09:18:47 EST Wed 07 Dec 2022
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First Quantum Minerals Ltd
Symbol FM
Shares Issued 691,154,314
Close 2022-02-15 C$ 35.21
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First Quantum earns $832-million in 2021

2022-02-15 16:33 ET - News Release

Mr. Philip Pascall reports


First Quantum Minerals Ltd. has released results for the three months and year ended Dec. 31, 2021. For the three months ended Dec. 31, 2021 (Q4), the company reported net earnings attributable to shareholders of the company of $247-million (36 cents per share), adjusted earnings (1) of $306-million (44 cents per share (2)), and cash flows from operating activities of $760-million ($1.10 per share (2)). For the year ended 2021, the company reported net earnings attributable to shareholders of the company of $832-million ($1.21 per share), adjusted earnings (1) of $826-million ($1.20 per share (2)) and cash flows from operating activities of $2,885-million ($4.19 per share (2)).

"First Quantum's operations continue to demonstrate resilience in dealing with the challenges brought about by the COVID-19 pandemic and new variants as they emerge. We are in a period of solid cash flow generation for the company and while debt reduction remains a priority, we are pleased to cautiously commence increased capital returns to our shareholders with our new dividend framework. We have released our inaugural climate change report which recognizes our obligation to mine responsibly and to report on our actions to address climate change," commented Philip Pascall, chairman and chief executive officer. "I am grateful for the dedication and commitment of the entire team at First Quantum and for the support of governments and communities in our host countries. It is with these efforts and this support that First Quantum is placed in a strong position for 2022 and beyond."

Fourth quarter summary

  • Fourth quarter financial results benefited from higher sales volumes and a higher realized copper price (2) of $4.08 per pound as the company's hedge profile continued to decline, partially offset by higher costs. The company's exposure to the strong copper price environment is expected to continue to improve with the declining profile of the hedge book with no new additional copper hedges were entered into during the fourth quarter. On the basis of continued strong operational performance, the company anticipates continued strong future cash flow and expects to be in a position to continue its debt reduction program, to advance growth programs, to support environmental, social and governance (ESG) initiatives, and to cautiously increase dividend payments in 2022.
  • Q4 2021 copper production totalled 201,823 tonnes, taking the full year production to 816,435 tonnes, the highest annual copper production in First Quantum's history. Through advancement of its brownfield portfolio, the company sees a path to one million tonnes of copper production.
  • Copper C1 cash costs (2) averaged $1.39 per lb during the quarter. While operating costs are facing inflationary pressures, Q4 2021 was also impacted by higher electricity costs due to regular maintenance shutdown works to unit 1 of the power station at Cobre Panama. During the quarter, however, there was a non-recurring reduction in provisions at Kansanshi from the Zambian Electricity Supply Corp. Ltd. (ZESCO) arbitration case that was settled in December, 2021.

(1) Adjusted earnings (loss) and EBITDA are non-GAAP financial measures which do not have a standardized meaning prescribed by IFRS and might not be comparable with similar financial measures disclosed by other issuers. Adjusted earnings (loss) and EBITDA were previously named comparative earnings and comparative EBITDA, respectively, and the composition remains the same.

(2) Adjusted earnings (loss) per share, cash flows from operating activities per share, realized metal prices and copper C1 cash costs (C1) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable with similar financial ratios disclosed by other issuers.

  • Cash flow from operating activities was $760-million for Q4 2021 and cumulatively $2,885-million for the full year 2021. Net debt (1) decreased by $249-million during the quarter, bringing the balance down to $6,053-million as at Dec. 31, 2021. The company expects to achieve the previously announced $2-billion debt reduction target in H1 2022 and has increased the short to medium term target by an additional $1-billion. A new dividend policy was announced on Jan. 17, 2022.

2022 to 2024 guidance update

Three-year guidance on production, C1 cash costs (1), AISC (1) and capital expenditures that was previously disclosed on Jan. 17, 2022, remains unchanged. Copper and nickel production are forecast to grow to 850,000 to 910,000 tonnes and 40,000 to 50,000 tonnes, respectively, by 2024. Capital cost guidance has been guided to $1,250-million in 2022 and 2023 and $1,375-million in 2024.

Cobre Panama is expected to produce 330,000 to 360,000 tonnes of copper and 135,000 to 150,000 ounces of gold in 2022. Mill throughput is expected to ramp up over the course of 2022 to achieve between 85 million and 90 million tonnes per annum. For 2022 as a whole, grades and recoveries are expected to be consistent with 2021 levels but will fluctuate from quarter to quarter. The three-year guidance period for Cobre Panama includes the CP100 expansion, which includes a new primary crushed ore screening facility, process water upgrades and the addition of a sixth ball mill. Completion of construction works and commencement of commissioning are targeted for the first quarter of 2023 to allow for a ramp-up of production over the course of the year and achieve a throughput rate of 100 Mtpa by the end of 2023. A letter of intent was signed for incremental electrical supply for the CP100 expansion, approximately 60 to 80 megawatts, and is expected to be renewable power, specifically hydroelectricity, sourced from the Panamanian grid.

At Kansanshi, production in 2022 is expected to range from 190,000 to 210,000 tonnes of copper and 120,000 to 130,000 ounces of gold. Based on the current mine plan at Kansanshi, while processed ore is expected to be slightly higher in 2022 relative to 2021, grades are expected to decline over the course of the year from Q4 2021 levels. For the three-year guidance period, copper and gold production in 2024 includes some limited production associated to the S3 expansion, with the development and timing still subject to board approval.

At Sentinel, copper production in 2022 is expected to be between 260,000 to 280,000 tonnes. Grade is expected to improve from 2021 levels throughout 2022 as higher-grade ore is exposed in both the Stage 1 and Stage 2 pits. Construction of the fourth in-pit crusher was completed in the December, 2021, and commissioning was completed in January, 2022, which will enable the plant to achieve throughput of 62 Mtpa in 2022.

Two thousand twenty-two copper production guidance from other sites is expected to be 30,000 tonnes.

Nickel production in 2022 from Ravensthorpe is expected to be 25,000 to 30,000 tonnes with major shutdowns and descales of autoclaves scheduled in March and August of this year. Nickel production for the three-year guidance period includes Enterprise, with first production assumed during 2023. The development timeline for Enterprise is expected to be approximately 12 months and still subject to board approval.

C1 cash cost (2) guidance over 2022 to 2024 period for both copper and nickel remains unchanged and reflects recent inflationary and commodity price pressures as well as movement in foreign exchange rates, particularly in Zambia. AISC guidance also reflects higher royalties in Zambia related to copper prices as well as an increase in sustaining capital expenditure. At this stage, guidance assumes no change in royalties in Panama. Copper C1 cash cost (2) and AISC (2) guidance for 2024 includes some limited contribution from the S3 expansion at Kansanshi. Nickel unit cost guidance does not include Enterprise. By 2024, nickel C1 cash costs (2) at Enterprise are expected to range $4.25/lb to $5.25/lb.

Guidance on 2022 to 2024 capital expenditures remains unchanged. Within the total project capital expenditure guidance of $2,210-million over the three-year period, approximately $1,000-million relates to Kansanshi, $830-million to Cobre Panama, $60-million to Enterprise and $15-million to Guelb Moghrein.

(1) Cash cost of copper production (C1) and all-in sustaining cost (AISC) are non-GAAP financial ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable with similar financial ratios disclosed by other issuers.

Conference call details

The company will host a conference call and webcast to discuss the results on Wednesday, Feb. 16, at 9 a.m. ET.

Conference call and webcast details:

Toll-free North America:  1-800-952-5114

Toronto local and international:  1-416-406-0743

Toll-free United Kingdom:  00-80042228835

Passcode:  8095536 followed by the pound key

Webcast:  First Quantum website

A replay of the webcast will be available on the First Quantum website. The replay can also be accessed by dialling 1-800-408-3053 and using the passcode 9327693 followed by the pound key.

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