Slide 1: First Quantum Minerals Ltd. May 2014
FIRST QUANTUM MINERALS LTD. TSX: FM; LSE: FQM & . = . OWwersified May 2014
Slide 2: Cautionary Note Regarding Forward-Looking Statement
Cautionary Note Regarding Forward-Looking Statement Some of the statements contained in the following material are forward-looking statements and not statement of facts. Such statements are based on the current beliefs of management, as well as assumptions based on management information currently a
Slide 3: First Quantum Minerals – At a Glance
First Quantum Minerals – At a Glance • A Global Company • Industry-Leading Growth – Operations and projects in 8 countries – 5 major projects under development – Production capacities to rise to 1.1 • High-Quality, Stable, Efficient Operations Mtpa for copper and 110 ktpa for nickel – 7 operations b
Slide 4: 2013 – A Transformative Year
2013 – A Transformative Year Successfully acquired Inmet Mining Corporation – Control of the Tier 1 Cobre Panama copper project – Added 3 well-run, low-cost operations Restructured financing and capital structure Advanced projects under development Record production at Flagship Kansanshi min
Slide 5: Main Areas of Focus
Main Areas of Focus INERALS LTD.
Slide 6: Cobre Panama – A Tier 1 Copper Project
Cobre Panama – A Tier 1 Copper Project • Acquired March 2013 • Critical review following acquisition – Focused mainly on Engineering, Contracts and Construction initially – Copied major areas of the design of the almost-complete Sentinel process plant • Made significant changes – Unwound ~US$1.7B of
Slide 7: Cobre Panama – A Tier 1 Copper Project
Cobre Panama – A Tier 1 Copper Project • A larger, more robust project – Installed capacity Yrs 1-10 = ~70 Mtpa 17% higher than prior Expansion up to 100 Mtpa beyond Yr 10 – Average annual LOM* copper production of 320,000 tonnes ~ 20% higher than prior – Average annual LOM by-product producti
Slide 8: Cobre Panama – A Tier 1 Copper Project
Cobre Panama – A Tier 1 Copper Project • Capex estimate of $6.4 billion – inclusive of $913 million incurred prior to acquisition • Capital per installed tonne of capacity of $17,125 – ~25% lower than prior • A realistic and well-defined timeframe – 230 KV overland power line – Q4 ’15 – 300 MW power
Slide 9: Cobre Panama Project – Process Plant Site Earthworks
COBRE PANAMA PROJECT – PROCESS PLANT SITE EARTHWORKS 9
Slide 10: Cobre Panama Project – Mill Pad Earthworks
COBRE PANAMA PROJECT – MILL PAD EARTHWORKS 10
Slide 11: Cobre Panama Project – Process Plant Stockpile Pad
COBRE PANAMA PROJECT – PROCESS PLANT STOCKPILE PAD 11
Slide 12: Cobre Panama Project – Power Station Area
COBRE PANAMA PROJECT – POWER STATION AREA 12
Slide 13: Cobre Panama Project – Breakwater and Material Offloading Facility
COBRE PANAMA PROJECT – BREAKWATER AND MATERIAL OFFLOADING FACILITY 13
Slide 14: Advanced Projects – Copper Smelter Complex, Zambia
Advanced Projects Copper Smelter Complex, Zambia • Phase 1 – Processing capacity of 1.2 Mtpa – Combination of concentrate from Kansanshi & Sentinel – Average copper grade 26% • Copper production 300,000 Tpa; acid production 1.0 Mtpa • Commissioning from 2H2014 • Estimated savings: – US$340M - US$510
Slide 15: Phase 1 Smelter - Overview
Phase 1 Smelter - Overview 15
Slide 16: Phase 1 Smelter – Cold Box Lifts – April 2014
Phase 1 Smelter – Cold Box Lifts – April 2014 16
Slide 17: Advanced Projects – Sentinel, Zambia
Advanced Projects Sentinel, Zambia • Located ~ 140 km northwest of Solwezi, northern Zambia • M&I resource of 1,027 Mt at 0.51% Cu grade, containing 5.2 Mt Cu • Estimates: – 2.2:1 LOM strip ratio – >15 years mine life – Annual production up to 300,000 tonnes – US$2.0B capex (incl. Enterprise nickel
Slide 18: Advanced Projects – Sentinel Cu project, Zambia
Advanced Projects Sentinel Cu project, Zambia • 55 Mtpa target throughput • 3 semi-mobile in pit crushers and assembly of large scale mining equipment • Largest operating SAG/Ball mill trains in the world (100MW milling power) • 265,000t of freight = 14,500 truckloads of materials • 2 rivers to be d
Slide 19: Sentinel – 80 Meter Feed Shuttle Conveyor Truss - April 2014
Sentinel – 80 Meter Feed Shuttle Conveyor Truss - April 2014 19
Slide 20: Sentinel – 80 Meter Feed Shuttle Conveyor Truss - April 2014
Sentinel – 80 Meter Feed Shuttle Conveyor Truss - April 2014 20
Slide 21: Advanced Projects – Sentinel 100MW Milling
Advanced Projects – Sentinel 100MW Milling – 2 x 40’SAG Mills + 2 x 28’Ball Mills 21
Slide 22: Advanced Projects – Sentinel Senior Housing
Advanced Projects – Sentinel Senior Housing SPORTS FACILITY 04-NOV-2013 SENIOR HOUSING - SINGLES 31-MAR-2013 SENIOR HOUSING AREA 28-FEB-2013 TRIDENT PREPARATORY SCHOOL 05-NOV-2013 22
Slide 23: Advanced Projects – Sentinel Affordable Housing
Advanced Projects – Sentinel Affordable Housing AFFORDABLE HOUSING LAYOUT TEACHER’S HOME 3-JAN-2014 TRUST SCHOOL 05-NOV-2013 COMPLETED 4-BEDROOM HOUSE 3-JAN-2014 23
Slide 24: Optimized Capital Structure & Financial Flexibility
Optimized Capital Structure & Financial Flexibility Refinanced the short-term US$2.5B revolver at FQM (Akubra) with a $1.2 billion Term Loan Facility five-year Term and and a $1.8 billion Revolving Credit Facility Exchanged the FQM (Akubra) Inc. US$1.49B 8.75% 2020 and US$500M 7.50% 2021 notes f
Slide 25: Illustrative Pro Forma Corporate Structure Chart
Illustrative Pro Forma Corporate Structure Chart As at March 31, 2014 25
Slide 26: One of the Few Mining Companies Investing in Building Capacity
One of the Few Mining Companies Investing in Building Capacity
Slide 27: A Small Copper Surplus Now, But…
Current State of the Copper Industry A Small Copper Surplus Now, But….. • EXPLORATION – Majors have cut back on exploration and juniors are mainly un-financeable – It takes 12-15 years to get from discovery to production • BROWN FIELD EXPANSIONS – Should be lower capital intensity but are not – Capi
Slide 28: Results in a Looming Deficit
Current State of the Copper Industry Results in a Looming Deficit 28
Slide 29: Lack of Supply Response to Price Was Staggering Over 2006-2012 Period
Lack of Supply Response to Price Was Staggering Over 2006-2012 Period Global copper mine supply growth and price 10% 400 Copper mine supply growth % YoY 9% 350 8% 7% 7% 7% 7% 300 Copper price, cents/lb 6% 5% 250 4% 4% 4% 200 3% 3% 3% 2% 2% 2% 150 2% 1% 1% 0% 1% 0% 100 0% 0% 0% 0% 50 -1% -1% -2% 0 19
Slide 30: So why is the industry cutting investment?
So The Seeds of The Next Copper Price Bubble are Already Sown AND it is Coming Soon So why is the industry cutting investment? • Pressure from shareholders who have a much shorter time horizon than miners This is not going to change • There is not much out there that the majors want With the cut-bac
Slide 31: Why is Capital Intensity Rising?
Why is Capital Intensity Rising? Average Copper Grades • Falling grades • Difficult geographies • Geopolitics Source: Brook Hunt, Freeport McMoRan 31
Slide 32: As Head Grades Fall, Capital Intensity Rises Rapidly
As Head Grades Fall, Capital Intensity Rises Rapidly Weighted average copper project by year of delivery 1.8 2000-2011 2002 1.6 2007 2012-2018f 1.4 2005 Average head grade 1.2 2001 1 0.8 2012 2000 2011 2006 2008 2009 2013f 0.6 2016f 2010 0.4 2017f 2004 2018f 2014f 0.2 2015f 0 0 5000 10000 15000 2000
Slide 33: But it is Possible to Build Projects Efficiently
But it is Possible to Build Projects Efficiently Capital Intensity (US$ / t) Galeno (Minmetals) Cobre Panama (First Quantum) Las Bambas (Xstrata) Tampakan (Xstrata) Toromocho (Chinalco) Sierra Gorda (KGHM) Ministro Mina Hales (Codelco) Oyu Tolgoi (Rio Tinto) Los Bronces (Anglo American) Las Cruces (
Slide 34: Cobre Panama Has Substantially Lower Capital Intensity
Cobre Panama Has Substantially Lower Capital Intensity Compared to Other Projects with Similar Start-Up Horizons Weighted average copper project by year of delivery 1.8 2000-2011 2002 1.6 2007 2012-2018f 1.4 2005 Average head grade 1.2 2001 1 COBRE PANAMA 0.8 2012 2000 2011 2006 2008 2009 2013f 0.6
Slide 35: High-Quality, Stable Operations
High-Quality, Stable Operations 35
Slide 36: Kansanshi Cu-Au mine, Zambia
High-Quality, Stable Operations Kansanshi Cu-Au mine, Zambia • Located near Solwezi in the north western Province of Zambia • First production in 2005 • Open pit mining • Flexible ore treatment to allow for variation in ore type : – sulphide circuit; oxide circuit; gold facility • As at December 31,
Slide 37: Kansanshi Cu-Au mine, Zambia
High-Quality, Stable Operations Kansanshi Cu-Au mine, Zambia • Q1 2014 – 71 kt of copper Expansion Estimate Production – 40 kozs of gold Project Capacity Completion Cost Impact – $1.57/lb copper C1 cash cost (US$M) • 2014 outlook Oxide 7.2 Mtpa Complete 34 Copper: 10,000 - 15,000 Tpa – 255 to 270 kt
Slide 38: Guelb Moghrein Cu-Au mine, Mauritania
High-Quality, Stable Operations Guelb Moghrein Cu-Au mine, Mauritania • 100% ownership • Located 250 kilometres northeast of the nation’s capital, Nouakchott • As at December 31, 2013, the estimated mine life was ~ 8 years (including stockpiles) based on current operations • First production in 2006
Slide 39: Guelb Moghrein Cu-Au mine, Mauritania
High-Quality, Stable Operations Guelb Moghrein Cu-Au mine, Mauritania • Q1 ‘14 – 9 kt tonnes of copper – 14 kozs of gold – $1.56/lb copper C1 cash cost • 2014 Outlook – 36 to 39 kt of copper – 55 to 60 k ozs of gold • Magnetite plant project: – In detailed design stage – Estimated capex of $50M – Ex
Slide 40: Ravensthorpe Ni mine, Australia
High-Quality, Stable Operations Ravensthorpe Ni mine, Australia • Acquired as a decommissioned plant in 2010 • First production within 20 months of purchase • Estimated mine life of 32 years • Commercial production declared Dec 2011 • Workforce = ~428 • Q1 ’14 – 9 kt of nickel @ $4.02/lb C1 cash cos
Slide 41: Kevitsa Ni-Cu-PGE mine, Finland
High-Quality, Stable Operations Kevitsa Ni-Cu-PGE mine, Finland • Built, commissioned and started commercial operations within 36 months of board approval • Estimated mine life of 29 years • Commercial production declared August 2012 • Workforce = ~337 • Further potential – Process optimization – Ap
Slide 42: Las Cruces Cu mine, Spain
High-Quality, Stable Operations Las Cruces Cu mine, Spain • Acquired in March 2013 • Estimated mine life of 9 years; potential for extension • Current average reserve grade of 5.4% copper • Workforce = ~254 • Q1 ’14 – 19 Kt of copper; $0.98/lb copper C1 cash cost • 2014 Outlook – 69 to 72 kt of copp
Slide 43: Çayeli Cu-Zn mine, Turkey
High-Quality, Stable Operations Çayeli Cu-Zn mine, Turkey • Acquired in March 2013 • Estimated mine life of 6 years with potential for an additional 3 years • Average grade of 3.1% copper and 3.6% zinc • Workforce = ~520 employees • Q1 ’14 – 7 kt of copper; 10 kt of zinc – $0.76/lb copper C1 cash co
Slide 44: Pyhäsalmi Cu-Zn mine, Finland
High-Quality, Stable Operations Pyhäsalmi Cu-Zn mine, Finland • Acquired in March 2013 • One of the most efficient underground mines in the world • Estimated mine life of 6 years • Average grade of 1.05% copper and 1.79% zinc • Workforce = ~228 employees • Q1 ’14 – 4 kt of copper; 5 kt of zinc – $0.
Slide 45: Strong Q1 2014 Results
Strong Q1 2014 Results • Production up – Copper up 43% to 113,118 tonnes – Nickel up 7% to 11,838 tonnes – Gold up 8% to 60,164 ounces – Platinum and palladium up 22% to 15,342 ounces • Cash cost lowered – Copper down 9% to $1.38 per pound – Nickel down 18% to $4.37 per pound • Comparative net earni
Slide 46: Full Year 2014 Guidance
Full Year 2014 Guidance • Production - Copper between 418,000 - 444,000 tonnes - Nickel between 42,000 - 47,000 tonnes - Gold between 221,000 - 246,000 ounces - Zinc between 59,000 - 65,000 tonnes - Palladium and platinum between 22,000 - 24,000 ounces each • C1 cash cost - Copper between $1.32 - $1
Slide 47: First Quantum Minerals Ltd. May 2014
FIRST QUANTUM MINERALS LTD. May 2014