First Quantum Minerals Ltd. (TSX: FM) reports results for the three months ended March 31, 2023 of net earnings attributable to shareholders of the Company of $75 million ($0.11 earnings per share) and adjusted earnings¹ of $76 million ($0.11 adjusted earnings per share²).

“The first quarter was difficult with production impacted at our three largest operations. At Cobre Panamá, production was interrupted by a temporary suspension of exports but returned to full production rates once the suspension was lifted. Our Zambian operations experienced a seasonal impact, however, the rainy season is nearing an end. We are focused on improving operational performance and expect production to recover over the course of the year and, as such, we remain committed to our guidance for 2023,” commented Tristan Pascall, Chief Executive Officer. “The first quarter also had important milestones, including a refreshed contract with the Government of Panamá and a new partnership with Rio Tinto to progress the La Granja project in northern Peru. The Company also successfully executed on two of our brownfield projects. Commissioning of the CP100 Expansion was completed ahead of schedule and remains on track to achieve 100 million tonnes of throughput per annum by the end of this year and we introduced first ore through the Enterprise nickel plant. Both of these projects will increase our copper and nickel production, two metals that are critical to the global transition to cleaner energy.”

Q1 2023 SUMMARY

In Q1 2023, First Quantum reported gross profit of $280 million, EBITDA¹ of $518 million, net earnings attributable to shareholders of $0.11 per share, and adjusted earnings of $0.11 per share². Relative to the fourth quarter of last year, first quarter financial results were impacted by lower sales volumes as a result of lower production that was partially mitigated by lower input costs and stronger realized copper and gold prices.

Total copper production for the first quarter was 138,753 tonnes, a 33% decrease from Q4 2022. The quarter-over-quarter decrease in production was attributable to a 15-day temporary suspension of production at Cobre Panamá and the rainy season in Zambia, with Sentinel receiving its highest rainfall in 25 years. Kansanshi continued to experience lower feed grades across all three circuits.

Copper C1 cash cost² of $2.24 per lb for Q1 2023 was $0.38 per lb higher than Q4 2022. While market rates for fuel and freight were, on average, lower in the first quarter of 2023, these benefits were more than offset by lower production levels.

2023 guidance on production, C1 cash costs², all-in sustaining cost (“AISC”)² and capital expenditures that was previously disclosed on January 16, 2023 remains unchanged. For 2023, copper production is forecast to be 770,000 to 840,000 tonnes. Production is expected to recover for each of the next three quarters, particularly in the second half of the year. Copper C1 cash costs¹ are guided to be $1.65 to $1.85 per lb. Capital cost guidance for 2023 is $1,600 million.

¹ EBITDA and adjusted earnings are non-GAAP financial measures. These measures do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
² Adjusted earnings per share, copper C1 cash cost (copper C1), and all-in sustaining costs (AISC) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.

Q1 2023 OPERATIONAL HIGHLIGHTS

Total copper production for Q1 2023 was 138,753 tonnes, down from the 206,007 tonnes reported in Q4 2022 as each of the Company’s three largest operations had negative production impacts during the period. Copper sales volumes in Q1 2023 totalled 150,287 tonnes, 11,534 tonnes higher than production.

• Cobre Panamá produced 65,427 tonnes of copper in Q1 2023, a decrease of 24,225 tonnes from the previous quarter as production was interrupted on February 23, 2023 for 15 days as a result of export restrictions imposed by the Maritime Port Authority. Following a resolution issued by the AMP, concentrate loading recommenced on March 9, 2023 with a record number of vessels loaded in March. Throughput returned to full capacity on March 10, 2023, two days after the restart of operations. Copper C1 cash cost¹ of $1.65 per lb was $0.02 per lb higher than the previous quarter mainly attributable to lower production levels. The commissioning of the CP100 Expansion was completed in the first quarter and the annualized throughput rate of 100 million tonnes per annum (“Mtpa”) remains on schedule for the end of the year. 2023 Production guidance for Cobre Panamá remains unchanged at 350,000 to 380,000 tonnes of copper and 140,000 to 160,000 ounces of gold. For the full year 2023, grades and recoveries are expected to be broadly consistent with 2022 regardless of the increased processing throughput, with some fluctuation from quarter to quarter. Construction of the molybdenum plant is progressing well, with completion of construction and commencement of commissioning expected by the end of 2023 with first production expected in Q1 2024.
• Kansanshi’s copper production of 28,683 tonnes in Q1 2023 was 6,119 tonnes lower than the previous quarter due to the seasonal impact of the rainy season and lower feed grades across all three circuits, particularly from the M11 area at lower elevations in the main pit. Variability of grades in ore stockpiles and lower grades from narrow-veined regions were the main drivers behind the lower grades. Copper C1 cash cost¹ of $2.88 per lb was $0.07 higher than Q4 2022 mainly due to lower production volumes despite an improvement in input costs. Production in 2023 is expected to be 130,000 to 150,000 tonnes of copper and 95,000 to 105,000 ounces of gold. Mining fleet deployment changes over the past six months have enabled the operation to open up mining areas, placing less reliance on variable grade ore stockpiles, as well as mining cutbacks M15 and M17 at upper elevations in the main pit with historically higher grades, which will benefit production through the rest of 2023. An extensive drilling campaign is ongoing in areas associated with vein mineralization prior to mining.
• Sentinel reported copper production of 36,232 tonnes in Q1 2023, 37,177 tonnes lower than the previous quarter due to the intense rainy season, resulting in the accumulation of water in the Stage 1 pit. Saturated ground conditions significantly impacted mining rates due to poor road conditions and water in the pit prevented access to working faces, particularly in the lower benches of Stage 1. Copper C1 cash cost¹ of $2.70 per lb was $1.15 per lb higher than the preceding quarter reflecting the lower production volumes. Despite the challenges encountered during the first quarter, copper production for 2023 remains unchanged at 260,000 to 280,000 tonnes as higher feed grades are expected in the second half of the year, with grades showing improvement already in April. The current focus on deploying additional dewatering capacity in Stage 1 to regain access to the high-grade ore is already yielding results early in the second quarter. The mine plan has been rescheduled, even if total volumes remain substantively the same and higher grade zones will be dispatched across the remaining three quarters of the year. This is to be complemented by a change in location of the in-pit ramps to liberate high-grade ore by mining the saddle zones between Stage 1 and Stage 2. There will also be a redistribution of loading equipment to better suit working areas and truck fleet capacity is planned to increase in the second quarter with the commissioning of an additional Liebherr T284, followed by two more in the second half of the year.
• Ravensthorpe payable nickel production of 4,344 tonnes was 106 tonnes lower than the fourth quarter. A major two week High Pressure Acid Leach train shutdown was performed during February. The shutdown ran according to schedule with all works being completed on time. Nickel C1 cash cost¹ was $9.34 per lb relatively unchanged from the preceding quarter. Production guidance for 2023 remains at 23,000 to 28,000 contained tonnes of nickel.

¹ C1 cash costs is a non-GAAP ratio which does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.

COBRE PANAMÁ UPDATE

During the quarter, the Company continued to engage in good faith discussions with the Government of Panamá and, on March 8, 2023, the Company and the GOP issued a press release announcing that an agreement was reached on the terms and conditions of the draft of a concession contract. The Refreshed Contract will have an initial 20-year term with a 20-year extension option and additional extensions for life of mine. The Refreshed Concession Contract is expected to be presented before the National Assembly of Panamá in the legislative term that commences on July 1, 2023, after having gone through a public consultation process and receipt of all required prior governmental approvals.

Once the agreement is signed and passed into law, payments to cover taxes and royalties up to the year-end 2022 of approximately $395 million are expected to be made within 30 days of the Refreshed Concession Contract being enacted into law. In addition, past due amounts payable for 2023 corporate tax instalments, withholding taxes and quarterly royalty payments will also be due 30 days after being enacted, without penalty or interest. It is intended that the charge relating to taxes and royalties up to the year-end 2022 be excluded from 2023 adjusted earnings. The expected taxes and royalties to the GOP relating to 2023 is $375 million. Any non-profit based top-up tax to meet the proposed minimum contribution is expected to be recognized within operating profit and impact AISC¹. The AISC¹ guidance range is unchanged and is able to accommodate the expected impact of between $0.00 per lb to $0.05 per lb. At current consensus pricing, the adjusted effective tax rate for the Group for the full year 2023 is expected to be between 35% and 40%.

¹ All-in sustaining costs is a non-GAAP ratio which does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.

KANSANSHI – CONVERSION OF ZCCM DIVIDEND RIGHTS TO ROYALTY RIGHTS

During the fourth quarter of 2022, an agreement was entered into between KMP and ZCCM-IH to convert ZCCM-IH’s dividend rights in KMP into royalty rights. The transaction was completed on April 4, 2023.

LA GRANJA

On March 30, 2023, the Company entered into an agreement with Rio Tinto to progress the next phase of the La Granja copper project in northern Peru. La Granja is one of the largest undeveloped copper resources in the world with a published Inferred mineral resource of 4.32 billion tonnes at 0.51% copper, and has potential for substantial expansion.

Under the terms of the agreement, the Company will acquire a 55% interest in La Granja for a consideration of $105 million and will become the operator of the project. The Company will then be responsible for the next $546 million of initial funding. Part of the initial funding will be used to complete a feasibility study, following which the remaining majority of the initial funding is expected to be spent on construction of the project following a positive investment decision. The transaction is expected to close before the end of the third quarter.

Work over the initial years is planned to continue to progress community engagement and the feasibility study. The feasibility study will focus on developing an updated geological resource and reserve model, which will require additional infill drilling to upgrade Inferred resources to Measured and Indicated categories. Additional metallurgical studies to establish optimal processing configurations are expected to be carried out in parallel, together with a high-level project layout and configuration of associated infrastructure requirements and logistical routes.

Further to the agreement on La Granja, First Quantum and Rio Tinto have also entered into a memorandum of understanding to support co-operation in relation to base metals development opportunities and the sharing of technology and know-how on certain mining methods, such as the application of trolley-assist and autonomous mining fleets.

BROWNFIELD PROJECTS

Construction for the CP100 Expansion project was completed seven weeks ahead of schedule and commissioning was completed in the first quarter. With these facilities now in daily operation, focus has moved onto ramping up these facilities over the course of the year to achieve a throughput rate of 100 Mtpa by the end of 2023. Significant progress has been made on the pre-strip work for the Colina pit and earthworks for the associated overland conveyor and in-pit crushing facility. The first crusher at Colina is expected to be commissioned in 2024.

At the S3 Expansion, detail design is progressing well. Long-lead mining fleet and long-lead process plant equipment have been ordered with deliveries commencing in the second half of 2023. Overall project procurement is approximately 25% committed as at the end of the quarter. The majority of the capital spend on the S3 Expansion is expected in late-2023 and 2024.

First ore through the Enterprise nickel plant was achieved on schedule in February 2023. Plant refurbishment, completion and commissioning activities were completed on schedule. First production of nickel is expected in the second quarter of 2023 and ramp up to commercial production will continue over the course of 2023, with ramp up to full plant throughput in 2024. 2023 production guidance for Enterprise is 5,000 to 10,000 contained tonnes of nickel.

At the Las Cruces Underground Project, the water concession license was granted in March 2023 and all permits are in place for project approval. The technical and study work on the polymetallic refinery project are expected to continue with all permits required to carry out the project now granted. The Las Cruces Underground Project is awaiting Board approval, which is not expected before the end of 2023 and will take into consideration prevailing economic conditions and the Company’s debt reduction objectives.

FINANCIAL HIGHLIGHTS

• Gross profit of $280 million and EBITDA¹ of $518 million for the first quarter were 22% and 20% lower, respectively, than the fourth quarter of last year due to lower metal sales volumes.
• Cash flows from operating activities of $299 million ($0.43 per share²) for the quarter were $62 million higher than the fourth quarter of last year due mainly to working capital movements related to trade and other receivables.
• Net debt¹ increased by $88 million during the quarter, taking the net debt¹ balance to $5,780 million as at March 31, 2023. As at March 31, 2023, total debt was $6,878 million (December 31, 2022, total debt was $7,380 million). The increase in net debt¹ and total debt¹ was attributable to timing of working capital cash flow and continued investment in the business. The Company continues to target a further $1 billion reduction in debt in the medium term.
• In the first quarter of 2023, the Company redeemed at par an aggregate principal amount of $850 million of the senior unsecured notes due 2024. $450 million was redeemed on February 25, 2023 and the remaining $400 million was redeemed on March 28, 2023. Following the redemptions, there are no outstanding senior unsecured notes due in 2024.

¹ EBITDA is a non-GAAP financial measures and net debt is a supplementary financial measure. These measures do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”
² Cash flows from operating activities per share, copper C1 cash cost (copper C1), and copper all-in sustaining cost (copper AISC) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.

ENVIRONMENT, SOCIAL AND GOVERNANCE

Reporting – The Company will publish its primary sustainability report, the 2022 ESG Report, in May 2023. The latest reports can be found in the ESG Analyst Centre on the Company’s website: https://www.first-quantum.com/English/sustainability/esg-analyst-centre/default.aspx. These include the TCFD-aligned Climate Change Reports, ESG Reports, Tax Transparency and Contributions to Government Reports, as well as Company’s sustainability policies.

Innovation driving sustainability – On March 1, 2023, Hitachi Construction Machinery Co. Ltd and the Company announced a technology partnership for the development of Hitachi Construction Machinery’s first battery mining trucks at the Kansanshi mine. As First Quantum seeks to lower the greenhouse gas intensity of copper produced, this initiative represents an important milestone towards future commercialization of battery technology to further decarbonize mining operations, consistent with the Company’s 2025 30% and 2030 50% GHG emissions reduction targets. It is expected that these battery dump trucks will be supplied to Kansanshi by December 2023 for feasibility trials as part of the commissioning of the Kansanshi S3 Expansion.

Health & Safety – The health and safety of the Company’s employees and contractors is a top priority and the Company is focused on the continuous strengthening and improvement of the safety culture at all of its operations. Tragically, on February 1, 2023, there was a fatal road traffic accident in the Sentinel pit involving a dump truck and a light vehicle. The site emergency response team attended immediately and the relevant local authorities were notified. This tragic incident is subject to internal and external investigation, as well as a Board review, and the Company is committed to improve practices from this incident.

CONSOLIDATED OPERATING HIGHLIGHTS

¹ Production is presented on a contained basis, and is presented prior to processing through the Kansanshi smelter.
² Sales include third-party sales of concentrate, cathode and anode attributable to Kansanshi (excluding copper anode sales attributable to Trident). Sales exclude the sale of copper anode produced from third-party concentrate purchased at Kansanshi. Sales of copper anode attributable to third party concentrate purchases were 9,120 tonnes for the three months ended March 31, 2023 (nil tonnes for the three months ended March 31, 2022).
³ Excludes refinery-backed gold credits purchased and delivered under the precious metal streaming arrangement (see “Precious Metal Stream Arrangement”).
⁴ Copper all-in sustaining cost (copper AISC), copper C1 cash cost (copper C1), and total cost of copper (copper C3) are non-GAAP ratios, which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
⁵ Excludes the sale of copper anode produced from third-party concentrate purchased at Kansanshi. Sales of copper anode attributable to third-party concentrate purchases were 9,120 tonnes for the three months ended March 31, 2023 (nil for the three months ended March 31, 2022).

REALIZED METAL PRICES¹

CONSOLIDATED FINANCIAL HIGHLIGHTS

¹ Net debt is a supplementary financial measure which does not have a standardized meaning under IFRS, and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures.
² EBITDA and adjusted earnings are non-GAAP financial measures, which do not have a standardized meaning under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Adjusted earnings have been adjusted to exclude items from the corresponding IFRS measure, net earnings attributable to shareholders of the Company, which are not considered by management to be reflective of underlying performance. The Company has disclosed these measures to assist with the understanding of results and to provide further financial information about the results to investors and may not be comparable to similar financial measures disclosed by other issuers. The use of adjusted earnings and EBITDA represents the Company’s adjusted earnings metrics. See “Regulatory Disclosures”.
³ Adjustments to EBITDA in 2023 relate principally to foreign exchange revaluations (2022 – foreign exchange revaluations and non-recurring costs relating to previously sold assets).
⁴ Adjusted earnings per share, realized metal prices, copper all-in sustaining cost (copper AISC), copper C1 cash cost (copper C1), and total cost of copper (copper C3) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.

COMPLETE FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS

The complete Consolidated Financial Statements and Management’s Discussion and Analysis for the three months ended March 31, 2023 are available at www.first-quantum.com and at www.sedar.com and should be read in conjunction with this news release.

REGULATORY DISCLOSURES

Non-GAAP and Other Financial Measures

EBITDA, ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE

EBITDA, adjusted earnings and adjusted earnings per share exclude certain impacts which the Company believes are not reflective of the Company’s underlying performance for the reporting period. These include impairment and related charges, foreign exchange revaluation gains and losses, gains and losses on disposal of assets and liabilities, one-time costs related to acquisitions, dispositions, restructuring and other transactions, revisions in estimates of restoration provisions at closed sites, debt extinguishment and modification gains and losses, the tax effect on unrealized movements in the fair value of derivatives designated as hedged instruments, and adjustments for expected phasing of Zambian VAT receipts.

¹ Other expenses includes a charge of $40 million for non-recurring costs in connection with previously sold assets for the quarter ended March 31, 2022.

REALIZED METAL PRICES

Realized metal prices are used by the Company to enable management to better evaluate sales revenues in each reporting period. Realized metal prices are calculated as gross metal sales revenues divided by the volume of metal sold in lbs. Net realized metal price is inclusive of the treatment and refining charges (TC/RC) and freight charges per lb.

OPERATING CASHFLOW PER SHARE

In calculating the operating cash flow per share, the operating cash flow calculated for IFRS purposes is divided by the basic weighted average common shares outstanding for the respective period.

NET DEBT

Net debt is comprised of bank overdrafts and total debt less unrestricted cash and cash equivalents.

CASH COST, ALL-IN SUSTAINING COST, TOTAL COST

The consolidated cash cost, all-in sustaining cost and total cost presented by the Company are measures that are prepared on a basis consistent with the industry standard definitions by the World Gold Council and Brook Hunt cost guidelines but are not measures recognized under IFRS. In calculating the C1 cash cost, AISC and C3, total cost for each segment, the costs are measured on the same basis as the segmented financial information that is contained in the financial statements.

C1 cash cost includes all mining and processing costs less any profits from by-products such as gold, silver, zinc, pyrite, cobalt, sulphuric acid, or iron magnetite and is used by management to evaluate operating performance. TC/RC and freight deductions on metal sales, which are typically recognized as a component of sales revenues, are added to C1 cash cost to arrive at an approximate cost of finished metal.

AISC is defined as cash cost plus general and administrative expenses, sustaining capital expenditure, deferred stripping, royalties and lease payments and is used by management to evaluate performance inclusive of sustaining expenditure required to maintain current production levels.

C3 total cost is defined as AISC less sustaining capital expenditure, deferred stripping and general and administrative expenses net of insurance, plus depreciation and exploration. This metric is used by management to evaluate the operating performance inclusive of costs not classified as sustaining in nature such as exploration and depreciation.

¹ Total cost of sales per the Consolidated Statement of Earnings in the Company’s unaudited condensed interim consolidated financial statements.
² C1 cash cost (C1), total costs (C3), and all-in sustaining costs (AISC) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
³ Sustaining capital and deferred stripping are non-GAAP financial measures which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
⁴ Excludes purchases of copper concentrate from third parties treated through the Kansanshi Smelter.

¹ Total cost of sales per the Consolidated Statement of Earnings in the Company’s unaudited condensed interim consolidated financial statements.
² C1 cash cost (C1), total costs (C3) and all-in sustaining costs (AISC) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
³ Sustaining capital and deferred stripping are non-GAAP financial measures which do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.