14th May 2007 14:00
First Quantum Minerals Ld14 May 2007 NEWS RELEASE 07-05 May 14, 2007 www.first-quantum.com FIRST QUANTUM MINERALS REPORTS OPERATIONAL AND FINANCIAL RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2007 (All figures expressed in US dollars) First Quantum Minerals Ltd. (the "Company") (TSE Symbol "FM", LSE Symbol "FQM")is pleased to announce its results for the three months ended March 31, 2007.The complete financial statements and management discussion and analysis areavailable for review at www.first-quantum.com and should be read in conjunctionwith this news release. Key features for the quarter • Net sales increase 37% compared to the first quarter of 2006 on higher volumes and prices• Net earnings increase 40% compared to the first quarter of 2006 due to higher sales and lower derivative losses• Copper production well down at Bwana/Lonshi due to low ore availability as a result of heavy rainfall and temporary border closure• Contained copper in concentrate inventory at Kansanshi reduced by approximately 2,000 tonnes due to higher shipments• Guelb Moghrein's first full quarter of production, but concentrate offtake restricted• Operating cashflow before working capital increases 15% compared to the first quarter of 2006 on higher sales• Dividends of $36.4 million declared to Company shareholders during the quarter Outlook • Expected copper production for 2007 confirmed as 240,000 tonnes• Bwana/Lonshi expected to partially recover lost first quarter production from May 2007 onwards• The Company expects to sell a large part of its stockpiled copper in concentrate during the second quarter of 2007• Admission to the Main Market of the London Stock Exchange scheduled for mid-May Key Group resultsFirst quarter Q1 2007 Q1 2006 Q1 2005 (Restated) (Restated) % of sales % of sales % of salesProduction t Cu 46,403 105 42,086 115 12,028 100 Sales t Cu 44,315 100 36,635 100 12,000 100 Net sales USDM 256.1 100 187.2 100 38.2 100 Operating profit USDM 145.8 57 122.0 65 17.6 46 $Net profit USDM 78.3 31 55.8 30 26.9 70 Basic EPS USD $1.16 $0.90 $0.44 Q1 2007 net sales Q1 2007 Q1 2006 Q1 2005(After TC/RC charges) USD M USD M USD M Kansanshi - copper 213.2 120.4 - - gold 4.8 4.5 -Bwana/Lonshi - copper 22.0 62.1 38.2 - acid 0.1 0.2 -Guelb Moghrein - copper 12.9 - - - gold 3.1 - -Net sales 256.1 187.2 38.2Provisional pricing adjustment included above (17.5) 16.9 -Copper selling price USD/lb USD/lb USD/lbCurrent period sales 2.96 2.32 1.45Prior period provisional pricing adjustment (0.18) 0.21 -TC/RC and freight parity charges (0.24) (0.27) -Realized copper price 2.54 2.26 1.45 Group net sales rise 37% to $256.1 million on higher copper production andcopper price Sales increased (up 21% to 44,315 tonnes of copper) as a result of higher copperproduction (up 10% to 46,403 tonnes of copper) and a decrease in the copper inconcentrate stockpiles at Kansanshi by approximately 2,000 tonnes of containedcopper compared to the same period in 2006, bringing overall copper inconcentrate tonnes to 17,300. Net sales were also impacted by the higheraverage copper price for the quarter of $2.96/lb compared to $2.32/lb in thesame period in 2006 and the lower tolling and refining charges (TC RCs) underrenegotiated contracts. However, provisional pricing adjustments of priorperiod sales had a negative impact in the current quarter due to the finalsettlement of copper sold in 2006 at prices lower than the December 31, 2006forward price. The increase in copper production was the result of Kansanshi's increased coppercathode output and increased copper in concentrate shipments to the Mufulirasmelter as well as the achievement of commercial production at Guelb Moghrein inOctober 2006. These increases were offset by a decrease in production at Bwana/Lonshi due to problems associated with the availability of high grade ore forprocessing. Kansanshi net sales increase 75% to $218.0 million despite record wet seasonrainfalls Net sales, compared to the same period in 2006, rose as a result of increasedcopper cathode production and a reduction of the copper in concentrate stockpilefrom December 31, 2006, which was shipped and processed at the upgraded Mufulirasmelter. Increased production (up 17% to 35,400 tonnes) was the result of a 44%increase in copper cathode production offset by a 14% decrease in copper inconcentrate production. The increase in copper cathode production was theresult of a 21% increase in ore throughput and the commissioning of the new SX/EW facility during the third quarter of 2006, while the decrease in copper inconcentrate production was due to the processing of lower grade ore. Salesvolume increased 50% to 37,319 tonnes, with the balance of increased salesrevenue coming from the higher average price received. Bwana/Lonshi net sales decrease 64% to $22.1 million due to low ore availabilityfrom Lonshi Net sales fell as a result of the low availability of ore from the Lonshi pitand the exhaustion of run-of-mine grade ore in stockpiles at the Bwana treatmentplant. The heavy rains during the wet season resulted in mining delays at theLonshi pit as the Lonshi resources were used to reconstruct pit walls andrebuild roads that were damaged from the excessive water. This resulted in adecrease in ore production of 89% compared to the same period of 2006 and adecrease in copper production (down 61% to 4,557 tonnes) at the Bwana SX/EWfacility. In addition, the DRC government temporarily closed the border to oreexports from March 8 to April 3 resulting in further shortages of ore. Theseproblems required the Bwana processing facility to fully utilize its low gradeore stockpiles and purchase low grade ore from external vendors to maintainprocessing, resulting in the low copper cathode output during the quarter.Sales volume decreased 60% to 4,664, with the balance of the decreased revenuecoming from the final settlement of copper sold in 2006 at prices lower than theDecember 31, 2006 forward price. Guelb Moghrein net sales of $16.0 million constrained by offtake restrictions Production increased 28% over the fourth quarter of 2006 as the operationcontinued to bed down following commencement in October 2006. By the end of thefirst quarter, Guelb Moghrein had both mills operating as compared to oneoperational mill in the prior quarter. Sales volumes were considerably lowerthan production, which was due to the failure of the contracted offtaker toaccept delivery of concentrate shipments, necessitating the company to enterinto alternate arrangements which were not finalised until late in the quarter. Provisional pricing adjustment negative following decrease in copper priceduring final settlement periods Included in the above net sales numbers was a total of $17.5 million or $0.18/lbfor negative provisional pricing adjustments related to prior period sales asfinal copper settlements in January and February were subject to average LMEprices of $2.57/lb for each month compared to the December 31, 2006 forwardaverage LME price of $2.87/lb. As at March 31, 2007, there were 29,116 tonnes of contained copper that wereprovisionally priced at an average LME copper price of $3.13/lb. This revenuewill be subject to future adjustments as a result of movements in the copperprice. Of this amount, 10,995 tonnes had the final price determined in April2007 at $3.52/lb, 13,986 tonnes will be determined in May 2007, 1,342 tonnes inJune 2007, and 2,793 tonnes thereafter. Q1 2007 operating profit Q1 2007 Q1 2006 Q1 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of salesKansanshi 145.0 57 86.6 46 - -Bwana/Lonshi (9.6) (4) 35.4 19 17.6 46Guelb Moghrein 10.4 4 - - - -Total operating profit 145.8 57 122.0 65 17.6 46Unit costs USD/lb % of sales1 USD/lb % of sales1 USD/lb % of sales1Cash costs (C1) 1.06 36 0.81 35 0.58 40Total costs (C3) 1.30 44 1.01 44 0.75 52 1 Calculated as the % of current period selling price Group operating profit rises 20% to $145.8 million despite increase in cashcosts Operating profit rose more slowly than net sales as a result of an increase inaverage cash unit cost of production by 30% to $1.06/lb compared with the sameperiod in 2006. This resulted in average profit margins per pound copper of$1.49, which decreased from the prior period (2006: $1.51/lb) due, mainly, tonegative provisional pricing adjustments in the current quarter and the poorresults at Bwana/Lonshi. Kansanshi operating profit increases 67% to $145.0 million despite theprocessing of lower grade ore The average cash unit cost of production increased by 9% to $0.85/lb and theaverage total unit cost of production increased by 13% to $1.05/lb compared tothe same period in 2006. This increase in cost per unit was due, mainly, to theprocessing of lower grade ore and increased oil based consumables, electricity,sulphur and wage costs. The processing of lower grade ore resulted in lesscopper output per tonne of ore input. This also increased the maintenance costsand processing costs associated with the increase in the volume of orethroughput and an increase in the acid consumption. The increase in orethroughput coupled with increased waste stripping and processing costs resultedin an increase in mining costs of 100% and an increase in processing costs of32% compared to the same period in 2006. However, TC RC and Freight Paritycharges decreased by 55% as Kansanshi renegotiated its TC RC terms for themajority of its concentrate off-take agreements and increased its shipments tothe Mufulira smelter, which has more favourable processing terms. Bwana/Lonshi operating loss of $9.6 million due to extreme wet season and DRCborder closure Bwana copper production was significantly affected by the lack of available highgrade ore for processing due to the heavy rain season and the temporary closureof the DRC border to ore exports. This resulted in an increase of the averagecash unit cost of production by 177% to $2.50/lb and the average total unit costof production by 143% to $2.92/lb as compared to the same period in 2006.Mining unit costs were significantly impacted by these current quarter problemsresulting in a 192% increase. Guelb Moghrein operating profit of $10.4 million despite restricted concentrateshipments The first full quarter of activity yielded a small profit from Guelb Moghreindue to the high copper prices and positive provisional adjustments of priorperiod sales. Current quarter costs of sales were related to prior periodproduction as all of the copper sold in the current quarter was taken from thecopper in concentrate stockpile that existed at December 31, 2006. Currentquarter production costs continue to improve over the fourth quarter of 2006 asboth the average cash unit cost of production and the average total unit costdecreased by 24% to $1.29/lb and $1.66/lb, respectively. This improvement wasdriven by an increase in copper output, an increase in the gold credit andimproved production processes. Q1 2007 net profit Q1 2007 Q1 2006 Q1 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of salesOperating profit 145.8 57 122.0 65 17.6 46Corporate costs (7.3) (3) (23.5) (13) (1.8) (5)Exploration (2.6) (1) (2.1) (1) (1.0) (3)Interest (net) (4.5) (2) (5.3) (2) (0.5) (1)Tax expense (31.7) (12) (25.0) (13) (3.5) (9)Minority interests (21.4) (8) (10.3) (6) - -Gain on sale ofinvestment - - - - 16.1 42 Net profit 78.3 31 55.8 30 26.9 70 Earnings per share - basic $1.16 $0.90 $0.44 - diluted $1.14 $0.88 $0.43Weighted average sharesoutstanding - basic 67.3 61.8 61.3 - diluted 68.6 63.4 62.7 Group net profit rises 40% to $78.3 million due to the increased operatingprofit and lower corporate costs The healthy increase in operating profit as compared to the same period in 2006together with a significant reduction in derivative losses, which were includedas corporate costs, both contributed to an increased net profit for the quarter. This was offset by increases in tax expense and minority interests due,primarily, to the strong performance from Kansanshi. Corporate costs decrease 69% to $7.3 million due to lower derivative losses Following the close-out of a large number of derivatives in 2006, the Companywas less exposed to derivative losses following increases in commodity prices.In the prior comparative period a loss of $18.6 million was recognized forderivative losses compared to only $1.1 million in the first quarter. Afterallowing for derivative losses, corporate costs for Vancouver and Perthfunctions increased steadily as the company has expanded, with a number of groupfunctions established to support the portfolio of operating sites. Exploration costs increase 24% to $2.6 million due to the Company's commitmentto exploration activities The Company continues to invest in exploration programs to expand currentmineral reserves or discover new reserves that can be exploited for futureproduction. Interest expense, net of interest income, decreased 15% to $4.5 million due toincreased cash position The positive cash flow from operating activities resulted in a lower netinterest costs as compared to the same period in 2006. Interest expenseincreased by 23%, however, interest income on the Company's outstanding cashbalance also increased by $2.0 million over the same period, which resulted inlower net interest expense. Q1 2007 balance sheet Q1 2007 Q4 2006 Q4 2005 (Restated) (Restated) USD M USD M USD MCash 196.3 249.5 82.9Property, plant and equipment 1,116.3 1,068.1 471.3Total assets 1,797.1 1,719.7 745.8Long term debt 260.9 294.9 235.0Total liabilities 827.6 799.9 434.7Shareholders' equity 969.5 919.8 311.1Net working capital 246.7 312.8 81.2Net debt to net debt plus equity 6% 5% 33% Group assets rise 4% to $1,797.1 million The Company's positive operating cash flow enabled continued expenditure andinvestment in Company assets. Payments were made to increase inventory by $22.8million, increase investments by $76.3 million, and increase property, plant andequipment by $61.8 million. Inventory balances increased due, mainly, to an additional $14.2 million inconsumable stores and an increase in finished product inventory of $5.9 million.As at March 31, 2007, the Company had stockpiled approximately 17,300 tonnesof copper in concentrate. The increase in this stockpile was related to GuelbMoghrein and delays in the shipment to off-takers. The stockpiles at Kansanshiwere reduced by approximately 2,000 tonnes during the quarter as the Mufulirasmelter continued to improve its treatment capacity of Kansanshi's surpluscopper in concentrate. The Company continued expenditure on capital investment and its strategy ofmaking investments in publicly traded companies by acquiring an additional $61.6million of marketable securities at cost. The Company recognized an additional$14.8 million of appreciation on the fair value of the investments at March 31,to a carrying value of $121.5 million. Property, plant and equipment balancesincreased by $48.2 million, net of depreciation, as the Company continueddeveloping the Frontier project in the DRC and the high pressure leach projectat Kansanshi. Group liabilities increase 3% to $827.6 million Accounts payable increased by $32.9 million due, primarily, to the accrual ofdividend payments and current income tax payable increased by $9.4 million dueto positive operating results. In addition, minority interest payable increasedby $20.2 million due, primarily, to the positive operating results at Kansanshi. These increases were offset by a reduction in long-term debt of $34.0 million,which was the result of payments of $25.0 million on debt facilities and theadoption of the new financial instruments accounting guidelines, which netteddeferred finance fees with the related debt (refer to 'Changes in accountingpolicies'). Shareholders' equity increases 5% to $969.5 million Positive earnings of $78.3 million were offset by the declaration of dividendsin the amount of $36.4 million. In addition, with the adoption of the newaccounting policy on financial instruments, the Company recognized $12.3 millionof accumulated other comprehensive income, which was directly related to theappreciation of the investments in publicly traded securities. Q1 2007 cash flow Q1 2007 Q1 2006 Q1 2005 (Restated) (Restated) USD M USD M USD MCash flow from operating activities - before working capital 118.9 103.8 15.3 - after working capital 74.8 83.8 20.1Cash flow from financing activities (25.8) (13.2) 24.8Cash flow from investing activities (102.0) (46.1) (16.2)Net cash flow (53.0) 24.5 28.7Cash flow per share - before working capital $1.77 $1.68 $0.25 - after working capital $1.11 $1.36 $0.33 Cash inflow from operating activities decreases 11% to $74.8 million due toworking capital movements Operating cash flow before working capital movements continues to be driven bythe Company's operating results; however, the increase in operating cash flowwas lower than the increase in net profit as compared to the same period in 2006as the prior period net profit included a large non-cash item for unrealizedderivative losses. Operating cash flow after working capital movements was impacted by payments forinventory and current payables, as well as, increases in accounts receivable,which all contributed to the decrease as compared to the same period in 2006. Cash outflow from financing activities increases 95% to $25.8 million due tolong-term debt repayments Financing activities included long-term debt repayments of $22.5 million on thecorporate revolving credit and term loan facility and $2.5 million on theKansanshi project completion facility. These payments were higher than debtrepayments incurred in the same period in 2006 resulting in the increase in cashoutflow. Cash outflow from investing activities increases 121% to $102.0 millionfollowing investment in listed companies Investing activities included the purchase of $61.6 million in shares ofpublicly listed companies held for investment purposes and $55.4 million incontinued capital expansion primarily related to the Frontier project and theKansanshi high pressure leach project. Growth activities Frontier development in DRC progresses At Frontier, construction continues on the metallurgical facilities with civilinfrastructure and structural work nearing effective completion. Most equipmenthas been received and the electrical/instrumentation contractor has beenmobilised. The plant is on schedule for start of commissioning in July. Thewet season is nearing completion with rainfall 50% higher than the long termaverage. This combined with the clay-like nature of the overlying saproliteshas made the pre-strip process difficult. It has as a result fallen behind plan Board approves $36.3 million capital for commencement of Kolwezi development inDRC The Company has continued to progress the early phases of the Kolwezi Project.An award was made for the Engineering Services on the project, and this willallow further development of the flow sheet and development of detailed designswhich will form the basis of the project capital cost estimate. In parallelwith the development of design and capital cost estimate preparation, theCompany will be proceeding with some specific infrastructure works during thecourse of this year. These include construction of an access road to the site,establishment of site communications, construction camp and similar, which willenable the project to target a process plant construction start from thecommencement of the dry season in 2008. IFC's and IDC's share of funding isawaiting their internal approval procedures. Kansanshi high pressure leach ("HPL") facility commences commissioning The first autoclave of the High Pressure Leach Project commenced initialoperation at the end of March after the return of refurbished valves. Theinitial weeks of operation have confirmed that the process design is sound, withthe circuit reporting approximately 91% sulphur conversion and 97% copperrecovery. The autoclave has run at or above its design throughput rate almostimmediately (design rate is 52,500 tpa concentrate), however some short periodsof downtime have been required to repair specific problems. The secondautoclave is awaiting the return of additional refurbished valves whichexhibited some leakage during testing, following which the second autoclave willbe able to be put into operation. Kansanshi sulphide project initiated The Company is undertaking an expansion to the sulphide circuit at its Kansanshioperation, aimed at taking the sulphide circuit throughput to a nominal 12Mtpa. The project has progressed significantly in terms of design and procurement,and initial deliveries of equipment to site will occur from Q2 onwards. Alllong lead items have been ordered. The physical commencement of site works isunderway, and this was timed to coincide with the conclusion of the Zambian wetseason, and the relocation of specific construction equipment from FrontierProject to Kansanshi. A critical path for the project is the concrete works,which will be able to be undertaken during the dry season; however the progressof the concrete work will impact directly on the overall project completion.It is expected that the project will be completed in Q1 2008. Other LSE main board listing application progresses It was announced on 15 March 2007 that the Company intended to move from AIM tothe Official List of the United Kingdom Listing Authority. It is expected thatadmission of the Company's common shares will be cancelled on AIM andsimultaneously admitted to the Official List of the UKLA and to trading on theLondon Stock Exchange's market for listed securities during the week commencing14 May 2007, subject to the receipt of the necessary approvals from the UKLA. Dividend of CDN 62.5 cents declared during the quarter Consistent with the Company's dividend policy, the Company declared a finaldividend of CA$0.625 per share in respect of the December 31, 2006 year endresults. The dividend will be paid on May 10, 2007 to shareholders on record atApril 19, 2007. Outlook Group copper production revised to 240,000 tonnes Based on first quarter production figures, on a group basis, the Company expectsto produce approximately 240,000 tonnes of copper in 2007, which is an increaseof 32% over 2006 copper production. This expected production includesapproximately 145,000 tonnes from Kansanshi, approximately 35,000 tonnes fromBwana/Lonshi, approximately 30,000 tonnes from Guelb Moghrein, and approximately30,000 tonnes from Frontier. During the next quarter it is anticipated, with improved Bwana/Lonshiproduction, to reverse the trend of rising C1 costs, and group cash costs areexpected to be in the range of $0.90 to $0.95 per pound of copper for 2007before considering the impact of the accounting change for the removal ofdeferred stripping. The majority of the copper in concentrate inventories heldat Kansanshi and Guelb Moghrein are expected to be recognized as revenues in thesecond quarter. During April Kansanshi produced 12,570 tonnes of copper, 7,373 tonnes as cathodeand 5,197 tonnes as copper in concentrate. Bwana/Lonshi produced 1,319 tonnesof copper cathode and Guelb Moghrein produced 2,454 tonnes of copper inconcentrate. Kansanshi focused on HPL and sulphide expansion Operational performance at Kansanshi continues to improve. During the secondquarter attention will focus both on the HPL facility, targeting steady stateproduction from autoclave #1 and start up of autoclave #2, and on constructionactivities for the sulphide circuit expansion now that the wet season hasfinished. Continuing build-up of the mining fleet is expected to increaseproduction in the third and fourth quarters. Bwana/Lonshi copper production estimate revised to 35,000 tonnes After a difficult first quarter, the supply of ore from the Lonshi operation isexpected to return to normal during the second quarter, and it is anticipatedthat some of the production lost in the first quarter will be recovered over theremainder of 2007. Looking forward the Lonshi oxide reserve should be exhausted by the middle of2008. It is anticipated that 35,000 tonnes of cathode will be produced at Bwanaduring 2007 with the operation continuing at a rate of 3,000 tonnes of cathodecopper per month for the first half of 2008. The Company continues to assessthe alternative and most beneficial uses for the Bwana processing plant afterthe Lonshi ore has been depleted. Guelb Moghrein continues to improve The focus during the first quarter was attaining steady operations at the plantand the optimization of the flotation circuit. SAG Mill No.1 was successfullycommissioned in March and progress was achieved on the optimization of both thegrinding and flotation circuits. Sales of copper concentrates to smelters haveincreased and shipments are expected to improve in the second quarter. The carbon in leach (CIL) circuit was taken off line at the beginning of Januarydue to CIL tailings storage facility (TSF) constraints. The design of a new CILTSF is in progress and construction is expected to be completed in the fourthquarter. The CIL feed is being stored in a temporary impoundment for futuretreatment. As a result gold production at Guelb Moghrein is expected to be65,000 ounces in 2007. Further improvements in copper and gold recovery and increased milling rates areanticipated for the remainder of 2007. The CIL plant is due to come back onstream in the fourth quarter, and stockpiled concentrate is expected to bereduced by year-end to less than a month's production inventory. Given the large inventories of concentrate held on site at Guelb Moghrein, theCompany believes that it is still premature to forecast unit cost guidance forthe mine. On Behalf of the Board of Directors 12g3-2b-82-4461of First Quantum Minerals Ltd. Listed in Standard and Poor's"G. Clive Newall" Sedar Profile #00006237G. Clive Newall For further information visit our web site at www.first-quantum.com North American contact: Geoff Chater or Bill Iversen 8th Floor, 543 Granville Street, Vancouver, British Columbia, Canada V6C 1X8 Tel: (604) 688-6577 Fax: (604) 688-3818 Toll Free: 1 (888) 688-6577 E-Mail: [email protected] United Kingdom contact: Clive Newall, President1st Floor, Mill House Mill Bay Lane Horsham West Sussex RH12 1TQ United Kingdom Tel: +44 140 327 3484 Fax: +44 140 327 3494 E-Mail: [email protected] or Carina Corbett, 4C-Burvale, Tel: + 44 20 7907 4761 The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. Certain information contained in this news release "forward-looking statements"within the meaning of the Private Securities Litigation Reform Act of 1995 andforward-looking information under applicable Canadian securities legislation.Such forward-looking statements or information, including but not limited tothose with respect to the prices of gold, copper, cobalt and sulphuric acid,estimated future production, estimated costs of future production, the Company'shedging policy and permitting time lines, involve known and unknown risks,uncertainties, and other factors which may cause the actual results, performanceor achievements of the Company to be materially different from any futureresults, performance or achievements expressed or implied by suchforward-looking statements or information. Such factors include, among others,the actual prices of copper, gold, cobalt and sulphuric acid, the factualresults of current exploration, development and mining activities, changes inproject parameters as plans continue to be evaluated, as well as those factorsdisclosed in the Company's documents filed from time to time with the Alberta,British Columbia, and Ontario Securities Commissions, the Autorite des marchesfinanciers in Quebec, the United States Securities and Exchange Commission andthe Alternative Investment Market operated by the London Stock Exchange.Thepreceding discussion and analysis and financial review should be read inconjunction with management's discussion of critical accounting policies, riskfactors and comments regarding forward looking statements contained in theunaudited consolidated financial statements for the period ended March 31, 2007. The discussion and analysis of the Company's results of operations should alsobe read in conjunction with the audited consolidated financial statements andrelated notes. Summary of Quarterly Results (unaudited) 2005 2005 2005 2006 2006 2006 2006 2007Statement of Operations and Retained Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Earnings(millions, except where indicated)Revenues Current period copper sales (1) $84.5 $131.2 $168.2 $165.6 $295.9 $311.5 $243.7 $265.6 Prior period provisional copper (1.1) 7.2 6.0 16.9 60.4 11.7 (31.7) (17.5)adjustments (2) Other revenues 3.1 4.6 2.7 4.7 6.2 5.2 4.4 8.0Total revenues 86.5 143.0 176.9 187.2 362.5 328.4 216.4 256.1Cost of sales (restated) 34.4 50.8 47.8 53.2 65.2 81.7 88.5 96.7Net earnings (restated) 29.4 41.5 56.7 55.7 149.5 133.2 60.9 78.3Basic earnings per share (restated) $0.48 $0.67 $0.92 $0.90 $2.32 $2.00 $0.93 $1.16Diluted earnings per share (restated) $0.47 $0.66 $0.89 $0.88 $2.27 $1.96 $0.91 $1.14 Copper selling price Current period copper sales (per lb) $1.55 $1.69 $2.02 $2.32 $3.14 $3.37 $2.89 $2.96 Prior period provisional adjustments (0.02) 0.08 0.07 0.21 0.57 0.11 (0.35) (0.18)(per lb)Gross copper selling price (per lb) 1.53 1.77 2.09 2.53 3.71 3.48 2.54 2.78 Tolling and refining charges (per lb) (0.08) (0.11) (0.08) (0.12) (0.19) (0.19) (0.08) (0.12) Freight parity charges (per lb) (0.03) (0.08) (0.04) (0.15) (0.16) (0.12) (0.14) (0.12)Realized copper price (per lb) 1.42 1.58 1.97 2.26 3.36 3.17 2.32 2.54Average LME cash copper price (per lb) 1.54 1.71 1.95 2.24 3.29 3.48 3.21 2.69Realized gold price (per oz) $427 $482 $467 $563 $631 $581 $628 $661Average gold price (per oz) $427 $440 $485 $554 $627 $622 $614 $650 Total copper sold (tonnes)(3) 26,535 39,864 40,203 36,635 46,930 46,227 41,454 44,315Total copper produced (tonnes) (3) 28,673 36,196 42,220 42,086 49,180 45,480 46,531 46,403Total gold sold (ounces) (3) 1,370 7,130 5,766 8,079 9,611 8,864 6,944 12,004 Cash Costs (C1) (per lb) (4) $0.60 $0.64 $0.71 $0.81 $0.87 $0.90 $1.00 $1.06Total Costs (C3) (per lb) (4) $0.80 $0.87 $0.89 $1.01 $1.07 $1.13 $1.24 $1.30 Financial PositionWorking capital (restated) $43.9 $32.9 $81.2 $106.9 $245.6 $308.0 $312.8 $246.7Total assets (restated) $559.1 $641.7 $745.8 $839.5 $1,398.1 $1,574.0 $1,719.7 $1,797.1Weighted average # shares (000's) 61,499 61,583 61,639 61,808 64,564 66,615 67,287 67,318 Cash Flows fromOperating activitiesBefore working capital movements $43.2 $78.2 $100.1 $103.8 $213.5 $176.3 $70.6 $118.9(restated)After working capital movements 1.3 64.2 109.2 83.8 142.8 118.2 129.4 74.8(restated)Financing activities (restated) (20.3) (5.9) 15.1 (13.2) 32.1 (58.6) 53.1 (25.8)Investing activities (restated) (3.8) (51.4) (104.7) (46.1) (91.8) (60.1) (122.7) (102.0)Cash Flows from Operating activities pershareBefore working capital movements $0.70 $1.27 $1.62 $1.68 $3.31 $2.65 $1.05 $1.77(restated)After working capital movements $0.02 $1.04 $1.77 $1.36 $2.21 $1.77 $1.92 $1.11(restated) Summary of Quarterly Results (unaudited) (continued) 2005 2005 2005 2006 2006 2006 2006 2007 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Kansanshi Production Statistics Mining Waste mined (000's tonnes) 3,185 6,064 5,240 2,588 5,516 6,683 7,123 5,316 Ore mined (000's tonnes) 2,050 1,621 1,499 1,382 2,552 3,220 2,380 2,600 Ore grade (%) 2.0 2.0 1.9 1.7 1.4 1.4 1.4 1.5 Processing (3) Sulphide Ore processed (000's tonnes) 434 507 580 782 1,140 1,277 1,212 1,171 Oxide Ore processed (000's tonnes) 696 955 1,039 1,044 1,246 1,401 1,080 1,263 Contained copper (tonnes) 19,917 27,510 30,934 32,213 36,981 32,882 31,545 38,231 Sulphide ore grade processed (%) 2.0 2.0 2.0 1.9 1.6 1.2 0.9 0.8 Oxide ore grade processed (%) 1.8 1.8 1.9 1.7 1.5 1.2 1.6 1.8 Recovery (%) 86 84 96 92 94 95 92 93 Copper cathode produced (tonnes) 8,802 14,395 18,324 15,796 18,687 20,194 19,006 22,823 Copper in concentrate produced 8,154 8,670 11,234 14,572 16,924 11,984 10,015 12,577 (tonnes) Concentrate grade (%) 28.9 29.5 28.7 29.3 25.8 26.4 26.9 25.2 Combined Costs (per lb) (4)Mining $0.09 $0.08 $0.06 $0.10 $0.12 $0.17 $0.14 $0.20Processing 0.33 0.36 0.38 0.41 0.44 0.50 0.62 0.54Site Administration 0.04 0.04 0.04 0.03 0.04 0.04 0.04 0.03TC RCs and freight parity charges 0.18 0.18 0.21 0.31 0.42 0.31 0.27 0.14Gold / Acid credit (0.01) (0.07) (0.04) (0.07) (0.08) (0.07) (0.05) (0.06)Combined Total Cash Costs (C1) $0.63 $0.59 $0.65 $0.78 $0.94 $0.95 $1.02 $0.85Combined Total Costs (C3) $0.80 $0.80 $0.76 $0.93 $1.11 $1.17 $1.21 $1.05 Cathode Costs (per lb) (4) Mining $0.11 $0.08 $0.06 $0.10 $0.13 $0.16 $0.12 $0.19 Processing 0.46 0.40 0.42 0.51 0.51 0.51 0.68 0.54 Site Administration 0.04 0.04 0.04 0.03 0.04 0.04 0.04 0.03 TC RCs and freight parity charges - - - - 0.03 0.10 0.08 0.08 Gold / Acid credit - - - (0.01) (0.02) (0.02) (0.03) Cathode Total Cash Costs (C1) $0.61 $0.52 $0.52 $0.64 $0.70 $0.79 $0.90 $0.81 Cathode Total Costs (C3) $0.80 $0.73 $0.63 $0.80 $0.87 $1.00 $1.08 $1.00 Concentrate Costs (per lb) (4) Mining $0.07 $0.08 $0.06 $0.09 $0.12 $0.18 $0.18 $0.27 Processing 0.19 0.29 0.30 0.28 0.35 0.46 0.51 0.49 Site Administration 0.04 0.05 0.05 0.04 0.04 0.04 0.04 0.03 TC RCs and freight parity charges 0.38 0.48 0.57 0.68 0.89 0.73 0.63 0.43 Gold / Acid credit (0.03) (0.19) (0.11) (0.16) (0.17) (0.16) (0.11) (0.20) Concentrate Total Cash Costs (C1) $0.65 $0.71 $0.87 $0.93 $1.23 $1.25 $1.25 $1.02 Concentrate Total Costs (C3) $0.81 $0.90 $0.98 $1.08 $1.40 $1.49 $1.47 $1.26 Revenues (3) Copper cathodes $29.2 $54.1 $87.6 $84.8 $142.3 $158.6 $110.9 $141.2 Copper in concentrates 15.3 34.7 31.9 35.6 109.5 65.3 22.3 72.0 Gold 0.6 3.4 2.7 4.5 6.1 5.1 2.7 4.8 Total revenues $45.1 $92.2 $122.2 $124.9 $257.9 $229.0 $135.9 $218.0 Copper cathode sold (tonnes) 8,919 14,227 18,505 15,556 18,754 20,217 19,165 22,798 Copper in concentrate sold (tonnes) 6,024 12,243 9,260 9,282 14,528 13,131 8,215 14,521 Gold sold (ounces) 1,370 7,130 5,766 8,079 9,611 8,864 4,427 7,764 Summary of Quarterly Results (unaudited) (continued) 2005 2005 2005 2006 2006 2006 2006 2007 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Bwana/Lonshi Production StatisticsMiningWaste mined (000's tonnes) 4,025 4,707 5,918 3,241 5,607 5,915 4,081 2,105Ore mined (000's tonnes) 319 300 209 147 183 110 80 16Ore grade (%) 5.5 3.9 6.1 8.4 10.7 11.9 10.4 7.5ProcessingOxide Ore processed (000's tonnes) 328 363 397 335 314 322 294 242Contained copper (tonnes) 13,354 15,003 14,262 13,401 15,625 15,011 13,037 5,007Oxide ore grade processed (%) 4.1 4.1 3.6 4.0 5.0 4.7 4.3 2.1Recovery (%) 88 88 89 87 87 89 96 91Copper cathode produced (tonnes) 11,717 13,131 12,662 11,718 13,569 13,302 12,479 4,557Acid produced (tonnes) 69,218 64,263 72,040 68,195 71,421 63,830 73,901 67,227Surplus acid (tonnes) 14,939 7,120 219 937 910 508 8 586Cathode Costs (per lb) (4)Mining $0.29 $0.43 $0.49 $0.51 $0.32 $0.32 $0.34 $1.49Processing 0.31 0.30 0.34 0.38 0.35 0.38 0.43 1.05Site Administration 0.06 0.06 0.09 0.10 0.10 0.10 0.07 0.20Gold / Acid credit (0.09) (0.05) (0.08) (0.09) (0.08) (0.06) (0.09) (0.24)Cathode Total Cash Costs (C1) $0.57 $0.74 $0.84 $0.90 $0.69 $0.74 $0.75 $2.50Cathode Total Costs (C3) $0.79 $1.01 $1.16 $1.20 $0.98 $1.00 $1.00 $2.92RevenuesCopper cathodes $38.9 $49.6 $54.7 $62.1 $104.5 $99.3 $75.4 $22.0 Copper cathodes sold (tonnes) 11,592 13,394 12,438 11,797 13,648 12,954 12,766 4,664 Guelb Production StatisticsMiningWaste mined (000's tonnes) - - - 1,156 1,721 1,660 1,719 1,610Ore mined (000's tonnes) - - - 41 144 179 400 462Ore grade (%) - - - 1.9 1.9 1.8 1.5 1.4Processing (3)Sulphide Ore processed (000's tonnes) - - - - - - 334 410Contained copper (tonnes) - - - - - - 6,552 7,791Sulphide ore grade processed (%) - - - - - - 2.0 1.9Recovery (%) - - - - - - 78 83Copper concentrate produced (tonnes) - - - - - - 5,031 6,446 Concentrate Costs (per lb) (4)Mining - - - - - - $0.13 0.21Processing - - - - - - 0.77 0.56Site Administration - - - - - - 0.08 0.07TC RCs and freight parity charges - - - - - - 0.86 0.66Gold / Acid credit - - - - - - (0.15) (0.21)Concentrate Total Cash Costs (C1) - - - - - - $1.69 $1.29Concentrate Total Costs (C3) - - - - - - $2.18 $1.66Revenues (3)Copper in concentrates - - - - - - $5.6 $12.9Gold - - - - - - 1.6 3.1Total revenues - - - - - - $7.2 $16.0 Copper concentrates sold (tonnes) - - - - - - 1,308 2,332Gold sold (ounces) - - - - - - 2,516 4,240 (1) Recognized at the settlement price or the LME copper price at the end of the respective period (2) The provisional adjustment reflects the settlement or provisional price adjustment of prior period coppersales (3) Copper sold or produced does not include tonnes sold or produced prior to achieving commercial production (4) For the definition of cash and total costs, reference should be made to section 10 Consolidated Balance SheetAs at March 31, 2007 and December 31, 2006(unaudited, expressed in millions of US dollars, except where indicated) 2007 2006 $ $ restated - note 2AssetsCurrent assetsCash and cash equivalents 196.3 249.5Restricted cash - 15.0Accounts receivable (note 11) 152.6 142.8Inventory (note 3) 190.1 167.3Current portion of other assets (note 6) 7.0 10.1 546.0 584.7Investments (note 4) 121.5 45.2Property, plant and equipment (note 5) 1,116.3 1,068.1Other assets (note 6) 13.3 21.7 1,797.1 1,719.7LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities 71.9 84.8Current taxes payable 119.4 110.0Dividend payable 36.4 -Current portion of long-term debt (note 7) 53.7 57.7Current portion of other liabilities (note 8) 17.9 19.4 299.3 271.9Long-term debt (note 7) 207.2 237.2Other liabilities (note 8) 46.3 38.3Future income tax liabilities 169.4 167.3 722.2 714.7Minority interests 105.4 85.2 827.6 799.9Shareholders' equityCapital stock (note 9) 396.5 396.0Retained earnings 560.7 523.8Accumulated other comprehensive income 12.3 - 969.5 919.8 1,797.1 1,719.7Commitments (note 15) Approved by the Board of Directors Peter St George Andrew AdamsDirector Director The accompanying notes are an integral part of these consolidated financial statements. For a copy of the notes visit the Company's website at www.first-quantum.com. Consolidated Statements of Earnings and Retained EarningsFor the three months ended March 31, 2007 and 2006(unaudited, expressed in millions of US dollars, except where indicated) Three months ended March 31, March 31, 2007 2006 $ $ restated - note 2 Sales revenues Copper (note 11) 248.1 182.5 Gold 7.9 4.5 Acid 0.1 0.2 256.1 187.2Cost of sales (96.7) (53.2)Depletion and amortization (13.6) (12.0)Operating profit 145.8 122.0Other expenses/income Exploration (2.6) (2.1) General and administrative (5.7) (3.8) Interest (7.6) (6.2) Other expenses/income (note 12) 1.5 (18.8) (14.4) (30.9)Earnings before income taxes and minority interests 131.4 91.1Income taxes (31.7) (25.0)Minority interests (21.4) (10.3)Net earnings for the period 78.3 55.8Retained earningsBalance - beginning of period as previously reported 539.1 144.8Changes in accounting policies Deferred stripping (note 2a) (15.3) (0.3) Financial instruments (note 2b) (5.0) -Dividends (36.4) -Balance - end of period 560.7 200.3 Earnings per common share Basic $1.16 $0.90 Diluted $1.14 $0.88 Weighted average shares outstanding (millions) Basic 67.3 61.8 Diluted 68.6 63.4 The accompanying notes are an integral part of these consolidated financial statements. For a copy of the notes visit the Company's website at www.first-quantum.com. Consolidated Statements of Other Comprehensive Income and AccumulatedOther Comprehensive IncomeAs at March 31, 2007(unaudited, expressed in millions of US dollars, except where indicated) March 31, 2007 $Net earnings for the period 78.3Other comprehensive income Unrealized gain on available-for-sale securities arising in the 14.8 period, net of tax of $3.0 millionComprehensive income 93.1 Accumulated other comprehensive incomeBalance - beginning of period - Change in accounting policy, net of tax of $0.5 million (note 2b) (2.5) Available-for-sale securities, net of tax of $3.0 million 14.8Balance - end of period 12.3 Consolidated Statements of Cash FlowsFor the three months ended March 31, 2007 and 2006(unaudited, expressed in millions of US dollars, except where indicated) Three months ended March 31, March 31, 2007 2006 $ $ restated - note 2Cash flows from operating activitiesNet earnings for the year 78.3 55.8Items not affecting cashDepletion and amortization 13.6 12.0Minority interests 21.4 10.3Unrealized foreign exchange loss 0.9 0.7Future income tax expense 1.7 7.1Stock-based compensation expense 2.3 1.0Unrealized derivative instruments (gain) loss (1.3) 16.0Other 2.0 0.9 118.9 103.8Change in non-cash operating working capitalIncrease in accounts receivable (7.2) (20.9)Increase in inventory (22.7) (14.9)(Decrease) increase in accounts payable and accrued liabilities (10.2) 15.8Long term incentive plan contribution (4.0) - 74.8 83.8Cash flows from financing activitiesRepayments of long-term debt (25.6) (12.3)Proceeds on issuance of common shares 2.2 1.5Deferred premium obligation (2.4) (2.4) (25.8) (13.2)Cash flows from investing activitiesRestricted cash 15.0 (4.5)Property, plant and equipment (55.4) (40.0)Net investments (61.6) (1.6) (102.0) (46.1)Effect of exchange rate changes on cash (0.2) 0.1(Decrease) increase in cash and cash equivalents (53.2) 24.6Cash and cash equivalents - beginning of period 249.5 82.9Cash and cash equivalents - end of period 196.3 107.5 The accompanying notes are an integral part of these consolidated financial statements. For a copy of the notes visit the Company's website at www.first-quantum.com. Segmented InformationFor three months ended March 31, 2007 and 2006 (unaudited, expressed in millions of US dollars, except where indicated) For the three months ended March 31, 2007, segmented information is presented asfollows: March 31, 2007 Kansanshi Bwana/ Guelb Frontier Corporate Total Lonshi Moghrein $ $ $ $ $ $ Segmented revenues 218.0 30.4 16.0 - 3.4 267.8Less inter-segment revenues - (8.3) - - (3.4) (11.7)Revenues 218.0 22.1 16.0 - - 256.1Cost of sales (63.7) (28.8) (4.2) - - (96.7)Depletion and amortization (9.3) (2.9) (1.4) - - (13.6)Operating profit (loss) 145.0 (9.6) 10.4 - - 145.8Interest on long-term debt (4.3) (0.1) (1.4) - (1.8) (7.6)Other (2.0) (0.4) (0.1) - (4.3) (6.8)Segmented profit (loss) 138.7 (10.1) 8.9 - (6.1) 131.4before undernoted itemsIncome taxes (34.9) 2.1 - - 1.1 (31.7)Minority interests (19.7) - (1.7) - - (21.4)Segmented profit 84.1 (8.0) 7.2 - (5.0) 78.3Property, plant and 424.1 46.8 104.2 149.5 391.7 1,116.3equipmentTotal assets 691.2 133.6 161.2 150.9 660.2 1,797.1Capital expenditures 21.7 0.7 1.6 33.1 7.3 64.4 For the three months ended March 31, 2006, segmented information is presented asfollows: March 31, 2006 restated - note 2 Kansanshi Bwana/ Guelb Frontier Corporate Total Lonshi Moghrein $ $ $ $ $ $ Segmented revenues 124.9 68.1 - - 2.3 195.3Less inter-segment revenues - (5.8) - - (2.3) (8.1)Revenues 124.9 62.3 - - - 187.2Cost of sales (32.1) (21.1) - - - (53.2)Depletion and amortization (6.2) (5.8) - - - (12.0)Operating profit (loss) 86.6 35.4 - - - 122.0Interest on long-term debt (5.6) (0.4) - - (0.2) (6.2)Other (8.1) (1.9) - - (14.7) (24.7)Segmented profit before 72.9 33.1 - - (14.9) 91.1undernoted itemsIncome taxes (12.3) (8.7) - - (4.0) (25.0)Minority interests (10.3) - - - - (10.3)Segmented profit 50.3 24.4 - - (18.9) 55.8Property, plant and 340.7 66.8 77.7 16.0 2.0 503.2equipmentTotal assets 561.7 122.8 79.6 16.0 59.3 839.4Capital expenditures 23.6 1.0 11.7 6.1 - 42.4 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
FQM.L