12th Nov 2007 07:01
First Quantum Minerals Ld12 November 2007 NEWS RELEASE 07-13 November 12, 2007 www.first-quantum.com FIRST QUANTUM MINERALS REPORTS OPERATIONAL AND FINANCIAL RESULTS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2007 (All figures expressed in US dollars) First Quantum Minerals Ltd. ("First Quantum" or the "Company", TSX Symbol "FM",LSE Symbol "FQM") is pleased to announce its results for the three months andnine months ended September 30, 2007. The complete financial statements andmanagement discussion and analysis are available for review atwww.first-quantum.com and should be read in conjunction with this news release. Key features for the quarter • Record earnings of $183.6 million or $2.71 per share • Record operating cash flow before working capital of $256.9 million or $3.80 per share • Record copper production of 57,565 tonnes increases 27% compared to Q3 2006 • Record copper sales of 60,904 tonnes increases 32% compared to Q3 2006 • C1 costs reduce by 12% to $0.98/lb compared to Q2 2007 • Guelb Moghrein segmented earnings increase 108% over Q2 2007 • Bwana/Lonshi improves over Q2 2007, but remains below last year's production levels • Contained copper metal in concentrate inventory decreases by 3,200 tonnes to 18,200 tonnes • Kansanshi high pressure leach project becomes operational and produces 1,291 tonnes of copper • Frontier plant commissioning continues with production of first copper in concentrate Key features for the year to date • Record earnings of $385.0 million or $5.70 per share • Record operating cash flow before working capital of $551.0 million or $8.16 per share • Copper production increases 13% to over 153,900 tonnes compared to YTD 2006 • Net sales increase 21% compared to YTD 2006 • Net earnings increase 14% compared to YTD 2006 Outlook • Commercial production began at Frontier on November 2 • Stockpiled copper in concentrate expected to reduce to normal operational inventory levels by year end and have a positive one-off impact on earnings • Kolwezi project continues to move forward, with the initial engineering study nearing completion • Kashime resource update and engineering study underway Key Group results Third quarter (Q3) Q3 2007 Q3 2006 Q3 2005 (Restated) (Restated) % of sales % of sales % of salesProduction t Cu 57,565 95 45,480 98 36,196 91 Sales t Cu 60,904 100 46,302 100 39,864 100 Net sales USDM 470.4 100 328.4 100 143.0 100 Operating profit USDM 308.1 66 233.0 71 79.7 56 Net profit USDM 183.6 39 133.2 41 41.5 29 Basic EPS USD $2.71 $2.00 $0.67 Year to date (YTD) YTD 2007 YTD 2006 YTD 2005 (Restated) (Restated) % of sales % of sales % of salesProduction t Cu 153,947 102 136,746 104 76,897 98 Sales t Cu 150,585 100 131,031 100 78,399 100 Net sales USDM 1,064.1 100 878.1 100 267.7 100 Operating profit USDM 664.7 62 638.0 73 142.5 53 Net profit USDM 385.0 36 338.5 39 97.8 37 Basic EPS USD $5.70 $5.26 $1.59 Q3 2007 net sales Q3 2007 Q3 2006 Q3 2005(After TC/RC charges) USD M USD M USD MKansanshi - copper 309.8 223.9 88.8 - gold 6.3 5.2 3.4Bwana/Lonshi - copper 66.1 99.2 49.6 - acid - 0.1 1.2Guelb Moghrein - copper 74.1 - - - gold 14.1 - -Net sales 470.4 328.4 143.0Provisional pricing adjustment included above 3.2 11.7 7.2Copper selling price USD/lb USD/lb USD/lbCurrent period sales 3.58 3.37 1.69Prior period provisional pricing adjustment 0.02 0.11 0.08TC/RC and freight parity charges (0.25) (0.31) (0.19)Realized copper price 3.35 3.17 1.58 Group net sales increase 43% to $470.4 million due to record copper productionand higher copper price Record net sales were achieved due to an increase in the tonnes of copper sold(up 32% to 60,904 tonnes of copper) and an increase in the realized copper pricerecognized during the quarter. Group copper production reached record levelsand was 27% higher than the comparative period of 2006. In addition, the copperin concentrate stockpiles were reduced by approximately 3,200 tonnes during thequarter. The higher realized copper price and the decrease in the tolling and refiningcharge (TC RC) rates also contributed to the record net sales. The increasingLME copper price resulted in positive provisional pricing adjustments, however,less than the comparative period of 2006 due to higher price increases in thecomparative period. Kansanshi net sales increase 38% to $316.1 million on the back of record copperproduction Net sales, compared to the same period in 2006, increased as a result of a 26%increase in the tonnes of copper sold and an increase in the realized copperprice. Kansanshi, again, reached record production levels this quarter withcopper output of 41,159 tonnes. Copper production increased 28% compared to thesame period in 2006 due, primarily, to an increase of 5% in oxide and 38% insulphide ore processed as a result of the throughput expansions at Kansanshi.In addition to the positive impact of these expansions, the high pressure leachsystem became operational during the quarter, which contributed 1,291 tonnes ofcathode production. Total sales volume was higher than production at 41,919tonnes primarily due to 845 tonnes of sales from copper in concentratestockpiles. Net revenue was positively impacted by decreased TC RC and freight paritycharges as the TC RC terms for the majority of Kansanshi's concentrate off-takeagreements are based on annual benchmark terms, which for 2007 were lower than2006 and included the removal of price participation as a refining cost. Bwana/Lonshi net sales decrease 33% to $66.1 million due to low ore availabilityfrom Lonshi Similar to the previous quarters of 2007, net sales fell compared to the sameperiod in 2006 as a result of the low availability of high grade ore from theLonshi pit and the exhaustion of run-of-mine grade ore in stockpiles at theBwana treatment plant. The effects of the mining delays during the first halfof the year continued to impact production resulting in limited high grade oreavailable for processing. As a result, copper production was down 38% comparedto the same period in 2006, but has recovered from the second quarter with a 24%increase in copper output. Guelb Moghrein net sales increase 81% to $88.2 million over the prior quarter onincreased shipments Copper sales revenue increased 80% due to higher production, increasedconcentrate shipments and an increase in the realized copper price over thesecond quarter of 2007. Production increased 15% to 8,101 tonnes of copper inconcentrate over the second quarter due to a 10% increase in the tonnes of oreprocessed and the processing of higher grade ore. Production continued tostreamline since achieving commercial production in the fourth quarter of 2006with design capacities being met during the current period. With copper inconcentrate sales of 10,514 tonnes exceeding production, the copper inconcentrate stockpile was reduced by 2,414 tonnes since the second quarter.These improvements also resulted in an 86% increase in the gold sales creditfrom the prior quarter. Provisional pricing adjustment positive following increase in copper priceduring final settlement periods Included in the above net sales numbers was a total of $3.2 million or $0.02/lbfor positive provisional pricing adjustments related to prior period sales asfinal copper settlements in the third quarter were at average LME prices of$3.50/lb compared to the June 30, 2007 provisional forward average LME price of$3.43/lb. As at September 30, 2007, there were 44,239 tonnes of contained copper that wereprovisionally priced at an average LME copper price of $3.68/lb. This revenuewill be subject to future adjustments as a result of movements in the copperprice. Of this amount, 19,532 tonnes had the final price determined in October2007 at $3.63/lb, 21,286 tonnes will be determined in November 2007, 952 tonnesin December 2007, and 2,469 tonnes thereafter. Q3 2007 operating profit Q3 2007 Q3 2006 Q3 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of salesKansanshi 222.3 47 168.2 51 53.9 38Bwana/Lonshi 22.3 5 64.8 20 25.8 18Guelb Moghrein 63.5 13 - - - -Total operating profit 308.1 65 233.0 71 79.7 56Unit costs USD/lb % of sales1 USD/lb % of sales1 USD/lb % of sales1Cash costs (C1) $0.98 29 $0.90 28 $0.64 41Total costs (C3) $1.22 36 $1.13 36 $0.87 55 1 Calculated as the % of current period selling price Group operating profit increases 32% to $308.1 million on the back of recordsales Record operating profit resulted from record sales. The profit margin benefitedfrom the increased realized copper price but was partially offset by theunfavourable movement in the average cash unit cost of production (C1) by 9% to$0.98/lb. Profit margin per pound of copper sold averaged $2.30, which was asmall increase from the comparative period (2006: $2.28/lb). Cash unit costswere negatively affected by the increased costs of mining and processing atKansanshi and the poor results at Bwana/Lonshi. Kansanshi operating profit increases 32% to $222.3 million despite higheroperating costs Kansanshi's average cash unit cost of production (C1) decreased by 1% to $0.94/lb and the average total unit cost of production (C3) decreased by 3% to $1.13/lb compared to the same period in 2006. The decrease in the average cash unitcost was due, primarily, to a decrease in TC RC and freight parity charges of52%, which was offset by an increase in mining costs of 41% and an increase inprocessing unit costs of 18%. The original Kansanshi Definitive FeasibilityStudy was based on a $0.80/lb copper price, and revisions in the reserve modelfor higher current prices resulted in a reduction of the grade of ore treatedthrough the two process routes. The decision to process lower grade ore andhigher acid consuming mixed ores through the leach circuit resulted in the needfor external purchases of a significant quantity of acid at a much highermarginal cost, increased ore and processing costs. Increases in oil-basedconsumables, electricity and wage costs all contributed to the increased miningand processing costs. In addition, ore costs were negatively impacted by theadoption of a new deferred stripping policy from January 1, 2007. Bwana/Lonshi operating profit of $22.3 million as operation begins recovery fromextreme wet season Bwana copper production continued to be significantly affected by the lack ofavailable high grade ore for processing due to the previous heavy rainy seasonand the related delays in mining. This resulted in an increase of the averagecash unit cost of production (C1) by 145% to $1.81/lb and the average total unitcost of production (C3) by 125% to $2.25/lb as compared to the same period in2006. The lack of available high grade ore resulted in a 225% increase inmining costs and reduced the copper output. This reduction in output and theincrease in oil based consumables, electricity and wage costs resulted in a 71%increase in processing costs. However, the average cash unit cost (C1)decreased from the prior quarter by 24% as the mining of ore from the Lonshi pitimproved compared to the first half of the current year. Guelb Moghrein operating profit of $63.5 million on higher sales and decreasingcosts In addition to Guelb Moghrein increasing its concentrate shipments to buyers,costs continued to decrease as the average cash unit cost of production (C1)decreased by 63% to $0.26/lb and the average total unit cost of production (C3)decreased by 30% to $0.76/lb compared to the previous quarter. The largestcontributors to the decrease in the unit costs were an increase in the realizedgold credit of 63% mainly due to extra concentrate shipments from inventory anda decrease in mining costs of 29% due to lower waste stripping and improvedmining efficiencies. In addition, unit processing costs decreased by 10% due tothe increase in copper output. Q3 2007 net profit Q3 2007 Q3 2006 Q3 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of salesOperating profit 308.1 66 233.0 71 79.7 56Corporate costs (10.6) (2) (7.7) (2) (3.6) (3)Derivative gains/(losses) (3.7) (1) (6.6) (2) (5.7) (4)Gain on sale of investment 0.1 - 1.6 - - -Exploration (5.2) (1) (5.2) (2) (1.5) (1)Interest (net) (3.2) (1) (4.3) (1) (4.9) (3)Tax expense (59.3) (14) (56.6) (17) (15.7) (11)Minority interests (42.6) (9) (21.0) (6) (6.8) (5)Net profit 183.6 38 133.2 41 41.5 29Earnings per share - basic $2.71 $2.00 $0.67 - diluted $2.66 $1.96 $0.66Weighted average sharesoutstanding - basic 67.7 66.6 61.6 - diluted 69.0 68.0 63.1 Group net profit increases 38% to set Company record at $183.6 million for aquarter The record net profit was the result of record sales and production at Kansanshiand the increased profitability of Guelb Moghrein. In addition, GuelbMoghrein's current tax exempt status resulted in a lower group tax expensepercentage of net income. There was an offset from higher minority interestshare of profit compared to the same period in 2006. Corporate costs rise on increasing administrative and support costs With the increase in operations and capital projects, the administrative andsupport function continued to grow resulting in increased costs. In addition,stock based compensation expense increased as a result of appreciation in theCompany's share price and continued grants under the long-term incentive plan. Derivative losses decrease due to less contractual obligations Following the closing of virtually all of the Company's commodity-basedderivatives in 2006, the Company was no longer exposed to derivative lossesresulting from an increasing copper price. Interest expense, net of interest income, decreases 26% to $3.2 million due tocapitalization of project related interest costs The Company capitalized interest costs on facility funds drawn for thedevelopment of Frontier, which reduced the interest expense compared with thesame period in 2006 despite the higher comparative debt level. Q3 2007 cash flow Q3 2007 Q3 2006 Q3 2005 (Restated) (Restated) USD M USD M USD MCash flow from operating activities - before working capital 256.9 176.3 78.2 - after working capital 201.6 118.3 64.4Cash flow from financing activities (42.8) (58.6) (5.9)Cash flow from investing activities (96.2) (60.1) (51.3)Net cash flow 62.6 (0.4) 7.2Cash flow per share - before working capital $3.80 $2.65 $1.27 - after working capital $2.98 $1.77 $1.04 Cash inflow from operating activities increases 70% to $201.6 million on recordnet profits Operating cash flow before working capital movements continued to be driven bythe Company's operating results with an increase of 46% over the same period in2006. Operating cash flow after working capital movements for the quarter was impactedby an increase in accounts receivable of approximately $59.5 million, a build upin inventory of approximately $17.5 million and an increase in accounts payablesof $22.0 million. The increase in accounts receivable was due to the increasein the volume of sales during the third quarter of 2007 and an increase in theprovisional price at quarter end. Inventory was impacted by an increase in orestockpiles and higher stores and consumables. The payables increase was due,primarily, to the timing of tax payments. The increase in operating cash flow after working capital movements compared tothe comparative period in 2006 was due to the increase in net cash earnings.Working capital movements for the quarter were similar in aggregate to lastyear. Cash outflow from financing activities decreases 27% to $42.8 million due tolower debt repayments Financing activities included scheduled long-term debt repayments totalling$25.5 million on the corporate revolving credit and term loan facility and theKansanshi project completion facility. These repayments were lower than in thesame period in 2006 on debt facilities outstanding at that time. This waspartly offset by an increase in dividend payments during the current quarter ascompared to the same period in 2006. Cash outflow from investing activities increases 60% to $96.2 million due tocontinued capital investment Investing activities included $95.1 million of capital investment on theFrontier project, Kansanshi expansion projects, and the Kolwezi project, whichwas an increase of $16.2 million compared to the same period in 2006. Inaddition, the Company acquired an additional $12.3 million of marketablesecurities and $11.3 million of asset backed commercial paper was reclassifiedfrom cash to available-for-sale investments during the quarter. YTD 2007 net sales YTD 2007 YTD 2006 YTD 2005(After TC/RC charges) USD M USD M USD MKansanshi - copper 765.7 596.2 133.3 - gold 15.8 15.7 4.0Bwana/Lonshi - copper 129.4 265.7 126.7 - acid 0.3 0.5 3.7Guelb Moghrein - copper 128.1 - - - gold 24.8 - -Net sales 1,064.1 878.1 267.7Provisional pricing adjustment included above (9.7) 30.9 -Copper selling price USD/lb USD/lb USD/lbCurrent period sales 3.36 3.19 1.63Prior period provisional pricing adjustment (0.03) 0.11 -TC/RC and freight parity charges (0.25) (0.32) (0.12)Realized copper price 3.08 2.98 1.51 Group net sales increase 21% to $1,064.1 million on higher copper production andcopper price Sales volume increased (up 15% to 150,585 tonnes of copper) as a result ofhigher copper production (up 13% to 153,947 tonnes of copper). Net salesfurther increased as a result of a higher average copper price for the period of$3.36/lb compared to $3.19/lb in the same period in 2006. In addition, TC RCand freight parity charges were lower under 2007 annual contract terms.However, provisional pricing adjustments to prior period sales had a negativeimpact in the current period due to the final settlement of copper sold in 2006at prices lower than the December 31, 2006 provisional 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 28% to $781.5 million as capital expansions resultin increased production Net sales, compared to the same period in 2006, rose as a result of increasedcopper production and higher copper prices. Despite the processing of lowergrade ores, production increased (up 15% to 112,812 tonnes) due, primarily, tothe 15 % increase in oxide and 34% increase in sulphide ore processed ascompared to the same period in 2006. This increase in ore throughput wasattributable to the capital expansions at Kansanshi, including the commissioningof the new SX/EW facility during the third quarter of 2006. Sales volumeincreased 21% to 111,899 tonnes, with the balance of the increased sales revenuecoming from the higher average price received and lower TC RC and freight paritycharges. TC RC terms for the majority of Kansanshi's concentrate off-takeagreements are based on annual benchmark terms, which for 2007 were lower than2006 and included the removal of price participation as a refining cost. Bwana/Lonshi net sales decrease 51% to $129.7 million due to low oreavailability from Lonshi Net sales fell as a result of the low availability of high grade ore from theLonshi pit and the exhaustion of run-of-mine grade ore in stockpiles at theBwana treatment plant. The heavy rains during the last wet season resulted inmining delays at the Lonshi pit as the Lonshi fleet was used to reconstruct pitwalls and rebuild roads that were damaged from the excessive water. Thistogether with the temporary DRC border closure in March/April, resulted in adecrease in ore production of 39% compared to the same period of 2006 and adecrease in copper cathode production (down 49% to 19,538 tonnes) at the BwanaSX/EW facility. To maintain throughput at the Bwana processing facility its lowgrade ore stockpiles were fully utilized and additional ore from externalvendors was purchased. Sales volume, as a result, decreased 49% to 19,504tonnes. Guelb Moghrein net sales of $152.9 million as shipments increase significantly Production continued to increase as the processing plant continued to improveduring the period following commencement of operations in October 2006. Throughbetter engineering and maintenance, ore mill rates increased steadily resultingin total production for the period of 21,597 tonnes. Sales volumes were 11%lower than production, however, concentrate shipments improved significantly dueto sales agreements with new customers being finalised and continuedimprovements in the shipping logistics . Provisional pricing adjustment negative following decrease in copper priceduring final settlement periods Included in the above net sales numbers was a total of $9.7 million or $0.03/lbfor negative provisional pricing adjustments related to prior period sales asthe majority of provisionally priced copper at December 31, 2006 settled inJanuary and February at average LME prices of $2.57/lb for each month comparedto the December 31, 2006 provisional price of $2.87/lb. YTD 2007 operating profit YTD 2007 YTD 2006 YTD 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of salesKansanshi 546.0 51 460.5 53 78.3 29Bwana/Lonshi 14.0 1 177.5 20 64.2 24Guelb Moghrein 104.7 10 - - - -Total operating profit 664.7 62 638.0 73 142.5 53Unit costs USD/lb % of sales1 USD/lb % of sales1 USD/lb % of sales1Cash costs (C1) $1.05 34 $0.86 29 $0.62 41Total costs (C3) $1.30 42 $1.08 36 $0.83 55 1 Calculated as the % of current period selling price Group operating profit increases 4% to $664.7 million impacted by oreavailability at Bwana/Lonshi operation Despite the 19% increase in operating profit at Kansanshi compared to the sameperiod in 2006 and Guelb Moghrein's strong results, the combined increase inoperating profit was impacted by the results from Bwana/Lonshi. The lack ofhigh grade ore available for processing contributed to an increase in averagecash unit cost of production (C1) by 22% to $1.05/lb compared to the same periodin 2006. This resulted in average profit margins per pound of copper sold of$2.00, which decreased from the comparative period (2006: $2.21/lb). Kansanshi operating profit increases 19% to $546.0 million despite theprocessing of lower grade ore Kansanshi's average cash unit cost of production (C1) increased by 2% to $0.91/lb and the average total unit cost of production (C3) increased by 4% to $1.11/lb compared to the same period in 2006. This increase was due to an increase inore costs of 77% and an increase in processing unit costs of 29%, which wereoffset by a decrease in TC RC and freight parity charges of 57%. The originalKansanshi Definitive Feasibility Study was based on a $0.80/lb copper price, andrevisions in the reserve model for higher current prices resulted in a reductionof the grade of ore treated through the two process routes. The decision toprocess lower grade ore and higher acid consuming mixed ores through the leachcircuit, resulted in need for external purchases of a significant quantity ofacid at a much higher marginal cost, increased ore and processing costs.Increases in oil-based consumables, electricity and wage costs all contributedto the increased ore and processing costs. In addition, ore costs werenegatively impacted by the adoption of a new deferred stripping policy fromJanuary 1, 2007. Bwana/Lonshi operating profit of $14.0 million Bwana copper production was significantly affected by the lack of available highgrade ore for processing due to the heavy rainy season and a temporary borderclosure earlier in the year. This resulted in an increase of the average cashunit cost of production (C1) by 182% to $2.17/lb and the average total unit costof production (C3) by 146% to $2.58/lb as compared to the same period in 2006.Mining unit costs were significantly impacted by these problems resulting in a250% increase. Guelb Moghrein operating profit of $104.7 million as production reaches designcapacity / lower unit costs Guelb Moghrein copper in concentrate production achieved design capacity by theend of the period with continued cost improvements since the beginning of theyear with an average cash unit cost of production (C1) of $0.71/lb and anaverage total unit cost (C3) of $1.13/lb for the period. This improvementcontinued to be driven by an increase in copper output, an increase in the goldcredit and improved production processes as the operation continued to stabilizesince achieving commercial production in October 2006. YTD 2007 net profit YTD 2007 YTD 2006 YTD 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of salesOperating profit 664.7 62 638.0 73 142.5 53Corporate costs (22.0) (2) (19.1) (2) (2.7) (1)Derivative gains/(losses) (3.7) - (59.2) (7) (9.1) (3)Gain on sale of investment 0.8 - 1.6 - 16.1 6Exploration (10.2) (1) (12.2) (1) (3.7) (1)Interest (net) (12.7) (1) (13.2) (1) (8.5) (3)Tax expense (136.0) (13) (145.7) (17) (26.6) (10) Minority interests (95.9) (9) (51.7) (6) (10.2) (4)Net profit 385.0 36 338.5 39 97.8 37Earnings per share - basic $5.70 $5.26 $1.59 - diluted $5.60 $5.16 $1.55Weighted average sharesoutstanding - basic 67.5 64.3 61.5 - diluted 68.8 65.7 63.0 Group net profit increases 14% to $385.0 million on lower derivative losses andtax expense The increase in net profit was attributable to increased operating income andlower derivative losses compared to the same period in 2006. In addition,Guelb Moghrein's current tax exempt status results in a lower group tax expenseproportion of profit. There was an offset from minority interests' share ofprofit compared to the same period in 2006. Derivative losses decrease significantly due to less contractual obligations Following the closing of virtually all the Company's commodity-based derivativesin 2006, the Company was no longer exposed to derivative losses resulting froman increasing copper price. Exploration costs decrease 16% to $10.2 million due to lower explorationactivities A significant portion of the comparative period's exploration costs related tothe Lonshi ore body. These costs decreased in this current period. Interest expense, net of interest income, decreases 4% to $12.7 million due tocapitalization of project related interest costs The Company capitalized interest costs on facility funds drawn for thedevelopment of Frontier, which reduced the interest expense compared with thesame period in 2006 despite the higher comparative debt level. YTD 2007 cash flow YTD 2007 YTD 2006 YTD 2005 (Restated) (Restated) USD M USD M USD MCash flow from operating activities - before working capital 551.0 493.6 136.7 - after working capital 316.7 344.7 85.9Cash flow from financing activities (30.6) (39.7) (1.5)Cash flow from investing activities (313.0) (198.0) (71.1)Net cash flow (26.9) 107.0 13.3Cash flow per share - before working capital $8.16 $7.67 $2.22 - after working capital $4.70 $5.36 $1.39 Cash inflow from operating activities decreases 8% to $316.7 million due toworking capital movements Operating cash flow before working capital movements continued to be driven bythe Company's operating results with a 12% increase, compared to the same periodin 2006. Operating cash flow after working capital movements for the year to date wasimpacted by an increase in accounts receivables of $158.1 million, a build up ininventory of $63.8 million and contributions to the long term incentive plan of$17.3 million, which all contributed to the decrease in the current period. Theincrease in accounts receivable was due to the increase in sales volume duringthe latter part of the period and the increase in the provisional price forcopper at September 30, 2007. Compared to the same period in 2006 the decrease in operating cash flow afterworking capital movements was due to income tax payments in the current periodat a much higher level than in the comparative period and higher accountsreceivable levels and the contributions to the long term incentive plan referredto above. Cash outflow from financing activities decreases 23% to $30.6 million due tolower debt repayments The decrease in financing cash outflow was due to lower long term debtrepayments of $51.1 million compared to $95.9 million in the comparative periodof 2006, partly offset by an increase in dividends paid of $31.5 millioncompared to last year. Cash outflow from investing activities increases 58% to $313.0 million followingcapital investments Investing activities included the purchase of $77.6 million in shares ofpublicly listed companies held for investment purposes and $239.1 million incontinued capital expansion related to the Frontier project, the Kansanshi highpressure leach project and sulphide circuit upgrade, and initial expenditure onthe Kolwezi project. In addition, $11.3 million of asset backed commercialpaper was reclassified from cash to other assets during the latter part of theperiod. Q3 2007 balance sheet Q3 2007 Q4 2006 Q4 2005 (Restated) (Restated) USD M USD M USD MCash 222.6 249.5 82.9Property, plant and equipment 1,259.9 1,068.1 471.3Total assets 2,300.4 1,719.7 745.8Long term debt 315.1 294.9 235.0Total liabilities 953.4 799.9 434.7Shareholders' equity 1,347.0 919.8 311.1Net working capital 464.8 312.8 81.2Net debt to net debt plus equity 6% 5% 33% Group assets rise 34% to $2,300.4 million The Company's positive operating cash flow enabled continued capital expenditureand investment. Working capital also rose significantly during the period. The Company holds $11.3 million of asset backed commercial paper (ABCP), whichmatured in August. Due to disruptions in the markets, the funds were not repaidwhen due to the Company. The defaulting issuers of this ABCP were placed in aninterim standstill arrangement (Montreal Agreement) to restructure theseinvestments and no final resolution has yet been achieved. The Company has noreason to believe at this stage that 100% of the initial investment will not berecovered in due course. The Company is monitoring the process of restructureand will review its position in the current quarter in the light of anydevelopments. Inventory balances increased due, mainly, to an additional $31.8 million inconsumable stores and an increase of $31.5 million in ore stockpiles. Inaddition, finished product remained higher than the balance at December 31,2006, but decreased by $9.5 million since the previous quarter end. The Companyhad stockpiles of approximately 18,200 tonnes of copper in concentrate atquarter end, which was a reduction of approximately 3,200 tonnes since June 30,2007. Of this total, approximately 9,000 tonnes is Kansanshi copper inconcentrate production that is stockpiled at the Mufulira smelter awaitingtreatment, with the balance stockpiled at the Guelb Moghrein plant and theNouakchott port awaiting shipment. The Company continued investment in publicly traded company shares by acquiring$77.6 million of marketable securities at cost during 2007. The Companyrecognized an additional $129.6 million of comprehensive income before tax dueto the appreciation in the fair value of these investments for the period,resulting in a closing carrying value of $240.8 million. Property, plant andequipment balances increased by $191.8 million, net of depreciation, as theCompany continued developing the Frontier project, the Kansanshi high pressureleach project and sulphide circuit upgrade and began work on the Kolweziproject. Group liabilities increase 19% to $953.4 million Long-term debt increased by $20.2 million due to net draw downs during the yearto assist in the funding of the Frontier project. Minority interests increasedby $94.7 million due to the positive operating results at Kansanshi and GuelbMoghrein. In addition, future income tax liabilities increased by $20.3 milliondue, primarily, to the appreciation in fair value of the investments. Shareholders' equity increase 46% to $1,347.0 million Positive earnings of $385.0 million were offset by the payment of dividends of$51.7 million. In addition, with the adoption of the new accounting policy onfinancial instruments, the Company recognized $107.6 million of accumulatedother comprehensive income after tax, which was directly related to theappreciation of the investments in publicly traded securities. Growth activities Frontier begins commercial production At Frontier, the metallurgical plant and infrastructure is substantiallycomplete. Mining of the Frontier ore body has made significant progressfollowing the end of the record wet season. Approximately 500,000 tonnes ofsulphide ore has been mined for plant start up. First copper in concentrate wasproduced in September. Full plant commissioning continues and commercialproduction started on November 2. Kolwezi development in DRC The Company continued to progress the early phases of the Kolwezi Project. Goodprogress has been made on development of the flow sheet and detailed designswhich will form the basis of the project capital cost estimate. An updatedengineering study is expected to be completed during the fourth quarter of 2007to enable a decision to proceed. In parallel with the development of design andcapital cost estimate preparation, the Company will be proceeding with somespecific infrastructure works during the course of this year. The followingactivities are underway - construction of an access road to the site;establishment of site communications and a construction camp; construction offirst phase housing, and negotiations for power requirements with SNEL.Assuming a commitment is made to proceed, the aim is to allow process plantconstruction to begin from the commencement of the dry season in March 2008. Kansanshi high pressure leach ("HPL") facility autoclave #2 commissioning Operation of the HPL facility continued during the third quarter, and someadditional redesign/upgrade work was undertaken (upgrade of autoclave agitatorseals to an improved design). The autoclave metallurgical performance continuedto meet or exceed its design expectation. Efforts were concentrated onobtaining steady state operating data, and to continue to implement improvementswhich will result in maximizing continuous and reliable run time. The secondautoclave was prepared for service, and curing of the refurbished internalbrickwork was in process of being completed. The second autoclave is expectedto be put into service in the fourth quarter, once all improvements that havebeen carried out to date on the first autoclave are also completed on the secondautoclave. The HPL throughput will then operate above design but will beconstrained by the oxygen plant capacity. At this stage both autoclaves will beoperating well below their limits. Investigations have, therefore, commencedto determine ways to best exploit the underutilized capacity. Kansanshi sulphide project construction continues The construction works for the Kansanshi sulphide circuit expansion to a nominalannual throughput of 12 million tons are progressing well. Concrete works arenearly complete, structural erection is well progressed and mechanicalinstallation works are underway. Electrical installation works will commence inNovember. Essentially all equipment items have been ordered for the project,with the majority of equipment now on site. Delivery of the main long leaditems, namely the gyratory crusher, the SAG mill and the ball mill areoutstanding. The delivery to site of these items will directly influence theproject completion. Construction completion and commissioning is still expectedin the first half of 2008. Kansanshi to build fourth 35,000 tonne per year electrowinning tank house The Board of Directors has approved the construction of a fourth 35,000 tonneper year electrowinning tank house at Kansanshi. This will bring on siteelectrowinning capacity to 140,000 tonnes of copper cathode per year. The newtank house will be based on existing designs with an estimated capital cost of$16 million. Construction will begin immediately with completion expected bythe second half of 2008. Kashime resource calculation and engineering study for 50,000 tonne copperoperation underway An updated resource estimate is currently underway on the Kashime depositlocated in Zambia. Concurrently, an engineering study has been initiated toevaluate the economics of a mining operation producing approximately 50,000tonnes of copper per year. Outlook Group copper production estimate for 2007 remains 215,000 tonnes Based on nine month production figures the Company still expects to produceapproximately 215,000 tonnes of copper in 2007. This expected productionincludes approximately 150,000 tonnes from Kansanshi, approximately 27,000tonnes from Bwana/Lonshi, approximately 30,000 tonnes from Guelb Moghrein, andapproximately 8,000 tonnes from Frontier. During the remainder of the year, the Company anticipates group C1 cash costs tobe around $1.00 per pound of copper, excluding the impact of any additional goldcredits from the new gold plant at Kansanshi or any higher realization costsarising from treatment of concentrate through alternative channels referred tobelow. The copper in concentrate inventories held at Kansanshi (9,733 tonnes)and Guelb Moghrein (8,483 tonnes) are expected to reduce to no more than normaloperating levels (Kansanshi about 7,500 tonnes and Guelb Moghrein about 2,500tonnes) by year end. During October, approximate total copper production from Kansanshi was 16,400tonnes, consisting of 8,600 tonnes of oxide and 7,800 tonnes of sulphide. Bwana/Lonshi produced approximately 2,800 tonnes of copper cathode and Guelb Moghreinproduced approximately 2,700 tonnes of copper in concentrate. In total, theCompany produced approximately 21,900 tonnes and recognized sales ofapproximately 20,000 tonnes of copper in October. Mufulira smelter continues to experience operating difficulties The Mufulira smelter continues to have operating issues which have limited itsconcentrate treatment capacity. These operating issues are expected to continueinto 2008. The Company has recently been advised by Mopani that it will beunable to treat all of the Company's anticipated concentrate production fromKansanshi and Frontier for the balance of 2007. Resulting from this advice theCompany will arrange to treat surplus concentrates from Kansanshi and Frontierthrough alternative channels including other Copperbelt and overseas smelters.Depending on the final terms negotiated this may result in slightly higherrealization costs for some of the concentrate sold due to higher freight chargesfor export. In addition, as much tonnage of concentrates as possible willcontinue to be treated via HPL at Kansanshi. Kansanshi focused on HPL, sulphide expansion and gold plant commissioning Kansanshi continues to operate at a steady rate of production of approximately12,500 tonnes of copper metal per month. During the fourth quarter, attentionwill continue to focus on both the HPL facility, targeting steady stateproduction from autoclave #1 and autoclave #2, and on construction activitiesfor the sulphide circuit expansion. Construction of a carbon-in-leach ("CIL") gold facility is complete. Watercommissioning of the gold facility was successfully completed in early October.Process commissioning is expected to occur in early November. The CILfacility will be used in combination with the HPL facility on a campaign basisto treat gold rich gravity concentrates. The gold plant project comprises a oneton per day Pressure Zadra circuit designed to treat gravity concentrate andleach residue from the HPL plant to produce gold/silver dore. Currently, theCompany has stockpiled gold rich gravity concentrates containing approximately27,000 ounces of gold. Realizing the value of this will result in a significantcredit to earnings and C1 costs. Realization of the value of these concentratesis expected to occur during the first quarter of 2008. Continuing build-up of the mining fleet is expected to result in increasedproduction in the fourth quarter and 2008. Bwana/Lonshi focused on stockpiling ore ahead of the wet season The supply of ore from the Lonshi operation returned to normal levels during thethird quarter. Mining activities will focus on establishing a stockpile of oreat the Bwana processing facility ahead of the wet season (November-March) The Lonshi oxide reserve should be exhausted in mid 2008. It is anticipatedthat about 27,000 tonnes of cathode will be produced at Bwana during 2007 withthe operation producing at an average rate of approximately 2,500 tonnes ofcathode copper per month for the remainder of 2007 and then declining in thefirst part of 2008. The Company continues to assess alternative and mostbeneficial uses for the Bwana processing plant after the Lonshi ore isexhausted. Guelb Moghrein producing copper concentrates above design levels During the third quarter, the process plant at Guelb Moghrein operated at abovedesign throughput capacity attaining steady operations while improving andoptimizing the flotation circuit. The average production for the remainder of the year is expected to beapproximately 2,500 tonnes of contained copper per month with planned sales of4,500 tonnes of copper per month for the last quarter. It is expected that theconcentrate stockpile at site will be reduced to an operating level of about2,500 tonnes of contained copper (approximately one month's production) by yearend. The CIL circuit was taken off line at the beginning of January due to CILtailings storage facility (TSF) constraints. The construction of a new CIL TSFis expected to be completed in November. At present, CIL feed is being storedin a temporary impoundment for future treatment. Gold production at GuelbMoghrein is expected to be about 65,000 ounces in 2007. A NI 43-101compliant resource is expected before year end and initialinvestigations into expanding the processing facility to 45,000 tonnes of copperyear are underway. An exploration program to test coincident magnetic andinduced polarization anomalies surrounding Guelb Moghrein with three drill rigshas commenced. Frontier project to produce approximately 8,000 tonnes of copper in 2007 Commissioning of the Frontier process plant continues. Estimated copperproduction for 2007 is 8,000 tonnes of copper metal and 75,000 tonnes of coppermetal in 2008. Production in the first quarter of 2008 is expected to be particularly impactedby the rains because, at this early stage, limited opportunity has beenavailable to pre-empt the effect of the wet season. Kolwezi tailings project feasibility study nears completion Updated capital estimates for the revised process plant will be available intime to make major plant commitments prior to the end of 2007. Preparatory siteworks have commenced to meet a schedule for start-up in 2009. The plant isexpected to start at a production level of 35,000 tonnes copper cathode perannum and about 5,000 tonnes per annum of cobalt. It will be designed forimmediate doubling of capacity and a staged increase to triple the output. The Government of the Democratic Republic of Congo are currently conducting areview of all agreements involving formerly State-owned mining assets. Thisreview has been undertaken to ensure the final terms of all agreements have beenagreed after a rigorous and transparent process with the interests of theGovernment fairly represented in the final terms. The company acquired itsinterest in the Kolwezi Tailings Project through the on market acquisition ofAdastra Minerals Inc. As a former state owned asset, the Kolwezi tailingsproject has been included in this review, the results of which are expected inearly 2008. On Behalf of the Board of Directors 12g3-2b-82-4461of First Quantum Minerals Ltd. Listed in Standard and Poor's"G. Clive Newall" G. Clive Newall For further information visit our web site at www.first-quantum.com North American contact: Geoff Chater 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 Harriet Pask or Sarah MacLeod Hogarth Partnership Ltd. Tel: +44 (0) 20 7357 9477 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 London Stock Exchange. The preceding discussion and analysis and financialreview should be read in conjunction with management's discussion of criticalaccounting policies, risk factors and comments regarding forward lookingstatements contained in the unaudited consolidated financial statements for theperiod ended June 30, 2007. The discussion and analysis of the Company'sresults of operations should also be read in conjunction with the auditedconsolidated financial statements and related notes. Summary of quarterly and current year to date results The following table sets out a summary of the quarterly results for the Companyfor the last seven quarters and the current year to date: Summary of Quarterly and Current Year to Date Results (unaudited) 2006 2006 2006 2006 2007 2007 2007 2007Statement of Operations and Retained Q1 Q2 Q3 Q4 Q1 Q2 Q3 YTDEarnings(millions, except where indicated)Revenues Current period copper sales (1) $165.6 $295.9 $311.4 $243.7 $265.6 $302.5 $446.8 $1,032.9 Prior period provisional copper 16.9 60.4 11.7 (31.7) (17.5) 22.6 3.2 (9.7)adjustments (2) Other revenues 4.7 6.2 5.3 4.4 8.0 12.5 20.4 40.9Total revenues 187.2 362.5 328.4 216.4 256.1 337.6 470.4 1,064.1Cost of sales (restated) 53.2 65.2 81.7 88.5 96.7 108.1 139.3 344.1Net earnings (restated) 55.8 149.5 133.2 60.9 78.3 123.1 183.6 385.0Basic earnings per share (restated) $0.90 $2.32 $2.00 $0.93 $1.16 $1.83 $2.71 $5.70Diluted earnings per share (restated) $0.88 $2.27 $1.96 $0.91 $1.14 $1.79 $2.66 $5.60 Copper selling price Current period copper sales (per lb) $2.32 $3.14 $3.37 $2.89 $2.96 $3.28 $3.58 $3.36 Prior period provisional adjustments 0.21 0.57 0.11 (0.35) (0.18) 0.23 0.02 (0.03)(per lb)Gross copper selling price (per lb) 2.53 3.71 3.48 2.54 2.78 3.51 3.60 3.33 Tolling and refining charges (per (0.12) (0.19) (0.19) (0.08) (0.12) (0.16) (0.15) (0.14)lb) Freight parity charges (per lb) (0.15) (0.16) (0.12) (0.14) (0.12) (0.10) (0.10) (0.11)Realized copper price (per lb) 2.26 3.36 3.17 2.32 2.54 3.25 3.35 3.08Average LME cash copper price (per lb) 2.24 3.29 3.48 3.21 2.69 3.46 3.50 3.22Realized gold price (per oz) $563 $631 $581 $628 $661 $629 $700 $670Average gold price (per oz) $554 $627 $622 $614 $650 $667 $681 $666 Total copper sold (tonnes)(3) 36,635 48,094 46,302 41,454 44,315 45,366 60,904 150,585Total copper produced (tonnes) (3) 42,086 49,180 45,480 46,531 46,403 49,979 57,565 153,947Total gold sold (ounces) (3) 8,079 9,611 8,864 6,944 12,004 19,422 29,182 60,608 Cash Costs (C1) (per lb) (4) $0.81 $0.87 $0.90 $1.00 $1.06 $1.12 $0.98 $1.05Total Costs (C3) (per lb) (4) $1.01 $1.07 $1.13 $1.24 $1.30 $1.38 $1.22 $1.30 Financial PositionWorking capital (restated) $106.9 $245.6 $308.0 $312.8 $246.7 $390.8 $464.8 $464.8Copper in concentrate inventory(tonnes) Kansanshi 7,157 8,389 7,242 9,046 7,102 10,578 9,733 9,733 Guelb Moghrein - - 2,345 6,068 10,182 10,897 8,483 8,483 Total copper in concentrate 7,157 8,389 9,587 15,114 17,284 21,475 18,216 18,216inventory (tonnes)Total assets (restated) $839.5 $1,398.1 $1,574.0 $1,719.7 $1,797.1 $2,035.4 $2,300.4 $2,300.4Weighted average # shares (000's) 61,808 64,564 66,615 67,287 67,318 67,531 67,681 67,512 Cash Flows fromOperating activitiesBefore working capital movements $103.8 $213.5 $176.3 $70.6 $118.9 $175.2 $256.9 $551.0(restated)After working capital movements 83.9 142.5 118.3 129.3 74.6 40.5 201.6 316.7(restated)Financing activities (restated) (13.2) 32.1 (58.6) 53.1 (25.8) 38.0 (42.8) (30.6)Investing activities (restated) (46.1) (91.8) (60.1) (122.8) (102.0) (114.8) (96.2) (313.0)Cash Flows from Operating activitiesper shareBefore working capital movements $1.68 $3.31 $2.65 $1.05 $1.77 $2.59 $3.80 $8.16(restated)After working capital movements $1.36 $2.21 $1.77 $1.92 $1.11 $0.60 $2.98 $4.70(restated) Summary of Quarterly and Current Year to Date Results (unaudited) (continued) 2006 2006 2006 2006 2007 2007 2007 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 YTD Kansanshi Production Statistics Mining Waste mined (000's tonnes) 2,588 5,516 6,683 7,123 5,316 6,681 6,482 18,479 Ore mined (000's tonnes) 1,382 2,552 3,220 2,380 2,600 3,371 4,650 10,621 Ore grade (%) 1.7 1.4 1.4 1.4 1.5 1.6 1.6 1.6 Processing (3) Sulphide Ore processed (000's tonnes) 782 1,140 1,277 1,212 1,171 1,372 1,759 4,302 Oxide Ore processed (000's tonnes) 1,044 1,246 1,401 1,080 1,263 1,499 1,465 4,227 Contained copper (tonnes) 32,213 36,981 32,882 31,545 38,231 36,766 41,605 116,602 Sulphide ore grade processed (%) 1.9 1.6 1.2 0.9 0.8 1.1 1.0 1.0 Oxide ore grade processed (%) 1.7 1.5 1.2 1.6 1.8 1.4 1.7 1.6 Recovery (%) 92 94 95 92 93 99 99 97 Copper cathode produced (tonnes) 15,796 17,501 17,158 17,201 22,823 20,322 23,705 66,850 Copper cathode tolled produced - 1,186 3,036 1,805 5,521 12,204 14,314 32,039 (tonnes) Copper in concentrate produced 14,572 16,924 11,984 10,015 7,056 3,727 3,140 13,923 (tonnes) Total copper production 30,368 35,611 32,178 29,021 35,400 36,253 41,159 112,812 Concentrate grade (%) 29.3 25.8 26.4 26.9 25.2 26.6 27.8 26.6 Combined Costs (per lb) (4)Mining $0.10 $0.12 $0.17 $0.14 $0.20 $0.24 $0.24 $0.23Processing 0.41 0.44 0.50 0.62 0.54 0.59 0.59 0.57Site Administration 0.03 0.04 0.04 0.04 0.03 0.02 0.03 0.03TC RCs and freight parity charges 0.31 0.42 0.31 0.27 0.14 0.16 0.15 0.15Gold / Acid credit (0.07) (0.08) (0.07) (0.05) (0.06) (0.06) (0.07) (0.07)Combined Total Cash Costs (C1) $0.78 $0.94 $0.95 $1.02 $0.85 $0.95 $0.94 $0.91Combined Total Costs (C3) $0.93 $1.11 $1.17 $1.21 $1.05 $1.17 $1.13 $1.11 Oxide Circuit Costs (per lb) (4) Mining $0.10 $0.12 $0.15 $0.11 $0.16 $0.22 $0.19 $0.19 Processing 0.51 0.52 0.54 0.70 0.56 0.68 0.64 0.62 Site Administration 0.03 0.01 0.02 0.04 0.03 0.02 0.03 0.03 Oxide Circuit Total Cash Costs (C1) $0.64 $0.65 $0.71 $0.85 $0.75 $0.92 $0.86 $0.84 Oxide Circuit Total Costs (C3) $0.80 $0.83 $0.92 $1.01 $0.92 $1.12 $1.02 $1.02 Sulphide Circuit Costs (per lb) (4) Mining $0.09 $0.12 $0.18 $0.18 $0.28 $0.26 $0.32 $0.29 Processing 0.28 0.35 0.45 0.52 0.45 0.48 0.52 0.49 Site Administration 0.04 0.02 0.02 0.04 0.03 0.02 0.03 0.02 TC RCs and freight parity charges 0.68 0.89 0.73 0.62 0.42 0.39 0.35 0.38 Gold / Acid credit (0.16) (0.17) (0.16) (0.13) (0.18) (0.14) (0.17) (0.16) Sulphide Circuit Total Cash Costs (C1)$0.93 $1.21 $1.22 $1.23 $1.00 $1.01 $1.05 $1.02 Sulphide Circuit Total Costs (C3) $1.08 $1.38 $1.45 $1.47 $1.25 $1.24 $1.29 $1.26 Revenues (3) Copper cathodes $84.8 $142.3 $158.6 $110.9 $170.6 $235.8 $293.8 $700.2 Copper in concentrates 35.6 109.6 65.3 20.1 42.6 6.9 16.0 65.5 Gold 4.5 6.0 5.2 2.8 4.8 4.7 6.3 15.8 Total revenues $124.9 $257.9 $229.1 $133.8 $218.0 $247.4 $316.1 $781.5 Copper cathode sold (tonnes) 15,556 17,568 17,181 17,360 22,798 20,207 24,909 67,914 Copper tolled cathode sold (tonnes) - 1,186 3,036 1,805 5,521 12,204 14,314 32,039 Copper in concentrate sold (tonnes) 9,282 15,692 13,131 8,215 9,000 250 2,696 11,946 Gold sold (ounces) 8,079 9,611 8,864 4,427 7,764 7,118 9,862 24,744 Summary of Quarterly and Current Year to Date Results (unaudited) (continued) 2006 2006 2006 2006 2007 2007 2007 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 YTDBwana/Lonshi Production StatisticsMiningWaste mined (000's tonnes) 3,241 5,607 5,915 4,081 2,105 3,425 2,992 8,522Ore mined (000's tonnes) 147 183 110 80 16 94 160 270Ore grade (%) 8.4 10.7 11.9 10.4 7.5 6.1 6.8 6.6ProcessingOxide Ore processed (000's tonnes) 335 314 322 294 242 327 353 922Contained copper (tonnes) 13,401 15,625 15,011 13,037 5,007 7,653 9,819 22,479Oxide ore grade processed (%) 4.0 5.0 4.7 4.3 2.1 2.3 2.8 2.4Recovery (%) 87 87 89 96 91 87 85 87Copper cathode produced (tonnes) 11,718 13,569 13,302 12,479 4,557 6,676 8,305 19,538Acid produced (tonnes) 68,195 71,421 63,830 73,901 67,227 69,108 67,537 203,872Surplus acid (tonnes) 937 910 508 8 586 1,483 11 2,080Oxide Circuit Costs (per lb) (4)Mining $0.51 $0.32 $0.32 $0.34 $1.49 $1.57 $1.04 $1.33Processing 0.38 0.35 0.38 0.43 1.05 0.81 0.65 0.79Site Administration 0.10 0.10 0.10 0.07 0.20 0.15 0.21 0.19Gold / Acid credit (0.09) (0.08) (0.06) (0.09) (0.24) (0.14) (0.09) (0.14)Oxide Circuit Total Cash Costs (C1) $0.90 $0.69 $0.74 $0.75 $2.50 $2.39 $1.81 $2.17Oxide Circuit Total Costs (C3) $1.20 $0.98 $1.00 $1.00 $2.92 $2.77 $2.25 $2.58RevenuesCopper cathodes $62.0 $104.5 $99.2 $75.4 $22.1 $41.2 $66.1 $129.4 Copper cathodes sold (tonnes) 11,797 13,648 12,954 12,766 4,664 6,369 8,471 19,504 Guelb Moghrein Production StatisticsMiningWaste mined (000's tonnes) 1,156 1,721 1,660 1,719 1,610 1,400 1,487 4,497Ore mined (000's tonnes) 41 144 179 400 462 539 674 1,675Ore grade (%) 1.9 1.9 1.8 1.5 1.4 1.4 1.3 1.4Processing (3)Sulphide Ore processed (000's tonnes) - - - 334 410 464 509 1,383Contained copper (tonnes) - - - 6,552 7,791 8,894 10,006 26,691Sulphide ore grade processed (%) - - - 2.0 1.9 1.9 2.0 1.9Recovery (%) - - - 78 83 79 81 81Copper in concentrate produced (tonnes) - - - 5,031 6,446 7,050 8,101 21,597Gold in concentrate produced (ounces) - - - 10,355 13,588 12,814 14,699 41,101Sulphide Circuit Costs (per lb) (4)Mining - - - $0.13 $0.21 $0.17 $0.12 $0.17Processing - - - 0.77 0.56 0.52 0.47 0.51Site Administration - - - 0.08 0.07 0.06 0.07 0.07TC RCs and freight parity charges - - - 0.86 0.66 0.43 0.38 0.48Gold / Acid credit - - - (0.15) (0.21) (0.48) (0.78) (0.52)Sulphide Circuit Total Cash Costs (C1) - - - $1.69 $1.29 $0.71 $0.26 $0.71Sulphide Circuit Total Costs (C3) - - - $2.18 $1.66 $1.09 $0.76 $1.13Revenues (3)Copper in concentrates - - - $5.6 $12.8 $41.2 $74.1 $128.1Gold - - - 1.6 3.1 7.6 14.1 24.8Total revenues - - - $7.2 $15.9 $48.8 $88.2 $152.9 Copper in concentrate sold (tonnes) - - - 1,308 2,332 6,336 10,514 19,182Gold sold (ounces) - - - 2,516 4,240 12,304 19,320 35,864 (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, 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. Consolidated Balance Sheet As at September 30, 2007 and December 31, 2006 (unaudited, expressed in millions of US dollars, except where indicated) September 30, December 31, 2007 2006 $ $ restated - note 2AssetsCurrent assetsCash and cash equivalents 222.6 249.5Restricted cash - 15.0Accounts receivable (note 10) 296.3 142.8Inventory (note 3) 232.9 167.3Current portion of other assets (note 6) 11.1 10.1 762.9 584.7Investments (note 4) 261.6 45.2Property, plant and equipment (note 5) 1,259.9 1,068.1Other assets (note 6) 16.0 21.7 2,300.4 1,719.7LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities 83.1 84.8Current taxes payable 126.8 110.0Current portion of long-term debt (note 7) 63.9 57.7Current portion of other liabilities (note 8) 24.3 19.4 298.1 271.9Long-term debt (note 7) 251.2 237.2Other liabilities (note 8) 36.6 38.3Future income tax liabilities 187.6 167.3 773.5 714.7Minority interests 179.9 85.2 953.4 799.9Shareholders' equityCapital stock 389.8 396.0Retained earnings 852.1 523.8Accumulated other comprehensive income 105.1 - 1,347.0 919.8 2,300.4 1,719.7Commitments (note 14) 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 Comprehensive Income For the three months and nine months ended September 30, 2007 and 2006 (unaudited, expressed in millions of US dollars, except where indicated) Three months ended Nine months ended September 30, September 30, September 30, September 30, 2007 2006 2007 2006 $ $ $ $ restated - restated - note 2 note 2 Sales revenues Copper (note 10) 450.0 323.1 1,023.2 861.9 Gold 20.4 5.2 40.6 15.7 Acid - 0.1 0.3 0.5 470.4 328.4 1,064.1 878.1Cost of sales (139.3) (81.7) (344.1) (200.1)Depletion and amortization (23.0) (13.7) (55.3) (40.0)Operating profit 308.1 233.0 664.7 638.0Other expenses/income Exploration (5.2) (5.2) (10.2) (12.2) General and administrative (8.2) (7.0) (20.4) (14.5) Interest (5.6) (7.1) (20.7) (19.0) Other expenses/income (note 11) (3.6) (2.9) 3.5 (56.4) (22.6) (22.2) (47.8) (102.1)Earnings before income taxes and minority 285.5 210.8 616.9 535.9interestsIncome taxes (59.3) (56.6) (136.0) (145.7)Minority interests (42.6) (21.0) (95.9) (51.7)Net earnings for the period 183.6 133.2 385.0 338.5 Comprehensive incomeNet earnings for the period 183.6 385.0 Other comprehensive income, net of tax Unrealized gain on available-for-sale 40.1 108.1 securities Realized gain on available-for-sale (0.1) (0.5) securities 40.0 107.6Comprehensive income 223.6 492.6 Earnings per common share Basic $2.71 $2.00 $5.70 $5.26 Diluted $2.66 $1.96 $5.60 $5.16 Weighted average shares outstanding(millions) Basic 67.7 66.6 67.5 64.3 Diluted 69.0 68.0 68.8 65.7 Total shares issued and outstanding 67.7 67.3 67.7 67.3(millions) 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 nine months and year ended September 30, 2007 and December 31, 2006 (unaudited, expressed in millions of US dollars, except where indicated) Nine months ended Year ended September 30, December 31, 2007 2006 $ $ restated - note 2 Capital StockCommon SharesBalance - beginning of period 399.6 160.7 Stock options exercised 5.5 4.0 Acquisition of Adastra - 234.9Balance - end of period 405.1 399.6Treasury SharesBalance - beginning of period (15.6) - Shares purchased (17.3) (15.6) Restricted stock units vested 2.2 -Balance - end of period (30.7) (15.6)Contributed SurplusBalance - beginning of period 12.0 5.8 Compensation expense for the period 7.0 6.7 Transfers upon exercise of stock options (1.4) (0.5) Transfers upon vesting of restricted stock units (2.2) -Balance - end of period 15.4 12.0Total capital stock 389.8 396.0 Retained earningsBalance - beginning of period as previously reported 539.1 144.8Change in accounting policies Deferred stripping (note 2a) (15.3) (0.3) Financial instruments (note 2b) (5.0) -Net earnings for the period 385.0 399.4Dividends (51.7) (20.1)Balance - end of period 852.1 523.8 Accumulated other comprehensive incomeBalance - beginning of period - Change in accounting policy, net of tax (2.5) Available-for-sale securities, net of tax 107.6Balance - end of period 105.1 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 three and nine months ended September 30, 2007 and 2006 (unaudited, expressed in millions of US dollars, except where indicated) Three months ended Nine months ended September 30, September 30, September 30, September 30, 2007 2006 2007 2006 $ $ $ $ restated - restated - note 2 note 2Cash flows from operating activitiesNet earnings for the period 183.6 133.2 385.0 338.5Items not affecting cashDepletion and amortization 23.0 13.7 55.3 40.0Minority interests 42.6 21.0 95.9 51.7Unrealized foreign exchange loss 2.9 0.3 3.7 2.8Future income tax (recovery) expense (0.3) 10.2 3.3 39.3Stock-based compensation expense 2.5 2.7 7.0 4.7Unrealized derivative instruments loss 1.2 (3.8) (3.8) 15.0(gain)Other 1.4 (1.0) 4.6 1.6 256.9 176.3 551.0 493.6Change in non-cash operating working capitalIncrease in accounts receivable (59.5) (19.2) (158.1) (143.8)Increase in inventory (17.5) (23.4) (63.8) (64.2)Increase (decrease) in accounts payable and 22.0 (15.5) 5.3 59.2accrued liabilitiesLong term incentive plan contribution - - (17.3) - 201.9 118.2 317.1 344.8Cash flows from financing activitiesProceeds from long-term debt - - 75.0 82.0Repayments of long-term debt (25.5) (50.5) (51.1) (95.9)Proceeds on issuance of common shares 0.3 0.5 4.1 3.5Dividends paid (15.3) (5.8) (51.7) (20.2)Deferred premium obligation (2.3) (2.8) (6.9) (9.1) (42.8) (58.6) (30.6) (39.7)Cash flows from investing activitiesRestricted cash 22.5 16.9 15.0 7.4Property, plant and equipment (95.1) (68.2) (239.1) (177.7)Acquisition of Adastra Minerals Inc. - (10.7) - (27.0)Net investments (23.6) 1.9 (88.9) 0.1 (96.2) (60.1) (313.0) (198.0)Effect of exchange rate changes on cash (0.3) 0.1 (0.4) (0.1)Increase (decrease) in cash and cash 62.6 (0.4) (26.9) 107.0equivalentsCash and cash equivalents - beginning of 160.0 190.3 249.5 82.9periodCash and cash equivalents - end of period 222.6 189.9 222.6 189.9 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 For three months ended September 30, 2007 and 2006 (unaudited, expressed in millions of US dollars, except where indicated) For the three months ended September 30, 2007, segmented information ispresented as follows: September 30, 2007 Bwana/ Guelb Kansanshi Lonshi Moghrein Frontier Corporate Total $ $ $ $ $ $ Segmented revenues 316.1 74.5 88.2 - 5.3 484.1Less inter-segment revenues - (8.4) - - (5.3) (13.7)Revenues 316.1 66.1 88.2 - - 470.4Cost of sales (80.4) (39.4) (19.5) - - (139.3)Depletion and amortization (13.4) (4.4) (5.2) - - (23.0)Operating profit (loss) 222.3 22.3 63.5 - - 308.1Interest on long-term debt (0.9) - (2.2) - (2.5) (5.6)Other (8.4) (2.0) (0.2) - (6.4) (17.0)Segmented profit (loss) 213.0 20.3 61.1 - (8.9) 285.5before undernoted itemsIncome taxes (56.3) (5.3) - - 2.3 (59.3)Minority interests (30.8) - (11.8) - - (42.6)Segmented profit (loss) 125.9 15.0 49.3 - (6.6) 183.6Property, plant and 488.4 42.2 100.8 226.8 401.7 1,259.9equipmentTotal assets 820.9 178.4 209.7 238.4 853.0 2,300.4Capital expenditures 45.7 2.2 2.9 32.8 11.2 94.8 For the three months ended September 30, 2006, segmented information ispresented as follows: September 30, 2006 restated - note 2 Bwana/ Guelb Kansanshi Lonshi Moghrein Frontier Corporate Total $ $ $ $ $ $Segmented revenues 229.1 108.0 - - 4.9 342.0Less inter-segment revenues - (8.7) - - (4.9) (13.6)Revenues 229.1 99.3 - - - 328.4Cost of sales (52.8) (28.9) - - - (81.7)Depletion and amortization (8.1) (5.6) - - - (13.7)Operating profit (loss) 168.2 64.8 - - - 233.0Interest on long-term debt (6.1) (0.7) - - (0.3) (7.1)Other (7.2) (2.3) - - (5.6) (15.1)Segmented profit before 154.9 61.8 - - (5.9) 210.8undernoted itemsIncome taxes (39.9) (17.8) - - 1.1 (56.6)Minority interests (21.0) - - - - (21.0)Segmented profit (loss) 94.0 44.0 - - (4.8) 133.2Property, plant and 396.2 54.0 103.2 65.2 374.7 993.3equipmentTotal assets 760.1 178.5 120.4 67.6 447.5 1,574.1Capital expenditures 6.8 34.8 19.5 - - 61.1 Segmented Information For nine months ended September 30, 2007 and 2006 (unaudited, expressed in millions of US dollars, except where indicated) For the nine months ended September 30, 2007, segmented information is presentedas follows: September 30, 2007 Bwana/ Guelb Kansanshi Lonshi Moghrein Frontier Corporate Total $ $ $ $ $ $Segmented revenues 781.5 157.1 152.9 - 13.1 1,104.6Less inter-segment revenues - (27.4) - - (13.1) (40.5)Revenues 781.5 129.7 152.9 - - 1,064.1Cost of sales (202.2) (104.0) (37.9) - - (344.1)Depletion and amortization (33.3) (11.7) (10.3) - - (55.3)Operating profit (loss) 546.0 14.0 104.7 - - 664.7Interest on long-term debt (9.8) - (5.1) - (5.8) (20.7)Other (9.7) (3.0) (0.3) - (14.1) (27.1)Segmented profit (loss) 526.5 11.0 99.3 - (19.9) 616.9before undernoted itemsIncome taxes (138.4) (2.8) - - 5.2 (136.0)Minority interests (76.6) - (19.3) - - (95.9)Segmented profit (loss) 311.5 8.2 80.0 - (14.7) 385.0Property, plant and 488.4 42.2 100.8 226.8 401.7 1,259.9equipmentTotal assets 820.9 178.4 209.7 238.4 853.0 2,300.4Capital expenditures 108.6 5.0 5.8 110.4 17.4 247.2 For the nine months ended September 30, 2006, segmented information is presentedas follows: September 30, 2006 restated - note 2 Bwana/ Guelb Kansanshi Lonshi Moghrein Frontier Corporate Total $ $ $ $ $ $Segmented revenues 611.9 288.5 - - 10.9 911.3Less inter-segment revenues - (22.3) - - (10.9) (33.2)Revenues 611.9 266.2 - - - 878.1Cost of sales (129.5) (70.6) - - - (200.1)Depletion and amortization (21.9) (18.1) - - - (40.0)Operating profit (loss) 460.5 177.5 - - - 638.0Interest on long-term debt (17.3) (0.9) - - (0.8) (19.0)Other (61.8) (7.9) - - (13.4) (83.1)Segmented profit before 381.4 168.7 - - (14.2) 535.9undernoted itemsIncome taxes (104.7) (47.9) - - 6.9 (145.7)Minority interests (51.9) - - - 0.2 (51.7)Segmented profit (loss) 224.8 120.8 - - (49.4) 338.5Property, plant and 396.2 54.0 103.2 65.2 374.7 993.3equipmentTotal assets 760.1 178.5 120.4 67.6 447.5 1,574.1Capital expenditures 25.9 0.5 11.0 30.1 90.5 158.0 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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