First Quantum Minerals Reports Second Quarter 2017 Results
TORONTO, July 27, 2017 /PRNewswire/ --
(In United States dollars, except where noted otherwise)
First Quantum Minerals Ltd. ("First Quantum" or the "Company", TSX Symbol "FM") today announced a comparative loss[1] of $18 million ($0.03 per share[1]) and cash flows from continuing operating activities of $205 million ($0.30 per share[1]) for the three months ended June 30, 2017. The comparative loss includes a $97 million loss realized under the copper sales hedge program for which no tax credit is available.
Net loss from continuing operations attributable to shareholders of the Company[1] amounted to $35 million ($0.05 per share) inclusive of the loss under the sales hedge program for which no tax credit is available.
SECOND QUARTER 2017 HIGHLIGHTS[2]
- STRONG OPERATING RESULTS:
- Continued growth in copper production[3]:
- 8% over Q2 2016 and 7% over Q1 2017 from the ramp-up of commercial operations at the Sentinel mine and strong production at the Kansanshi mine.
- Record throughput of 334,269 tonnes of concentrate at the Kansanshi copper smelter.
- Maintained low unit copper production cost[4]:
- Cash cost ("C1") = $1.12 per pound; All-in sustaining ("AISC") = $1.50 per pound; Total cost ("C3") = $1.95 per pound
- Continued growth in copper production[3]:
- MARKET GUIDANCE MAINTAINED:
- Previously-disclosed market guidance for total production, production cost and capital expenditures for the years 2017 to 2019 has been maintained however, copper production guidance by operation for 2017 has been adjusted:
- Kansanshi increased to 248,000 tonnes
- Sentinel reduced to 185,000 tonnes
- Las Cruces increased to 72,000 tonnes
- Previously-disclosed market guidance for total production, production cost and capital expenditures for the years 2017 to 2019 has been maintained however, copper production guidance by operation for 2017 has been adjusted:
- COBRE PANAMA DEVELOPMENT ON TRACK:
- Advanced to over 58% completion:
- Pre-commissioning activities continued on the first 150 MW unit of the power station and associated infrastructure. Power generation into the Panamanian electricity grid now targeted for the first quarter of 2018.
- Entire project remains scheduled for phased commissioning during 2018, with continued ramp-up over 2019.
- Advanced to over 58% completion:
- FINANCIAL:
- Realized an average price for copper of $2.24 per pound, approximately $0.33 per pound below the average LME price for the period, mainly on account of the copper sales hedge program.
- As at June 30, 2017, there were unsettled and unmargined copper hedges for 285,000 tonnes with maturities to February 2018 at an average price of $2.34 per pound in addition to zero cost collar unmargined copper sales hedges for 61,000 tonnes at prices ranging from low side (or put) prices of $2.50 per pound to high side (or call) prices of $2.86 per pound with maturities to June 2018.
- Sales hedge positions outstanding as at July 27, 2017 totaled 359,000 tonnes of copper at an average price of $2.43 per pound.
- Remained in full compliance with all financial covenants and ended the quarter with $838 million of committed undrawn facilities and $450 million in net unrestricted cash.
- The process to put in place project financing for the Cobre Panama project continues. Market sounding of banks and export credit agencies was recently undertaken. Total process completion currently targeted for the end of 2017.
- Continuing to take action to manage operational and price risk and further strengthen the balance sheet. Commenced the process to refinance the existing facilities, aimed at extending the tenor and maintaining liquidity at the corporate level.
- CORPORATE DEVELOPMENT:
- Declared an interim dividend of CDN$0.005 per share in respect of the financial year ended December 31, 2017. The dividend will be paid on September 19, 2017 to shareholders of record on August 28, 2017. The ex-dividend date is August 24, 2017.
[1] Net earnings (loss) attributable to shareholders of the Company and Earnings before interest, tax, depreciation, amortization and impairment ("EBITDA") have been adjusted to exclude items which are not reflective of underlying performance to arrive at comparative earnings (loss) and comparative EBITDA. EBITDA, comparative earnings (loss), comparative earnings (loss) per share, comparative EBITDA and cash flows per share are not measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. The Company has disclosed these measures to assist with the understanding of results and to provide further financial information about the results to investors. Refer to the "Regulatory Disclosures" section in the MD&A for the quarter ended June 30, 2017 for further information.
[2] On June 1, 2016 the sale of the Kevitsa mine was completed. In accordance with the requirements of IFRS 5 - Non-current assets Held for Sale and Discontinued Operations, the financial and operating information presented for 2016 exclude the Kevitsa mine.
[3 ]Production is presented on a copper contained basis, and is presented prior to processing through the Kansanshi smelter.
[4] C1, AISC and C3 cost per pound are not recognized under IFRS. Refer to the "Regulatory Disclosures" section in the MD&A for the quarter ended June 30, 2017 for further information.
CEO'S COMMENTS
"We are pleased with the overall performance in the quarter and half year," noted Philip Pascall, Chairman and CEO.
"Operationally, our Kansanshi complex and Las Cruces mine turned in good results as margin improvement measures, implemented last year at Las Cruces and ongoing at Kansanshi, are making a considerable positive difference. Pyhäsalmi continued to operate profitably despite later-stage mine life conditions, Çayeli began its recovery from first quarter difficulties and Sentinel is moving progressively to steady-state operations with solid months in June and July. Ravensthorpe however, continues to face an ongoing challenging nickel price market.
"Development of our tier-one Cobre Panama project continues to advance strongly. With some challenging aspects of the project now behind us and phased commissioning within 18 months, we are building the team that will be operating the mine and processing facilities, port and power plant. This project, when in operation, will add significant geographic diversification to the Company.
"First Quantum's financial position is much improved. Its debt maturity structure has been greatly strengthened following the liability management initiatives undertaken. With the cash generated by our operations, cash on hand, committed, undrawn credit facilities and continuing initiatives to further strengthen the balance sheet, the Company is well-positioned to continue to execute its strategy," Mr. Pascall concluded.
OPERATING HIGHLIGHTS[4]
Three months ended Six months ended
June 30 June 30
(U.S. dollars where applicable) 2017 2016 2017 2016
COPPER
- Production (tonnes) 141,912 131,349 274,268 250,636
- Sales (tonnes) 139,521 132,030 279,331 263,297
- Cost of production:
o C1 (per lb) $1.12 $0.98 $1.19 $1.00
o AISC (per lb) $1.50 $1.32 $1.54 $1.33
o C3 (per lb) $1.95 $1.80 $2.00 $1.83
- Realized price (per lb) $2.24 $2.21 $2.22 $2.29
NICKEL
- Production (contained tonnes) 5,920 4,982 11,512 12,088
- Sales (contained tonnes) 5,522 5,415 10,719 14,355
- Cost of production:
o C1 (per lb) $4.43 $4.73 $4.63 $4.59
o AISC (per lb) $5.60 $5.49 $5.70 $5.17
o C3 (per lb) $6.09 $6.63 $6.32 $6.26
- Realized price (per payable
lb) $4.17 $4.15 $4.54 $3.98
GOLD
- Production (ounces) 50,040 50,630 100,619 106,821
- Sales (ounces) 52,020 69,898 98,924 133,039
FINANCIAL HIGHLIGHTS
Three months ended Six months ended
June 30 June 30
(U.S. dollars millions, except
where noted otherwise) 2017 2016 2017 2016
Sales revenues 782 659 1,548 1,379
Gross profit 66 102 135 207
Net earnings (loss) from
continuing operations
attributable to shareholders of
the Company (35) 125 (149) 174
Net earnings (loss) from
discontinued operations - (1) - (267)
Net earnings (loss) per share
from continuing
operations attributable to
shareholders of the
Company ($0.05) $0.18 ($0.22) $0.25
Net earnings (loss) per share[5] ($0.05) $0.18 ($0.22) ($0.14)
Basic and diluted earnings
(loss) per share[5] ($0.05) $0.18 ($0.22) ($0.14)
Comparative EBITDA 267 257 532 526
Comparative earnings (loss) (18) 38 (47) 101
Comparative earnings (loss) per
share ($0.03) $0.06 ($0.07) $0.15
Cash flows from continuing
operating activities 205 304 444 558
[5 ]2016 figures include discontinued operations.
CONFERENCE CALL & WEBCAST
Conference call and webcast details are as follows:
Date: July 28, 2017
Time: 9:00 am (EDT); 2:00 pm (BST); 6:00 am (PDT)
Webcast: http://www.first-quantum.com
Dial in: North America: (toll free) 1 877 291 4570
North America and international: 1 647 788 4919
United Kingdom: (toll free) 0 800 051 7107
Available from noon (EDT) on July 28 until 11:59 pm (EDT) on August 3,
Replay: 2017
North America: (toll free) 1 800 585 8367
North America and international: 1 416 621 4642
Passcode: 51930862
COMPLETE FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS
The complete unaudited consolidated financial statements and Management's Discussion and Analysis for the quarter ended June 30, 2017 are available at http://www.first-quantum.com and should be read in conjunction with this news release.
On Behalf of the Board of Directors of First Quantum Minerals Ltd.
G. Clive Newall
President
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain statements and information herein, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. The forward-looking statements include estimates, forecasts and statements as to the Company's expectations of production and sales volumes, and expected timing of completion of project development at Cobre Panama and Enterprise and are subject to the impact of ore grades on future production, the potential of production disruptions, capital expenditure and mine production costs, the outcome of mine permitting, the outcome of legal proceedings which involve the Company, information with respect to the future price of copper, gold, nickel, zinc, pyrite, cobalt and sulphuric acid, estimated mineral reserves and mineral resources, First Quantum's exploration and development program, estimated future expenses, exploration and development capital requirements, the Company's hedging policy, and goals and strategies. Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.
With respect to forward-looking statements and information contained herein, the Company has made numerous assumptions including among other things, assumptions about continuing production at all operating facilities, the price of copper, gold, nickel, zinc, pyrite, cobalt and sulphuric acid, anticipated costs and expenditures and the ability to achieve the Company's goals. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. These factors include, but are not limited to, future production volumes and costs, the temporary or permanent closure of uneconomic operations, costs for inputs such as oil, power and sulphur, political stability in Zambia, Peru, Mauritania, Finland, Spain, Turkey, Panama, Argentina and Australia, adverse weather conditions in Zambia, Finland, Spain, Turkey, Mauritania and Panama, labour disruptions, power supply, mechanical failures, water supply, procurement and delivery of parts and supplies to the operations, and the production of off-spec material.
See the Company's Annual Information Form for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information. Although the Company has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actual results, performances, achievements or events not to be anticipated, estimated or intended. Also, many of these factors are beyond First Quantum's control. Accordingly, readers should not place undue reliance on forward-looking statements or information. The Company undertakes no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information made herein are qualified by this cautionary statement.
visit our website at http://www.first-quantum.com; North American contact: Sharon Loung, Director, Investor Relations, Tel: +1(647)346-3934 Fax: (604) 688-3818, Toll Free: +1(888)688-6577, E-Mail: sharon.loung@fqml.com; United Kingdom contact: Clive Newall, President, Tel: +44-140-327-3484, Fax: +44-140-327-3494, E-Mail: clive.newall@fqml.com
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