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First Quantum Minerals Reports Fourth Quarter And Year-End 2021 Results

TORONTO, Feb. 15, 2022 (GLOBE NEWSWIRE) -- First Quantum Minerals Ltd. (“First Quantum” or the “Company”) (TSX: FM) today reported results for the three months and year-ended December 31, 2021. For the three months ended December 31, 2021 (“Q4”), the Company reported net earnings attributable to shareholders of the Company of $247 million ($0.36 per share), adjusted earnings1 of $306 million ($0.44 per share2), and cash flows from operating activities of $760 million ($1.10 per share2). For the year-ended 2021, the Company reported net earnings attributable to shareholders of the Company of $832 million ($1.21 per share), adjusted earnings1 of $826 million ($1.20 per share2), and cash flows from operating activities of $2,885 million ($4.19 per share2).

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

FOURTH QUARTER SUMMARY

  • Fourth quarter financial results benefitted from higher sales volumes and a higher realized copper price2 of $4.08 per lb as the Company’s hedge profile continued to decline, partially offset by higher costs. The Company’s exposure to the strong copper price environment is expected to continue to improve with the declining profile of the hedge book with no new additional copper hedges were entered into during the fourth quarter. On the basis of continued strong operational performance, the Company anticipates continued strong future cash flow and expects to be in a position to continue its debt reduction program, to advance growth programs, to support Environmental, Social & Governance (“ESG”) initiatives and to cautiously increase dividend payments in 2022.
  • Q4 2021 copper production totalled 201,823 tonnes, taking the full year production to 816,435 tonnes, the highest annual copper production in First Quantum’s history. Through advancement of its brownfield portfolio, the Company sees a path to 1 million tonnes of copper production.
  • Copper C1 cash costs2 averaged $1.39 per lb during the quarter. While operating costs are facing inflationary pressures, Q4 2021 was also impacted by higher electricity costs due to regular maintenance shutdown works to Unit 1 of the power station at Cobre Panama. During the quarter, however, there was a non-recurring reduction in provisions at Kansanshi from the Zambian Electricity Supply Corporation Limited (“ZESCO”) arbitration case that was settled in December 2021.

Adjusted earnings (loss) and EBITDA are non-GAAP financial measures which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. Adjusted earnings (loss) and EBITDA were previously named comparative earnings and comparative EBITDA, respectively, and the composition remains the same. See “Regulatory Disclosures” in this News Release for a reconciliation of EBITDA and adjusted earnings (loss) to the IFRS measures. The use of adjusted earnings (loss) and EBITDA represents the Company’s adjusted earnings (loss) metrics.
2 Adjusted earnings (loss) per share, cash flows from operating activities per share, realized metal prices, and copper C1 cash costs (C1) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial ratios disclosed by other issuers.

  • Cash flow from operating activities was $760 million for Q4 2021 and cumulatively $2,885 million for the full year 2021. Net debt1 decreased by $249 million during the quarter, bringing the balance down to $6,053 million as at December 31, 2021. The Company expects to achieve the previously announced $2 billion debt reduction target in H1 2022 and has increased the short to medium term target by an additional $1 billion. A new dividend policy was announced on January 17, 2022.

Q4 2021 OPERATIONAL HIGHLIGHTS

As previously reported, fourth quarter total copper production of 201,823 tonnes was down 4% from Q3 2021. Production declined quarter-over-quarter as a result of expected lower ore grades at Cobre Panama while production at Kansanshi and Sentinel remained consistent with Q3 2021 levels. Copper C1 cash costs2 averaged $1.39 per lb during the quarter, up 10% from the previous quarter, as the company continued to experience cost increases related to freight and fuel. For the full year 2021, First Quantum achieved its highest ever annual copper production of 816,435 tonnes, a 5% increase from 2020, attributable to record production at Cobre Panama and the resilience of the other operations. Copper C1 cash costs2 averaged $1.30 per lb for the year, the midpoint of the Company’s guidance range of $1.25 to $1.35 per lb.

  • Cobre Panama produced 80,030 tonnes of copper in Q4 2021, a decrease of 8% quarter-over-quarter principally due to expected lower ore grades based on the mine plan. During the quarter, Unit 1 of the power plant continued maintenance shutdown works, which were completed in late January. Although replacement power for Unit 1 was sourced from the grid, a 7-day unplanned shutdown of Unit 2 impacted total tonnes milled during the quarter. However, Cobre Panama set a record in monthly copper production in October. Copper C1 cash cost2 for the quarter was $1.57 per lb, a 24% increase from Q3 2021 as electricity was drawn from the grid at spot rates during the period of maintenance to the power station.
  • Kansanshi copper production in the fourth quarter of 2021 was 51,939 tonnes, a slight improvement over Q3 levels on improved ore grades. Copper C1 cash costs2 were $0.79 per lb in Q4 2021, down 26% from the previous quarter. Copper C1 cash costs during the quarter benefitted from a reduction on operational provisions following the conclusion of the arbitration case on electricity prices charged by ZESCO in December 2021. This is a one-time benefit that is not expected to recur in future quarters.
  • Sentinel delivered its best quarterly production of the year with 60,197 tonnes of copper produced on record quarterly throughput rates equivalent to 60 million tonnes per annum (“Mtpa”). Sentinel copper C1 cash cost2 in the fourth quarter of $1.51 per lb was up 10% quarter-over-quarter, reflecting inflationary pressures such as higher consumables, fuel and labour costs.
  • Copper sales in Q4 2021 totalled 213,087 tonnes, up from 194,278 tonnes in Q3 2021. In the fourth quarter, there was a recovery in sales volumes at Kansanshi and Sentinel as a number of planned shipments from the third quarter were rolled into the fourth quarter. Logistical challenges for Zambian sales are expected to continue throughout the first quarter of 2022.
  • Total gold production for Q4 2021 was 74,945 ounces, a 4% decrease from the previous quarter, mainly attributable to lower gold production at Cobre Panama. Gold sales volumes of 79,403 ounces for the fourth quarter remained fairly consistent with the prior quarters in the year.
  • Ravensthorpe had its lowest quarterly nickel production of the year at 3,385 contained tonnes. Fourth quarter production was impacted by the delayed transition to the Shoemaker Levy orebody and unplanned maintenance at the power plant main steam pipe. However, commissioning of the Shoemaker Levy conveyor was completed later in the quarter and the resulting material handling performance and beneficiation upgrade was improved compared to the Hale Bopp ore, in line with expectations. Skilled labour availability and high sulphur prices remain a challenge.

1 Net debt is a supplementary financial measure which does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”
2 Cash cost of copper production (C1) is a non-GAAP financial ratio which does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”

CONSOLIDATED OPERATING HIGHLIGHTS

 QUARTERLYFULL YEAR
 Q4 2021Q3 2021Q4 202020212020
Cobre Panama80,03087,24265,520331,000205,548
Kansanshi51,93950,98752,630202,159221,487
Sentinel60,19759,93162,993232,688251,216
Other sites9,65711,69922,02850,588100,660
Copper production (tonnes)1201,823209,859203,171816,435778,911
Copper sales (tonnes)213,087194,278217,041821,889764,471
Gold production (ounces)74,94578,12468,747312,492265,112
Gold sales (ounces)279,40379,77370,905321,858277,291
Nickel production (contained tonnes)3,3854,2485,60316,81812,695
Nickel sales (contained tonnes)3,7564,0555,34317,07812,120

CONSOLIDATED FINANCIAL HIGHLIGHTS

 QUARTERLYFULL YEAR
 Q4 2021Q3 2021Q4 2020 2021 2020
Sales revenues3 2,061 1,747 1,562 7,212 5,070
Gross profit 784 613 443 2,562 1,077
Net earnings (loss) attributable to shareholders of the Company 247 303 9 832 (180)
Basic earnings (loss) per share$0.36$0.44$0.01$1.21($0.26)
Diluted earnings (loss) per share$0.36$0.44$0.01$1.20($0.26)
Cash flows from operating activities 760 703 533 2,885 1,613
Net debt4 6,053 6,302 7,409 6,053 7,409
EBITDA4,5 1,085 886 725 3,684 2,152
Adjusted earnings (loss)4 306 197 53 826 (46)
Adjusted earnings (loss) per share6$0.44$0.29$0.08$1.20($0.07)
Cash cost of copper production (C1) (per lb)7$1.39$1.26$1.28$1.30$1.21
Total cost of copper production (C3) (per lb)7$2.39$2.22$2.20$2.23$2.11
All-in sustaining cost (AISC) (per lb)7$2.05$1.87$1.77$1.88$1.63
Realized copper price (per lb)7$4.08$3.68$2.97$3.64$2.74

1 Production is presented on a contained basis, and is presented prior to processing through the Kansanshi smelter.
2 Excludes refinery-backed gold credits purchased and delivered under the precious metal streaming arrangement.
3 Sales revenues and cost of sales in the year ended 2020 have been reduced by $129 million from previously reported values as refinery-backed gold and silver credits on the Company’s precious metal stream arrangement are now netted within sales revenues rather than included in cost of sales.
4 EBITDA and adjusted earnings (loss) are non-GAAP financial measures and net debt is a supplementary financial measure. These do not have a standardized meaning under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Adjusted earnings have been adjusted to exclude items from the corresponding IFRS measure, net earnings (loss) attributable to shareholders of the Company, which are not considered by management to be reflective of underlying performance. The Company has disclosed these measures to assist with the understanding of results and to provide further financial information about the results to investors and may not be comparable to similar financial measures disclosed by other issuers. The use of adjusted earnings (loss) and EBITDA represents the Company’s adjusted earnings (loss) metrics. See “Regulatory Disclosures”.
5 Adjustments to EBITDA in 2021 relate principally to foreign exchange revaluations (2020 - foreign exchange revaluations).
6 Adjusted earnings (loss) per share is a non-GAAP financial ratio, which does not have a standardized meaning under IFRS, and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
7 Realized metal prices, all-in sustaining cost (AISC), cash cost of copper production (C1), and total cost of copper production (C3) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.

FINANCIAL HIGHLIGHTS

Financial results for the fourth quarter benefitted from higher sales volumes and a higher realized copper price1 of $4.08 per lb as the Company’s hedge profile continued to decline, partially offset by higher costs.

  • Q4 2021 adjusted earnings were $306 million ($0.44 adjusted earnings per share), a significant improvement from Q3 2021 of $197 million ($0.29 per share). Net earnings included a total impairment charge of $44 million against the Sese Integrated Power project, exploration assets and housing assets.
  • Gross profit of $784 million and EBITDA of $1,085 million for the quarter were higher (28% and 22%, respectively) than the preceding quarter.
  • Cash flows from operating activities was $760 million for Q4 2021 and cumulatively $2,885 million for the full year 2021.
  • Debt reduction: Net debt3 decreased by $249 million during the quarter, bringing the balance down to $6,053 million as at December 31, 2021. Net debt3 decreased by $1,356 million during the year. At December 31, 2021, total debt was $7,912 million.
  • Debt restructure: On October 14, 2021, the Company signed a new $2.925 billion Term Loan and Revolving Credit Facility (the "Facility"). This new Facility replaces the existing $2.7 billion Term Loan and Revolving Credit Facility due to mature December 2022. The new $2.925 billion Facility comprises a $1.625 billion Term Loan Facility and a $1.3 billion Revolving Credit Facility, maturing in 2025 and is syndicated to a group of long-standing relationship banks of First Quantum. The Facility was used to fully prepay and cancel amounts outstanding on the existing facility, to fully prepay and cancel a bilateral bank facility for $175 million and for general corporate purposes. Repayments on the term loan will commence in December 2022. The Facility has a single Net debt3 to EBITDA ratio covenant set at 3.5 times over the Facility term.
  • Note redemption: On December 7, 2021, the Company redeemed $600 million of the 2023 Notes at a redemption price of 101.813%. The portion of the outstanding 2023 Notes to be redeemed was allocated on a lottery drawing basis at the redemption plus accrued and unpaid interest.
  • As previously announced, with the company on track to meet the previously announced $2 billion debt reduction target during the first half of 2022, the target for debt reduction in the short to medium term has increased by $1 billion.
  • The Company has declared a final dividend of $0.005 Canadian dollar (“CDN”) per share, in respect of the financial year-ended December 31, 2021. The final dividend together with the interim dividend of CDN$0.005 per share is a total of CDN$0.01 per share for the 2021 financial year.
  • A new dividend policy was also adopted by the Company. The Company intends to pay, on a semi-annual basis, a performance dividend (the “Performance Dividend”) that represents, in the aggregate, 15% of available cash flows generated after planned capital spending and distributions to non-controlling interests. It is expected that a minimum annual base dividend of CDN$0.10 per share consisting of semi-annual dividends of CDN$0.05 per share will be part of the Performance Dividend.
  • Copper price hedges: At December 31, 2021, all of the Company’s unmargined copper forward sales contracts have matured, with no new hedges put in place. At February 15, 2022, the Company had 40,000 tonnes of unmargined zero cost copper collar sales contracts with maturities to June 2022 at weighted average prices of $3.63 per lb to $4.68 per lb outstanding. Copper sales in the fourth quarter were 24% hedged. Approximately 5% of expected copper sales for the next 12 months are hedged to unmargined zero cost collar sales contracts.

1 Realized metal prices and adjusted earnings (loss) per share are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”
2 Adjusted earnings (loss) and EBITDA are non-GAAP financial measures which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures” in this News Release for a reconciliation of EBITDA and adjusted earnings (loss) to the IFRS measures. The use of adjusted earnings (loss) and EBITDA represents the Company’s adjusted earnings (loss) metrics.
3 Net debt is a supplementary financial measure which does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers.

2022 to 2024 GUIDANCE UPDATE

Three-year guidance on production, C1 cash costs1, AISC1 and capital expenditures that was previously disclosed on January 17, 2022 remains unchanged. Copper and nickel production are forecast to grow to 850,000 to 910,000 tonnes and 40,000 to 50,000 tonnes, respectively, by 2024. Capital cost guidance has been guided to $1,250 million in 2022 and 2023 and $1,375 million in 2024.

  • Cobre Panama is expected to produce 330,000 to 360,000 tonnes of copper and 135,000 to 150,000 ounces of gold in 2022. Mill throughput is expected to ramp up over the course of 2022 to achieve between 85 and 90 Mtpa. For 2022 as a whole, grades and recoveries are expected to be consistent with 2021 levels but will fluctuate from quarter to quarter. The three-year guidance period for Cobre Panama includes the CP100 Expansion, which includes a new primary crushed ore screening facility, process water upgrades and the addition of a sixth ball mill. Completion of construction works and commencement of commissioning is targeted for the first quarter of 2023 to allow for a ramp up of production over the course of the year and achieve a throughput rate of 100 Mtpa by the end of 2023. A Letter of Intent was signed for incremental electrical supply for the CP100 Expansion, approximately 60-80MW, and is expected to be renewable power, specifically hydroelectricity, sourced from the Panamanian grid.
  • At Kansanshi, production in 2022 is expected to range from 190,000 to 210,000 tonnes of copper and 120,000 to 130,000 ounces of gold. Based on the current mine plan at Kansanshi, while processed ore is expected to be slightly higher in 2022 relative to 2021, grades are expected to decline over the course of the year from Q4 2021 levels. For the three-year guidance period, copper and gold production in 2024 includes some limited production associated to the S3 expansion, with the development and timing still subject to Board approval.
  • At Sentinel, copper production in 2022 is expected to be between 260,000 to 280,000 tonnes. Grade is expected to improve from 2021 levels throughout 2022 as higher-grade ore is exposed in both the Stage 1 and Stage 2 pits. Construction of the fourth in-pit crusher was completed in the December 2021 and commissioning was completed in January 2022, which will enable the plant to achieve throughput of 62 Mtpa in 2022.
  • 2022 copper production guidance from Other sites is expected to be 30,000 tonnes.
  • Nickel production in 2022 from Ravensthorpe is expected to be 25,000 to 30,000 tonnes with major shutdowns and descales of autoclaves scheduled in March and August of this year. Nickel production for the three-year guidance period includes Enterprise, with first production assumed during 2023. The development timeline for Enterprise is expected to be approximately twelve months and still subject to Board approval.
  • C1 cash cost2 guidance over 2022 to 2024 period for both copper and nickel remains unchanged and reflects recent inflationary and commodity price pressures as well as movement in foreign exchange rates, particularly in Zambia. AISC guidance also reflects higher royalties in Zambia related to copper prices as well as an increase in sustaining capital expenditure. At this stage, guidance assumes no change in royalties in Panama. Copper C1 cash cost2 and AISC2 guidance for 2024 includes some limited contribution from the S3 expansion at Kansanshi. Nickel unit cost guidance does not include Enterprise. By 2024, nickel C1 cash costs2 at Enterprise are expected to range $4.25/lb to $5.25/lb.
  • Guidance on 2022 to 2024 capital expenditures remains unchanged. Within the total project capital expenditure guidance of $2,210 million over the three-year period, approximately $1,000 million relates to Kansanshi, $830 million to Cobre Panama, $60 million to Enterprise and $15 million to Guelb Moghrein.

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

PRODUCTION GUIDANCE

000’s202220232024
Copper (tonnes)810 – 880840 – 910850 – 910
Gold (ounces)285 – 310275 – 300295 – 320
Nickel (contained tonnes)25 – 3030 – 4040 – 50

PRODUCTION GUIDANCE BY OPERATION 1

Copper production guidance (000’s tonnes)202220232024
Cobre Panama330 – 360350 – 380370 – 400
Kansanshi190 – 210190 – 210205 – 220
Sentinel260 – 280270 – 290255 – 270
Other sites303020
Gold production guidance (000’s ounces)   
Cobre Panama135 – 150140 – 155155 – 170
Kansanshi120 – 130105 – 115110 – 120
Other sites303030
Nickel production guidance (000’s contained tonnes)   
Ravensthorpe25 – 3025 – 3025 – 30
Enterprise-5 - 1015 – 20

1 Production is stated on a 100% basis as the Company consolidates all operations.

CASH COST AND ALL-IN SUSTAINING COST

Total Copper202220232024
C1 cash cost (per lb)2$1.30 – $1.50$1.30 – $1.50$1.25 – $1.45
AISC (per lb)2$1.90 – $2.05$1.90 – $2.05$1.85 – $2.00
    


Ravensthorpe Nickel202220232024
C1 cash cost (per lb)2$5.75 - $6.50$5.75 - $6.50$5.50 - $6.25
AISC (per lb) 2$7.00 - $7.75$7.00 - $7.75$6.75 - $7.25

PURCHASE AND DEPOSITS ON PROPERTY, PLANT & EQUIPMENT

 202220232024
Deferred stripping3,4250250275
Sustaining capital4310290290
Project Capital4690710810
Total purchase and deposits on property, plant and equipment1,2501,2501,375

2 Cash costs of copper and nickel production (C1), and all-in sustaining costs (AISC) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
3 Capitalized stripping represents additions to what IFRS refers to as the ‘stripping activity asset’.
4 Capitalized stripping, sustaining capital and project capital are non-GAAP financial measures which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.

PANAMA LAW 9 UPDATE

In July 2021, the Government of Panama (“GOP”) announced the appointment of a high-level commission of senior government ministers and officials, chaired by the Minister of Commerce, to discuss the Company’s concession contract. In September 2021, the Supreme Court upheld its ruling in respect of the clarification motions presented by the Company to the Court in relation to its Law 9 decision announced in September 2018 and the ruling was gazetted in the fourth quarter. We understand that the upholding of the unconstitutionality ruling against Law 9 of 1997 does not have retroactive effects, pursuant to article 2573 of the Code of Judicial Proceedings of Panama, therefore the approval of the mining concession contract which occurred in 1997 with the enactment of Law 9, remains unaltered, providing operation continuity as per status quo. In September 2021, the Ministry of Commerce publicly announced the culmination of the high-level formal discussions on two topics being environmental and labour matters.

During January 2022, the GOP tabled a new proposal, namely that the GOP should receive $375 million in benefits per year from Cobre Panama and that the existing revenue royalty will be replaced by a gross profit royalty. The parties continue to finalize the details behind these principles, including the appropriate mechanics that would achieve this outcome, the necessary protections to the business for downside copper price and production scenarios and to ensure that the new contract and legislation are both durable and sustainable.

Once an agreement is concluded and the full contract is documented, it is expected that the newly drafted legislation will be put to the National Assembly. The Company welcomes the transparency of the robust ministerial commission process and is hopeful that this matter can be concluded shortly.

ZESCO RESOLUTION

In the fourth quarter of 2021, the Company received a favourable resolution on the case that commenced in June 2018 between ZESCO and Kansanshi.

The arbitration hearing took place on August 22, 2018 and concluded in July 2021 with the Tribunal issuing its award in November 2021. The Tribunal found in favour of Kansanshi on the key issues including the appropriate tariff and the return to Kansanshi of the funds held in the segregated account pursuant to the Order. In December 2021, the Tribunal awarded Kansanshi its costs of the arbitration and rejected ZESCO’s application for interpretation of various parts of the Tribunal’s award.

Despite this dispute, the Company’s operations generally maintain a constructive relationship with ZESCO, particularly with regards to the management of technical and supply issues. Operational and technical dialogue between the parties is expected to continue in the normal course.

COVID-19

The ongoing challenges presented by COVID-19 have continued throughout the fourth quarter, with the Omicron variant present on several sites. Fortunately, employees and neighbouring communities are not experiencing as severe symptoms from this wave as previous variants. The focus for this quarter has been to maximize vaccination rates and plan booster vaccination campaigns for 2022.

The Company continues to maintain strict health and sanitary protocols to minimize transmission and support the government health authorities. We continue to work with local communities to develop support processes and encourage vaccination. The Company has also redesigned ways of working, with staggered rosters, remote working and bubble concepts on site to continue operations while limiting the potential spread.

As cases are identified amongst the workforce, they are contained and isolated according to the established protocols and in coordination with local health authorities, with limited impact to operations. The Company continues to employ measures to ensure minimal spread, and the health and well-being of our workforce continues to be a priority.

SUSTAINABILITY

On January 17, 2022, First Quantum published its Inaugural Climate Change Report. First Quantum has set tangible targets with an identified realistic path to reduce unit greenhouse gas emissions by 50% by 2030. The achievement of these targets is not expected to result in significant increases in capital expenditures or operating costs from previous forecasts. Details of the Company’s ESG reporting, including the Company’s primary ESG report, the annual Environment, Safety and Social Data Report, policies and related programs, including the Taskforce on Climate-related Financial Disclosures aligned Climate Change Report, policies and data can be found at: https://www.first-quantum.com/English/sustainability/default.aspx

SOCIAL RESPONSIBILITY

The Company has published its Legacy Report which provides a ten-year overview of the Company’s approach to social responsibility. This report highlights the Company’s environmental, community and economic development initiatives, programs and achievements across the regions in which the operations are located.

COMPLETE FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS

The complete Consolidated Financial Statements and Management’s Discussion and Analysis for the three months and year-ended December 31, 2021 are available at www.first-quantum.com and at www.sedar.com and should be read in conjunction with this news release.

CONFERENCE CALL DETAILS

The Company will host a conference call and webcast to discuss the results on Wednesday, February 16 at 9:00 am (ET).

Conference call and webcast details:
Toll-free North America: 1-800-952-5114
Toronto Local and International: 1-416-406-0743
Toll-free UK: 00-80042228835
Passcode: 8095536#
Webcast: www.first-quantum.com 

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

For further information, visit our website at www.first-quantum.com or contact:

Bonita To, Director, Investor Relations
(416) 361-6400 Toll-free: 1 (888) 688-6577
E-Mail: info@fqml.com 

REGULATORY DISCLOSURES

EBITDA1, ADJUSTED EARNINGS1 AND ADJUSTED EARNINGS PER SHARE2

EBITDA1, adjusted earnings1 and adjusted earnings per share2 exclude certain impacts which the Company believes are not reflective of the Company’s underlying performance for the reporting period. These include impairment and related charges, foreign exchange revaluation gains and losses, gains and losses on disposal of assets and liabilities, one-time costs related to acquisitions, dispositions, restructuring and other transactions, revisions in estimates of restoration provisions at closed sites, debt extinguishment and modification gains and losses, the tax effect on unrealized movements in the fair value of derivatives designated as hedged instruments, and adjustments for expected phasing of Zambian VAT receipts.

 QUARTERLYFULL YEAR
 Q4 2021Q3 2021Q4 20202021 2020
Operating profit722 775 3572,598 695
Depreciation314 288 3261,174 1,217
Other adjustments:     
Foreign exchange (gain) loss(13) (180) 32(159) 225
Impairment expense44 - -44 -
Other expense12 4 820 15
Revisions in estimates of restoration provisions at closed sites6 (1) 27 -
Total adjustments excluding depreciation49 (177) 42(88) 240
EBITDA11,085 886 7253,684 2,152


 Q4 2021Q3 2021Q4 2020 2021  2020
Net earnings (loss) attributable to shareholders of the Company 247  303  9 832  (180)
Adjustments attributable to shareholders of the Company:     
Adjustment for expected phasing of Zambian VAT (2)  4  (5) 16  (80)
Loss on redemption of debt 21  -  (3) 21  5
Other -  -  11 -  5
Total adjustments to EBITDA1 excluding depreciation 49  (177)  42 (88)  240
Tax and minority interest adjustments (9)  67  (1) 45  (36)
Adjusted earnings (loss)1 306  197  53 826  (46)
Earnings (loss) per share as reported$0.36 $0.44 $0.01$1.21 ($0.26)
Adjusted earnings (loss) per share2$0.44 $0.29 $0.08$1.20 ($0.07)

REALIZED METAL PRICES2

Realized metal prices are used by the Company to enable management to better evaluate sales revenues in each reporting period. Realized metal prices are calculated as gross metal sales revenues divided by the volume of metal sold in lbs. Net realized metal price is inclusive of the treatment and refining charges (TC/RC) and freight charges per lb.

OPERATING CASHFLOW PER SHARE2

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.

NET DEBT3

Net debt comprises unrestricted cash and cash equivalents, bank overdrafts and total debt.

1Adjusted earnings (loss) and EBITDA non-GAAP financial measures which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. The use of adjusted earnings (loss) and EBITDA represents the Company’s adjusted earnings (loss) metrics.
2 Adjusted earnings (loss) per share, operating cash flows per share and realized metal prices are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers
3 Net debt is a supplementary financial measure which does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers.

 Q4 2021Q3 2021Q4 2020Q4 2019
Cash and cash equivalents1,8591,9189501,138
Bank overdraft--36615
Current debt313746871838
Non current debt7,5997,4747,4527,360
Net debt16,0536,3027,4097,675

CASH COST2, ALL-IN SUSTAINING COST2, TOTAL COST2

The consolidated cash cost (C1)2, all-in sustaining cost (AISC) 2 and total cost (C3) 2 presented by the Company are measures that are prepared on a basis consistent with the industry standard definitions by the World Gold Council and Brook Hunt cost guidelines but are not measures recognized under IFRS. In calculating the C1 cash cost2, AISC2 and C32, total cost for each segment, the costs are measured on the same basis as the segmented financial information that is contained in the financial statements.

C1 cash cost includes all mining and processing costs less any profits from by-products such as gold, silver, zinc, pyrite, cobalt, sulphuric acid, or iron magnetite and is used by management to evaluate operating performance. TC/RC and freight deductions on metal sales, which are typically recognized as a component of sales revenues, are added to C1 cash cost to arrive at an approximate cost of finished metal.

AISC2 is defined as cash cost (C1) 2 plus general and administrative expenses, sustaining capital expenditure, deferred stripping, royalties and lease payments and is used by management to evaluate performance inclusive of sustaining expenditure required to maintain current production levels.

C32 total cost is defined as AISC2 less sustaining capital expenditure, deferred stripping and general and administrative expenses net of insurance, plus depreciation and exploration. This metric is used by management to evaluate the operating performance inclusive of costs not classified as sustaining in nature such as exploration and depreciation.

1Net debt is a supplementary financial measure which does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers.
2 All-in sustaining cost (AISC), cash cost of copper production (C1), and total cost of copper production (C3) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.

For the three months ended
December 31, 2021
Cobre
Panama
KansanshiSentinelGuelb
Moghrein
Las CrucesÇayeliPyhäsalmiCopperCorporate &
other
RavensthorpeTotal
Cost of sales1,i (485)  (295)  (294)  (50)  (26)  (10)  (8)  (1,168) (15)  (94) (1,277) 
Adjustments:           
Depreciation 154  71  70  6  -  3  -  304 2  8 314 
By-product credits 48  63  -  17  -  4  4  136 -  6 142 
Royalties 16  57  61  1  -  1  -  136 -  4 140 
Treatment and refining charges (30)  (7)  (15)  (2)  -  (1)  -  (55) -  - (55) 
Freight costs (1)  -  (11)  -  -  -  -  (12) -  - (12) 
Finished goods 12  19  (11)  9  1  (5)  -  25 -  8 33 
Other 20  9  8  (2)  -  2  -  37 13  - 50 
Cash cost (C1)2 (266)  (83)  (192)  (21)  (25)  (6)  (4)  (597) -  (68) (665) 
Adjustments:           
Depreciation (excluding depreciation in finished goods) (146)  (60)  (75)  (4)  -  (6)  -  (291) -  (8) (299) 
Royalties (16)  (57)  (61)  (1)  -  (1)  -  (136) -  (4) (140) 
Other (4)  (3)  (2)  1  -  -  -  (8) -  (1) (9) 
Total cost (C3)2 (432)  (203)  (330)  (25)  (25)  (13)  (4)  (1,032) -  (81) (1,113) 
Cash cost (C1)2 (266)  (83)  (192)  (21)  (25)  (6)  (4)  (597) -  (68) (665) 
Adjustments:           
General and administrative expenses (12)  (4)  (8)  -  (1)  -  -  (25) -  (3) (28) 
Sustaining capital expenditure and deferred stripping3 (34)  (47)  (43)  -  -  (1)  -  (125) -  4 (121) 
Royalties (16)  (57)  (61)  (1)  -  (1)  -  (136) -  (4) (140) 
Lease payments (2)  -  -  -  (1)  -  -  (3) -  - (3) 
AISC3 (330)  (191)  (304)  (22)  (27)  (8)  (4)  (886) -  (71) (957) 
AISC (per lb)2$1.94 $1.67 $2.39 $4.57 $4.32 $0.62 $2.93 $2.05  $11.15  
Cash cost – (C1)(per lb)$1.57 $0.79 $1.51 $4.11 $4.01 ($0.44) $2.81 $1.39  $10.93  
Total cost – (C3) (per lb)$2.55 $1.78 $2.59 $4.01 $4.10 $1.19 $2.81 $2.39  $12.87  

Total cost of sales per the Consolidated Statement of Earnings (Loss) in the Company’s annual audited consolidated financial statements.
Cash costs of copper and nickel production (C1), and all-in sustaining costs (AISC) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
Sustaining capital is a non-GAAP financial measures which does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measuresdisclosed by other issuers. See “Regulatory Disclosures”.

For the twelve months ended
December 31, 2021
Cobre
Panama
KansanshiSentinelGuelb
Moghrein
Las CrucesÇayeliPyhäsalmiCopperCorporate &
other
RavensthorpeTotal
Cost of sales1ii (1,711)  (1,045)  (1,116)  (208)  (98)  (57)  (31)  (4,266) (35)  (349) (4,650) 
Adjustments:           
Depreciation 579  220  270  36  13  18  1  1,137 3  34 1,174 
By-product credits 208  220  -  114  -  14  21  577 -  22 599 
Royalties 61  192  203  9  2  8  -  475 -  13 488 
Treatment and refining charges (112)  (26)  (56)  (10)  -  (5)  (2)  (211) -  - (211) 
Freight costs (5)  -  (41)  -  -  (5)  -  (51) -  - (51) 
Finished goods 27  (24)  10  12  3  (7)  -  21 -  10 31 
Other 41  13  16  2  -  2  1  75 32  5 112 
Cash cost (C1)2 (912)  (450)  (714)  (45)  (80)  (32)  (10)  (2,243) -  (265) (2,508) 
Adjustments:           
Depreciation (excluding depreciation in finished goods) (564)  (224)  (270)  (29)  (10)  (21)  (1)  (1,119) -  (34) (1,153) 
Royalties (61)  (192)  (203)  (9)  (2)  (8)  -  (475) -  (13) (488) 
Other (16)  (9)  (8)  -  (1)  -  -  (34) -  (5) (39) 
Total cost (C3)2 (1,553)  (875)  (1,195)  (83)  (93)  (61)  (11)  (3,871) -  (317) (4,188) 
Cash cost (C1)2 (912)  (450)  (714)  (45)  (80)  (32)  (10)  (2,243)   (265) (2,508) 
Adjustments:           
General and administrative expenses (43)  (21)  (33)  (2)  (4)  (1)  -  (104) -  (13) (117) 
Sustaining capital expenditure and deferred stripping3 (106)  (182)  (149)  (1)  -  (5)  -  (443) -  (14) (457) 
Royalties (61)  (192)  (203)  (9)  (2)  (8)  -  (475) -  (13) (488) 
Lease payments (5)  -  -  -  (2)  (1)  -  (8) -  (1) (9) 
AISC2 (1,127)  (845)  (1,099)  (57)  (88)  (47)  (10)  (3,273) -  (306) (3,579) 
AISC (per lb) 2$1.61 $1.96 $2.21 $1.66 $2.91 $1.56 $1.61 $1.88 - $9.87  
Cash cost – (C1) (per lb) 2$1.31 $1.04 $1.44 $1.38 $2.67 $0.99 $1.54 $1.30 - $8.59   
Total cost – (C3) (per lb) 2$2.22 $2.03 $2.40 $2.31 $3.10 $2.01 $1.71 $2.23 - $10.24  

Total cost of sales per the Consolidated Statement of Earnings (Loss) in the Company’s annual audited consolidated financial statements. Refinery-backed credits presented net within revenues.
2 Cash costs of copper and nickel production (C1), and all-in sustaining costs (AISC) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
3 Sustaining capital is a non-GAAP financial measures which does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.

For the three months ended
December 31, 2020
Cobre
Panama
KansanshiSentinelGuelb
Moghrein
Las CrucesÇayeliPyhäsalmiCopperCorporate &
other
RavensthorpeTotal
Cost of sales1,4iii (308)  (255)  (332)  (46)  (81)  (12)  (9)  (1,043) (8)  (68) (1,119) 
Adjustments:           
Depreciation 107  60  90  9  48  3  1  318 -  8 326 
By-product credits 39  54  -  37  -  3  5  138 -  4 142 
Royalties 9  30  45  4  1  1  -  90 -  3 93 
Treatment and refining charges (24)  (6)  (17)  (3)  -  (1)  (1)  (52) -  - (52) 
Freight costs (1)  -  (18)  -  -  (1)  -  (20) -  - (20) 
Finished goods (12)  (1)  26  -  (1)  (2)  -  10 -  (2) 8 
Other 3  4  1  (3)  (2)  1  1  5 8  1 14 
Cash cost (C1)2 (187)  (114)  (205)  (2)  (35)  (8)  (3)  (554) -  (54) (608) 
Adjustments:           
Depreciation (excluding depreciation in finished goods) (110)  (57)  (75)  (11)  (49)  (3)  (1)  (306) -  (9) (315) 
Royalties (9)  (30)