22nd Feb 2008 07:00
First Quantum Minerals Ld22 February 2008 NEWS RELEASE 08-05 February 21, 2008 www.first-quantum.com FIRST QUANTUM MINERALS REPORTS OPERATIONAL AND FINANCIAL RESULTS FOR THE THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 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 andtwelve months ended December 31, 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 • Net earnings of $135.3 million or $2.00 per share on record sales (after year end negative provisional pricing adjustment of $34.7 million (before tax and minorities) or approximately $0.34 in earnings per share)• Record operating cash flow before working capital of $220.8 million or $3.26 per share• Record copper production of 72,746 tonnes increases 56% compared to Q4 2006• Kansanshi produces at an annualized rate of over 200,000 tonnes• Record copper sales of 73,322 tonnes increases 77% compared to Q4 2006• Cash operating costs (C1) 14% lower than Q4 2006• Commercial production begins at Frontier on November 2, with 8,712 tonnes produced• The Company announces the acquisition of 17.27% of the shares of Equinox Minerals Limited Key features for the year • Net earnings of $520.3 million or $7.72 per share, up 30% on last year• Record operating cash flow before working capital of $771.8 million or $11.45 per share• Record copper production of over 226,000 tonnes following expansions at Kansanshi, full year of operations at Guelb Moghrein and start-up at Frontier• Record copper sales increases 30% to over 223,900 tonnes compared to 2006• Net sales increase 41% compared to 2006 Near term outlook • Copper production for 2008 estimated to grow by 37% to approximately 310,000 tonnes• Smelter and power capacity in Zambia likely to remain issues during 2008• Q1 2008 results dependant on extent of power and wet season disruptions• Resolution of current uncertainties being sought with the governments of DRC and Zambia Longer term outlook • Kansanshi expansion project and gold plant construction will drive further improvements in production• Guelb Moghrein gold plant modifications underway will improve gold recoveries• Kolwezi project approved and under construction• Copper production profile over the five years 2009-2013 is expected to average 222,000 tonnes at Kansanshi, 43,000 tonnes at Guelb Moghrein and 81,000 tonnes at Frontier as a result of planned expansions Key Group results Fourth quarter (Q4) Q4 2007 Q4 2006 Q4 2005 (Restated) (Restated) % of sales % of sales % of salesProduction t Cu 72,746 99 46,531 112 42,220 105Sales t Cu 73,322 100 41,454 100 40,203 100 Net sales USDM 443.3 100 216.4 100 176.9 100Operating profit USDM 249.0 56 111.8 52 115.9 66Net profit USDM 135.3 31 60.9 28 56.7 32 Basic EPS USD $2.00 $0.93 $0.92 Full year (FY) FY 2007 FY 2006 FY 2005 (Restated) (Restated) % of sales % of sales % of salesProduction t Cu 226,693 101 183,277 106 119,117 100Sales t Cu 223,907 100 172,485 100 118,602 100 Net sales USDM 1,539.2 100 1,094.5 100 444.6 100Operating profit USDM 913.7 59 749.8 69 258.4 58Net profit USDM 520.3 34 399.4 36 154.5 35 Basic EPS USD $7.72 $6.14 $2.51 Unless otherwise indicated, all comparisons of performance throughout thisreport are to the comparative period for the prior year. Q4 2007 net sales Q4 2007 Q4 2006 Q4 2005(After TC/RC charges) USD M USD M USD MKansanshi - copper 305.2 131.0 119.5 - gold 10.2 2.8 2.7Bwana/Lonshi - copper 37.1 75.4 54.7 - acid 0.1 - -Guelb Moghrein - copper 55.3 5.6 - - gold 19.3 1.6 -Frontier - copper 16.1 - - Net sales 443.3 216.4 176.9 Copper provisional pricing adjustment included above (34.7) (31.7) 6.0 Copper selling price USD/lb USD/lb USD/lbCurrent period sales 2.97 2.89 2.02Prior period provisional pricing adjustment (0.21) (0.35) 0.07TC/RC and freight parity charges (0.20) (0.22) (0.12)Realized copper price 2.56 2.32 1.97 Group net sales increase 105% to $443.3 million due to record copper productionand higher copper price Net sales increased due to an increase in the tonnes of copper sold (up 77% to73,322 tonnes of copper) and an increase in the realized copper price recognizedduring the quarter. Group copper production achieved record levels, surpassingthe prior quarter's record, and was 56% higher than the comparative quarter in2006. The higher realized copper price and the decrease in the tolling and refiningcharge (TC RC) rates also contributed to the record net sales. In addition, thedecrease in the LME copper price from the prior quarter end was less than thedecrease in the comparative quarter in 2006, which resulted in a lower negativeprovisional pricing adjustment per pound. Kansanshi net sales increase 136% to $315.4 million on the back of record copperproduction Net sales, compared to the same quarter in 2006, increased as a result of a 90%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 51,012 tonnes. Copper production increased 76% compared to thesame quarter in 2006 due, primarily, to an increase of 42% in oxide and 51% insulphide ore processed as a result of the throughput expansions at Kansanshi.In addition, Kansanshi processed higher grade ore at improved recovery rates.With the high pressure leach system becoming operational during the previousquarter, the sulphide circuit contributed approximately 1,950 tonnes to cathodeproduction. Total sales volume was higher than production at 51,966 tonnesprimarily due to a drawdown in copper in concentrate stockpiles. 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 component of refiningcost. Bwana/Lonshi net sales decrease 51% to $37.2 million as Lonshi mine nears end oflife Similar to the previous quarters of 2007, net sales fell compared to the samequarter 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. In addition to the effects of the mining delays duringthe first half of the year, the provincial government disallowed shipments ofore from the Lonshi mine to cross the border into Zambia effective November 28,2007 until all issues raised by the government were addressed. As of the dateof this report the border remains closed. In all, copper production in thequarter was down 53% compared to the same quarter in 2006. Guelb Moghrein net sales of $74.6 million as stockpiles reduced Since achieving commercial production in the comparative quarter in 2006, coppersales revenue increased 888% as sales restrictions were resolved and productionachieved full capacity compared to the same period in 2006. Compared with theprevious quarter, net sales revenue decreased 15%, although there was a 21%increase in the tonnes of copper in concentrate shipped, as the realized copperprice declined period on period. The increased concentrate shipments were theresult of a reduction in the copper in concentrate stockpile of 5,616 tonnessince the previous quarter end. Production decreased 12% to 7,158 tonnes ofcopper in concentrate from the previous quarter due to an 8% decrease in thetonnes of ore processed and the processing of lower grade ore. The reduction inore throughput was primarily due to the planned maintenance shutdown of theplant during the fourth quarter. Despite the decrease in net sales, gold salesrevenue increased by 37% over the previous quarter as the volume sold increaseddue to the increased concentrate shipments and, also, due to higher gold prices. Frontier net sales of $16.1 million as commercial production achieved Since the achievement of commercial production during the fourth quarter,Frontier produced 8,712 tonnes of copper in concentrate. Partly as a result of atemporary border closure which prevented the shipment of concentrates, Frontiershipped and sold only 2,684 tonnes of copper in concentrate before year end. Thebalance of production was stockpiled at year end. Provisional pricing adjustment negative following decrease in copper priceduring final settlement periods Total net sales were reduced by $34.7 million or $0.21/lb as a result ofnegative provisional pricing adjustments. These adjustments reflect thequarter's final settlement prices for prior period copper sales at an average of$3.28/lb compared to the September 30, 2007 provisional forward average LMEprice of $3.68/lb. As at December 31, 2007, there were 54,558 tonnes of contained copper that wereprovisionally priced at an average LME copper price of $3.04/lb. This revenuewill be subject to future adjustments as a result of movements in the copperprice. Of this amount, 27,496 tonnes had the final price determined in January2008 at $3.21/lb resulting in a favourable provisional pricing adjustment of$9.8 million, 24,722 tonnes will be determined in February 2008, and 2,340tonnes in March 2008. Q4 2007 operating profit Q4 2007 Q4 2006 Q4 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of salesKansanshi 194.7 44 80.9 38 97.9 55Bwana/Lonshi 0.0 0 28.6 13 18.0 10Guelb Moghrein 44.4 10 2.3 1 - -Frontier 9.9 2 - - - - Total operating profit 249.0 56 111.8 52 115.9 65 Unit costs USD/lb % of sales1 USD/lb % of sales1 USD/lb % of sales1Cash costs (C1) $0.98 38 $1.14 49 $0.71 36Total costs (C3) $1.19 47 $1.38 60 $0.88 45 1 Calculated as the % of current period selling price Group operating profit increases 123% to $249.0 million on the back ofsignificant sales increases Group operating profit rose materially as a result of higher sales and lowercash costs than in the same quarter of last year. The profit margin benefitedfrom the increased realized copper price and a reduction in the average cashunit cost of production (C1) to $0.98/lb, down 14%. Profit margin per pound ofcopper sold averaged $1.54/lb, which was 26% higher than the comparative quarter(2006: $1.22/lb). Cash unit costs benefited from the increase in the goldcredit related to the increased concentrate shipments at Kansanshi and GuelbMoghrein and the lower contract TC RC rates compared to the same quarter in2006. Kansanshi operating profit increases 141% to $194.7 million on higher sales andreduced costs Kansanshi's average cash unit cost of production (C1) decreased by 22% to $0.85/lb and the average total unit cost of production (C3) decreased by 32% to $0.86/lb compared to the same quarter in 2006. The decrease in the average cash unitcost was due to multiple factors; including the increase in production output,the lower TC RC rates (56% lower) and the increase in gold sales (100% higher ). With copper production increasing 76%, of which copper in concentrateproduction increased 108%, processing costs decreased 15% per pound of coppercompared to the same quarter in 2006. Improved efficiencies, along with theincreased ore throughput and the processing of higher grade sulphides resultedin lower costs per pound of copper produced. Bwana/Lonshi breaks even as lack of high grade ore impacts results Bwana copper production continued to be significantly affected by the lack ofavailable high grade ore for processing due to the mining delays related to theprevious heavy rainy season, increases in oil based consumables, electricity andwage costs and the closure of ore exports through the DRC border. This resultedin an increase of the average cash unit cost of production (C1) by 142% to $2.45/lb and the average total unit cost of production (C3) by 123% to $2.81/lb ascompared to the same quarter in 2006. Guelb Moghrein operating profit increases to $44.4 million Guelb Moghrein enjoyed a significant increase in operating profit compared tothe same quarter in 2006, which was the mine's first operating period. Comparedto Q3 2007, Guelb Moghrein's average cash unit cost of production (C1) increasedby 42% to $0.37/lb and the average total unit cost of production (C3) increasedby 38% to $1.05/lb. Overall, increased maintenance costs on the miningequipment and processing facilities negatively impacted mining and processingcosts as the dry and dusty conditions of the site began to impact the equipment. This, combined with the processing of lower ore grades, resulted in a decreasein copper output, thus increasing mining costs by 66% and processing andadministration costs by 59%. These increases were partly offset by an increasein the gold credit of 62% compared to the previous quarter, flowing from theincreased concentrate shipments. Frontier achieves operating profit of $9.9 million in first few months ofoperations Since achieving commercial production, the average unit cost of production (C1)was $1.29/lb and the average total unit cost of production (C3) was $1.59/lb asthe operation continues improving production processes to achieve optimaloutput. Q4 2007 net profit Q4 2007 Q4 2006 Q4 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of sales Operating profit 249.0 56 111.8 52 115.9 66Corporate costs (10.9) (2) (8.1) (4) (4.3) (3)Derivative gains/(losses) (5.0) (1) 1.0 - (12.7) (7)Gain on sale of investment - - 0.2 - - -Exploration (10.1) (2) (6.7) (3) (3.8) (2)Interest (net) (5.4) (2) (10.7) (5) (8.8) (5)Tax expense (46.8) (10) (15.4) (7) (19.7) (11)Minority interests (35.5) (8) (11.2) (5) (9.9) (6) Net profit 135.3 31 60.9 28 56.7 32 Earnings per share - basic $2.00 $0.93 $0.92 - diluted $1.97 $0.91 $0.89Weighted average sharesoutstanding - basic 67.7 67.3 61.6 - diluted 68.6 68.7 63.4 Group net profit increases 122% to $135.3 million on increased operating profit This increase in net profit was the result of increased copper prices, recordproduction at Kansanshi and the increased profitability of Guelb Moghrein. Thiswas partially offset by correspondingly higher income tax charges and higherminority interest share of profit compared to the same quarter in 2006. Derivative losses increase to $5.0 million on increasing gold price The loss on derivatives was primarily due to the effect on outstanding goldcontracts of higher gold prices this quarter than in the corresponding periodlast year. Exploration costs increase 51% to $10.1 million due to increased explorationactivities in Zambia The Company increased its exploration activities in Zambia during the fourthquarter of 2007. Part of the increase was targeted at finding new oxide orebodies to provide suitable feed to the Bwana processing facility. Interest expense, net of interest income, decreases 49% to $5.4 million despitehigher outstanding debt The Company's net interest costs were lower than the same quarter in 2006 due tothe comparative quarter's recognition of $8.7 million in deferred finance feesrelated to the repayment of outstanding debt facilities in that period. Q4 2007 cash flows Q4 2007 Q4 2006 Q4 2005 (Restated) (Restated) USD M USD M USD MCash flows from operating activities - before working capital 220.8 70.6 100.1 - after working capital 224.1 129.3 109.2Cash flows from financing activities 50.6 53.1 15.1Cash flows from investing activities (297.3) (122.8) (104.7) Net cash flows (22.6) 59.6 19.6 Cash flows per share - before working capital $3.26 $1.05 $1.62 - after working capital $3.29 $1.92 $1.77 Cash inflows from operating activities increases 73% to $224.1 million onsignificant increase in net profit Operating cash flows before working capital movements continued to benefit fromthe Company's operating results with an increase of 213% over the same quarterin 2006. Non-cash related expenses that were included in the operating resultsincluding depreciation, minority interests and future tax expense weresignificantly higher than the comparative quarter in 2006. Operating cash flows after working capital movements for the quarter wereimpacted by a build up inventory of approximately $43.2 million offset by anincrease in accounts payables of $26.8 million. Inventory was impacted by anincrease in ore stockpiles and higher stores and consumables. The payablesincrease was due, primarily, to the timing of trade payments. The increase in operating cash flows after working capital movements compared tothe same quarter in 2006 was due to the increase in net cash earnings, which waspartially offset by a negative change in working capital movements. Cash inflows from financing activities decreases slightly to $50.6 million dueto lower debt draw downs Financing activities included a long-term debt draw down of $50.0 million on thecorporate revolving credit and term loan facility, a repayment of $4.6 millionon the Kansanshi subordinated debt facility and vested stock option proceeds of$7.4 million. These financing cash inflows were slightly lower than in the samequarter in 2006 due, primarily, to higher net debt facility draw downs of $55.0million, net of financing fees, in the comparative quarter. Cash outflows from investing activities increases 142% to $297.3 million onpurchase of Equinox shares Investing activities included the purchase of $194.3 million in shares ofEquinox resulting in the increase compared to the same quarter in 2006. Inaddition, the Company invested $80.5 million in continued capital expansionrelated to the completion of the Frontier project, the Kansanshi sulphidecircuit expansion, and initial expenditures on the Kolwezi project. FY 2007 net sales FY 2007 FY 2006 FY 2005(After TC/RC charges) USD M USD M USD M Kansanshi - copper 1,102.7 727.2 252.8 - gold 26.0 18.5 6.7Bwana/Lonshi - copper 166.5 341.2 181.4 - acid 0.4 0.4 3.7Guelb Moghrein - copper 183.4 5.6 - - gold 44.1 1.6 -Frontier - copper 16.1 - - Net sales 1,539.2 1,094.5 444.6 Provisional pricing adjustment included above (9.7) 30.9 - Copper selling price USD/lb USD/lb USD/lbCurrent period sales 3.16 3.04 1.79Prior period provisional pricing adjustment (0.02) 0.08 -TC/RC and freight parity charges (0.17) (0.30) (0.13)Realized copper price 2.97 2.82 1.66 Group net sales increase 41% to $1,539.2 million on record copper production andhigher copper price Sales volume increased (up 30% to 223,907 tonnes of copper) as a result ofrecord copper production (up 24% to 226,693 tonnes of copper). Net salesfurther increased as a result of a higher average copper price for the year of$3.16/lb compared to $3.04/lb in the 2006 year. In addition, TC RC charges werelower under 2007 annual contract terms. However, provisional pricingadjustments to prior period sales had a negative impact in the current year dueto the final settlement of copper sold in 2006 at prices lower than the December31, 2006 provisional price. The increase in copper production resulted from Kansanshi's capital expansions,a full year of commercial production at Guelb Moghrein in 2007, and theachievement of commercial production at Frontier in early November 2007. Theseincreases were reduced by lower production at Bwana/Lonshi due to a lack of highgrade ore for processing. Kansanshi net sales increase 51% to $1,128.7 million as capital expansionsresult in record production Net sales, compared to the 2006 year, rose as a result of increased copperproduction and higher copper prices. Record production increased (up 29% to163,824 tonnes) due, primarily, to the 21% increase in oxide and 39% increase insulphide ore processed as compared to the 2006 year. This increase in orethroughput was attributable to the capital expansions at Kansanshi, includingthe commissioning of the new SX/EW facility during the third quarter of 2006.Sales volume increased 37% to 163,864 tonnes, with the balance of the increasedsales revenue coming from the higher average price received and lower TC RCcharges. 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 no longer included price participation as a refining cost. Bwana/Lonshi net sales decrease 51% to $166.9 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. Inaddition, two DRC border closures in March/April and November/Decemberrestricted ore shipments to the Bwana SX/EW facility. To maintain throughput atthe Bwana facility, its low grade ore stockpiles were fully utilized andadditional ore from external vendors was purchased. This resulted in an equaldecrease in copper cathode production and sales volume (down 50% to 25,402tonnes) compared to the 2006 year. Guelb Moghrein net sales of $227.5 million on first full year of operations With the achievement of commercial production in October 2006, productionreached its nameplate operating levels during the year. Through betterengineering and maintenance, ore mill rates increased steadily resulting intotal production for the year of 28,755 tonnes. Copper in concentrate salesvolumes were 11% higher than production as concentrate shipments improvedsignificantly due to sales agreements with new customers being concluded andcontinued improvements in shipping logistics. This allowed for a reduction inthe copper in concentrate stockpile of 3,201 tonnes since the end of the 2006year. Guelb Moghrein also benefited from higher concentrate shipments with agold credit of $44.1 million during the year. Frontier net sales of $16.1 million as commercial production achieved Since the achievement of commercial production during the fourth quarter,Frontier produced 8,712 tonnes of copper in concentrate. Partly as a result of atemporary border closure which prevented the shipment of concentrates, Frontiershipped and sold only 2,684 tonnes of copper in concentrate before year end. Thebalance of production was stockpiled at year end. 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 $0.02/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. FY 2007 operating profit FY 2007 FY 2006 FY 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of sales Kansanshi 740.7 47 541.4 50 176.2 40Bwana/Lonshi 14.0 1 206.1 19 82.2 18Guelb Moghrein 149.1 10 2.3 - - -Frontier 9.9 1 - - - - Total operating profit 913.7 59 749.8 69 258.4 58 Unit costs USD/lb % of sales1 USD/lb % of sales1 USD/lb % of sales1Cash costs (C1) $1.04 33 $0.93 33 $0.64 39Total costs (C3) $1.27 40 $1.15 41 $0.84 51 1 Calculated as the % of current period selling price Group operating profit increases 22% to $913.7 million Operating profit at Kansanshi increased 37% compared to the 2006 year and GuelbMoghrein posted very strong results in its first full year of operation. Thecombined increase in operating profit was impacted, however, by the results fromBwana/Lonshi. The high unit costs of this operation contributed to an increasein average group cash unit cost of production (C1) by 12% to $1.04/lb comparedto the 2006 year. Removing the impact of higher costs at Bwana/Lonshi, C1 costsfor the other operations averaged $0.86/lb for the year. Across the Groupaverage profit margin per pound of copper sold was $1.87, which decreased fromthe comparative year (2006: $1.97/lb) again reflecting lower volumes fromLonshi. Kansanshi operating profit increases 37% to $740.7 million on increased profitmargins Kansanshi's average cash unit cost of production (C1) decreased by 5% to $0.90/lb and the average total unit cost of production (C3) decreased by 8% to $1.04/lb. The decrease was due to a decrease in TC RC's of 72%, which was offset byan increase in ore costs of 22% and an increase in processing unit costs of 14%. The original Kansanshi Definitive Feasibility Study was based on a $0.80/lbcopper price, and revisions in the reserve model for higher current pricesresulted in a reduction of the grade of ore treated through the two processroutes. The decision to process lower grade ore and higher acid-consuming mixedores through the leach circuit, resulted in the need for external purchases of asignificant quantity of acid at a much higher marginal cost, as well asincreased ore mining and processing costs. Increases in oil-based consumables,electricity and wage costs all contributed to the increased ore and processingcosts. 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 two border closuresduring the year. This resulted in an increase of the average cash unit cost ofproduction (C1) by 163% to $2.24/lb and the average total unit cost ofproduction (C3) by 133% to $2.63/lb as compared to the 2006 year. Mining unitcosts were significantly impacted by these problems resulting in a 191%increase. Guelb Moghrein operating profit of $149.1 million as production reaches designcapacity / lower unit costs Guelb Moghrein copper in concentrate production achieved design capacity duringthe year with continued cost improvements since the beginning of the year. Theaverage cash unit cost of production (C1) was $0.65/lb and the average totalunit cost (C3) of $1.15/lb for the period. This improvement continued to bedriven by an increase in copper output, an increase in the gold credit andimproved production processes as the operation continued to stabilize sinceachieving commercial production in October 2006. Frontier achieves operating profit of $9.9 million in first few months ofoperations Since achieving commercial production, the average unit cost of production (C1)was $1.29/lb and the average total unit cost (C3) of production was $1.59/lb. FY 2007 net profit FY 2007 FY 2006 FY 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of sales Operating profit 913.7 59 749.8 69 258.4 58Corporate costs (32.9) (2) (27.2) (3) (7.0) (2)Derivative losses (8.7) (1) (58.2) (5) (21.8) (5)Gain on sale of investment 0.8 - 1.8 - 16.1 4Exploration (20.3) (1) (18.9) (2) (7.5) (2)Interest (net) (18.1) (1) (23.9) (2) (17.3) (4)Tax expense (182.8) (11) (161.1) (15) (46.3) (10) Minority interests (131.4) (9) (62.9) (6) (20.1) (4)Net profit 520.3 34 399.4 36 154.5 35Earnings per share - basic $7.72 $6.14 $2.51 - diluted $7.62 $6.01 $2.45Weighted average sharesoutstanding - basic 67.4 65.1 61.5 - diluted 68.3 66.4 63.0 Group net profit increases 30% to $520.3 million on higher operating income,lower derivative losses The increase in net profit was attributable to increased operating income andlower derivative losses compared to the 2006 year. In addition, GuelbMoghrein's current tax exempt status results in a lower effective group taxrate. These were offset by a higher share of minority interests' profitcompared to the 2006 year, due to the strong contributions from the partly-ownedKansanshi and Guelb Moghrein operations. Derivative losses decrease significantly The 2007 year's derivative losses were primarily related to the increasing goldprice. Following the closing out of virtually all of the Company's copper basedderivatives in 2006, the Company was no longer exposed to derivative lossesresulting from an increasing copper price. Exploration costs increase 7% to $20.3 million due to increased explorationactivities in Zambia The Company increased its exploration activities in Zambia during the fourthquarter. Part of the increase was targeted at finding new oxide ore bodiessuitable as feed for the Bwana processing facility. Interest expense, net of interest income, decreases 24% to $18.1 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. This, with anincrease in interest income, resulted in the net decrease compared to the 2006year. FY 2007 cash flows FY 2007 FY 2006 FY 2005 (Restated) (Restated) USD M USD M USD MCash flows from operating activities - before working capital 771.8 564.2 236.8 - after working capital 540.8 474.0 195.1Cash flows from financing activities 20.0 13.4 13.6Cash flows from investing activities (610.3) (320.8) (175.8) Net cash flows (49.5) 166.6 32.9 Cash flows per share - before working capital $11.45 $8.67 $3.84 - after working capital $8.01 $7.29 $3.16 Cash inflows from operating activities increases 14% to $540.8 million due tooperating results Operating cash flows before working capital movements continued to be driven bythe Company's operating results with a 37% increase compared to the 2006 year. Operating cash flows after working capital movements for the year were impactedby an increase in accounts receivables of $136.1 million, inventory build-up of$106.9 million and contributions to the long term incentive plan of $21.3million. The increase in accounts receivable was due to the increase in salesvolume during the latter part of the year and an increase in the amount ofprovisionally priced copper tonnes outstanding at year end. In addition, anincrease in income tax payments compared to the previous year contributed to thelower percentage increase in operating cash flows after working capitalmovements compared to the 2006 year. Cash inflows from financing activities increases to $20.0 million due toincrease in net debt facility draw downs The increase in financing cash inflows was due to higher net long term debtproceeds as the Company had facility draw downs, net of repayments of $69.3million compared to $44.7 million during the 2006 year. This, combined withproceeds on stock options vested and exercised of $11.5 million, was partlyoffset by an increase in dividend payments of $31.6 million compared to theprevious year. Cash outflows from investing activities increases 90% to $610.3 million onacquisition of investments Investing activities included the purchase of $283.2 million in shares ofpublicly listed companies held for investment purposes, which was primarily theinvestment in Equinox. A further $319.6 million was invested in continuedcapital expansion related to the completion of the Frontier project, theKansanshi high pressure leach project and sulphide circuit upgrade, and initialexpenditure on the Kolwezi project. FY 2007 balance sheet FY 2007 FY 2006 FY 2005 (Restated) (Restated) USD M USD M USD M Cash 200.0 249.5 82.9Property, plant and equipment 1,308.4 1,068.1 471.3Total assets 2,682.7 1,719.7 745.8Long term debt 361.2 294.9 235.0Total liabilities 1,096.7 799.9 434.7Shareholders' equity 1,586.0 919.8 311.1 Net working capital 457.3 312.8 81.2 Net debt to net debt plus equity 9% 5% 33% Group assets rise 56% to $2,682.7 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. In response to thecurrent market conditions, the Company valued these investments at 85% of theoriginal cost and a provision of $1.1 million, net of tax was recognized duringthe fourth quarter. The Company continues to monitor the restructure processand will review its position during the current quarter in the light of anyproposals in which it is asked to participate. Inventory balances increased due, mainly, to an additional $55.3 million inconsumable stores and $54.2 million in ore stockpiles. The Company hadstockpiles of approximately 18,300 tonnes of copper in concentrate at year end.Reductions in the Kansanshi and Guelb Moghrein stockpiles from the previousquarter end were offset by stockpiled production at Frontier. DRC relatedborder issues resulted in the delay of Frontier concentrate shipments. Theissues were resolved in December and shipments commenced, however, this delaycontributed to the stockpiling of approximately 7,100 tonnes of copper inconcentrate. Of the remaining 11,200 tonnes, approximately 8,300 tonnes isKansanshi copper in concentrate production that is stockpiled at the Mufulirasmelter awaiting treatment, with the balance stockpiled at the Guelb Moghreinplant and the Nouakchott port awaiting shipment. With the Company's continued investment in publicly traded company sharesthroughout the year, an additional $272.8 million of marketable securities wereacquired bringing the total cost to $308.4 million at December 31. Included inthis total was 17.27% of the total issued and outstanding shares of EquinoxMinerals Ltd. ("Equinox"). Equinox is developing its 100% owned Lumwana coppermine located in the North Western Province of Zambia approximately 65 kilometreswest of Kansanshi. The Company holds these Equinox shares for investmentpurposes and may acquire further Equinox shares or dispose of its holdings asinvestment conditions warrant. The Company recognized an additional $247.0million of comprehensive income before tax due to the appreciation in the fairvalue of these investments for the year, resulting in a closing carrying valueof $547.9 million. Property, plant and equipment balances increased by $240.3 million, net ofdepreciation, as the Company completed the Frontier project and achievedcommercial production on November 2. In addition, the Company continued capitalinvestment in the Kansanshi high pressure leach project and sulphide circuitupgrade and began work on the Kolwezi project. Group liabilities increase 37% to $1,096.7 million Long-term debt increased by $66.3 million due to net draw downs during the yearto assist in the funding of the Frontier project. Minority interests increasedby $130.2 million due to the positive operating results at Kansanshi and GuelbMoghrein. In addition, future income tax liabilities increased by $57.1 milliondue, primarily, to the appreciation in fair value of the investments. Subsequent to year-end, the Company finalised a $250.0 million loan facility forgeneral corporate purposes and to provide financing in relation to the Equinoxinvestment. The facility is secured by a first ranking mortgage over Equinoxshares owned by the Company and will mature in January 2009. Shareholders' equity increases 72% to $1,586.0 million Positive earnings of $520.3 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 $202.6 million of accumulatedother comprehensive income after tax, which was directly related to theappreciation of the investments in publicly traded securities. As at February 21, 2008 the Company has 68,143,922 shares outstanding. Growth activities Kolwezi development in DRC The Kolwezi Project received board approval in November, and the project hasstarted. Detailed design is in progress and is approximately 25% complete.Construction works are underway on site for infrastructure items which includepower supply, water supply, roads access, construction camp, site housing andsite buildings. A number of major equipment packages have been awarded, and constructioncontracts have been let for earthworks, concrete works and site erected tankage.Approximately $120 million of the project budget has been committed at yearend. Significant work is being undertaken during this current wet season toprepare the site (especially in terms of availability of construction equipmentand tools), to ensure that an efficient and effective start on process plantconstruction is made from commencement of the dry season 2008 (nominally Aprilonwards). Kansanshi high pressure leach ("HPL") facility Operation of the HPL facility continued during the fourth quarter andconcentrated on Autoclave #1. This autoclave's metallurgical performance isexcellent and has exceeded its design expectation. Efforts were concentrated onobtaining steady state operating data, and to continue with mechanicalimprovements which will result in maximizing continuous and reliable run time.December's availability and utilization was 27 days on the #1 autoclave;however, the mechanical (materials) failure of certain valves, seals, andducting continues to reduce operating time between repairs. The replacement ofcomponents with exotic corrosion/erosion resistant materials continues.Autoclave #2 returned to service in January incorporating various componentimprovements. Both autoclaves are expected to be fully operational at athroughput capacity of 8,500 tonnes per month by the end of Q1. Actualthroughput will be dependant on management decisions to optimise production inthe light of electrowinning capacity and power availability. Kansanshi sulphide expansion project construction continues The construction works for the Kansanshi sulphide circuit expansion to an annualthroughput in excess of 12 million tonnes are well progressed. Concrete worksand structural erection are essentially complete, and the site focus is onmechanical installation, piping and electrical installation. The majority ofthe project equipment items have been received on site, and much of theequipment is installed. The main items outstanding are the crusher and specificmill components (which are en route to site). The completion of the projectwill occur following the SAG mill installation after delivery of the mill shellwhich is due on site during February 2008. The construction completion andcommissioning is expected during the first half of 2008. Kansanshi fourth 35,000 tonne per year electrowinning tank house Kansanshi is proceeding with the construction of a fourth 35,000 tonne per yearelectrowinning tank house to bring electrowinning capacity to 140,000 tonnes ofcopper cathode per year. The new tank house is based on existing designs and theproject estimated capital cost is $16 million. All detailed design drawingshave been completed and issued, and almost all mechanical equipment has beenprocured. Site construction is underway with earthworks having been completedand site concrete works approximately 50% complete. Structural and mechanicalinstallation works are scheduled to commence in February, and delivery ofproject equipment will allow continued erection from late February onwards.Construction completion is expected in the second half of 2008, withcommissioning of the new tank house to occur approximately mid year. It is notexpected that Kansanshi will utilize the full tank house capacity. It will,however, provide flexibility to make up for periods of power disruptions. 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 2008 is 310,000 tonnes The Company expects to produce approximately 310,000 tonnes of copper in 2008.This expected production includes approximately 181,000 tonnes from Kansanshi,approximately 84,000 tonnes from Frontier, approximately 33,000 tonnes fromGuelb Moghrein and approximately 12,000 tonnes from Bwana/Lonshi. During January, total copper production was about 25,700 tonnes sourced asfollows: • Kansanshi - 18,300 tonnes;• Bwana/Lonshi - 800 tonnes;• Guelb Moghrein - 2,900 tonnes;• Frontier - 3,700 tonnes. The Company sold approximately 21,700 tonnes of copper in January. Group copper production five-year estimate The Company is investing significantly in additional capacity at its existingproduction facilities and as a result plans that these operations will achievethe following average production levels over the years 2009 to 2013: • Kansanshi - up 22% on 2008 planned production to 222,000 tonnes;• Guelb Moghrein - up 30% on 2008 planned production to 43,000 tonnes;• Frontier - broadly in line with 2008 planned production at 81,000 tonnes. Over this period the Company expects Group production will rise even further asa result of new operations being brought on stream. Mufulira smelter had continued to experience operating difficulties The Mufulira smelter continued to encounter operating constraints which limitedits concentrate treatment capacity. These operating issues are expected tocontinue into 2008. The Company was advised by Mopani that it will be unable totreat all of the Company's anticipated concentrate production from Kansanshi andFrontier during 2008. Expansion projects underway on the smelter will increasethroughput by mid-year to 1,850 tonnes per day of concentrate. Even then, thecapacity of the Mufulira smelter after treating Mopani's own material will notbe able to treat all the Company's concentrate. As a result, the Company willarrange to treat a considerable surplus of concentrates from Kansanshi andFrontier through alternative channels including other Copperbelt and overseassmelters. Depending on the final terms negotiated, this may result in slightlyhigher realization costs for some of the concentrate sold due to higher freightcharges for export. In addition, the Company will process concentrates throughthe HPL at Kansanshi. Power blackouts in Zambia causing disruptions Power is a major problem in the whole Southern African region. Increasedproduction capacity has been designed into the plants to help overcome theeffects of power disruptions. Congolese supply is currently adequate. TheCompany is currently studying a number of initiatives in an attempt to mitigatelong term disruption and supply constraints. Power supply in Zambia hasrecently improved, but risks to supply exist associated with load-shedding andnew mine developments. Zambian budget announcement The Government of the Republic of Zambia ("GRZ") announced in January 2008 anumber of proposed changes to the tax regime in the country, particularly inrelation to mining companies. These changes, if enacted as proposed and ifapplicable to the Company, could result in higher tax payments in that country,which may be material at current commodity prices, as well as to potentiallydiscourage further investment in both new and existing projects. The Companyhas entered into Development Agreements with GRZ on existing operations whichprovide for stability in the regulatory environment, including taxation, andrights of international arbitration in the event of any dispute which theCompany will pursue if necessary to protect its contractual position. Theimpact of the changes proposed on the Company is uncertain and the Company isseeking resolution of this issue. Kansanshi focussed on HPL, sulphide expansion and gold plant commissioning Activities at Kansanshi continue to focus on both the HPL facility, targetingsteady state production from autoclave #1 and autoclave #2, and on constructionof 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 began in November. 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. The continued build-up of the mining fleet, the completion of a fourth 35,000tonne electrowinning tankhouse and the completion of the sulphide expansion isexpected to result in copper production of 181,000 tonnes in 2008. Guelb Moghrein producing copper concentrates above design levels During the fourth 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 first quarterin 2008 is expected to be approximately 2,700 tonnes of contained copper permonth. The concentrate stockpile at site has been reduced to an operating levelof about 2,500 tonnes of contained copper (approximately one month'sproduction). The CIL gold circuit was taken off line at the beginning of January 2007 due toCIL tailings storage facility (TSF) constraints. The construction of a new CILTSF is expected to be completed in the second quarter of 2008. At present, CILfeed is being stored in a temporary impoundment for future treatment. Goldproduction at Guelb Moghrein is expected to be approximately 100,000 ounces in2008. An NI 43-101compliant resource was published on February 12, 2008 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 mine to produce approximately 84,000 tonnes of copper in 2008 The Frontier mine start-up has performed in line with expectations andproduction should continue to improve into 2008 as the mine reaches steady stateproduction levels. Production in the first quarter of 2008 is expected to beimpacted by the rains because, at this early stage, limited opportunity has beenavailable to pre-empt the affect of the wet season. With limitations on thesmelter capacity of Mufulira, the current plan is to ship all of Frontier'sconcentrate production for treatment elsewhere on the Copperbelt and for exportoverseas. Bwana/Lonshi border issues continue to impact production The DRC border has been closed for the export of copper ores and explorationcore samples from the Lonshi mine into Zambia since November 2007. The Companyhas been working with the DRC authorities to resolve this issue. The miningoperations at the Lonshi mine continued but as the ore body reaches its end,there will be retrenchment of personnel. The Lonshi oxide reserve should be exhausted in mid 2008. It is anticipatedthat about 12,000 tonnes of cathode will be produced at Bwana during 2008. TheCompany continues to assess alternative and most beneficial uses for the Bwanaprocessing plant after the Lonshi ore is exhausted. The study to construct a decline to assess the underground mining option atLonshi is underway. If feasible, the aim would be to commence a declinedevelopment by the start of the dry season. Studies are also underway to modifythe Bwana plant for use in metallurgical treatment of cobalt ores, and to builda roaster for copper concentrate. Kolwezi tailings project construction commences The Board of Kingamyambo Musonoi Tailings SARL (KMT) (owned by First Quantum65%, La Generale Des Carrieres et Des Mines (Gecamines) 12.5%, IndustrialDevelopment Corporation of South Africa (IDC) 10%, the International FinanceCorporation (IFC) 7.5% and the Government of the Democratic Republic of Congo 5%(RDC) committed to proceed with the development of the Kolwezi tailings project(Kolwezi). First Quantum with support from its contributing equity partners ofKMT (IDC and IFC) will finance or procure third party debt project financingtotalling up to $593 million. This satisfies the obligations of First Quantum,the IDC and the IFC under the Contract of Association to complete feasibilitystudies, carry out an environmental impact assessment, prepare an environmentalmanagement plan, and to obtain commitments with respect to the financing of theproject. Preparatory site works commenced to meet a schedule for commercial start-up inthe first quarter of 2010. The plant will commence operations at 35,000 tonnesper year copper and 7,000 tonnes per year of cobalt hydroxide at a capital costof $553 million. The plant will be designed and constructed such that itscapacity can be doubled for an incremental capital cost of $40 million. Themine life is expected to be 22 years at an annual production rate of 70,000tonnes of copper cathode per year. The future development of a cobalt metalfacility and the expansion of copper and cobalt capacity will be considered inlight of practical experience on site and on commodity market conditions. The Government of the Democratic Republic of Congo ("DRC") announced during 2007a review of over 60 mining agreements entered into over the last decade withforeign companies. The Kolwezi mining convention was included in this reviewand on February 19, 2008 formal notification of the outcome of the review wasreceived by the Company. The notification lists a number of conditions to bemet by the Company. The Company has advice that the convention is valid andbinding and that KMT has complied with all its terms. The convention provides adispute resolution mechanism through international arbitration. The Company willliaise with its financially contributing partners the IFC and IDC and, asinvited by the Minister, will through KMT respond to the letter shortly andarrange to meet with him in due course. 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 Contact: Clive Newall, President1st Floor, Mill House Mill Bay Lane Horsham West Sussex RH12 1TQ United Kingdom Tel: +44 140 327 3484 Fax: +44 140 327 3494 E-Mail: [email protected]. Or 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 2007 2007 2007 2007 2007Statement of Operations and Retained Q2 Q3 Q4 Q1 Q2 Q3 Q4 FYEarnings(millions, except where indicated)Revenues Current period copper sales (1) $295.9 $311.4 $243.7 $270.9 $315.7 $460.2 $448.4 $1,478.4 Prior period provisional copper 60.4 11.7 (31.7) (17.6) 22.6 3.2 (34.7) (9.7)adjustments (2) Other revenues 6.2 5.3 4.4 8.0 12.5 20.4 29.6 70.5Total revenues 362.5 328.4 216.4 261.3 350.8 483.8 443.3 1,539.2Cost of sales (restated) 65.2 81.7 88.5 102.0 121.3 152.6 168.4 544.3Net earnings (restated) 149.5 133.2 60.9 78.3 123.1 183.6 135.3 520.3Basic earnings per share (restated) $2.32 $2.00 $0.93 $1.16 $1.83 $2.71 $2.00 $7.72Diluted earnings per share (restated) $2.27 $1.96 $0.91 $1.14 $1.79 $2.66 $1.97 $7.62 Copper selling price Current period copper sales (per lb) $3.14 $3.37 $2.89 $2.96 $3.28 $3.58 $2.97 $3.16 Prior period provisional adjustments 0.57 0.11 (0.35) (0.18) 0.23 0.02 (0.21) (0.02)(per lb)Gross copper selling price (per lb) 3.71 3.48 2.54 2.78 3.51 3.60 2.76 3.14 Tolling and refining charges (per (0.19) (0.19) (0.08) (0.06) (0.03) (0.05) (0.06) (0.05)lb) Freight parity charges (per lb) (0.16) (0.12) (0.14) (0.13) (0.10) (0.10) (0.14) (0.11)Realized copper price (per lb) 3.36 3.17 2.32 2.59 3.38 3.45 2.56 2.98Average LME cash copper price (per lb) 3.29 3.48 3.21 2.69 3.46 3.50 3.28 3.23Realized gold price (per oz) $631 $581 $628 $661 $629 $700 $736 $696Average gold price (per oz) $627 $622 $614 $650 $667 $681 $788 $697 Total copper sold (tonnes)(3) 48,094 46,302 41,454 44,315 45,366 60,904 73,322 223,907Total copper produced (tonnes) (3) 49,180 45,480 46,531 46,403 49,979 57,565 72,746 226,693Total gold sold (ounces) (3) 9,611 8,864 6,944 12,004 19,422 29,182 40,081 100,689 Cash Costs (C1) (per lb) (4) (5) $0.89 $1.00 $1.14 $1.06 $1.12 $0.98 $0.98 $1.04Total Costs (C3) (per lb) (4) (5) $1.09 $1.23 $1.38 $1.30 $1.38 $1.22 $1.19 $1.27 Financial PositionWorking capital (restated) $245.6 $308.0 $312.8 $246.7 $390.8 $464.8 $457.3 $457.3Copper in concentrate inventory(tonnes) Kansanshi 8,389 7,242 9,046 7,102 10,578 9,733 8,325 8,325 Guelb Moghrein - 2,345 6,068 10,182 10,897 8,483 2,867 2,867 Frontier - - - - - - 7,104 7,104 Total copper in concentrate 8,389 9,587 15,114 17,284 21,475 18,216 18,296 18,296inventory (tonnes)Total assets (restated) $1,398.1 $1,574.0 $1,719.7 $1,797.1 $2,035.4 $2,300.4 $2,682.7 $2,682.7Weighted average # shares (000's) 64,564 66,615 67,287 67,318 67,531 67,681 67,689 67,394 Cash Flows fromOperating activitiesBefore working capital movements $213.5 $176.3 $70.6 $118.9 $175.2 $256.9 $220.8 $771.8(restated)After working capital movements 142.5 118.3 129.3 74.6 40.5 201.6 224.1 540.8(restated)Financing activities (restated) 32.1 (58.6) 53.1 (25.8) 38.0 (42.8) 50.6 20.0Investing activities (restated) (91.8) (60.1) (122.8) (102.0) (114.8) (96.2) (297.3) (610.3)Cash Flows from Operating activitiesper shareBefore working capital movements $3.31 $2.65 $1.05 $1.77 $2.59 $3.80 $3.26 $11.45(restated)After working capital movements $2.21 $1.77 $1.92 $1.11 $0.60 $2.98 $3.29 $8.01(restated) Summary of Quarterly and Current Year to Date Results (unaudited) (continued) 2006 2006 2006 2007 2007 2007 2007 2007 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY Kansanshi Production Statistics Mining Waste mined (000's tonnes) 5,516 6,683 7,123 5,316 6,681 6,482 6,482 24,961 Ore mined (000's tonnes) 2,552 3,220 2,380 2,600 3,371 4,650 4,867 15,488 Ore grade (%) 1.4 1.4 1.4 1.5 1.6 1.6 1.8 1.6 Processing (3) Sulphide Ore processed (000's tonnes) 1,140 1,277 1,212 1,171 1,372 1,759 1,830 6,132 Oxide Ore processed (000's tonnes) 1,246 1,401 1,080 1,263 1,499 1,465 1,538 5,765 Contained copper (tonnes) 36,981 32,882 31,545 38,231 36,766 41,605 51,572 168,174 Sulphide ore grade processed (%) 1.6 1.2 0.9 0.8 1.1 1.0 1.3 1.1 Oxide ore grade processed (%) 1.5 1.2 1.6 1.8 1.4 1.7 1.6 1.7 Recovery (%) 94 95 92 93 99 99 99 97 Copper cathode produced (tonnes) 17,501 17,158 17,201 22,823 20,322 23,705 26,399 93,249 Copper cathode tolled produced (tonnes) 1,186 3,036 1,805 5,521 12,204 14,314 16,142 48,181 Copper in concentrate produced (tonnes) 16,924 11,984 10,015 7,056 3,727 3,140 8,471 22,394 Total copper production 35,611 32,178 29,021 35,400 36,253 41,159 51,012 163,824 Concentrate grade (%) 25.8 26.4 26.9 25.2 26.6 27.8 28.3 27.2 Combined Costs (per lb) (4) (5)Mining $0.14 $0.23 $0.21 $0.20 $0.24 $0.24 $0.20 $0.22Processing 0.44 0.50 0.62 0.54 0.59 0.59 0.53 0.56Site Administration 0.04 0.04 0.04 0.03 0.02 0.03 0.03 0.03TC RCs and freight parity charges 0.42 0.31 0.27 0.14 0.16 0.15 0.18 0.17Gold / Acid credit (0.08) (0.07) (0.05) (0.06) (0.06) (0.07) (0.09) (0.08)Combined Total Cash Costs (C1) $0.96 $1.01 $1.09 $0.85 $0.95 $0.94 $0.85 $0.90Combined Total Costs (C3) $1.13 $1.23 $1.28 $1.05 $1.17 $1.13 $0.86 $1.04 Oxide Circuit Costs (per lb) (4) (5) Mining $0.13 $0.19 $0.15 $0.16 $0.22 $0.19 $0.18 $0.18 Processing 0.52 0.54 0.70 0.56 0.68 0.64 0.64 0.63 Site Administration 0.01 0.02 0.04 0.03 0.02 0.03 0.03 0.03 Oxide Circuit Total Cash Costs (C1) $0.66 $0.75 $0.89 $0.75 $0.92 $0.86 $0.85 $0.84 Oxide Circuit Total Costs (C3) $0.84 $0.96 $1.05 $0.92 $1.12 $1.02 $0.86 $0.97 Sulphide Circuit Costs (per lb) (4) (5) Mining $0.13 $0.20 $0.20 $0.28 $0.26 $0.32 $0.23 $0.27 Processing 0.35 0.45 0.52 0.45 0.48 0.52 0.39 0.45 Site Administration 0.02 0.02 0.04 0.03 0.02 0.03 0.03 0.03 TC RCs and freight parity charges 0.89 0.73 0.62 0.42 0.39 0.35 0.39 0.39 Gold / Acid credit (0.17) (0.16) (0.13) (0.18) (0.14) (0.17) (0.20) (0.17) Sulphide Circuit Total Cash Costs (C1) $1.22 $1.24 $1.25 $1.00 $1.01 $1.05 $0.84 $0.97 Sulphide Circuit Total Costs (C3) $1.39 $1.47 $1.49 $1.25 $1.24 $1.29 $0.86 $1.13 Revenues ($ millions) (3) Copper cathodes $142.3 $158.6 $110.9 $175.8 $249.1 $307.1 $268.0 $1,000.0 Copper in concentrates 109.6 65.3 20.1 42.6 6.9 16.0 37.2 102.7 Gold 6.0 5.2 2.8 4.8 4.7 6.3 10.2 26.0 Total revenues $257.9 $229.1 $133.8 $223.2 $260.7 $329.4 $315.4 $1,128.7 Copper cathode sold (tonnes) 17,568 17,181 17,360 22,798 20,207 24,909 27,897 95,811 Copper tolled cathode sold (tonnes) 1,186 3,036 1,805 5,521 12,204 14,314 16,142 48,181 Copper in concentrate sold (tonnes) 15,692 13,131 8,215 9,000 250 2,696 7,927 19,873 Gold sold (ounces) 9,611 8,864 4,428 7,764 7,118 9,862 16,053 40,797 Summary of Quarterly and Current Year to Date Results (unaudited) (continued) 2006 2006 2006 2007 2007 2007 2007 2007 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FYBwana/Lonshi Production StatisticsMiningWaste mined (000's tonnes) 5,607 5,915 4,081 2,105 3,425 2,992 1,732 10,254Ore mined (000's tonnes) 183 110 80 16 94 160 82 352Ore grade (%) 10.7 11.9 10.4 7.5 6.1 6.8 6.1 6.5ProcessingOxide Ore processed (000's tonnes) 314 322 294 242 327 353 355 1,277Contained copper (tonnes) 15,625 15,011 13,037 5,007 7,653 9,819 6,787 29,266Oxide ore grade processed (%) 5.0 4.7 4.3 2.1 2.3 2.8 1.9 2.3Recovery (%) 87 89 96 91 87 85 86 87Copper cathode produced (tonnes) 13,569 13,302 12,479 4,557 6,676 8,305 5,864 25,402Acid produced (tonnes) 71,421 63,830 73,901 67,227 69,108 67,537 72,477 276,349Surplus acid (tonnes) 910 508 8 586 1,483 11 - 2,080Oxide Circuit Costs (per lb) (4) (5)Mining $0.32 $0.50 $0.60 $1.49 $1.57 $1.04 $1.37 $1.34Processing 0.35 0.38 0.43 1.05 0.81 0.65 0.90 0.82Site Administration 0.10 0.10 0.07 0.20 0.15 0.21 0.35 0.23Gold / Acid credit (0.08) (0.06) (0.09) (0.24) (0.14) (0.09) (0.17) (0.15)Oxide Circuit Total Cash Costs (C1) $0.69 $0.92 $1.01 $2.50 $2.39 $1.81 $2.45 $2.24Oxide Circuit Total Costs (C3) $0.98 $1.18 $1.26 $2.92 $2.77 $2.25 $2.81 $2.63Revenues ($ millions)Copper cathodes $104.5 $99.2 $75.4 $22.1 $41.2 $66.1 $37.1 $166.5 Copper cathodes sold (tonnes) 13,648 12,954 12,766 4,664 6,369 8,471 5,898 25,402 Guelb Moghrein Production StatisticsMiningWaste mined (000's tonnes) 1,721 1,660 1,719 1,610 1,400 1,487 1,358 5,855Ore mined (000's tonnes) 144 179 400 462 539 674 650 2,325Ore grade (%) 1.9 1.8 1.5 1.4 1.4 1.3 1.4 1.4Processing (3)Sulphide Ore processed (000's tonnes) - - 334 410 464 509 470 1,853Contained copper (tonnes) - - 6,552 7,791 8,894 10,006 8,410 35,101Sulphide ore grade processed (%) - - 2.0 1.9 1.9 2.0 1.8 1.9Recovery (%) - - 78 83 79 81 85 82Copper in concentrate produced - - 5,031 6,446 7,050 8,101 7,158 28,755(tonnes)Gold in concentrate produced (ounces) - - 10,355 13,588 12,814 14,699 13,060 54,161Sulphide Circuit Costs (per lb) (4)(5)Mining - - $0.40 $0.21 $0.17 $0.12 $0.20 $0.18Processing - - 0.77 0.56 0.52 0.47 0.64 0.56Site Administration - - 0.08 0.07 0.06 0.07 0.22 0.11TC RCs and freight parity charges - - 0.86 0.66 0.43 0.38 0.57 0.51Gold / Acid credit - - (0.15) (0.21) (0.48) (0.78) (1.26) (0.71)Sulphide Circuit Total Cash Costs (C1) - - $1.96 $1.29 $0.71 $0.26 $0.37 $0.65Sulphide Circuit Total Costs (C3) - - $2.45 $1.66 $1.09 $0.76 $1.05 $1.15Revenues ($ millions) (3)Copper in concentrates - - $5.6 $12.8 $41.2 $74.1 $55.3 $183.4Gold - - 1.6 3.1 7.6 14.1 19.3 44.1 Total revenues - - $7.2 $15.9 $48.8 $88.2 $74.6 $227.5 Copper in concentrate sold (tonnes) - - 1,308 2,332 6,336 10,514 12,774 31,956Gold sold (ounces) - - 2,516 4,240 12,304 19,320 24,028 59,892 Summary of Quarterly and Current Year to Date Results (unaudited) (continued) 2006 2006 2006 2007 2007 2007 2007 2007 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FYFrontier Production StatisticsMiningWaste mined (000's tonnes) - - - 888 2,857 3,619 2,810 10,174Ore mined (000's tonnes) - - - 81 160 1,442 2,042 3,725Ore grade (%) - - - 1.1 0.9 1.0 1.2 1.1Processing (3)Sulphide Ore processed (000's tonnes) - - - - - - 835 835Contained copper (tonnes) - - - - - - 11,872 11,872Sulphide ore grade processed (%) - - - - - - 1.4 1.4Recovery (%) - - - - - - 73 73Copper in concentrate produced (tonnes) - - - - - - 8,712 8,712Sulphide Circuit Costs (per lb) (4)Mining - - - - - - $0.41 $0.41Processing - - - - - - 0.32 0.32Site Administration - - - - - - 0.17 0.17TC RCs and freight parity charges - - - - - - 0.39 0.39Sulphide Circuit Total Cash Costs (C1) - - - - - - $1.29 $1.29Sulphide Circuit Total Costs (C3) - - - - - - $1.59 $1.59Revenues ($ millions) (3)Copper in concentrates - - - - - - $16.1 $16.1 Copper in concentrate sold (tonnes) - - - - - - 2,684 2,684 (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. (5) Mining costs included in cash and total costs have been restated to reflect the removal of the deferredstripping accounting policy and the retroactive restatement of prior period balances. Consolidated Balance SheetAs at December 31, 2007 and December 31, 2006(unaudited, expressed in millions of US dollars, except where indicated) 2007 2006 $ $ restated - note 2 AssetsCurrent assetsCash and cash equivalents (note 19) 200.0 249.5Restricted cash (note 10) 22.5 15.0Accounts receivable 272.0 142.8Inventory (note 6) 279.4 167.3Current portion of other assets (note 9) 12.7 10.1 786.6 584.7Investments (note 7) 567.0 45.2Property, plant and equipment (note 8) 1,308.4 1,068.1Other assets (note 9) 20.7 21.7 2,682.7 1,719.7LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities 104.9 84.8Current taxes payable 127.2 110.0Current portion of long-term debt (note 10) 73.7 57.7Current portion of other liabilities (note 11) 23.5 19.4 329.3 271.9Long-term debt (note 10) 287.5 237.2Other liabilities (note 11) 40.1 38.3Future income tax liabilities (note 13) 224.4 167.3 881.3 714.7Minority interests 215.4 85.2 1,096.7 799.9Shareholders' equityCapital stock 396.0 396.0Retained earnings 987.4 523.8Accumulated other comprehensive income 202.6 - 1,586.0 919.8 2,682.7 1,719.7 Commitments (note 20) 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 IncomeFor the years ended December 31, 2007 and 2006(unaudited, expressed in millions of US dollars, except where indicated) 2007 2006 $ $ restated - note 2 Sales revenues Copper 1,468.7 1,074.0 Gold 70.1 20.1 Acid 0.4 0.4 1,539.2 1,094.5Cost of sales (544.3) (288.6)Depletion and amortization (81.2) (56.1) 913.7 749.8Other expenses/income Exploration (20.3) (18.9) General and administrative (28.0) (19.2) Interest and finance costs (28.9) (32.7) Other expenses/income (note 16) (2.0) (55.6) (79.2) (126.4) Earnings before income taxes and minority interests 834.5 623.4Income taxes (note 13) (182.8) (161.1)Minority interests (131.4) (62.9) Net earnings for the year 520.3 399.4 Comprehensive incomeNet earnings for the year 520.3Other comprehensive income Unrealized gain on available-for-sale securities, net of tax of 205.8 $41.2 million Realized gain on available-for-sale securities, net of tax of $0.1 (0.7) million, transferred to net earnings for the year 205.1 Comprehensive income 725.4 Earnings per common share Basic $7.72 $6.14 Diluted $7.62 $6.01Weighted average shares outstanding (000's) Basic 67,394 65,088 Diluted 68,246 66,442Total shares issued and outstanding (000's) 68,108 67,291 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. Statements of Changes in Shareholders' EquityFor the years ended December 31, 2007 and 2006(unaudited, expressed in millions of US dollars, except where indicated) 2007 2006 $ $ restated - note 2Capital stockCommon shares (note 14a)Balance - beginning of year 399.6 160.7 Stock options exercised (note 14a) 15.6 4.0 Shares issued on acquisition of Adastra (note 5) - 234.9 Balance - end of year 415.2 399.6Treasury shares (note 14b)Balance - beginning of year (15.6) - Shares purchased (note 14b) (21.3) (15.6) Restricted stock units vested (note 14b) 2.6 - Balance - end of year (34.3) (15.6)Contributed surplusBalance - beginning of year 12.0 5.8 Compensation expense for the year 9.8 6.7 Transfers upon exercise of stock options (4.1) (0.5) Transfers upon vesting of restricted stock units (2.6) - Balance - end of year 15.1 12.0 Total capital stock 396.0 396.0 Retained earningsBalance - beginning of year 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 year 520.3 399.4Dividends (51.7) (20.1) Balance - end of year 987.4 523.8 Accumulated other comprehensive incomeBalance - beginning of year - Change in accounting policy (note 2b) (2.5) Increment in fair value of available-for-sale securities, net of 205.1 realized gains Balance - end of year 202.6 Retained earnings and accumulated other comprehensive income 1,190.0 523.8 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 FlowsFor the years ended December 31, 2007 and 2006(unaudited, expressed in millions of US dollars, except where indicated) 2007 2006 $ $ restated - note 2 Cash flows from operating activitiesNet earnings for the year 520.3 399.4Items not affecting cash Depletion and amortization 81.2 56.1Minority interests 131.4 62.9Unrealized foreign exchange loss 4.0 4.6Future income tax expense 21.6 16.6Stock-based compensation expense 9.8 6.7Unrealized derivative instruments (gain) loss (1.6) 5.6Other 5.1 12.3 771.8 564.2Change in non-cash operating working capitalIncrease in accounts receivable (136.1) (81.8)Increase in inventory (106.9) (99.1)Increase in accounts payable and accrued liabilities 15.3 12.5Increase in current taxes payable 17.2 94.0Long term incentive plan contributions (note 14b) (21.3) (15.6) 540.0 474.2Cash flows from financing activitiesProceeds from long-term debt 125.0 307.0Repayments of long-term debt (55.7) (251.5)Payment of financing fees for long-term debt - (10.8)Proceeds on issuance of common shares 11.5 3.5Dividends paid (51.7) (20.1)Deferred premium obligation paid (9.1) (9.2)Other - (5.5) 20.0 13.4Cash flows from investing activitiesRestricted cash (7.5) 5.2Payments for property, plant and equipment (319.6) (264.3)Acquisition of Adastra Minerals Inc. (note 5) - (27.8)Acquisition of investments - net (283.2) (33.9) (610.3) (320.8) Effect of exchange rate changes on cash 0.8 (0.2)(Decrease) increase in cash and cash equivalents (49.5) 166.6Cash and cash equivalents - beginning of year 249.5 82.9 Cash and cash equivalents - end of year 200.0 249.5 The accompanying notes are an integral part of these consolidated financial statements. For a copy of the notes visit the Company's website at www.first-quantum.com. Segmented InformationFor the years ended December 31, 2007 and 2006(unaudited, expressed in millions of US dollars, except where indicated) For the year ended December 31, 2007, segmented information is presented asfollows: 2007 Bwana/ Guelb Kansanshi Lonshi Moghrein Frontier Corporate Total $ $ $ $ $ $ Segmented revenues 1,128.7 204.4 227.5 16.1 17.5 1,594.2Less inter-segment revenues - (37.5) - - (17.5) (55.0) Revenues 1,128.7 166.9 227.5 16.1 - 1,539.2Cost of sales (339.4) (137.3) (62.8) (4.8) - (544.3)Depletion and amortization (48.6) (15.6) (15.6) (1.4) - (81.2) Operating profit 740.7 14.0 149.1 9.9 - 913.7Interest on long-term debt (7.9) (0.2) (9.6) (1.9) (9.3) (28.9)Other (21.1) (8.8) (1.0) (0.2) (19.2) (50.3) Segmented profit (loss) 711.7 5.0 138.5 7.8 (28.5) 834.5before undernoted itemsIncome taxes (181.5) (1.3) - (2.3) 2.3 (182.8)Minority interests (105.0) - (26.4) - - (131.4) Segmented profit 425.2 3.7 112.1 5.5 (26.2) 520.3 Property, plant and equipment 519.0 42.8 104.9 232.5 409.2 1,308.4Total assets 840.3 212.5 227.4 298.4 1,104.1 2,682.7Capital expenditures 156.9 9.0 12.3 121.7 25.3 325.2 For the year ended December 31, 2006, segmented information is presented asfollows: 2006 restated - note 2 Bwana/ Guelb Kansanshi Lonshi Moghrein Frontier Corporate Total $ $ $ $ $ $ Segmented revenues 745.7 374.4 7.2 - 14.7 1,142.0Less inter-segment revenues - (32.8) - - (14.7) (47.5) Revenues 745.7 341.6 7.2 - - 1,094.5Cost of sales (172.9) (111.9) (3.8) - - (288.6)Depletion and amortization (31.4) (23.6) (1.1) - - (56.1) Operating profit (loss) 541.4 206.1 2.3 - - 749.8Interest on long-term debt (30.7) (0.7) (0.6) - (0.7) (32.7)Other (63.0) (13.3) (1.4) - (16.0) (93.7) Segmented profit before 447.7 192.1 0.3 - (16.7) 623.4undernoted itemsIncome taxes (115.2) (49.2) - - 3.3 (161.1)Minority interests (62.9) - - - - (62.9) Segmented profit 269.6 142.9 0.3 - (13.4) 399.4 Property, plant and equipment 411.3 49.1 106.0 116.4 385.3 1,068.1Total assets 633.3 155.3 145.2 122.8 663.1 1,719.7Capital expenditures 111.0 2.4 44.9 106.5 384.6 649.4 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
FQM.L