2008 Fourth Quarter and Year Results

9th Mar 2009 07:00



NEWS RELEASE 09-04 March 6, 2009 www.first-quantum.com

FIRST QUANTUM MINERALS REPORTS OPERATIONAL AND FINANCIAL RESULTS FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2008 

(All figures expressed in US dollars)

First Quantum Minerals Ltd. ("First Quantum" or the "Company", TSX Symbol "FM", LSE Symbol "FQM") today announced its results for the three and twelve months ended December 31, 2008. The complete financial statements and management discussion and analysis are available for review at www.first-quantum.com and should be read in conjunction with this news release.

Key features	Q4 2008	Q4 2007	FY 2008	FY 2007
Production - copper  t Cu	95,635	72,746	334,415	226,693
Sales t Cu	97,280	73,322	334,787	223,907
Net sales USDM	12.4	443.3	1,740.4	1,539.2
Operating (loss) profit USDM	(296.1)	249.0	743.5	913.7
Net (loss) profit before impairment charge USDM	(237.4)	135.3	300.1	520.3
Net (loss) profit after impairment charge USDM	(491.6)	135.3	45.9	520.3
(Loss) earnings per share before impairment charge USD	(3.47)	2.00	4.40	7.72
(Loss) earnings per share after impairment charge USD	(7.19)	2.00	0.67	7.72

Unless otherwise indicated, all comparisons of performance throughout this report are to the comparative periods for 2007.

Q4 results negatively affected by the world economic crisis and significant decline in the price of copper, which led to: 

an impairment charge of $254.2 million to investments;

negative provisional pricing adjustment of $212.7 million; and

net realizable value ("NRV") adjustment of $41.9 million and $10.7 million on Bwana/Lonshi and Kansanshi inventories, respectively

Q4 copper production rose 31% to record levels on the back of Frontier's operations and Kansanshi's expansions

Cash inflows after working capital movements rose 43% for the full year; quarter impacted by negative provisional pricing adjustments

Implemented wide ranging productivity improvements and cost saving initiatives

Closing cash position at similar levels to prior year

Constructive discussions continued in relation to the Kolwezi revisitation process

  Current market overview

The global economic environment weakened considerably during Q4 resulting in a significant decline in base metal prices. These market conditions have inevitably had an impact on the overall financial position of the Company. However, the Company's financial position remains strong due to its relatively low-cost operating mines and its ability to access financing.

The Company does not expect there to be any impact on its ability to meet its targeted production levels and the development of the Kolwezi project continues during this current economic downturn, albeit at a reduced rate. 

Near term outlook

Forecast production for 2009 is 380,000 tonnes of copper and 240,000 ounces of gold

Significant cost reductions now flowing from operational enhancements, cost saving initiatives, declining process input costs and a strengthening US dollar - average C1 costs for 2009 targeted to be $0.80 per pound

Renewal of the $250 million corporate revolving loan facility completed in January 2009

Subsequent to year end the Company initiated a short-term hedging program, currently consisting of 72,500 tonnes of copper hedges for the five-month period ending July 2009, to provide protection against the possibility of further deterioration in the copper price

Positive provisional pricing adjustment of approximately $36.4 million recognized to date in Q1 2009 due to the final settlement of 71,343 tonnes of the total of 79,293 tonnes of copper provisionally priced at the end of Q4

Zambian 2009 Budget released, which included the abolition of the windfall tax and other changes

Longer term outlook

Kolwezi project construction continues; the commercial start-up date has been extended to Q3 2010

Decision on Kevitsa development in Finland deferred pending detailed engineering review and capital costing, and further delineation 

  Q4 2008 operating results

	Q4 2008	Q4 2007	Q4 2006
NET SALES (after provisional pricing and realization charges)	USD M	USD M	USD M
Kansanshi - copper	81.2	305.2	131.0
- gold	10.1	10.2	2.8
Frontier   - copper	(73.9)	16.1	-
Guelb Moghrein - copper	(13.0)	55.3	5.6
- gold	11.1	19.3	1.6
Bwana/Lonshi - copper	(3.1)	37.1	75.4
- acid	-	0.1	-
Net sales	12.4	443.3	216.4
Copper provisional pricing adjustment included above	(212.7)	(34.7)	(31.7)
OPERATING (LOSS) PROFIT	USD M	USD M	USD M
Kansanshi	(56.2)	194.7	80.9
Frontier	(137.1)	9.9	-
Guelb Moghrein	(27.9)	44.4	2.3
Bwana/Lonshi	(22.3)	-	28.6
Operating (loss) profit before inventory NRV adjustments	(243.5)	249.0	111.8
Inventory NRV adjustments	(52.6)	-	-
Operating (loss) profit	(296.1)	249.0	111.8
COPPER SELLING PRICE	USD/lb	USD/lb	USD/lb
Current period sales	1.35	2.97	2.89
Prior period provisional pricing adjustment	(0.99)	(0.21)	(0.35)
Treatment charges/refining charges ("TC/RC") and freight parity charges	(0.40)	(0.20)	(0.22)
Realized copper price	(0.04)	2.56	2.32
UNIT COSTS	USD/lb	USD/lb	USD/lb
Cash costs (C1)	1.26	0.98	1.14
Total costs (C3)	1.50	1.19	1.38

Group operating profit significantly affected by decline in copper price

The effects of the global economic crisis and consequential significant reduction in the demand for copper resulted in the London Metal Exchange ("LME") copper price declining by 54% from $2.90 per pound at the end of Q3 to $1.32 per pound at the end of Q4. This significantly affected group operating profit. In addition, a large negative provisional pricing adjustment was recognized on outstanding prior periods copper sales. The realized copper price for Q4 sales included a negative adjustment of $0.11 per pound related to an incorrect classification of Frontier concentrates at the end of Q3 (refer provisional pricing commentary on page 5 below), plus approximately 82% of Q4 copper sales were priced at the average December 31, 2008 forward price of $1.33 per pound.

Copper sales volumes, however, increased 33% to 97,280 tonnes compared to Q4 2007, which was the result of increased production output. The increase in production was driven by Frontier, which accounted for 71% of this increase, with Kansanshi contributing the majority of the balance. Frontier achieved commercial production during Q4 2007 and has since continued to ramp up production, while Kansanshi has increased its production capacity through expansions and upgrades. Production costs were negatively impacted by a lower gold credit, higher TC/RC and freight parity charges, inventory adjustments and export levies.

Kansanshi production increases due to commissioning of sulphide circuit expansion; results negatively impacted by lower copper price and global cost pressures

The lower copper price resulted in approximately $70 million in negative provisional pricing adjustments at Kansanshi, which resulted in an operating loss for the quarter.

Copper production increased 22% to 62,014 tonnes as the sulphide circuit expansion began commissioning during Q2 and continued to ramp up to design throughput in Q4. This expansion allows for an annual throughput in excess of 12 million tonnes of ore and resulted in a 61% increase in sulphide ore throughput over Q4 2007 and a 47% increase in copper in concentrate production. Ore grades processed in both the oxide and sulphide circuits remained relatively consistent with the comparative quarter.

Tolled copper production decreased from the Mufulira smelter by 33% from Q4 2007 and by 20% from Q3 2008 due to expected smelter capacity constraints. Kansanshi's high pressure leach system ("HPL") has made steady improvements since commencing operations in late 2007. Various exotic pump materials, which were necessary to increase the HPL's performance, were received and installed resulting in an increase in the availability of the HPL. The HPL contributed approximately 4,200 tonnes of copper in concentrate to cathode production this quarter. This was a 117% increase over Q4 2007 and a 61% increase over the previous quarter. With the significant increase in copper in concentrate production and a lack of available smelter capacity, approximately 21,300 tonnes of copper in concentrate were sold without any further processing.

Kansanshi's average cash unit cost of production (C1) increased 46% over Q4 2007 to $1.24 per pound as ore and processing costs were higher because of increases in costs for oil-based consumables, sulphur, TC/RC and freight parity charges. In addition, a writedown of $10.7 million in low-recovery and low-grade ore stockpiles to NRV was taken during the quarter. The high global prices for oil and sulphur experienced throughout most of the year continued to negatively impact all areas of production during the quarter. However, declining prices for many process inputs and the Company's efforts to reduce costs began to have a positive impact as the average cash cost of production (C1) was 11% lower than the $1.40 per pound in Q3 2008 after adjusting for the inventory writedown. TC/RC and freight parity charges were 67% higher than Q4 2007 due to a 168% increase in the amount of copper in concentrate sold, without any further processing, as a result of constrained capacity at the Mufulira smelter. The Company's plan of more efficient mining practices, including less waste stripping, coupled with declining oil prices, lower demand for sulphur and declining exchange rates against the US dollar contributed to the cost reductions and are expected to continue to reduce costs throughout 2009.

Kansanshi's total average unit cost of production (C3) was negatively impacted by the new Zambian tax regime, specifically for the export levy and royalties during Q4. These taxes resulted in an approximate $0.10 per pound increase to the average C3 cost. The receivable recognized for the recovery of these taxes was not included in C costs.

Frontier operating profit significantly impacted by lower copper price and negative provisional pricing adjustment

The lower copper price and changes to the quotational periods of some prior period copper sales resulted in approximately $114 million in negative provisional pricing adjustments. 

Frontier achieved its highest quarterly copper production output to date with 33% greater production compared to the Q3 2008 level of 24,917 tonnes. This was achieved due to a 32% increase in ore throughput over the prior quarter as the mine continued to ramp up production since achieving commercial production in Q4 2007. Mining production was slightly lower than Q3 due to the onset of the rainy season.

Frontier's average cash unit cost of production (C1) remained consistent with the prior quarter at $1.53 per pound. Ore and processing costs decreased by 8% as the benefits of the declining price of oil and the related oil-based consumables were partially offset by the higher costs of production associated with the wet season. Freight parity charges also increased over Q3 due to the change in the mix of sales offshore. The total average unit cost of production (C3) was 12% lower than Q3 at $1.67 per pound as Frontier incurred lower royalties and export levies, which are both related to the copper price.

The copper in concentrate stockpile was reduced by a further 3,800 tonnes during Q4 resulting in only approximately 100 tonnes remaining in stockpile at year end.

  Guelb Moghrein negatively impacted by copper price and increased costs

Guelb Moghrein recognized $28.1 million in negative provisional pricing adjustments in Q4, which resulted in an operating loss for the quarter. The lower copper price and lower volume of gold sold resulted in the decrease in Guelb Moghrein's operating profit compared with Q4 2007.

Copper production increased by 14% to 8,177 tonnes due to the increase in ore throughput and better recoveries. Guelb Moghrein's ore and processing costs were 13% higher due to the processing of lower grade ore combined with higher fuel and oil-based consumable costs, labour costs and an increase in equipment repairs and maintenance. This, combined with a 51% decrease in the gold credit due to fewer ounces sold, resulted in an increase in the C1 cost to $0.96 per pound from the Q4 2007 level of $0.37 per pound.

Bwana/Lonshi costs related to suspension of operations

Mining operations at the Lonshi open pit mine were completed in Q3 and the ore stockpiles remain in the République démocratique du Congo ("RDC") as a result of the continuing closure of the RDC border since November 2007. The solvent extraction/electrowinning ("SX/EW") facility at Bwana produced approximately 500 tonnes of copper cathode from some remaining low grade ore before the Company suspended processing operations and placed the copper plant on care and maintenance until the Lonshi ore is available or alternative feed sources are obtained. 

Inventory NRV adjustments at Bwana/Lonshi

With the suspension of operations at Bwana/Lonshi and the continuing closure of the RDC border to ore exports, the Company recorded in Q4 a NRV adjustment on the ore stockpile and the stores and consumables inventory of $41.9 million.

Provisional pricing adjustment negative following decrease in copper price during final settlement periods

Under the industry standard for the structure of copper sales agreements, virtually all of the Company's concentrate sales and some of its cathode sales are provisionally priced based on the prevailing LME cash price in the shipment month. The provisional prices paid are then finalized based on a contractually specified future month's average quoted LME official price. The sales that are subject to final pricing are often settled in a subsequent quarter.

As a significant portion of the Company's concentrate and cathode sales at any quarter end remain subject to final pricing, the quarter end forward price is a major determinant of recorded revenues and the average copper price for that period.

At September 30, 2008, 62,931 tonnes of copper were provisionally priced at $3.08 per pound ($6,797 per tonne). These amounts differ from those previously reported as approximately 16,000 tonnes of copper in concentrate from Frontier were incorrectly classified as settled during Q3, but in fact remained provisionally priced at the time.

The average price of provisionally priced sales that were finalized during Q4 or were still provisionally priced at the end of Q4 averaged $1.55 per pound ($3,417 per tonne). The resulting total adjustment to the Q3 copper sales due to provisional pricing decreased consolidated revenues by $212.7 million.

At December 31, 2008, 79,293 tonnes of copper were provisionally priced at $1.33 per pound ($2,932 per tonne) and subject to final pricing over the period January to June 2009. Refer below to the 'Outlook' section for further discussion.

  Q4 2008 net profit

	Q4 2008	Q4 2007	Q4 2006
	USD M	USD M	USD M
Operating (loss) profit	(296.1)	249.0	111.8
Corporate costs and other expenses/income	(14.3)	(10.9)	(7.9)
Derivative losses, net	(0.1)	(5.0)	1.0
Exploration	(9.1)	(10.1)	(6.7)
Interest, net	(7.7)	(5.4)	(10.7)
Tax recovery (expense)	61.2	(46.8)	(15.4)
Minority interests	28.7	(35.5)	(11.2)
Net (loss) profit before impairment charges	(237.4)	135.3	60.9
Impairment charge on investments	(254.2)	-	-
Net (loss) profit after impairment charges	(491.6)	135.3	60.9
(Loss) earnings per share before impairment charges
- basic (USD per share)	(3.47)	2.00	0.93
- diluted (USD per share)	(3.47)	1.97	0.91
(Loss) earnings per shares after impairment charges
- basic (USD per share)	(7.19)	2.00	0.93
- diluted (USD per share)	(7.19)	1.97	0.91
Weighted average shares outstanding
- basic (number of shares - millions)	68.4	67.7	67.3
- diluted (number of shares - millions)	68.4	68.6	68.7

Other expenses negatively impacted by foreign exchange loss

The Company is exposed to fluctuations on certain currencies in which cash deposits are held, such as the Australian dollar, the Canadian dollar ("CA"), and the Zambian kwacha. These currencies were subject to significant depreciation against the US dollar during the quarter resulting in a $6.9 million foreign exchange loss.

Exploration costs focussed on Lonshi underground

The Lonshi underground mining evaluation project, which began earlier in the year to assess the conditions and viability of extracting sulphide ores, continued intoQ4. The exploration costs in Q4 2007 were related to targeting new ore bodies suitable to feed the Bwana processing facility.

Income tax recovery result of operating loss

Income tax recoveries were recorded in relation to the operating losses at Kansanshi and Frontier. There was no income tax recovery related to the operating loss at Bwana/Lonshi due to the suspension of operations and the uncertainty related to recovering tax losses in the future.

Following the confirmation in the 2009 Zambian Budget of the retention of the variable profit tax ("VPT") introduced in 2008, the Company has reviewed the value recognized in its accounts for deferred income tax liabilities. The impact of VPT is estimated to result in a rise in the future effective tax rate from the 30% base rate for mining companies in Zambia to 41%, which has required a charge to Q4 2008 profit of $43.3 million. Accordingly, the Company recorded a future recovery on this VPT under its Development Agreements and offset this against the income tax charge in net earnings as it maintains that these taxes are in excess of those permitted under its Development Agreements.

  Minority interests recovery due to operating losses at Kansanshi, Frontier and Guelb Moghrein

The recovery of minority interests was due to the operating losses at Kansanshi, Frontier and Guelb Moghrein. Kansanshi and Guelb Moghrein are both subject to a 20% minority interest and Frontier is subject to a 5% minority interest.

Impairment review 

Following the end of the 2008 year, the Company conducted a review of the carrying values of its assets under Canadian GAAP. 

The Company prepared cash flow forecasts for each operating mine and development project using price assumptions reflecting prevailing commodity prices and analysts' consensus forecasts, current life-of-mine plans and forecast operating cost profiles. The long-term price assumptions used were $1.75 per pound of copper, $7.32 per pound of nickel and $12.50 per pound of cobalt. No impairment was identified for any of the Company's mines or projects.

The review of carrying values for investments was based on current market prices for listed investments and other data for unlisted investments. For listed investments, an impairment write down of $254.2 million to reflect recent market trading prices was identified. This adjustment was recorded in the Q4 accounts partly as a transfer from comprehensive loss to net earnings. 

Q4 2008 cash flows

	Q4 2008	Q4 2007	Q4 2006
	USD M	USD M	USD M
Cash (outflows) inflows from operating activities
- before working capital	(147.8)	220.8	70.6
- after working capital	43.4	224.1	129.3
Cash (outflows) inflows from financing activities	(7.3)	50.6	53.1
Cash outflows from investing activities	(146.5)	(297.3)	(122.8)
Net cash (outflows) inflows	(110.4)	(22.6)	59.6
Cash (outflows) inflows per share
- before working capital (USD per share)	(2.16)	3.26	1.05
- after working capital (USD per share)	0.64	3.29	1.92

Cash flows from operating activities down due to net loss

Operating cash outflows before working capital movements were driven by the net loss for the quarter. The total outflow was lower than the loss due to the effect of non-cash charges such as depreciation and inventory and investment write downs.

Operating cash flows after working capital movements for Q4 were positive, due to a drawdown in accounts receivable of $245.2 million. This was due mainly to the negative provisional pricing adjustments being partially offset by final amounts owed by offtakers, which reduced the impact on the Company's cash. Current income taxes payable decreased by $90.6 million on account of the operating loss and the consequent tax recoveries.

Cash outflows from financing activities due to debt facility payments

Financing activities included repayments on debt facilities of $7.3 million, comprising of $4.6 million on the Kansanshi subordinated debt facility and $2.7 million on the Kansanshi project completion facility. The comparative quarter of 2007 included a debt drawdown of $50.0 million under the corporate revolving credit and term loan facility.

Cash outflows from investing activities driven by continued capital investment 

Capital expenditure on mining equipment at various sites and expansion activities at Guelb Moghrein accounted for $56.9 million, while $52.0 million was spent on the Kolwezi development project. Capital expenditure continued at Guelb Moghrein on the gold plant and the copper plant expansion project. In addition, $40.4 million was classified to restricted cash to provide for the next corporate revolving credit and term loan facility payment. The comparative quarter of 2007 included the purchase of $194.3 million in listed security investments.

FY 2008 operating results

	FY 2008	FY 2007	FY 2006
NET SALES (after provisional pricing and realization charges)	USD M	USD M	USD M
Kansanshi - copper	1,180.4	1,102.7	727.2
- gold	44.1	26.0	18.5
Frontier   - copper	287.8	16.1	-
Guelb Moghrein - copper	137.7	183.4	5.6
- gold	53.4	44.1	1.6
Bwana/Lonshi - copper	35.4	166.5	341.2
- acid	1.6	0.4	0.4
Net sales	1,740.4	1,539.2	1,094.5
Copper provisional pricing adjustment included above	44.5	(9.7)	30.9
OPERATING PROFIT	USD M	USD M	USD M
Kansanshi	674.9	740.7	541.4
Frontier	86.9	14.0	206.1
Guelb Moghrein	91.9	149.1	2.3
Bwana/Lonshi	(49.7)	9.9	-
Operating profit before inventory NRV adjustments	804.0	913.7	749.8
Inventory NRV adjustments	(60.5)	-	-
Total operating profit	743.5	913.7	749.8
COPPER SELLING PRICE	USD/lb	USD/lb	USD/lb
Current period sales	2.50	3.16	3.04
Prior period provisional pricing adjustment	0.06	(0.02)	0.08
TC/RC and freight parity charges	(0.34)	(0.17)	(0.30)
Realized copper price	2.22	2.97	2.82
UNIT COSTS	USD/lb	USD/lb	USD/lb
Cash costs (C1)	1.23	1.04	0.93
Total costs (C3)	1.67	1.27	1.15

Group operating profit decrease due to global economic downturn 

Group operating profit decreased 19% as the copper price declined over 65% over the second half of the year as global economic conditions deteriorated rapidly. Sales volume increased 50% roughly in line with the increase in production. Two thirds of this increased production was contributed by Frontier, which achieved commercial production in late 2007, while Kansanshi and Guelb Moghrein increased their production by 31% and 15% respectively. Of this combined production, copper in concentrate output increased by 105%, which was subject to higher TC/RC and freight parity charges due principally to the requirement to export untreated concentrates.

Inflationary cost increases related to the price of oil and other commodities and the higher TC/RC and freight parity charges resulted in an 18% higher average cash unit cost of production (C1) compared to 2007. The year average global crude oil prices were over 35% higher than 2007 and sulphur prices skyrocketed on heavy global demand. The combination of the lower average copper price, higher C1 costs and NRV inventory adjustments of $60.5 million resulted in the lower operating profit.

Kansanshi benefits from capital investment in expansion upgrades

Kansanshi copper production increased to 215,314 tonnes as a result of the capital investments in expanding Kansanshi's facilities during 2007 and 2008. The increased production led to a 27% increase in sales volumes to 207,701 tonnes. Investment in additional mining equipment throughout 2007 allowed increased mine production and processing facility upgrades and expansions resulted in a 28% increase in ore throughput over 2007 to over 15 million tonnes. 

Tolled cathode production, of approximately 45,100 tonnes from the Mufulira smelter, decreased by 6% due to limited processing capacity. However, the HPL contributed approximately 11,200 tonnes of copper in concentrate to cathode production, which was a 245% increase over 2007, as significant improvements were made throughout the year to increase the availability of the HPL. With the significantly increased concentrate production and smelter capacity constraints at the Mufulira smelter, Kansanshi sold approximately 50,500 tonnes of copper in concentrate without further processing and stockpiled an additional 6,000 tonnes of copper in concentrate over the course of the year.

Higher prices for fuel, oil-based consumables, sulphur and wages increased the average unit cash cost of production (C1) by 29% to $1.16 per pound. TC/RC and freight parity charges also contributed to the higher C1 costs due to the increase in concentrate production. The Zambian tax changes that became effective in Q2 contributed to the 57% increase in the average total unit cost of production (C3) to $1.63 per pound.

Frontier production achieves design levels; becomes second biggest contributor to the group's copper production 

Frontier's operations ramped up to design levels after achieving commercial production in Q4 2007 and contributed 80,177 tonnes of copper in concentrate to the Company's output.

Mining and copper production were impacted by Frontier's first wet season during the early part of the year as the heavy rains hampered mining activities leading to low quality ore being available for processing. As the wet season ended, higher grade was accessed which led to increased concentrate production during the latter part of the year. Frontier copper production represented 24% of the Company's total output.

Throughout the year, Frontier's average unit cash cost of production (C1) of $1.52 per pound was negatively impacted by higher than planned ore and processing costs, due to high oil prices and pit accessibility issues related to the mine plan. In addition, TC/RC and freight parity costs were higher than planned due to the lack of available processing capacity at the Mufulira smelter and the need to export all of Frontier's concentrate production. However, lower oil prices and changes to the existing mine plan in Q4 began to reduce costs in December. These costs reductions are expected to continue.

Guelb Moghrein increases production 

Guelb Moghrein's copper in concentrate production was 15% higher at 33,073 tonnes on increased ore throughput. The average unit cash cost of production (C1) of $0.70 per pound was 8% higher than 2007 due to higher prices for process inputs; however the average total unit cost of production (C3) was 9% lower at $1.05 per pound due to higher interest costs in 2007.

Bwana/Lonshi operation suspended 

The open pit mining operations at the Lonshi mine were completed in August with the ore stockpiles remaining in the RDC. In October, the SX/EW operation at Bwana Mkubwa was suspended due to a lack of economically viable ore available for processing.

Bwana/Lonshi's operating results for the year were generated from the processing of low grade ore purchased from third parties, less related shut down costs.

  FY 2008 net profit

	FY 2008	FY 2007	FY 2006
	USD M	USD M	USD M
Operating profit	743.5	913.7	749.8
Corporate costs and other expenses/income	(39.8)	(32.1)	(25.4)
Derivative losses, net	(6.1)	(8.7)	(58.2)
Exploration	(28.5)	(20.3)	(18.9)
Interest, net	(23.9)	(18.1)	(23.9)
Tax expense	(247.2)	(182.8)	(161.1)
Minority interests	(97.9)	(131.4)	(62.9)
Net profit before impairment charge	300.1	520.3	399.4
Impairment charge on investments	(254.2)	-	-
Net profit after impairment charge	45.9	520.3	399.4
Earnings per share before impairment charge
- basic (USD per share)	4.41	7.72	6.14
- diluted (USD per share)	4.36	7.62	6.01
Earnings per share after impairment charge
- basic (USD per share)	0.67	7.72	6.14
- diluted (USD per share)	0.67	7.62	6.01
Weighted average shares outstanding
- basic (number of shares - millions)	68.2	67.4	65.1
- diluted (number of shares - millions)	68.9	68.3	66.4

Net profit decreases on lower operating profit and higher tax expense

Net profit and basic earnings per share were both 91% lower than 2007 on account of the global economic crisis and the Zambian mining tax changes introduced in Q2 2008.

Corporate costs increase on foreign exchange losses related to the strengthening of the US dollar 

The strengthening of the US dollar against other currencies resulted in an $8.1 million foreign exchange loss, of which $6.9 million was recognized in Q4.

Exploration costs increase with Lonshi underground evaluation and exploration in Mauritania

The Company's increase in exploration costs was substantially due to the evaluation of underground mining at Lonshi and exploring new opportunities in Mauritania.

Interest expense up on higher outstanding debt balance

The increased interest expense on the Company's higher long-term debt level during the year was offset to some extent by lower market interest rates.

Income tax expense higher on tax rate changes

Due to the increase in the Zambian income tax rate referred to previously and an increase in the proportion of income subject to the higher 30% statutory tax rate in RDC, tax expense was higher than the comparative year.

  FY 2008 cash flows

	FY 2008	FY 2007	FY 2006
	USD M	USD M	USD M
Cash inflows from operating activities
- before working capital	637.3	771.8	564.2
- after working capital	765.4	540.8	474.0
Cash (outflows) inflows from financing activities	(29.8)	20.0	13.4
Cash outflows from investing activities	(759.4)	(610.3)	(320.8)
Net cash (outflows) inflows	(23.8)	(49.5)	166.6
Cash inflows per share
- before working capital (USD per share)	9.36	11.45	8.67
- after working capital (USD per share)	11.25	8.01	7.29

Increase in cash inflows from operating activities despite economic downturn in Q4

The operating cash flows after working capital movements were higher due to more effective working capital management. This included better utilization of payment terms with suppliers and timing of the payment of taxes and a reduction of accounts receivable related to the decrease in the copper price and its effect on the provisional payments made by offtakers. At the end of 2007, there was a significant balance in accounts receivable which was reversed during 2008.

Cash outflows from financing activities steady

The cash outflows from financing activities included dividend payments of $53.0 million for the year, which were partially offset by net debt facility drawdowns of $18.2 million. In 2007, net drawdowns were higher at $69.3 million.

Cash outflows from investing activities increase on acquisition of Scandinavian Minerals Limited ("SML") and project expenditure

The acquisition of SML during Q2 at a net cash cost of $214.3 million and a 44% increase in capital expenditure to $460.3 million resulted in the significant increase in investing cash outflows compared to 2007. In 2007, there were $283.2 million in investment purchases compared to $90.4 million in 2008.

Q4 2008 balance sheet

	YE 2008	YE 2007	YE 2006
	USD M	USD M	USD M
Cash (including restricted cash)	216.5	222.5	264.5
Property, plant and equipment	1,996.3	1,308.4	1,068.1
Total assets	3,004.5	2,682.7	1,719.7
Long term debt	385.7	361.2	294.9
Total liabilities	1,603.9	1,096.7	799.9
Shareholders' equity	1,400.6	1,586.0	919.8
Net working capital (including non-current inventory but excluding cash and debt)	69.5	308.5	106.0
Net debt to net debt plus equity (%)	11%	8%	5%

Group assets rise on positive cash flows, acquisition of SML and continued capital investment 

The Company's positive operating cash flow was utilised to acquire SML, which holds the Kevitsa nickel-copper-PGE project in Finland, and to continue with other capital projects, expansions and investments.

Net working capital decreased primarily due to a reduction in accounts receivable related to the decline in the copper price, and an increase in accounts payable and income taxes payable, including the Zambian windfall tax payable. Net working capital fell from the end of Q3 by $223.4 million as a result of the sharp fall in the copper price and its relation to the provisionally priced receivables and better utilization of credit terms which resulted in an increase in accounts payable.

Overall, inventory increased by $52.6 million from December 31, 2007. This increase included $10.1 million of ore stockpile and $38.0 million of consumable stores inventory. In addition, the Company reduced the copper in concentrate stockpile by approximately 1,900 tonnes since the previous year end resulting in approximately 16,400 tonnes of contained copper in concentrate at year end. The majority of this copper in concentrate was Kansanshi's with approximately 11,600 tonnes stockpiled at the Mufulira smelter awaiting further treatment.

The total investment in marketable securities at cost amounted to $398.6 million. With the current economic conditions and the negative impact to the equities market, the Company recognized an impairment loss of $254.2 million in Q4 to reduce the investments to a fair value of $144.4 million. The accumulated other comprehensive income recognized in 2007 relating to these investments was reversed.

Property, plant and equipment balances increased by $687.9 million, net of depreciation, with $105.0 million of this increase in Q4. In addition to the acquisition of SML in Q2, the increase was due to continued capital expansions at Kansanshi, the Kolwezi development project and expansions at Guelb Moghrein. 

Group liabilities increase on accounts payable, future tax adjustments, and minority interests

Accounts payable increased by $228.2 million due to the increase in purchases, windfall taxes and capital expenditure, and the timing of payments. The future tax liability increased due to new Zambian taxes and the acquisition of SML. Minority interests were higher on positive operating results at Kansanshi and Guelb Moghrein.

Shareholders' equity decreases on significant decline in the fair value of investments

Shareholders' equity decreased due to the decline in the fair value of the Company's marketable security investments. In addition, dividends of $53.0 million were paid during the year.

As at the date of this report the Company has 68,750,911 shares outstanding.

  Financial position and liquidity

The Company's cash position was approximately $207 million at February 28, 2009.

The Company expects to generate sufficient cash flow from operations to cover any liquidity requirements within the next 12 months. Consensus analysts' forecasts currently indicate average copper prices for 2009 of $1.60 per pound. On this basis and taking into account the Company's 2009 targeted average C1 cost of production of $0.80 per pound and production targets of 380,000 tonnes of copper and 240,000 ounces of gold, the Company expects to generate positive operating cash flows sufficient to cover all commitments, financing obligations and capital expenditures over the next 12 months.

The Company has taken additional steps to deal with the current volatility surrounding the copper price, which included the finalization of approximately 71,000 tonnes of the outstanding year end provisionally priced copper sales, and hedged 83,500 tonnes of copper production between January and July 2009. At the end of February 2009 the Company had settled or arranged extended settlement of all outstanding December 2008 provisional pricing exposure and had remaining hedges over 72,500 tonnes.

In addition to generating operating cash flows, the Company expects to have available additional funding sources. The Company renewed the $250 million corporate revolving loan facility in January 2009. The renewed facility matures in January 2010, bears interest at LIBOR plus 4.5% and is available for corporate purposes. This loan is secured by a first ranking mortgage over investments owned by the Company, including the Kevitsa project. As at December 31, 2008, the original facility was drawn to $50 million. In January 2009 this amount was repaid and $150 million was drawn under the renewed facility. $100 million of this facility remains undrawn.

Upon completion of the revisitation process, the Company intends to finalize long-term project financing for the development of the Kolwezi project in accordance with the provisions of the amended Contrat D'Association. The project debt, when available, will be used to repay the funding provided by the contributing equity partners to date. The balance of funding will be provided by way of subordinated shareholder loans. A syndicate of commercial and development banks were mandated in early 2008 to provide a $450 million facility for the development of the project. These banks have recently reaffirmed that, subject to a satisfactory outcome to the revisitation process being conducted in the RDC, they are prepared to provide the financing subject to completion of documentation and standard conditions precedent for a facility of this nature. 

In addition, the Company is entitled to a pro-rata reimbursement of capital costs incurred to date from the other contributing partners in the Kolwezi project upon declaration of financial close as defined in the Contrat D'Association or those contributing partners will be required to dilute their ownership interests.

The Company does not expect to be subject to liquidity risk and believes that it is well positioned to meet all of its near-term obligations as they become due.

Contractual Obligations at December 31, 2008

	Total	Less than 1 year	1 - 2 years	2 - 3 years	3 - 4 years	4 - 5 years	Thereafter
	USD M	USD M	USD M	USD M	USD M	USD M	USD M
Term debt	390.6	141.6	91.8	136.0	5.3	5.3	10.6
Accounts payables	279.6	279.6	-	-	-	-	-
Deferred payments	6.9	5.2	0.5	0.4	0.4	0.4	-
Commitments	216.2	216.2	-	-	-	-	-
Asset retirement obligations	18.8	0.9	-	-	-	-	17.9

  Zambian mining tax changes

Background

As previously reported the Government of the Republic of Zambia ("GRZ") announced in January 2008 a number of proposed changes to the tax regime in the country in relation to mining companies. These changes were passed by parliament in late March and the majority of changes took effect from April 1, 2008.

The various taxes in the revised tax regime have been accounted for as follows:

The Company, through its Zambian subsidiaries, is party to Development Agreements with the GRZ for its existing operations which provide an express right to full and fair compensation for any loss, damages or costs (including interest) incurred by the Company by reason of the GRZ's failure to comply with the tax stability guarantees set out in the Development Agreements, and rights of international arbitration in the event of any dispute.

The Company obtained legal advice on its rights under the Development Agreements confirming that the Company has rights of recovery for any taxes which are levied in excess of those permitted under those Development Agreements. In the light of the detailed advice received, the Company assessed there to be a high probability of recovery from the GRZ of certain payments made in respect of these taxes. Accordingly, the Company has recognized a receivable from the GRZ for an amount in respect of the expected ultimate repayment of taxes in excess of the taxes permitted under the Development Agreements. As required by the financial instruments standards, this receivable has initially been recorded at fair value based on management's best estimate of the timing of receipts and amounts due. At December 31, 2008 this receivable amounted to $127.5 million and the recovery has been included in other operating income and not deducted in calculating C costs.

The Company received letters from the Zambian Revenue Authority ("ZRA") during July confirming that the Company "will with immediate effect be required to pay windfall tax on a provisional basis at a flat rate of 25% at any price above the first trigger price for both copper and cobalt". This advice is inconsistent with the legislation referred to above which provides for windfall tax rates of 50% above $3.00 per pound and 75% above $3.50 per pound. The letters go on further to state that this "is an interim arrangement and, we expect at the end of the tax year, necessary adjustments will be effected accordingly". Because of this inconsistency with duly passed legislation, the purported capping of the windfall tax rate has not been taken into account in the liability calculations for the financial statements. The Company's accounts reflect tax liabilities consistent with the legislation passed by parliament.

Update

The Company continued to record the full liability for these taxes in its Q4 accounts in accordance with the 2008 legislation, and has also recognized as a receivable an amount in respect of the excess taxes recoverable in accordance with the Development Agreements.

On January 30, 2009 the Minister of Finance of the GRZ handed down the 2009 budget. As expected there were positive changes to the mining tax regime announced including:

The 2009 changes are intended to take effect on April 1, 2009.

There were, however, a number of changes implemented in 2008 that were retained, including the variable profit tax, concentrate export levy, income tax at 30% and higher royalties, which the Company maintains are in excess of those permitted under its Development Agreements and for which it has rights of recovery.

The Company is seeking to hold discussions with the GRZ to find an alternative solution to arbitration or litigation to fully resolve these matters. The timing and outcome of these discussions is uncertain.

Growth activities

Capital expenditure

In 2009, the capital expenditure program is expected to total approximately $190 million in cash outflow and will concentrate on committed capital projects - mainly the development of the Kolwezi project and the expansion of the Guelb Moghrein mine, which will both be low cost producers when completed. The modified program will be financed through operating cash flow and completion of the $450 million facility for the Kolwezi project, subject to a satisfactory outcome of the revisitation process with the Government of the RDC. 

Details of the 2009 program are as follows:

Kolwezi development in RDC

The Board of Kingamyambo Musonoi Tailings SARL ("KMT") (owned by the Company: 65%; La Générale Des Carrières et Des Mines ("Gécamines"): 12.5%; Industrial Development Corporation of South Africa ("IDC"): 10%; the International Finance Corporation ("IFC"): 7.5%; and the Government of the RDC: 5%) committed in November 2007 to proceed with the development of the Kolwezi tailings project ("Kolwezi"). First Quantum with support from the contributing equity partners of KMT (IDC and IFC) will finance or procure third party debt project financing totalling up to $593 million, representing the budgeted development costs of $553 million plus the incremental expansion costs of $40 million. This satisfied the obligations of First Quantum, IDC and IFC under the Contrat D'Association to complete feasibility studies, carry out an environmental impact assessment, and prepare an environmental management plan and to obtain commitments with respect to the financing of the project.

Approximately $355 million of the project budget has been committed and approximately $185 million has been spent.

At the end of Q4 2008 the overall project was 47% complete. The status of completion of various project components was approximately as follows:

engineering of copper plant - 98% ;

engineering of acid plant - 100%;

manufacture of materials and equipment - 65%;

overall construction - 34%;

process plant earthworks - 96%;

process plant concrete - 69%;

erection of tankage - 49%;

erection of buildings - 75%;

structural steel erection - 24%; and

pipe installation - 5%.

In light of the current economic conditions and decline in the copper price, KMT will reduce its monthly cash outflow on the Kolwezi project and increase the expected length of the construction period. The project commissioning will be rescheduled to commence in Q3 2010, roughly six months later than previously scheduled.

The forecasted capital cost is expected to be under the budget of $553 million at approximately $545 million.

The plant is expected to commence operations at 35,000 tonnes of copper cathode per year and 7,000 tonnes of cobalt hydroxide per year. The plant is designed and constructed such that its capacity can be doubled for an incremental capital cost of approximately $40 million. The mine life is expected to be 22 years at an annual production rate of 70,000 tonnes of copper cathode per year. 

A study commenced on the development of a cobalt metal facility to augment the plant and this study is expected to be completed in Q1 2009.

Kolwezi revisitation

During 2007, the Government of the RDC announced a review of over 60 mining agreements entered into over the last decade with foreign companies. The Kolwezi mining convention was included in this review. The Company and its contributing partners in the Kolwezi project, IDC and IFC have obtained legal advice that the Kolwezi mining convention is valid and binding and that all terms have been complied with. The Kolwezi mining convention provides a dispute resolution mechanism through international arbitration.

Over the past months, the Company and its contributing partners attended several meetings with Gécamines (the state-owned mining agency of the RDC) and Government representatives on the review of the Kolwezi mining convention. No agreement has been reached to date but the Company is encouraged that the process appears to be nearing conclusion.

Kansanshi continues to improve HPL and sulphide circuit upgrade 

Output from the HPL operations improved notably as material and equipment improvements took effect. Running both autoclaves was achieved for the first time during the month of December 2008.

The 12 million tonne per annum sulphide expansion operated consistently at design rates, with improved metallurgical performance across both old and new sulphide circuits obtained as consistency in operations improved. The planned completion of additional cleaning capacity, in conjunction with the added capacity provided by in-circuit crushing for the new mill circuit, due by end of Q1 2009, will further increase capacity, flexibility and efficiency.

Capacity improvements in leaching and solvent extraction operations along with the added capacity provided by the fourth electro-winning tank house, and refurbishment and other quality initiatives in existing tank houses, will lead to efficiency and quality gains in electro-won copper output. Plating capacity will be improved further with the installation of the second transformer, which was unavailable for initial commissioning, in the recently completed fourth tank house.

Guelb Moghrein plant expansion project underway

Construction of the gold recovery circuit was completed in December 2008 and commissioning is complete with commercial production achieved in January 2009. The new carbon-in-leach tailings storage facility earthworks and drainage and the liner installation on the first cell, were completed at the end of October 2008. Gold bullion was poured in December and the first bullion shipment occurred in early February 2009.

Additional power generation requirements are being addressed with the Mirrlees No.5 commissioning partly completed while waiting for some electrical circuit components; and the Mirrlees No.6 engine installation is well advanced with the bed and crankshaft and the cylinder head in place. Pipe extrusion for the new saline pipeline from Bennichab is proceeding with the pipeline due to be completed by the end of Q1 2009. Trenching work is now greater than 26 kilometres with more than 14 kilometres of pipe laid, out of a total distance of 113 kilometres.

As part of the plant expansion project, the foundation civils works for the additional mill and flotation cells are advancing as per the original schedule, as well as the earthworks on the new flotation tailings storage facility.

Additional mining fleet to cope with the plant expansion requirements is being commissioned. A new excavator and four new 100-tonne trucks were already assembled on site and brought in to operation in November 2008. A new drill rig was commissioned in December 2008. Another excavator, two additional 100-tonne trucks and more ancillary equipment are due to be commissioned in March 2009.

Scandinavian Minerals Limited acquisition 

In June 2008, the Company acquired all of the outstanding common shares of SML for consideration of CA$9.00 in cash plus 0.01 common shares of the Company for each SML common share. SML's main asset was the 100% owned Kevitsa nickel-copper-PGE project in northern Finland.

The Kevitsa project fits the Company's strategy of acquiring projects to which it can apply its expertise in both development and financing expertise and experience. The acquisition is also consistent with the Company's goal of diversifying its assets geographically.

The acquisition of SML has been accounted for as an asset purchase. 

The total purchase cost was $277.6 million comprising:

			USD M
Cash			255.4
Issuance of common shares			19.8
Transaction costs			2.4
Total			277.6

(a) The Company issued 284,491 common shares at CA$71.28 per share for the acquisition of SML. The measurement of the common share component of the consideration is based on the average share price of the Company's common shares immediately before and after the date of acquisition. 

(b) The cash paid to acquire SML, including transaction costs less the cash received, was $214.3 million.

The preliminary allocation of the purchase price to the assets and liabilities acquired is as follows:

			USD M
Assets
Cash			43.5
Restricted cash			23.6
Accounts receivable			0.2
Property, plant and equipment			14.7
Mineral property			268.5
Liabilities
Accounts payable and accrued liabilities			(1.1)
Future income tax liability			(71.8)
Net assets acquired			277.6

The decision on the timing of the development of the Kevitsa project has been deferred until later in 2009 and existing contracts for the supply of equipment have been renegotiated or cancelled. Drilling and geophysics carried out during 2008 and continuing in 2009 have shown that the project has considerably more upside potential than was previously thought and the resource is now being better defined.

A review of the carrying value of the Kevitsa project was carried out at the end of 2008 and no impairment was identified under Canadian GAAP.

Exploration

After reviewing the group's exploration program, management has curtailed activities in 2009 to focus on brownfield expansion opportunities and the Kevitsa project. As a result, the budget for the 2009 program has been set at $10 million and reflects:

Zambian/RDC projects have been scaled back to the high priority targets in the Pedicle District of the RDC around Frontier and Lonshi. At Frontier, after recent success in drilling high grade sulphide mineralization immediately south of Frontier, exploration will be limited to developing these resources and the massive sulphide style targets recently defined in and around Kipushi.

In Mauritania, the Company now has its own RC drilling rig and sample preparation laboratory which boosts its exploration capability and lowers costs. Exploration is now focused on delineating encouraging targets already identified.

In Finland, development drilling continues to extend the Kevitsa ore system. An updated resource model is expected to be ready by Q3 2009. A recent review of geophysics and geology at Kevitsa has established good potential for Cu-Ni-PGE massive sulphides and a drill rig is currently testing these targets. 

While reducing overall exploration expenditure substantially, the Company is aware that some excellent opportunities are now becoming available. Any opportunities considered worthwhile will be carefully assessed against First Quantum's existing prospects.

Outlook 

Group copper production estimate for 2009 is 380,000 tonnes

The Company estimates production of approximately 380,000 tonnes of copper in 2009 as follows: 

	Target production Cu tonnes	Target production Au ounces	Expected average C1 cost USD/lb
Kansanshi	244,000	140,000	0.80
Guelb Moghrein	38,000	100,000	0.50
Frontier	98,000	-	0.90
Total	380,000	240,000	0.80

During January and February 2009, total copper production was approximately 58,500 tonnes sourced as follows:

Frontier - 11,900 tonnes;

Guelb Moghrein - 5,800 tonnes;

The Company sold approximately 44,800 tonnes of copper in the two months.

Following the company-wide review conducted in Q4 2008, the operating plans at each mine have been adjusted, supply contracts renegotiated, supplier credit terms improved, working capital management tightened and some exploration and capital expenditure delayed and deferred. These changes are being supplemented by other measures to optimize costs rather than production. In addition, costs are benefiting from price reductions for key inputs, particularly diesel and sulphur which declined significantly in Q4 2008. The full benefit of these cost reductions is expected to be realized in Q1 2009 and continue throughout the year.

Kansanshi

The volume of material mined is being reduced by approximately 40% by increasing the cut-off grades for both oxide and sulphide ores. This has significantly reduced both mining and processing unit costs. The recently installed 35,000 tonne per year electrowinning tankhouse, the four million tonne per year concentrator expansion and the HPL facility are all giving Kansanshi considerable processing flexibility. Gold production for 2009 is expected to total 140,000 ounces.

Guelb Moghrein

A program to upgrade the primary mining fleet has been established and is expected to be complete soon. The new fleet will have fewer vehicles, be more fuel efficient and require less maintenance. Power is a significant cost element at Guelb Moghrein and the power expense is being reduced by greater use of heavy fuel oil ("HFO"). The project for introducing new and larger HFO power sets is expected to start installation in the next few months. The new sets should be more reliable and by early 2010 the operation will be using HFO only. In addition, with the new gold scavenger circuit now in operation, Guelb Moghrein is expected to increase its gold production significantly in 2009 to over 100,000 ounces compared to approximately 60,000 ounces in 2008. The plant expansion to 3.8 million tonnes per year, which is expected to start commissioning in Q3 2009, is also anticipated to result in economies of scale.

Frontier

Frontier's average C1 cost is expected to decline to approximately $0.90 cents per pound in 2009. This is expected to be achieved by optimizing grade and tonnage to minimize mining operating cost; improvement efficiency in the process plant; utilize local smelters, thus reducing realization charges; and a redeployment of personnel. 

Management estimates that Frontier's C1 cost could fall further with increased availability of local smelting capacity on competitive terms. Capacity availability will be determined by the production levels of other Zambian mines.

Medium term group production estimate

The Company forecasts its current operations will achieve the following average production levels over the years 2010 to 2013:

Frontier - 103,000 tonnes of copper

Guelb Moghrein - 44,000 tonnes of copper and 130,000 ounces of gold

The Kolwezi project is expected to begin production in the latter half of 2010 with expected production of approximately 9,000 tonnes of copper. The Company expects the average production levels over the years 2011 to 2013 for this project to be approximately 70,000 tonnes of copper per year.

Hedging program

The Company believes that its reduced capital program is sustainable at current commodity prices given the cost saving measures initiated and falling input costs. However, the world economic outlook remains uncertain and volatile and commodity prices could still materially deteriorate. The Company has therefore initiated the defensive strategy of hedging up to 50% of targeted copper production for the seven-month period ended July 31, 2009 to protect against this downside risk.

The Company used a producer put and call option - a zero premium cost strategy so that a floor price at the put option price is achieved and upside participation is capped at the call option strike level. The hedged price is between the put and call option strikes.

To date, 83,500 tonnes were hedged for the months of January through July 2009 inclusive at an average put strike of $1.46 per pound ($3,225 per tonne) and an average call strike of $1.64 per pound ($3,626 per tonne). Of this hedging 11,000 tonnes matured in January and February 2009 and resulted in a small payment to the Company. At the end of February 2009 hedging of 72,500 tonnes for the months of March through July 2009 remains in place at an average put strike of $1.47 per pound ($3,235 per tonne) and an average call strike of $1.65 per pound ($3,642 per tonne).

The program will be reviewed on a rolling monthly basis throughout 2009 in light of prevailing market conditions.

Q4 copper sales subject to final settlement prices in subsequent periods will result in revenue adjustment in 2009

At December 31, 2008, 79,293 tonnes of copper were provisionally priced at an average of $1.33 per pound ($2,932 per tonne) and subject to final pricing over the period January to June 2009.

Of the total year end provisionally priced tonnage, 71,343 tonnes have already been priced out and finalized at an average price of $1.56 per pound ($3,442 per tonne). The effect on the Company's Q1 2009 revenue to date is a favourable adjustment of approximately $36.4 million.

The average LME cash price for January and February 2009 was $1.46 per pound ($3,221 per tonne) and $1.50 per pound ($3,315 per tonne), respectively.

Dividend policy maintained

The Company has a long-term commitment to paying dividends, and in recent years has paid approximately 10% of net earnings in total interim and final dividends each year. Following the finalization of the 2008 results, the interim dividend paid in September 2008 in respect of the year of CA$0.26 per share amounted to 37% of the full year net earnings. Accordingly, the Board has decided that no final dividend will be paid in respect of 2008. The Company also currently intends to follow its policy on interim dividends of paying no less than one-third of the prior year's total dividend, but the Board will review the interim payment for 2009 in light of prevailing market conditions and outlook following the Q2 results. 

On Behalf of the Board of Directors 12g3-2b-82-4461

of First Quantum Minerals Ltd. Listed in Standard and Poor's

G. Clive Newall

President

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

North American contact: Sharon Loung 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, President 1st 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 Simon Hockridge Hogarth Partnership Ltd. Tel: +44 (0) 20 7357 9477

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 U.S. and Canadian securities laws. Such forward-looking statements or information include but are not limited to statements or information with respect to future price of copper or gold, estimation of mineral reserves and mineral resources, our exploration and development program, estimated future expenses, exploration and development capital requirements, and our 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, we have made numerous assumptions including among other things, assumptions about the price of copper and gold, anticipated costs and expenditures and our ability to achieve our goals. Although our management believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that a forward-looking statement or information herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our 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.

See our annual information form and our quarterly and annual management's discussion and analysis for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information. Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actual results, performances, achievements or events not to be anticipated, estimated or intended. Also, many of the factors are beyond our control. Accordingly, readers should not place undue reliance on forward-looking statements or information. We undertake 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.

  Summary of quarterly and current year to date results

The following unaudited table sets out a summary of the quarterly results for the Company for the last eight quarters and the 2008 full year:

	2007	2007	2007	2007	2008	2008	2008	2008	2008
Statement of Operations and Retained Earnings	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	FY
(millions, except where indicated)
Revenues
Current period copper sales (1)	$270.9	$315.7	$460.2	$448.4	$441.8	$624.3	$554.7	$203.9	$1,596.8
Prior period provisional copper adjustments (2)	(17.6)	22.6	3.2	(34.7)	44.5	1.2	(16.4)	(212.7)	44.5
Other revenues	8.0	12.5	20.4	29.6	25.2	27.1	25.6	21.2	99.1
Total revenues	261.3	350.8	483.8	443.3	511.5	652.6	563.9	12.4	1,740.4
Cost of sales	101.9	121.3	152.6	168.4	137.1	219.0	248.6	218.4	823.1
Inventory NRV adjustments	-	-	-	-	-	-	7.9	52.6	60.5
Impairment charge	-	-	-	-	-	-	-	254.2	254.2
Net earnings	78.3	123.1	183.6	135.3	182.0	208.0	147.5	(491.6)	45.9
Basic earnings per share	$1.16	$1.83	$2.71	$2.00	$2.68	$3.06	$2.16	$(7.19)	$0.67
Diluted earnings per share	$1.14	$1.79	$2.66	$1.97	$2.65	$3.02	$2.13	$(7.19)	$0.67
Copper selling price
Current period copper sales (per lb)	$2.96	$3.28	$3.58	$2.97	$3.43	$3.72	$3.11	$1.35	$2.50
Prior period provisional adjustments (per lb)	(0.18)	0.23	0.02	(0.21)	0.32	0.01	(0.08)	(0.99)	0.06
Gross copper selling price (per lb)	2.78	3.51	3.60	2.76	3.75	3.73	3.03	0.36	2.56
Tolling and refining charges (per lb)	(0.06)	(0.03)	(0.05)	(0.06)	(0.05)	(0.06)	(0.06)	(0.07)	(0.06)
Freight parity charges (per lb)	(0.13)	(0.10)	(0.10)	(0.14)	(0.19)	(0.29)	(0.27)	(0.33)	(0.28)
Realized copper price (per lb)	2.59	3.38	3.45	2.56	3.51	3.38	2.70	(0.04)	2.22
Average LME cash copper price (per lb)	2.69	3.46	3.50	3.28	3.52	3.83	3.49	1.79	3.15
Realized gold price (per oz)	$661	$629	$700	$736	$868	$982	$759	$637	$801
Average gold price (per oz)	$650	$667	$681	$788	$927	$895	$871	$795	$872
Total copper sold (tonnes)(3)	44,315	45,366	60,904	73,322	62,802	84,007	90,698	97,280	334,787
Total copper produced (tonnes) (3)	46,403	49,979	57,565	72,746	75,616	80,977	82,187	95,635	334,415
Total gold sold (ounces) (3)	12,004	19,422	29,182	40,081	29,071	26,797	32,663	33,299	121,830
Cash Costs (C1) (per lb) (4) (5)	$1.06	$1.12	$0.98	$0.98	$1.02	$1.23	$1.37	$1.26	$1.23
Total Costs (C3) (per lb) (4) (5)	$1.30	$1.38	$1.22	$1.19	$1.28	$1.91	$1.99	$1.50	$1.67
Financial Position
Working capital including non-current inventories (restated)	$246.7	$390.8	$464.8	$457.3	$575.0	$472.2	$440.2	$69.5	$69.5
Copper in concentrate inventory (tonnes)
Kansanshi	7,102	10,578	9,733	8,325	14,243	16,342	14,306	14,416	14,416
Guelb Moghrein	10,182	10,897	8,483	2,867	1,057	1,546	1,765	1,869	1,869
Frontier	-	-	-	7,104	16,328	10,850	3,876	106	106
Total copper in concentrate inventory (tonnes)	17,284	21,475	18,216	18,296	31,628	28,738	19,947	16,391	16,391
Total assets	$1,797.1	$2,035.4	$2,300.4	$2,682.7	$2,917.9	$3,629.2	$3,372.8	$3,004.5	$3,004.5
Weighted average # shares (000's)	67,318	67,531	67,681	67,689	67,837	68,046	68,370	68,388	68,161
Cash Flows from
Operating activities
Before working capital movements	$118.9	$175.2	$256.9	$220.8	$272.6	$303.0	$209.5	$(147.8)	$637.3
After working capital movements	74.6	40.5	201.6	224.1	143.5	316.1	262.4	43.5	765.4
Financing activities	(25.8)	38.0	(42.8)	50.6	26.0	211.0	(259.5)	(7.3)	(29.8)
Investing activities	(102.0)	(114.8)	(96.2)	(297.3)	(99.9)	(403.3)	(109.7)	(146.6)	(759.4)
Cash Flows from Operating activities per share
Before working capital movements	$1.77	$2.59	$3.80	$3.26	$4.02	$4.45	$3.06	$(2.16)	$9.35
After working capital movements	$1.11	$0.60	$2.98	$3.29	$2.12	$4.64	$3.84	$0.64	$11.25

  

			2007			2007			2007			2007			2008			2008			2008			2008			2008
			Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4			FY
Kansanshi Production Statistics
Mining
Waste mined (000's tonnes)			5,316			6,681			6,482			6,482			3,671			10,167			10,066			4,771			28,675
Ore mined (000's tonnes)			2,600			3,371			4,650			4,867			5,433			3,306			5,027			5,324			19,090
Ore grade (%)			1.5			1.6			1.6			1.8			1.6			1.8			1.5			1.4			1.6
Processing (3)
Sulphide Ore processed (000's tonnes)			1,171			1,372			1,759			1,830			1,891			1,548			2,824			2,956			9,219
Oxide Ore processed (000's tonnes)			1,263			1,499			1,465			1,538			1,455			1,541			1,562			1,414			5,972
Contained copper (tonnes)			38,231			36,766			41,605			51,572			55,995			47,945			55,358			61,145			220,443
Sulphide ore grade processed (%)			0.8			1.1			1.0			1.3			1.3			1.4			1.1			1.3			1.2
Oxide ore grade processed (%)			1.8			1.4			1.7			1.6			1.8			1.6			1.6			1.7			1.7
Recovery (%)			93			99			99			99			93			93			96			93			94
Copper cathode produced (tonnes)			22,823			20,322			23,705			26,399			27,522			25,430			23,685			25,716			102,353
Copper cathode tolled produced (tonnes)			5,521			12,204			14,314			16,142			8,219			13,039			13,266			10,657			45,181
Copper in concentrate produced (tonnes)			7,056			3,727			3,140			8,471			16,562			9,154			16,423			25,641			67,780
Total copper production			35,400			36,253			41,159			51,012			52,303			47,623			53,374			62,014			215,314
Concentrate grade (%)			25.2			26.6			27.8			28.3			27.6			28.7			28.1			28.3			28.2
Combined Costs (per lb) (4) (5)
Mining			$0.20			$0.24			$0.24			$0.20			$0.20			$0.36			$0.41			$0.36			$0.33
Processing			0.54			0.59			0.59			0.53			0.50			0.69			0.79			0.62			0.65
Site Administration			0.03			0.02			0.03			0.03			0.02			0.03			0.03			0.04			0.03
TC/RC and freight parity charges			0.14			0.16			0.15			0.18			0.18			0.20			0.28			0.30			0.24
Gold / Acid credit			(0.06)			(0.06)			(0.07)			(0.09)			(0.08)			(0.13)			(0.11)			(0.08)			(0.09)
Combined Total Cash Costs (C1)			$0.85			$0.95			$0.94			$0.85			$0.82			$1.15			$1.40			$1.24			$1.16
Combined Total Costs (C3)			$1.05			$1.17			$1.13			$0.86			$0.95			$2.00			$2.11			$1.52			$1.63
Oxide Circuit Costs (per lb) (4)
Mining			$0.16			$0.22			$0.19			$0.18			$0.16			$0.32			$0.31			$0.27			$0.26
Processing			0.56			0.68			0.64			0.64			0.59			0.86			1.09			0.96			0.87
Site Administration			0.03			0.02			0.03			0.03			0.03			0.02			0.03			0.05			0.03
Oxide Circuit Total Cash Costs (C1)			$0.75			$0.92			$0.86			$0.85			$0.78			$1.20			$1.43			$1.28			$1.16
Oxide Circuit Total Costs (C3)			$0.92			$1.12			$1.02			$0.86			$0.88			$1.99			$1.96			$1.46			$1.55
Sulphide Circuit Costs (per lb) (4) (5)
Mining			$0.28			$0.26			$0.32			$0.23			$0.24			$0.41			$0.49			$0.44			$0.40
Processing			0.45			0.48			0.52			0.39			0.39			0.49			0.53			0.36			0.43
Site Administration			0.03			0.02			0.03			0.03			0.02			0.02			0.03			0.03			0.03
TC/RC and freight parity charges			0.42			0.39			0.35			0.39			0.40			0.43			0.52			0.51			0.48
Gold / Acid credit			(0.18)			(0.14)			(0.17)			(0.20)			(0.17)			(0.27)			(0.20)			(0.13)			(0.19)
Sulphide Circuit Total Cash Costs (C1)			$1.00			$1.01			$1.05			$0.84			$0.88			$1.08			$1.37			$1.21			$1.15
Sulphide Circuit Total Costs (C3)			$1.25			$1.24			$1.29			$0.86			$1.03			$2.01			$2.24			$1.57			$1.71
Revenues ($ millions) (3)
Copper cathodes			$175.8			$249.0			$307.1			$268.0			$305.5			$338.1			$286.2			$117.8			$1,047.6
Copper in concentrates			42.6			6.9			16.0			37.2			67.9			28.9			72.6			(36.6)			132.8
Gold			4.8			4.7			6.3			10.2			8.8			13.0			12.2			10.1			44.1
Total revenues			$223.2			$260.6			$329.4			$315.4			$382.2			$380.0			$371.0			$91.3			$1,224.5
Copper cathode sold (tonnes)			22,798			20,207			24,909			27,897			29,811			28,063			25,943			28,199			112,016
Copper tolled cathode sold (tonnes)			5,521			12,204			14,314			16,142			8,219			13,039			13,266			10,657			45,181
Copper in concentrate sold (tonnes)			9,000			250			2,696			7,927			8,981			4,393			15,830			21,300			50,504
Gold sold (ounces)			7,764			7,118			9,862			16,053			11,995			11,995			18,416			19,658			62,064

  

	2007	2007	2007	2007	2008	2008	2008	2008	2008
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	FY
Guelb Moghrein Production Statistics
Mining
Waste mined (000's tonnes)	1,610	1,400	1,487	1,358	1,388	1,018	776	1,128	4,310
Ore mined (000's tonnes)	462	539	674	650	662	626	858	1,038	3,184
Ore grade (%)	1.4	1.4	1.3	1.4	1.3	1.6	1.5	1.5	1.5
Processing (3)
Sulphide Ore processed (000's tonnes)	410	464	509	470	517	491	511	553	2,072
Contained copper (tonnes)	7,791	8,894	10,006	8,410	9,241	9,423	10,161	9,576	38,401
Sulphide ore grade processed (%)	1.9	1.9	2.0	1.8	1.8	1.9	2.0	1.7	1.9
Recovery (%)	83	79	81	85	83	86	84	85	86
Copper in concentrate produced (tonnes)	6,446	7,050	8,101	7,158	7,668	8,722	8,506	8,177	33,073
Gold in concentrate produced (ounces)	13,588	12,814	14,699	13,060	14,191	16,300	15,423	16,011	61,925
Sulphide Circuit Costs (per lb) (4)
Mining	$0.21	$0.17	$0.12	$0.20	$0.20	$0.19	$0.23	$0.38	$0.25
Processing	0.56	0.52	0.47	0.64	0.63	0.60	0.69	0.71	0.66
Site Administration	0.07	0.06	0.07	0.22	0.13	0.10	0.12	0.11	0.11
TC/RC and freight parity charges	0.66	0.43	0.38	0.57	0.38	0.57	0.39	0.38	0.43
Gold / Acid credit	(0.21)	(0.48)	(0.78)	(1.26)	(0.97)	(0.75)	(0.69)	(0.62)	(0.75)
Sulphide Circuit Total Cash Costs (C1)	$1.29	$0.71	$0.26	$0.37	$0.37	$0.71	$0.74	$0.96	$0.70
Sulphide Circuit Total Costs (C3)	$1.66	$1.09	$0.76	$1.05	$0.89	$1.14	$1.09	$1.08	$1.05
Revenues ($ millions) (3)
Copper in concentrates	$12.8	$41.2	$74.1	$55.3	$67.2	$51.1	$32.4	$(13.0)	$137.7
Gold	3.1	7.6	14.1	19.3	16.4	13.3	12.6	11.1	53.4
Total revenues	$15.9	$48.8	$88.2	$74.6	$83.6	$64.4	$45.0	$(1.9)	$191.1
Copper in concentrate sold (tonnes)	2,332	6,336	10,514	12,774	9,757	7,953	8,287	8,073	34,070
Gold sold (ounces)	4,240	12,304	19,320	24,028	17,076	14,802	14,247	13,641	59,766
Frontier Production Statistics
Mining
Waste mined (000's tonnes)	888	2,857	3,619	2,810	2,195	3,740	3,433	3,057	12,425
Ore mined (000's tonnes)	81	160	1,442	2,042	638	1,860	1,986	2,037	6,521
Ore grade (%)	1.1	0.9	1.0	1.2	1.3	1.4	1.2	1.2	1.3
Processing (3)
Sulphide Ore processed (000's tonnes)	-	-	-	835	1,499	1,794	1,651	2,178	7,122
Contained copper (tonnes)	-	-	-	11,872	18,238	25,308	19,479	27,391	90,416
Sulphide ore grade processed (%)	-	-	-	1.4	1.2	1.4	1.2	1.3	1.3
Recovery (%)	-	-	-	73	74	91	96	91	89
Copper in concentrate produced (tonnes)	-	-	-	8,712	13,437	23,136	18,687	24,917	80,177
Sulphide Circuit Costs (per lb) (4)
Mining	-	-	-	$0.41	$0.61	$0.33	$0.43	$0.45	$0.44
Processing	-	-	-	0.32	0.29	0.26	0.35	0.31	0.30
Site Administration	-	-	-	0.17	0.15	0.12	0.19	0.13	0.14
TC/RC and freight parity charges	-	-	-	0.39	0.65	0.69	0.55	0.64	0.64
Sulphide Circuit Total Cash Costs (C1)	-	-	-	$1.29	$1.70	$1.40	$1.52	$1.53	$1.52
Sulphide Circuit Total Costs (C3)	-	-	-	$1.59	$2.18	$1.70	$1.90	$1.67	$1.82
Revenues ($ millions) (3)
Copper in concentrates	-	-	-	$16.1	$32.6	$192.0	$137.1	$(73.9)	$287.8
Copper in concentrate sold (tonnes)	-	-	-	2,684	4,214	28,615	25,660	28,533	87,022

	2007	2007	2007	2007	2008	2008	2008	2008	2008
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	FY
Bwana/Lonshi Production Statistics
Mining
Waste mined (000's tonnes)	2,105	3,425	2,992	1,732	898	1,079	117	-	2,094
Ore mined (000's tonnes)	16	94	160	82	37	89	14	-	140
Ore grade (%)	7.5	6.1	6.8	6.1	4.4	5.3	4.3	-	5.0
Processing
Oxide Ore processed (000's tonnes)	242	327	353	355	242	234	228	14	718
Contained copper (tonnes)	5,007	7,653	9,819	6,787	2,279	1,778	1,935	118	6,110
Oxide ore grade processed (%)	2.1	2.3	2.8	1.9	0.9	0.8	0.8	0.9	0.9
Recovery (%)	91	87	85	86	97	84	84	92	96
Copper cathode produced (tonnes)	4,557	6,676	8,305	5,864	2,208	1,496	1,620	527	5,851
Acid produced (tonnes)	67,227	69,108	67,537	72,477	66,414	74,699	90,987	64,016	296,116
Surplus acid (tonnes)	586	1,483	11	-	10	2,174	2,071	150	4,405
Oxide Circuit Costs (per lb) (4) (5)
Mining	$1.49	$1.57	$1.04	$1.37	$1.65	$1.61	$1.53	-	$1.60
Processing	1.05	0.81	0.65	0.90	2.15	3.20	1.77	-	2.33
Site Administration	0.20	0.15	0.21	0.35	0.58	0.39	0.35	-	0.46
Gold / Acid credit	(0.24)	(0.14)	(0.09)	(0.17)	(0.78)	(1.26)	(0.39)	-	(0.80)
Oxide Circuit Total Cash Costs (C1)	$2.50	$2.39	$1.81	$2.45	$3.60	$3.94	$3.26	-	$3.59
Oxide Circuit Total Costs (C3)	$2.92	$2.77	$2.25	$2.81	$4.13	$5.47	$3.69	-	$4.50
Revenues ($ millions)
Copper cathodes	$22.1	$41.2	$66.1	$37.1	$13.1	$15.4	$10.0	$(3.1)	$35.4
Copper cathodes sold (tonnes)	4,664	6,369	8,471	5,898	1,820	1,944	1,712	518	5,994

(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 copper sales; therefore the sum of the periods will not equal the year to date. (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 the regulatory disclosures section. (5) TC/RC and freight parity charges at Kansanshi were restated from prior releases for Q1 09, Q2 09 and Q3 09 due to the finalization of offtaker terms, which resulted in higher rates than previously anticipated.

  Consolidated Balance Sheets

As at December 31, 

(expressed in millions of U.S. dollars, except where indicated)

	Note	2008	2007
Assets
Current assets
Cash and cash equivalents	20	176.2	200.0
Restricted cash	11a	40.3	22.5
Accounts receivable		93.2	272.0
Inventory	7	270.9	228.4
Current portion of other assets	10	150.8	12.7
		731.4	735.6
Available-for-sale investments	8	163.5	567.0
Property, plant and equipment	9	1,996.3	1,320.5
Other assets	10	113.3	59.6
Total assets		3,004.5	2,682.7
Liabilities
Current liabilities
Accounts payable and accrued liabilities		333.1	104.9
Current taxes payable	14	146.4	127.2
Current portion of long-term debt	11	139.5	73.7
Current portion of other liabilities	12	27.0	23.5
		646.0	329.3
Long-term debt	11	246.2	287.5
Other liabilities	12	34.8	40.1
Future income tax liabilities	14	363.6	224.4
Total liabilities		1,290.6	881.3
Minority interests		313.3	215.4
Total liabilities and minority interests		1,603.9	1,096.7
Shareholders' equity
Capital stock	15	420.3	396.0
Retained earnings		980.3	987.4
Accumulated other comprehensive income		-	202.6
Total shareholders' equity		1,400.6	1,586.0
Total shareholders' equity, liabilities and minority interests		3,004.5	2,682.7
Commitments and contingencies	21,22

Director  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 Comprehensive (Loss) Income

For the years ended December 31,

(expressed in millions of U.S. dollars, except where indicated)

		Note	2008	2007
Sales revenues
	Copper		1,641.3	1,468.7
	Gold		97.5	70.1
	Acid		1.6	0.4
			1,740.4	1,539.2
Cost of sales			(763.2)	(528.2)
Adjustment to net realizable value of inventory		7	(60.5)	-
Depletion and amortization			(113.3)	(81.2)
Royalties, windfall taxes and export levies		5	(187.4)	(16.1)
Zambian taxes recovery		5	127.5	-
Operating profit			743.5	913.7
Other expenses/income
	Exploration		(28.5)	(20.3)
	General and administrative		(31.4)	(28.0)
	Interest		(31.8)	(28.9)
	Impairment of available-for-sale investments	8	(254.2)	-
	Other expenses/income	17	(6.6)	(2.0)
			(352.5)	(79.2)
Earnings before income taxes and minority interests			391.0	834.5
Income taxes		14	(247.2)	(182.8)
Minority interests			(97.9)	(131.4)
Net earnings			45.9	520.3
Other comprehensive (loss) income
Unrealized (loss) gain on available-for-sale investments, net of tax of $(36.9) million  (2007 - $36.9 million)			(457.2)	205.8
Realized loss (gain) on available-for-sale investments, net of tax of $(0.1) million  (2007 - $0.1 million)			0.4	(0.7)
Other-than-temporary loss recognized in net earnings			254.2	-
			(202.6)	205.1
Comprehensive (loss) income			(156.7)	725.4
Earnings per common share
	Basic		$0.67	$7.72
	Diluted		$0.67	$7.62
Weighted average shares outstanding (000's)
	Basic		68,161	67,394
	Diluted		68,916	68,246
Total shares issued and outstanding (000's)			68,751	68,108

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 Changes in Shareholders' Equity

For the years ended December 31,

(expressed in millions of U.S. dollars, except where indicated)

		Note	2008	2007
Capital stock
Common shares
Balance - beginning of year			415.2	399.6
	Stock options exercised	15a	6.8	15.6
	Acquisition of Scandinavian Minerals Limited	6	19.8	-
Balance - end of year			441.8	415.2
Treasury shares
Balance - beginning of year			(34.3)	(15.6)
	Shares purchased	15b	(9.2)	(21.3)
	Restricted stock units vested	15b	4.7	2.6
Balance - end of year			(38.8)	(34.3)
Contributed surplus
Balance - beginning of year			15.1	12.0
	Compensation expense for the year	16	8.7	9.8
	Transfers upon exercise of stock options		(1.8)	(4.1)
	Restricted stock units vested	15b	(4.7)	(2.6)
Balance - end of year			17.3	15.1
Total capital stock			420.3	396.0
Retained earnings
Balance - beginning of year			987.4	518.8
Net earnings for the year			45.9	520.3
Dividends			(53.0)	(51.7)
Balance - end of year			980.3	987.4
Accumulated other comprehensive income
Balance - beginning of year			202.6	(2.5)
	Other comprehensive (loss) income for the year		(202.6)	205.1
Balance - end of year			-	202.6
Retained earnings and accumulated other comprehensive income			980.3	1,190.0

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 Cash Flows

For the years ended December 31,

(expressed in millions of U.S. dollars, except where indicated)

	Note	2008	2007
Cash flows from operating activities
Net earnings for the year		45.9	520.3
Items not affecting cash
Depletion and amortization		113.3	81.2
Minority interests		97.9	131.4
Impairment of available-for-sale investments	8	254.2	-
Adjustment to net realizable value of inventory	7	60.5	-
Unrealized foreign exchange (gain) loss		(9.2)	4.0
Future income tax expense		64.9	21.6
Stockߛbased compensation expense	16	8.7	9.8
Unrealized derivative instruments gain		(5.5)	(1.6)
Other		6.6	5.1
		637.3	771.8
Change in nonߛcash operating working capital
Decrease (increase) in accounts receivable and other		48.3	(136.1)
Increase in inventory		(113.1)	(106.9)
Increase in accounts payable and accrued liabilities		183.6	15.3
Increase in current taxes payable		19.2	17.2
Long term incentive plan contributions		(9.2)	(21.3)
		766.1	540.0
Cash flows from financing activities
Proceeds from long-term debt		294.4	125.0
Repayments of long-term debt		(276.2)	(55.7)
Proceeds on issuance of common shares		5.0	11.5
Dividends paid		(53.0)	(51.7)
Other		-	(9.1)
		(29.8)	20.0
Cash flows from investing activities
Restricted cash		5.6	(7.5)
Payments for property, plant and equipment		(460.3)	(319.6)
Acquisition of Scandinavian Minerals Limited	6	(214.3)	-
Acquisition of available-for-sale investments, net		(90.4)	(283.2)
		(759.4)	(610.3)
Effect of exchange rate changes on cash		(0.7)	0.8
Decrease in cash and cash equivalents		(23.8)	(49.5)
Cash and cash equivalents - beginning of year		200.0	249.5
Cash and cash equivalents - end of year	20	176.2	200.0

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 Information

 (expressed in millions of US dollars, except where indicated)

For the year ended December 31, 2008, segmented information is presented as follows:

	Kansanshi	Guelb Moghrein	Frontier	Bwana/ Lonshi	Kolwezi	Kevitsa	Corporate	Total
Segmented revenues	1,224.5	191.1	287.8	142.8	-	-	24.9	1,871.1
Less inter-segment revenues	-	-	-	(105.8)	-	-	(24.9)	(130.7)
Revenues	1,224.5	191.1	287.8	37.0	-	-	-	1,740.4
Cost of sales	(599.3)	(83.8)	(182.7)	(84.8)	-	-	-	(950.6)
Adjustment to net realizable value of inventory	(10.7)	-	-	(49.8)	-	-	-	(60.5)
Depletion and amortization	(73.8)	(15.4)	(18.2)	(5.9)	-	-	-	(113.3)
Zambian taxes recovery	123.5	-	-	4.0	-	-	-	127.5
Operating profit (loss)	664.2	91.9	86.9	(99.5)	-	-	-	743.5
Interest on long-term debt	(9.0)	(0.1)	(12.8)	(0.3)	-	-	(9.6)	(31.8)
Other including impairment	(11.4)	(6.2)	(0.1)	(14.2)	-	-	(288.8)	(320.7)
Segmented profit (loss) before undernoted items	643.8	85.6	74.0	(114.0)	-	-	(298.4)	391.0
Income taxes	(217.0)	-	(29.0)	(8.9)	-	-	7.7	(247.2)
Minority interests	(79.9)	(16.3)	(1.7)	-	-	-	-	(97.9)
Segmented profit (loss)	346.9	69.3	43.3	(122.9)	-	-	(290.7)	45.9
Property, plant and equipment	594.7	149.4	264.8	43.2	637.8	302.2	4.2	1,996.3
Total assets	1091.3	204.9	312.2	69.5	641.2	311.6	373.8	3,004.5
Capital expenditures	114.8	60.4	48.4	8.1	233.4	302.2	0.5	767.8

For the year ended December 31, 2007, segmented information is presented as follows:

	Kansanshi	Guelb Moghrein	Frontier	Bwana/ Lonshi	Kolwezi	Kevitsa	Corporate	Total
Segmented revenues	1,128.7	227.5	16.1	204.4	-	-	17.5	1,594.2
Less inter-segment revenues	-	-	-	(37.5)	-	-	(17.5)	(55.0)
Revenues	1,128.7	227.5	16.1	166.9	-	-	-	1,539.2
Cost of sales	(339.4)	(62.8)	(4.8)	(137.3)	-	-	-	(544.3)
Depletion and amortization	(48.6)	(15.6)	(1.4)	(15.6)	-	-	-	(81.2)
Operating profit	740.7	149.1	9.9	14.0	-	-	-	913.7
Interest on long-term debt	(7.9)	(9.6)	(1.9)	(0.2)	-	-	(9.3)	(28.9)
Other	(21.1)	(1.0)	(0.2)	(8.8)	-	-	(19.2)	(50.3)
Segmented profit (loss) before undernoted items	711.7	138.5	7.8	5.0	-	-	(28.5)	834.5
Income taxes	(181.5)	-	(2.3)	(1.3)	-	-	2.3	(182.8)
Minority interests	(105.0)	(26.4)	-	-	-	-	-	(131.4)
Segmented profit (loss)	425.2	112.1	5.5	3.7	-	-	(26.2)	520.3
Property, plant and equipment	531.1	104.9	232.5	42.8	404.2	-	5.0	1,320.5
Total assets	840.3	227.4	298.4	212.5	404.2	-	699.9	2,682.7
Capital expenditures	156.9	12.3	121.7	9.0	13.9	-	11.4	325.2

ENDFR BCGDXGSGGGCL

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FQM.L