The New Leader in Global Copper. October 31, Third Quarter 2013

Transcription

1 The New Leader in Global Copper October 31, 2013 Third Quarter 2013

2 Cautionary Note Regarding Forward-Looking Statement 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 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 First Quantum s 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, many of which are beyond the control of First Quantum, that might cause actual results, performances, achievements or events not to be anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking statements or information. While First Quantum may elect to update the forward-looking statements at any time, First Quantum does not undertake to update them at any particular time or in response to any particular event, other than as may be required by applicable securities laws. Investors and others should not assume that any forward-looking statement contained in this presentation represents management's estimate as of any date other than the date of this presentation. Neither First Quantum nor any of its directors or officers has verified the accuracy or completeness of information or statements contained herein which are made by or derived from third-party sources (including any projections or estimates made by third-party research analysts). Such third-party sources may have failed to identify events or facts which may have occurred or which may affect the significance or accuracy of any such information or statements. First Quantum has no means of verifying the accuracy or completeness of such information or statements made by or derived from third-party sources or whether there has been any failure by such sources to identify events that may have occurred or may affect the significance or accuracy of any information or statements. This presentation does not constitute an offer to buy or an invitation to sell, or the solicitation of an offer to buy or invitation to sell, any securities of First Quantum or Inmet. Such an offer may only be made pursuant to the offer and takeover bid circular First Quantum has filed with the Canadian securities regulators and pursuant to registration or qualification under the securities laws of any other such jurisdiction. In accordance with applicable Canadian securities regulatory requirements, all mineral reserve and mineral resource estimates disclosed herein have been prepared in accordance with Canadian National Instrument Standards of Disclosure for Mineral Projects ("NI "), classified in accordance with Canadian Institute of Mining Metallurgy and Petroleum's "CIM Standards on Mineral Resources and Reserves Definitions and Guidelines" (the "CIM Guidelines"). The terms "mineral resources", "measured mineral resources", "indicated mineral resources" and "inferred mineral resources" are recognized by Canadian securities regulatory authorities, however, they may not be recognized by the securities regulatory authorities of other jurisdictions. Pursuant to the CIM Guidelines, mineral resources have a higher degree of uncertainty than mineral reserves as to their existence as well as their economic and legal feasibility. Inferred mineral resources, when compared with measured or indicated mineral resources, have the least certainty as to their existence, and it cannot be assumed that all or any part of an inferred mineral resource will be upgraded to an indicated or measured mineral resource as a result of continued exploration. Pursuant to NI , inferred mineral resources may not form the basis of any economic analysis, including any feasibility study. Accordingly, readers are cautioned not to assume that all or any part of a mineral resource exists, will ever be converted into a mineral reserve, or is or will ever be economically or legally mineable or recovered. Note: all dollar amounts in US dollars unless otherwise indicated; C$ indicates Canadian dollars 2

3 Sentinel Project Plant Area Looking North-East 3

4 Sentinel Project Mill Area, Rougher Flotation 4

5 Sentinel Project Concentrate Handling, Filtration and Reagents Area 5

6 Cobre Panama Project Road from Site to Coast 6

7 Cobre Panama Project Site Accommodation 7

8 Cobre Panama Project Breakwater Construction 8

9 Q HIGHLIGHTS Strong production against Q with contribution from acquired operations and lower costs more than offsetting weaker commodity prices Revenue $885m, including $243m contribution from acquired operations (up 22% vs. Q3 2012) Copper production 114.5k tonnes (up 36% or 30.3k tonnes vs. Q3 2012) with 30.8k tonnes from acquired operations Strong copper production at all operations with Las Cruces a record quarter Nickel production 12.5k tonnes (up 26% vs. Q3 2012) including record quarterly production at Ravensthorpe Gold production 65.4k ounces (up 29% vs. Q3 2012) C1 copper $1.16/lb; lower than $1.44/lb Q (1) C1 nickel $4.90/lb; lower than $6.24/lb Q Comparative EBITDA of $394m; up 43% above Q Gross Profit before Inmet acquisition fair value adjustments (2) is 29% higher than Q3 2012: $125m benefit from acquired operations before fair value acquisition adjustments of $32m (2) Higher gold sales volumes at Kansanshi, higher nickel and cobalt sales volumes at Ravensthorpe combined with a full quarter of commercial production and sales at Kevitsa (3) Lower mining and processing costs at Kansanshi combined with lower sulphur prices at Ravensthorpe More than offsetting lower average market prices: copper ($3.21/lb vs. $3.50/lb Q3 2012), nickel ($6.32/lb vs. $7.41/lb Q3 2012) and gold ($1,327/oz vs. $1,651/oz Q3 2012) (1) C1 costs for pre-acquisition operations is $1.32/lb for Q (2) Q gross profit before Inmet acquisition fair value adjustments excludes $31.6m (Q $27.6m) additional depreciation to unwind the uplift to fair value at acquisition date of acquired mineral property plant and equipment and $0.8m (Q $35.6m) for impact of sale of acquired inventory adjusted to fair value at the acquisition date. (3) Kevitsa operation commercial production declared on August 18,

10 PRODUCTION Copper Production ( 000 tonnes) Up 30.3k tonnes from Q Kansanshi in line with Q3 2012, with higher throughput from plant expansions offset by lower grade for oxide. Guelb Moghrein in line with Q production. Kevitsa (1) production of 4.0k tonnes is 0.4k tonnes higher than Q with improved recoveries. 30.8k tonnes production attributable to newly acquired operations Las Cruces, Çayeli and Pyhäsalmi operations with Las Cruces a record quarter. Production for the quarter exceeded Q by 5.3k tonnes and also 1.1k tonnes higher than these operations produced in Q Nickel Production ( 000 tonnes) Up 2.6k tonnes from Q Record quarter production at Ravensthorpe, up 1.4k tonnes from Q driven by increased throughput and grade. Kevitsa (1) production of 2.6k tonnes was higher than Q driven by higher throughput, grade and plant recoveries. Gold Production ( 000 ounces) Up 14.6k ounces from Q Kansanshi production 25% higher than Q as a result of gold circuit enhancements and the reprocessing of tailings containing gold. Guelb Moghrein was in line with Q Kevitsa (1) production of 3.4k ounces increased from Q due to improved throughput and grade. 5.0k ounces attributable to acquired operations for Q (1) Kevitsa operation commercial production declared on August 18,

11 COPPER C1 COST Group Copper C1 reduced by 19% to $1.16/lb for quarter $/lb Group Pre-acquisition Operations Kansanshi Guelb Moghrein Kevitsa (1) Acquired Operations Las Cruces (2) Çayeli (2) Pyhäsalmi (2) 0.65 (0.44) 0.30 Commentary vs. Q3 2012: Q Q Q Lower Copper C1 of $1.32/lb at pre-acquisition operations Kansanshi lower with lower mining costs, lower processing costs mainly attributable to treating lower volumes of high acid consuming ore, combined with a higher gold credit due to a 17% increase in gold sales volumes. Guelb Moghrein 28% higher than Q primarily due to a lower gold credit. Kevitsa (1) 12% lower than Q mainly driven by lower processing costs, lower treatment and refining charges and increased by-product credits in line with increased copper sales. Impact of acquired operations drives Group C1 lower Las Cruces 27% lower due to improved efficiencies in the plant which offset slightly higher mining costs, and a lower freight credit due to a favourable mix of higher grade cathode sales resulting in a higher cathode premium. Çayeli higher primarily due to lower by-product credits resulting from lower realized metal prices. Pyhäsalmi higher due to lower by-product credits driven by lower pyrite sales volumes and lower realized metal prices. (1) Kevitsa operation compared to Q with commercial production declared on August 18, (2) Acquired operations C Costs shown are proforma for each comparative quarter. The method of calculation has been aligned to other FQM operations. 11

12 NICKEL C1 COST Group Nickel C1 for the quarter below full year market guidance $/lb Q Q Q Group Ravensthorpe Kevitsa Ravensthorpe: lower than Q with lower mining costs, processing efficiencies, lower cost of sulphur and a higher cobalt by-product credit. Kevitsa (1) : higher compared to Q due to a lower by-product credit from lower nickel concentrate sales combined with increased freight, treatment and refining charges from a change in customer mix. (1) Kevitsa operation commercial production declared on August 18,

13 FINANCIAL OVERVIEW $ millions Q Q Q Revenue Gross Profit excluding fair value adjustments (1) Gross Profit Operating Profit EBITDA Comparative EBITDA (2) Comparative Earnings (2) Comparative EPS (Basic) (2) Comparative Effective Tax Rate (%) (2) Closing Net Cash/(Net Debt) (2,576) 320 (1,818) Copper C1 Cost ($/lb) Nickel C1 Cost ($/lb) Performance against Q Comparative EBITDA up 43% showing strong cash flow generation from operations despite lower metal prices. Gross profit excluding fair value adjustments (1) 29% higher despite lower metal prices, due to higher gold sales volumes at Kansanshi, higher nickel sales volumes at Ravensthorpe, lower costs recorded at Kansanshi and Ravensthorpe combined with a full quarter contribution from Kevitsa. Group Copper C1 Cost reduced to $1.16/lb benefiting from lower cash costs at acquired operations with also a high proportion of by-product credits. Copper C1 Cost at pre-acquisition operations is $1.32/lb, lower mainly as a result of lower mining and processing costs at Kansanshi combined with an increase in gold by-product credit sales volumes. Group Nickel C1 Cost lower at $4.90/lb benefiting mainly from reduced sulphur costs and processing efficiencies at Ravensthorpe. Comparative effective tax rate of 37% is below prior periods resulting from the lower tax rates of the acquired operations. (1) Q gross profit before Inmet acquisition fair value adjustments excludes $31.6m (Q $27.6m) additional depreciation to unwind the uplift to fair value at acquisition date of acquired mineral property plant and equipment and $0.8m (Q $35.6m) for impact of sale of acquired inventory adjusted to fair value at the acquisition date. (2) Q comparative results adjusted for $0.8m (Q $35.6m) fair value inventory adjustment and $0.0m (Q $12.4m) impairment of investment. 13

14 GROSS PROFIT Q VS. Q Price Lower copper prices (Q LME average $3.21/lb vs. Q $3.50/lb), nickel (LME average $6.32/lb vs. Q $7.41/lb) and gold prices (LBMA average $1,327/ounce vs.q $1,651/ounce). Depreciation Mainly due to use of large projects capitalized subsequent to Q at Kansanshi, combined with higher deprecation at Ravensthorpe in line with an increase in nickel volumes. Sales Volume Pre-acquisition operations: higher gold sales at Kansanshi, combined with higher nickel and cobalt sales volumes at Ravensthorpe partially offset by lower copper sales volumes. Acquired Operations Reflects a full quarter of results from acquired operations before acquisition accounting fair value adjustments. Costs Pre-acquisition operations: focus on cost control and processing efficiencies continues. Savings in acid consumption at Kansanshi, lower sulphur costs at Ravensthorpe partially offset by an increase in treatment and refining charges at Kansanshi. Fair Value Adjustments The additional depreciation over the life of the relevant mines resulting from fair value uplift to mineral properties and plant and equipment recognized at acquisition date will continue at similar levels in future quarters. Substantially all of the fair value adjustments related to finished goods inventory has been unwound by Q

15 QUARTERLY NET DEBT MOVEMENT $m Opening Net Debt at start of Quarter (1,818) EBITDA 393 Working capital and other (306) Taxes paid (42) Dividends to shareholders (1) (41) Capital expenditure (736) Net Interest paid (2) Investments Net cash (debt) movement (20) (6) (758) Closing Net Debt at end of Quarter (2,576) Comprising: Closing Cash (3) 803 Closing Debt (4) (3,379) Available committed undrawn debt facilities at end of Quarter 2,945 (1) Includes $8m paid to non-controlling interest of Kansanshi (2) Includes $10m of capitalized interest. (3) Includes cash and cash equivalents ($617m), restricted cash ($83m) and short term investments ($103m) (4) Includes senior notes ($2.5b), revolving debt facility ($457m), revolving facility ($300m) and short term and other debt ($103m) 15

16 MARKET GUIDANCE Production guidance has been increased from previously disclosed guidance Copper Production Nickel Production Gold Production Tonnes ('000) Post Full Year Acquisition (1) Proforma (2) Kansanshi Guelb Moghrein Kevitsa Pre-acquisition Las Cruces Cayeli Pyhasalmi Acquired mines Total Group Upper range for Group production is unchanged but range has been narrowed. Kansanshi forecast to be in top two quartiles of previously given guidance. Tonnes ('000) Full Year Ravensthorpe Kevitsa 9-10 Total Group Guidance increased at Ravensthorpe. Zinc Production Tonnes ('000) Post Full Year Acquisition (1) Proforma (2) Cayeli Pyhasalmi Total Group Guidance increased at both operations. Ounces ('000) Post Acquisition (1) Kansanshi Guelb Moghrein Kevitsa Pre-acquisition Cayeli 4-5 Pyhasalmi 6-7 Acquired mines Total Group Guidance increased significantly at Kansanshi. Guidance for acquired operations, first given at Q2, has also increased. (1) Includes production from acquired mines from date of acquisition; March 22, 2013 (2) Full year 2013 production including proforma full year production guidance for acquired operations. 16

17 MARKET GUIDANCE Copper C1 Cost guidance Nickel C1 Cost guidance Copper C1 Cost $ $1.45 / lb Nickel C1 Cost $ $5.60 / lb Copper cash cost per lb of copper has been reduced from previous guidance of $1.40 to $1.50. Nickel cash cost per lb of nickel has been reduced by $0.40 from previous guidance. Capital Expenditure Pre-acquisition First Quantum site capital expenditure and development projects remains unchanged at $2.0 billion. Capital expenditure at acquired operations is unchanged, and including Cobre Panama is estimated to total approximately $650m for the post acquisition period, making total Group capital expenditure estimate for the year of $2.65 billion. 17