investor presentation april 2011
TRANSCRIPT
Global Diversified
www.first-quantum.com
April 2011
TSX: FM LSE: FQM
Cautionary Note Concerning Forward-Looking Statements
Some of the statements contained in the following material are forwardlooking statements and not statement of facts. Such statements arebased on the current beliefs of management, as well as assumptionsbased on management information currently available. Forward-lookingstatements are subject to various risks, uncertainties and other factorsthat could cause actual results to differ materially from expectedresults. Readers must rely on their own evaluation of theseuncertainties.
Note: all dollar amounts in US dollars unless otherwise indicated
2
A Growing Diversified Metals and Mining Company
Profile: A mid-tier mining and metals company
currently producing LME grade "A"
copper cathode, copper in concentrate,
gold and sulphuric acid
Core strength: Discovering, developing and operating
mines efficiently and cost-effectively
Investment Highlights:
A significant copper producer with
considerable new production growth in
the near and medium term
An emerging nickel producer
Expanding into high-potential, low-risk
mining jurisdictions
Strong financial position and capacity
to fund growth initiatives
3
-
200
400
600
800
1,000
04 05 06 07 08 09 10 12F13F14F15F
Actual Further potential
Copper Production Objectives000’s tonnes
A Solid Track Record
4
Revenue
($ millions)
$46
$237
$564
$772
$637 $678
$900
Operating Cash Flow
($ millions)
Earnings*
($ millions)
$114
$445
$1,095
$1,539
$1,740 $1,864
$2,378
$28
$155
$399
$520
$300
$419
$557
*Before impairments and other adjustments
A Strong Operating Base
Unit Cash Margin(US$/lb copper)
5
$-
$350
$700
$1,050
$1,400
Cash & Equivalents(US$ millions)
Debt to Capitalization Ratio
$-
$0.70
$1.40
$2.10
$2.80
0.00
0.40
0.80
1.20
1.60
Strong Operating Base & Development Pipeline
Operations— Kansanshi, Zambia
— Guelb Moghrein, Mauritania
6
Projects— Ravensthorpe, Australia
— Kevitsa, Finland
— Sentinel, Zambia
— Haquira, Peru
Exploration— Enterprise, Zambia
— Fishtie, Zambia
Other Investment— Mopani (16.9%), Zambia
ADVANCING GROWTH & DIVERSIFICATION STRATEGY7
Growth and Diversification
Copper production objective:
— 46% growth to 470,000 tonnes in 2015 –excluding potential from Sentinel and Haquira which could add a further 500,000 tonnes
Nickel production objective:
— Beginning in 2011 and increasing to 55,000 tonnes in 2014
Investment in growth projects:
— ~ $2 billion projected over the 2011 –2015 timeframe – excluding assumptions on the Haquira deposit and the building of a copper smelter in Zambia
-
15
30
45
60
2011F 2012F 2013F 2014F
Nickel Production Objectives000’s tonnes
8
-
200
400
600
800
1,000
04 05 06 07 08 09 10 12F13F14F15F
Actual Further potential
Copper Production Objectives000’s tonnes
Expanding the Kansanshi Mine (80%), Zambia
Located near Solwezi, Zambia
Copper-gold operation
Production began in 2005
2010 production
231,124 tonnes of copper
109,629 ounces of gold
9
Expanding the Kansanshi Mine (80%), Zambia
Stepped up exploration program
Primary focus on the Southeast Dome prospect
Updated reserves & resources estimate by end of 2011
Will provide design details for Phase 2 expansion
60% expansion to the production capacity over the 2011 – 2015 timeframe
Phase 1 underway – 20% expansion to oxide circuit; added flexibility - 2011
Phase 2 in 2012 – new concentrator with throughput capacity of 25M tonnes per year - 2014
Production objective of 400,000 tonnes of copper per year in 2015
Capex estimate of $390M
10
Optimizing Guelb Moghrein (100%), Mauritania
Located near Akjoujt, Mauritania
Copper-gold operation
Production began in 2006
2010 production
36,969 tonnes of copper
81,766 ounces of gold
Estimated 8-year remainingmine life; ongoing exploration
11
Optimizing Guelb Moghrein (100%), Mauritania
Optimizing recent expansion
— Throughput capacity expansion to 3.8 million tonnes per year
Combination of increased production and enhanced recoveries will allow annual copper production to rise to approximately 50,000 tonnes
Ongoing exploration at and nearby focused on identifying additional feedstock to extend the life of the operation
12
Ravensthorpe Nickel Project (100%), Australia
Located in Western Australia
Three lateritic deposits
— Halleys, Hale-Bopp and Shoemaker-Levy
— Resource comprises 385Mt @ 0.62% Ni and the reserve comprises 235Mt @ 0.67% Ni
Open pit using conventional drill and blast, load and haul system
Processing plant using proven technology
13
Ravensthorpe on Schedule for Commissioning
85% of nameplate capacity
Average annual production of nickel metal:
— 39,000 tonnes for the first five years; 28,000 tonnes over the life of mine
C1 cost estimate:
— $5.00/lb nickel
— $3.00/lb without realization
Expected mine life >30 years
Capital of approx. $190 million
Assumptions:
— nickel = $6.75/lb; cobalt = $12.00/lb
Production in 2H 2011
14
Kevitsa Nickel-Copper Project (100%), Finland
Located in northern Finland
Open pit mine
— Estimated measured and indicated resources of 240 million tonnes grading 0.30% nickel; 0.28 nickel sulphide; 0.41% copper; using a nickel cut-off grade of 0.1%
Conventional processing to produce two concentrates:
— nickel-cobalt-PGE-concentrate grading ~ 12% nickel
— copper-PGE-gold concentrate grading ~ 28% copper
Designed for 5 million tonnes per annum with built-in expansion capabilities
15
Kevitsa on Schedule for Completion
16
At initial capacity average annual production
— 10,000 tonnes of nickel
— 20,000 tonnes of copper
LOM C1 cost estimate of $2.50/lb nickel, net of by product credits
Capital cost estimate of $400 million
Estimated mine life >20 years
Assumptions:
— nickel = $6.75/lb; copper = $2.00/lb; Euro/US = 1.35
Ongoing drill program returning further positive results
Production targeted for mid 2012
Trident Project (100%), Zambia
Located in Northwestern Province – approx.150 kilometres from Kansanshi mine
Acquired in January 2010
Trident project comprises five prospecting licences totaling 2,300 square kilometres that includes:
— Sentinel copper deposit
— Enterprise nickel target
17
Trident Project - Sentinel Deposit, Zambia
18
Significant drill program underway with 16 drills onsite
Excellent continuity of mineralization
Mining and processing conditions appear relatively straightforward
Mining licence application about to be filed
Extensive CSR program already underway
Sentinel Deposit Drill Pattern – February 2011
19
Completed
>260 holes
for 90,000m
Sentinel’s Estimated Potential
20
Internal evaluation assumptions:
— Resource in the range of at least 700 million tonnes at a headgrade in the range of 0.65% to 0.80% copper
— Annual throughput rate of 40 million tonnes
— Annual production of ~250,000 tonnes of copper
— Capital cost in the range of $1B, including the necessary infrastructure
— recoveries in the range of 90% to 95%
— unit cash cost of production approximate to Kansanshi
Initial design and construction could start in 2011 with commercial production in early 2014
Potential New Copper Smelter, Zambia
Bulk of Kansanshi concentrate treated at smelters ~ 250 kilometers from mine site
Limited smelter capacity
Substantial production increase expected from Kansanshi mine and Sentinel deposit
Evaluation underway to determine the economics and options for building and operating a copper smelter close to Kansanshi
Completion and decision expected in 2H 2011
21
Haquira Copper Deposit (100%), Peru
Acquired in December 2010
Large scale copper project located in southern Peru
— M&I resource of 3.7 million tonnes of copper equivalent and an inferred resource of 2.4 million tonnes of copper equivalent
Current priorities:
— Expand infill and condemnation drill program
— Initiate the process to expand the exploration program
— Commence the EIA
— Updated reserves and resources estimate and the environmental impact assessment in mid-2012 when detailed project design will commence
22
A Significant and Growing Copper Producer
23
Total Copper Production000’s tonnes
Assumptions:
1) Sentinel granted permits and board approval by mid 2011
2) Haquira in production in 2015
Base Further
potential
2010F 8.26 -
2012F 9.21 -
2013F 9.46 -
2014F 10.49 6.39
2015F 12.02 12.79
Copper ProductionLbs per common share
-
200
400
600
800
1,000
04 05 06 07 08 09 10 12F13F14F15F
Actual Further potential
An Emerging Nickel Producer
24
2011F 0.38
2012F 1.28
2013F 1.33
2014F 1.41
Nickel ProductionLbs per common share
Total Nickel Production000’s tonnes
Lowering Political Risk Profile
The Doing Business project provides objective measures of business regulations and their enforcement across 183 economies and selected cities at the subnational and regional level
Source: World Bank Survey – Doing Business 2011
Country Ease of Doing Business
Australia 10
Finland 13
Peru 36
Zambia 76
Mauritania 165
25
Goal: A Globally Diversified Mining Company
Technical strength at the core of growth strategy
Existing operations provide a solid platform to support growth
Strong financial position and cash flow
2011 milestones in execution of growth strategy:
— Emergence as a nickel producer
— Establishing a presence in Peru
~$2 billion investment in growth over 2011 – 2015 to significantly increase copper production
26
Global Diversified
www.first-quantum.com
April 2011
TSX: FM LSE: FQM
Corporate Profile
Average daily trading volume - shares
Market capitalization – $ millions
Recent share price – March 28, 2011
Dividend paid in regards to year 2010 – per share
52-week share price range
Geographic breakdown of institutional shareholders
Fully diluted
Shares issued and outstanding
Stock exchange listings & symbols – (S&P/TSX 60 Index)
621,000
C$10.4 billion
C$120.60
C$0.80
C$138.25-C$48.20
NA=45%; Eur=45%; other=10%
95.1 million
86.2 million
TSX: FM LSE: FQM
28
Financial Summary
Year ended December 31, 2010
Investing activities
Financing activities
Cash flow before working capital movements
Cash flow per share before working capital movements
Earnings per share, before impairment and acquisition costs
Cash and equivalents – as at December 31, 2010
Net earnings, before impairment and acquisition costs
Cost of sales
Total revenues
$(225.6)M
$(110.0)M
$899.8M
$11.21
$6.94
$1,344.9M
$557.4M
$1,050.7M
$2,378.2M
Average shares outstanding for the period 80.3M
29
30
Operating Summary
Year ended December 31, 2010
Realized copper price – (per lb)
Total cost – (per lb)
Cash cost – (per lb)
Realized gold price – (per oz)
Copper in concentrate inventory – (tonnes)
Gold sold – (ozs)
Copper sold – (tonnes)
Copper produced – (tonnes)
$2.98
$1.47
$1.18
$1,033
36,753
188,368
311,560
323,017
30