First Quantum Minerals Limited announced its results for the 3 months ended March 31st 2012. The complete financial statements and management's discussion.
Overall copper production affected by lower ore grades at both mines and work stoppages at Kansanshi;
1. Total copper production was 12% lower than Q1 2011 due to reduced oxide ore grades processed at Kansanshi and a loss of approximately 2,700 tonnes of copper during labor related stoppages in Q1 2012. Guelb Moghrein achieved a quarterly throughput record however production was lower than the prior year period as a result of lower grades processed.
2. Total gold production was 14% lower than Q1 2011 due to lower gold grades processed at both Kansanshi and Guelb Moghrein.
YoY comparative earnings impacted by lower average copper price and cost inflation on consumables;
1. Sales revenues increased to a quarterly record of USD 708.8 million as a result of the nickel revenue from Ravensthorpe, offset partially by the impact of lower copper prices and sales volumes.
2. Cash costs of copper production increased as a result of inflationary cost pressures principally related to sulphuric acid, energy and other consumables. Cash costs were comparable with Q3 and Q4 2011.
3. Comparative earnings were lower than Q1 2011 due to lower realized copper prices and sales volumes and higher production costs. This was offset partially by the earnings contribution from Ravensthorpe.
Commissioning ramped up at Kevitsa; first production expected in Q2 2012;
1. Construction of the Kevitsa project is complete and commissioning activities were ramped up in Q1 2012. The rotation of the mills and full end to end testing of the plant is imminent. First concentrate production is expected during Q2 2012 with commercial production shortly thereafter.
Development projects progressing;
1. Expansion of the oxide processing circuit at Kansanshi to 7.2 million tonnes per annum progressed well and is scheduled for completion in Q2 2012. The stage two expansion to 14.5 million tonne per annum is on track for commissioning in 2013.
2. The fifth Kansanshi acid plant is scheduled to be commissioned during Q3 2012 allowing for full utilization of the 7.2 million tonne per annum oxide circuit capacity.
3. Detailed design work on the Kansanshi copper smelter project is underway with long lead equipment ordered and site construction works scheduled to begin in Q2 2012.
4. Finalization of the Sentinel resource estimate was completed in Q1 2012 resulting in a resource of 1,027 million tonnes containing 5.2 million tonnes of copper.
5. Design of the Sentinel project, including a nickel concentrator facility for the anticipated development of the Enterprise target, is being advanced. Commitments are in place and full scale development of the project is expected to commence by mid-2012 subject to the completion of power tariff negotiations.
Strong financial position maintained to finance development projects
1. On March 2nd 2012 the Company completed the settlement of claims and sale of its Republique democratique du Congo assets for USD 1,250.0 million. Consideration is comprised of USD 750.0 million, received on March 2nd 2012 and USD 500.0 million promissory note, receivable on March 2nd 2015. A gain of USD 1,217.9 million has been recognized in net earnings which includes the fair value of consideration received net of transaction costs and the underlying net assets of subsidiaries disposed of.
2. Cash generated by operations, before working capital changes, of USD 176.9 million.
3. On January 30th 2012, a five year USD 1.0 billion senior term and revolving facility was signed for Kansanshi Mining PLC to enable the execution of planned capital projects at the mine site. The facility is available and undrawn at the date of this report.
Operational outlook for 2012;
1. Expected production of approximately; 270,000 to 290,000 tonnes of copper, 36,000 tonnes to 40,000 tonnes of contained nickel and 170,000 to 190,000 ounces of gold.
2. Expected average cash cost of approximately USD 1.55 per pound of copper.
3. Expected average cash cost of approximately; USD 6.60 to USD 6.80 per pound of nickel at Ravensthorpe.
4. Expected total capital expenditure of approximately; USD 1.2 to USD 1.4 billion.
Copper production decreased by 13% from the prior year due to lower grade ore processed and two short term labor related work stoppages which resulted in an estimated production loss of 2,700 tonnes. All parties involved in the labor dispute are engaged in a legal process aimed at resolving the differences.
The sulphide and mixed circuits were reconfigured in August 2011 to align plant throughput with ore availability. This configuration remained in place during Q1 2012 resulting in the large offsetting variances in throughput on both circuits in comparison to Q1 2011. Combined throughput was consistent with the prior year despite the downtime caused by the labor related stoppages.
Sulphide ore grade has improved as a result of continuing mine pit development work aimed at exposing more sulphide ore faces at planned grades. This work is planned to continue as part of the overall mine pit development project with a view to preparing mining operations for the significant concurrent plant throughput expansions in 2012 to 2014.
Copper production from the oxide circuit was 21% lower than Q1 2011 as the limited availability of locally sourced sulphuric acid continued to affect ore grade processed. During the quarter, high grade, higher acid consuming oxide ore was stockpiled resulting in 16% lower ore grade processed. The high grade oxide ore stockpile is expected to be processed when the availability of sulphuric acid improves.
Source - First Quantum
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