First Quantum Minerals Ltd. · TSX:FM
First Quantum Minerals — Q4 2014 Earnings Presentation
28 slides from First Quantum Minerals's earnings presentation, February 2015
Slide 1: Turning Vision into Reality
TURNING VISION INTO REALITY FEBRUARY 2015 TSX: FM; LSE: FQM
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: 2014 - A Good Year with Highest Copper Production in Our History
2014 - A GOOD YEAR WITH HIGHEST COPPER PRODUCTION IN OUR HISTORY • Production within guidance • Realized metal prices – Copper up 4% to 427,655 tonnes – Copper down 6% – Nickel down 3% to 45,879 tonnes – Nickel up 11% – Gold down 7% to 229,813 ounces • Comparative earnings of $474.5M or • Low cash c
Slide 4: Zambian Developments
ZAMBIAN DEVELOPMENTS • Amended Zambian tax regime ⁻ Effective January 1, 2015 ⁻ Reduced corporate tax to 0% ⁻ Increased royalties from 6% to 20% ⁻ Decreased EBITDA at Zambian operations • VAT refunds outstanding ⁻ $246M claims at end of December ⁻ Classified as non-current • On-going dialogue with g
Slide 5: Ensuring Ability to Withstand Prolonged Low Metal Price Environment
ENSURING ABILITY TO WITHSTAND PROLONGED LOW METAL PRICE ENVIRONMENT • Reduced capital expenditure program ⁻ From $2.9B in 2014 to between $1.2B and $1.4B in 2015 ⁻ Reflects completion of Sentinel, the smelter and other smaller projects ⁻ Workplan unchanged at Cobre Panama; $600M capex estimate for 2
Slide 6: One of the Few Mining Companies Investing in Building Capacity
ONE OF THE FEW MINING COMPANIES INVESTING IN BUILDING CAPACITY 6
Slide 7: Building a Leading Copper-Focused Company: Sentinel
BUILDING A LEADING COPPER-FOCUSED COMPANY SENTINEL $2B capital investment >15 years mine life 55 Mtpa copper throughput Production of up to 300 Ktpa copper 3 semi-mobile in pit crushers and assembly of large scale mining equipment Large operating SAG/Ball mill trains (100MW milling power
Slide 8: Sentinel - Overview
FIRST QUANTUM 8 MINERALS LTD.
Slide 9: Sentinel: Concentrate in Production
S E N T I N E L : C O N C E N T R AT E I N P R O D U C T I O N 9
Slide 10: Sentinel
Sentinel & FIRST QUANTUM 10 MINERALS LTD.
Slide 11: Building a Leading Copper-Focused Company: Copper Smelter
BUILDING A LEADING COPPER-FOCUSED COMPANY COPPER SMELTER • Processing capacity of 1.2 Mtpa • Combination of concentrate from Kansanshi & Sentinel • Average copper grade 26% • Production 300,000 Tpa copper; 1.0 Mtpa sulphuric acid • Commissioning underway 11
Slide 12: Smelter: First Anodes
S M E LT E R : F I R S T A N O D E S D E C 2 8 , 2 0 1 4 12
Slide 13: Smelter: First Anodes
S M E LT E R : F I R S T A N O D E S D E C 2 8 , 2 0 1 4 13
Slide 14: Cobre Panama – A Tier 1 Copper Project
BUILDING A LEADING COPPER-FOCUSED COMPANY Cobre Panama – A Tier 1 Copper Project A large, robust project – Installed capacity Yrs 1-10 = ~70 Mtpa – Expansion up to 100 Mtpa beyond Yr 10 – Average annual LOM* copper production of 320,000 tonnes – Average annual LOM by-product production 100,000 o
Slide 15: Cobre Panama – Mill Area Civils
COBRE PANAMA – MILL AREA CIVILS 15
Slide 16: Cobre Panama: Milling Area SAG Mill and Mill Building Foundations
C O B R E PA N A M A : M I L L I N G A R E A S A G M I L L A N D M I L L B U I L D I N G F O U N D AT I O N S 16
Slide 17: Cobre Panama Port Area Material Offloading Facility Wharf
C O B R E PA N A M A P O R T A R E A M AT E R I A L O F F L O A D I N G FA C I L I T Y W H A R F 17
Slide 18: Cobre Panama: 300 MW Power Station
C O B R E PA N A M A : 3 0 0 M W P O W E R S TAT I O N B O I L E R I S L A N D A N D P U LV E R I Z E R F O U N D AT I O N S 18
Slide 19: Strong Long-Term Fundamentals for Copper Intact
STRONG LONG-TERM FUNDAMENTALS FOR COPPER INTACT 19
Slide 20: Forces at Work in the Copper Market Suggest a Near-Term Price Range
Forces at work in the copper market suggest a near–term price range between $2.80 and $3.50 shifting to $3.50 to $4.00 within 2 years $4.00/lb 2017-2021 Price Range $3.50/lb For what it’s worth… 2015-2016 Price Range Consensus for 2015 (January forecasts) is $2.85/lb Analyst LT Consensus Price $3.00
Slide 21: C1 90th Percentile Historically Provided Solid Floor
C1 90th Percentile historically provided solid floor on quarterly basis Over 72 quarters, price only breached 90th percentile 3 times – and by no more than 1¢/lb. 21
Slide 22: What Production Is Likely to Fall Out if $2.50 Cu Is Sustained?
What production is likely to fall out if $2.50 Cu is sustained? $2.50/lb • Reuters Poll in late January put consensus Of 1.8 Mt above the 90th percentile, copper market surplus at 220 kt. • 300 kt very vulnerable • Will China’s State Reserve Bureau return as a • 300 kt somewhat vulnerable buyer? • 1
Slide 23: No Reason for This Cyclical Dip to Behave Significantly Differently
No reason for this cyclical dip to behave significantly differently from previous ones • 90th percentile C1 ($2.05/lb) should provide floor on a quarterly basis • Relative to 23 Mt copper market, the currently forecast surplus is small • As miners cut costs there will be disruptions until operations
Slide 24: Forces at Work in the Copper Market Suggest a Near-Term Price Range
Forces at work in the copper market suggest a near–term price range between $2.80 and $3.50 shifting to $3.50 to $4.00 within 2 years Chinese Design $3.75-4.00/lb ($8269- Domestic Adjustments and 8820/t) Short–term and Scrap (LT) Substitution medium term corrections to demand especially if 2017- 201
Slide 25: Growth Supported by Seven Operating Mines
GROWTH SUPPORTED BY SEVEN OPERATING MINES 25
Slide 26: Full Year 2015 Guidance
FULL YEAR 2015 GUIDANCE • Production ranges • C1 cash cost ranges – Copper 410,000 - 440,000 tonnes – Copper $1.30 - $1.55/lb. – Nickel 32,000 - 40,000 tonnes – Nickel $4.80 - $5.30/lb. – Gold 218,000 - 247,000 ounces • Capital expenditures – Zinc 40,000 - 45,000 tonnes – $1.2B to $1.4B – Platinum 2
Slide 27: A Copper-Focused, Global Company
Revenues A COPPER-FOCUSED, GLOBAL COMPANY Zinc Other Gold 2% 3% Signifiant Nickel and Gold Production 6% Operations and Projects in 9 countries Nickel 16% High-Quality, Stable, Efficient Operations Industry-Leading Growth Unique Core Strength of In-House Project Development Strong Track Record
Slide 28: Turning Vision into Reality
TURNING VISION INTO REALITY February 2015 TSX: FM; LSE: FQM
First Quantum Minerals — Q4 2014 Earnings Presentation on 6ix