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First Quantum Minerals Announces 2019 Preliminary Production and 2020-2022 Guidance

TORONTO, Jan. 09, 2020 (GLOBE NEWSWIRE) — First Quantum Minerals Ltd. (“First Quantum” or the “Company”) (TSX:FM) today announced preliminary production for the three months and year ended December 31, 2019, and guidance for production, capital expenditure and costs for the years 2020 to 2022.

2019 PRELIMINARY PRODUCTION

The Company achieved its highest ever annual copper production of 702,000 tonnes, an increase of 96kt from 2018 production. Copper production in Q4 2019 was 204kt compared to 158kt in the same quarter in 2018.

Cobre Panama’s final mill (8th mill), came on line in mid-December, providing additional capacity on the third milling train.  Mill throughput can now ramp-up to annualized production of 85 million tonnes.  Mill throughput for the month of December was 6.6 million tonnes. Production for Q4 2019 was 60kt with 25kt produced in the month of December.

Kansanshi copper production for the fourth quarter was in line with the comparable period of 2018 though, as noted in Q2 and Q3 2019, lower oxide ore grades and resulting recoveries contributed to lower copper production for the year compared with 2018.

Sentinel copper production for the fourth quarter reflects lower feed grades and lower recoveries due to transitional ore mined from the east cutback of the pit which resulted in lower production compared with the comparable period of 2018.

Amounts are preliminary and subject to final adjustment. The final production figures will be provided in the Company’s financial results for the fourth quarter and year ended December 31, 2019.

000’s   Q4
  2019		 Q4
2018		   Year
  2019		   Year
  2018
Copper production (tonnes)1,2 204 158 702 606
Gold production (ounces)2 78 48 257 185
Zinc production (tonnes) 3 8 18 27
Copper (000’s tonnes)1,2   Q4
  2019		 Q4
2018		   Year
  2019		   Year
  2018
Cobre Panama2 60 – 147 –
Kansanshi 61 62 232 252
Sentinel 51 61 220 224
Las Cruces 18 18 48 71
Other 14 17 55 59
  204 158 702 606
Gold production (000’s ounces)2   Q4
  2019		 Q4
2018		   Year
  2019		   Year
  2018
Cobre Panama2 28 – 60 –
Kansanshi 36 33 145 130
Other 14 15 52 55
  78 48 257 185

 1  Production presented on a copper concentrate basis, i.e. mine production only. Production does not include output from the Kansanshi smelter.
 2  Copper and gold production volumes include pre-commercial and commercial production from Cobre Panama. Cobre Panama was declared in commercial production from September 1, 2019.

Copper (000’s tonnes)   Q4
  2019		 Q4
2018		   Year
  2019		   Year
  2018
Commercial 204 158 634 606
Pre-commercial – – 68 –
  204 158 702 606
Gold (000’s ounces)   Q4
  2019		 Q4
2018		   Year
  2019		   Year
  2018
Commercial 78 48 233 185
Pre-commercial – – 24 –
  78 48 257 185

2020 – 2022 GUIDANCE

Guidance is based on a number of assumptions and estimates as of December 31, 2019, including among other things, assumptions about metal prices and anticipated costs and expenditures. Guidance involves estimates of known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different.

Production guidance

000’s 2020 2021 2022
Copper (tonnes) 830 – 880 800 – 850 800 – 850
Gold (ounces) 280 – 300 280 – 300 280 – 300
Nickel (tonnes) 15 – 20 25 – 28 25 – 28

Production guidance by operation

Copper

000’s tonnes 2020 2021 2022
Cobre Panama 285 – 310 310 – 330 310 – 340
Kansanshi 220 – 235 220 – 235 220 – 230
Sentinel 230 – 240 240 – 255 250 – 260
Las Cruces 52 – –
Other sites 43 30 20

Gold

000’s ounces 2020 2021 2022
Cobre Panama 120 – 130 125 – 135 135 – 145
Kansanshi 120 – 130 120 – 130 120 – 130
Other sites 40 35 25

Nickel

000’s tonnes 2020 2021 2022
Ravensthorpe  15 – 20 25 – 28 25 – 28

Cash cost and all-in sustaining cost

Copper ($/ lb) 2020 2021 2022
C1 1.20 – 1.40 1.20 – 1.40 1.20 – 1.40
AISC 1.70 – 1.85 1.70 – 1.85 1.70 – 1.85

Production at Ravensthorpe is expected to ramp-up through 2020.  In the first two full years of production, 2021 and 2022, C1 and all-in sustaining cost costs are expected to be between $4.60 – $4.80/lb and $5.10 – $5.40/lb respectively.

Capital expenditure

$ million 2020 2021 2022
Capitalized stripping 250 250 250
Sustaining capital and other projects 600 600 600
Total capital expenditure 850 850 850

On Behalf of the Board of Directors of First Quantum Minerals Ltd.                
G. Clive Newall
President

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

North American contact: Lisa Doddridge, Director, Investor Relations
Tel: (416) 361-3752 Toll free: 1 (888) 688-6577
United Kingdom contact: Clive Newall, President
Tel: +44 7802 721663
E-Mail: info@fqml.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. The forward-looking statements include estimates, forecasts and statements as to the Company’s expectations of production and sales volumes, and expected timing of completion of project development at Enterprise and post completion of construction activity at Cobre Panama and are subject to the impact of ore grades on future production, the potential of production disruptions (including at Cobre Las Cruces as a result of the land slippage in January 2019), capital expenditure and mine production costs, the outcome of mine permitting, other required permitting, the outcome of legal proceedings which involve the Company, information with respect to the future price of copper, gold, silver, nickel, zinc, pyrite, cobalt, iron and sulphuric acid, estimated mineral reserves and mineral resources, First Quantum’s exploration and development program, estimated future expenses, exploration and development capital requirements, the Company’s hedging policy, and goals and strategies. Often, but not always, forward-looking statements or information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate” or “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.

With respect to forward-looking statements and information contained herein, the Company has made numerous assumptions including among other things, assumptions about continuing production at all operating facilities, the price of copper, gold, nickel, zinc, pyrite, cobalt, iron and sulphuric acid, anticipated costs and expenditures and the ability to achieve the Company’s goals. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. These factors include, but are not limited to, future production volumes and costs, the temporary or permanent closure of uneconomic operations, costs for inputs such as oil, power and sulphur, political stability in Zambia, Peru, Mauritania, Finland, Spain, Turkey, Panama, Argentina and Australia, adverse weather conditions in Zambia, Finland, Spain, Turkey, Mauritania and Panama, labour disruptions, potential social and environmental challenges, power supply, mechanical failures, water supply, procurement and delivery of parts and supplies to the operations, and the production of off-spec material.

See the Company’s Annual Information Form for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information. Although the Company has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actual results, performances, achievements or events not to be anticipated, estimated or intended. Also, many of these factors are beyond First Quantum’s control. Accordingly, readers should not place undue reliance on forward-looking statements or information. The Company undertakes no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information made herein are qualified by this cautionary statement.

Source: Globe News Wire
Investee Company News

ZESCO, CEC Stand-Off Worrisome

KALONDE NYATI, Lusaka
THE ‘divorce’ between Zesco Limited and the Copperbelt Energy Corporation (CEC) needs to be handled with caution to avoid cutting off power to the mining industry, an energy expert has said.
Johnstone Chikwanda said the two entities need to ensure a smooth transition that will not affect power supply to the mines as Zesco relies on CEC infrastructure on the Copperbelt.
At the same time, CEC will need Zesco to export electricity to the Democratic Republic of Congo (DRC) CLICK TO READ MORE 

Source: Zambia Daily Mail
Investee Company News

Kansanshi Workers In 7% Pay Rise

Kansanshi Mine PLC has awarded its unionized workers a seven per cent salary increase across the board.

This follows the signing of the 2020 collective agreement with the Mineworkers Union of Zambia (MUZ), National Union of Miners and allied workers (NUMAW) and United Mineworkers Unions of Zambia (UMUZ).

NUMAW president James Chansa, who spoke on behalf of other unions, said the negotiations were due to the many challenges in the sector.

Chansa said the unions will work towards ensuring adherence to agreed conditions and further urged workers to continue working hard.

Meanwhile, Kansanshi Mine PLC Human Resource Manager, Maimbo Silimi said the collective agreement includes a seven per cent increase in salaries and an adjustments to the funeral grant, among other conditions.

He said the mining firm has also introduced long service awards for employees reaching five, 10 and 15 years.

Silimi said Kansanshi Mine was cognizant of the importance of its workforce, hence the adjustments to their packages.

©Zambia Reports 2020.

Source: Zambia Reports
Investee Company News

ZESCO’s Termination of CEC Bulk Supply Questionable – Energy Experts

A GROUP of energy experts has questioned Zesco’s motive behind the refusal to renew a Bulk Supply Agreement it entered into with the Copperbelt Energy Corporation (CEC) over 22 years ago.

On November 21, 1997, Zesco Limited and CEC entered into an agreement where the former was supplying power to the latter at wholesale, a deal that comes to an end on March 31 this year.

Since then, CEC has been supplying power to mining companies on the Copperbelt, as well as most mining residential areas.

The company is also the major financier of the Zambian premier league side Power Dynamos Football Club.

Last Friday, CEC informed its shareholders that energy minister Mathew Nkhuwa had notified management that the agreement would not be extended once it expires at the end of March.

Responding to the government’s decision, the Energy Advisory and Solicitation Institute (EASI) argued that CEC was already proven to be a responsible stakeholder in the energy sector.

EASI chairperson Chisakula Kaputu said the motive behind the government’s refusal to renew the agreement with CEC was highly questionable.

“Zesco has since the post 2000 commercialisation narrative still remained in the doldrums of a social enterprise with very little to show of a financially sustainable business model existing,” he said in a statement yesterday.
“…EASI believes that we have an energy sector at crossroads with pertinent issues of cost reflective tariffs, Electricity Supply Industry (ESI) sustainability and viability, reform uncertainty, legacy PPAs and BSAs, energy security, etc at the fore, as such transparency and good intent is demanded of all the energy sector players/stakeholders.”

Kaputu demanded clarification from the PF government on what he termed as an ambiguous statement.
He stated that both Zesco and CEC were key stakeholders in the energy sector, hence the need for the government to reflect on the decision.

“The energy sector needs CEC as an already proven key stakeholder and only second to Zesco in functional responsibility in the power generation, transmission, distribution and supply portfolios. The energy sector needs Zesco the most as sole owner of 66 per cent of national installed capacity and over 30,000 km of transmission and distribution national grid as well as custodian of [the] National Control Centre/systems operator functionality,” stated Kaputu. “Government’s decision on the nearing expiring ZESCO – CEC BSA must be taken in the best interest of the country and energy sector above all else. Ambiguity around the bold statement that the ZESCO-CEC BSA ‘will not be renewed’ after it expires on 31st March 2020 needs to be clarified at the earliest opportunity. In order to calm the anxiety of the mining load owners and Copperbelt Province energy users in general, the discussion/negotiation around the ZESCO-CEC BSA issue needs to be expedited with resolution made way ahead of the expiry date of 31st March 2020.”

According to a notice to shareholders, the government, through Nkhuwa and Zesco, had notified CEC that the Bulk Supply Agreement would not be renewed once it expired.

“In accordance with Section 81(1) of the Securities Act No. 41 of 2016, the Board of Directors of Copperbelt Energy Corporation Plc (“CEC” or “the Company”) advises the Company’s shareholders, and the market, that the power purchase agreement or Bulk Supply Agreement (“BSA”) between CEC and ZESCO Limited (“ZESCO”), entered into on 21 November 1997 is expected to come to an end on 31 March 2020,” company secretary Julia Chaila stated. “The Government of the Republic of Zambia (“GRZ”), through the Minister of Energy, and Zesco have notified CEC of their position that the BSA will expire on the date stated above and will not be renewed. GRZ and Zesco have expressed to CEC their commitment to continue facilitating an efficient and economic supply of power to consumers on the Copperbelt both during the validity of and post the BSA. CEC wishes to emphasise its unwavering commitment to use its infrastructure and capabilities in ensuring continued and seamless supply of power to all consumers on the Copperbelt now and after the BSA.”

Source: The Mast
Investee Company News

Agarwal Mining Group Hit by Commodity Price Slump

Anil Agarwal’s mining group has reported a drop in half-year profits due to lower commodity prices.

Vedanta Resources, which was taken private by the Indian tycoon in 2018, said that earnings before interest, depreciation, taxation and amortisation fell 19 per cent to $1.4 billion in the six months to September. Revenues fell 5 per cent to $6.1 billion, mainly because of lower prices.

Vedanta Resources has operations in India, Africa and Australia, employing 65,000 people. It listed in London in 2003 but remained controlled by Mr Agarwal, 65. In 2018 Volcan Investments, his family trust, bought back the listed third of its shares.

Vedanta said that profits in its largest business, zinc, fell by 20 per cent to $479 million in the six months to…

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Source: The Times (UK)
Investee Company News

Kansanshi Miners in Pay Rise

KALONDE NYATI, Lusaka
UNIONISED workers at Kansanshi Mining Plc have been awarded a seven percent salary increment effective today.
Kansanshi Mining Plc human resources manager Maimbo Silimi said the increment will go a long way in cushioning the cost of living.
Speaking during the signing ceremony in Lusaka yesterday, Mr Silimi said the increment has been awarded despite the operational challenges affecting the mining firm  CLICK TO READ MORE 

Source: Zambia Daily Mail
Investee Company News, ZCCM-IH News

Serenje Set for Manganese Mining

KALONDE NYATI, Lusaka
MINING of manganese at Kabundi Mining Resources Limited will get underway soon after approval around community resettlement is concluded by the Zambia Environmental Management Agency (ZEMA), Zambia Consolidated Copper Mines -Investment Holdings (IH) said.
The K70 million project located in Serenje, and is a subsidiary of ZCCM-IH, will help to unlock the manganese potential thus enable the country to benefit from the increasing global demand for the commodity used in steel production and batteries CLICK TO READ MORE 

Source: Zambia Daily Mail
Investee Company News

CEC Ready to tab into SAPP for Alternative Power if ZESCO BSA Reaches Stalemate

Copperbelt Energy Corporation (CEC) Plc says it geared to tap into the Southern African Power Pool (SAPP) as an alternative source of electricity, should its Bulk Supply Agreement (BSA) with Zesco Limited not be renewed.

And CEC says it cannot restrict electricity to Konkola Copper Mines (KCM) Plc as it has done in the past to defaulting clients for unpaid invoices because the mining company has started making some payments.

The BSA between Zesco and CEC is a 20-year agreement that underpins power supply to the Copperbelt and it is set to come to an end in March, 2020.

Ministry of Energy Permanent Secretary Trevor Kaunda disclosed that the BSA will not be renewed.

“Government made a decision earlier in the year, if you have been following the news, that when the Bulk Supply Agreement that is existing now comes to an end in March, next year, it shall not be renewed. I think that is the Cabinet decision that was made earlier in the year. It’s not a rumour, that’s just what it is. So, those are now the discussions that are taking place between the parties. Post-March, 2020, how does supply in the Copperbelt and, indeed, other areas look like? That’s the discussion which is in place, and at an appropriate time, the nation shall be updated once those discussions are concluded because, basically, we still have the rest of December up to March for those discussions in terms of the outlook,” Kaunda said in an interview in Lusaka.

But responding to a press query for an update on CEC’s progress on its BSA with Zesco, CEC senior manager corporate communication & investor relations Chama Nsabika stated that the Kitwe-based power utility was geared to tap into the regional market through the SAPP, the cooperation of the national electricity companies in southern Africa, as an alternative source of power should the stalemate with Zesco over its BSA persist.

“The alternative source of power would be the regional market. CEC has bilateral Power Purchase Agreements (PPAs) with regional utilities and can, if necessary, access some of this power to benefit the local market. Deploying this solution, obviously only makes sense in circumstances where the local market is unable to meet CEC’s requirements. It is cardinal that everybody recognises that the situation we are faced with requires concerted efforts at constructive engagement and putting in place a mutually acceptable solution in good time. CEC will continue to render quality service to all its customers, using its infrastructure and capabilities, to the benefit of both its mining and non-mining customers. While the solution to the BSA remains to be agreed, CEC believes that in time, a mutually-acceptable solution that safeguards the interests of customers and investors will be found,” Nsabika stated.

On the company’s ongoing dispute with Zesco over non-payment of retainers from power CEC sold to mining companies, Nsabika noted that the status quo remained.

“On 4th December, 2019, in accordance with the Lusaka Securities Exchange listings rules, CEC issued a further cautionary announcement advising the market that the matter is in progress and remains under adjudication. The status quo remains,” she added.

And Nsabika added that the company would not restrict power supply to KCM despite its outstanding debt for electricity supplied to the mine’s business units as it had started making payments.

KCM remained in receipt of power throughout this year despite its indebtedness to CEC.

“It is true that KCM remains CEC’s largest customer and any non-payment for power supplied has a negative impact, not only on CEC’s financial performance, but also on the financial well-being of the entire value chain; a fact we also reflected in our published half-year results for the period January to June, 2019. It is also true that any payment default would constrain CEC’s ability to meet its payments to Zesco. CEC has continued to work constructively with all stakeholders, including the government, KCM and Zesco in respect of the KCM situation and it is evident that all parties are committed to seeing a KCM that meets its payment obligations. KCM has since made some payment against the outstanding amounts. We, therefore, take the view that the option to restrict power is not necessary at this stage,” stated Nsabika.

Source: News Diggers
Annual Report Summaries

CEC Africa Extract from 2019 Annual Report

During the financial year ended 31 March 2019 CEC Africa’s revenue was ZMW1.35 billion (US$120.86 million) (2018: ZMW2.07 billion (US$217.17million). The net loss was at ZMW3.35billion (US$298.95 million) (2018: Loss ZMW 3.23billion (US$337.86 million).
CEC Africa associate company, North South Power Company Limited (NSP), contributed a profit of US$8.10 million (2017: US$4.60 million) and declared a dividend of NGN10.00 bn (US$27.00 million) in 2018. However, the Group continues to make a gross loss mainly due to tariff shortfalls in the electricity pricing regime and the increasing cost of energy arising from the Power Purchase Agreements signed between the Nigeria Bulk Electricity Company (NBET) and the generation companies. The cost of purchased energy increased by 19.00% to US$293.00 million between 2017 and 2018. The net loss, which increased by 1.00% to US$316 million between 2017 and 2018 continued to erode the shareholders’ equity.
No dividends were declared and paid by the Company during the year (2018: Nil).