanshi and lower production at Sentinel.

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. 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.

Interest expense on debt for the full year 2024 is expected to be approximately $610-million to $630-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 $555-million to $575-million for the full year 2024. This figure excludes interest paid on related party loans to Cobre Panama and Ravensthorpe and capitalized interest paid.

Capitalized interest is expected to be approximately $55-million for the full year 2024.

The effective tax rate for 2024 excluding Cobre Panama and interest expense is expected to be approximately 30 per cent.

The full year 2024 depreciation expense excluding Cobre Panama is expected to be between $630-million and $660-million. Whilst under P&SM, depreciation at Cobre Panama is expected to be $90-million to $120-million on an annualized basis.

Cobre Panama update

Cobre Panama 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 dissipated, allowing for the delivery by road and at port of necessary supplies to conduct the P&SM program.

On June 26, 2023, the company and the GOP signed the Refreshed Concession Contract and it was subsequently countersigned by the National Comptroller of Panama. The Refreshed Concession Contract was presented before the Commerce Committee of the National Assembly of Panama, that recommended the amendment of certain terms of the contract.

On Oct. 17, 2023, the Refreshed Concession Contract, with amended terms, was resubmitted to and approved by the Commerce Committee of the National Assembly of Panama. On Oct. 20, 2023, the National Assembly in Panama passed Bill 1100 for the approval of the Refreshed Concession Contract for the Cobre Panama mine. On the same day, the President of Panama sanctioned Bill 1100 into Law 406 that was subsequently published in the Official Gazette.

On Nov. 16, 2023, in accordance with its contractual obligations to the Republic of Panama under Law 406, the company made tax and royalty payments of $567-million in respect of the period from December, 2021, to October, 2023.

On Nov. 28, 2023, the Supreme Court of Justice of Panama declared Law 406 unconstitutional and stating the effect of the ruling is that the Refreshed Concession Contract no longer exists. The Supreme Court did not order the closure of the Cobre Panama mine. The ruling of the Supreme Court was subsequently published in the Official Gazette on Dec. 2, 2023.

On Dec. 19, 2023, the Minister for Panama's MICI announced plans for Cobre Panama following the ruling of the Supreme Court. The validity of Panama's mineral resource code which was established more than 50 years ago was reiterated by the Minister given the absence of retroactivity of the Supreme Court ruling. As part of these plans, a temporary phase of environmental preservation and safe management would be established until June, 2024, during which intervening period independent audits, review and planning activities would be undertaken. It was stated that Panama would be the first country in the world to implement a sudden mine closure of this magnitude, and therefore the planning is estimated by the GOP to take up to two years, and 10 years or more to implement. The Minister also announced plans to consider the economic impacts of the halt to operations of Cobre Panama at both a national and local level. The company is of the view, supported by the advice of legal counsel, that it has acquired rights with respect to the operation of the Cobre Panama project, as well as rights under international law.

In January, 2024, the company and MICI had discussions related to a formalized P&SM program and the associated costs for Cobre Panama. Additionally, the company hosted a large delegation 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 delivered a preliminary draft for the first phase of P&SM on Jan. 16, 2024.

Presidential and national legislative elections will take place in May, 2024, with a new president, GOP cabinet and National Assembly assuming office in July, 2024.

The company has commenced international arbitration processes including notification under the Free Trade Agreement (FTA) between Canada and Panama, and under the International Court of Arbitration relating to concession agreement. The FTA provides for, among other things, arbitration before the International Centre for Settlement of Investment Disputes, which is seated in Washington, D.C.

Brownfield projects

At the S3 expansion, the majority of the capital spend is expected to occur in 2024. Detailed design is largely complete. Earthworks and civil works continue to progress and the project remains on track to come on line during the second half of 2025. The first 11 ultraclass trucks and first shovel are commissioned and are in service on site.

Earthworks and civil works continued to progress and project procurement was approximately 70 per cent committed at the end of the quarter. Deliveries of major long lead equipment such as mills, primary crusher and thickeners commenced in the third quarter of 2023, and will continue through to the second quarter of 2024. Construction continues across all disciplines and excavation of the primary crusher position commenced during the quarter.

At enterprise, all major mining and plant infrastructure has been completed. However, additional equipment is being mobilized for higher mining volumes and the cleaner circuit expansion, to include columns and Jameson cell flotation technology, is progressing toward commissioning in early 2024. The focus remains on stripping of waste and the final ramp-up of the process plant to full production capacity, which was challenged by the metallurgical characteristics of the shallow ore. Oxide material has been impacting recoveries, but the ore profile has been updated to reflect the classification of material and provide a good understanding of the impact of this material on plant performance and recoveries. Recovery and concentrate quality are continuously improving as supply of the fresher sulphide ore increases, consistent with expectations from the geometallurgical understanding of the deposit. Commercial production and full plant throughput is expected in 2024.

On Feb. 20, 2024, the company filed an updated National Instrument 43-101 technical report on mineral resources and reserves for the Las Cruces Underground project. The purpose of the technical report is to update the 2022 mineral resources estimate, declare a mineral reserves estimate and to provide commentary on the project development strategy. Polymetallic primary sulphides (underground) measured and indicated mineral resources have increased from 36.2 million tonnes from the January, 2022, technical report to 41.4 million tonnes with the copper equivalent grade decreasing from 2.51 per cent to 2.29 per cent. There is an additional 5.0 million tonnes of polymetallic primary sulphides tabled as stockpiles and 900,000 tonnes of secondary sulphide (underground measured and indicated mineral resources).

Other developments

Zambian mines secure 100-per-cent renewable power with new power supply agreement (PSA)

On Nov. 27, 2023, a 10-year PSA was signed between the company and ZESCO, the Zambian state energy provider. As part of the agreement, ZESCO is committed to supplying 100-per-cent-certified renewable power, principally hydroelectricity, to Trident and Kansanshi.

This agreement marks an important step in the company's greenhouse gas emissions reduction plan and underlines the company's commitment to sustainability, and lowering the carbon intensity of responsibly mined copper production.

Zambian power supply

The Kariba Lake level closed the fourth quarter of 2023 at 477.23 metres (m), compared with 475.60 m recorded at the same time last year. The rainy season in Zambia generally starts in November and continues through April, with the heaviest rainfall normally experienced in the months of January, February and March. However, the lower than normal rains experienced in the current rainy season have resulted in a reduction in water allocation for ZESCO's electricity generation. ZESCO is currently implementing mitigation measures to address the lower water allocation. No extended power restrictions are expected for the Zambian mining operations beyond normal fluctuations on the national grid.

Pioneering full battery dump truck trials for green mining

Hitachi Construction Machinery Co. Ltd. completed the construction of the full battery dump truck and shipped it to the Kansanshi mine in January, 2024. The technological feasibility trials are expected to start in mid-2024.

The development and trials of the full battery dump truck, in partnership with Hitachi, will leverage First Quantum's industry-leading trolley assist expertise. This will be key to the next phase of the company's climate change strategy as it seeks to reduce greenhouse gas emissions associated with mining operations.

Complete financial statements and management's discussion and analysis

The complete consolidated financial statements and management's discussion and analysis for the three months and year-ended Dec. 31, 2023, are available on 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, Feb. 21, 2024, 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:  First Quantum website

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

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