MANAGEMENT'S

DISCUSSION AND ANALYSIS

FIRST QUARTER ENDED MARCH 31, 2022

(In United States dollars, tabular amounts in millions, except where noted)

First Quantum Minerals Ltd. | Q1 2022 MANAGEMENT'S DISCUSSION AND ANALYSIS 0

INDEX

FIRST QUARTER HIGHLIGHTSENVIRONMENT, SOCIAL AND GOVERNANCE COVID-19

2

5

6

LOGISTICS AND SHIPPING COST INFLATION DEVELOPMENT PROJECTS EXPLORATION

6

6

6

8

OTHER DEVELOPMENTS GUIDANCE

9

10

SUMMARY OPERATIONAL RESULTS OPERATIONS REVIEW

13

16

SUMMARY FINANCIAL RESULTS LIQUIDITY AND CAPITAL RESOURCES ZAMBIAN VAT

26

31

35

JOINT VENTURE

36

PRECIOUS METAL STREAM ARRANGEMENT MATERIAL LEGAL PROCEEDINGS REGULATORY DISCLOSURES SUMMARY QUARTERLY INFORMATION APPENDICES

36

38

39

46

47

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

51

First Quantum Minerals Ltd. ("First Quantum" or "the Company") is engaged in the production of copper, nickel, gold and silver, and related activities including exploration and development. The Company has operating mines located in Zambia, Panama, Finland, Turkey, Spain, Australia and Mauritania, and a development project in Zambia. The Company is progressing the Taca Taca copper-gold-molybdenum project in Argentina and is exploring the Haquira copper deposit in Peru.

The Company's shares are publicly listed for trading on the Toronto Stock Exchange. The Company has depository receipts listed on the Lusaka Stock Exchange and is in the process of terminating the facility. The termination of the depositary receipts will be effective on May 2, 2022.

This Management's Discussion and Analysis ("MD&A") should be read in conjunction with the unaudited consolidated financial statements of First Quantum for the three months ended March 31, 2022. The Company's results have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to interim reporting, IAS 34 Interim Financial Reporting, and are presented in United States dollars, tabular amounts in millions, except where noted.

For further information on First Quantum, reference should be made to its public filings (including its most recently filed Annual Information Form) which are available on SEDAR atwww.sedar.com.Information is also available on the Company's website atwww.first-quantum.com.This MD&A contains forward-looking information that is subject to risk factors, see "Cautionary statement on forward-looking information" for further discussion. Information on risks associated with investing in the Company's securities and technical and scientific information under National Instrument 43-101 - Standards for Disclosure for Mineral Projects ("NI 43-101") concerning the Company's material properties, including information about mineral resources and mineral reserves, are contained in its most recently filed Annual Information Form. This MD&A was prepared as of April 26, 2022.

FIRST QUARTER HIGHLIGHTS

With strong financial performance during the quarter, the Company reported significant increases in gross profit, EBITDA1, net earnings attributable to shareholders, and adjusted earnings1. Despite lower copper and gold sales volumes and the inflationary pressures on costs, the first quarter benefitted from higher realized metal prices2 as copper hedge positions continued to decline.

Gross profit of $908 million and EBITDA1 of $1,180 million for the first quarter were both a record and significantly higher (68% and 45%, respectively) than the comparable quarter in 2021, attributable to higher metal prices and reduced hedge profile, with a realized copper price2 of $4.45 per lb achieved during the quarter.

Total copper production for the first quarter was 182kt, an 11% decrease from the comparative prior year quarter. Different factors at each of the main operating mines contributed, to varying degrees, to a reduction in grade, from the first quarter of 2021. Grades at both Cobre Panama and Sentinel are expected to return to planned levels over the coming months, while Kansanshi's full year grades are expected to be lower than last year.

Cobre Panama delivered copper production of 78kt for the quarter, and achieved a record mill throughput of 7.6 million tonnes in March. Lower head grade compared to the same period in the prior year accounted for 5% lower copper production, but full year grades are expected to be consistent with full year 2021.

Kansanshi's copper production of 42kt for the quarter was 7kt lower than same quarter of 2021. Production was impacted by a reduction in grades and this is likely to continue for the remainder of the year, with full year grades lower than last year.Sentinel's copper production of 52kt for the quarter was 6kt lower than the same quarter of 2021 due to wet underfoot ground conditions with an extended rain season, which constrained the planned waste stripping and delayed access to high grade ore. Grades are expected to improve in the second half of 2022. The fourth in-pit crusher was successfully fully commissioned during the quarter.

Total copper sales volumes of 197kt were 14kt higher than first quarter production, with lower closing inventory levels at

Zambian operations in particular, although volumes continue to be affected by shipping challenges and inland logistics.

Ravensthorpe nickel production of 5kt contained tonnes was a 10% increase from the comparable quarter of 2021. An updated technical report was filed in March 2022.

  • 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. Adjusted earnings and EBITDA were previously named comparative earnings (loss) and comparative EBITDA, respectively, and the composition remains the same. See "Regulatory Disclosures".

  • 2 Realized metal price is 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".

Total gold production for the quarter was 70koz, a 10% decrease from the prior year, due to decreases at the Cobre Panama and Guelb Moghrein operations, offset by increased gold production at Kansanshi.

Production Guidance has been lowered for total copper production from a range of 810,000 to 880,000 tonnes to between 790,000 and 855,000 tonnes, to reflect lower grades experienced at Zambian operations. Guidance for gold and nickel production remains unchanged.

Financial results for the first quarter includes net earnings attributable to the shareholders of the Company of $385 million

($0.56 net earnings per share) and record adjusted earnings1 of $480 million ($0.70 adjusted earnings per share2), showing significant improvements over the comparable quarter in 2021 which had net earnings attributable to shareholders of the Company of $142 million ($0.21 net earnings per share) and adjusted earnings1 of $150 million ($0.22 adjusted earnings per share2). Net earnings in the first quarter of 2022 includes foreign exchange losses of $56 million, largely unrealized, primarily due to the depreciation of the Zambian Kwacha ("ZMW") against the U.S. dollar ("USD") during the quarter. Net earnings also includes a charge of $40 million for non-recurring costs in connection with previously sold assets.

The conflict in Ukraine and the associated wide-reaching sanctions imposed upon Russia has led to sustained higher energy and commodity prices. These increases have further contributed to the global inflationary environment since the Company provided three-year guidance in January 2022. For the Company, various inputs and operational costs have increased and may increase further. These include costs for fuel, explosives, sulphur, freight, reagents and steel. Such inflationary pressures have currently added approximately $0.10 per lb to monthly copper C1 cash costs2 and approximately $0.50 per lb to monthly nickel C1 cash costs2.

Copper C1 cash cost2 of $1.61 per lb for the first quarter of 2022 was $0.37 per lb higher than the comparable quarter in 2021, attributable to inflationary pressures and lower production. In addition, Cobre Panama experienced higher power costs in January due to its power plant maintenance, which was completed late January. Copper AISC2 of $2.27 per lb for the quarter was also impacted by higher royalties on production at the Company's Zambian operations due to higher copper prices.

Guidance range for copper C1 cost2 has been increased to between $1.45 per lb and $1.60 per lb, as a result of global cost inflationary pressures. The increase in copper all-in sustaining cost (AISC)2 cost guidance to between $2.15 per lb and $2.30 per lb also reflects the impact of the increased royalty expense following rises in metal prices. Guidance for nickel cash costs2 has been increased, with C1 cost2 range increasing to between $6.25 per lb and $7.00 per lb and AISC2 range increasing to between $7.50 per lb and $8.50 per lb.

Cash flows from operating activities of $666 million ($0.97 per share2) for the quarter were $77 million lower than the same quarter of 2021, due to high receivables working capital balance at the end of the quarter, principally due to higher metal prices.

Debt reduction: Net debt1 decreased by $238 million during the quarter, bringing the net debt1 balance down to $5,815 million as at March 31, 2022 with the debt reduction program on track. As at March 31, 2022, total debt was $7,763 million (December 31, 2021: $7,912 million).

Note redemption: On April 5, 2022, the Company redeemed at par $500 million of aggregate principal amount of the $1 billion senior unsecured notes due in 2023.

Increasing cash returns to shareholders: Given the outlook for strong ongoing earnings from the business, the Board intends to commence a cautious increase in shareholder dividends. The Board has adopted the Dividend policy, pursuant to which the Company intends to pay, on a semi-annual basis, a Performance Dividend that represents, in the aggregate, 15% of available cash flows generated after planned capital spending and distributions to non-controlling interests. It is expected that a minimum Annual Base Dividend of CDN$0.10 per share, consisting of semi-annual dividends of CDN$0.05 per share, will be part of the Performance Dividend. Dividend payments remain at the discretion of the Board.

Copper price hedge: The hedge profile is significantly reduced and the quarter benefitted from high market prices. At April 26, 2022, the Company had 15,000 tonnes of unmargined zero cost copper collar sales contracts with maturities to June 2022 at weighted average prices of $3.75 per lb to $4.63 per lb outstanding. Copper sales in the first quarter were 19% hedged. Approximately 2% of expected copper sales for the next 12 months are hedged to unmargined zero cost collar sales contracts.

  • 1 EBITDA and adjusted earnings are 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. Adjusted earnings and EBITDA were previously named comparative earnings (loss) and comparative EBITDA, respectively, and the composition remains the same. See "Regulatory Disclosures".

  • 2 Adjusted earnings per share, realized metal prices, C1 cash cost (C1), and all-in sustaining cost (AISC) are non-GAAP ratios, and 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".

CONSOLIDATED OPERATING HIGHLIGHTS

Copper production (tonnes)1

Copper sales (tonnes)

Gold production (ounces)

Gold sales (ounces)2

Nickel production (contained tonnes)

Nickel sales (contained tonnes)

QUARTERLY

Q1 2022

Q4 2021

Q1 2021

182,210

201,823

205,064

196,702

213,087

210,734

70,357

74,945

78,048

76,195

79,403

77,391

5,122

3,385

4,642

4,350

3,756

2,357

CONSOLIDATED FINANCIAL HIGHLIGHTS

QUARTERLY

Q1 2022

Q4 2021

Q1 2021

Sales revenues3

2,163

2,061

1,622

Gross profit

908

784

540

Net earnings attributable to shareholders of the Company

385

247

142

Basic earnings per share

$0.56

$0.36

$0.21

Diluted earnings per share

$0.56

$0.36

$0.21

Cash flows from operating activities

666

760

743

Net debt6

5,815

6,053

7,062

EBITDA4,5

1,180

1,085

811

Adjusted earnings4

480

306

150

Adjusted earnings per share7

$0.70

$0.44

$0.22

Cash cost of copper production (C1) (per lb)7

$1.61

$1.39

$1.24

Total cost of copper production (C3) (per lb)7

$2.65

$2.39

$2.10

Copper all-in sustaining cost (AISC) (per lb)7

$2.27

$2.05

$1.72

Realized copper price (per lb)7

$4.45

$4.08

$3.25

Net earnings attributable to shareholders

of the Company

385

247

142

Adjustments attributable to shareholders of the Company:

Adjustment for expected phasing of Zambian value-added tax

("VAT") receipts

22

(2)

(8)

Loss on redemption of debt

-

21

-

Total adjustments to EBITDA4 excluding depreciation5

103

49

12

Tax and minority interest adjustments

(30)

(9)

4

Adjusted earnings4

480

306

150

  • 1 Production is presented on a contained basis, and is presented prior to processing through the Kansanshi smelter.

  • 2 Excludes refinery-backed gold credits purchased and delivered under the precious metal streaming arrangement (see "Precious Metal Stream Arrangement").

  • 3 Delivery of non-financial items (refinery-backed gold and silver credits) into the Company's precious metal stream arrangement have been netted within sales revenues rather than included in cost of sales. The quarter ended March 31, 2021 has been revised to reflect this change. Sales revenues and cost of sales for the quarter ended March 31, 2021 have been reduced by $56 million compared to the Q1 2021 reported values (see "Precious Metal Stream Arrangement").

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First Quantum Minerals Ltd. published this content on 26 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 April 2022 20:22:55 UTC.