First Quantum swings to headline Q2 loss despite red metal ramp-up

VANCOUVER (miningweekly.com) – Canadian miner First Quantum Minerals has reported a comparative loss of $18-million, or $0.03 a share, for the three months ended June, despite an 8% year-on-year improvement of copper output.

This contrasted with the Toronto-based company’s comparative earnings of $38-million, or $0.06 a share, for the same period in 2016. The net loss attributable to shareholders was $35-million, compared with net earnings of $125-million a year earlier.

Sales revenues of $782-million for the period reflected a $123-million improvement compared with the same period in 2016, with copper sales revenue $136-million higher and gold sales revenue $16-million lower.

The increase in copper sales revenue was driven by sales from Sentinel being in commercial production since November 2016, as well as slightly higher net realised copper prices, which together more than offset lower sales volumes at Kansanshi and Guelb Moghrein, noted First Quantum.

The realised average price for copper of $2.24/lb for the second quarter was below the average LME price for the period, owing to the company’s sales hedge programme, which reduced revenues by $97-million for the quarter and lowered the net realised copper price by $0.31/lb.

Copper output was 8% higher year-on-year at 141 912 t, mainly owing to increased production at Sentinel and Kansanshi. Nickel output was 19% better at 5 920 t, reflecting improved equipment availability and higher throughput at Ravensthorpe. Gold output was 50 040 oz, slightly lower than the comparable period in 2016, with lower production at Guelb Moghrein because of lower throughput and recovery.

The copper C1 cash cost of $1.12/lb was $0.14/lb higher compared with the same period in 2016, reflecting the second full quarter of commercial production at Sentinel. C1 cash costs at Sentinel were impacted on by increased maintenance costs arising from the planned five-day shutdown, and higher costs driven by increased waste mining required by the current mine plan.

First Quantum expects 2017 output of about 248 000 t of copper, and about 145 000 oz of gold. The decrease from 2016 levels is attributable to lower grades expected during 2017. Lower smelter recoveries realised in the first half of the year are expected to return to levels above 97% during the third quarter. A four-week maintenance shutdown is planned for the smelter in mid-August.

Full-year all-in sustaining costs are pegged at $1.50/lb, and total C3 costs at $1.95/lb.

Meanwhile, First Quantum advised that the giant Cobre Panama copper mine project had advanced beyond the 58%-completion mark. Pre-commissioning activities continued on the first 150 MW unit of the power station and associated infrastructure. Power generation into the Panamanian electricity grid is now targeted for the first quarter of 2018, the company advised.

The project remains scheduled for phased commissioning during 2018, with continued ramp-up over 2019.

The company said a process to finalise project financing for the $5.5-billion Cobre Panama project continues. Total process completion is currently targeted for the end of 2017.