Mr. Tristan Pascall reports

FIRST QUANTUM MINERALS REPORTS FIRST QUARTER 2024 RESULTS

First Quantum Minerals Ltd. today released results for the three months ended March 31, 2024 (Q1 2024 or the first quarter), of a net loss attributable to shareholders of the company of $159-million (21 cents loss per share) and an adjusted loss of $154-million (20 cents adjusted loss per share) (in United States dollars, except where noted otherwise).

"The successful completion of a comprehensive refinancing package during the first quarter of this year has strengthened the company's balance sheet significantly and it has unlocked the time and financial headroom needed to secure the successful delivery of the Kansanshi S3 expansion. The company's outlook reflects First Quantum's enduring commitment to the success of our Zambian operations. We recognize the challenges Zambia faces from the drought this year, particularly in regard to food security, even as we are pleased to be finalizing agreements to ensure adequate power supply to Trident and Kansanshi. Beyond this, the company remains focused on evaluating additional measures to manage its balance sheet ever more prudently," commented Tristan Pascall, chief executive officer of First Quantum. "Panama holds its presidential election in early May and a new president will be inaugurated in July. Clearly, throughout this period of change, the environmental stability and asset integrity of Cobre Panama remains a priority for the company. First Quantum will continue to work with the current administration to implement the Cobre Panama preservation and safe management plan."

Q1 2024 summary

In Q1 2024, First Quantum reported gross profit of $156-million, EBITDA (earnings before interest, taxes, depreciation and amortization) of $180-million, a net loss attributable to shareholders of 21 cents per share, and an adjusted loss per share of 20 cents. Relative to the fourth quarter of 2023 (Q4 2023), first 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) since November, 2023.

Along with the Q1 2024 financial and operational results, there were a number of developments during the quarter that are detailed in the news release.

• Due to a National Emergency in Zambia, in response to a drought aggravated by El Nino, ZESCO revealed a plan to reduce power supply to the mining sector over the period from May 1, 2024, to Dec. 31, 2024. First Quantum received a force majeure notice from ZESCO to formalize its request for power reductions. This procedural step will allow First Quantum to secure power independently from alternative sources. First Quantum is in the process of finalizing binding offtake agreements with third party traders for power sourced from the Southern African Power Pool for a total of 80 megawatts (MW) currently, which may be expanded if forecasts of power reductions in Zambia change. The company anticipates that it will be able to substitute the power curtailed by ZESCO with imports, thereby avoiding any major interruptions to its Zambian operations.
• The previously announced comprehensive refinancing and balance sheet strengthening initiatives were completed, providing the company with much stronger liquidity and a solid financial position on which to deliver its operational objectives.
• Cobre Panama continues to work on the P&SM program. Approximately 121,000 dry metric tonnes of copper concentrate remains on site. The Attorney General of Panama, Rigoberto Gonzalez, advised on Jan. 29, 2024, that "minerals extracted through mining concessions granted in accordance with the Mining Code belong to the concessionaire."
• The Kansanshi S3 expansion project continued on track during the quarter. The first quarter of 2024 has been focused on site construction activities with the installation of large mechanical equipment (that is, SAG mill, primary crusher) commenced. Site activities were unaffected by the rainy season. The majority of the capital spend on the S3 expansion is expected to occur in 2024, with first production expected in 2025.

Q1 2024 operational highlights

With Cobre Panama in a phase of P&SM, total copper production for the first quarter was 100,605 tonnes, a 37 per cent decrease from Q4 2023. Copper sales volumes totaled 101,776 tonnes, approximately 1,171 tonnes higher than production. Copper C1 cash cost was $0.20 per lb higher quarter over quarter to $2.02 per lb due to the lower production. Excluding Cobre Panama, copper production was 3,021 tonnes higher quarter over quarter resulting from improved mining conditions at Sentinel, while copper C1 cash cost were lower by six cents per lb at $2.01 per lb.

• Kansanshi's copper production of 31,473 tonnes in Q1 2024 was 414 tonnes lower than the previous quarter as a result of weaker grades, partially offset by improved throughput. Grades were weaker quarter over quarter due to an unplanned smelter shutdown in February, which impacted acid stock availability and restricted the ability to treat high-grade ore. Despite lower production volumes, copper C1 cash cost of $2.34 per lb was nine cents lower quarter over quarter mainly due to the absence of a one-time catch-up charge on new electricity rates in Q4 2023 following a new 10-year power supply agreement with ZESCO that was entered into at the end of 2023. Production guidance for 2024 is maintained at 130,000 to 150,000 tonnes of copper and 65,000 to 75,000 ounces of gold. Copper grades are expected to improve over the course of the year as mining progresses at higher elevation areas with higher-grade material from M15 and M17 cutbacks.
• Sentinel reported copper production of 62,225 tonnes in Q1 2024 was 2,261 tonnes higher than the previous quarter mainly due to an improvement in grades as mining activity was able to progress as planned with ore accessed from the bottom of Stage 1 and the high-grade material from the saddle zone between Stage 1 and Stage 2. Throughput, however, was lower than the fourth quarter of 2023 due to a planned total plant shutdown that occurred in January, 2024, that was deferred from 2023. Despite the higher production volumes in Q1 2024, copper C1 cash cost of $1.85 per lb is unchanged from the preceding quarter, reflecting higher electricity rates from the new power supply agreement with ZESCO and higher freight costs associated with the higher volumes of concentrate sold during the quarter. Copper production guidance for 2024 is maintained at 220,000 to 250,000 tonnes. Copper grades are expected to normalize for the remainder of the year after an exceptionally strong first quarter, while throughput is expected to improve over the course of the year with the development of Stage 3 (Western Cut-back) progressing well that will enable improved mining productivities and increased availability of softer material from higher elevations.
• Enterprise produced 4,031 tonnes of nickel during the first quarter, an increase from 2,751 tonnes in Q4 2023, reflecting a ramp-up of mining operations. In the first quarter, additional equipment was mobilized to increase mining volumes. The Jameson cell and one of the two additional columns to expand the cleaner circuit have been commissioned with a noticeable improvement in recovery. The second column is expected to be commissioned in the second quarter. The focus remains on the stripping of waste and the final ramp-up of the process plant to full production capacity, which has been challenged by the metallurgical characteristics of the shallow ore. 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 later in 2024. Production guidance in 2024 is 10,000 to 20,000 contained tonnes of nickel.

• Cobre Panama currently remains in a phase of P&SM. During the quarter, the process plant went through a 14-day preservation and maintenance cycle, with equipment being run and monitored for periods to help maintain the equipment in good working condition. Furthermore, all the major ultraclass mobile equipment is in a maintenance cycle that involves daily inspections and weekly start-up and running of the assets. This equipment will be required as part of the P&SM plan that is awaiting approval by the Ministry of Commerce and Industries (MICI). Through the course of the first quarter of 2024, Cobre Panama sent to the National Authority of Public Services (ASEP), the request to extend the Auto-generator certificate, which is required to put the generation units of the power plant into operation. The restart of the power plant is a critical area for the continuing implementation of the P&SM plan and the company is actively engaged with ASEP in this respect. Excluding one-time severance charges for employees, the costs for the P&SM program in the first quarter were approximately $20-million per month, which included labour, maintenance spares, contractor's services, electricity and other general expenses. For the remainder of the year, P&SM expenses are expected to range from $15-million to $20-million per month, depending on the level of environmental stability and asset integrity programs. The company is actively managing the P&SM costs of Cobre Panama and will adjust the level of employment and cost of these activities according to the conditions on the ground in Panama.
• At Ravensthorpe, nickel production for the first quarter totalled 3,740 contained tonnes of nickel. Production for the quarter was lower than expected mainly due to lower throughput rates and leach extractions which was predominantly limited by capacity constraints on the Atmospheric Leach. Despite the transition to a new operating strategy announced subsequent to the year-end, maintenance challenges continue to impact production certainty and weak nickel prices, lower payabilities, and high operating costs have continued to result in significant margin pressure. Production guidance remains at 12,000 to 17,000 contained tonnes of nickel per annum.

Financial highlights

Financial results continue to be impacted by Cobre Panama in a phase of P&SM.

• Gross profit for the first quarter of $156-million was $69-million higher than the fourth quarter of last year, while EBITDA of $180-million for the same period was $93-million lower.
• Cash flows from operating activities of $411-million (55 cents per share) for the quarter were $596-million higher than the fourth quarter of last year.

The previously disclosed comprehensive refinancing and balance sheet strengthening initiatives were completed in the first quarter, providing the company with strong liquidity, sustainable leverage and a solid financial position on which to deliver its operational objectives. These transactions include:

• Execution of a copper prepayment agreement with Jiangxi Copper, resulting in gross proceeds of $500-million.
• Amendments to the term loan and revolving credit facility, providing additional liquidity headroom and increases the net leverage covenant from 3.50 times to 5.75 times net debt/EBITDA until June 30, 2025. The net leverage covenant will be reduced to 5.00 times between July 1, 2025, and Dec. 31, 2025; 4.25 times between Jan. 1, 2026, and June 30, 2026; and 3.75 times thereafter.
• Completion of the offering of $1,600-million 9.375 per cent senior secured second-lien notes due 2029, along with the bought deal equity offering detailed below, allowing the company to redeem in full its $1,050-million and $1,000-million aggregate principal amount senior notes that were due in 2025 and 2026, respectively.
• Issuance of 139,932,000 common shares (including an overallotment option) from the previously disclosed bought deal equity offering resulting in gross proceeds of approximately $1,150-million ($1,553-million (Canadian)).

The completion of the above refinancing transactions, offset by changes in working capital, resulted in a decrease in the company's net debt position by $1,143-million during the quarter, taking net debt to $5,277-million and total debt to $5,988-million as at March 31, 2024 (net debt was $6,420-million and total debt was $7,379-million at Dec. 31, 2023).

The company continues to pursue previously announced measures to prudently manage the balance sheet for optionality and flexibility, including a sales process for the Las Cruces mine in Spain, as well as a potential minority investment in the company's Zambian business.

Zambia power update

On Feb. 29, 2024, Zambia's President, Hakainde Hichilema, declared a National Emergency in response to a drought aggravated by El Nino. In response to reduced water levels in the Kafue River and Zambezi basins, ZESCO announced a comprehensive power management plan. This plan involves a targeted reduction in power generation across the country as a whole by a total of 700 MW (megawatts) to mitigate the impact of the drought on the nation's power supply.

Starting March 11, 2024, ZESCO implemented eight-hour daily load shedding for its retail customers. Additionally, after the National Emergency was declared, ZESCO began a series of consultations on a bilateral basis with Zambia's mining companies. During these consultations, ZESCO revealed a plan to reduce power supply to the mining sector by a total of 150 MW, over the period from May 1, 2024 to Dec. 31, 2024. First Quantum's combined operations are expected to have its power curtailed by approximately 80 MW over this period. Consequently, on April 11, 2024, First Quantum received a force majeure notice from ZESCO to formalize its request for power reductions. This procedural step will allow First Quantum to secure power independently from alternative sources.

In anticipation of these challenges, First Quantum is in the process of finalizing binding offtake agreements with third party traders for power sourced from the Southern African Power Pool for a total of 80 MW currently, which may be expanded if forecasts of power reductions in Zambia change. These vendors are securing the necessary power required by the company's Zambian operations from Mozambique's Electricidade de Mocambique and Namibia's NamPower. The company estimates that impact of sourcing of power from these other sources would be $25-million for the remainder of the year, approximately three cents per lb impact on cash costs.

First Quantum has also signed a letter of intent with ZESCO to support improved power quality across the national grid. Under the terms of the arrangement, First Quantum will provide upfront funding for ZESCO to install Static VAR compensator units which are expected to improve the quality and availability of power on the national grid. The funding will be recovered by deductions on ZESCO's monthly invoices to Trident and Kansanshi.

The company is advancing a 430 MW of solar and wind project with TotalEnergies and Chariot Energy. The expected commissioning date of the solar and wind component is 2026 and 2027, respectively. Furthermore, the company is in advanced discussions with Zambian hydro scheme project developers with sites in northwest and northern provinces of Zambia. The combined baseload power of these projects is 50 MW. These sites have more favourable hydrology than Zambia's south, where most of Zambia's current generation are located.

At this stage, based on current power supply and demand forecasts, the company anticipates that it will be able to substitute the power curtailed by ZESCO with imports, thereby avoiding any major interruptions to its Zambian operations.

Cobre Panama update

Cobre Panama experienced illegal blockades in November, 2023, 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, which led to the suspension of production at the end of November, 2023, and placed the mine into a phase of P&SM. Cobre Panama currently remains in a phase of P&SM with approximately 1,400 workers remaining on site to run the program. Previous illegal blockages around the mine have since dissipated, allowing for the delivery by road and at port of necessary supplies to conduct the P&SM program. The company is actively managing the P&SM costs of Cobre Panama and will adjust the level of employment and cost of these activities according to the conditions on the ground in Panama.

The company is working with the Ministry of Commerce and Industries (MICI) to implement environmental stability and asset integrity measures. As part of these measures, a phase of environmental P&SM was established until June, 2024, during which intervening period independent audits, review and planning activities would be undertaken. It was noted by the government of Panama (GOP) that the planning would take up to two years, and 10 years or more to implement.

At the request of MICI, Cobre Panama delivered a preliminary draft for the first phase of P&SM on Jan. 16, 2024. Consequently, on Feb. 27, 2024, MICI issued a resolution indicating that the Ministries of Labor, Safety, Health, Industries and Commerce, and Environment would carefully review the plan. In early March, 2024, MICI requested some clarifications and additional information with respect to the P&SM plan, to which Cobre Panama submitted an updated and expanded preservation plan at the end of March, 2024. Subsequently, in early April, 2024, government delegations, including representation from various ministries undertook site inspection and verification visits.

Steps towards two arbitration proceedings have been taken by the company, one under the Canada-Panama Free Trade Agreement (FTA), and another one as per the arbitration clause of the refreshed concession contract.

1. On Nov. 29, 2023, the company initiated arbitration before the International Chamber of Commerce's International Court of Arbitration (ICC) pursuant to the ICC's Rules of Arbitration and Clause 46 of the Refreshed Concession Contract, to protect its rights under Panamanian law and the Refreshed Concession Contract that the government of Panama (GOP) agreed to in October, 2023. The arbitration clause of the contract provides for arbitration in Miami, Fla.
2. On Nov. 14, 2023, First Quantum submitted a notice of intent to the GOP initiating the consultation period required under the FTA. First Quantum submitted an updated notice of intent on Feb. 7, 2024. Under the terms of the FTA, First Quantum may initiate arbitration after at least six months have elapsed since the events giving rise to a claim. First Quantum is entitled to seek any and all relief appropriate in arbitration, including but not limited to damages and reparation for Panama's breaches of the Canada-Panama FTA. These breaches include, among other things, the GOP's failure to permit MPSA to lawfully operate the Cobre Panama mine prior to the Supreme Court's November, 2023, decision, and the GOP's pronouncements and actions concerning closure plans and P&SM at Cobre Panama.

2024 guidance

Guidance is based on a number of assumptions and estimates as of March 31, 2024, 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.

All previously provided guidance remains unchanged.

Brownfield projects

At the Kansanshi S3 expansion project, having completed the majority of detailed engineering and the long lead procurement during 2023, the first quarter of 2024 has been focused on site construction activities. Deliveries of major long lead equipment will continue through to the second quarter of 2024 and the remaining equipment and materials deliveries will be sequenced to match the construction progression. Construction continues across all disciplines with the installation of large mechanical equipment (that is, SAG mill, primary crusher) having started during the quarter. The primary crusher excavation has been completed and the construction of the boxcut walls has commenced. The project has a strong focus on cost control whilst ensuring quality of construction execution. The majority of the capital spend on the S3 expansion is expected to occur in 2024, with first production expected in 2025.

Environment, social and governance (ESG)

The latest sustainability reports can be found in the ESG analyst centre on the company's website. These include the TCFD-aligned climate change reports, ESG reports, tax transparency and contributions to government reports, as well as company's sustainability policies.

The company expects to publish the 2023 ESG climate and tax transparency reports in the second quarter.

Complete financial statements and management's discussion and analysis

The complete consolidated financial statements and management's discussion and analysis for the three months ended March 31, 2024, are available at the company 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, April 24, 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:  on the company's website

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

We seek Safe Harbor.