First Quantum Minerals Reports Operational and Financial Results for the Three and Nine Months Ended September 30, 2012
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 10/31/12 -- First Quantum Minerals Ltd. (TSX: FM)(LSE: FQM) -
(In United States dollars, tabular amounts in millions, except where noted)
First Quantum Minerals Ltd. ("First Quantum" or the "Company") today announced its results for the three and nine months ended September 30, 2012. The complete financial statements and management's discussion and analysis are available for review at www.first-quantum.com and should be read in conjunction with this news release.
First Quantum's President, Clive Newall, will host a conference call and live webcast to discuss the results on Thursday, November 1, 2012 at 6:00 am (PST); 9:00 am (EST); 1:00 pm (BST). The call and webcast will be available on www.first-quantum.com and by dialing 416-340-8530 or toll free in North America on 877-240-9772.
First Quantum's results have been prepared in accordance with International Financial Reporting Standards ("IFRS").
SUMMARIZED OPERATING AND FINANCIAL RESULTS
------------------------------------
Three months ended Nine months ended
September 30 September 30
------------------------------------
(USD millions unless otherwise noted) 2012 2011 2012 2011
---------------------------------------------------------------------------
Copper production (tonnes)(1) 84,144 58,785 222,198 198,260
Copper sales (tonnes) 77,396 71,443 217,896 207,619
Cash cost of copper production (C1)(2)
(per lb) $1.44 $1.52 $1.51 $1.37
Realized copper price (per lb) $3.45 $3.84 $3.53 $4.04
Nickel production (contained tonnes)(1) 9,916 - 26,663 -
Nickel sales (contained tonnes) 7,120 - 22,298 -
Cash cost of nickel production (C1)(2)
(per lb) $6.24 - $5.88 -
Realized nickel price (per lb) $7.69 - $8.04 -
Gold production (ounces)(1) 50,784 41,468 137,559 131,701
Gold sales (ounces) 48,889 47,458 140,953 131,233
---------------------------------------------------------------------------
Sales revenues 724.8 651.0 2,175.8 2,016.2
Gross profit 261.0 322.6 806.0 1,125.3
EBITDA(2) 276.2 279.2 2,051.5 1,051.6
Net earnings attributable to
shareholders of the Company 107.3 90.9 1,586.2 452.9
Earnings per share $0.23 $0.20 $3.35 $1.03
Diluted earnings per share $0.23 $0.20 $3.33 $1.03
---------------------------------------------------------------------------
Comparative earnings(3) 107.3 139.3 368.3 501.3
Comparative earnings per share(3) $0.23 $0.30 $0.78 $1.14
---------------------------------------------------------------------------
(1) Includes copper, nickel and gold produced at Kevitsa during
pre-commercial production up to August 18, 2012. See "Summary of
results" for further information.
(2) Cash costs (C1) and EBITDA are not recognized under IFRS. See
"Regulatory Disclosures" for further information.
(3) Earnings attributable to shareholders of the Company have been adjusted
to remove the effect of unusual items to arrive at comparative earnings.
Comparative earnings and comparative earnings 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. See "Regulatory Disclosures" for a
reconciliation of comparative earnings.
Commercial production achieved at the Kevitsa mine
-- Commercial production achieved on August 18, 2012 following a successful
commissioning and rapid ramp-up phase at the nickel and copper
operation. This is the second project successfully commissioned by the
Company during the past year.
Copper production up 43% over Q3 2011 as a result of record quarterly production at Kansanshi
-- Total copper production increased significantly due to higher grade,
throughput and recovery at Kansanshi resulting from mine pit
developments and plant expansions. Guelb Moghrein increased production
despite the loss of 12 production days related to an illegal labour
dispute in July.
-- Total nickel production benefitted from a contribution of 1,884 tonnes
from Kevitsa and steady operations at Ravensthorpe.
-- Total gold production was 22% higher than Q3 2011 due to the
contribution of 2,713 ounces from Kevitsa and higher recovery at
Kansanshi.
Comparative earnings decreased from Q3 2011 as a result of lower copper prices and higher cost of sales
-- Sales revenues increased by $73.8 million to $724.8 million as a result
of revenue contributions from Ravensthorpe and Kevitsa, higher copper
and gold sales volumes, offset partially by the impact of 13% lower LME
copper prices.
-- Cost of sales increased by $135.4 million to $463.8 million due
primarily to the addition of operating costs from Ravensthorpe and
Kevitsa, a higher Zambian royalty rate and the sale of higher-cost
inventory from Q2 2012.
-- Cash costs of copper production decreased to $1.44 per pound as higher
overall production and ore grades outweighed increased acid costs
related to processing higher acid-consuming ore at Kansanshi.
Development projects continue according to plan
-- The fifth Kansanshi acid plant is scheduled to be operational during Q4
2012 which will allow for utilization of the expanded 7.2 million tonne
per annum ("Mtpa") oxide circuit capacity.
-- The stage two oxide expansion to 14.5 Mtpa at Kansanshi continues and is
scheduled for commissioning in the first half of 2013.
-- Detailed design works on the Kansanshi smelter project are well
progressed and all major equipment packages have been ordered.
Structural and mechanical installation is expected to commence in early
2013.
-- Significant progress made at the Sentinel project on earth works, civil
works and the advancement of detailed design engineering.
Strong financial position maintained to finance development projects
-- Cash and available debt facilities amount to $1.6 billion as at
September 30, 2012.
-- On October 10, 2012, the Company completed the issuance of $350.0
million of Senior Notes due in 2019. Interest on the senior notes is
payable semi-annually at a rate of 7.25% per annum
Operational outlook for 2012
-- Expected production increased to approximately; 285,000 to 295,000
tonnes of copper, unchanged at 36,000 to 40,000 tonnes of contained
nickel and increased to approximately 175,000 to 190,000 ounces of gold.
-- Expected average C1 cash cost for copper operations reduced to
approximately $1.50 per pound of copper.
-- Expected average C1 cash cost for Ravensthorpe reduced to approximately
$6.20 per pound of nickel.
-- Expected total capital expenditure of approximately $1.5
billion in 2012.
OPERATIONS
------------------------------------
Three months ended Nine months ended
Kansanshi Copper and Gold Operation September 30 September 30
------------------------------------
2012 2011 2012 2011
---------------------------------------------------------------------------
Sulphide ore tonnes milled (000's) 2,763 2,185 6,575 7,227
Sulphide ore grade processed (%) 0.9 0.4 1.0 0.7
Sulphide copper recovery (%) 92 88 93 93
Mixed ore tonnes milled (000's) 1,955 2,057 6,610 5,391
Mixed ore grade processed (%) 1.0 0.9 1.1 1.0
Mixed copper recovery (%) 77 61 67 64
Oxide ore tonnes milled (000's) 1,500 1,594 4,472 4,580
Oxide ore grade processed (%) 2.6 2.3 2.2 2.3
Oxide copper recovery (%) 84 84 85 86
Copper production (tonnes) 71,484 50,179 190,920 171,132
Copper sales (tonnes) 65,830 61,102 188,125 181,796
Gold production (ounces) 35,245 26,677 90,647 82,706
Gold sales (ounces) 33,510 29,592 92,980 86,746
Cash costs (C1) (per lb)(1) $1.46 $1.56 $1.50 $1.35
Total costs (C3) (per lb)(1) $1.86 $1.90 $1.87 $1.67
---------------------------------------------------------------------------
Sales revenues 507.1 521.6 1,485.6 1,642.6
Gross profit 223.8 266.7 691.4 1,000.9
EBITDA(1) 240.4 298.4 744.8 1,060.7
---------------------------------------------------------------------------
(1) C1 and C3 costs and EBITDA are not recognized under IFRS. See
"Regulatory Disclosures" for further information.
Copper production increased by 42% from Q3 2011, to a quarterly record, due to higher ore grades, throughput and recoveries in Q3 2012. Ore grades benefited from improved access to mining areas and an increase in availability of sulphuric acid in the period, which allowed for the treatment of some high grade, high acid-consuming ore.
Sulphide copper production was significantly higher than Q3 2011 due to increased throughput and ore grades processed in Q3 2012. Q3 2011 ore grades were impacted by a change in the mine plan which temporarily reduced the mining of higher grade sulphide ore in favor of pit development activity. This ongoing mine pit development has now established significantly wider pits and improved access to various ore types at target grades to coincide with the plant expansions underway. Throughput was higher in Q3 2012 due to a circuit reconfiguration in the prior year which temporarily reduced the capacity of the sulphide circuit.
The mixed ore circuit benefited from higher recovery and steady throughput in Q3 2012. The improved recovery was driven by a more favorable blend of sulphide and oxide ore processed in Q3 2012. Mixed ore throughput exceeded the 6.5 Mtpa design capacity in Q3 2012 as a result of a focus on reducing process disturbances in conjunction with improving plant availability and utilization.
Copper production from the oxide circuit increased from Q3 2011 as reduced throughput was more than offset by improved ore grades processed in Q3 2012. An increase in the availability of sulphuric acid enabled the treatment of higher grade, higher acid consuming oxide ore in Q3 2012.
Gold production was 32% higher than Q3 2011 due to higher overall throughput and improved recovery. The continued gold circuit enhancements and improvements have resulted in a higher proportion of gold recovered in dore, which is not subject to the smelter deductions applied to gold recovered from concentrate.
Q3 2012 C1 costs decreased by $0.10/lb from Q3 2011. C1 costs benefited from the unit cost effect of producing 42% more copper, as the increased production was driven primarily by higher grades and recoveries. This benefit outweighed higher acid costs related to processing higher acid-consuming ore during Q3 2012.
Gross profit was lower than Q3 2011 due primarily to lower realized copper prices and higher royalty rates. The Zambian royalty rate was increased from 3% to 6%, effective April 2012, resulting in an increase of $15.5 million in the royalty expense in Q3 2012. Cost of sales increased in Q3 2012 due to the sale of higher-cost inventory which was produced in the prior period.
Outlook
The main areas of focus continue to be on sulphuric acid supply and increasing the flexibility of ore sources for the three circuits. Available mining areas continue to increase as planned with several new areas in the Main and North-West pits now providing ore. Further improvements are anticipated with additional plant operational efficiency and flexibility afforded by multiple concurrent mining areas.
The benefit of the 7.2 Mtpa oxide circuit upgrade is expected to be realized in Q4 2012, coinciding with the commissioning of the fifth acid plant. The additional leach and CCD capacity in the oxide process circuit is expected to contribute to maximizing output from available ore through improved recovery, as well as providing the capacity to efficiently operate at higher treatment rates.
In the medium term, some of Kansanshi's mining areas for oxide ore are characterized as high grade, high acid-consuming ore. Currently the supply of sulphuric acid from acid plants requires the import of sulphur at high costs. Consideration will be given to withholding the high grade, high acid-consuming ore from production until acid is provided at minimal cost from the Kansanshi smelter. In this event, the capacity of the oxide expansions and fifth acid plant may not be fully exploited.
------------------------------------
Guelb Moghrein Copper and Gold Three months ended Nine months ended
Operation September 30 September 30
------------------------------------
2012 2011 2012 2011
---------------------------------------------------------------------------
Sulphide ore tonnes milled (000's) 687 668 2,236 2,057
Sulphide ore grade processed (%) 1.3 1.4 1.3 1.4
Sulphide copper recovery (%) 94 91 91 91
Copper production (tonnes) 8,656 8,606 26,632 27,126
Copper sales (tonnes) 8,962 10,332 27,167 24,173
Gold production (ounces) 12,827 14,791 43,718 48,995
Gold sales (ounces) 13,631 17,866 46,225 44,487
Cash costs (C1) (per lb)(1) $1.43 $1.33 $1.63 $1.40
Total costs (C3) (per lb)(1) $1.93 $1.89 $2.20 $2.14
---------------------------------------------------------------------------
Sales revenues 85.6 102.4 267.1 249.0
Gross profit 24.3 52.4 70.2 124.3
EBITDA(1) 29.6 58.2 88.2 138.8
---------------------------------------------------------------------------
(1) C1 and C3 costs and EBITDA are not recognized under IFRS. See
"Regulatory Disclosures" for further information.
Q3 2012 Copper production was consistent with Q3 2011 despite the loss of 12 days of production following an illegal strike action by some unionized employees in July 2012.
Throughput rates during Q3 2012 benefited from mill optimization works and improved blast fragmentation aimed at achieving steady state operations. Copper recovery increased as a result of longer flotation residence time following a circuit reconfiguration during the quarter. Copper grades in 2012 reflect the current ore profile in the pit and are expected to remain at these levels in the future.
Gold production was lower than Q3 2011 due to reduced gold grade and recovery.
C1 costs were higher in Q3 2012 due to a $0.28/lb lower gold credit resulting from lower gold sales volumes, however cash operating costs were lower than Q3 2011 due to cost reductions in mining and processing related to reduced maintenance costs in Q3 2012.
Gross profit was lower than Q3 2011 as a result of lower realized copper prices and lower sales volumes.
Outlook
Process plant enhancements continue with a focus on consistent operation at steady state to maximize product recovery and concentrate quality. Additional mining equipment, to facilitate higher mine production rates, is planned for commissioning in Q4 2012.
------------------------------------
Three months ended Nine months ended
Ravensthorpe Nickel Operation September 30 September 30
------------------------------------
2012 2011 2012 2011
---------------------------------------------------------------------------
Beneficiated ore tonnes processed
(000's) 733 - 2,125 -
Beneficiated ore grade processed (%) 1.4 - 1.5 -
Nickel recovery (%) 77 - 77 -
Nickel production (contained tonnes) 8,032 - 24,658 -
Nickel sales (contained tonnes) 6,272 - 21,450 -
Nickel production (payable tonnes) 6,188 - 19,009 -
Nickel sales (payable tonnes) 4,790 - 16,432 -
Cash costs (C1) (per lb)(1) $6.43 - $5.94 -
Cash costs (C3) (per lb)(1) $7.84 - $7.22 -
---------------------------------------------------------------------------
Sales revenues 81.3 - 293.4 -
Gross profit (loss) (1.6) - 39.7 -
EBITDA(1) 6.4 - 67.7 -
---------------------------------------------------------------------------
(1) C1 and C3 costs and EBITDA are not recognized under IFRS. See
"Regulatory Disclosures" for further information.
Q3 2012 nickel production was in-line with plan as a result of steady state operation of the complete circuit. Crushing plants and ore beneficiation continue to operate above plan and ore supply from the buffer ponds is allowing for scheduled maintenance to be undertaken without full plant shutdowns. Mining activity increased from prior periods and the majority of ore feed was sourced from the pit for the first time since the start of operations.
Nickel cash costs per payable pound have increased from prior periods due to increased mining costs, consumables costs and realization costs. Ore was sourced largely from existing ore stockpiles during the first half of 2012. Ore costs have increased in Q3 2012 as the mining operations moved to the mine pit, resulting in additional costs related to waste stripping and drill and blast activity. Q3 2012 C1 costs were also higher due to the unit cost impact of processing lower grade ore.
Outlook
Circuit developments and enhancements in the beneficiation area are expected to result in improvements in plant utilization and reduce flocculent consumption in 2013.
Various options are also being explored to improve the payable nickel content in order to increase revenue from sales.
------------------------------------
Three months ended Nine months ended
Kevitsa Nickel and Copper Operation September 30, 2012 September 30
------------------------------------
Post- Pre-
commer- commer-
cial cial
produc- produc-
tion tion 2012 2011
---------------------------------------------------------------------------
Ore tonnes milled (000's) 687 720 1,725 -
-
Nickel ore grade processed (%) 0.25 0.22 0.22 -
Nickel recovery (%) 60 54 53 -
Nickel production (tonnes) 1,041 843 2,005 -
Nickel sales (tonnes) 848 - 848 -
- -
Copper ore grade processed (%) 0.33 0.34 0.33 -
Copper recovery (%) 84 87 82 -
Copper production (tonnes) 1,874 2,130 4,646 -
Copper sales (tonnes) 2,604 1,040 3,644 -
- -
Gold production (ounces) 1,431 1,282 3,194 -
Platinum production (ounces) 3,926 3,174 7,685 -
Palladium production (ounces) 3,373 2,827 6,764 -
- -
Nickel cash costs (C1) (per lb)(1) $3.79 - $3.79 -
Nickel cash costs (C3) (per lb)(1) $5.35 - $5.35 -
Copper cash costs (C1) (per lb)(1) $0.11 - $0.11 -
Copper cash costs (C3) (per lb)(1) $1.49 - $1.49 -
---------------------------------------------------------------------------
Sales revenues 35.6 - 35.6 -
Gross profit 17.5 - 17.5 -
EBITDA(1) 23.6 - 23.6 -
---------------------------------------------------------------------------
(1) C1 and C3 costs and EBITDA are not recognized under IFRS. See
"Regulatory Disclosures" for further information.
The expected ramp up of Kevitsa progressed as planned during Q3 2012 and commercial production was achieved on August 18, 2012 following a successful and rapid commissioning period. The plant is running well and production is continuing to ramp up.
Throughput rates have exceeded plan due to continuous operation of the autogenous mills. Recoveries have increased consistently during the commissioning phase, however they are temporarily below life-of-mine targets due to the weathered nature of ore currently available in the mine pit. Recoveries are expected to increase as mining progresses deeper into the ore body in early 2013.
During the first month of commercial operations, the cash costs for nickel and copper were temporarily lower than normal operating levels as a result of higher by-product credits, reduced consumable spares costs and maintenance costs. The higher by-product credits resulted from the sale of production from the commissioning phase. Nickel C1 costs of $3.79/lb are net of by-product credits of $2.50/lb and Copper C1 costs of $0.11/lb are net of by-product credit of $1.41/lb.
At the current approved throughput rate of 5.5 Mtpa, Kevitsa is expected to produce approximately 11,000 tonnes of nickel and 20,000 tonnes of copper annually. The Company has submitted an environmental assessment and application to increase the plant throughput rate up to a maximum of 10 Mtpa. Liaison with the relevant authorities is in progress and approval is expected in the first half of 2013. With the current estimated measured and indicated resource, the increased throughput rate is expected to increase annual production to approximately 15,000 tonnes of nickel and 28,000 to 30,000 tonnes of copper while retaining a mine life in excess of 20 years.
DEVELOPMENT ACTIVITIES
Kansanshi expansions, Zambia
The multi-stage Kansanshi plant upgrade to an annual production capacity of 400,000 tonnes of copper continued in Q3 2012. The stage one oxide circuit expansion to 7.2 Mtpa was completed in Q2 and optimized during Q3 2012. The benefit of this expansion is expected during Q4 2012 once acid supply is increased with the operation of the fifth acid plant.
Progress on the stage two oxide capacity expansion to 14.5 Mtpa continued with civil works nearing completion and structural installation underway. Completion remains on target for the first half of 2013. Acid supply will dictate the rate of oxide treatment until the smelter is commissioned in mid-2014, however the output of the five acid plants as well as the current volume of acid that can be externally sourced will allow for interim treatment rates of approximately 10 Mtpa.
In the medium term, some of Kansanshi's mining areas for oxide ore are characterized as high grade, high acid-consuming ore. Currently the supply of sulphuric acid from the acid plants requires the import of sulphur at high costs. Consideration will be given to withholding the high grade, high acid-consuming ore from production until acid is available at minimal cost from the Kansanshi smelter. In this event, the capacity of the oxide expansions and fifth acid plant may not be fully exploited.
The second phase of the 400,000 tonne annual production capacity expansion project is a proposed expansion of the sulphide treatment facilities by construction of a new section of plant capable of treating up to 16 Mtpa of sulphide ore. Initial board approval has been granted to allow design work to commence along with ordering of long-lead equipment. Construction of this new plant is planned to commence in 2013. Full project commitment is expected in Q4 2012 following completion of the resource definition drilling program, which is necessary for detailed mine planning.
Copper smelter project, Zambia
Kansanshi's concentrate is currently treated at smelters in Zambia, however, existing domestic smelting capacity will be insufficient to process the substantial increase in production resulting from the Kansanshi expansion and the Sentinel project. The new copper smelter is designed to process 1.2 million tonnes of concentrate to produce over 300,000 tonnes of copper metal annually. The smelter is expected to also produce 1.0 million tonnes of sulphuric acid as a by-product at a low cost which will benefit Kansanshi by allowing the treatment of high acid-consuming oxide ores and the leaching of some mixed ores. The additional acid is also expected to optimize the expansion of the oxide leach facilities and allow improved recoveries of leachable minerals in material now classified and treated as mixed ore.
Detailed design works on the smelter are well progressed and all major equipment packages have been ordered. On site, earthworks construction is approximately 65% complete and concrete pouring is underway. Structural and mechanical installation will be commencing in early 2013. The project is scheduled for construction completion in mid-2014 followed by commissioning and ramp up.
Sentinel project, Zambia
A mineral resource and reserve estimate for the Sentinel copper project was released in March 2012. An estimated measured and indicated resource of 1,027 Mt at 0.51% copper grade, containing 5.2 Mt of copper has been delineated, inclusive of an estimated recoverable proven and probable mineral reserve of 774 Mt at 0.50% copper grade, containing 3.9 Mt of copper. The life of mine strip ratio is anticipated to be 2.2:1 and the estimated mine life is in excess of 15 years.
The project is expected to produce up to 280,000 to 300,000 tonnes of copper in concentrate annually.
Project construction activities ramped up in early Q2 2012 following approval from the Company's Board of Directors. Significant progress has been made to date including; advancement of detailed design engineering, completion of process plant earthworks, construction of a concrete batch plant with over 7,800 cubic metres of concrete poured and 1,250 tonnes of structural steel fabrication completed.
The key construction activities for the remainder of 2012 and into 2013 include; arrival of structural and mechanical packages at site, construction of the tailings storage facility, commencement of tender packages for the 330kV transmission line and substation, delivery of first mining fleet and commencement of pre-operating mining works including the installation of in-pit crushing and completion of housing for over 200 staff. The Company will continue project development with an ongoing commitment to social responsibility within the complete license area.
Project capital costs are estimated at approximately $1.7 billion with project completion expected during 2014.
Exploration
Exploration programs continued at a high level in most districts with major drilling campaigns active at Trident and Kansanshi. The Company has recently entered into two new joint ventures in Peru and Turkey which are both focused on early stage copper and gold porphyry opportunities.
Trident Exploration
At Trident 10 drill rigs are active split between Enterprise resource drilling and regional target testing within the Trident license area. The resource definition drilling over the main Enterprise deposit was completed during Q3 2012 and geological modelling and resource estimation on the main Enterprise resource should be finalized in Q4 2012. Resource drilling has now moved on to the adjacent Enterprise Southwest prospect which has now been broadly delineated but requires better definition for resource classification.
Several regional targets were drill tested during the quarter. The best target to date is at 'Bream', approximately 20 kilometres ("km") northeast of Enterprise, where low grade copper mineralization has been intersected in several holes.
Kansanshi
At Kansanshi 14 core rigs continued operating on the project divided between incremental resource and reserve additions immediately around the existing pits and the district exploration program. These programs are designed to provide enhanced definition of longer term oxide and sulphide resource potential as well as to test the ultimate extents of the mineral system.
Several exploration drill rigs are focused on the final phase of resource drilling on the Southeast Dome which is nearing completion with the final resource estimation in process. Further rigs are working on completing large scale regional cross sections and new targets northwest and southeast of the current pits.
A large scale magneto-telurics ("AMT") geophysical survey has been completed over much of Kansanshi during the period. The majority of the survey has been very successful in effectively mapping the broad architecture of the 'Greater Kansanshi Dome'. In combination with the regional drill transects this AMT survey will allow the delineation of smaller scale structural domes that are now known to focus mineralization into the presently defined deposits at Kansanshi. Several new targets are already apparent that will be drill tested.
Five rigs are active on resource development drilling around the Kansanshi pits and continue to report vein intercepts beyond the current reserve area, particularly around the North-West pit. These areas continue to add incremental additions to the significantly increased Kansanshi resource and reserve position.
Finland
Approximately 6,500 metres of near mine exploration drilling has been completed over the last few months. The drilling largely focused on the Satovaara intrusion which is thought to be a southerly extension of the Kevitsa intrusive complex.
Extensive programs of scout drilling and prospect mapping have been completed over targets on the Kevitsa North and Moykelma projects during the summer. Although many targets remain inaccessible due to new government access permitting rules, several areas have been highlighted for follow up. Diamond drilling is in progress on a prospect north of Kevitsa where previous drilling has intersected narrow zones of massive nickel-copper sulphide. A downhole electro-magnetic survey has identified 'off-hole conductors' that may represent thicker massive sulphide mineralization. These are the target of current holes.
Reconnaissance mapping and prospecting has been completed over several districts in Scandinavia where conceptual studies have indicated the potential for copper mineralization in sediments. Some prospective stratigraphy was identified by the Company during the mapping and geochemical results are awaited.
Peru
Exploration drilling at Haquira has been suspended since January. Planned recommencement of drilling after the wet season has not been possible due to delays in granting of drilling and environmental permits. Although permits for drilling from the Environmental and Mines departments have been received, a new layer of permitting for 'permission to commence exploration' requiring identification and permission from local stakeholders has stalled any further drilling. Soil sampling and general reconnaissance has continued and several high priority new targets await follow up.
Several new regional prospects are under evaluation in southern Peru. Access to a large land package 40 kilometres east of Haquira was secured via an agreement with Zincore Metals Inc. ("Zincore"). First Quantum has acquired 19.9% of Zincore, and 60% of the invested proceeds will be used for regional exploration. In addition, First Quantum has taken an option to earn 75% of Zincore's early stage Dolores copper porphyry prospect. The Company is now assisting in operating the Dolores exploration program where approximately 7,500 meters of diamond core drilling has recently commenced. Geological mapping plus airborne and ground geophysical surveys will be used to focus the drilling on the extensive area of outcropping porphyry.
Turkey
The company has agreed to terms to enter into a placement and option-joint venture agreement with Empire Mining Corporation ("Empire") who hold rights to a porphyry/skarn copper project at Bursa in western Turkey. Company staff are currently working with Empire to define a drilling and geophysics program over the project which is expected to commence in Q4 2012.
Mauritania & West Africa
Two drill rigs are active on targets near Guelb Moghrein. A diamond core drill programme is in progress on the Oriental Hill prospect adjacent to the current open pit where historically defined oxide copper-gold mineralization is being assessed for metallurgical processing characteristics.
Permit applications are still pending for new exploration projects identified in Cote d'Ivoire and Burkina Faso.
SALES REVENUES
------------------------------------
Sales revenues (after realization Three months ended Nine months ended
charges) September 30 September 30
------------------------------------
2012 2011 2012 2011
---------------------------------------------------------------------------
Kansanshi - copper 462.3 485.9 1,359.4 1,540.9
- gold 44.8 35.7 126.2 101.7
Guelb Moghrein - copper 64.1 72.3 194.2 178.2
- gold 21.5 30.1 72.9 70.8
Ravensthorpe - nickel 79.6 - 287.8 -
- cobalt 1.7 - 5.6 -
Kevitsa - nickel 8.8 - 8.8 -
- copper 18.7 - 18.7 -
- gold, PGE and cobalt 8.1 - 8.1 -
Corporate and other 15.2 27.0 94.1 124.6
---------------------------------------------------------------------------
Sales revenues 724.8 651.0 2,175.8 2,016.2
---------------------------------------------------------------------------
Q3 2012 total sales revenues from continuing operations were 11% higher than the prior year period due to the contribution of $81.3 million of revenues from Ravensthorpe and $35.6 million from Kevitsa, offset by a 13% lower average copper price and lower corporate revenues.
The Company's revenues are recognized at provisional prices when title passes to the customer. Subsequent adjustments for final pricing are materially offset by derivative adjustments and shown on a net basis in cost of sales (see "Hedging Program" for further discussion).
------------------------------------
Three months ended Nine months ended
Copper selling price (per lb) September 30 September 30
------------------------------------
2012 2011 2012 2011
---------------------------------------------------------------------------
Average LME cash price 3.50 4.02 3.60 4.12
Realized copper price 3.45 3.84 3.53 4.04
Treatment/refining charges ("TC/RC")
and freight charges (0.26) (0.30) (0.26) (0.26)
---------------------------------------------------------------------------
Net realized copper price 3.19 3.54 3.27 3.78
---------------------------------------------------------------------------
The LME copper price averaged $3.50/lb for the quarter, a decrease of $0.52/lb from the average for Q3 2011. Copper traded flat during July and August ranging from $3.32/lb to $3.53/lb before appreciating in early September achieving a high of $3.83/lb before closing at $3.75/lb end of September prompted by the European Central Bank bond purchase program and China infrastructure spending announcements.
------------------------------------
Three months ended Nine months ended
Nickel selling price (per lb) September 30 September 30
------------------------------------
2012 2011 2012 2011
---------------------------------------------------------------------------
Average LME cash price 7.41 10.01 8.04 11.10
Realized nickel price per payable pound 7.69 - 8.04 -
TC/RC charges (0.44) - (0.22) -
---------------------------------------------------------------------------
Net realized nickel price per payable
pound 7.25 - 7.83 -
---------------------------------------------------------------------------
The LME nickel price averaged $7.41/lb for the quarter, a decrease of $2.60/lb from the average for Q3 2011. Nickel prices traded downwards during the first half of the quarter before rebounding mid-August and September to close at a high of $8.40/lb stimulated by the European Central Banks and US Federal Reserve's bond purchase program announcements.
SUMMARY FINANCIAL RESULTS
------------------------------------
Three months ended Nine months ended
September 30 September 30
------------------------------------
2012 2011 2012 2011
---------------------------------------------------------------------------
Gross profit
Kansanshi 223.8 266.7 691.4 1,000.9
Guelb Moghrein 24.3 52.4 70.2 124.3
Ravensthorpe (1.6) - 39.7 -
Kevitsa 17.5 - 17.5 -
Other (3.0) 3.5 (12.8) 0.1
---------------------------------------------------------------------------
Total gross profit 261.0 322.6 806.0 1,125.3
---------------------------------------------------------------------------
Exploration (6.3) (18.5) (36.3) (53.3)
General and administrative (22.5) (24.8) (55.6) (58.0)
Other income (1.0) 18.1 0.7 11.1
Net finance income (costs) 1.2 (1.4) 7.3 (4.5)
Gain on disposal of residual claim and
assets - - 1,217.9 -
Bond inducement costs - (48.4) - (48.4)
Income taxes (99.7) (127.1) (277.3) (411.2)
---------------------------------------------------------------------------
Net earnings for the period 132.7 120.5 1,662.7 561.0
---------------------------------------------------------------------------
Net earnings for the period
attributable to:
Non-controlling interests 25.4 29.6 76.5 108.1
Shareholders of the Company 107.3 90.9 1,586.2 452.9
---------------------------------------------------------------------------
Comparative earnings 107.3 139.3 368.3 501.3
---------------------------------------------------------------------------
Earnings per share
basic $0.23 $0.20 $3.35 $1.03
diluted $0.23 $0.20 $3.33 $1.03
---------------------------------------------------------------------------
Comparative earnings per share $0.23 $0.30 $0.78 $1.14
---------------------------------------------------------------------------
Exploration costs decreased due to the capitalization of exploration development costs at Enterprise from Q1, Q2 and Q3 2012 in the current quarter, resulting in a recovery of $10.1 million in Q3 2012. Other exploration costs in the period comprises primarily of;
-- $6.8 million in Peru
-- $2.2 million in Finland
-- $2.4 million at Guelb Moghrein
-- $2.4 million at Kansanshi
General and administrative costs decreased from Q3 2011 as a reduction in legal costs related to 2011 Republique democratique du Congo ("RDC") matters were partially offset by an increase in personnel costs driven by an increased complement of employees to develop and manage the Company's expanded pipeline of projects.
On January 5, 2012, the Company reached an agreement with ENRC to dispose of its residual claims and assets in respect of the Kolwezi Tailings project, and the Frontier and Lonshi mines and related exploration interests, all located in the Katanga Province of the RDC and to settle all current legal matters relating to these interests for a total consideration of $1.25 billion. The transaction was completed on March 2, 2012. The total consideration was comprised of $750.0 million, paid on March 2, 2012, together with a deferred consideration of $500.0 million in the form of a 3-year Promissory Note with an interest coupon of 3% payable annually in arrears. Under the terms of the acquisition, ENRC acquired, with certain limited exceptions, all of First Quantum's assets and property either physically located within the RDC or relating to the operations formerly carried out by First Quantum and its subsidiaries in the RDC. In connection with the transaction, First Quantum, ENRC, the RDC Government, International Finance Corporation and Industrial Development Corporation have also settled all disputes relating to the companies being sold and their assets and operations in the RDC and each of First Quantum, ENRC, the RDC Government, International Finance Corporation and Industrial Development Corporation have released one another in respect of all claims and judgments relating to the foregoing or to any other matter arising in the RDC on or before the date of closing.
The $1,217.9 million gain recognized on the disposal includes the fair value of proceeds received, net of transaction costs and the underlying net liabilities of subsidiaries disposed of.
The Q3 2012 effective income tax rate was 43% of earnings before taxes. Following the completion of its tax holiday in Mauritania on February 19, 2012, Guelb Moghrein is now subject to Mauritanian income taxes at a rate of 25%.
LIQUIDITY AND CAPITAL RESOURCES
------------------------------------
Three months ended Nine months ended
September 30 September 30
------------------------------------
2012 2011 2012 2011
---------------------------------------------------------------------------
Cash flows from operating activities
- before changes in working capital 282.5 327.0 846.1 1,116.0
- after changes in working capital (99.1) 97.8 272.3 417.5
Cash flows from investing activities
Payments for property, plant and
equipment (365.8) (380.9) (953.3) (814.3)
Proceeds from settlement of RDC
claims and sale of assets - - 736.5 -
Other investing activities (0.1) - (13.7) 9.9
Cash flows from financing activities (16.8) (61.7) (119.0) (203.5)
---------------------------------------------------------------------------
Net cash flows (481.8) (344.8) (77.2) (590.4)
Cash balance 374.9 754.5 374.9 754.5
---------------------------------------------------------------------------
Cash flows from operating activities
per share(1)
before working capital (per share) $0.60 $0.55 $1.79 $1.68
after working capital (per share) $(0.21) $0.21 $0.57 $0.95
---------------------------------------------------------------------------
(1) Cash flows per share is not recognized under IFRS. See "Regulatory
Disclosures" for further information.
Operating cash flows before changes in working capital decreased from the comparative quarter due to higher non-cash expenses in Q3 2011. Changes in working capital during Q3 2012 resulted in a reduction of cash of $481.8 million. The Company paid $183.7 million in Zambian taxes during the period. Increases in accounts receivable and inventory totaled $176.5 million during Q3 2012, resulting in part, from the commencement of operations at Kevitsa.
Cash flows from financing activities comprise primarily of dividend payments made to shareholders of the Company of $29.6 million in Q3 2012. Cash flows from financing activities in Q3 2011 include dividend payments of $25.8 million and bond inducement costs of $48.4 million.
Capital expenditure increased significantly during Q3 2012 to $365.8 million as activity at the Company's key development projects increased according to plan. Q3 2012 capital expenditure comprises primarily of;
-- $213.2 million at Kansanshi for the oxide circuit expansions, smelter
project and mine pit development costs
-- $104.1 million at Sentinel, including deposits, for site development and
long-lead plant and mine equipment
-- $15.8 million at Kevitsa for project completion and development costs
incurred during the commissioning phase
Proceeds from settlement of RDC claims and sale of assets represents the net cash proceeds received during Q1 2012. The $500.0 million promissory note is payable by ENRC on March 2, 2015.
As at September 30, 2012, the Company had the following contractual obligations outstanding:
---------------------------------------------------------------------------
less
than 1 1 - 2 2 - 3 3 - 4 4 - 5
Total year years years years years Thereafter
---------------------------------------------------------------------------
Debt 55.4 40.7 5.1 4.8 4.8 - -
Accounts payable and
current taxes 441.6 441.6 - - - - -
Deferred payments 4.0 0.4 0.2 - - - 3.4
Finance leases 27.6 2.1 2.2 2.4 2.5 2.7 15.8
Commitments 965.1 965.1 - - - - -
Restoration provisions 258.5 1.3 1.3 1.3 1.3 1.3 252.0
---------------------------------------------------------------------------
Total commitments of $965.1 million comprise primarily of capital expenditure for property, plant and equipment related to the development of Sentinel, upgrades at Kansanshi and other projects.
The significant capital expansion and development program is expected to be funded using available cash, future cash flows from operations and debt facilities. Currently the $250.0 million Kevitsa debt facility and $1.0 billion Kansanshi senior term and revolving facility are undrawn and available for drawdown.
On October 10, 2012, the Company completed a senior notes offering for gross proceeds of $350.0 million due 2019. Interest on the senior notes will accrue at 7.25% per annum. The notes are senior obligations of the Company, guaranteed on a subordinated basis by Ravensthorpe and Kevitsa.
Hedging program
As at September 30, 2012, the following derivative positions were outstanding:
----------------------------------------
Maturity September 30, December 31,
2012 2012 2011
----------------------------------------
Asset Liability Asset Liability
---------------------------------------------------------------------------
Foreign currency
USD/EUR extendible collarPrincipal - - - - (0.2)
Strike price -
---------------------------------------------------------------------------
Copper (a)
Futures sales contracts over
quotation period (tonnes) 52,888 1.1 (30.7) 1.9 (5.1)
Average contract price ($/tonne) $7,853
Embedded derivative hedged by
future sales contracts (tonnes) 51,975 - - - -
Average market price ($/tonne) $8,268
---------------------------------------------------------------------------
Net provisional copper exposure
(tonnes) (913)
---------------------------------------------------------------------------
Gold (a)
Futures sales contracts over
quotation period (ounces) 16,950 - (1.9) 3.2 -
Average contract price ($/ounce) $1,702
Embedded derivative hedged by
future sales contracts (ounces) 16,812 - - - -
Average market price ($/tonne) $1,779
---------------------------------------------------------------------------
Net provisional gold exposure
(ounces) (138)
---------------------------------------------------------------------------
Nickel (a)
Futures sales contracts over
quotation period (tonnes) 2,565 - (2.6) - (0.7)
Average contract price ($/tonne) $17,228
Embedded derivative hedged by
future sales contracts (tonnes) 1,664 - - - -
Average market price ($/tonne) $18,520
---------------------------------------------------------------------------
Net provisional nickel exposure
(tonnes) (901)
---------------------------------------------------------------------------
Other
Embedded derivative - (0.1) - (2.4)
---------------------------------------------------------------------------
1.1 (35.3) 5.1 (8.4)
---------------------------------------------------------------------------
a) Provisional pricing and derivative contracts
A portion of the Company's metal sales is sold on a provisional pricing basis whereby sales are recognized at prevailing metal prices when title transfers to the customer and final pricing is not determined until a subsequent date, typically two months later. The difference between final price and provisional invoice price is recognized in net earnings. In order to mitigate the impact of these adjustments on net earnings, the Company enters into derivative contracts to directly offset the pricing exposure on the provisionally priced contracts. The provisional pricing gains or losses and offsetting derivative gains or losses are both recognized as a component of cost of sales. Derivative assets are presented in other assets and derivative liabilities are presented in other liabilities with the exception of copper, gold and nickel embedded derivatives which are included within accounts receivable.
As at September 30, 2012, substantially all of the Company's metal sales contracts subject to pricing adjustments were hedged by offsetting derivative contracts.
EQUITY
At the date of this report, the Company has 476,310,282 shares outstanding. There were no changes in common shares outstanding during Q3 2012.
OTHER ITEMS
Zambian taxation
The Government of the Republic of Zambia ("GRZ") announced in January 2008 a number of proposed changes to the tax regime in the country in relation to mining companies. The Company, through its Zambian subsidiaries, is party to Development Agreements with the GRZ for its existing operations which provide an express right to full and fair compensation for any loss, damages or costs (including interest) incurred by the Company by reason of the government's failure to comply with the tax stability guarantees set out in the Development Agreements and rights of international arbitration in the event of any dispute. The Company's Zambian subsidiaries have complied with the GRZ's new tax regime without prejudice to its rights under the Development Agreement.
Following the change of government in 2011, the first Budget of the new government introduced a further increase in the mineral royalty tax from 3% to 6%, effective April 2012, in breach of the Development Agreements.
In the 2013 Budget, delivered October 2012, the GRZ has decreased the rate of Capital Allowances from 100% per annum to 25% per annum. This will impact the timing of the tax benefit from the Company's significant capital programs at Kansanshi and Sentinel.
Until resolved differently with the GRZ, the Company is recognizing and paying taxes in excess of the Development Agreement, resulting in an effective tax rate of approximately 43% at Kansanshi.
On Behalf of the Board of Directors of First Quantum Minerals Ltd.
G. Clive Newall, President
12g3-2b-82-4461
Listed in Standard and Poor's
Forward-Looking Statements
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. These forward-looking statements are principally included in the Development activities section and are also disclosed in other sections of the document. The forward looking statements include estimates, forecasts and statements as to the Company's expectations of production and sales volumes, expected timing of completion of project development at Kansanshi, Kevitsa and Sentinel, 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, cobalt, nickel, PGE, and sulphuric acid, estimated mineral reserves and mineral resources, our exploration and development program, estimated future expenses, exploration and development capital requirements, the Company's hedging policy, and our 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, we have made numerous assumptions including among other things, assumptions about the price of copper, gold, nickel, PGE, cobalt and sulphuric acid, anticipated costs and expenditures and our ability to achieve our goals. Although our management believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that a forward-looking statement or information herein will prove to be accurate. 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 our 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, costs for inputs such as oil, power and sulphur, political stability in Zambia, Peru, Mauritania, Finland and Australia, adverse weather conditions in Zambia, Finland and Mauritania, labour disruptions, mechanical failures, water supply, procurement and delivery of parts and supplies to the operations, the production of off-spec material.
See our Annual Information Form for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information. Although we have 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 our control. Accordingly, readers should not place undue reliance on forward-looking statements or information. We undertake 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.
First Quantum Minerals Ltd.
Consolidated Statements of Earnings
Unaudited
(expressed in millions of U.S. dollars, except where indicated and share
and per share amounts)
---------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
--------------------------------------------
Note 2012 2011 2012 2011
---------------------------------------------------------------------------
Sales revenues 9 724.8 651.0 2,175.8 2,016.2
Cost of sales 10 (463.8) (328.4) (1,369.8) (890.9)
---------------------------------------------------------------------------
Gross profit 261.0 322.6 806.0 1,125.3
Exploration (6.3) (18.5) (36.3) (53.3)
General and administrative (22.5) (24.8) (55.6) (58.0)
Settlement of RDC claims
and sale of assets 11 - - 1,217.9 -
Bond inducement costs 8d - (48.4) - (48.4)
Other income (expense) (1.0) 18.1 0.7 11.1
---------------------------------------------------------------------------
Operating profit 231.2 249.0 1,932.7 976.7
Finance income 6.5 0.5 17.2 4.0
Finance costs 12 (5.3) (1.9) (9.9) (8.5)
---------------------------------------------------------------------------
Earnings before income
taxes 232.4 247.6 1,940.0 972.2
Income taxes (99.7) (127.1) (277.3) (411.2)
---------------------------------------------------------------------------
Net earnings for the period 132.7 120.5 1,662.7 561.0
---------------------------------------------------------------------------
Net earnings for the period
attributable to:
Non-controlling interests 25.4 29.6 76.5 108.1
Shareholders of the Company 107.3 90.9 1,586.2 452.9
---------------------------------------------------------------------------
Earnings per share
Basic 8b 0.23 0.20 3.35 1.03
Diluted 8b 0.23 0.20 3.33 1.03
Weighted average shares
outstanding (000's)
Basic 8b 473,776 456,865 473,960 438,145
Diluted 8b 476,310 456,865 476,310 438,145
Total shares issued and
outstanding (000's) 8a 476,310 476,301 476,310 476,301
---------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements. For a copy of the notes visit the Company's website at
www.first-quantum.com.
First Quantum Minerals Ltd.
Consolidated Statements of Comprehensive Income
Unaudited
(expressed in millions of U.S. dollars)
---------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
--------------------------------------------
2012 2011 2012 2011
---------------------------------------------------------------------------
Net earnings for the period 132.7 120.5 1,662.7 561.0
Other comprehensive income
(loss)
Unrealized gain (loss) on
available-for-sale
investments 0.3 (0.5) (5.1) (0.8)
Tax on unrealized (gain) loss
on available-for-sale
investments (0.1) 0.1 1.0 0.2
---------------------------------------------------------------------------
Comprehensive income for the
period 132.9 120.1 1,658.6 560.4
---------------------------------------------------------------------------
Total comprehensive income for
the period attributable to:
Non-controlling interests 25.4 29.6 76.5 108.1
Shareholders of the Company 107.5 90.5 1,582.1 452.3
---------------------------------------------------------------------------
132.9 120.1 1,658.6 560.4
---------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements. For a copy of the notes visit the Company's website at
www.first-quantum.com.
First Quantum Minerals Ltd.
Consolidated Statements of Cash Flows
Unaudited
(expressed in millions of U.S. dollars)
---------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
--------------------------------------------
2012 2011 2012 2011
---------------------------------------------------------------------------
Cash flows from operating
activities
Net earnings for the period 132.7 120.5 1,662.7 561.0
Items not affecting cash
Depletion and
amortization 45.0 30.2 118.8 74.9
Unrealized foreign
exchange (income) loss 1.0 (3.7) 1.8 (0.8)
Deferred income tax 42.8 51.6 53.5 31.8
Income tax expense 56.8 75.5 223.6 380.1
Share-based compensation
expense 4.9 2.5 9.9 6.4
Bond inducement costs - 48.4 - 48.4
Net finance (income)
costs (1.2) 1.9 (7.3) 8.5
Settlement of RDC claims
and sale of assets - - (1,217.9) -
Other 0.5 0.1 1.0 5.7
---------------------------------------------------------------------------
282.5 327.0 846.1 1,116.0
Taxes paid (183.7) (224.6) (373.7) (504.1)
Change in non-cash operating
working capital
(Increase) decrease in
trade, other receivables
and derivatives (100.8) 1.6 (125.3) 67.2
Increase in inventories (75.7) (19.7) (134.8) (144.8)
Increase (decrease) in
trade and other payables 14.3 34.3 95.7 (96.0)
Long term incentive plan
contributions (35.7) (20.8) (35.7) (20.8)
---------------------------------------------------------------------------
(99.1) 97.8 272.3 417.5
---------------------------------------------------------------------------
Cash flows from investing
activities
Purchase of property, plant and
equipment (363.7) (321.4) (894.2) (754.8)
Deposits on property, plant and
equipment (2.1) (59.5) (59.1) (59.5)
Proceeds from sale of property,
plant and equipment 1.0 - 1.0 -
Acquisition of investments (1.5) - (17.5) -
Interest received 0.4 - 2.8 9.9
Proceeds from settlement of RDC
claims and sale of assets - - 736.5 -
---------------------------------------------------------------------------
(365.9) (380.9) (230.5) (804.4)
---------------------------------------------------------------------------
Cash flows from financing
activities
Net movement in trading
facility 15.2 (17.1) (7.5) (99.4)
Proceeds on issuance of common
shares - 15.9 - 16.1
Cash paid on bond inducement - (48.4) - (48.4)
Restricted cash - 20.2 - 40.3
Dividends paid (29.6) (25.8) (91.0) (79.3)
Dividends paid to non-
controlling interests - (3.3) (15.8) (10.8)
Finance lease payments (0.9) (0.9) (2.8) (2.8)
Interest paid (1.5) (2.3) (1.9) (19.2)
---------------------------------------------------------------------------
(16.8) (61.7) (119.0) (203.5)
---------------------------------------------------------------------------
Decrease in cash and cash
equivalents (481.8) (344.8) (77.2) (590.4)
Cash and cash equivalents -
beginning of period 856.7 1,099.3 452.1 1,344.9
---------------------------------------------------------------------------
Cash and cash equivalents - end
of period 374.9 754.5 374.9 754.5
---------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements. For a copy of the notes visit the Company's website at
www.first-quantum.com.
First Quantum Minerals Ltd.
Consolidated Balance Sheets
Unaudited
(expressed in millions of U.S. dollars)
---------------------------------------------------------------------------
September December
Note 30, 2012 31, 2011
---------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents 374.9 452.1
Trade and other receivables 373.3 238.1
Inventories 3 789.1 649.9
Current portion of other assets 5 52.7 34.0
---------------------------------------------------------------------------
1,590.0 1,374.1
Non-current assets
Investments 29.9 18.0
Property, plant and equipment 4 4,508.1 3,824.4
Promissory note receivable 11 479.8 -
Other assets 5 151.2 81.5
---------------------------------------------------------------------------
Total assets 6,759.0 5,298.0
---------------------------------------------------------------------------
Liabilities
Current liabilities
Trade and other payables 302.3 273.4
Current taxes payable 139.3 289.4
Current portion of debt 6 40.7 48.1
Current portion of provisions and other
liabilities 38.6 11.0
---------------------------------------------------------------------------
520.9 621.9
Non-current liabilities
Debt 6 14.7 14.8
Provisions and other liabilities 288.2 286.4
Deferred income tax liabilities 263.8 206.4
---------------------------------------------------------------------------
Total liabilities 1,087.6 1,129.5
---------------------------------------------------------------------------
Equity
Share capital 1,924.8 1,950.6
Retained earnings 3,219.0 1,723.8
Accumulated other comprehensive income (loss) (2.9) 1.2
---------------------------------------------------------------------------
Total equity attributable to shareholders of the
Company 5,140.9 3,675.6
Non-controlling interests 530.5 492.9
---------------------------------------------------------------------------
Total equity 5,671.4 4,168.5
---------------------------------------------------------------------------
Total liabilities and equity 6,759.0 5,298.0
---------------------------------------------------------------------------
Commitments 15
---------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements. For a copy of the notes visit the Company's website at
www.first-quantum.com.
First Quantum Minerals Ltd.
Consolidated Statements of Changes in Shareholders' Equity
Unaudited
(expressed in millions of U.S. dollars)
---------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
--------------------------------------------
Note 2012 2011 2012 2011
---------------------------------------------------------------------------
Share capital
Common shares
Balance - beginning of
period 2,003.8 1,479.5 2,003.8 1,479.3
Shares issued and share
options exercised - 15.9 - 16.1
Conversion of
convertible bonds 8d - 508.3 - 508.3
---------------------------------------------------------------------------
Balance - end of period 2,003.8 2,003.7 2,003.8 2,003.7
---------------------------------------------------------------------------
Equity portion of
convertible bonds
Balance - beginning of
period - 48.3 - 48.3
Conversion of convertible
bonds 8d - (48.3) - (48.3)
---------------------------------------------------------------------------
Balance - end of period - - - -
---------------------------------------------------------------------------
Treasury shares
Balance - beginning of
period (67.6) (56.8) (68.0) (57.1)
Restricted and
performance stock
units vested 5.9 9.0 6.3 9.3
Shares purchased (35.7) (20.8) (35.7) (20.8)
---------------------------------------------------------------------------
Balance - end of period (97.4) (68.6) (97.4) (68.6)
---------------------------------------------------------------------------
Contributed surplus
Balance - beginning of
period 19.4 19.5 14.8 15.9
Share-based
compensation expense
for the period 4.9 2.5 9.9 6.4
Restricted and
performance stock
units vested (5.9) (9.0) (6.3) (9.3)
---------------------------------------------------------------------------
Balance - end of period 18.4 13.0 18.4 13.0
---------------------------------------------------------------------------
Total share capital 1,924.8 1,948.1 1,924.8 1,948.1
---------------------------------------------------------------------------
Retained earnings
Balance - beginning of
period 3,141.3 1,600.6 1,723.8 1,292.1
Earnings for the period
attributable to
shareholders of the
Company 107.3 90.9 1,586.2 452.9
Dividends 8c (29.6) (25.8) (91.0) (79.3)
---------------------------------------------------------------------------
Balance - end of period 3,219.0 1,665.7 3,219.0 1,665.7
---------------------------------------------------------------------------
Accumulated other
comprehensive income
Balance - beginning of
period (3.1) 0.8 1.2 1.0
Other comprehensive
income (loss) for the
period 0.2 (0.4) (4.1) (0.6)
---------------------------------------------------------------------------
Balance - end of period (2.9) 0.4 (2.9) 0.4
---------------------------------------------------------------------------
Non-controlling interests
Balance - beginning of
period 528.3 448.8 492.9 377.8
Earnings attributable
to non-controlling
interests 25.4 29.6 76.5 108.1
Disposal of
subsidiaries - - 0.1 -
Dividends (23.2) (3.3) (39.0) (10.8)
---------------------------------------------------------------------------
Balance - end of period 530.5 475.1 530.5 475.1
---------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements. For a copy of the notes visit the Company's website at
www.first-quantum.com.
Contacts:
First Quantum Minerals Ltd. - North American contact
Sharon Loung
Director, Investor Relations
(647) 346-3934 or Toll Free: 1 (888) 688-6577
(604) 688-3818 (FAX)
sharon.loung@fqml.com
First Quantum Minerals Ltd. - United Kingdom contact
Clive Newall
President
+44 140 327 3484
+44 140 327 3494 (FAX)
clive.newall@fqml.com
www.first-quantum.com
