First Quantum Minerals Ltd.
TSX : FM
LSE : FQM

First Quantum Minerals Ltd.

October 30, 2014 17:00 ET

First Quantum Minerals Reports Third Quarter 2014 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 30, 2014) -

(In United States dollars, except where noted otherwise)

First Quantum Minerals Ltd. ("First Quantum" or the "Company") (TSX:FM)(LSE:FQM) today announced comparative earnings1 of $137.2 million or $0.23 per share for the three months ended September 30, 2014. Cash flow from operations, before working capital changes and tax paid, amounted to $339.8 million or $0.58 per share2.

THIRD QUARTER 2014 HIGHLIGHTS3

  • Production affected by lower grades and temporary shutdown:
    • Copper down 11% to 101,553 tonnes
    • Nickel down 5% to 11,884 tonnes
  • Revenues stable on higher metal prices:
    • 31% higher realized nickel price offset lower copper and nickel sales volumes
  • Low cash cost of production maintained:
    • Copper up 24% to $1.44 per pound
    • Nickel down 8% to $4.52 per pound
  • Growth projects supported by strong cash flow from operations and available financial resources:
    • $339.8 million of cash flow generated by operations, before changes in working capital and taxes paid2
    • $534.0 million cash balance including restricted cash at September 30, 2014
    • Undrawn and available facilities of $1,444.7 million
  • $786.5 million invested in the expansion of the production base
    • Sentinel advanced to 98% overall completion; connected to national power grid; staged commissioning underway
    • Phase 1 copper smelter advanced to 92% overall completion; construction completion expected during Q4 2014
    • Enterprise nickel advanced; environmental approval received
    • Acquisition of Lumina Copper Corporation completed during the quarter

1 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 International Financial Reporting Standards ("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.

2 Cash flows per share is not recognized under IFRS. In calculating the operating cash flow per share, the operating cash flow calculated for IFRS purposes is divided by the basic weighted average common shares outstanding for the respective period.

3 Results are compared to the third quarter 2013, unless noted otherwise.

CEO'S COMMENTS

"Good operations and cost management continued at our operations. While some benefit of this work was overshadowed by the processing of lower ore grades during the quarter compared to last year, most of this was anticipated and included in our outlook. However, the ongoing lack of local smelting availability in Zambia continues to influence Kansanshi's operations and results as the mine's strategy to favor copper cathode production is constrained by the availability and cost of sulphuric acid and ore accessibility. These constraints will ease substantially when our new smelter is in operation beginning in 2015. To maintain production, we have therefore also retained a large stock of sulphide concentrates to be processed by this smelter," noted Philip Pascall, First Quantum's CEO and Chairman.

"On the smelter, construction continued apace during the quarter and cold commissioning has been either completed or underway in many areas. Sentinel crossed several milestones during the quarter including the installation, dry run commission and hydro testing of the first semi-mobile, in-pit crusher and connection to the national power grid. As previously discussed, Sentinel's Train 1 start-up is being synchronized with that of the smelter.

"The Company continues to maintain a well-financed balance sheet through this important stage in its growth by means of well-run operations and a supportive banking syndicate. The copper price has performed relatively well despite some bumps in the global economy. Underlying the copper price are market indications that the once-expected supply surplus is not likely to materialize in 2014. This is consistent with our belief in the fundamentals of copper and with our strategy to expand the Company's production and resource capacities globally.

"When our latest projects, being the smelter and Sentinel, are completed and operating, they are expected together to employ an additional 2,400 people, add significantly to Zambia's copper production and contribute meaningfully to its gross national income. It is therefore of concern for the Company that the tax rules will be changed at a time when stability in mining fiscal policy is crucial in the encouragement and support for further investment in our industry and in Zambia," Mr. Pascall concluded.

FINANCIAL HIGHLIGHTS

Three months ended
September 30
Nine months ended
September 30
(U.S. dollars millions, except where noted otherwise) 2014 2013 2014 20131
Sales revenues 885.2 885.4 2,720.8 2,655.9
Gross profit 240.4 303.1 814.6 814.4
EBITDA2 366.7 393.1 1,111.8 987.7
Net earnings attributable to shareholders of the Company3 121.2 143.0 381.6 327.3
Earnings per share $0.21 $0.24 $0.65 $0.59
Diluted earnings per share $0.20 $0.24 $0.64 $0.59
Comparative earnings3 137.2 143.6 397.6 401.0
Comparative earnings per share3 $0.23 $0.24 $0.68 $0.73
Cash flow from operations, before changes in working capital and taxes paid 339.8 410.3 1,098.5 1,016.6

1 Financial results for the nine months ended September 30, 2013 include the results of the Las Cruces mine (100%), the Çayeli mine (100%), and the Pyhäsalmi mine (100%) (together "the acquired operations") from March 22, 2013, the date of acquisition.

2 Earnings before interest, tax, depreciation and amortization ("EBITDA") is not recognized under IFRS. Refer to the "Regulatory Disclosures" section in the Management's Discussion and Analysis ("MD&A") for the three and nine months ended September 30, 2014, for further information.

3 Net 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.

OPERATING HIGHLIGHTS

Three months ended
September 30
Nine months ended
September 30
(U.S. dollars where applicable) 2014 2013 2014 20131
Copper production (tonnes) 101,553 114,488 322,479 297,490
Copper sales (tonnes) 99,132 105,859 316,367 290,459
Cash cost of copper production (C1)2 (per lb) $1.44 $1.16 $1.42 $1.33
Realized copper price (per lb) $3.11 $3.10 $3.06 $3.22
Nickel production (contained tonnes) 11,884 12,485 35,945 34,432
Nickel sales (contained tonnes) 10,812 12,335 35,560 35,310
Cash cost of nickel production (C1)2 (per lb) $4.52 $4.90 $4.38 $5.20
Realized nickel price (per payable lb) $8.47 $6.45 $7.71 $7.00
Gold production (ounces) 51,446 65,368 172,333 184,879
Gold sales (ounces) 52,235 60,391 165,496 178,563

1 Operating results for the nine months ended September 30, 2013 include those of the Las Cruces mine (100%), the Çayeli mine (100%) and the Pyhäsalmi mine (100%) from March 22, 2013, the date of acquisition.

2 Cash costs (C1) is not recognized under IFRS. Refer to the "Regulatory Disclosures" section in the MD&A for the three and nine months ended September 30, 2014, for further information.

UPDATED FULL YEAR 2014 GUIDANCE

  • Total production
    • copper between 419,000 and 436,000 tonnes
    • nickel between 45,000 and 48,000 tonnes
    • gold between 218,000 and 237,000 ounces
    • zinc between 55,000 and 60,000 tonnes
    • palladium between 22,000 and 24,000 ounces
    • platinum between 26,000 and 29,000 ounces
  • Cash cost of production
    • copper between $1.32 and $1.48 per pound
    • nickel between $4.40 and $4.90 per pound
  • Capital expenditures of between $2.2 billion and $2.4 billion, excluding capitalization of any pre-commercial production costs and capitalized interest

CONFERENCE CALL & WEBCAST

The Company will host a conference call and webcast to discuss the results on Friday, October 31, 2014.

Conference call and webcast details are as follows:

Date: October 31, 2014
Time: 9:00 am (EDT); 1:00 pm (GMT); 6:00 am (PDT)
Webcast: http://www.first-quantum.com/
Dial in: North America: 800 750 5857 (toll free)
International and North America: 1 647 722 6879
United Kingdom: 0800 496 0822 (toll free) or 44 207 855 8972
Replay: Canada and international: 1 416 626 4100
OR
Toll free North America: 800 558 5253
Passcode: 21736405

The conference call replay will be available from 11:00 am (EDT) October 31, 2014 until 11:59 pm (EST) on November 7, 2014.

COMPLETE FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS

The complete unaudited condensed interim consolidated financial statements, and MD&A for the three and nine months ended September 30, 2014 are available at www.first-quantum.com and should be read in conjunction with this news release.

BASIS OF PRESENTATION

This news release and the Company's financial statements have been prepared in accordance with IFRS and are presented in United States dollars, except where noted. Changes in accounting policies have been applied consistently to comparative periods unless otherwise noted.

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

For further information visit our website at www.first-quantum.com

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. 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, Sentinel, Enterprise and Cobre Panama, 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, zinc, pyrite, PGE, 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 the price of copper, gold, nickel, zinc, pyrite, PGE, cobalt and sulphuric acid, anticipated costs and expenditures and the ability to achieve the Company's goals. Although 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 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, 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 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 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 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.

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