RESPONSIBLE
GROWTH
ANNUAL REPORT2021 COBRE PANAMA | Colón Province, PANAMA
Ownership
90%
Primary
Copper
Secondary
Gold, molybdenum, silver
2021 Production Copper 331kt, Gold 142koz
PYHÄSALMI | Pyhäjärvi, FINLAND
Ownership
100%
Primary
Copper
Secondary
Pyrite, Zinc
2021 Production Copper 3kt
GUELB MOGHREIN | Akjoujt, MAURITANIA
Ownership
100%
Primary
Copper
Secondary
Gold
2021 Production Copper 19kt, Gold 38koz
HAQUIRA | Copper | Apurimac Region, PERU
ENTERPRISE | Nickel | North-Western Province, ZAMBIA
TACA TACA | Copper | Salta Province, ARGENTINA
LEGEND
Operations
Development Project
Advanced Exploration Projects
2021 Production
816,435
tonnes Cu
LAS CRUCES | Sevilla Province, SPAIN
Ownership
100%
Primary
Copper
2021 Production Copper 14kt
ÇAYELI | Rize Province, TURKEY
Ownership
100%
Primary
Copper
Secondary
Zinc
2021 Production Copper 15kt, Zinc 7kt
KANSANSHI | North-Western Province, ZAMBIA
Ownership
80%
Primary
Copper
Secondary
Gold
2021 Production Copper 202kt, Gold 128koz
SENTINEL | North-Western Province, ZAMBIA
Ownership
100%
Primary
Copper
2021 Production Copper 233kt
RAVENSTHORPE | Western Australia, AUSTRALIA
Ownership
Primary
Secondary
70%
Nickel
Cobalt
2021 Production Nickel 17kt
First Quantum is a global mining
company primarily producing copper,
with secondary production in gold,
nickel, zinc and cobalt. We operate
long life mines in several countries
and employ approximately
18,000 people worldwide.
We are well known for our “can do”
attitude and specialist technical,
engineering, construction and
operational skills, which allow us to
develop and successfully run complex
mines and processing plants.
After over 25 years of operations we are
now one of the world’s top 10 copper
producers. We are focused on providing
a tangible benefit from everything we
do for investors, employees and the
many communities that surround
our operations.
FIRST QUANTUM MINERALS LTD.
2021 ANNUAL REPORT
CONTENTS
Our Properties
CEO Letter to Shareholders
Incoming CEO Letter
Climate Change Report
Introduction
Actions on Climate Change
Governance
Opportunities for Copper
Innovation Driving Sustainability
Our Targets
Risk Management
Metrics - Current Status
Financial Report
Management’s Discussion and Analysis
Management’s Responsibility for Financial Reporting
Independent Auditor’s Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Board of Directors
Shareholder Information
Corporate Directory
IFC
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164
IBC
CEO LETTER TO SHAREHOLDERS
Despite the ongoing challenges of
the global pandemic, 2021 was a year
marked with many achievements
that the Company, its workforce and
many stakeholders can be proud
of. While the Company operated
with COVID-19 related restrictions
for the better part of the year, we
achieved our highest annual copper
production of 816 thousand tonnes.
PHILIP K. R. PASCALL
Chairman of the Board and Chief Executive Officer
The global COVID-19 pandemic continued to present
challenges in 2021. I am grateful to our entire workforce
for the commitment that they demonstrated through
these uncertain times.
With health and safety a priority for our workforce,
COVID-19 protective measures remain a focus
across all our operations, including monitoring
and vaccination programs in our workforce. In
response to the pandemic, the Company developed
the CobreSafe app, which has been recognised by
Microsoft on its Customer Stores website, for our
Cobre Panama workforce. This app enables COVID-19
health monitoring and improves workforce safety
through traceability in real time of potential cases
at the mine. In Zambia, the Company is working
with the Ministry of Health in the North Western
Province to provide vaccination stations to employees
and affiliated contractors in support of the national
vaccination program.
First Quantum remains committed to providing
support for our local communities and governments
during these challenging times. The Company has
been very active in supporting the Ministry of Health
of Panama with supplies and emergency livelihood
packages into surrounding communities. We
sponsored the Gorgas Memorial Institute for Health
Studies, a medical research institution that has been
dedicated for more than 80 years on investigating
diseases in the tropics and preventative medicine. In
April 2021, the Gorgas COVID-19 Institute was opened
and now provides advanced genetic sequencing of
coronavirus samples to help track its mutation and
spread in the country.
In Zambia, the Company provided testing and
medical equipment and assisted with the
construction of COVID-19 isolation facilities for the
community. Ongoing support includes the provision
of oxygen, consumables, face masks, sanitation
stations and transportation of medical supplies. We
also launched our BBN community health program in
the North Western Province of Zambia, an initiative to
support the government in providing essential health
services to the communities around our Sentinel and
Kansanshi mines through 182 schools and health
facilities as we seek to improve the health of our
host communities.
First Quantum has always embraced its responsibility
to invest in the communities that host its projects.
We remain focused on the ongoing importance of
our community support during the pandemic, not
just in order to mitigate the impacts of COVID-19, but
also in greater community outreach. Many of our host
communities depend on our support and I would like
to extend my thanks to each operation for ensuring
the continuity of these important programs. The Cobre
Panama mine supports the Girl Up Club, a UN-funded
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FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD. movement, that provides training and support to
empower young women in surrounding communities.
Kansanshi continues to provide support for the Young
Women’s Christian Association, which manages the
One Stop Gender-Based Violence Survivor Center that
treats victims of gender-based violence. The Sentinel
mine continues to support the Start Your Business
training program, a program to equip people in the
mine’s catchment area with business skills to promote
sustainable community development. Our Literacy
Program in Akjoujt, Mauritania continues to offer
local women opportunities to gain education and
independence through literacy and numeracy lessons
thanks to our team at Guelb Moghrein.
First Quantum has always embraced
its responsibility to invest in the
communities that host its projects.
Many of our host communities depend
on our support and I would like to
extend my thanks to each operation
for ensuring the continuity of these
important programs.
Despite the ongoing challenges of the global
pandemic, 2021 was a year marked with many
achievements that the Company, its workforce
and many stakeholders can be proud of. While the
We also launched our BBN
community health program in the
North Western Province of Zambia,
an initiative to support the Zambian
government in providing essential
health services to the communities
around our Sentinel and Kansanshi
mines through 182 schools and health
facilities as we seek to improve the
health of our host communities.
Panama produced 331 thousand tonnes of copper in
2021, up 61% from 2020. In September 2021, the Cobre
Panama operation removed the most stringent of
health protocols onsite, which allowed staffing levels
to return to optimal levels, due to high vaccination
levels. In January 2022, Cobre Panama and the
Ministry of Health commenced a booster vaccination
program at the mine site.
In Zambia, we are pleased to be engaging
constructively with the new Government as we look
to establish the parameters for long-term investments
into our growth projects in the country. Kansanshi
achieved copper production of 202 thousand tonnes for
the full 2021 year, which represented solid performance
against a backdrop of declining overall grades due to
the depleting oxide ore in the mine.
Company operated with COVID-19 related restrictions
Despite a ball mill trunnion failure earlier in the year,
for the better part of the year, we achieved our
highest annual copper production of 816 thousand
tonnes. This coupled with the benefit from continued
strong copper prices has enabled us to deliver on
our ongoing commitment to debt reduction and to
Sentinel exited 2021 with its best quarterly production
of the year. Copper production for the year was
233 thousand tonnes and with the installation and
commissioning of the fourth in-pit crusher completed,
the plant is expected to increase throughput to
implement a new performance-based dividend for our
62 million tonnes per annum in 2022.
shareholders. Gross profit of $2,562 million and cash
flow from operating activities of $2,885 million for the
full year 2021 were significantly higher than the prior
year 2020 (138% and 79%, respectively).
Cobre Panama recovered strongly from 2020 when
it was placed on preservation and safe maintenance
due to COVID-19 restrictions. Solid operational
performance continues with steadily improving
plant availability and mill processing rates. Cobre
Ravensthorpe had a difficult year as COVID-19-related
restrictions impacted labour availability as well as the
transportation of supplies and equipment. Despite
these challenges, the Shoemaker Levy conveyor was
completed during the fourth quarter, which resulted
in improved material handling and beneficiation
upgrade performance as limonite ore supply to the plant
transitioned away from the Hale Bopp orebody.
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2021 ANNUAL REPORT2021 ANNUAL REPORT Stable copper production of
810-910 thousand tonnes is expected
from our existing operations over the
next several years and beyond this,
First Quantum is focused on disciplined
re-investment in our business.
All our other operations performed to expectations,
achieving consolidated copper production of
50 thousand tonnes for the full year. In the third
quarter of 2021, a final cutback of the main pit at Guelb
Moghrein was approved, which will extend mining
operations by another two years to the end of 2024.
Stable copper production of 810-910 thousand tonnes
is expected from our existing operations over the
next several years and beyond this, First Quantum is
focused on disciplined re-investment in our business.
The Company sees a path to 1 million tonnes of annual
copper production through its organic brownfield
opportunities. At Cobre Panama, the CP100 Expansion
is well underway, with completion targeted for the
end of 2023. This will allow for an increase in the
annual copper production of 50-60 thousand tonnes.
At Kansanshi, the S3 Expansion is awaiting Board
approval. It will enable the mine to transition to a much
larger scale mining operation with steady annual
copper production of approximately 250 thousand
tonnes. At Las Cruces, work on the underground
project continues. The project could extend the mine
life by fifteen years and contribute approximately
45 thousand tonnes of annual copper equivalent
production to First Quantum’s production profile.
We are excited about the nickel growth within First
Quantum. The Enterprise project is a low-cost, high-
grade nickel sulphide project with annual nickel
production of 30 thousand tonnes over an eleven-year
mine life. Subject to Board approval, this project will
place First Quantum as a top 10 global nickel producer.
With our confidence in the strengthening long-term
prospects for copper, we continue to advance our
development projects at Taca Taca in Salta Province,
Argentina, and Haquira in Apurimac, Southern Peru.
Gradual progress continues on these projects with
various studies and negotiations. We are fortunate
to have a pipeline of greenfield opportunities, albeit
long-dated, as copper supply growth is constrained
with a lack of new discoveries, limited shovel-ready
projects and more stringent environmental, social and
regulative hurdles.
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6
At First Quantum, we see that increased supply of
critical metals, such as copper and nickel, is required
to meet the needs of the global energy transition.
Both copper and nickel are required in substantially
higher volumes for new renewable energy
infrastructure and electric vehicles. A responsible
approach to mining is the only acceptable solution
in order to deliver new primary production of metals.
At First Quantum, we are well placed to deliver the
metals required for the global challenges of the
21st century. We recognise our need to extract these
metals in ways that continue to be cleaner and
more environmentally responsible.
At First Quantum, we see that
increased supply of critical metals,
such as copper and nickel, is required
to meet the needs of the global energy
transition. Both copper and nickel
are required in substantially higher
volumes for new renewable energy
infrastructure and electric vehicles.
First Quantum continues to innovate to improve
efficiency and hence reduce the environmental
impact of our operations. This is resulting in decreased
energy use, waste reduction and lowered greenhouse
gas emissions as well as improved operational and
safety performance. At Kansanshi, we installed one of
the world’s most realistic and sophisticated simulators
to train mine equipment operators. The ThoroughTec’s
latest generation Cybermine 5 Full-Mission simulators
will make operator training safer and more efficient.
As we continue to be leaders in trolley-assist
technology, First Quantum confirmed the order for
an additional eleven trolley-assisted T 284 trucks with
Liebherr. The soon-to-be fleet of 38 T 284s in Panama
will claim the title of the world’s largest ultra-class
truck fleet on trolley.
In early 2021, we published our approach to managing
climate change and committed to reporting more
widely on our climate-related risks. We recently
announced that we have set targets to reduce our
absolute Scope 1 and 2 greenhouse gas emissions
by 30% by 2025 and our absolute and intensity of
emissions by 50% by 2030. An important first step to
these targets is a Letter of Intent that was signed for
the incremental electrical supply for the
FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD. CP100 Expansion, which is expected to be renewable
power, specifically hydroelectricity, sourced from the
Panamanian grid. We have provided more detail in
our Climate Change Report that is aligned with the
Task Force on Climate-related Financial Disclosures.
Our targets are based on tangible solutions as
we position ourselves to deliver the copper that is
essential to meet the global transition to cleaner
and more renewable energy sources.
It is with great sadness that I am to report that
during 2021, the life of one our security contractors
was lost in a road traffic accident. The safety of our
workforce is paramount and we have investigated the
circumstances surrounding the accident and taken
steps to prevent such incidents in the future.
At the end of 2020, Clive Newall, Executive Director
and President as well as co-founder of the Company
stepped back from his Executive duties but continued
to serve as a Director on the Board. Clive has decided
to retire from the Board and will not be putting
himself forward for re-election at this year’s Annual
General Meeting. Clive has been with First Quantum
longer than anyone and has made a unique and
significant contribution to its development and
growth into the company that it is today. I would
personally like to thank Clive for his support and
counsel over many years and his continued guidance
as non-executive Director over the past year.
We are excited about the
nickel growth within First Quantum.
The Enterprise project is a low-cost,
high-grade nickel sulphide project
with annual nickel production of
30 thousand tonnes over an
eleven-year mine life.
The Board of Directors announced the appointment
of Tristan Pascall, currently the Company’s Chief
Operating Officer, to the role of Chief Executive
Officer, which will take effect at the upcoming Annual
General Meeting. The appointment of Tristan Pascall
represents the culmination of a succession planning
process led by independent directors on the Board’s
Nominating and Governance Committee. Tristan has
over 22 years of experience in the global resources and
mining sectors in a variety of roles from permitting
and pre-development of a project to construction,
As my time as Chief Executive Officer
of First Quantum comes to a close,
I am very proud of how the Company
has grown from a ten thousand tonne
per annum copper tailings processor
in Zambia into the world’s sixth largest
copper producer.
operational and executive leadership responsibilities.
Tristan’s combination of operational, strategic and
capital markets experience, as well as the strong
stakeholder relationships he has developed, are
fundamental to the continuity of First Quantum’s
unique core capabilities, namely industry-leading
project execution and operational excellence. In
addition to his extensive technical experience, Tristan
has strong values in social responsibility, responsible
mining and workplace safety, stemming from his time
living and working in Panama and Zambia.
As my time as Chief Executive Officer of First
Quantum comes to a close, I am very proud of how
the Company has grown from a ten thousand tonne
per annum copper tailings processor in Zambia into
the world’s sixth largest copper producer. This growth
would not have been possible without the combined
efforts of a number of long-standing Directors and by
those many loyal and steadfast managers and staff
who have worked devotedly with First Quantum,
some since its inception. It is these people who have
established and who nurture the unique culture of
our Company. The Company’s capacity for caring
and for creative thinking and practices, recognised
in the industry, relies on this culture. I know that
you shareholders value it. Our future development
will depend on your encouraging management to
continue and to grow this distinct character. It is with
the continuity of this distinct character and deep
talent pool that First Quantum is placed in a very
strong position for 2022 and beyond. I thank you and
appreciate your support over many years.
PHILIP K. R. PASCALL
Chairman of the Board and Chief Executive Officer
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2021 ANNUAL REPORT2021 ANNUAL REPORT INCOMING CEO MESSAGE
I am very encouraged by the
opportunities presented to First
Quantum today and the existing
platform to build from. I am greatly
appreciative of the support provided
to me in meetings with shareholders
since the announcement of my
appointment as CEO in November
and I am very motivated to meet
the expectations placed on me.
TRISTAN PASCALL
Incoming Chief Executive Officer
I am honoured and excited to be appointed the
incoming Chief Executive Officer of First Quantum.
in. The strength of First Quantum lies with its people
and their capacity to dream boldly, innovate, and
Over the past fourteen years with the Company,
living and working at several of our locations around
the world, I have been fortunate to be part of highly
skilled teams and collaborate with inspirational
colleagues engaging directly with local stakeholders
and communities. This on-the-ground experience is
reflective of the hands-on, practical approach
of First Quantum.
The strong and unique culture of the business
has been forged over the past twenty-five years.
An entrepreneurial and collaborative approach
by the founding Directors of the Company has
enabled substantial growth and established a
diverse mining business with strong capabilities
in project execution and operational excellence.
The Company has grown alongside the
communities at each of our mines, where
First Quantum provides a significant
contribution in corporate social responsibility.
I am proud of First Quantum’s culture and it is a
legacy that I intend to continue. However, I take
cognisance that the Company must also learn and
adapt, not only to continue to motivate and enthuse
our people, but also to overcome the challenges of
each new project and each new geography we work
be impactful.
Attracting young and diverse talent into mining is
one of the greatest challenges facing the long-term
health of the mining industry. At First Quantum, we
understand that much work needs to be done to
raise awareness of the positive impacts of mining
to society, plus the quality of work experiences, and
the broad scope and engagement of working in the
mining industry today. We are focused on improving
our communication with young people from diverse
backgrounds so they become more aware of the
opportunities a career in mining is able to provide.
Copper and nickel are critical metals for
the future. I believe First Quantum is the right
company to deliver the energy metals needed
for the 21st Century as the world transitions to a
greener economy and towards more renewable
energy. A focus on safe, efficient achievement of
production and financial results provides the basis
for further opportunity for our investors and also our
surrounding stakeholders. At the same time, we
understand the impact mining has on the
environment and the climate and it is important
that we extract resources in a highly environmentally
responsible manner, which supports the
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8
FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD. Attracting young and diverse talent
into mining is one of the greatest
challenges facing the long-term
health of the mining industry. At
First Quantum, we understand that
much work needs to be done to
raise awareness. We are focused
on improving our communication
with young people from diverse
backgrounds so they become more
aware of the opportunities a career
in mining is able to provide.
communities around our operations. Having lived
in Africa for eight years and Panama for four years,
this is an area of particular importance to me.
Integrity in our decision making is vital to the
business and I am proud that the benefits of a
long-term approach to responsible mining is well
engrained in the Company.
I am very encouraged by the opportunities presented
to First Quantum today and the existing platform to
build from. I am greatly appreciative of the support
provided to me in meetings with shareholders since
the announcement of my appointment as CEO in
November and I am very motivated to meet the
expectations placed on me.
I believe First Quantum has an exciting future ahead
as we transition into a stronger balance sheet and
period of cash flow generation and move into the next
chapter of disciplined growth for the Company and
return for shareholders.
TRISTAN PASCALL
Incoming Chief Executive Officer
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9
2021 ANNUAL REPORT2021 ANNUAL REPORT TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) ALIGNED
CLIMATE CHANGE
REPORT
JANUARY 2022
I am pleased to present our first report setting out the impacts
of climate change on our business. We place sustainability
at the heart of our business and we are committed to the
ongoing development of our reporting. This first report on
Climate Change, aligned to the TCFD recommendations, sets
out the potential challenges faced by our operations but also
the resilience of our business. Copper and the performance and
energy metals will be essential in meeting the global challenge
to address climate change and First Quantum is well placed to
meet these opportunities in a responsible manner.
PHILIP K.R. PASCALL
Chairman of the Board
and Chief Executive Officer
10
INTRODUCTION
Our Commitments
Identify and manage climate-related
physical and transition risks and
opportunities. The Company plans
to invest appropriately to improve the
climate resilience of our operations.
Improve efficiency, energy intensity and
reduce wastage and emissions by continually
challenging the status quo, leveraging our
innovative culture and new technologies as
they become commercial.
Prioritise the use of renewable energy sources
for new and existing operations where they
are achievable.
Support the transition to a low-carbon
economy by mining the metals required to
deliver this global initiative as responsibly
as we can.
Increase the transparency of our climate
change reporting and communications,
including continuing to disclose our data
across a selection of ratings agencies
and platforms.
Report on our performance across a range
of industry-accepted metrics, including
Scope 1 and 2 emissions, Global Reporting
Initiative (GRI) and CDP.
Improve our understanding of lifecycle
emissions for the copper, nickel, gold and
cobalt value chains and consider partnerships
with suppliers and customers to reduce our
value chain emissions.
Set tangible targets through the execution
of real projects to implement change as a
strategic priority of the Company. We consider
targets focusing on the absolute emission
levels and carbon intensity of our operations
as the most appropriate measures of our
performance at this time.
Integrate an internal carbon price and the
expected determinant impacts on commodity
prices in the evaluation of our new projects.
At First Quantum, we are
committed to extracting resources
responsibly and the importance
that we place on sustainability is
an intrinsic part of everything we
do. In February 2021, we published
our Climate Change Position
Statement, which sets out our
approach to climate-related issues.
This inaugural Climate Change Report,
consistent with our commitment to
further develop our Environmental,
Social and Governance (ESG)
reporting, demonstrates our continued
commitment to communicate
consistently and transparently. As
part of this commitment, we will
continue to develop our reporting
under TCFD, incorporating detailed
risk and opportunity analysis aligned
and updated to the most appropriate
climate change scenarios.
We recognise that our major
mines are located in developing
countries so care with regards to
their economies must be taken into
account. We intend to work with our
host governments on climate-related
issues in the context of Nationally
Determined Contributions (NDCs),
through the transition to appropriate
and sustainable alternative sources of
energy, as well as through continued
support for reforestation initiatives.
11
CLIMATE CHANGE REPORT Our primary product, copper, is fundamental
for energy efficiency, security and climate
change mitigation.
With copper being a catalyst to the global transition to
We have a proven track record in delivering copper
a low-carbon economy and a key driver for the socio-
growth, more than doubling our production in
economic progression of developing economies, the
the last decade, driven by the development and
positive impact of the copper mining sector will be
commissioning of the Sentinel copper mine in 2017,
significant to the achievement of the United Nations
and more recently the Cobre Panama mine in 2019.
Sustainable Development Goals (UN SDGs). In the near
Growth in copper production remains important to
term First Quantum is focused on brownfield growth
First Quantum even as we seek to reduce the intensity
then greenfields as the world is expected to require
of our environmental and climate impact. We believe
significantly more copper to achieve decarbonisation
that responsible growth is achievable by ensuring that
targets. As the world’s 6th largest producer with one of
our projects meet higher hurdles for environmental
the largest copper resources, First Quantum Minerals
and climate impact into the future. For this reason,
is well placed to support the transition to a low-carbon
First Quantum has implemented a carbon price for
economy through our responsible approach to mining
the evaluation of new projects.
and our emphasis on UN SDGs.
12
FIRST QUANTUM MINERALS LTD. ACTIONS ON CLIMATE CHANGE
BY 2023
BY 2025
70,000
TONNES OF CARBON DIOXIDE EQUIVALENT
(CO2e) SAVED PER YEAR BY POWERING
COBRE PANAMA’S EXPANSION WITH
RENEWABLE ENERGY
-30%
REDUCTION OF OUR
ABSOLUTE GREENHOUSE GAS
(GHG) EMISSIONS
BY 2030
-50%
REDUCTION OF OUR ABSOLUTE
GHG EMISSIONS
BY 2030
-50%
REDUCTION TARGET IN THE GHG
INTENSITY OF THE COPPER MINED
AT OUR OPERATIONS
The achievement of these targets is not expected
to result in significant increases in operating costs,
based on the current cost of power, inclusive
of depreciation.
No significant capital expenditure is expected to
be required over the lives of mine to achieve these
targets, with limited capital required prior to 2025.
FIRST QUANTUM 2020 ABSOLUTE SCOPE 1 & 2 CO2e EMISSIONS (TONNES) – BASE
4.26Mt CO2e
1.97Mt CO2e
46%
COBRE PANAMA COAL-FIRED
POWER STATION
0.99Mt CO2e
23%
DIESEL AND FUEL OIL
0.53Mt CO2e
12%
KANSANSHI
OXIDE LEACH
CIRCUIT
0.42Mt CO2e
0.35Mt CO2e
10%
ZAMBIAN NON-
HYDROELECTRIC POWER
9%
OTHER
13
FIRST QUANTUM ABSOLUTE SCOPE 1 AND 2 GHG EMISSIONS REDUCTION TARGETS
Breakdown of emissions by operation
Cobre Panama
Ravensthorpe
Kansanshi
Sentinel
Enterprise
Other
Reduction in emissions
Increase in emissions
-30%
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79%
OF PURCHASED ELECTRICITY
CONSUMPTION IS FROM RENEWABLES
ALMOST
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TONNES OF CO2e SAVED ANNUALLY WITH
THE IMPLEMENTATION OF MINING
EFFICIENCIES IN ZAMBIA
76%
OF THE GROUP’S PURCHASED
ELECTRICITY CONSUMPTION
IS HYDROELECTRICITY
14
FIRST QUANTUM MINERALS LTD.
FIRST QUANTUM TARGET PATHWAY COMPARED WITH CO2e EMISSIONS REDUCTION PATHWAYS,
IEA WEO 2021 CO2e EMISSIONS BASED ON DATA FROM INTERNATIONAL ENERGY AGENCY (IEA),
(2021), AS MODIFIED BY FIRST QUANTUM
)
0
2
0
2
.
v
(
n
o
i
t
c
u
d
e
r
%
–
s
n
o
i
s
s
i
m
E
e
2
O
C
120
100
80
60
40
20
0
2020
2030
2040
2050
IEA – Net Zero
IEA – Sustainable
IEA – Stated Policies
FQM – Base
FQM – Reduction
by 2050 (NZE)
Development
Scenario (STEPS)
targets
Scenario (SDS)
The Company’s GHG emissions reduction targets have an identified pathway to achievement
and are based on commercially available solutions. For this reason, we have not made a
net zero commitment at this time. We will continue to monitor the development of new
technologies for implementation at our operations as they become commercially viable,
and where possible update our GHG emissions reduction targets accordingly.
15
CLIMATE CHANGE REPORT
FIRST QUANTUM MINERALS LTD.
GOVERNANCE
The Board executes many of its responsibilities through its Committees.
The Environment, Health, Safety and Corporate Social Responsibility (EHS
& CSR) Committee, comprising independent directors, is responsible
for the review and monitoring of the suitability and effectiveness of the
Company’s risk management policies and processes with respect to
climate change as defined in the Committee charter.
KATHLEEN
HOGENSON
CHAIR
SIMON
SCOTT
JOANNE
WARNER
KEVIN
MCARTHUR
The EHS & CSR Committee also monitors adherence
by the Company to its environment, health and
safety and social policies and practices in
accordance with applicable environmental, health
and safety laws and regulations in those countries
and locations in which the Company operates.
Members of management responsible for
climate change present reports to the EHS & CSR
Committee at each meeting and are available to
answer questions raised by EHS & CSR Committee
members. This committee meets at least four
times a year.
16
An in-pit crusher and conveyor at the
Company’s Sentinel mine contributed
to GHG savings of almost 40,000 tonnes
in 2020 through reduced use of the
diesel-powered mining fleet.
17
The Compensation Committee is responsible for the
review, identification and mitigation of risks associated
with the Company’s compensation policies as well as for
making any necessary determinations relating to executive
compensation.
The Compensation Committee considers
external relations as performance objectives
in determining total compensation for
executives. External relations encourages the
development of responsible and effective
business relationships with appropriate
governments, agencies, regulators, financial
institutions, and with our shareholders through
our investor relations program and broader
engagement initiatives, for example in respect
of ESG, inclusive of climate change issues.
These external relations factors are summarised below:
Environment
E
Social
S
Governance
G
Longer-term business
strategy with project
identification and approval
influenced by potential
impacts on the environment
and climate change.
Measures linked to
sustainable and innovative
mine operations that
are intended to reduce
environmental impact.
Measures linked to
the performance and
engagement of our
workforce.
Measures linked to safe
operating procedures,
mitigating workplace
injuries.
Measures linked to the
Ensuring business
health and growth of our
relationships with external
stakeholders, including
the communities in which
we operate.
practices and decisions
are conducted with
appropriate judgement.
Ensuring compensation
decisions are made within
an effective governance
framework.
18
FIRST QUANTUM MINERALS LTD. The assessment and management of climate-related issues
is actively monitored by the Company’s management as part
of regular operational and technical planning at each mine
site through to consideration of regulatory, market and policy
impacts and the integration of climate-related issues into
strategic and financial planning.
Executive
Management
Group Functions and
Site Operations
Board of
Directors
Audit
Committee
EHS & CSR
Committee
Compensation
Committee
Chief
Executive
Officer
Chief
Operating
Officer
Chief
Financial
Officer
Site
Operational
Management
Environmental,
Corporate Social
Responsibility
and Community
Relations
Safety
Human
Resources
Risk and
Internal Audit
Legal and
Governance
Responsibility for performance
and compliance is delegated
to the relevant managers and
teams across the business
as well as the identification
of climate-related risks
and opportunities and the
implementation of related
policies and practices.
19
Review of the suitability
and monitor effectiveness
of policies, processes and
reporting related to
climate change
Management and direct
oversight of the implementation
of operational approach and
strategy on climate change
FIRST QUANTUM MINERALS LTD.
Environmental
and social impact
of mining
20
20
We recognise the environmental and social
impact of mining and at First Quantum,
we seek to mine in the most responsible
manner achievable.
Although mining can create significant economic
that we do and founded on four key pillars:
benefit to its host countries, typically from a
economically viable investments, technically
limited geographic footprint, this must be
appropriate operations, environmentally sound
weighed against its impacts on surrounding
practices and socially responsible actions.
communities and the environment.
At First Quantum, we have never been comfortable
Our ultimate goal everywhere we operate is to
with the transactional aspect of social license –
leave a place better than we found it, with greater
the idea that stakeholders are compensated for
protection of biodiversity, a responsible approach
granting us permission to develop and operate a
to climate change, enhanced public infrastructure
mine. We’ve always seen the relationship as more
and improved education and health care. Most
of a social contract in which all parties participate
importantly, we want to ensure the communities
in the collective effort and share in the rewards.
in which we operate, and which play such an
This sense of common purpose is all the more
important role in our success, become increasingly
evident as we increasingly join forces with our
self-reliant and feel empowered to pursue a more
mining communities to confront major challenges,
rewarding way of life – today and for generations
from alleviating poverty, to fostering inclusion and
to come.
We’re committed to develop, design and operate
our mines in an environmentally sensitive manner,
striving for protection and where reasonably
possible, positive benefits to local biodiversity,
protection of water resources and the efficient
use of energy and other resources. Our approach
to sustainability is an intrinsic part of everything
social equity (including racial justice and gender
equality), to addressing the disruptive impacts of
climate change. Even the remotest communities
are more connected than ever to the wider world
and feel the impacts of global issues; they’re
also more aware of the need to tackle these big
problems together.
21
21
OPPORTUNITIES FOR COPPER
The global transition to a low-carbon
economy represents a fundamental
shift in the materials required for
energy generation, moving away
from fuel to minerals.
COPPER USED IN CLEAN ENERGY
TECHNOLOGIES COMPARED TO OTHER
POWER GENERATION SOURCES1
This transition is expected to drive an increase
10,000
in the demand for copper as the electrical
infrastructure requirements to drive the
necessary changes to the global energy markets
are significant. This presents an opportunity
for First Quantum, as the metals that we mine
are essential for the global transition to a low-
carbon economy, as well as a crucial driver of
socio-economic development, particularly in
emerging economies.
W
M
/
g
k
8,000
6,000
4,000
2,000
0
MINERALS USED IN ELECTRIC CARS COMPARED TO CONVENTIONAL CARS1
Coal
Nuclear
Natural
gas
Solar
PV
Onshore
wind
Offshore
wind
Conventional car
Copper
Nickel
Manganese
Cobalt
Lithium
Zinc
Other
First Quantum’s metal produced
Electric car
Kg/Vehicle
0
20
40
60
80
100
120
140
160
1
Source: Based on IEA data from the IEA (2021), The Role of Critical Minerals in Clean Energy Transitions, IEA,
Paris https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions. All rights reserved;
as modified by First Quantum Minerals Ltd.
22
FIRST QUANTUM MINERALS LTD. First Quantum has a strong
COBRE PANAMA
project pipeline, with very
significant copper resource
bases, comprising both
brownfield projects that
would further grow our
existing operations and
also greenfield projects
in Argentina and Peru
that could add significant
volumes of copper to global
supply, which are as follows:
OVER
400,000 tonnes/year
COPPER PRODUCTION
100MTPA EXPANSION PROJECT TO BE
POWERED WITH RENEWABLE ENERGY
KANSANSHI
SULPHIDE CIRCUIT EXPANSION: MAINTAIN
LEVELS OF PRODUCTION, GHG INTENSITY
COBRE LAS CRUCES
UNDERGROUND PROJECT: POTENTIAL
FOR ALMOST ZERO EMISSIONS MINE
TACA TACA
POTENTIAL FOR LOW EMISSIONS;
WELL-LOCATED FOR RENEWABLE POWER,
LOW COMMUNITY IMPACT
HAQUIRA
ONE OF THE WORLD’S MAJOR
UNDEVELOPED COPPER DEPOSITS
The pace of development for the new supply of
transition minerals, in particular copper, represents
a very significant challenge for the global mining
industry that may have to increase metal production
by as much as 500%.1 Increasing regulation required
for new mining projects means that the time to
develop a new project has increased by up to 16
years.2 The world will need more copper and at First
Quantum, with our extensive experience in executing
and delivering major copper projects, we want to be
the partner of choice to develop new mines. In the
last ten years, we have more than doubled our copper
production to more than 800,000 tonnes per year.
The important role that emerging economies have
to play in the production of the metals essential to
the low carbon transition, such as copper, means that
responsible mining can be a key driver of economic
development through increased government
revenues, employment opportunities, infrastructure
development and investment, and the transfer of
knowledge and technology to host governments
and communities. COVID-19 has been a particularly
challenging period for many people around the
world, with the World Bank calculating that 97 million
people fell back into poverty in 2020 as a result of the
pandemic.3 Mining provides investment and jobs in
our host communities and revenue sources for the
governments in the countries in which we operate.
Our $6.7 billion investment in Cobre Panama mine
means approximately 34,000 direct and indirect jobs
for Panama. In Zambia, where First Quantum has had
operations for 25 years, mining accounts for 10% of the
GDP of the country.
1
‘How green bottlenecks threaten the clean energy business’, The Economist, June 12th, 2021
2 Source: IEA (2021), The Role of Critical Minerals in Clean Energy Transitions, IEA, Paris
https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions
3 Source: World Bank, June 2021, Updated estimates of the impact of COVID-19 on global poverty:
Turning the corner on the pandemic in 2021?
https://blogs.worldbank.org/opendata/updated-estimates-impact-covid-19-global-poverty-turning-corner-pandemic-2021
23
1
Source: Based on IEA data from the IEA (2021), The Role of Critical Minerals in Clean Energy Transitions, IEA,
Paris https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions. All rights reserved;
as modified by First Quantum Minerals Ltd.
CLIMATE CHANGE REPORT Climate-related Opportunities for First Quantum
MARKET
PRODUCTS
& SERVICES
Additional demand for copper is expected to result from
Our Zambian mines, largely powered by renewable
the continuing transition to renewable energy generation
energy supplied through the grid, have lower GHG
and electric vehicle propulsion, which are both much
intensity, resulting in Sentinel and Kansanshi being in
more intensive users of copper compared to existing
technologies. First Quantum, as one of the largest global
producers of copper, is well placed to take advantage of
the lower quartile and midpoint of the intensity curve
respectively.1 Although the Company’s Cobre Panama
mine has a higher GHG emissions intensity due to the
this with the ramp-up of Cobre Panama, the Kansanshi
coal-fired power plant, the actions outlined in our report
S3 expansion and two significant advanced exploration
would reduce this and significantly improve the GHG
projects in Taca Taca and Haquira.
intensity of our Panamanian copper production. Increased
focus by consumers on the GHG emissions of their supply
chain may result in opportunities for the Company.
RESOURCE EFFICIENCY
& RESILIENCE
ENERGY SOURCE
We are an industry leader in technology such as trolley
The Company is reliant on hydroelectricity for two of our
assist which significantly reduces diesel consumption and
largest operations in Zambia. Climate risks incentivize the
as a result GHG emissions. The trolley assist infrastructure
transition to alternative renewable sources of power, such as
offers the potential for future integration with battery
increased hydroelectric, solar or wind, that would improve
technology.
Pit-electrification remains an area of focus as the
the resilience of operations and limit exposure from an
operational and financial perspective to the Zambian grid.
Company looks to drive production and cost efficiencies
In Panama, a shift from reliance on coal power to renewable
through lower GHG emissions technology such as in-pit
alternatives should deliver both environmental and
crushing and conveying and electrical mining equipment,
economic benefits in the medium term and over the
which include drills and shovels. A global push for
remaining life of the project through stable operating costs
decarbonisation represents an opportunity to further
and limited additional capital expenditure. The Company
develop this approach and we are well-placed to capitalise
has committed to work with the Government of Panama to
on this as the technology is developed by equipment
perform a study into the feasibility of alternative sources of
manufacturers.
1 Skarn and Associates, 2021
24
power over 2022 and 2023. This will provide increased clarity
with respect to the options for further decarbonisation of
power and the timelines to realize the construction and
commissioning of these projects.
FIRST QUANTUM MINERALS LTD. Responsible Growth in Copper
Growth in mining production remains important as the
measured and indicated resources of each mine are
limited and will eventually be exhausted. We believe that
responsible growth in copper production is essential to
replace exhausted resources and ensure that the world has
adequate performance and energy metals in order to meet
the challenges of the 21st century. First Quantum wants to be
the partner of choice for new mining projects as we remain
committed to the continuous improvement of our approach
to responsible mining.
We believe responsible growth is achievable by ensuring each
new mining project meets higher hurdles for environmental
and social impact. In keeping with this approach, and as we
seek to lower the GHG intensity of our copper production, we
have implemented a carbon price for the evaluation of new
projects to incentivize the use of lower carbon technologies
and renewable sources of power.
25
First Quantum Minerals Ltd. | 2020 ANNUAL REPORT
25
INNOVATION DRIVING SUSTAINABILITY
Fundamental to First Quantum’s philosophy
is our ongoing commitment to innovation
in mining, working in collaboration with
equipment manufacturers to deliver benefits
in productivity and profitability as well as
incremental GHG emissions reductions and
health & safety improvements.
This is evidenced by our successful implementation
of new technologies in mining, crushing,
processing, water management and concentrate
grade improvements across our operations. For
the last ten years, it has been a priority for First
Quantum to create reliable, efficient and robust
technologies that maximise the use of electrical
power within the mining and haulage of waste
and ore. First Quantum leads the industry in the
implementation of several mining technologies
which improve energy efficiency and reduction
of emissions, including trolley assist and electric
shovels and drills combined with in-pit crushing
and conveying. We will continue to prioritise the use
of renewable energy where possible as well as work
with our partners to develop technology essential
for decarbonisation.
In 2020, these innovations resulted in estimated savings
of almost 100,000 tonnes CO2e at our Zambian operations,
where close to 80% of our electricity is renewable.
26
FIRST QUANTUM MINERALS LTD. CASE STUDY
First Quantum is
recognised as an industry
leader in trolley assist
technology.
Implementing trolley assist technology
to drive energy efficiencies
GHG emissions are reduced at our
Kansanshi and Sentinel mines through
the use of trolley assist technology.
The technology lowers overall diesel
consumption and operating costs, saves
on maintenance and increases productivity
with a reduced GHG emissions profile.
The haul truck driving up a ramp to
exit a pit will likely be powered by
electricity rather than conventional diesel.
Electrification of our pit operations at
our mines is estimated to save tens of
thousands of tonnes in CO2e emissions
each year.
The concept is relatively simple. Trucks
are fitted with pantographs, which collect
power through contact with overhead
power lines installed on the up-ramps, just
like the electric locomotives on many train
networks. This means that for the part of
each truck cycle when the truck is driving
fully loaded uphill, and requiring the most
energy, the truck’s diesel-burning engine is
switched off. In Zambia, this energy is more
than 75% powered by hydroelectricity.
The execution is complex and the initial
installation of lines, modifications to trucks
and electrical infrastructure have taken
several years of dedicated development
work to achieve reliable trolley assist
systems first at Kansanshi and then
Sentinel and Cobre Panama. The use of
trolley assist is fundamental to the mine
design and profile, and is now an integral
aspect of these operations.
Our success, in collaboration with truck
manufacturers, will enable other operators
to implement this GHG emissions-saving
technology.
Looking to the future, we see a number
of ways that trolley assist technology
can be used to further improve First
Quantum’s energy efficiency. Our long-
term life-of-mine plans include trolley assist
technology, taking dedicated permanent
trolley ramps as deep as possible to make
the most of the electrical power-assist.
Our trolley assist technology offers the
potential for future integration with battery
technology that will be key to the further
abatement of GHG emissions.
27
OUR TARGETS
In acknowledgment of the importance of ensuring
The Company’s GHG emissions reduction targets have
the resilience of the Company’s operations in a
an identified pathway to achievement and are based
changing legal and regulatory environment, as well
on commercially available solutions. For this reason,
as incentivising lower GHG emissions in our future
we have not made a net zero commitment at this
projects, we have integrated a range of internal carbon
time. We will continue to monitor the development
pricing into our new project evaluation process.
of new technologies for implementation at our
In keeping with our results-driven culture, we are
committed to real actions which make a difference to
our GHG emissions. We recognise the need to use less
energy and to use energy more efficiently.
operations as they become commercially viable, and
as appropriate update our GHG emissions reduction
targets accordingly.
)
e
2
O
C
s
e
n
n
o
t
s
d
n
a
s
u
o
h
t
(
s
n
o
i
s
s
i
m
E
G
H
G
4,000
3,000
2,000
1,000
0
0
2
0
2
e
n
M
i
t
n
e
m
e
r
i
t
e
r
s
e
g
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a
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i
g
n
n
m
n
i
i
-30%
e
s
i
r
p
r
e
t
n
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e
n
m
i
l
e
k
c
n
i
o
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5
2
0
2
e
n
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i
t
n
e
m
e
r
i
t
e
r
-50%
-50%
o
t
n
o
i
t
i
s
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a
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r
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q
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-
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C
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O
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(
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-
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C
0
3
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2
Our targets for GHG reduction are based on 2020 as our base year, and on our operating mines and consistent with the mine
lives, as published in our 2021 Annual Information Form. Our forecast includes the Kansanshi S3 expansion and the Enterprise
nickel mine, both of which are subject to board approval.
Decarbonising Power
Our focus is centred on continual improvement
of GHG emissions. The infrastructure was inherited
driving these efficiencies – in production, in cost
by First Quantum when we acquired the partially
profile and use of resources. Our commitment to
constructed station in 2013. Although an appropriate
decarbonisation is summarised below and focuses
choice at the time that it was designed and delivered
on our most significant GHG Scope 1 and Scope 2
given the lack of availability of reliable alternative
emissions emanating from our current power
power in Panama, we acknowledge the need to now
requirements in Panama and Zambia.
reduce our carbon footprint and therefore make the
The Cobre Panama coal-fired power station
represents the Company’s single largest source
following commitments to achieve this:
28
FIRST QUANTUM MINERALS LTD.
BY 2023
70,000
TONNES OF
CO2e SAVED
The expansion of operations to 100Mtpa at Cobre
Panama is expected to be powered by renewable
energy by 2023, saving approximately 70,000
tonnes of CO2e per year.
BY 2025
-30%
REDUCTION OF OUR
ABSOLUTE GHG EMISSIONS
By 2025, we plan to source alternative supply
options of up to 50% of the energy currently
provided by the Panama power station with
renewable energy. This would contribute to
a 30% reduction in the Company’s absolute
GHG emissions.
BY 2030
-50%
BY 2030
-50%
REDUCTION OF OUR ABSOLUTE
GHG EMISSIONS
REDUCTION TARGET IN THE
GHG INTENSITY OF THE COPPER MINED
By 2030, First Quantum expects to be able to
reduce its absolute GHG emissions by 50% as it
aims to increase the use of alternative power and
further reduce reliance on coal at Cobre Panama.
By 2030, we target a 50% reduction in the
GHG intensity of the copper mined. We
expect to achieve this through the reduced
emissions associated with our power as well
as maintaining our production through the
Kansanshi S3 expansion and the 100Mtpa
expansion at Cobre Panama.
Due to power capacity considerations in
Panama and the corresponding impact on
pricing for our host communities, some power
may be drawn from the existing power station,
particularly in peak periods where baseload is
required to support affordable power.
At the Company’s other operations, we will
continue to prioritise the use of renewable
power, where feasible.
In Zambia where close to 80% of power is
renewable, we are actively evaluating the
potential for renewable wind and solar
power projects to reduce our consumption of
domestic third-party coal power.
First Quantum does not intend to develop the
Sese coal power project.
The Company expects that the operating cost of
power associated with the transition to greener
sources will be consistent with the current levels
seen by our operations, inclusive of depreciation.
No significant capital expenditure is expected
to be required over the lives of mine to achieve
these targets, with limited capital required prior
to 2025.
29
CLIMATE CHANGE REPORT RISK MANAGEMENT
Our assessment of the impacts of climate change on our
operations has been informed by the IEA World Energy Outlook
2020 scenarios as well as climate data projections from
the Intergovernmental Panel on Climate Change (IPCC), as
recommended by the TCFD recommendations. Incorporating the
following IEA scenarios, our climate change impact assessment
considers two time horizons: an interim time frame through to
2030 as well as a long-term time frame to 2050.
Stated Policies Scenario (STEPS) – this represents
of potential climate change impacts is based on
a more conservative scenario based on the
engagement with the site management of our
national policy frameworks already outlined and
long-life operating assets, senior and executive
announced.
management and members of the board, including
The IPCC climate projections used in conjunction
the chair of our EHS & CSR Committee, COO,
with this scenario is the Representative
Concentration Pathway (RCP) 8.5
Sustainable Development Scenarios (SDS) –
representing our comparative scenario, this
is aligned to a pathway consistent with the
goals of the 2015 Paris agreement to limit
global warming to 2C˚, preferably 1.5C˚,
from pre-industrial temperatures.
CEO and Chair.
For this assessment, the following areas were
considered:
Operational activities (mining, processing,
tailings management, workforce and
communities)
Supply chain (logistics and power)
The IPCC climate projections used in conjunction
Access to capital (debt and equity markets)
with this scenario is the RCP 4.5
Through the evaluation of the IPCC climate projection
data for each scenario, the physical impacts associated
with climate change, such as changes in average
levels of precipitation, temperature and sea levels, as
well as the changes in extreme weather events, have
been considered in the assessment. These associated
physical impacts have been evaluated based on
Availability of appropriate technology
Legal and regulatory requirements
Commodity markets
The evaluation, update and monitoring of climate
change risks will be integrated into the Company’s
bi-annual risk assessment process in 2022. As part
the impact of the climate-related risk to each of the
of this process, responsibilities for risk controls and
Company’s operations.
The potential impacts of climate change vary across
all levels of our business and are specific to the
geographies in which our operations are located.
As such, with the support of specialist climate
consultants, our assessment of the significance
management are assigned to each site and senior
management and will be subject to an internal audit
review. The risk register and the accompanying
mitigating controls are reviewed twice a year by the
Company’s Audit Committee.
30
FIRST QUANTUM MINERALS LTD. The most significant climate physical and transition
Our risk assessment framework is based on an
risks to First Quantum are summarised in the
assessment of the likelihood within the time frames
following tables and reflect the risk after considering
considered under each climate scenario assessed
the controls that we have implemented to mitigate
(a medium-term time frame to 2030 and a longer-
the impact of the underlying risk.
term time frame to 2050), and the impact at either a
corporate or a site level on a 1 – 5 rating scale, in which
1 represents a low risk and 5 a high risk.
Physical Risks – Site Specific
RISK
DESCRIPTION
SITES
ACTION
Tailings
storage
facilities
and dams
ACUTE
CHRONIC
Mining
activities
ACUTE
CHRONIC
The potential failure of a
tailings storage facility or
dam may be impacted
by increased rainfall or
variability in chronic
rain and temperature.
Changes in the intensity
or frequency of extreme
weather events can
impact the operation of
the facilities, requiring
additional planning and
infrastructure to manage
the impacts.
Increased intensity or
frequency of extreme
weather events (rain or
wind storms, wildfires,
lightning strikes) could
present a health and
safety risk to employees,
or impact the ability to
operate according to mine
plans through damage to
key equipment and/or the
integrity of pit structures.
Cobre Panama
Kansanshi
Sentinel
Ravensthorpe
Regular scenario modelling
in the design and operation
of facilities using climate data
and forecasts.
Planning through design and
management for extreme
weather events to ensure
resilience and capacity exists.
Continuous monitoring by
site and corporate teams.
Frequent independent
review and audit.
Monitoring and review of best
practices to ensure ongoing
optimum performance.
Cobre Panama
Kansanshi
Sentinel
Ravensthorpe
Design, engineering and
construction of plant and
machinery reflect the
changing environments
in which they operate.
Implementation of health and
safety procedures designed
to minimise the impact of
extreme weather events and the
vulnerability of the workforce and
key equipment.
Weather data is monitored
and extreme weather response
plans are conducted by site
management to ensure these are
incorporated into mine planning.
Mitigating actions, such as
ensuring that capacity exists
for coping with surge weather
events or monitoring mechanisms
and protocols to reduce the
vulnerability of our workforce or
infrastructure to extreme weather
events, have been and continue
to be implemented and reviewed
by site management.
31
CLIMATE CHANGE REPORT
Physical Risks – Site Specific
RISK
DESCRIPTION
SITES
ACTION
Supply chain
Cobre Panama
Sentinel
Ravensthorpe
Extreme weather events
such as storms could result
in interruptions or delays
to the supply chain at
ports and roads that are
necessary for the provision
of key inputs required for
mine production.
Inventory of key supplies is actively
managed in conjunction with a
review of forecast weather data
to maintain the resilience of
operations to supply infrastructure
interruptions.
The Company engages with
our host governments on
the management of local
infrastructure that supports the
communities and the mines
as well as contributing to the
maintenance and upgrade of
related infrastructure where
appropriate.
ACUTE
Power
ACUTE
CHRONIC
Communities
CHRONIC
32
Zambia has a high
degree of dependency
on hydroelectricity where
changes in levels of rainfall
could affect the power
supply in the country. In
Panama, the power line
connecting the power
station to the mine, as well
as the connection to the
national grid, runs through
an inaccessible area
characterised by undulating
topography, which could
be affected by extreme
weather events.
Our host communities
in Zambia, an emerging
economy, where
livelihoods are more
dependent on agriculture,
may be more adversely
impacted by the changes
in weather patterns, such
as rainfall or temperature
on local resources. As a
key contributor to the local
and national economic
development, there may
be increased expectations
of us by our communities.
Kansanshi
Sentinel
Cobre Panama
The Company is engaged with
local and national governments
in Zambia on the power supply to
our mines.
Kansanshi
Sentinel
Projects focused on the
establishment of alternative and
renewable sources of power are
under consideration in Zambia.
In Panama, the powerline
infrastructure was recently
designed and was constructed
for the environment in which it
is located. It is subject to regular
review and maintenance by the
Company’s teams.
The Company maintains strong
links with our host communities,
through regular formal and
informal engagement to
ensure that any concerns are
communicated and addressed
in a timely fashion.
A number of initiatives are
undertaken by the Company, to
assist in the availability of key
resources such as water and
access to education and training.
Through these programs we
seek to decrease the likelihood
of shortages and/or interruptions
impacting our host communities.
The Company’s Conservation
Farming for Nutrition program
works with our host communities
to enhance farming techniques,
maximising yields and minimising
soil degradation and deforestation.
FIRST QUANTUM MINERALS LTD.
Transition Risks – Group Wide
RISK
DESCRIPTION
ACTION
The Company has regular engagement with local
and government authorities and agencies to
ensure that we have visibility and understanding
of changes to regulatory and policy frameworks.
Operations at the Company’s major sites are
focused on mining and processing efficiency
projects that have a significant positive impact on
its emissions profile thereby reducing exposure.
The Company has undertaken to set
decarbonisation targets which are expected
to significantly reduce its exposure over the
longer term.
The Company monitors market prices for
electricity and seeks long term contracts for
offtake, as well as opportunities for self supply
where reasonable and competitive.
The Company is engaged with the original
equipment manufacturers (OEM) to monitor the
availability and commerciality of mine fleet in line
with the Company’s renewal program.
The Company is leading the industry on the use
of trolley assist which significantly reduces fuel
consumption, as well as a broader focus on the
electrification of pit machinery, which remains
key to the Company’s short and medium-term
decarbonisation strategy. Trolley assist also offers
potential future bridging technology for the
implementation of commercially viable battery
solutions to diesel-operated mine fleets.
The Company has committed to reduce
its reliance on high-carbon fuels for power
generation, as outlined in this report.
Policy and
regulatory
GREENHOUSE
GAS EMISSIONS
As governments and
regulatory bodies commit
to decarbonisation, this may
be accompanied by stricter
laws and regulations linked
to GHG emissions as well as
carbon pricing and reporting
requirements.
Rapid changes to energy policy
may impact the market price
of electricity in the countries in
which we operate.
Costs to
transition
to new
technology
and risk of
success
of new
technologies
TECHNOLOGY
Key to efforts by the mining
industry to decarbonise will
be the reduction of emissions
of mining fleets as well as the
transition to renewable power
sources.
The transition of the mine
fleet would require significant
capital and development and
advancements in existing
technology. There is a risk that
investment in a technology
solution that is currently
available results in reduced
efficiency and increased costs
compared with alternatives that
could be developed.
In Panama, there are currently
limited low-carbon alternatives
to thermal power, though this
is improving, which represents
a significant challenge to
the Company’s efforts to
decarbonise.
33
CLIMATE CHANGE REPORT Transition Risks – Group Wide
RISK
DESCRIPTION
ACTION
In the future, commodity
market pricing mechanisms
could assign a premium to
products with lower embedded
GHG emissions.
Second order impacts from
changes in the energy mix,
for example the reduction in
petroleum production may
affect prices for key inputs
to the business such as fuel,
sulphur, ammonium nitrate.
The GHG intensity of copper produced from
the Company’s operations in Zambia is lower
than or comparable to the average. Further
initiatives to reduce energy consumption and
maximise productivity are expected to yield
some improvement.
Actions to reduce our GHG emissions in
Panama, centred on the coal-fired power
station, will significantly reduce the GHG
intensity of the operation.
Price monitoring and offtake agreements for
key inputs.
The continued use of coal for
the power provided in Panama
could hinder the ability of the
Company to take advantage of
strategic opportunities or limit
access to capital markets, as
stakeholder expectations for
decarbonisation increase.
The Company has committed to reduce
its reliance on high-carbon fuels for power
generation, as outlined in this report.
The Company has reported key climate-related
metrics for a number of years and is committed
to the transparency and ongoing development
of our climate change and broader ESG
reporting.
There is continuous engagement with key
stakeholders and ratings agencies on our
approach and actions relating to climate
change to ensure that our strategy is
communicated and understood.
Shifts in
customer
preferences
and increased
stakeholder
concerns
MARKET
Sector
stigmatization/
pressure to
decarbonise
resulting in a
reduction
in capital
availability
REPUTATION
34
FIRST QUANTUM MINERALS LTD. METRICS – CURRENT STATUS
GHG and Energy Metrics: 2018 to 2020
FIRST QUANTUM SCOPE 1 & 2
CO2e EMISSIONS
2020 FIRST QUANTUM GHG INTENSITY
a
m
a
n
a
P
e
r
b
o
C
9.25
i
h
s
n
a
s
n
a
K
4.24
i
n
e
r
h
g
o
M
l
b
e
u
G
3.28
Tonnes CO2e
2018
2019
2020
Scope 1
Emissions
Scope 2
Emissions
1,612,000
3,272,000
3,732,000
250,000
424,000
527,000
Total
1,862,000
3,696,000
4,259,000
Commercial production was declared at the Cobre Panama mine in
September 2019. The increase in emissions is principally attributable
to the commissioning of the mine and the power station.
s
e
c
u
r
C
s
a
L
e
r
b
o
C
1.93
i
l
e
y
a
Ç
2.03
l
e
n
i
t
n
e
S
1.85
i
l
m
a
s
ä
h
y
P
0.89
FIRST QUANTUM ENERGY CONSUMPTION
Tonnes CO2e/ tonne
Cu-EQ
SCOPE
1
SCOPE
2
Pyhäsalmi
Sentinel
Cobre Las Cruces
Çayeli
Guelb Moghrein
Kansanshi
Cobre Panama
Group
0.18
1.06
0.76
0.41
3.28
3.39
9.20
4.02
0.71
0.79
1.17
1.62
0.00
0.85
0.05
0.60
Terrajoules (TJ)
Energy
consumption*
Energy
consumption from
renewable sources
Energy
consumption from
non-renewable
sources
2018
2019
2020
16,162
20,328
23,096
8,817
8,755
8,410
7,345
11,573
14,686
* Includes energy consumed from all sources by the Company’s operations
(purchased electricity and on-site generation)
p
u
o
r
G
4.62
SCOPE
1&2
0.89
1.85
1.93
2.03
3.28
4.24
9.25
4.62
35
CLIMATE CHANGE REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED DECEMBER 31, 2021
(In United States dollars, tabular amounts in millions, except where noted)
(in United States dollars, tabular amounts in millions, except where noted)
INDEX
IINNDDEEXX
OVERVIEW
FULL YEAR HIGHLIGHTS
FOURTH QUARTER HIGHLIGHTS
SUSTAINABILITY
COVID-19
LOGISTICS AND SHIPPING
DEVELOPMENT PROJECTS
EXPLORATION
OTHER DEVELOPMENTS
GUIDANCE
SUMMARY OPERATIONAL RESULTS
OPERATIONS REVIEW
SUMMARY FINANCIAL RESULTS
LIQUIDITY AND CAPITAL RESOURCES
ZAMBIAN VAT
JOINT VENTURE
PRECIOUS METAL STREAM ARRANGEMENT
MATERIAL LEGAL PROCEEDINGS
REGULATORY DISCLOSURES
SUMMARY QUARTERLY INFORMATION
APPENDICES
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
11
37
2
38
3
40
5
43
8
44
9
44
9
44
9
46
11
47
12
48
13
51
16
56
21
68
33
76
41
81
46
83
48
83
48
85
50
88
53
101
66
102
67
106
71
3636
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 1
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
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 at 5:00pm (Eastern Time) on May 2, 2022.
This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the audited consolidated financial
statements of First Quantum Minerals Ltd. (“First Quantum” or “the Company”) for the year ended December 31, 2021. The
Company’s results have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”) 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 at www.sedar.com. Information is also available on the Company’s website at
www.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 February 15, 2022.
OVERVIEW
The Company’s operations continued to demonstrate resilience in dealing with the challenges brought about by the COVID-19
pandemic and the new variants as they emerged. The Company continued to maintain strict health and sanitation protocols to
minimize transmission and support the government health authorities with the focus on ensuring the health and safety of the
workforce and the wider community.
Despite some additional challenges faced in the year, the Company achieved its highest ever annual copper production of 816
thousand tonnes (“kt”), attributable to record-breaking production at Cobre Panama and the resilience of the other operations.
This together with higher realized metal prices has led to the Company’s best financial performance to date with sales revenues
rising to $7,212 million.
Cobre Panama set new quarterly records on mill throughput and copper production throughout the year and achieved record
annual copper production, delivering its first full year of uninterrupted production since announcing commercial production.
Despite facing COVID-19 preventative restrictions for the majority of the year, Cobre Panama’s performance was strong,
exceeding initial 2021 guidance.
Record annual gold production of 312k ounces was achieved by the Company during the year and exceeded guidance.
The Company experienced some cost increases over the year, in particular with fuel, foreign exchange movements and freight
costs, in part due to global shipping and logistical challenges presented by widespread constraints faced by the global container
freight sector over the majority of 2021. Operational improvements and cost control remain a priority.
Financial results for the year increased significantly from the prior year with the Company achieving gross profit of $2,562 million,
operating cash flow of $2,885 million, EBITDA1 of $3,684 million, and a reduction in net debt1 of $1,356 million.
On the basis of continued strong operational and Environmental, Social & Governance (“ESG”) performance, the Company
anticipates to be in a position to continue growth programs, continue the debt reduction program, and support a cautious rise in
dividend payments in 2022. With the Company on track to meet the previously announced $2 billion debt reduction target during
the first half of 2022, the target for debt reduction in the short to medium term has increased by an additional $1 billion. A new
dividend policy (the “Dividend Policy”) was also adopted by the Company and announced on January 17, 2022. Pursuant to the
Dividend Policy, the Company intends to pay, on a semi-annual basis, a performance dividend (the “Performance Dividend”) that
1 EBITDA is a non-GAAP financial measure 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. EBITDA was previously named comparative EBITDA, the composition remains
the same. See “Regulatory Disclosures”.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 2
3737
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
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 (the “Annual Base Dividend”) of $0.10 Canadian dollar
(“CDN”) 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.
Improvements to the existing sites are ongoing with some pivotal capital projects completed during the year. The Sentinel mine
construction of the fourth in-pit crusher was completed in December 2021, with commissioning and ramp up now well underway,
which is expected to enable the plant to ramp up throughput to 62 million tonnes per annum (“Mtpa”). At the Ravensthorpe nickel
mine operations, the Shoemaker Levy conveyor was completed during the fourth quarter and resulted in improved material
handling and beneficiation upgrade performance, in line with expectations, as limonite ore supply to the plant transitioned away
from the Hale Bopp orebody.
Several brownfield projects are also under development. At Cobre Panama, an expansion (“CP100 Expansion”) of the process
plant facilities and related infrastructure is well underway, in order to facilitate a 100 Mtpa throughput operation. In addition,
Cobre Panama has committed to invest in new facilities and accommodation upgrades to allow for more staff to be
accommodated on site in improved conditions.
In Zambia, the Enterprise and S3 Expansion projects are both pending Board approval. The Enterprise project is a low-cost, high-
grade nickel sulphide project that is anticipated to progress in 2022 and to produce its initial nickel concentrate by early to mid
2023. The S3 Expansion at the Kansanshi mine, once approved and completed, is expected to transition the mine from a more
selective high-grade medium-scale operation to a medium-grade, much larger scale mining operation while increasing annual
throughput to 53 Mtpa.
In January 2022, the Company filed an updated NI 43-101 Technical Report for the Las Cruces Underground project, which
upgrades the previous Polymetallic Primary Sulfide (“PPS”) Inferred Mineral Resources to 41.2 million tonnes of PPS Measured
and Indicated Mineral Resources, and includes approximately 18.3 tonnes of Measured Mineral Resources and approximately
17.9 tonnes of Indicated Mineral Resources, as well as 5.02 million tonnes of Indicated Mineral Resources tabled as stockpiles.
No Mineral Reserves are included in the Mineral Resource estimate for the Las Cruces Underground project. There is an
additional 7.1 million tonnes of Inferred Mineral Resources. The Company continues to examine the Las Cruces Underground
project and is expected to consider Board approval for the project by early 2023.
On November 15, 2021, the Board of Directors announced that Tristan Pascall, currently the Company’s Chief Operating Officer,
will be appointed to the role of Chief Executive Officer (“CEO”). The appointment will take effect at the Annual General Meeting
(“AGM”) to be held on May 5, 2022, at which time Philip Pascall, the Company’s current Chairman and CEO, will retire from the
CEO role and will continue to serve as Chairman of the Board. The Company will nominate Tristan Pascall for election as a director
at the AGM. Tristan has served as First Quantum’s Chief Operating Officer since January 2021 and oversaw the ramp-up of the
Company’s largest mine, Cobre Panama. Prior to this, Tristan served as Director of Strategy in 2020. From 2015-2020, Tristan was
a member of the team that managed the construction of Cobre Panama. Previously, Tristan spent six years in Zambia as part of
the group that developed, constructed and operated the Sentinel project. Prior to joining First Quantum, Tristan spent eight years
in corporate finance and investment banking with a focus on resources and heavy industry.
FULL YEAR HIGHLIGHTS
OOppeerraattiioonnaall aanndd FFiinnaanncciiaall
Record copper production of 816kt was achieved during the year, backed by solid operational performance at Cobre Panama and
the resilience of the other operations, leading to strong operational results in the fourth quarter and full year 2021. Robust
financial performance during the year was driven by an increase in revenue, with higher metal prices, together with strong
operational performance resulting in a significant increase in net earnings and EBITDA1, as well as a notable further reduction in
net debt 1.
TToottaall ccooppppeerr pprroodduuccttiioonn for the year was 816kt, a 5% increase from the prior year.
1 EBITDA is a non-GAAP financial measure 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. See “Regulatory Disclosures”.
3838
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 3
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
CCoobbrree PPaannaammaa achieved record copper production of 331kt for the full year, 125kt more than 2020. Despite facing COVID-
19 preventative restrictions for approximately three quarters of the year, Cobre Panama’s sustained performance exceeded
initial 2021 guidance announced in January 2021 and delivered its first full year of uninterrupted production since announcing
commercial production on September 1, 2019.
KKaannssaannsshhii achieved copper production of 202kt for the full year, 19kt lower than 2020, reflecting the depleting oxide ore in
the maturing mine.
SSeennttiinneell achieved copper production of 233kt for the full year, 18kt lower than the prior year. Performance in 2021 was
impacted by a lower grade profile during the year and a ball mill trunnion failure in the first quarter; however, record quarterly
throughput was achieved in the fourth quarter of 2021. Construction of the fourth in-pit crusher at Sentinel was completed in
December 2021, which is expected to enable the plant to ramp up throughput to 62 Mtpa.
OOtthheerr ssiitteess achieved consolidated copper production of 50kt for the full year, a 51kt reduction from 2020, resulting from the
cessation of open-pit mining at Las Cruces and Guelb Moghrein in late 2020 and early 2021, respectively. Las Cruces is now
reprocessing high-grade tailings and Guelb Moghrein is processing stockpiled ore until the cutback to provide access to new
ore is completed in 2023.
RRaavveennsstthhoorrppee:: The Shoemaker Levy conveyor was completed during the fourth quarter, which resulted in improved material
handling and beneficiation upgrade performance, in line with expectations, as limonite ore supply to the plant transitioned
away from the Hale Bopp orebody.
TToottaall ggoolldd pprroodduuccttiioonn for the year was 312k ounces, an 18% increase from the prior year, mainly attributable to record gold
production at Cobre Panama of 142k ounces.
TToottaall ccooppppeerr ssaalleess vvoolluummeess, of 822kt were impacted, in particular for product from Zambian sites, by freight and logistical
challenges in the year including port availability in Southern Africa and the global constraints that the container shipping
sector experienced over the majority of 2021. Although the bulk shipping sector was less affected by the global supply chain
and freight related constraints, vessel freight costs were higher than in recent years. Concentrates from Cobre Panama and
Çayeli are shipped in bulk.
GGrroossss pprrooffiitt of $2,562 million and EBITDA1 of $3,684 million for the full year 2021 were significantly higher (138% and 71%,
respectively) than the prior year, attributable to increased sales volumes at Cobre Panama, as well as a 33% increase in the
realized copper price2. The realized copper price of $3.64 per lb achieved during the year also reflected the Company’s
reduced hedge profile.
FFiinnaanncciiaall rreessuullttss for the year includes net earnings attributable to shareholders of the Company of $832 million ($1.21 basic
earnings per share) and adjusted earnings1 of $826 million ($1.20 adjusted earnings per share2), which represents a
significant improvement from the prior year’s net loss attributable to shareholders of the Company of $180 million ($0.26 net
loss per share) and adjusted loss1 of $46 million ($0.07 adjusted loss per share2). Net earnings in 2021 includes foreign
exchange gains of $159 million, largely unrealized, primarily due to the appreciation of the Zambian Kwacha (“ZMW”) against
the U.S. dollar (“USD”) during the third quarter of 2021. Net earnings also includes a total impairment charge of $44 million
against the Sese Integrated Power project, exploration projects and Zambian housing assets.
CCaasshh fflloowwss from operating activities of $2,885 million ($4.19 per share2) for the year 2021 were $1,272 million or 79% higher
than the prior year. On the basis of continued operational strength, the Company anticipates continued strong future cash
flows and expects to continue the debt reduction program, advance brownfield growth projects, and cautiously raise dividend
payments in 2022.
CCooppppeerr CC11 ccaasshh ccoosstt2 of $1.30 per lb for 2021 was $0.09 per lb higher than the prior year, impacted by higher fuel costs and
freight charges, together with lower production at both Zambian operations and cessation of open-pit mining at Las Cruces
in August 2020. Copper AISC2 of $1.88 per lb was also impacted by higher Zambia royalties due to higher copper prices.
DDeebbtt rreedduuccttiioonn:: Net debt1 decreased by $1,356 million during the year, bringing the net debt1 level down to $6,053 million as
at December 31, 2021. At December 31, 2021, total debt was $7,912 million. With the current strength in the copper price,
1 EBITDA and adjusted earnings (loss) 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. See “Regulatory Disclosures”.
2 Realized metal prices, copper all-in sustaining cost (copper AISC), copper C1 cash cost (copper C1), adjusted earnings (loss) per share, and cash flows from operating
activities per share 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. Adjusted earnings (loss) and EBITDA were previously named comparative earnings (loss) and comparative EBITDA, respectively, and the
composition remains the same. See “Regulatory Disclosures”.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 4
3939
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
and the Company on track to meet the previously announced $2 billion debt reduction target during the first half of 2022, the
target for debt reduction has been increased by an additional $1 billion in the short to medium term. The longer-term policy
objective is a through-the-commodity-cycle Net debt to EBITDA ratio of less than two times.
IInnccrreeaassiinngg ccaasshh rreettuurrnnss ttoo sshhaarreehhoollddeerrss:: 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.
DDiivviiddeennddss ddeeccllaarreedd:: On February 15, 2022, the Company declared a final dividend of CDN$0.005 per share, in respect of the
financial year ended December 31, 2021. The final dividend together with the interim dividend of CDN$0.005 per share
declared on July 27, 2021 is a total of CDN$0.01 per share for the 2021 financial year.
CCooppppeerr pprriiccee hheeddggee:: At December 31, 2021, all of the Company’s unmargined copper forward sales contracts have matured,
with no new hedges put in place. At February 15, 2022, the Company had 40,000 tonnes of unmargined zero cost copper
collar sales contracts with maturities to June 2022 at weighted average prices of $3.63 per lb to $4.68 per lb outstanding.
Copper sales in the fourth quarter were 24% hedged. Approximately 5% of expected copper sales for the next 12 months are
hedged to unmargined zero cost collar sales contracts.
DDeebbtt rreessttrruuccttuurree:: On October 14, 2021, the Company signed a new $2.925 billion term loan and revolving credit facility (the
"Facility"). This new Facility replaced the Company’s previous $2.7 billion term loan and revolving credit facility (the “Previous
Facility”), which was due to mature in December 2022. The Facility is comprised of a $1.625 billion term loan facility and a
$1.3 billion revolving credit facility, matures in 2025 and is syndicated to a group of long-standing relationship banks of First
Quantum. At December 31, 2021, the Company had a balance of $2.17 billion drawn on the Facility. The Facility was used to
fully prepay and cancel amounts outstanding on the existing facility to fully prepay and cancel a bilateral bank facility for $175
million and for general corporate purposes. Repayments on the term loan will commence in December 2022. The Facility has
a single Net debt to EBITDA ratio covenant set at 3.5 times over the Facility term.
NNoottee rreeddeemmppttiioonn: On December 7, 2021, the Company redeemed $600 million of aggregate principal amount of senior
unsecured notes due in 2023 at redemption price of 101.813%. The portion of the outstanding notes due in 2023 to be
redeemed was allocated on a lottery drawing basis at the redemption price plus the payment of accrued and unpaid interest.
PPOOSSCCOO ttrraannssaaccttiioonn:: In September 2021, for cash consideration of $240 million, the Company completed the sale of a 30%
equity interest in Ravensthorpe to POSCO, one of the world’s leading integrated producer of materials for the electric vehicle
(“EV”) sector. The Company retains a 70% interest in Ravensthorpe and continues to be the operator. The proceeds of the
transaction were used to pay down the revolving portion of the Company’s Previous Facility.
FOURTH QUARTER HIGHLIGHTS
TToottaall ccooppppeerr pprroodduuccttiioonn for the quarter was 202kt, consistent with the prior year fourth quarter.
CCoobbrree PPaannaammaa produced 80kt of copper during the quarter, an increase of 22% from the comparable quarter of 2020, and
included record setting monthly copper production in October. Unit 1 of the power plant commenced regular major
maintenance shutdown works in the quarter, which were completed in late January 2022.
KKaannssaannsshhii copper production in the fourth quarter of 2021 was 52kt, a reduction of 1kt from the same quarter in 2020,
resulting from the lower throughput and oxide recoveries.
SSeennttiinneell delivered its best quarterly production of the year with 60kt of copper produced, although this was 3kt lower than
the comparable quarter in 2020 due to lower grade; it achieved a record quarterly throughput.
TToottaall ggoolldd pprroodduuccttiioonn for the quarter was approximately 75k ounces, a 9% increase from the comparable quarter in 2020,
mainly attributable to gold production at Cobre Panama of approximately 33k ounces as well as a 17% increase in gold
production at Kansanshi.
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First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 5
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
GGrroossss pprrooffiitt of $784 million and EBITDA1 of $1,085 million for the quarter were significantly higher (77% and 50%,
respectively) than the comparable quarter in 2020. The realized copper price2 of $4.08 per lb achieved during the quarter
reflected the reduced hedge profile in place.
FFiinnaanncciiaall rreessuullttss for the quarter includes net earnings attributable to shareholders of the Company of $247 million ($0.36
earnings per share) and adjusted earnings1 of $306 million ($0.44 adjusted earnings per share2), which represents a
significant improvement over the comparable quarter in 2020 with net earnings attributable to shareholders of the Company
of $9 million ($0.01 net earnings per share) and adjusted earnings1 of $53 million ($0.08 adjusted earnings per share2). Net
earnings in the fourth quarter of 2021 includes a total impairment charge of $44 million against the Sese Integrated Power
project, as well as exploration projects and Zambian housing assets.
CCooppppeerr CC11 ccaasshh ccoosstt2 of $1.39 per lb for the fourth quarter of 2021 was $0.11 per lb higher than the comparable quarter in
2020, impacted by higher fuel costs, higher electricity costs in Panama due to the regular major maintenance shutdown works
at Unit 1, higher freight charges, as well as appreciation of the ZMW together with lower production at Las Cruces. This
increase was mitigated by a favourable movement on operational provisions following the conclusion on the arbitration case
on electricity prices charged by Zambian Electricity Supply Corporation Limited (“ZESCO”). Copper AISC2 of $2.05 per lb for
the quarter was also impacted by higher royalties on production at the Company’s Zambian properties due to higher copper
prices.
DDeebbtt rreedduuccttiioonn:: Net debt1decreased by $249 million during the quarter, bringing the net debt1 level down to $6,053 million
as at December 31, 2021. At December 31, 2021, total debt was $7,912 million.
1 EBITDA and adjusted earnings (loss) 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 (loss) and EBITDA were previously
named comparative earnings (loss) and comparative EBITDA, respectively, and the composition remains the same. See “Regulatory Disclosures”.
2 Adjusted earnings (loss) per share, copper C1 cash cost (copper C1), and copper all-in sustaining cost (copper 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”.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 6
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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
CONSOLIDATED OPERATING HIGHLIGHTS
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
22002211
22002200
Copper production (tonnes)1
201,823
209,859
203,171
816,435
778,911
Copper sales (tonnes)
Gold production (ounces)
Gold sales (ounces)2
Nickel production (contained tonnes)
Nickel sales (contained tonnes)
213,087
194,278
217,041
821,889
764,471
74,945
79,403
3,385
3,756
78,124
79,773
4,248
4,055
68,747
312,492
265,112
70,905
321,858
277,291
5,603
5,343
16,818
17,078
12,695
12,120
CONSOLIDATED FINANCIAL HIGHLIGHTS
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
Sales revenues3
Gross profit
Net earnings (loss) attributable to shareholders
of the Company
Basic earnings (loss) per share
Diluted earnings (loss) per share
Cash flows from operating activities
Net debt6
EBITDA4,5
Adjusted earnings (loss)4
Adjusted earnings (loss) per share7
Cash cost of copper production (C1) (per lb)7
Total cost of copper production (C3) (per lb)7
Copper all-in sustaining cost (AISC) (per lb)7
Realized copper price (per lb)7
Net earnings (loss) attributable to shareholders
of the Company
Adjustments attributable to shareholders of the
Company:
Adjustment for expected phasing of Zambian
value-added tax (“VAT”) receipts
Loss on redemption of debt
Other
Total adjustments to EBITDA excluding
depreciation4
Tax and minority interest adjustments
Adjusted earnings (loss)4
2,061
1,747
784
247
$0.36
$0.36
760
6,053
1,085
306
$0.44
$1.39
$2.39
$2.05
$4.08
613
303
$0.44
$0.44
703
6,302
886
197
$0.29
$1.26
$2.22
$1.87
$3.68
1,562
443
22002211
7,212
2,562
22002200
5,070
1,077
9
832
(180)
$0.01
$0.01
533
7,409
725
53
$0.08
$1.28
$2.20
$1.77
$2.97
$1.21
$1.20
2,885
6,053
3,684
826
$1.20
$1.30
$2.23
$1.88
$3.64
($0.26)
($0.26)
1,613
7,409
2,152
(46)
($0.07)
$1.21
$2.11
$1.63
$2.74
247
303
9
832
(180)
(2)
21
-
49
(9)
306
4
-
-
(177)
67
197
(5)
(3)
11
42
(1)
53
16
21
-
(88)
45
826
(80)
5
5
240
(36)
(46)
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”).
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First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 7
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
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 year ended December 31, 2020 has been revised to reflect this change. Sales revenues and cost of sales for the full year 2020
have both been reduced by $129 million compared to the previous reported values (see “Precious Metal Stream Arrangement”).
4 EBITDA and adjusted earnings (loss) are non-GAAP financial measures which do not have a standardized meaning under IFRS and might not be comparable to similar
financial measures disclosed by other issuers. Adjusted earnings (loss) and EBITDA were previously named comparative earnings (loss) and comparative EBITDA,
respectively, and the composition remains the same. Adjusted earnings have been adjusted to exclude items from the corresponding IFRS measure, net earnings (loss)
attributable to shareholders of the Company, which are not considered by management to be reflective of underlying performance. The Company has disclosed these
measures to assist with the understanding of results and to provide further financial information about the results to investors and may not be comparable to similar
financial measures disclosed by other issuers. The use of adjusted earnings (loss) and EBITDA represents the Company’s adjusted earnings (loss) metrics. See
“Regulatory Disclosures”.
5 Adjustments to EBITDA in 2021 relate principally to foreign exchange revaluations (2020 - foreign exchange revaluations).
6 Net debt is a supplementary financial measure which does not have a standardized meaning under IFRS, and might not be comparable to similar financial measures
disclosed by other issuers. See “Regulatory Disclosures.
7 Adjusted earnings (loss) per share, realized metal prices, copper all-in sustaining cost (copper AISC), copper C1 cash cost (copper C1), and total cost of copper (copper
C3) are non-GAAP ratios which 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”.
SUSTAINABILITY
RReeppoorrttiinngg
Details of the Company’s ESG reporting, including the Company’s primary ESG report, the annual Environment, Safety and Social
Data Report, policies and related programs, including Taskforce on Climate-related Financial Disclosure (“TCFD”)-aligned
Climate Change Report, policies and data can be found at: https://www.first-quantum.com/English/sustainability/default.aspx
CClliimmaattee cchhaannggee aanndd ggrreeeennhhoouussee ggaass ((GGHHGG)) rreedduuccttiioonn ttaarrggeettss
In January 2022, the Company published its inaugural Climate Change Report, aligned to the TCFD recommendations. This report
sets out the Company’s climate strategy and resilience to the impacts of climate change, as well as targets to reduce unit
greenhouse gas emissions, while delivering the performance and energy metals essential to the global transition to a low carbon
economy.
The Cobre Panama CP100 Expansion is expected to be powered by renewable energy by 2023.
By 2025, the Company expects to be able to source alternative supply options for up to 50% of the energy currently provided
by the Cobre Panama power station with renewable energy. This is expected to contribute to a 30% reduction in the
Company’s absolute GHG emissions.
By 2030, the Company expects to reduce its absolute GHG emissions and GHG intensity of copper production by 50% as it
aims to increase the use of alternative power and further reduce reliance on coal at Cobre Panama, while maintaining levels
of copper production through the Kansanshi S3 Expansion and the Cobre Panama CP100 Expansion.
The Company’s GHG emissions reduction targets have an identified pathway to achievement and are based on commercially
available solutions. For this reason, the Company has not made a net zero commitment at this time. First Quantum will
continue to monitor the development of new technologies for implementation at operations as they become commercially
viable, and where appropriate update GHG emissions reduction targets accordingly.
First Quantum believes that responsible growth in copper production is essential to replace resources as they are exhausted
and ensure that the world has adequate performance and energy metals to meet demand. The Company believes that
responsible growth in copper production is achievable by ensuring that projects meet higher hurdles for environmental and
climate impacts into the future. In keeping with this approach, and as the Company seeks to lower the GHG intensity of its
copper production, a carbon price for the evaluation of new projects has been implemented to incentivize the use of lower
carbon technologies and renewable sources of power.
First Quantum will continue to embrace innovation and the development of new technologies for optimising productivity,
profitability and environmental impact through, for example, the expansion of our trolley assist infrastructure, expansion of in-pit
crushing and conveying systems and increased use of electrical mining equipment.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 8
4343
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
SSoocciiaall RReessppoonnssiibbiilliittyy
The Company recently published its Legacy Report which provides a ten-year overview of the Company’s approach to social
responsibility. This report highlights the Company’s environmental, community and economic development initiatives, programs
and achievements across the regions in which the operations are located.
HHeeaalltthh && SSaaffeettyy
The health and safety of the Company’s employees and contractors is our top priority and the Company is focused on the
continual strengthening and improvement of the safety culture at all of our operations. Regrettably, during 2021 the Company
had one fatality at the Kansanshi mine. The Lost Time Injury Frequency Rates (“LTIFR”) is an area of continued focus and a key
performance metric for the Company. Our rolling 12-month LTIFR is 0.07 per 200,000 hours worked during the year ended
December 31, 2021 (2020: 0.06).
COVID-19
The ongoing challenges presented by COVID-19 have continued throughout the fourth quarter, with the Omicron variant present
on several sites. The Company’s focus for the fourth quarter was to maximize vaccination rates and plan booster vaccination
campaigns for 2022.
The Company continues to maintain strict health and sanitation protocols to minimize transmission and support the government
health authorities. We continue to work with local communities to develop support processes and encourage vaccination. The
Company has also redesigned ways of working, with staggered rosters, remote working and bubble concepts on site to continue
operations while limiting the potential spread.
As cases are identified amongst the workforce, they are contained and isolated according to the established protocols and in
coordination with local health authorities with limited impact to operations. The Company continues to employ measures to
ensure minimal spread, while the health and well-being of our workforce continues to be a priority.
LOGISTICS AND SHIPPING
The Company has worked to manage the logistical challenges that presented in the year, including the global constraints that
the container shipping sector experienced over the majority of 2021 as well as the specific challenges from the global pandemic
on the closure of, or bottlenecks at border crossings and ports.
Port congestion in South Africa and a global shortage of container shipping capacity in particular led to delays and disruptions
impacting the sales and shipments of Zambian anode, and resulted in higher freight costs overall. Logistical challenges for
Zambian sales are expected to continue throughout the first quarter of 2022. The bulk shipping sector, in comparison, has been
less affected, although vessel freight costs were higher than in recent years. Concentrates from Cobre Panama and Çayeli are
shipped in bulk. The Company has also experienced some minor disruptions and additional costs on freight shipments out of
Asia.
With consideration to road haulage, the Company has been able to adequately manage road haulage in the regions where
significant inputs and products are hauled by road.
DEVELOPMENT PROJECTS
BBrroowwnnffiieelldd PPrroojjeeccttss
CCPP110000 EExxppaannssiioonn
At Cobre Panama, an expansion of the process plant facilities and related infrastructure is well underway, in order to support a
100 Mtpa throughput operation. During 2022, the Company expects to expand the fleet by adding a fifth rope shovel and eight
additional ultra-class haul trucks. The plans also include developing the Colina pit and its associated overland conveyor and in-
pit crushing facility. Completion of construction works and commencement of commissioning is targeted for the first quarter of
2023 to allow for a ramp up of production over the course of the year and achieve a throughput rate of 100 Mtpa by the end of
2023. The plant expansion includes a new primary crushed ore screening facility, process water upgrades and the addition of a
4444
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 9
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
sixth ball mill. A Letter of Intent was signed for incremental electrical supply for the CP100 Expansion, approximately 60-80MW,
and is expected to be renewable power, specifically hydroelectricity, sourced from the Panamanian grid.
SS33 EExxppaannssiioonn
The S3 Expansion is awaiting Board approval. As the Kansanshi pits expand, the volume of near-surface high-grade oxide ore
continues to decrease, whilst the proportion of primary sulphide ores increases with depth. The S3 Expansion is expected to
transition Kansanshi away from the current, more selective high-grade medium scale operation to a medium-grade, much larger
scale mining operation. The NI 43-101 Technical Report filed on September 14, 2020 includes the plan for a 25 Mtpa expansion
of the sulphide ore processing facility, increasing annual throughput to 53 Mtpa. The S3 Expansion would also involve a new
larger mining fleet, and combined with the standalone 25 Mtpa processing plant, is expected to create efficiencies and
economies of scale. The majority of the capital spend on the S3 Expansion is proposed for 2023-2024.
In parallel with the expansion of the mine and processing facilities, the Company plans to increase throughput capacity of the
Kansanshi smelter to 1.65 Mtpa from the current capacity level of 1.38 Mtpa. The capacity increase would be achieved partly
through enhancing copper concentrate grades by lowering the carbon and pyrite content of the Kansanshi and Sentinel
concentrate feeds and de-bottlenecking the gas handling circuit, including incorporating a new acid plant. Concentrate
processing capacity is expected to be further expanded through modifications to the existing high-pressure leach (“HPL”) circuit.
In addition to increased capacity, the smelter expansion is expected to create greater flexibility should smelter capacity
constraints in the Zambian Copperbelt arise, as well as reduce downstream Scope 3 GHG emissions from the transport and
refining of copper concentrate at third party smelters.
The S3 Expansion remains subject to Board approval and discussions with the Zambian government to implement the appropriate
measures to support the S3 Expansions are ongoing.
EEnntteerrpprriissee
The Enterprise project is awaiting Board approval. Enterprise is a nickel deposit located 12 kilometres away from Sentinel in the
North Western Province of Zambia, with Proven and Probable Mineral Reserves amounting to 34.7 million tonnes (including 9.6
million tonnes of Proven Mineral Reserves and 25.1 million tonnes of Probable Reserves) at 0.99% nickel. It is expected to be a
low-cost, high-grade nickel sulphide project. Due to the proximity of the project to Sentinel, the project benefits from shared
existing infrastructure and a skilled workforce already in place at Sentinel.
Several key preparatory activities were completed in 2021, being focused on water management facilities and early pre-strip
works. A reverse circulaton (“RC”) drilling campaign which targeted the improvement of the upper parts of the geological model
was completed and provided samples for further confirmatory geometallurgical test work. Surface water control dams, insulation
of the water treatment facilities, in-pit water pumping and pipelines, and a power line extension from Sentinel to Enterprise were
also completed in 2021.
Subject to Board approval, the main workstream to bring Enterprise online, the pre-strip of the mine, is expected to take 12
months. In parallel, mine facilities would be installed including the satellite administration office, workshop, fuel storage and other
facilities. The ROM pad will be constructed and the haul road upgraded. Plant refurbishment, completion and commissioning
would also be undertaken during this period. These works are estimated to cost $60 million, which has been included in guidance.
Assuming Board approval is obtained, initial nickel production from Enterprise is expected by early 2023.
LLaass CCrruucceess UUnnddeerrggrroouunndd PPrroojjeecctt
The Las Cruces project is awaiting Board approval, which is not expected until early 2023.
Las Cruces successfully operated its open-pit mine and hydrometallurgical plant over the last 12 years. Although the mine has
depleted the secondary sulphide resources and reserves from the previously published NI 43-101 Technical Report dated June
2015, the Company has recently published an updated technical report dated January 17, 2022 with an updated Mineral Resource
estimate of 41.2 million tonnes of Measured and Indicated Mineral Resources, which includes 5.02 million tonnes of Indicated
Mineral Resources tabled as stockpiles. There is an additional 7.1 million tonnes of Inferred Mineral Resources. Further detailed
technical work is being conducted to convert Mineral Resources to Mineral Reserves as part of the Las Cruces Underground
Project.
In 2021, the Las Cruces mine transitioned from open-pit mining to re-processing of high-grade tailings, which is expected to
continue until 2023. This retreatment project produces low-cost copper as work on the Las Cruces Underground project
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 10
4545
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) (in United States dollars, tabular amounts in millions, except where noted)
advances. The proposed underground project involves supplementing the existing copper facilities at Las Cruces with new
processing capacity for zinc, silver and lead. These new facilities are required, as the underground project will mine the PPS ore
body which is below the mined-out secondary copper sulphide ore body.
Work in 2022 is planned to focus on advancing the design of the underground mine and plant, obtaining the water concession
and release of an initial reserve. Given the work still required, the project is not included in guidance; however, management is
planning for completion of all technical and permitting work in 2022.
GGrreeeennffiieelldd PPrroojjeeccttss
TTaaccaa TTaaccaa
Taca Taca, located in the Salta province of Argentina, is the more advanced of the two greenfield projects and is one of the largest,
highest quality copper projects globally. It will consist of a large open-pit copper mine and ore processing plant to produce up to
275,000 tonnes per year of copper along with gold and molybdenum by-products. With an initial mine life of 32 years, a large
resource base, and C1 cash costs1 of less than $1.40 per lb, Taca Taca is projected to be both long-life and low-cost.
In addition to the mining and processing facilities, the project incorporates waste rock and tailings storage facilities, a new
electrical transmission line of 125 kilometres, and planned water supply from regional borefields that are hydrologically separate
from community water sources. Project infrastructure also includes new access roads and rehabilitation and upgrades to existing
railway line. Power supply options are available to source up to 100 percent of the project’s electricity needs from renewable or
from a combination of renewable and Argentinian natural gas. GHG emissions could be further reduced through application of
the Company’s industry leading electric trolley assist for haul trucks.
The Company is continuing with the project pre-development and feasibility activities. The primary Environmental and Social
Impact Assessment (“ESIA”) for the project, which covers the principal proposed project sites, was submitted to the Secretariat
of Mining of Salta Province in 2019 and approval of the ESIA is anticipated in late 2022. Two additional environmental permits
were filed with the relevant authorities during the second quarter of 2021, including one for the transmission line to connect the
project to the national electrical grid, and another for the proposed bypass and access road construction for the project. The
project will also require approval of a concession for borefield water supply and is completing additional water supply studies
and fuel tests in 2022 in advance of the permit application.
A Board decision to advance the Taca Taca project is not expected before 2024 or 2025.
HHaaqquuiirraa
Haquira is located in the Apurímac region of Peru, and is a longer-dated greenfield project for the Company. Following a period
of establishing environmental baseline monitoring processes, a program of 35,000 metres of diamond drilling is planned to
commence in 2022 and is expected to continue for about two years. The program is intended to upgrade resource confidence
and assist with mine planning and scheduling. In parallel with drill planning, a dialogue with community leaders at Haquira has
been underway for several months and will continue as drilling progresses.
EXPLORATION
The Company’s global exploration program is focused on identifying high-quality porphyry and sediment-hosted copper deposits
in prospective belts around the world.
The Company is engaged in the assessment and early stage exploration of a number of properties around the world, particularly
focused on the Andean porphyry belt of Argentina, Chile, Peru, Ecuador and Colombia, as well as specific targets in other
jurisdictions, including Australia. Near-mine exploration programs are restricted to Las Cruces in Spain, as well as on satellite
targets around Kansanshi in Zambia. Some encouraging targets have emerged from a season of reconnaissance work in the
district around Las Cruces with new tenure applications submitted and drilling planned once relevant permits are received.
During the quarter, reconnaissance drilling was conducted on targets in Peru, Chile, and Zambia. More substantial drill programs
are active on a copper-gold porphyry prospect in Argentina and a zinc project in Turkey.
1 Copper C1 cash cost (copper C1) is a non-GAAP ratio, and 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”.
4646
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 11
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
OTHER DEVELOPMENTS
RRaavveennsstthhoorrppee--PPOOSSCCOO TTrraannssaaccttiioonn
On September 30, 2021, the Company completed the sale of a 30% equity interest in Ravensthorpe for cash consideration of
$240 million to POSCO, one of the world’s leading integrated producers of materials for the electric vehicle sector. The Company
retains a 70% interest in Ravensthorpe and continues to be the operator. The proceeds of the transaction were used to pay down
the Company’s Previous Facility.
ZZaammbbiiaann TTaaxx RReeggiimmee
The 2022 National Budget, presented on October 29, 2021, reintroduced the corporate tax deductibility of mineral royalties in
Zambia. These measures were enacted into law, effective January 1, 2022.
Royalty rates remain unchanged.
It was also announced in the 2022 National Budget that the Government of the Republic of Zambia (“GRZ”) intends that mineral
royalty tax determination will be amended to be on an incremental basis in the medium term. No further information is currently
available on the details or timing of this proposed change.
ZZaammbbiiaann VVAATT
During the year ended December 31, 2021, the Company was granted offsets of $71 million with respect to VAT receivable
balances. In the same period of 2020, offsets of $110 million were granted and cash recoveries of $1 million were received. With
a strengthening of the ZMW during the year, an unrealized gain of $191 million was recognized. For a detailed summary of the
VAT receivable balance due to the Company’s Zambian operations please see “Zambian VAT”.
ZZaammbbiiaann PPoowweerr SSuuppppllyy
Kariba Dam water levels are recovering more slowly than during last year’s rains. However, no power restrictions are expected
for the Zambian mining operations. Commissioning of the 750MW Kafue Gorge Lower Power Station appears to be continuing in
order.
ZZEESSCCOO RReessoolluuttiioonn
In the fourth quarter of 2021, the Company received a favourable resolution on the case that commenced in June 2018 between
ZESCO and Kansanshi.
The arbitration hearing took place on August 22, 2018 and concluded in July 2021 with the Tribunal issuing its award in November
2021. The Tribunal found in favour of Kansanshi on the key issues including the appropriate tariff and the return to Kansanshi of
the funds held in the segregated account pursuant to the Order. In December 2021, the Tribunal awarded Kansanshi its costs of
the arbitration and rejected ZESCO’s application for interpretation of various parts of the Tribunal’s award.
Despite this dispute, the Company’s operations generally maintain a constructive relationship with ZESCO, particularly with
regards to the management of technical and supply issues. Operational and technical dialogue between the parties is expected
to continue in the normal course.
PPaannaammaa LLaaww 99 UUppddaattee
In July 2021, the Government of Panama (“GOP”) announced the appointment of a high-level commission of senior government
ministers and officials, chaired by the Minister of Commerce, to discuss the Company’s concession contract. In September 2021,
the Supreme Court upheld its ruling in respect of the clarification motions presented by the Company to the Court in relation to
its Law 9 decision announced in September 2018 and the ruling was gazetted in the fourth quarter. We understand that the
upholding of the unconstitutionality ruling against Law 9 of 1997 does not have retroactive effects, pursuant to article 2573 of the
Code of Judicial Proceedings of Panama, therefore the approval of the mining concession contract which occurred in 1997 with
the enactment of Law 9, remains unaltered, providing operation continuity as per status quo. In September 2021, the Ministry of
Commerce publicly announced the culmination of the high-level formal discussions on two topics being environmental and
labour matters.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 12
4747
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
During January 2022, the Government of Panama tabled a new proposal, namely that the GOP should receive $375 million in
benefits per year from Cobre Panama and that the existing revenue royalty will be replaced by a gross profit royalty. The parties
continue to finalize the detail behind these principles, including the appropriate mechanics that would achieve the desired
outcome, the necessary protections to the Company’s business for downside copper price and production scenarios and
ensuring that the new contract and legislation are both durable and sustainable.
Once an agreement is concluded and the full contract is documented, it is expected that the newly drafted legislation would be
put to the Panamanian National Assembly. The Company welcomes the transparency of the robust ministerial commission
process and it is hopeful that this matter can be concluded shortly.
GUIDANCE
Guidance for the upcoming three years was previously provided on January 17, 2022 as part of the annual year-end reporting. On
a quarterly basis, guidance for the current year will be updated as necessary or reaffirmed.
Guidance provided below is based on a number of assumptions and estimates as of December 31, 2021, including among other
things, assumptions about metal prices and anticipated costs and expenditures. Guidance involves estimates of known and
unknown risks, uncertainties and other factors, which may cause the actual results to be materially different. The unprecedented
challenges presented by COVID-19 pose some additional risk to the accuracy of forward looking information. Production
guidance and cost guidance includes current assumptions on the impact of COVID-19 on operations.
PRODUCTION GUIDANCE
000000’’ss
Copper (tonnes)
Gold (ounces)
Nickel (contained tonnes)
22002222
810 – 880
285 – 310
25 – 30
22002233
22002244
840 – 910
275 – 300
30 – 40
850 – 910
295 – 320
40 – 50
PRODUCTION GUIDANCE BY OPERATION 1
CCooppppeerr pprroodduuccttiioonn gguuiiddaannccee ((000000’’ss ttoonnnneess))
22002222
22002233
22002244
Cobre Panama
Kansanshi
Sentinel
Other sites
GGoolldd pprroodduuccttiioonn gguuiiddaannccee ((000000’’ss oouunncceess))
Cobre Panama
Kansanshi
Other sites
NNiicckkeell pprroodduuccttiioonn gguuiiddaannccee ((000000’’ss ccoonnttaaiinneedd ttoonnnneess))
Ravensthorpe
Enterprise
1 Production is stated on a 100% basis as the Company consolidates all operations.
330 – 360
190 – 210
260 – 280
30
135 – 150
120 – 130
30
350 – 380
190 – 210
270 – 290
30
140 – 155
105 – 115
30
370 – 400
205 – 220
255 – 270
20
155 – 170
110 – 120
30
25 – 30
-
25 – 30
5 - 10
25 – 30
15 – 20
Guidance for Cobre Panama includes expected commissioning of the sixth ball mill in the first quarter of 2023 with a ramp up
over the course of the year to achieve a throughput rate of 100 Mtpa by the end of 2023.
Kansanshi copper and gold production in 2024 includes some limited production associated to the S3 Expansion, with the
development and timing still subject to Board approval.
2023 copper production for other sites includes tailings reprocessing at Las Cruces. Processing of cutback 4 ore at Guelb
Moghrein is expected to commence in 2023.
4848
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 13
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Guidance on nickel production at Enterprise has been included for the first time, with first production assumed during 2023. The
development timeline for Enterprise is expected to be approximately twelve months. The development of the project is still
subject to Board approval.
CASH COST1 AND ALL-IN SUSTAINING COST1
TToottaall CCooppppeerr
C1 (per lb)1
AISC (per lb)1
RRaavveennsstthhoorrppee NNiicckkeell
C1 (per lb)1
AISC (per lb)1
22002222
22002233
22002244
$1.30 – $1.50
$1.30 – $1.50
$1.25 – $1.45
$1.90 – $2.05
$1.90 – $2.05
$1.85 – $2.00
22002222
22002233
22002244
$5.75 - $6.50
$5.75 - $6.50
$5.50 - $6.25
$7.00 - $7.75
$7.00 - $7.75
$6.75 - $7.25
C1 cash cost1 guidance for both copper and nickel reflects recent inflationary and commodity price pressures as well as
movement in foreign exchange rates, particularly in Zambia. AISC1 guidance also reflects higher royalties in Zambia related to
copper prices as well as an increase in sustaining capital expenditure. At this stage, guidance assumes no change in royalties in
Panama. C1 cash cost1 and AISC1 guidance for 2024 includes some limited contribution from the S3 expansion at Kansanshi.
Nickel unit cost guidance above does not include Enterprise. By 2024, C1 costs1 at Enterprise are expected to range from $4.25/lb
to $5.25/lb.
PURCHASE AND DEPOSITS ON PROPERTY, PLANT & EQUIPMENT
Capitalized stripping2,
Sustaining capital2
Project capital2
22002222
250
310
690
22002233
250
290
710
22002244
275
290
810
Total purchase and deposits on property, plant and equipment
1,250
1,250
1,375
Capital expenditures in 2021 were $995 million, $45 million higher than the previously issued guidance of $950 million. The
Company has been experiencing cost increases and delays on most current capital projects associated with shipping, steel price,
fuel costs, and labour with the latter often an impact of COVID-19 constraints.
Guidance on 2022 and 2023 capital expenditures of $1,250 million each year reflects these inflationary and logistical pressures,
in particular on project expenditure, as well as the inclusion of new projects.
Within the total project capital2 expenditure guidance of $2.2 billion, over the three-year period, approximately $1.0 billion relates
to Kansanshi and $830 million relates to Cobre Panama.
Approximately $450 million has been included for the CP100 Expansion at Cobre Panama, including development of the Colina
pit. The CP100 Expansion includes ball mill 6, secondary screening, process water works, crusher relocation, port modifications
and the concentrate shed expansion.
Across the three years guidance, approximately $700 million is expected to be spent on the Kansanshi S3 project development,
with the majority of the spend to occur over 2023 and 2024. Project capital2 over the guidance period now includes the South
East Dome pit pre-stripping mining activities of $100 million.
1 C1 cash costs (C1), and all-in sustaining costs (AISC) are non-GAAP ratios which 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”.
2 Capitalized stripping, sustaining capital and project capital are non-GAAP financial measures which 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”.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 14
4949
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
The total Kansanshi S3 development capital expenditure is expected to be approximately $900 million. The commencement of
the S3 project will bring forward pre-strip mining activities of the South East Dome Pit, which is expected to be approximately
$350 million over five years to 2026. Pre-strip mining is classified as project capital1. The S3 Expansion includes the development
and construction of the S3 process plant circuit and mining fleet acquisitions.
In addition, approximately $60 million for the development of the Enterprise nickel project is included in the guidance period.
New projects not previously included in guidance that was provided in 2021 are the Enterprise nickel project, Guelb Moghrein’s
cutback 4 in 2022, which is expected to extend the mine life by two years, and upgrades to accommodation and camp facilities
at Cobre Panama over the three years. Expenditure over the three years also includes the acquisition of a fifth rope shovel, eight
additional haul trucks, and port modifications at Cobre Panama. The Las Cruces Underground project has not been included in
capital expenditure guidance.
Sustaining capital expenditure1 is expected to range between $290 million and $310 million over the three-year guidance period
and reflects recent inflation, an increase in tailings storage facility (“TSF”) costs, as well as timing of fleet replacement programs.
IInntteerreesstt
Interest expense on debt for the year ended December 31, 2021 was $532 million. Interest expense on debt for the full year 2022
is expected to be approximately $470 million. Interest expense on debt excludes interest accrued on related party loans to Cobre
Panama and Ravensthorpe, a finance cost accreted on the precious metal streaming arrangement, capitalized interest expense
and accretion on asset retirement obligation (“ARO”).
In addition to interest expense on debt, finance costs in the income statement include interest accrued on related party loans to
Cobre Panama and Ravensthorpe, a finance cost accreted on the precious metal streaming arrangement and ARO expense.
Cash outflow on interest paid on debt for the year ended December 31, 2021 was $521 million and is expected to be approximately
$450 million for the full year 2022. This figure excludes interest paid on related party loans to Cobre Panama and Ravensthorpe
and capitalized interest paid.
Capitalized interest for the year ended December 31, 2021 was $4 million and is expected to be approximately $20 million for the
full year 2022.
A significant proportion of the Company’s interest expense is incurred in jurisdictions where no tax credit is recognized.
TTaaxx
The effective tax rate for 2021 was 31% excluding the impact of interest expense and 43% including interest. Including current
Law 9 legislation, the effective tax rate for 2022, including the impact of interest, is expected to range between 20% and 25%.
During January 2022, the GOP tabled a new proposal, namely that the GOP should receive $375 million in benefits per year from
Cobre Panama and that the existing revenue royalty will be replaced by a gross profit royalty. The parties continue to finalize the
detail behind these principles.
DDeepprreecciiaattiioonn
Depreciation expense for the year ended December 31, 2021 was $1,174 million. The full year 2022 depreciation expense is
expected to be between $1,200 million and $1,250 million.
1Capitalized stripping, sustaining capital and project capital are non-GAAP financial measures which 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”.
5050
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 15
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
SUMMARY OPERATIONAL RESULTS
PPrroodduuccttiioonn
FOURTH QUARTER
Total copper production in the fourth quarter of 2021 remained high at over 200,000 tonnes produced, contributing to an annual
record copper production of 816,435 tonnes. Strong copper production was attributable to the three main operating sites, namely,
Cobre Panama, Sentinel, and Kansanshi.
Cobre Panama’s sustained and strong operational performance continued into the fourth quarter with 20.7 million tonnes of ore
milled and 80,030 tonnes of copper produced, including a new monthly record for copper production in October. Fourth quarter
results were an improvement over the comparable quarter of 2020, and contributed to the record setting performance year at
Cobre Panama.
In Zambia, Sentinel and Kansanshi demonstrated strong and consistent performance during the fourth quarter. Sentinel achieved
its highest quarterly copper production for the year, slightly surpassing the previous quarter, which was reflective of the record
mill throughput rate, slightly offset by lower grades. Kansanshi also had its highest copper production quarter of the year, despite
experiencing lower throughput and recoveries as compared to the same quarter of 2020.
Other site operations saw a decrease in copper production over the year and in the fourth quarter as compared to the same
quarter of 2020. This was mainly due to two sites, Las Cruces and Guelb Moghrein, which had copper production decrease by
7,429 tonnes and 4,781 tonnes, respectively, from the comparable quarter in 2020. The Las Cruces operations transitioned to re-
processing of high-grade tailings, which has effectively extended the mine life and is expected to continue until at least the end
of the third quarter of 2023. Please also see ‘Development Projects’ on page 9 for more information on the Las Cruces
Underground project. Guelb Moghrein had a final cutback of the main pit approved in the third quarter of 2021, which is expected
to extend mining operations to the end of 2024.
44
Strong gold production continued in the fourth quarter and was 9% higher than the same quarter of 2020. This contributed to
record annual gold production of 74,945 ounces. Both Cobre Panama and Kansanshi had fourth quarter gold production
exceeding that of the comparable quarter in 2020, with a 30% and 17% increase, respectively.
Ravensthorpe had its lowest quarterly nickel production of the year, at 3,385 contained tonnes, a 40% decrease from the
comparable quarter of 2020. Fourth quarter production was impacted by the delayed transition to the Shoemaker Levy orebody
and unplanned maintenance at the power plant main steam pipe. However, commissioning of the Shoemaker Levy conveyor was
completed later in the quarter and the resulting material handling and beneficiation upgrade performance was significantly
improved compared to the Hale Bopp ore, in line with expectations.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 16
5151
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
FULL YEAR
AANNNNUUAALL CCOOPPPPEERR PPRROODDUUCCTTIIOONN BBYY
OOPPEERRAATTIIOONN
AANNNNUUAALL GGOOLLDD PPRROODDUUCCTTIIOONN BBYY
OOPPEERRAATTIIOONN
s
e
n
n
o
T
0
0
0
'
777799
110011
225511
222211
220066
22002200
881166
5500
223333
220022
333311
22002211
s
e
c
n
u
O
0
0
0
'
226655
44
4488
112288
8855
22002200
331122
44
3388
112288
114422
22002211
Cobre Panama
Kansanshi
Sentinel
Other
Cobre Panama
Kansanshi
Guelb Moghrein
Other
Record annual copper production was achieved during the year ended December 31, 2021, with total copper production at
816,435 tonnes, representing a 5% annual increase from the prior year. The record achievement was mainly attributable to the
strong operational performance at Cobre Panama, which more than offset the production decreases seen at Sentinel, Kansanshi
and other sites.
Cobre Panama had several milestone achievements during the year, leading up to a record annual copper production of 331,000
tonnes for the year. Total plant throughput for the year was 80.8 million tonnes compared to the target of 85 million tonnes,
however, Cobre Panama produced strong operational results due to increased mill availability, throughput rates, and higher ore
grades processed during the year. Cobre Panama demonstrated a strong recovery from the prior year, when it was placed on
preservation and safe maintenance from April to August 2020 due to COVID-19 restrictions.
Copper production at the Zambian sites, Sentinel and Kansanshi, saw an annual decline of 7% and 9%, respectively, compared
to the prior year, due to lower grades at Sentinel, and lower grades as well as throughput at Kansanshi.
At the Company’s other sites, copper production decreased year-over-year at Las Cruces by 40,700 tonnes, and Guelb Moghrein
by 9,646 tonnes, which represented a significant decrease due to the mines nearing their end of life.
Record annual gold production was achieved during the year ended December 31, 2021, with total gold production at 312,492
ounces, representing an 18% annual increase. Cobre Panama contributed a record 141,637 ounces of gold in 2021, a 67%
increase from the prior year, while Kansanshi was the other large contributor at 128,199 ounces, consistent with the prior year.
Ravensthorpe nickel production for the year was 16,818 contained tonnes, a significant increase of 32% from the prior year, as
Ravensthorpe recommenced operations with the first nickel production in late April 2020.
5252
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 17
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
SSaalleess VVoolluummeess
FOURTH QUARTER
QQUUAARRTTEERRLLYY CCOOPPPPEERR SSAALLEESS BBYY OOPPEERRAATTIIOONN
QQUUAARRTTEERRLLYY GGOOLLDD SSAALLEESS BBYY OOPPEERRAATTIIOONN
s
e
n
n
o
T
0
0
0
'
119988
2255
5566
5566
6611
221177
2211
7799
5511
6666
221111
220044
1166
6666
4444
1177
5588
4433
119944
1122
5511
4488
221133
99
5588
6600
7788
11
1122
3388
s
e
c
n
u
O
0
0
0
'
7711
11
1155
2299
8855
11
1166
2288
7777
11
1133
2288
8800
11
99
7799
11
88
3344
3366
8855
8866
8833
8866
2277
2266
3355
4400
3366
3344
QQ33 22002200
QQ44 22002200
QQ11 22002211
QQ22 22002211
QQ33 22002211
QQ44 22002211
QQ33 22002200
QQ44 22002200
QQ11 22002211
QQ22 22002211
QQ33 22002211
QQ44 22002211
Cobre Panama
Kansanshi
Sentinel
Other
Cobre Panama
Kansanshi
Guelb Moghrein
Other
Total copper sales volumes of 213,087 tonnes for the fourth quarter of 2021 was 2% lower than the same period in 2020, but was
the highest quarterly result for the year and contributed to the Company’s highest annual total copper sales volumes to date. In
the fourth quarter, there was a recovery in sales volumes at Kansanshi and Sentinel, as shipment and port issues from the third
quarter pushed a number of planned shipments into the fourth quarter of 2021. Logistical challenges for Zambian sales are
expected to continue throughout the first quarter of 2022.
Copper sales volumes at Cobre Panama in the fourth quarter of 2021 were 31% higher than the comparable quarter in 2020 in
line with increased production.
Sentinel sales volumes were particularly high in the fourth quarter of 2020 with a sell down of finished goods inventory and so a
relative reduction in sales in the fourth quarter of 2021, when also combined with its lower production profile, is in line with
expectations.
Sales volumes were lower at Las Cruces, in line with the production profile, and Çayeli’s sales were impacted by a shipment delay
during the fourth quarter.
Gold sales volumes of 79,403 ounces for the fourth quarter of 2021 remained fairly consistent with the prior quarters and
represents an increase of 12% from the comparable quarter of 2020, mainly due to increased gold production at Cobre Panama
and Kansanshi.
Nickel sales volumes were low during the quarter at Ravensthorpe with 3,756 contained tonnes sold for the quarter, a 30%
decrease compared to the same quarter of 2020, which was in line with the decrease in production during the quarter.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 18
5353
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
FULL YEAR
AANNNNUUAALL CCOOPPPPEERR SSAALLEESS BBYY
OOPPEERRAATTIIOONN
AANNNNUUAALL GGOOLLDD SSAALLEESS BBYY
OOPPEERRAATTIIOONN
s
e
n
n
o
T
0
0
0
'
776644
110000
223322
222233
220099
22002200
882222
5533
223333
119955
334411
22002211
s
e
c
n
u
O
0
0
0
'
227777
66
5533
113311
8877
22002200
332222
55
4477
112255
114455
22002211
Cobre Panama
Kansanshi
Sentinel
Other
Cobre Panama
Kansanshi
Guelb Moghrein
Other
Total copper sales during the year of 821,889 tonnes are the Company’s highest annual sales seen to date, reflective of the record
production achieved during the year and represents an 8% increase in copper sales from the prior year. Cobre Panama was a
major contributor to the increase in copper sales, with a 63% increase from prior year.
Gold sales volumes increased by 16% compared to the prior year, also reflective of the record gold production for the year and
significant contribution from Cobre Panama.
Nickel sales volumes at Ravensthorpe were 17,078 contained tonnes sold for the year, a 41% increase from the prior year.
CCaasshh CCoossttss11
FOURTH QUARTER
QQUUAARRTTEERRLLYY CCOOPPPPEERR CC11 CCAASSHH CCOOSSTT11
QQUUAARRTTEERRLLYY CCOOPPPPEERR AAIISSCC11
1.50
1.30
)
b
l
r
e
p
$
(
1.10
11..0077
0.90
0.70
11..2299
11..2244
11..2288
11..2266
11..3399
2.40
2.20
2.00
1.80
1.60
)
b
l
r
e
p
$
(
1.40
11..4488
1.20
22..0055
11..7777
11..9911
11..8877
11..7722
QQ33 22002200
QQ44 22002200
QQ11 22002211
QQ22 22002211
QQ33 22002211
QQ44 22002211
QQ33 22002200
QQ44 22002200
QQ11 22002211
QQ22 22002211
QQ33 22002211
QQ44 22002211
Cobre Panama
Sentinel
Kansanshi
Total
Cobre Panama
Sentinel
Kansanshi
Total
Total copper C1 cash cost1 of $1.39 per lb for the fourth quarter was $0.11 per lb higher than the same quarter of 2020, driven by
higher fuel costs and freight charges, as well as the impact of the appreciation of ZMW and lower production at Las Cruces and
Guelb Moghrein.
1 Copper C1 cash cost (copper C1) is a 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”.
5454
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 19
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
(in United States dollars, tabular amounts in millions, except where noted)
Cobre Panama copper C1 cash cost1 of $1.57 per lb was $0.23 per lb higher than the comparable quarter of 2020, reflecting the
Cobre Panama copper C1 cash cost1 of $1.57 per lb was $0.23 per lb higher than the comparable quarter of 2020, reflecting the
impact of the unplanned maintenance in December and higher electricity costs due to regular major maintenance shutdown
impact of the unplanned maintenance in December and higher electricity costs due to regular major maintenance shutdown
works at Unit 1 of the power plant, as well as higher freight charges and fuel costs. However, a collar structure for coal purchases
works at Unit 1 of the power plant, as well as higher freight charges and fuel costs. However, a collar structure for coal purchases
is currently in place, which limits exposure to further increases in the coal price until December 2023.
is currently in place, which limits exposure to further increases in the coal price until December 2023.
Kansanshi saw a significant decrease in copper C1 cash cost1 of $0.22 per lb compared to the same quarter in 2020 mainly due
Kansanshi saw a significant decrease in copper C1 cash cost1 of $0.22 per lb compared to the same quarter in 2020 mainly due
to the favourable movement on operational provisions following the conclusion on the arbitration case on electricity prices
to the favourable movement on operational provisions following the conclusion on the arbitration case on electricity prices
charged by ZESCO. This was a one-time benefit that is not expected to recur in future quarters.
charged by ZESCO. This was a one-time benefit that is not expected to recur in future quarters.
Sentinel copper C1 cash cost1 in the fourth quarter of $1.51 per lb was $0.07 per lb higher than the comparable quarter in 2020,
Sentinel copper C1 cash cost1 in the fourth quarter of $1.51 per lb was $0.07 per lb higher than the comparable quarter in 2020,
reflecting lower production and higher consumables, fuel and labour costs, including the impact of appreciation of ZMW.
reflecting lower production and higher consumables, fuel and labour costs, including the impact of appreciation of ZMW.
Total copper AISC1 of $2.05 per lb was $0.28 per lb higher than the same quarter of 2020, resulting from higher copper C1 cash
Total copper AISC1 of $2.05 per lb was $0.28 per lb higher than the same quarter of 2020, resulting from higher copper C1 cash
costs1, higher sustaining capital expenditures2, as well as higher copper prices driving an increase in Zambian royalty rates.
costs1, higher sustaining capital expenditures2, as well as higher copper prices driving an increase in Zambian royalty rates.
Royalty costs were $0.11 per lb higher than the same quarter of 2020.
Royalty costs were $0.11 per lb higher than the same quarter of 2020.
FULL YEAR
FULL YEAR
FFUULLLL YYEEAARR CCOOPPPPEERR CC11 CCAASSHH CCOOSSTT11
FFUULLLL YYEEAARR CCOOPPPPEERR CC11 CCAASSHH CCOOSSTT11
FFUULLLL YYEEAARR CCOOPPPPEERR AAIISSCC11
FFUULLLL YYEEAARR CCOOPPPPEERR AAIISSCC11
)
b
)
b
l
l
r
e
p
$
(
r
e
p
$
(
1.50
1.50
1.40
1.40
1.30
1.30
1.20
1.20
1.10
1.10
1.00
1.00
11..3300
11..3300
11..2211
11..2211
2.20
2.20
2.00
2.00
)
b
)
b
l
l
r
e
p
$
(
r
e
p
$
(
1.80
1.80
1.60
1.60
1.40
1.40
11..6633
11..6633
11..8888
11..8888
22002200
22002200
Cobre Panama
Cobre Panama
Sentinel
Sentinel
22002211
22002211
Kansanshi
Kansanshi
Total
Total
22002200
22002200
Cobre Panama
Cobre Panama
Sentinel
Sentinel
22002211
22002211
Kansanshi
Kansanshi
Total
Total
Copper C1 cash cost1 of $1.30 per lb for the year ended December 31, 2021 increased by $0.09 per lb from the prior year mainly
Copper C1 cash cost1 of $1.30 per lb for the year ended December 31, 2021 increased by $0.09 per lb from the prior year mainly
due to the decreased production at Sentinel, Kansanshi, and Las Cruces, as well as higher fuel costs and freight charges. Copper
due to the decreased production at Sentinel, Kansanshi, and Las Cruces, as well as higher fuel costs and freight charges. Copper
C1 cash cost1 at Cobre Panama remained the same as the prior year at $1.31 per lb, while Kansanshi copper C1 cash cost1
C1 cash cost1 at Cobre Panama remained the same as the prior year at $1.31 per lb, while Kansanshi copper C1 cash cost1
decreased by $0.05 per lb and Sentinel copper C1 cash cost1 increased by $0.04 per lb.
decreased by $0.05 per lb and Sentinel copper C1 cash cost1 increased by $0.04 per lb.
Total copper AISC1 of $1.88 per lb for the year ended December 31, 2021 was $0.25 per lb higher than the prior year, mainly
Total copper AISC1 of $1.88 per lb for the year ended December 31, 2021 was $0.25 per lb higher than the prior year, mainly
resulting from an increase in copper AISC1 at Kansanshi and Sentinel due to the higher Zambian royalty rate following the increase
resulting from an increase in copper AISC1 at Kansanshi and Sentinel due to the higher Zambian royalty rate following the increase
in copper prices, as well as an increase in copper AISC at Las Cruces further contributing to the total increase in copper AISC.
in copper prices, as well as an increase in copper AISC at Las Cruces further contributing to the total increase in copper AISC.
Please see the appendices from page 67 onwards for further details on production and sales volumes by operation as well as
Please see the appendices from page 67 onwards for further details on production and sales volumes by operation as well as
sales revenues and cash costs.
sales revenues and cash costs.
102
1 Copper C1 cash cost (copper C1), and copper all-in sustaining costs (copper AISC) are non-GAAP ratios which do not have a standardized meaning prescribed by IFRS
1 Copper C1 cash cost (copper C1), and copper all-in sustaining costs (copper AISC) are non-GAAP ratios which 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”.
and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
2 Sustaining capital expenditures is a non-GAAP financial measure which does not have a standardized meaning prescribed by IFRS and might not be comparable to
2 Sustaining capital expenditures is a non-GAAP financial measure 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”.
similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 20
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 20
5555
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
OPERATIONS REVIEW
CCoobbrree PPaannaammaa
Waste mined (000’s tonnes)
Ore mined (000’s tonnes)
Copper ore milled (000’s tonnes) 1
Copper ore grade processed (%)
Copper recovery (%)
Concentrate grade (%)
Copper production (tonnes)
Copper sales (tonnes)
Gold production (ounces)
Gold sales (ounces)2
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
12,504
24,243
20,672
0.42
92
27.5
80,030
86,112
32,800
34,409
13,462
24,960
20,819
0.46
91
26.9
87,242
83,261
36,649
35,914
12,576
20,348
17,697
0.41
91
26.6
65,520
65,770
25,295
25,669
22002211
49,688
96,426
80,838
0.45
91
27.0
22002200
34,653
59,024
54,457
0.42
90
25.1
331,000
205,548
341,078
208,787
141,637
145,185
84,667
86,862
Silver production (ounces)
634,396
653,961
500,806
2,521,235
1,595,561
Silver sales (ounces)2
675,450
636,551
504,002
2,597,310
1,581,881
Copper all-in sustaining cost (AISC) (per lb)3
Copper cash cost (C1) (per lb)3
Total copper cost (C3) (per lb)3
Financial Results ($ millions)
Copper in concentrates
Gold – precious metal stream ongoing cash
payments
Gold – other cash
Silver – precious metal stream ongoing cash
payments
Silver – other cash
Gold and silver - non cash amortization
Total sales revenues4
Gross profit
EBITDA5
$1.94
$1.57
$2.55
$1.55
$1.27
$2.24
$1.72
$1.34
$2.22
$1.61
$1.31
$2.22
$1.60
$1.31
$2.30
773
13
3
2
5
25
821
336
488
725
11
10
2
5
24
777
359
509
432
8
11
1
4
15
471
163
268
2,952
1,202
48
31
9
21
99
3,160
1,449
2,021
27
25
4
12
56
1,326
274
667
1 Measured in dry metric tonnes (“DMT”).
2 Excludes refinery-backed gold and silver credits purchased and delivered under the precious metal streaming arrangement (see "Precious Metal Stream
Arrangement”).
3 Copper all-in sustaining costs (copper AISC), copper C1 cash cost (copper C1), and total copper cost (copper C3) are non-GAAP ratios, and do not have standardized
meanings under IFRS and might not be comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
4 Sales revenues and cost of sales for the full year 2020 have been reduced by $129 million from previously reported values as refinery-backed gold and silver credits on
the Company’s precious metal stream arrangement are now netted within sales revenues rather than included in cost of sales (see “Precious Metal Stream
Arrangement”).
5 EBITDA is a non-GAAP financial measure, and does not have standardized meanings under IFRS and might not be comparable to similar measures disclosed by other
issuers. See “Regulatory Disclosures” for further information.
5656
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 21
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
FFoouurrtthh QQuuaarrtteerr
Copper production remained strong during the quarter, with 80,030 tonnes of copper produced, an increase of 22% from the
comparable quarter of 2020, and included record setting monthly copper production in October. During the quarter, 20.7 million
tonnes of ore with an average head grade of 0.42% were processed and average recoveries of 92% were achieved; all of which
were improvements over the comparable quarter in 2020. During the quarter, Unit 1 of the power plant commenced regular major
maintenance shutdown works, which were completed in late January 2022. Although replacement power for Unit 1 was sourced
from the grid, the seven-day unplanned shutdown of Unit 2 impacted total tonnes milled during the quarter. Milling rates were
also impacted by reduced availability of secondary and pebble crushing. However, October copper production of 32,303 tonnes
set a new monthly record, surpassing the previous highest level of 30,162 tonnes achieved in March 2021.
Copper AISC1 and copper C1 cash cost1 of $1.94 per lb and $1.57 per lb, respectively, were $0.22 per lb and $0.23 per lb higher
than the same quarter in 2020, mainly as a result of increased electricity costs in December, and increased fuel, freight, and
contractor costs. During the period of maintenance to the power station, electricity was drawn from the grid at spot rates, which
were elevated due to relatively low rainfall during the period and high spot prices for diesel and bunker, which impacted the
copper C1 cash cost1. The power station maintenance was completed in late January 2022. A collar structure for coal purchases
is currently in place with the ceiling price already exercised for July 2021 onwards, thereby limiting exposure to further increases
in the coal price until December 2023.
Sales revenues for the quarter were $821 million, excluding the impact of the corporate sales hedge program. Revenues during
the same quarter of 2020 were $471 million, which represents an improvement of $350 million, or 74%, for the current reporting
quarter as a result of both the higher volumes as well as the favourable copper price.
Gross profit of $336 million for the quarter was $173 million, or 106%, higher than the comparable period in 2020, reflecting higher
production and sales volumes as well as higher copper prices, partially offset by higher operating costs.
By September 30, 2021, the Cobre Panama operations had reached COVID-19 vaccination levels of 97% in employees and
contractors. As a result, during the fourth quarter, Cobre Panama removed the most stringent of health protocols onsite and, in
particular, removed limits on the number of onsite personnel, as well as, the requirement for vaccinated staff to undergo
preventative quarantine prior to entering the site. As a result, Cobre Panama was able to return to optimal staffing levels on site.
During December, the number of cases of COVID-19 in the country and at Cobre Panama increased, which resulted in higher
absenteeism in the month. By February 2022, this wave of increased cases had subsided. In January 2022, Cobre Panama and
the Ministry of Health commenced a booster vaccination program at the mine site.
FFuullll YYeeaarr
Strong operational performance continues to be demonstrated with steadily improving plant availability and mill processing rates.
During the year ended December 31, 2021, 80.8 million tonnes of ore with an average grade of 0.45% were processed, with
recoveries of 91% achieved. This resulted in copper production of 331,000 tonnes and gold production of 141,637 ounces, which
are 61% and 67% higher, respectively, than the prior year. Cobre Panama has demonstrated a strong recovery from the prior year,
when it was placed on preservation and safe maintenance due to COVID-19 restrictions up until the third quarter of 2020.
Copper AISC1 and copper C1 cash cost1 of $1.61 per lb and $1.31 per lb, respectively, for the year ended December 31, 2021,
were in line with the previous year, reflecting increased production levels, offset by increased freight, electricity and fuel costs.
However, the ceiling price on the coal collar structures in place have been exercised from July 2021 onwards, thereby limiting
exposure to further increases in the coal price until December 2023.
A total of 341,078 tonnes of contained copper was sold during the year and sales revenues for the year ended December 31,
2021, amounted to $3,160 million, excluding the impact of the corporate sales hedge program, reflecting higher sales volumes
and higher realized metal prices. In comparison, 2020 sales were significantly affected by COVID-19 related restrictions as
operations were functioning on preservation and safe maintenance mode. For the same reasons, there were significant
improvements to EBITDA2 and gross profit for the year ended December 31, 2021, with totals of $2,021 million and $1,449 million,
respectively.
1 Copper C1 cash cost (copper C1), and copper all-in sustaining costs (copper AISC) are non-GAAP ratios which 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”.
2 EBITDA is a non-GAAP financial measure 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”.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 22
5757
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
OOuuttllooookk
For 2022, Cobre Panama is expected to achieve between 85 million and 90 million tonnes of mill throughput and annual
production of between 330,000 and 360,000 tonnes of copper and between 135,000 and 150,000 ounces of gold. 2022 grades
and recoveries are expected to be consistent with 2021 levels but will fluctuate from quarter to quarter.
An expansion of the process plant facilities and related infrastructure is well underway, supporting a 100 Mtpa throughput
operation. During 2022, the Company expects to expand the fleet by adding a fifth rope shovel and eight additional ultra-class
haul trucks. The plans also include developing the Colina pit and its associated overland conveyor and in-pit crushing facility.
Completion of construction works and commencement of commissioning is targeted for the first quarter of 2023 to allow for a
ramp up of production over the course of the year and achieve a throughput rate of 100 Mtpa by the end of 2023. The plant
expansion includes a new primary crushed ore screening facility, process water upgrades and the addition of a sixth ball mill. A
Letter of Intent was signed for incremental electrical supply for the CP100 Expansion, approximately 60-80MW, which is expected
to be renewable power, specifically hydroelectricity, sourced from the Panamanian grid.
The priority for Cobre Panama remains the health and safety of the workforce and surrounding communities. The operation
continues to work towards improving throughput and finding efficiencies, with a focus on managing costs. In addition, Cobre
Panama has committed to invest in new facilities and accommodation upgrades to allow more staff to be accommodated on site
in improved conditions.
During January 2022, the Government of Panama tabled a new proposal, namely that the GOP should receive $375 million in
benefits per year from Cobre Panama and that the existing revenue royalty will be replaced by a gross profit royalty. The parties
continue to finalize the detail behind these principles.
5858
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 23
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
KKaannssaannsshhii
Waste mined (000’s tonnes)
Ore mined (000’s tonnes)
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
22002211
22002200
14,100
10,309
23,572
13,481
69,758
61,972
9,344
8,221
35,142
34,423
Sulphide ore milled (000’s tonnes) 1
3,341
3,352
3,491
13,386
13,527
Sulphide ore grade processed (%)
Sulphide copper recovery (%)
Sulphide concentrate grade (%)
Mixed ore milled (000’s tonnes)1
Mixed ore grade processed (%)
Mixed copper recovery (%)
Mixed ore concentrate grade (%)
Oxide ore milled (000’s tonnes)1
Oxide ore grade processed (%)
Oxide copper recovery (%)
Oxide concentrate grade (%)
Copper production (tonnes)2
Copper smelter
0.95
90
23.3
0.94
91
27.9
0.79
90
24.3
0.88
0.83
91
92
24.5
23.1
1,866
1,970
1,987
7,601
8,167
0.93
81
22.0
0.94
81
20.2
0.96
81
24.1
0.96
1.00
82
81
21.3
26.0
1,788
1,792
1,654
7,164
7,440
0.80
68
16.9
0.69
65
16.2
1.02
75
22.8
0.72
0.93
69
76
17.1
20.8
51,939
50,987
52,630
202,159
221,487
Concentrate processed 3
364,031
325,068
354,155
1,259,856
1,320,328
Copper anodes produced (tonnes)3
85,484
75,929
87,392
301,556
323,667
Smelter copper recovery (%)
Acid tonnes produced (000’s)
Copper sales (tonnes)4
Gold production (ounces)
Gold sales (ounces)
Copper all-in sustaining cost (AISC) (per lb)5
Copper cash cost (C1) (per lb)5
Total copper cost (C3) (per lb)5
Financial Results ($ millions)
Copper
Gold
Other
Total sales revenues
Gross profit
EBITDA5
97
350
59,872
34,546
36,295
1.67
0.79
1,78
569
63
1
633
337
407
98
310
99
341
98
98
1,217
1,262
48,423
51,265
195,327
223,147
32,249
29,515
128,199
128,409
33,961
29,021
125,338
131,248
$2.08
$1.07
$2.12
445
60
-
505
239
288
$1.59
$1.01
$1.81
361
55
-
416
161
216
1.96
1.04
2.03
$1.60
$1.09
$1.86
1,794
1,309
219
229
1
1
2,014
1,539
969
464
1,178
712
1 Measured in dry metric tonnes (“DMT”).
2 Production presented on a copper concentrate basis, i.e. mine production only. Production does not include output from the smelter.
3 Concentrate processed in smelter and copper anodes produced are disclosed on a 100% basis, inclusive of Sentinel and third-party concentrate processed.
Concentrate processed is measured in DMT.
4 Sales include third-party sales of concentrate, cathode and anode attributable to Kansanshi (excluding copper anode sales attributable to Sentinel).
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 24
5959
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
5 Copper all-in sustaining costs (copper AISC), copper C1 cash cost (copper C1), and total copper cost (copper C3) are are non-GAAP ratios, and EBITDA is a non-GAAP
financial measure, and do not have standardized meanings under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See
“Regulatory Disclosures” for further information.
FFoouurrtthh QQuuaarrtteerr
Kansanshi delivered another consistent production quarter producing 51,939 tonnes of copper. Copper production was
marginally lower than the same quarter of 2020, due to lower plant throughput as a result of processing more competent mixed
and oxide ore. Gold production increased 17% compared to the same quarter of 2020 mainly as a result of operational
improvements.
Copper C1 cash cost1 was $0.22 per lb lower than the comparable quarter in 2020, mainly due to a favourable movement on
operational provisions following the conclusion on the arbitration case on electricity prices charged by ZESCO. This was a one-
time benefit that is not expected to recur in future quarters. This favourable impact on copper C1 cash cost1 was partially offset
by increases in labour costs and the impact of the appreciation of the ZMW. Copper AISC1 of $1.67 per lb was $0.08 per lb higher
than the comparable quarter in 2020 due to higher copper prices driving an increase in the royalty rate and higher capitalized
stripping2, partially offset by lower copper C1 cash costs1 in the quarter.
Sales revenues of $633 million were 52% higher than the same quarter of 2020, reflecting higher realized copper prices1,
excluding the impact of the corporate sales hedge program, and assisted by a 17% increase in copper sales volumes during the
quarter.
Gross profit of $337 million is 109% higher than the comparable period in 2020, reflecting higher sales revenues and lower copper
C1 cash costs1 but offset by higher royalties.
FFuullll YYeeaarr
Copper production for the year was 9% lower than the prior year, mainly due to lower grades in the mixed and oxide circuits
coupled with lower oxide recovery and 3% lower throughput, which was a result of unplanned maintenance and processing of
competent mixed ore. The decline in the oxide ore grade was due to the depletion of higher-grade areas and the increased
processing of low-grade ore from stockpiles and tarnished sulphide.
Gold production for the year remained consistent with that of the prior year.
Copper C1 cash cost1 of $1.04 per lb for the year ended December 31, 2021 was $0.05 per lb lower compared to the prior year,
mainly due to favourable movement on operational provisions following conclusion on the arbitration case on electricity prices,
partially offset by lower copper production and increases in labour costs, including the impact of the appreciation of the ZMW.
Copper AISC1 of $1.96 per lb for the year ended December 31, 2021, was $0.36 per lb higher than the prior year, reflecting higher
royalties and increased capitalized stripping2, partially offset by slightly lower copper C1 cash costs1. The increase in copper
prices during the year directly drove higher Zambian royalties, which increased copper AISC1 by $0.22 per lb.
Sales revenues of $2,014 million were 31% higher than the same period in 2020, reflecting higher realized copper and gold
prices1, excluding the impact of the corporate sales hedge program, offset by lower sales volumes.
Gross profit of $969 million was more than double the comparable period in 2020, reflecting higher sales revenues.
KKaannssaannsshhii CCooppppeerr SSmmeelltteerr
FFoouurrtthh QQuuaarrtteerr
The smelter treated a record 364,031 DMT of concentrate during the quarter and produced 85,484 tonnes of copper anode and
350,000 tonnes of sulphuric acid. The concentrate grade treated in the quarter was 24%.
FFuullll YYeeaarr
During the year, the smelter treated 1,259,856 DMT of concentrate, representing a 5% decrease from the prior year due to the
shutdown in June, and produced 301,556 tonnes of copper in anode and 1,217,000 tonnes of sulphuric acid. The smelter
commenced the planned shutdown in June, which lasted the entire month and returned to operation on schedule in early July.
1 Copper all-in sustaining costs (copper AISC), Copper C1 cash cost (copper C1), and realized metal prices are non-GAAP ratios, do not have standardized meanings
under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Capitalized stripping is a non-GAAP financial measure 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”.
6060
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 25
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
OOuuttllooookk
Production in 2022 is expected to be between 190,000 and 210,000 tonnes of copper, and between 120,000 and 130,000 ounces
of gold. Based on the current mine plan at Kansanshi, while processed ore is expected to be slightly higher in 2022 relative to
2021, grades are expected to decline over the course of the year from the levels seen in the fourth quarter of 2021.
The S3 Expansion is awaiting Board approval. As the Kansanshi pits expand, the volume of near-surface high-grade oxide ore
continues to decrease, whilst the proportion of primary sulphide ores increases with depth. The S3 Expansion is expected to
transition Kansanshi away from the current, more selective high-grade medium scale operation to a medium-grade, much larger
scale mining operation. The NI 43-101 Technical Report filed on September 14, 2020 includes the plan for a 25 Mtpa expansion
of the sulphide ore processing facility, increasing annual throughput to 53 Mtpa. The S3 Expansion would also involve a new
larger mining fleet, and combined with the standalone 25 Mtpa processing plant, is expected to create efficiencies and
economies of scale. The majority of the capital spend on the S3 Expansion is proposed for 2023-2024.
In parallel with the expansion of the mine and processing facilities, the Company plans to increase throughput capacity of the
Kansanshi smelter to 1.65 Mtpa from the current capacity level of 1.38 Mtpa. The capacity increase would be achieved partly
through enhancing copper concentrate grades by lowering the carbon and pyrite content of the Kansanshi and Sentinel
concentrate feeds and de-bottlenecking the gas handling circuit including incorporating a new acid plant. Concentrate
processing capacity is expected to be further expanded through modifications to the existing high-pressure leach (“HPL”) circuit.
In addition to increased capacity, the smelter expansion is expected to create greater flexibility should smelter capacity
constraints in the Zambian Copperbelt arise, as well as reduce downstream Scope 3 GHG emissions from the transport and
refining of copper concentrate at third party smelters.
The S3 Expansion remains subject to Board approval and discussions with the Zambian government to implement the appropriate
measures to support the S3 Expansion are ongoing.
SSeennttiinneell
Waste mined (000’s tonnes)
Ore mined (000’s tonnes)
Copper ore milled (000’s tonnes) 1
Copper ore grade processed (%)
Copper recovery (%)
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
22002211
24,624
14,863
15,030
0.45
89
27,405
15,246
14,319
0.47
88
26,152
14,002
13,816
0.51
90
102,445
57,380
56,329
0.47
89
22002200
97,970
60,098
56,589
0.49
90
Copper production (tonnes)
60,197
59,931
62,993
232,688
251,216
Concentrate grade (%)
Copper sales (tonnes)
28.0
27.2
26.7
27.5
26.6
58,087
51,092
78,975
232,812
231,731
Copper all-in sustaining cost (AISC) (per lb)2
Copper cash cost (C1) (per lb)2
Total copper cost (C3) (per lb)2
Financial Results ($ millions)
Sales revenues – Copper
Gross profit
EBITDA2
1 Measured in dry metric tonnes (“DMT”)
$2.39
$1.51
$2.59
527
233
300
$2.16
$1.37
$2.33
449
200
261
$2.04
$1.44
$2.28
526
194
277
$2.21
$1.44
$2.40
2,032
916
1,178
$1.92
$1.40
$2.14
1,353
363
614
2 Copper all-in sustaining costs (copper AISC), copper C1 cash cost (copper C1), and total copper cost (copper C3) are non-GAAP ratios, and EBITDA is a non-GAAP
financial measure, and do not have standardized meanings under IFRS and might not be comparable to similar measures disclosed by other issuers. See “Regulatory
Disclosures” for further information.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 26
6161
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
FFoouurrtthh QQuuaarrtteerr
Sentinel delivered its best quarterly production of the year with 60,197 tonnes of copper produced, and achieved a record
quarterly throughput. The record throughput was 9% above the comparable quarter in 2020 and assisted by soft ore treatment
and utilization of secondary crushing. Continued optimization of the third and fourth flotation column cells supported the
achievement of record concentrate grades.
Fourth quarter copper production reflects a decrease of 4% compared to the same period in 2020, mainly attributable to lower-
grade ore and slightly lower recovery, partially offset by higher throughput. Grade was lower due to spatial variances between
actual and planned mining locations, in particular the Stage 1 north wall and lower eastern extent of Stage 2, and further impacted
by feeding mineralized waste to supplement ore feed. Recovery was slightly impacted due to higher proportion of transitional ore
from the Stage 2 pit.
Copper C1 cash cost1 in the fourth quarter of $1.51 per lb was $0.07 per lb higher than the comparable period in 2020, reflecting
lower production levels as a result of the lower-grade ores processed, as well as higher consumables, fuel and labour costs,
including the impact of the appreciation of the ZMW. Fourth quarter copper AISC1 of $2.39 per lb was $0.35 per lb higher than
the comparable period in 2020 due to higher copper C1 cash costs1, royalties and sustaining capital expenditure2. The higher
Zambian royalties, due to the higher copper price, increased copper AISC1 by $0.22 per lb.
Sales revenues of $527 million in the fourth quarter were consistent with the same period in 2020, due to higher realized copper
prices1, excluding the impact of the corporate sales hedge program, offset by lower sales volumes. Sales revenues comprised of
both copper concentrate and anode with a higher proportion of revenue realized from copper anode.
Gross profit of $233 million was 20% higher than the comparable period in 2020, reflecting lower depreciation and higher realized
copper prices1.
FFuullll YYeeaarr
Copper production for the year ended December 31, 2021, decreased by 7% compared to the prior year, reflecting lower
throughput, grade and recovery. During the first quarter of 2021, throughput was limited due to a ball mill trunnion failure. Grades
during the year were lower due to higher volumes of lower-grade ore feed from the eastern extent of the Stage 2 pit. Recovery
was also impacted by the higher proportion of transitional ore feed from the Stage 2 pit.
Copper C1 cash cost1 of $1.44 was $0.04 per lb higher than the prior year, impacted by lower production levels and higher
consumable and employee costs due to the appreciation of the ZMW. Copper AISC1 of $2.21 per lb was $0.29 per lb higher than
the prior year, reflecting higher copper C1 cash costs1, royalties and sustaining capital expenditure2. The higher Zambian
royalties, due to the higher copper price, increased copper AISC1 by $0.18 per lb.
Sales revenues of $2,032 million were 50% higher than the prior year, primarily due to higher realized copper prices1, excluding
the impact of the corporate sales hedge program. Sales revenues is comprised of both concentrate and anode sales, with a higher
proportion of revenue realized from copper anode.
Gross profit of $916 million for the year was over 152% higher than the prior year, reflecting higher sales revenues.
OOuuttllooookk
Copper production in 2022 is expected to be between 260,000 and 280,000 tonnes.
Grade is expected to improve from 2021 levels as higher-grade ore is exposed in both the Stage 1 and Stage 2 pits. The focus will
be on developing the pits to maintain consistent ore feed as well as supporting the successful commissioning and ramp up of the
fourth in-pit crusher, which is already underway after completion of construction in December 2021. The fourth in-pit crusher is
expected to enable the plant to increase throughput to 62 Mtpa in 2022.
1 Copper all-in sustaining costs (copper AISC), copper C1 cash cost (copper C1), and realized metal prices are non-GAAP ratios, do not have standardized meanings
under IFRS and might not be comparable to similar financial measures or measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Sustaining capital expenditure is a non-GAAP financial measure which does not have a standardized meaning prescribed by IFRS and might not be comparable to
similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
6262
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 27
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
RRaavveennsstthhoorrppee
Beneficiated ore tonnes processed (000’s)
Beneficiated ore grade processed (%)
Nickel recovery (%)
Nickel production (contained tonnes)
Nickel sales (contained tonnes)
Nickel production (payable tonnes)
Nickel sales (payable tonnes)
Nickel all-in sustaining cost (AISC) (per lb)1
Nickel cash cost (C1) (per lb)1
Total nickel cost (C3) (per lb)1
Financial Results ($ millions)
Sales revenues
Gross profit (loss)
EBITDA1
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
544
0.98
74
3,385
3,756
2,855
3,175
$11.15
$10.93
$12.87
69
(25)
(16)
667
0.93
72
4,248
4,055
3,531
3,392
$11.66
$9.58
$11.32
71
(24)
(16)
728
0.99
78
5,603
5,343
4,534
4,342
$6.09
$5.39
$6.78
75
7
15
22002211
2,441
1.01
74
16,818
17,078
14,018
14,313
$9.87
$8.59
$10.24
286
(63)
(29)
22002200
1,954
0.98
74
12,695
12,120
10,215
9,787
$6.46
$5.72
$7.19
156
(68)
(48)
1 Nickel all-in sustaining cost (nickel AISC), nickel C1 cash cost (nickel C1), total nickel cost (nickel C3) are non-GAAP ratios, and EBITDA is a non-GAAP financial measure.
These measures do not have standardized meanings under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory
Disclosures” for further information.
FFoouurrtthh QQuuaarrtteerr aanndd FFuullll YYeeaarr
Nickel production in the fourth quarter of 2021 was 3,385 contained tonnes of nickel, delivering a total annual production of
16,818 contained tonnes of nickel in 2021. Fourth quarter production was impacted by the delayed transition to the Shoemaker
Levy orebody and unplanned maintenance at the power plant main steam pipe. As a result, production ceased from December
18, 2021 until January 5, 2022, when the main steam pipe was fully repaired.
2021 performance was impacted by delays to the completion of the Shoemaker Levy project. The limonite ore from Hale Bopp
was low grade and had high clay content causing consistent materials handling issues in the limonite beneficiation plant,
restricting autoclave throughput. Operational performance was also impacted by high turnover and high volatility in the Western
Australian labour market.
Commissioning of Shoemaker Levy Conveyor and Crushing station at Ravensthorpe was completed during the quarter. All
limonite put through the plant in December was mined and delivered from the Shoemaker Levy pit. The material handling and
beneficiation upgrade performance was significantly improved compared to Hale Bopp ore, in line with expectations.
COVID-19 controls continued to impact availability of resource industry workers, but once the Western Australia borders are
opened, this may provide better opportunities for interstate and international recruitment.
Sales revenues were $69 million in the fourth quarter and $286 million for the year. The impact of lower production and sales in
the fourth quarter of 2021, compared to the same quarter of 2020, were mitigated by higher realized nickel prices, excluding the
impact of corporate sales hedge program. The increase in sales revenues for the full year reflected higher sales volumes and
higher realized nickel prices.
Nickel C1 cash cost1 of $10.93 per lb and nickel AISC1 of $11.15 per lb for the fourth quarter was impacted by lower production,
higher sulphur prices, unplanned diesel costs and shutdowns driving higher maintenance costs. Nickel C1 cash cost1 and AISC1
for the full year were $8.59 per lb and $9.87 per lb, respectively.
1 Nickel all-in sustaining cost (nickel AISC) and nickel C1 cash cost (nickel C1), do not have standardized meanings under IFRS and might not be comparable to similar
financial measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 28
6363
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
Ravensthorpe incurred a gross loss during the fourth quarter of $25 million due to lower sales volumes and higher costs of
production during the transition period to the Shoemaker Levy orebody. Gross loss for the full year was $63 million with higher
sales revenues offset by higher sulphur prices and freight costs.
OOuuttllooookk
Production guidance for 2022 is between 25,000 and 30,000 contained tonnes of nickel.
Mining is focused on optimizing Shoemaker Levy operating strategies to minimize operating costs. The focus for the plant
remains on improving availability and optimizing operating parameters for Shoemaker Levy ore. Major shutdowns and descales
of autoclaves in 2022 are scheduled in March and August. Skilled labour availability and high sulphur prices remain a challenge.
Demand for the MHP product is strong with negotiated payables in 2022 significantly higher than 2021.
GGuueellbb MMoogghhrreeiinn
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
22002211
22002200
Waste mined (000’s tonnes)
2,871
1,294
906
5,160
10,190
Ore mined (000’s tonnes)
-
22
1,189
1,757
4,354
Sulphide ore milled (000’s tonnes) 1
585
858
986
3,426
3,788
Sulphide ore grade processed (%)
0.58
0.54
0.82
0.62
0.85
Sulphide copper recovery (%)
76
89
91
88
89
Copper production (tonnes)
2,588
4,091
7,369
18,845
28,491
Copper sales (tonnes)
4,359
4,522
7,365
23,614
29,899
Gold production (ounces)
6,552
8,174
13,115
38,431
47,637
Gold sales (ounces)
8,189
8,822
14,885
46,661
53,217
Magnetite concentrate production (WMT)2
56,058
123,604
114,128
375,268
579,572
Magnetite concentrate sales (WMT)2
45,700
135,780
136,316
362,083
590,013
Copper all-in sustaining cost (AISC) (per lb)3
Copper cash cost (C1) (per lb)3
Financial Results ($ millions)
Sales revenues
Gross profit
EBITDA3
$4.57
$4.11
$1.95
$1.61
$0.36
$0.09
$1.66
$1.38
$0.70
$0.38
55
69
5
11
20
26
84
38
45
313
105
140
300
103
139
1 Measured in dry metric tonnes (“DMT”)
2 Magnetite concentrate production and sales volumes are measured in wet metric tonnes (“WMT”).
3 Copper all-in sustaining costs (copper AISC), copper C1 cash cost (copper C1), are non-GAAP ratios, and EBITDA is a non-GAAP financial measure, and do not have
standardized meanings under IFRS and might not be comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
FFoouurrtthh QQuuaarrtteerr aanndd FFuullll YYeeaarr
Copper production for the quarter and year ended December 31, 2021 were 65% and 34% lower, respectively, than the same
periods in 2020, as a result of lower-grade ore as the feed has transitioned from open-pit ore to lower-grade stockpiled material.
A crusher failure, resulting in fourteen days downtime in December 2021, reduced throughput in the last quarter of 2021. The
crusher was fully repaired in December 2021.
Gold production for the quarter and year ended December 31, 2021 were 50% and 19% lower, respectively, than the same periods
in 2020, as a result of lower-grade ore.
Magnetite production for the quarter and year ended December 31, 2021 were 51% and 35% lower, respectively, compared to
the same periods in 2020 due to lower magnetite feed grade and throughput.
6464
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 29
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Copper C1 cash cost1 for the quarter and year ended December 31, 2021 were $4.02 and $1.00 per lb higher, respectively, than
the same periods in 2020, mainly due to higher maintenance costs, fuel prices and significantly reduced production. This in turn,
was the main driver for the increase in copper AISC1 of $4.21 and $0.96 per lb for the quarter and year ended December 31, 2021,
respectively, as compared to the same periods in 2020.
Sales revenues for the fourth quarter were 35% lower than the same period in 2020, mainly due to lower sales volumes, whereas
for the full year 2021, sales revenues were 4% higher than that of the prior year, due to higher realized copper prices1, partially
offset by lower sales volumes. Gross profit for the fourth quarter was $33 million lower than the comparable period in 2020 due
to lower sales revenues and higher copper C1 costs1. Gross profit for the full year was $2 million higher than that of the prior year,
attributable to higher sales revenues.
OOuuttllooookk
Production in 2022 is expected to be between 12,000 to 13,000 tonnes of copper, 30,000 ounces of gold, and 400,000 WMT of
magnetite concentrate.
With the final cutback of the main pit approved during the third quarter of 2021, the project is expected to contribute an additional
3 million tonnes of plant feed over the next two to three years to supplement the feed from lower-grade ore stockpiles and is
expected to extend mining operations to the end of 2024. Ore supply from this source is expected to commence in 2023 following
a period of waste stripping.
Production forecast includes approximately 600 hours of planned plant shutdowns in 2022, relating to SAG mill reline, ball mill
girth gear change out and monthly planned maintenance.
LLaass CCrruucceess
Copper cathode production (tonnes)
Copper cathode sales (tonnes)
Copper cash cost (C1) (per lb)1
Financial Results ($ millions)
Sales revenues
Gross profit (loss)
EBITDA1
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
2,805
2,914
$4.01
29
3
5
3,222
3,234
$2.46
30
12
12
10,234
9,915
$1.56
70
(11)
35
22002211
13,652
14,322
$2.67
131
33
47
22002200
54,352
54,852
$1.05
332
(13)
204
1 Copper C1 cash cost (copper C1) is a non-GAAP ratio, and EBITDA is a non-GAAP financial measure, and do not have standardized meanings under IFRS and might
not be comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
FFoouurrtthh QQuuaarrtteerr aanndd FFuullll YYeeaarr
After 12 years of successful operation of its open-pit mine and hydrometallurgical plant, mining activities ceased in August 2020
with the depletion of ore in Phase VI, while related ore stockpiles continued to be processed until completion by February 2021.
Subsequently, the operation has transitioned to the re-processing of high-grade tailings, which has effectively extended the mine
life and is expected to continue until at least the end of the third quarter of 2023.
Copper production for both the fourth quarter and full year 2021 decreased significantly compared with the same periods in 2020,
due to lower grade and recoveries of the tailings being processed compared to previously processed fresh ore.
Copper C1 cash cost1 of $4.01 per lb and $2.67 per lb for the fourth quarter and full year, respectively, was $2.45 per lb and $1.62
per lb higher than the same periods in 2020, respectively, reflecting the impact of lower copper production and record high
electricity prices in Spain during the second half of 2021.
1 Copper all-in sustaining costs (copper AISC), Copper C1 cash cost (copper C1) and realized metal prices are non-GAAP ratios, do not have standardized meanings
under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 30
6565
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
Sales revenues of $29 million for the quarter and $131 million for the year ended December 31, 2021, were approximately 60%
lower compared to the same periods in 2020 due to lower volume sold partially offset by higher realized copper prices1. Despite
a significant reduction in production and underlying sales revenues and increase of unit cash cost1, gross profit was $3 million
compared to a gross loss of $11 million in the fourth quarter of 2020 and gross profit for the year was maintained at $33 million
compared to a gross loss of $13 million in the prior year.
EBITDA1 in 2021 was lower than periods in 2020 because of reduced sales and production volumes.
OOuuttllooookk
Copper production guidance for 2022 is between 9,000 and 10,000 tonnes. Cost and process optimization to re-process high-
grade tailings will be the focus in 2022, with a focus on extending the re-processing of high-grade tailings beyond the third quarter
of 2023, including treatment of other external concentrates.
Although the mine has depleted the secondary sulphide resources and reserves from the previously published NI 43-101
Technical Report dated June 2015, the Company has recently published an updated technical report dated January 17, 2022, with
an updated Mineral Resource estimate that upgrades the previous PPS Inferred Mineral Resources to 41.2 million tonnes of PPS
Measured and Indicated Mineral Resources, which includes 5.02 million tonnes of Indicated Mineral Resources tabled as
stockpiles. There is an additional 7.1 million tonnes of Inferred Mineral Resources. Further detailed technical work is being
conducted to convert Mineral Resources to Mineral Reserves as part of the Las Cruces Underground project.
In 2021, the mine transitioned from open-pit mining to re-processing of high-grade tailings, which is expected to continue until
2023. This retreatment project has the benefit of not only producing some low-cost copper, but more importantly, keeping the
existing team in place, as work on the Las Cruces Underground project advances. The underground project involves
supplementing the existing copper facilities at Las Cruces with new processing capacity for zinc, silver and lead. These new
facilities are required as the underground project will mine the PPS ore body, which is below the mined-out secondary copper
sulphide ore body.
Work in 2022 will focus on advancing the design of the underground mine and plant, obtaining the water concession and release
of an initial reserve. Given the work still required, the project is not included in our guidance, but management is planning for
completion of all technical and permitting work in 2022.
ÇÇaayyeellii
Copper production (tonnes)
Copper sales (tonnes)
Zinc production (tonnes)
Zinc sales (tonnes)
Copper cash cost (C1) (per lb)1
Financial Results ($ millions)
Sales revenues
Gross profit
EBITDA1
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
3,532
978
1,576
1,941
($0.44)
12
2
5
3,693
2,902
2,095
1,690
$1.15
24
9
14
3,534
2,672
1,943
1,882
$0.96
18
6
9
22002211
14,799
11,343
6,754
5,316
$0.99
99
42
59
22002200
13,334
11,443
4,512
5,364
$1.24
64
6
26
1 Realized metal prices and copper C1 cash cost (copper C1) are non-GAAP ratios, and EBITDA is a non-GAAP financial measure. These do not have standardized
meanings under IFRS and might not be comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
FFoouurrtthh QQuuaarrtteerr aanndd FFuullll YYeeaarr
Copper production for the fourth quarter was in line with the same period in 2020 due to higher head grades and recovery, which
were offset by lower throughput. For the year ended December 31, 2021, copper production was 11% higher compared to the
prior year due to higher recovery, grade and throughput.
6666
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 31
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Zinc production was 19% lower in the fourth quarter compared to the same period in 2020 due to lower recovery and throughput.
Zinc production for the year ended December 31, 2021 was 50% higher than the prior year due to higher recovery, grade and
throughput.
Copper C1 cash cost1 for the quarter ended December 31, 2021 decreased by $1.40 per lb compared to the same period in 2020,
mainly due to higher by-product revenue related to higher price and decreased copper sales. For the year ended December 31,
2021, copper C1 cash cost decreased by $0.25 per lb compared to the same period in 2020, mainly due to the impact of higher
copper production and higher by product revenue.
Sales revenues for the fourth quarter were $6 million lower compared to the same period in 2020 due to lower sales volumes
related to the timing of a shipment at year end. For the year ended December 31, 2021, sales revenues were $35 million higher
compared to the same period in 2020, due to higher sales volumes as a result of higher realized metal prices.
Gross profit for the quarter ended December 31, 2021 was $4 million lower as compared to the same period in 2020, due to lower
sales revenue. Gross profit for the year ended December 31, 2021 was $36 million higher compared to the same period in 2020
due to higher sales revenue related to higher metal prices.
OOuuttllooookk
Production for 2022 is expected to be between 9,000 and 10,000 tonnes of copper and 3,000 tonnes of zinc, reflecting a declining
number of work areas as the mine approaches reserve depletion in 2025.
Production is expected to be challenging due to poor ground conditions in the areas planned to be mined and the closure of the
shaft at the end of the third quarter of 2021.
PPyyhhäässaallmmii
Copper production (tonnes)
Copper sales (tonnes)
Pyrite production (tonnes)
Pyrite sales (tonnes)
Copper cash cost (C1) (per lb)1
Financial Results ($ millions)
Sales revenues
Gross profit
EBITDA1
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
732
765
693
844
891
1,079
22002211
3,292
3,393
22002200
4,483
4,612
107,984
99,342
132,415
434,148
462,160
106,701
99,133
119,593
437,400
460,878
$2.81
$1.86
$2.06
$1.54
$1.48
12
4
5
13
5
4
12
3
4
52
21
20
46
8
12
1 Copper C1 cash cost (copper C1) is a non-GAAP ratio, and EBITDA is a non-GAAP financial measure. These do not have standardized meanings under IFRS and might
not be comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
FFoouurrtthh QQuuaarrtteerr aanndd FFuullll YYeeaarr
Copper production was 18% and 27% lower in the fourth quarter and full year 2021, respectively, compared to the same periods
in 2020, due to lower throughput and copper grade. This reflects the nearly depleted mineral reserve and the constraint on
available work areas at this stage of the mine life.
Sales revenues for the quarter and year ended December 31, 2021 were at similar levels to the same periods in 2020 with higher
realized metal prices offsetting the impact of lower sales volumes. Gross profit for the fourth quarter remained consistent with
the comparable quarter in 2020, while the gross profit for the full year 2021 increased by $13 million.
OOuuttllooookk
Production in 2022 is expected to be approximately 500 tonnes of copper. The operation is also expected to produce 300,000
tonnes of pyrite. Mining is expected to end during the first quarter of 2022.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 32
6767
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
SUMMARY FINANCIAL RESULTS
Sales revenues1
Gross profit (loss)
Cobre Panama
Kansanshi
Sentinel
Guelb Moghrein
Las Cruces
Çayeli
Pyhäsalmi
Ravensthorpe
Corporate
Total gross profit
Exploration
General and administrative
Impairment expense
Other income (expense)
Net finance expense2
Loss on redemption of debt
Adjustment for expected phasing of Zambian VAT
Income tax expense
Net earnings (loss)
Net earnings (loss) attributable to:
Non-controlling interests
Shareholders of the Company
Adjusted earnings (loss)3
Earnings (loss) per share
Basic
Diluted
Adjusted3
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
2,061
1,747
1,562
336
337
233
5
3
2
4
(25)
(111)
784
(7)
(29)
(44)
18
(165)
(21)
2
(239)
299
52
247
306
$0.36
$0.36
$0.44
359
239
200
20
12
9
5
(24)
(207)
613
(6)
(31)
-
199
(154)
-
(4)
(235)
382
79
303
197
$0.44
$0.44
$0.29
163)
161)
194)
38
(11)
6
3
7
(118)
443
(6)
(29)
-
(51)
(189)
(3)
5
(147)
23
14)
9)
53
$0.01)
$0.01)
$0.08)
22002211
7,212
1,449
969
916
105
33
42
21
(63)
(910)
2,562
(20)
(118)
(44)
218
(660)
(21)
(16)
(812)
1,089
257
832
826
$1.21
$1.20
$1.20
22002200
5,070
274
464
363
103
(13)
6
8
(68)
(60)
1,077
(15)
(99)
-
(268)
(738)
(5)
80
(256)
(224)
(44)
(180)
(46)
($0.26)
($0.26)
($0.07)
Basic weighted average number of shares (in 000’s)
688,691
688,852
688,939
688,674
688,469)
1 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 year ended 31 December, 2020 has been revised for this change. Sales revenues and cost of sales for the full year 2020 have
both been reduced by $129 million compared to the previous reported values(see “Precious Metal Stream Arrangement”).
2 Net finance expense comprises finance income and finance costs.
3 Adjusted earnings (loss) is a non-GAAP financial measure and Adjusted earnings (loss) per share is a non-GAAP ratio. Such 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 (loss) was previously named
comparative earnings (loss), the composition remains the same. See “Regulatory Disclosures”.
6868
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 33
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
SSaalleess RReevveennuueess
FOURTH QUARTER
QQUUAARRTTEERRLLYY RREEVVEENNUUEE BBYY CCOOMMMMOODDIITTYY
QQUUAARRTTEERRLLYY RREEVVEENNUUEE BBYY OOPPEERRAATTIIOONN
11,,556622
111144
3322
6688
11,,334488
s
n
o
i
l
l
i
m
$
22,,006611
111144
3366
6622
11,,884499
QQ44 22002200
QQ44 22002211
s
n
o
i
l
l
i
m
$
11,,556622
226633
552266
441166
447711
((111144))
QQ44 22002200
22,,006611
118833
552277
663333
882211
((110033))
QQ44 22002211
Copper
Gold
Nickel
Other
Cobre Panama
Kansanshi
Sentinel
Hedge gain (loss)
Other
Sales revenues for the fourth quarter of 2021 of $2,061 million were 32%, or $499 million higher than the comparable quarter of
2020, reflecting the increase in copper sales revenues of $501 million, higher production at Cobre Panama as well as higher
realized copper prices1.
Copper sales revenues for the fourth quarter of 2021 of $1,849 million were 37%, or $501 million, higher than the comparable
period in 2020 reflecting the 40% higher net realized copper prices1. Total copper sales volumes of 213,087 tonnes for the fourth
quarter of 2021 were 2% lower than the same period in 2020, but represented the highest quarterly result for the year and
contributed to the Company’s highest annual total copper sales to date. Copper sales revenues included a $103 million loss, or
$0.22 per lb, on the copper sales hedge program, compared with a loss of $111 million, or $0.23 per lb in the comparable period
in 2020.
The realized price1 for copper of $4.08 per lb for the fourth quarter of 2021 was 37% higher than the same period in 2020. This
compares to an increase of 38% in the average LME price of copper for the same period, to $4.40 per lb.
Gold sales revenues were in line with the comparable period in 2020. A 12% increase in gold sales volumes, attributable to Cobre
Panama and Kansanshi, which contributed total gold revenue of $37 million, and $63 million, respectively was offset by 5% lower
realized prices1 and $22 million higher cost for the purchase of refinery-backed gold and silver credits to satisfy the precious
metal stream obligation. A total of $61 million cost for the purchase of refinery credits was recognized within revenues.
Nickel sales revenues of $62 million for the fourth quarter of 2021 include a $1 million loss on the nickel sales hedge program, or
$0.14 per lb compared with a $3 million loss in the comparative quarter, or $0.31 per lb. Nickel sales volumes were 3,756
contained tonnes for the quarter, a 30% decrease compared to the same quarter of 2020, in line with the decrease in production
during the quarter.
1 Realized metal prices are non-GAAP ratios, do not have standardized meanings under IFRS and might not be comparable to similar financial measures disclosed by
other issuers. See “Regulatory Disclosures” for further information.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 34
6969
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
FULL YEAR
FFUULLLL YYEEAARR RREEVVEENNUUEE BBYY CCOOMMMMOODDIITTYY
FFUULLLL YYEEAARR RREEVVEENNUUEE BBYY OOPPEERRAATTIIOONN
77,,221122
447700
115566
225544
66,,333322
s
n
o
i
l
l
i
m
$
111100
115599
55,,007700
442244
44,,337777
22002200
22002211
Copper
Gold
Nickel
Other
s
n
o
i
l
l
i
m
$
77,,221122
990088
22,,003322
22,,001144
33,,116600
((990022))
22002211
55,,007700
990000
11,,335533
11,,553399
11,,332266
22002200
((4488))
Cobre Panama
Kansanshi
Sentinel
Hedge gain (loss)
Other
Sales revenues for the year ended December 31, 2021 were $7,212 million, 42%, or $2,142 million higher than the prior year,
reflecting an increase in copper sales revenues and gold sales revenues of $1,955 million and $46 million respectively, together
with a $95 million increase in nickel sales revenues as Ravensthorpe ramped up following restart of production in late April 2020.
Copper sales revenues of $6,332 million were 45%, or $1,955 million, higher than the prior year reflecting higher sales volumes
at Cobre Panama, combined with higher net realized prices1. Copper sales revenues include an $892 million loss, or $0.49 per lb,
on the copper sales hedge program, compared with a loss of $59 million, or $0.04 per lb, in the prior year.
The realized price for copper1 of $3.64 per lb in 2021 was 33% higher than the prior year. This compares to an increase of 51% in
the average LME price of copper for the same period, to $4.23 per lb.
Gold sales revenues in 2021 were 11%, or $46 million, higher than the prior year, reflecting a 16% increase in gold sales volumes,
attributable to Cobre Panama, which contributed total gold revenue of $166 million, an increase of $65 million, and higher realized
gold prices1. Cobre Panama gold and silver revenues of $208 million include $156 million of gold and silver revenues recognized
under the precious metal stream, and an associated $237 million cost for the purchase of refinery-backed gold and silver credits
to satisfy the obligation.
Nickel sales revenues of $254 million have been recognized for the year ended December 31, 2021 and include a $10 million loss
on the nickel sales hedge program, or $0.32 per lb compared with an $11 million gain, or $0.51 per lb, in the comparative period.
Nickel sales volumes at Ravensthorpe, were 17,078 contained tonnes sold for the year, a 41% increase from the prior year.
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
Copper selling price (per lb)
QQ44 22002211
QQ33 22002211
QQ44 22002200
Average LME cash price
Realized copper price
Treatment/refining charges (“TC/RC”) (per lb)
Freight charges (per lb)
Net realized copper price1
$4.40
$4.08
($0.11)
($0.03)
$4.25
$3.68
($0.11)
($0.04)
$3.20
$2.97
($0.11)
($0.04)
22002211
$4.23
$3.64
($0.12)
($0.03)
22002200
$2.80
$2.74
($0.10)
($0.04)
$3.94
$3.53
$2.82
$3.49
$2.60
1 Realized metal prices are a non-GAAP ratio, do not have standardized meanings under IFRS and might not be comparable to similar financial measures disclosed by
other issuers. See “Regulatory Disclosures” for further information
7070
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 35
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Gold selling price (per oz)
Average LBMA cash price
Net realized gold price1
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
22002211
22002200
$1,795
$1,677
$1,790
$1,683
$1,876
$1,771
$1,799
$1,673
$1,771
$1,662
1 Excludes gold revenues recognized under the precious metal stream arrangement.
Nickel selling price (per payable lb)
QQ44 22002211
QQ33 22002211
QQ44 22002200
Average LME cash price
Net realized nickel price
$8.99
$8.88
$8.67
$8.50
$7.11
$7.11
22002211
$8.39
$8.05
22002200
$6.25
$7.37
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
Given the volatility in commodity prices, significant variances can arise between average market price and net realized prices due
to the timing of sales during the period. Realized metal prices are non-GAAP ratios, and are not recognized under IFRS and might
not be comparable to similar measures disclosed by other issuers. Refer to “Regulatory Disclosures”.
Details of the Company’s hedging program and the contracts held are included on page 44.
80.
GGrroossss PPrrooffiitt
FFoouurrtthh QQuuaarrtteerr
Gross profit for the quarter of $784 million was $341 million higher than the fourth quarter of 2020, due to higher metal prices.
Gross profit in Q4 2020
Higher metal prices
Movement in hedge program
Lower sales volumes and change in sales mix
Higher by-product contribution
Higher cash costs
Higher royalty expense
Lower depreciation
Negative impact of foreign exchange on operating costs
Gross profit in Q4 20211
443
508
11
(5)
14
(138)
(55)
12
(6)
784
1 Gross profit is reconciled to EBITDA by including exploration costs of $7 million, general and administrative costs of $29 million, share of profit in joint venture of $17
million, and adding back depreciation of $314 million and other expense of $6 million (a reconciliation of EBITDA is included in “Regulatory Disclosures”).
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 36
7171
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
QQUUAARRTTEERRLLYY GGRROOSSSS PPRROOFFIITT BBYY OOPPEERRAATTIIOONN
s
n
o
i
l
l
i
m
$
3399
444433
119944
116611
116633
((111144))
QQ44 22002200
778844
223333
333377
333366
((110033))
QQ44 22002211
((1199))
Cobre Panama
Kansanshi
Sentinel
Hedge gain (loss)
Other
Gross profit for the fourth quarter of 2021 was $784 million, an increase of $341 million, or 77%, from the same period in 2020,
and was driven by higher net realized prices resulting in increased revenues, offset by the higher royalties, higher fuel, electricity,
consumables and freight cash costs and lower sales volumes. A loss of $103 million was recognized in the quarter on the
corporate sales hedge program, compared to a loss of $114 million in the comparative quarter.
FFuullll YYeeaarr
Gross profit for the year ended December 31, 2021 of $2,562 million was $1,485 million higher than 2020, based on higher metal
prices and contribution from Cobre Panama.
Gross profit in 2020
Higher metal prices
Movement in hedge program
Higher sales volumes
Higher by-product contribution
Higher cash costs
Higher royalty expense
Increase in depreciation
Positive impact of foreign exchange on operating costs
Gross profit in 20211
1,077
2,593
(854)
104
70
(256)
(219)
40
7
2,562
1 Gross profit is reconciled to EBITDA by including exploration costs of $20 million, general and administrative costs of $118 million, share of profit in joint venture of $75
million and adding back depreciation of $1,174 million, and other expense of $11 million (a reconciliation of EBITDA is included in “Regulatory Disclosures”).
7272
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 37
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
FFUULLLL YYEEAARR GGRROOSSSS PPRROOFFIITT BBYY OOPPEERRAATTIIOONN
s
n
o
i
l
l
i
m
$
11,,007777
2244
336633
227744
((4488))
446644
22002200
22,,556622
113300
991166
996699
11,,444499
((990022))
22002211
Cobre Panama
Kansanshi
Sentinel
Hedge gain (loss)
Other
Gross profit of $2,562 million was a notable increase of $1,485 million, or 138%, from 2020, and driven by increased sales volumes
at Cobre Panama and higher net realized prices, with some offset from higher cash costs, principally fuel, freight and royalties. A
loss of $902 million was recognized for the year on the corporate sales hedge program, compared to a $48 million loss in 2020.
NNeett EEaarrnniinnggss
FFoouurrtthh QQuuaarrtteerr
Net earnings attributable to shareholders of the Company for the fourth quarter of 2021 were $247 million, and is $238 million
higher than the same period in 2020. Basic earnings per share was $0.36 during the quarter compared to $0.01 per share in the
same quarter of 2020. Net finance expense of $165 million was $24 million lower than the fourth quarter of 2020 as debt levels
continued to decrease. Net finance expense consists of interest on debt of $128 million, interest on related party debt of $30
million, accretion of deferred revenue and restoration provision of $16 million and $3 million, respectively, and other interest
expense of $6 million; offset by interest capitalized of $2 million and interest income of $16 million.
A loss of $21 million was recognized as a result of the redemption of the 2023 notes. A $17 million share of profit in Korea Panama
Mining Corporation (“KPMC”) was recognized in the quarter, for which a loss of $4 million was recognized in the comparable
period of 2020.
An impairment of $44 million was recognized in relation to the Sese power project, specific housing assets constructed at the
Sentinel mine for its employees, and exploration activities, separate from the Company’s development projects.
An income tax expense of $239 million was recognized in the fourth quarter of 2021, compared with a $147 million expense
recognized in the comparable period in 2020, due to an increase of pre-tax earnings at operations and reflecting applicable
statutory tax rates, which range from 20% to 35% for the Company’s operations. No tax credits have been recognized with respect
to losses of $103 million realized under the Company’s copper and nickel sales hedge program.
FFuullll YYeeaarr
Net earnings attributable to shareholders of the Company of $832 million for the year ended December 31, 2021, was $1,012
million higher than the same period in 2020. Basic earnings per share of $1.21 compares to a loss per share of $0.26 in the prior
year. Net finance expense of $660 million was $78 million lower than the prior year as debt levels continued to decrease. Net
finance expense consists of interest on debt of $532 million, interest on related party debt of $119 million, accretion of deferred
revenue and restoration provision of $64 million and $11 million, respectively, and other interest expense of $3 million; offset by
interest capitalized of $4 million and interest income of $65 million.
Other income of $218 million includes foreign exchange gains of $159 million, principally attributable to foreign exchange gains
arising on translating the Zambian VAT receivable. This compares to a loss of $225 million in the prior year ended December 31,
2020.
A $75 million share of the profit in KPMC was recognized in 2021, for which a loss of $45 million was recognized in the prior year.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 38
7373
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
A $16 million expense reflecting the expected phasing of the Zambian VAT was recognized in the year, compared with a credit of
$80 million recognized in 2020, which represented the expected phasing of receipts, and the impact of foreign exchange, using
a ZMW risk-free rate.
An income tax expense of $812 million was recognized in 2021, compared with an income tax expense of $256 million recognized
in the prior year, reflecting applicable statutory tax rates, which range from 20% to 35% for the Company’s operations. No tax
credits have been recognized with respect to losses of $902 million realized under the Company’s copper and nickel sales hedge
program. The effective tax rate for the year ended December 31, 2021 excluding the impact of interest expense was 31%.
AAddjjuusstteedd EEaarrnniinnggss11
FOURTH QUARTER
QQUUAARRTTEERRLLYY AADDJJUUSSTTEEDD EEAARRNNIINNGGSS11
QQUUAARRTTEERRLLYY AADDJJUUSSTTEEDD EEAARRNNIINNGGSS PPEERR SSHHAARREE22
s
n
o
i
l
l
i
m
$
5533
110088
8866
112211
((114488))
((111144))
330066
113344
115500
225544
((112299))
((110033))
QQ44 22002200
QQ44 22002211
Cobre Panama
Kansanshi
Sentinel
Other
Hedge
$$00..4444
$$00..2299
$$00..2222
$$00..2255
$$00..0099
$$00..0088
QQ33 22002200 QQ44 22002200 QQ11 22002211 QQ22 22002211 QQ33 22002211 QQ44 22002211
Adjusted earnings per share
Adjusted earnings1 for the quarter ended December 31, 2021 of $306 million is an increase of $253 million from the comparative
period in 2020. Adjusted earnings per share2 of $0.44 in the fourth quarter compares to adjusted earnings per share2 of $0.08 in
the same period of 2020. The principal items not included in adjusted earnings1 in the quarter are foreign exchange gains of $13
million, impairment charge of $44 million and loss on redemption of debt of $21 million. A reconciliation of adjusted metrics is
included in “Regulatory Disclosures”.
1Adjusted earnings (loss) is a non-GAAP financial measure, does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial
measures disclosed by other issuers. Adjusted earnings (loss) was previously named comparative earnings (loss), the composition remains the same. See “Regulatory
Disclosures”.
2Adjusted earnings (loss) per share, and cash flows from operating activities per share are non-GAAP ratios, 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”.
7474
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 39
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
FULL YEAR
FFUULLLL YYEEAARR AADDJJUUSSTTEEDD EEAARRNNIINNGGSS ((LLOOSSSS))11
s
n
o
i
l
l
i
m
$
220066
117711
((4488))
((4466))
225555
((663300))
22002200
882266
556666
447722
11,,111177
((442277))
((990022))
22002211
FFUULLLL YYEEAARR AADDJJUUSSTTEEDD EEAARRNNIINNGGSS ((LLOOSSSS)) PPEERR
SSHHAARREE22
$$11..2200
$$((00..0077))
22002200
22002211
Adjusted earnings (loss) per share
Cobre Panama
Kansanshi
Sentinel
Other
Hedge
Adjusted earnings1 for the year ended December 31, 2021 of $826 million was a significant increase from adjusted loss1 of $46
million in 2020. Adjusted earnings per share2 of $1.20 compares to adjusted loss per share2 of $0.07 in 2020.
The principal items not included in adjusted earnings1 for the year are foreign exchange gains of $159 million, principally related
to movements on the Zambian VAT receivable, impairment charge of $44 million, loss on redemption of debt of $21 million and
adjustment for expected phasing of Zambian VAT of $16 million. Adjusted earnings1 is an earnings metric used by management
to evaluate operating performance. The Company believes that the adjusted metrics presented are useful as the items excluded
from adjusted earnings1 do not reflect the underlying operating performance of its current business and are not necessarily
indicative of future operating results. A reconciliation of adjusted earnings to gross profit is included in “Regulatory Disclosures”.
1Adjusted earnings (loss) is a non-GAAP financial measure, does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial
measures disclosed by other issuers. Adjusted earnings (loss) was previously named comparative earnings (loss), the composition remains the same. See “Regulatory
Disclosures”.
2Adjusted earnings (loss) per share, and cash flows from operating activities per share are non-GAAP ratios, 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”.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 40
7575
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
LIQUIDITY AND CAPITAL RESOURCES
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
Cash flows from operating activities
760
703
533
QQ44 22002211
QQ33 22002211
QQ44 22002200
Cash flows used by investing activities
Purchase and deposits on property, plant and
equipment
Acquisition of KPMC
Other
Cash flows used by financing activities
(277)
(100)
(2)
Net movement in debt and trading facilities
(338)
Interest paid1
Transactions with non-controlling interests
Other
Exchange gains (losses) on cash and cash
equivalents
Net cash inflow
Cash balance
Total assets
Total current liabilities
Total long-term liabilities
Net debt2
Cash flows from operating activities per share3
22002211
2,885
(995)
(100)
(3)
(454)
(521)
263
(129)
(1)
945
1,859
22002200
1,613
(610)
(100)
37
103
(574)
-
(72)
(6)
391
914
(274)
-
(3)
(327)
(189)
240
(24)
-
126
(172)
(100)
27
(143)
(85)
-
(63)
2
(1)
914
(71)
23
(53)
(1)
(59)
1,859
1,918
25,270
25,200
24,236
25,270
24,236
1,678
2,059
2,435
1,678
2,435
12,098
11,963
11,766
12,098
11,766
6,053
$1.10
6,302
$1.02
7,409
$0.77
6,053
$4.19
7,409
$2.34
1 Interest paid excludes $4 million capitalized to property, plant and equipment for the year ended December 31, 2021, presented in cash flows used by investing activities.
(2020, nil).
2 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. See “Regulatory Disclosures”.
3 Cash flows from operating activities per share is a non-GAAP ratio, and 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”.
CCaasshh FFlloowwss ffrroomm OOppeerraattiinngg AAccttiivviittiieess
Cash flows from operating activities in the year were $1,272 million higher than 2020, reflecting higher EBITDA1 and lower
working capital outflows.
CCaasshh FFlloowwss UUsseedd bbyy IInnvveessttiinngg AAccttiivviittiieess
Capital expenditures of $995 million was $385 million higher than 2020, reflecting increased capital expenditure spend at
Kansanshi on the mining fleet and maintenance shutdown of the smelter. The expenditure on in-pit crusher 4 at Sentinel, on the
Shoemaker Levy project at Ravensthorpe and higher spend at Cobre Panama following relatively low expenditure in 2020 when
Cobre Panama was placed on preservation and safe maintenance due to COVID-19 restrictions from April 2020 up until August
2020.
Cash flows from investing activities also include the final $100 million instalment payment in respect of the acquisition of KPMC
in 2017.
1EBITDA is a non-GAAP financial measure, and 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”.
7676
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 41
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
CCaasshh FFlloowwss ffrroomm FFiinnaanncciinngg AAccttiivviittiieess
Cash flows from financing activities of $841 million for the year included an inflow of $240 million after the completion of the
minority interest sale to POSCO and a $454 million net movement on gross debt and trading facilities.
Cash flows used by financing activities include a $600 million partial redemption of the 2023 notes, drawdowns on a new Term
Loan and Revolving Credit Facility and full repayment of the $175 million bilateral bank facility signed in April 2021.
Interest paid of $521 million is included within cash flows from financing activities for the year which excludes $4 million of
capitalized interest; and is $53 million lower than the $574 million of interest paid in 2020, reflecting the lower net debt1 position
in the year. In addition, net payments of $64 million were paid to KPMC, a 50:50 joint venture between the Company and Korea
Mine Rehabilitation and Mineral Resources Corporation (“KOMIR”). Additionally, $23 million was drawn down from the working
capital facility provided by POSCO, which holds a 30% minority interest in Ravensthorpe.
LLiiqquuiiddiittyy
FOURTH QUARTER
1 EBITDA is a non-GAAP financial measure and net debt is a supplementary financial measure. These measures do not have standardized meanings under IFRS and
might not be comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Includes $23 million outflow related to long-term incentive plans.
3 Interest paid includes $2 million of interest capitalized to property plant and equipment.
4 Other includes non-cash adjustments relating to amortization of gold and silver revenue ($25 million) and share of profit in joint venture (“JV”) ($17 million).
Net debt1 decreased by $249 million during the quarter to $6,053 million. At December 31, 2021, total debt was $7,912 million.
On October 14, 2021, the Company signed the new $2.925 billion Facility. This Facility replaced the Previous Facility, which had
been due to mature in December 2022. The Facility comprises a $1.625 billion term loan facility and a $1.3 billion revolving credit
facility, matures in 2025 and is syndicated to a group of long-standing relationship banks of First Quantum. The refinancing
extends the debt maturity profile of the business and removes all material debt maturities through to April 2023. In addition, the
refinancing provides additional liquidity headroom and continues management's practice of proactively addressing debt
maturities, and further demonstrates the Company's access to a diverse range of funding sources.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 42
7777
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
The refinancing includes improved financial terms, reduced financial covenants, and an extended amortization schedule for the
Facility beginning in December 2022 and improves the financial flexibility of the Company through the added liquidity. The Facility
was used to fully prepay and cancel amounts outstanding on the Previous Facility, to fully prepay and cancel a bilateral bank
facility for $175 million and for general corporate purposes. Repayments on the term loan portion of the Facility will commence
in December 2022. The Facility has a single Net debt to EBITDA ratio covenant set at 3.5 times over the Facility term.
On December 7, 2021, the Company redeemed $600 million aggregate principal amount of senior unsecured notes due 2023 at
redemption price of 101.813%. The portion of the outstanding notes due 2023 to be redeemed was allocated on a lottery drawing
basis at the redemption price plus the payment of accrued and unpaid interest.
FULL YEAR
1 EBITDA is a non-GAAP financial measure and net debt is a supplementary financial measure. These measures do not have standardized meanings under IFRS and
might not be comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Includes $94 million outflow related to long-term incentive plans.
3 Interest paid includes $4 million of interest capitalized to property plant and equipment.
4 Other includes non-cash adjustments relating to amortization of gold and silver revenue ($99 million) and share of profit in JV ($75 million).
Net debt1 decreased by $1,356 million during the year ended December 31, 2021 to $6,053 million. At December 31, 2021, total
debt was $7,912 million.
The Company actively manages all capital spending and operating costs while maintaining a high level of health and safety,
productivity and environmental and social standards. Operating costs at all sites have been and are continuously being reviewed
to identify opportunities to further reduce costs.
Following the upgrades by S&P Global Ratings and Fitch Ratings in April to a B credit rating, the Company outlook remains stable.
Copper prices and demand continue to be robust. National policies and infrastructure plans supporting green energy across the
world are expected to be passed which are projected to drive the demand for copper, an essential component of both the
transition to a low carbon economy and of the socioeconomic development of emerging economies.
The Company has entered into derivative contracts to ensure that the exposure to the price of copper on future sales is managed
to ensure stability of cash flows. At February 15, 2022, the Company has zero cost copper collar unmargined sales contracts for
40,000 tonnes at weighted average prices of $3.63 per lb to $4.68 per lb outstanding with maturities to June 2022.
7878
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 43
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
At February 15, 2022, the Company has zero cost nickel collar unmargined sales contracts for 400 tonnes at weighted average
prices of $7.71 per lb to $8.58 per lb outstanding with maturities to May 2022.
Approximately 5% of expected copper sales for the next 12 months are hedged to zero cost collar sales contracts, at an average
floor price and average ceiling price of $3.63 per lb and $4.68 per lb, respectively. This compares to approximately one sixth at
the reporting date of the third quarter of 2021, with an average floor price and average ceiling price of $3.41 per lb and $4.23 per
lb, respectively.
These, together with expected future cash flows, support the Company’s belief in its ability to meet current obligations as they
become due, and to have sufficient liquidity through the next 12 months to carry out its operating and capital expenditure plans.
The Company was in full compliance with all its financial covenants at December 31, 2021, and expects to remain in compliance
throughout the next 12 months. The Company continues to take action to manage operational and price risks and further
strengthen the balance sheet, including through strategic initiatives and use of the copper sales hedge program. The current
hedge profile is at a significantly reduced level moving into the first quarter of 2022.
At December 31, 2021, the Company had total commitments of $129 million, $122 million of which is related to the 12 months
following the period end.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 44
7979
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
Contractual and other obligations as at December 31, 2021 are as follows:
CCaarrrryyiinngg
VVaalluuee
CCoonnttrraaccttuuaall
CCaasshh fflloowwss
<< 11 yyeeaarr 11 –– 33 yyeeaarrss 33 –– 55 yyeeaarrss TThheerreeaafftteerr
Debt – principal repayments
Debt – finance charges
Trading facilities
Trade and other payables
Derivative instruments
Liability to joint venture1
Other loans owed to non-controlling
interest2
Current taxes payable
Deferred payments
Leases
Commitments
Restoration provisions
7,881
-
31
719
57
1,310
176
363
50
26
-
731
7,926
1,684
31
719
57
2,207
262
363
50
30
129
1,144
283
462
31
719
57
-
23
363
5
10
122
3
2,760
741
3,383
378
1,500
103
-
-
-
-
-
-
10
13
7
47
-
-
-
-
-
-
10
5
-
57
-
-
-
2,207
239
-
25
2
-
1,037
5,113
11,344
14,602
2,078
3,578
3,833
1Refers to distributions to KPMC, a joint venture that holds a 20% non-controlling interest in Minera Panama SA (“MPSA”), of which the Company has joint control, and
not scheduled repayments.
2Refers to liability with POSCO, an entity that holds a 30% non-controlling interest in FQM Australia Holdings Pty Ltd (“Ravensthorpe”), of which the Company has full
control.
EEqquuiittyy
As at December 31, 2021, the Company had 691,102,415 common shares outstanding.
HHeeddggiinngg PPrrooggrraammss
The Company has hedging programs in respect of future copper and nickel sales and provisionally priced sales contracts. Below
is a summary of the fair values of unsettled derivative financial instruments for commodity contracts recorded on the consolidated
balance sheet.
COMMODITY CONTRACTS
Asset position
Liability position
CCoommmmooddiittyy ccoonnttrraaccttss::
Copper zero cost collar
Nickel zero cost collar
DDeecceemmbbeerr 3311,,
22002211
DDeecceemmbbeerr 3311,,
22002200
38
(57)
8
(452)
OOppeenn PPoossiittiioonnss
((ttoonnnneess))
AAvveerraaggee
CCoonnttrraacctt pprriiccee
CClloossiinngg MMaarrkkeett
pprriiccee
MMaattuurriittiieess
TThhrroouugghh
52,500
$3.61-$4.69/lb
500
$7.71-$8.58/lb
$4.40/lb
$8.55/lb
June 2022
May 2022
During the year ended December 31, 2021, a loss for settled hedges of $902 million was realized through sales revenues.
8080
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 45
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
PPrroovviissiioonnaall PPrriicciinngg aanndd DDeerriivvaattiivvee CCoonnttrraaccttss
A portion of the Company’s metal sales is sold on a provisional pricing basis whereby sales are recognized at prevailing metal
prices when title transfers to the customer and final pricing is not determined until a subsequent date, typically two months later.
The difference between final price and provisional invoice price is recognized in net earnings. In order to mitigate the impact of
these adjustments on net earnings, the Company enters into derivative contracts to directly offset the pricing exposure on the
provisionally priced contracts. The provisional pricing gains or losses and offsetting derivative gains or losses are both recognized
as a component of cost of sales. Derivative assets are presented in other assets and derivative liabilities are presented in other
liabilities with the exception of copper and gold embedded derivatives, which are included within accounts receivable.
As at December 31, 2021, the following derivative positions in provisionally priced sales and commodity contracts not designated
as hedged instruments were outstanding:
OOppeenn PPoossiittiioonnss
((ttoonnnneess//oozz))
AAvveerraaggee CCoonnttrraacctt
pprriiccee
CClloossiinngg MMaarrkkeett
pprriiccee
MMaattuurriittiieess
TThhrroouugghh
Embedded derivatives in provisionally
priced sales contracts:
Copper
Gold
Nickel
Commodity contracts:
Copper
Gold
Nickel
162,370
51,247
982
161,950
51,249
984
$4.35/lb
$4.40/lb
$1,806/oz
$1,806/oz
$8.95/lb
$9.49/lb
$4.35/lb
$4.40/lb
$1,806/oz
$1,806/oz
$8.95/lb
$9.49/lb
May 2022
April 2022
May 2022
May 2022
April 2022
May 2022
As at December 31, 2021, substantially all of the Company’s metal sales contracts subject to pricing adjustments were hedged
by offsetting derivative contracts.
FFoorreeiiggnn EExxcchhaannggee
Foreign exchange risk arises from transactions denominated in currencies other than the U.S. Dollar (“USD”). The USD/ZMW
exchange rate has had the greatest impact on the Company’s cost of sales, as measured in USD. A 10% movement in the
USD/ZMW exchange rate would impact the Company’s cost of sales by approximately $20 million per year. Movements in the
USD/ZMW exchange rate would also result in the revaluation of balance sheet items, including the VAT receivable by the
Company’s Zambian operations.
ZAMBIAN VAT
The total VAT receivable accrued by the Company’s Zambian operations at December 31, 2021, was $644 million, of which $284
million relates to Kansanshi, $324 million relates to Sentinel, with the balance of $36 million attributable to other Zambian
subsidiaries providing supporting services.
Offsets of $71 million against other taxes due have been granted during the year ended December 31, 2021. In the year ended
December 31, 2020, offsets of $110 million were granted and cash recoveries of $1 million were received. Future recoveries of
Zambian VAT receivable balances due to the Company may be received in cash, offset of other tax liabilities or similar forms.
The Company considers that the outstanding VAT claims are fully recoverable and has classified all VAT balances due to the
Zambian operations as non-current. The Company plans to work with the GRZ to settle the outstanding VAT claims.
A $16 million expense adjustment for Zambian VAT receipts was recognized in the year ended December 31, 2021, representing
the expected phasing of receipts, and the impact of foreign exchange, using a ZMW risk-free rate. A credit of $80 million had
previously been recognized in the twelve months ended December 31, 2020. An unrealized foreign exchange gain of $191 million
was recognized against the receivable in the year ended December, 2021 as a result of significant appreciation of the Zambia
Kwacha during this period with movement of the rate from ZMW 21.17 : $1 as at December 31, 2020, to a rate of ZMW 16.66 : $1
as at December 31, 2021.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 46
8181
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
ZAMBIAN VAT
Receivable at date of claim 1
Impact of depreciation of Zambian Kwacha against U.S. dollar
Receivable at the period end exchange rate
Adjustment for expected phasing for non-current portion
Total VAT receivable
Consisting:
Current portion, included within trade and other receivables
Non-current VAT receivable
DDeecceemmbbeerr 3311,,
22002211
DDeecceemmbbeerr 3311,,
22002200
975
(188)
787
(143)
644
--
644
855
(379)
476
(127)
349
-
349
AGING ANALYSIS OF VAT RECEIVABLE FOR THE COMPANY’S ZAMBIAN OPERATIONS
<< 11 yyeeaarr 11--33 yyeeaarrss 33--55 yyeeaarrss 55--88 yyeeaarrss
>> 88 yyeeaarrss
TToottaall
Receivable at date of claim12
238
438
93
96
110
975
Impact of appreciation (depreciation) of Zambian
Kwacha
Non-current VAT due
Adjustment for expected phasing of Zambian VAT
receipts
Total VAT receivable from Zambian operations
43
228811
(51)
230
(69)
336699
(67)
302
(39)
5544
(10)
44
(55)
4411
(7)
34
(68)
4422
(8)
34
(188)
778877
(143)
644
1 The movement in VAT receivable at date of claim is net of offsets and realized foreign exchange loss arising on offsets received in the year ended December 31, 2021,
of $71 million and $51 million, respectively.
CChhaannggeess ttoo ZZaammbbiiaann VVAATT RReeggiimmee
There were no material changes to the Zambian VAT regime announced in the 2022 Budget.
A zero rating order for VAT on petrol and diesel and a suspension on the excise duty on petrol and diesel announced in January
2021, remained in place during the quarter.
PPrree--FFeebbrruuaarryy 22001155 VVAATT RReecceeiivvaabbllee
In February 2015, the GRZ implemented a change in the statutory instrument regarding VAT on exports from Zambia. Claims
totaling ZMW 1,307 million (equivalent to $78 million as at December 31, 2021) made by Kansanshi prior to this date remain
outstanding. This balance has reduced by ZMW 80 million (equivalent to $5 million as at December 31, 2021) in the year to
December 31, 2021, (December 31, 2020: $6 million).
ZMW 357 million (equivalent to $21 million as at December 31, 2021) of the VAT refunds for this period remain under dispute,
stemming from the application of discretionary rules established and applied by the Zambia Revenue Authority, however offsets
for months under dispute have been received in the year to December 31, 2021. The Company is in regular discussions with the
relevant government authorities and continues to consider that the outstanding claims are fully recoverable. ZMW 80 million
(equivalent to $5 million as at December 31, 2021) of offsets received in 2021 were allocated to pre-February 2015 outstanding
refunds. Cash and offsets totaling ZMW 4,383 million (equivalent to $350 million, based on the receivable value at date of receipt)
have been received to date for claims subsequent to February 2015 by Kansanshi.
8282
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 47
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
JOINT VENTURE
On November 8, 2017, the Company completed the purchase of a 50% interest in KPMC from LS-Nikko Copper Inc. KPMC is
jointly owned and controlled with Korea Mine Rehabilitation and Mineral Resources Corporation (“KOMIR”) and holds a 20%
interest in Cobre Panama. The purchase consideration of $664 million comprised the acquisition consideration of $635 million
and the reimbursement of cash advances of $29 million with $179 million paid on closing. The final consideration of $100 million
was paid in November 2021 (year ended December 31, 2020: $100 million).
A $619 million investment in the joint venture representing the discounted consideration value and the Company’s proportionate
share of the profit or loss in KPMC to date. For the year ended December 31, 2021, the profit attributable to KPMC was $150
million (December 31, 2020: loss of $90 million). The profit in KPMC relates to the 20% equity accounted share of profit reported
by the Minera Panama S.A. (“MPSA”), a subsidiary of the Company. The material assets and liabilities of KPMC are an investment
in MPSA of $418 million, shareholder loans receivable from the Company and shareholder loans payable of $1,310 million due to
the Company and its joint venture partner KOMIR.
At December 31, 2021, the Company’s subsidiary, MPSA, owed to KPMC $1,310 million (December 31, 2020: $1,327 million and
December 31, 2019: $1,238 million). Interest is accrued at an annual interest rate of 9%; unpaid interest is capitalized to the
outstanding loan on a semi-annual basis. The loan matures on June 30, 2029.
PRECIOUS METAL STREAM ARRANGEMENT
AArrrraannggeemmeenntt OOvveerrvviieeww
The Company, through MPSA, has a precious metal streaming arrangement with Franco-Nevada Corporation (“Franco-Nevada”).
The arrangement comprises two tranches. Under the first phase of deliveries under the first tranche (“Tranche 1”) Cobre Panama
is obliged to supply Franco-Nevada 120 ounces of gold and 1,376 ounces of silver for each 1 million pounds of copper produced,
deliverable within 5 days of eligible copper concentrate sales. Under the first phase of deliveries under the second tranche
(“Tranche 2”) Cobre Panama is obliged to supply Franco-Nevada a further 30 ounces of gold and 344 ounces of silver for each 1
million pounds of copper produced, deliverable within 5 days of eligible copper concentrate sales.
Tranche 1 was amended and restated on October 5, 2015, which provided for $1 billion of funding to the Cobre Panama project.
Under the terms of Tranche 1, Franco-Nevada, through a wholly owned subsidiary, agreed to provide a $1 billion deposit to be
funded on a pro-rata basis of 1:3 with the Company’s 80% share of the capital costs of Cobre Panama in excess of $1 billion. The
full Tranche 1 deposit amount has been fully funded to MPSA. Tranche 2 was finalized on March 16, 2018, and $356 million was
received on completion. Proceeds received under the terms of the precious metals streaming arrangement are accounted for as
deferred revenue.
In all cases, the amount paid is not to exceed the prevailing market price per ounce of gold and silver.
The Company commenced the recognition of delivery obligations under the terms of the arrangement in September 2019
following the first sale of copper concentrate. Deferred revenue will continue to be recognized as revenue over the life of the
mine, which is expected to be 33 years. The amount of precious metals deliverable under both tranches is indexed to total copper-
in-concentrate sold by Cobre Panama.
GOLD STREAM
Delivered (oz)
Delivery terms
Threshold
TTRRAANNCCHHEE 11
0 to 808,000
TTRRAANNCCHHEE 22
0 to 202,000
120 oz of gold per one million
pounds of copper
30 oz of gold per one million
pounds of copper
First 1,341,000 oz
First 604,000 oz
Ongoing cash payment
$443.93/oz (+1.5% inflation)
20% market price
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 48
8383
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
SILVER STREAM
Delivered (oz)
Delivery terms
Threshold
TTRRAANNCCHHEE 11
0 to 9,842,000
TTRRAANNCCHHEE 22
0 to 2,460,500
1,376 oz of silver per one million
pounds of copper
344 oz of silver per one million
pounds of copper
First 21,510,000 oz
First 9,618,000 oz
Ongoing cash payment
$6.66 / oz (+1.5% inflation)
20% market price
Under the first threshold of deliveries, the above Tranche 1 ongoing cash payment terms are for approximately the first 20 years
of expected deliveries, thereafter the greater of $443.93 per oz for gold and $6.66 per oz for silver, subject to an adjustment for
inflation, and one half of the then prevailing market price. Under the first threshold of deliveries, the above Tranche 2 ongoing
cash payment terms are for approximately the first 25 years of production, and thereafter the ongoing cash payment per ounce
rises to 50% of the spot price of gold and silver.
AAccccoouunnttiinngg
Gold and silver produced by the mine, either contained in copper concentrate or in doré form, are sold to off-takers and revenue
recognized accordingly. Cobre Panama gold and silver revenues consist of revenues derived from the sale of metals produced
by the mine, as well as revenues recognized from the amortization of the precious metal stream arrangement.
Gold and silver revenues recognized under the terms of the precious metal streaming arrangement are indexed to copper sold
from the Cobre Panama mine, and not gold or silver production. Gold and silver revenues recognized in relation to the precious
metal streaming arrangement comprise two principal elements:
the non-cash amortization of the deferred revenue balance.
the ongoing cash payments received, as outlined in the above section.
Obligations under the precious metal streaming arrangement are satisfied with the purchase of refinery-backed gold and silver
credits, the cost of which is recognized within revenues. Refinery-backed credits purchased and delivered are excluded from the
gold and silver sales volumes disclosed and realized price calculations.
C11 and AISC1 include the impact of by-product credits, which include both gold and silver revenues earned under the precious
metal stream arrangement and revenues earned on the sales of mine production of gold and silver. Also included is the cost of
refinery-backed gold and silver credits, purchased at market price, to give a net gold and silver by-product credit.
The Company has amended its accounting in respect of the delivery of non-financial items (refinery-backed gold and silver
credits) into its precious metal stream arrangement, from presenting as a cost of sale to net within sales revenues. The year ended
December 31, 2020, was revised for this change. Sales revenues and cost of sales have both reduced by $129 million compared
to the previous reported values.
Gold and silver revenue – ongoing cash payments
Gold and silver revenue – non cash amortization
Total gold and silver revenues - precious metal
stream
Cost of refinery-backed credits for precious metal
stream included in revenue
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
22002211
22002200
15
25
40
13
24
37
9)
15)
24
57
99
156
31)
56)
87
(61)
(55)
(39)
(237)
(129)
1 Copper C1 cash cost (copper C1) and copper all-in sustaining costs (copper AISC) are non-GAAP ratios, do not have standardized meanings under IFRS and might not
be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
8484
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 49
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
MATERIAL LEGAL PROCEEDINGS
PPaannaammaa CCoonnssttiittuuttiioonnaall PPrroocceeeeddiinnggss
In February 1996, the Republic of Panama and MPSA, now a subsidiary of the Company, entered into a mining concession
contract in respect of the Cobre Panama project (“Concession Contract”).
On February 26, 1997, Contract-Law No. 9 (“Law 9”) was passed by the Panamanian National Assembly. Law 9 granted the status
of national law to the Concession Contract, establishing a statutory legal and fiscal regime for the development of the Cobre
Panama project. On December 30, 2016, the Government of Panama signed and issued Resolution No. 128 by which it extended
the Concession Contract held by MPSA for a second 20-year term commencing March 1, 2017 up to February 28, 2037. The
Company remains eligible for consideration of a third 20-year term of the Concession Contract commencing March 1, 2037.
In September 2018, the Company became aware of a ruling of the Supreme Court of Panama (“Supreme Court”) in relation to the
constitutionality of Law 9. The Company understands that the ruling of the Supreme Court with respect to the constitutionality of
Law 9 relates to the enactment of Law 9 and does not affect the legality of the Concession Contract itself, which remains in effect,
and allows continuation of the development and operation of the Cobre Panama project by MPSA.
In respect of the Supreme Court ruling on Law 9, the Company notes the following:
The Supreme Court decision was in respect of ongoing legal filings made since 2009 with regard to specific environmental
petitions.
In reviewing the process of approval of Law 9 of 1997, the Supreme Court found that the National Assembly had failed to
consider whether Law 9 complied with applicable legislation at the time, namely Cabinet Decree 267 of 1969.
The applicable Cabinet Decree of 1969, which was repealed in 1997 by Law 9, required the Ministry of Commerce and
Industry (“MICI”) to issue a request for proposals before awarding the Law 9 mining concession.
The Attorney General of Panama provided two formal opinions favourable to the constitutionality of Law 9 as required in this
type of proceedings by Panamanian law.
The Supreme Court ruling did not make a declaration as to the annulment of the MPSA Concession Contract.
In 2018, MPSA submitted filings to the Supreme Court for ruling, prior to the ruling in relation to the constitutionality of Law 9
taking effect. On September 26, 2018, the Government of Panama issued a news release affirming support for Cobre Panama.
The release confirmed that MICI considers that the MPSA Mining Concession contract, and its extension, remains in effect in all
its parts (The MICI release is available at www.twitter.com/MICIPMA/status/1044915730209222657). In July 2021, the Supreme
Court responded to the requests for clarifications submitted by MPSA, ruling them inadmissible. This means that the original
ruling that Law 9 is unconstitutional has been upheld. The unconstitutionality ruling was published in the Official Gazette on
December 22, 2021. The Company understands that the ruling’s effects are non-retrospective, pursuant to the Code of Judicial
Proceedings, which means that the enactment of the contract in 1997 and its extension in 2017 granted until the year 2037,
remain unaffected. As of the date of this report, the Cobre Panama project continues steady and uninterrupted operations.
The current Government of Panama (“GOP”), inaugurated on July 1, 2019, established a multidisciplinary commission including
the Minister of Commerce and Industries (mining regulator), Minister of Environment, and Minister of Employment to discuss the
Law 9 matter and seek resolution. In July 2021, the GOP announced the appointment of a high-level commission of senior
government ministers and officials, chaired by the Minister of Commerce, to discuss the Company’s concession contract. In
September 2021, the Ministry of Commerce publicly announced the culmination of the high-level formal discussions on two
topics being environmental and labour matters. On December 22, 2021, the unconstitutionality ruling was gazetted, after the
requests for clarification submitted by MPSA had been deemed inadmissible in July 2021.
During January 2022, the Government of Panama tabled a new proposal, namely that the GOP should receive $375 million in
benefits per year from Cobre Panama and that the existing revenue royalty will be replaced by a gross profit royalty. The parties
continue to finalize the detail behind these principles, including the appropriate mechanics that would achieve the desired
outcome, the necessary protections to the Company’s business for downside copper price and production scenarios and
ensuring that the new contract and legislation are both durable and sustainable.
Once an agreement is concluded and the full contract is documented, it is expected that newly drafted legislation would be put
to the National Assembly. The Company welcomes the transparency of the robust ministerial commission process and it is
hopeful that this matter can be concluded shortly.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 50
8585
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) (in United States dollars, tabular amounts in millions, except where noted)
ZZaammbbiiaann PPoowweerr
In June 2018, without any warning, ZESCO reduced power supply to the Kansanshi operation. The reduction was due to Kansanshi
and Sentinel’s rejection of ZESCO’s demand for payment of higher tariffs, contrary to the existing contractual agreements
between the parties.
On June 26, 2018, Kansanshi sought an injunction against ZESCO before the English courts, as the contracts on tariff are
governed by English law. On June 28, 2018, ZESCO resisted the application and requested an extension to respond. On July 6,
2018, the Court awarded Kansanshi’s request by way of a sanctioned consent order (“Order”) which requires ZESCO to restore
the full capacity as demanded by Kansanshi. In turn, Kansanshi is required to deposit the difference between the contractual tariff
and the disputed higher tariff into a segregated account until an arbitration between Kansanshi and ZESCO on these facts are
concluded. The Order continues to apply as ZESCO is restrained from making any reductions without incurring further sanction
from the Court.
On August 22, 2018, Kansanshi served on ZESCO a Notice of Arbitration in respect of these facts. The arbitration hearing
concluded in July 2021 and the Tribunal issued its award in November 2021. The Tribunal found in favour of Kansanshi on the
key issues including the appropriate tariff and the return to Kansanshi of the funds held in the segregated account pursuant to
the Order. In December 2021, the Tribunal awarded Kansanshi its costs of the arbitration and rejected ZESCO’s application for
interpretation of various parts of the Tribunal’s award. Kansanshi is now engaged in pursuing ZESCO’s compliance with the
Tribunal’s orders.
Despite this dispute, the Company’s operations generally maintain a constructive relationship with ZESCO, particularly with
regards to the management of technical and supply issues. Operational and technical dialogue between the parties is expected
to continue in the normal course.
KKaannssaannsshhii MMiinnoorriittyy PPaarrttnneerr
In October 2016, the Company, through its subsidiary Kansanshi Holdings Limited, received a Notice of Arbitration from ZCCM
International Holdings PLC (“ZCCM”) under the Kansanshi Mining PLC (“KMP”) Shareholders Agreement. ZCCM is a 20%
shareholder in KMP and filed the Notice of Arbitration against Kansanshi Holdings Limited (“KHL”), the 80% shareholder, and
against KMP. The Company also received a Statement of Claim filed in the Lusaka High Court naming additional defendants,
including the Company, and certain directors and an executive of the named corporate defendants. Aside from the parties, the
allegations made in the Notice of Arbitration and the High Court for Zambia were the same. The Company is firmly of the view
that the allegations are in their nature inflammatory, vexatious and untrue.
The dispute was stated as a request for a derivative action, requiring ZCCM to obtain permission to proceed in each forum of the
Arbitration and the Lusaka High Court. The dispute arose from facts originating in 2007, and concerned the rate of interest paid
on select deposits by KMP with the Company. The deposits were primarily retained for planned investment by KMP in Zambia. In
particular, KMP deposits were used to fund a major investment program at Kansanshi, including the successful construction and
commissioning of the Kansanshi smelter and expansion of the processing plant and mining operations. The entirety of the deposit
sums has been paid down from the Company to KMP, with interest. The interest was based on an assessment of an arm’s length
fair market rate, which is supported by independent third-party analysis. ZCCM disputed that interest rate paid to KMP on the
deposits was sufficient.
In July 2019, the Arbitral Tribunal issued a final award in favour of KMP (the “Arbitral Award”). The parties have reached an
agreement on costs, in total exceeding US$1 million payable by ZCCM, bringing this particular matter to an end.
In parallel, several preliminary procedural applications to dismiss the High Court Action were lodged on behalf of the Company,
and other defendants, in the Lusaka High Court. By a decision dated January 25, 2018, the Lusaka High Court used its discretion
to rectify ZCCM’s procedural errors. The Court granted leave to the Company, FQM Finance, a wholly-owned subsidiary of the
Company, and the individual defendants to appeal against this decision and the litigants have agreed to a stay pending the appeal.
The appeal hearing took place on November 21, 2018, with submissions made by all parties. The Court of Appeal delivered
judgment on January 11, 2019, dismissing the appeal. An appeal to the Supreme Court of Zambia was heard on April 24, 2019,
and has been dismissed. The High Court was scheduled to resume hearing two further procedural applications, including
whether ZCCM is allowed to maintain the derivative action. However, before these hearings could take place the defendants
brought an application requesting dismissal of the case on grounds of abuse of process/ res judicata, on the basis that the action
cannot be allowed to continue for risk of producing conflicting judgment from the London arbitration, which has already
adjudicated the facts of this particular complaint. ZCCM objected to the defendants’ application. ZCCM also tried to bring an
8686
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 51
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
application to set aside the registration of the Arbitral Award in Zambia. The defendants’ resisted this application. Both
applications had an oral hearing in October 2019.
However, after the October 2019 hearing, ZCCM pursued a challenge to the registration of the Arbitral Award on grounds that it
was not enforceable because it had complied with the costs payment order of the Arbitral Award. KMP opposed ZCCM’s
challenge and made submissions to the Registrar that an Arbitration Award is eligible for registration despite compliance with
costs orders. On February 13, 2020, the Registrar accepted KMP’s position and dismissed ZCCM’s challenge to the registration
of the Arbitration Award. Accordingly, the Lusaka High Court proceeded to rule on the abuse of process application. By way of a
ruling dated March 23, 2020, the Lusaka High Court agreed with KMP’s application that the process, if it were to be allowed to
continue before it, would risk conflicting judgements and would be res judicata. Accordingly, ZCCM’s derivative action case was
dismissed, with costs awarded to KMP against ZCCM. On April 6, 2020, ZCCM sought permission to appeal to the Court of Appeal
on grounds that the High Court judge erred in fact and in law. KMP objected to the appeal. The Court of Appeal delivered its
judgment on January 13, 2021, dismissing all grounds of appeal with the exception of one ground raised by the ZCCM and
awarded costs to the Defendants. With regards to the remaining ground, the Court of Appeal held that the determination of this
ground of appeal would be inconsequential as the matter should have been determined earlier than now and is therefore now
moot. On January 27, 2021, ZCCM filed a notice of motion for leave to appeal to the Supreme Court. ZCCM filed skeleton
arguments in respect of the motion for leave to appeal to Supreme Court in reply to those of KMP on April 23, 2021, and the
remaining defendants on April 26, 2021. A hearing on the matter was held on April 29, 2021, and judgement was reserved. On
August 11, 2021, ZCCM submitted a new summons for leave to appeal to the Supreme Court. KMP submitted its response on
August 27, 2021, opposing leave to appeal. On October 4, 2021, the Supreme Court dismissed ZCCM’s application in its entirety
with costs awarded to KMP. On October 19, 2021, ZCCM submitted a notice of motion for leave to appeal to a full bench (3 judges)
of the Supreme Court. KMP submitted its response on November 26, 2021. ZCCM submitted its heads of arguments on January
10, 2022. The hearing occurred on January 18, 2022. The Supreme Court panel, which consisted of the Deputy Chief Justice and
two other Supreme Court Judges, indicated that according to the Court, the High Court proceedings by ZCCM were a nullity from
the very beginning, so their appeal should fail. The Company awaits the Supreme Court’s actual decision as it was reserved.
In addition, on November 11, 2019, Kansanshi Holding Ltd (KHL) filed a UNCITRAL Rules based Request for Arbitration against
ZCCM and KMP (as Nominal Respondent) in connection with a Cash Management Services Agreement dated August 19, 2019.
KHL seeks a declaration that the CMSA is an arm’s length contract. The CMSA provides for cash management services whereby
KMP would deposit with the Group’s treasury subsidiary certain of its cash balances for management by FQML’s treasury
function. All cash managed and deposited is callable on demand by KMP and attracts commercial interest rates. Under the
shareholder agreement between the Group and ZCCM, related party transactions are required to be on an arms’ length basis.
This arbitration was held virtually in a hearing from October 19 to 23, 2020. The parties are now awaiting the Final Award in the
arbitration. The Partial Final Award was issued in the first quarter of 2021. The arbitral panel held a Case Management Conference
on June 25, 2021, with a focus on the legal issues expressly identified in the Partial Final Award for resolution and relief in a Final
Award. The parties have conferred on the table of matters that remain to be determined, which are scheduled to be heard by the
Tribunal on November 9, 2021. The parties reached a settlement on the remaining matters on November 30, 2021 and the
Tribunal issued the Final Award by Consent on January 12, 2022.
KKaannssaannsshhii DDeevveellooppmmeenntt AAggrreeeemmeenntt
On May 19, 2020, KMP filed a Request for Arbitration against the GRZ with the International Centre for Settlement of International
Disputes (“ICSID”). This arbitration is confidential. KMP’s claims concern breaches of certain contractual provisions of a
development agreement between GRZ and KMP (the “Development Agreement”) and international law. The amount in dispute is
to be quantified at a later stage, however it is believed to be material. The Tribunal is now fully consisted and has held its first
Case Management Conference, setting the hearing date for the adjudication of the merits for March 14 to 18, 2022. KMP
submitted its Memorial and corresponding documents on January 25, 2021. GRZ filed its Memorial on Jurisdiction and Counter-
Memorial of Defence and Counterclaim on July 9, 2021. The parties have exchanged requests for production of documents. The
parties produced documents ordered by the Tribunal on November 1, 2021. KMP submitted its Reply Memorial on February 11,
2022. The hearing in this matter is scheduled for January 2023.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 52
8787
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) (in United States dollars, tabular amounts in millions, except where noted)
REGULATORY DISCLOSURES
SSeeaassoonnaalliittyy
The Company’s results as discussed in this MD&A are subject to seasonal aspects, in particular the wet season in Zambia. The
wet season in Zambia generally starts in November and continues through to April, with the heaviest rainfall normally experienced
in the months of December, January, February and March. As a result of the wet season, pit access and the ability to mine ore is
lower in the first quarter of the year than other quarters and the cost of mining is higher.
OOffff--BBaallaannccee SShheeeett AArrrraannggeemmeennttss
The Company had no off-balance sheet arrangements as of the date of this report.
NNoonn--GGAAAAPP FFiinnaanncciiaall MMeeaassuurreess aanndd RRaattiiooss
This document refers to cash cost (C1), all-in sustaining cost (AISC) and total cost (C3) per unit of payable production, operating
cash flow per share, realized metal prices, EBITDA, net debt and adjusted earnings, which are not measures recognized under
IFRS, do not have a standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented
by other issuers. These measures are used internally by management in measuring the performance of the Company’s operations
and serve to provide additional information which should not be considered in isolation to measures prepared under IFRS.
Comparative earnings and comparative EBITDA have been renamed to adjusted earnings and EBITDA, respectively, with no
change to compositions, to more appropriately describe the measures in line with National Instrument 52-112.
C1, AISC and C3 are non-GAAP financial measures based on production and sales volumes for which there is no directly
comparable measure under IFRS, though a reconciliation from the cost of sales, as stated in the Company’s financial statements,
and which should be read in conjunction with this Management’s Discussion and Analysis, to C1, AISC and C3 can be found on
the following pages. These reconciliations set out the components of each of these measures in relation to the cost of sales for
the Company as per the consolidated financial statements.
The calculation of these measures is described below, and may differ from those used by other issuers. The Company discloses
these measures in order to provide assistance in understanding the results of the operations and to provide additional information
to investors.
CCaallccuullaattiioonn ooff CCaasshh CCoosstt,, AAllll--IInn SSuussttaaiinniinngg CCoosstt,, TToottaall CCoosstt,, SSuussttaaiinniinngg CCaappiittaall EExxppeennddiittuurree aanndd
DDeeffeerrrreedd SSttrriippppiinngg CCoossttss CCaappiittaalliizzeedd
The consolidated cash cost (C1), all-in sustaining cost (AISC) and total cost (C3) presented by the Company are measures that
are prepared on a basis consistent with the industry standard definitions by the World Gold Council and Brook Hunt cost
guidelines but are not measures recognized under IFRS. In calculating the C1 cash cost, AISC and C3, total cost for each segment,
the costs are measured on the same basis as the segmented financial information that is contained in the financial statements.
C1 cash cost includes all mining and processing costs less any profits from by-products such as gold, silver, zinc, pyrite, cobalt,
sulphuric acid, or iron magnetite and is used by management to evaluate operating performance. TC/RC and freight deductions
on metal sales, which are typically recognized as a component of sales revenues, are added to C1 cash cost to arrive at an
approximate cost of finished metal.
AISC is defined as cash cost (C1) plus general and administrative expenses, sustaining capital expenditure, deferred stripping,
royalties and lease payments and is used by management to evaluate performance inclusive of sustaining expenditure required
to maintain current production levels.
C3 total cost is defined as AISC less sustaining capital expenditure, deferred stripping and general and administrative expenses
net of insurance, plus depreciation and exploration. This metric is used by management to evaluate the operating performance
inclusive of costs not classified as sustaining in nature such as exploration and depreciation.
Sustaining capital expenditure is defined as capital expenditure during the production phase, incurred to sustain and maintain
the existing assets to achieve constant planned levels of production, from which future economic benefits will be derived. This
includes expenditure for assets to retain their existing productive capacity, and to enhance assets to minimum reliability,
environmental and safety standards.
8888
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 53
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
Deferred stripping costs capitalized are defined as waste material stripping costs in excess of the strip ratio, for the production
phase, and from which future economic benefits will be derived from future access to ore. Deferred stripping costs are capitalized
to the mineral property, and will be depreciated on a units-of-production basis.
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
Q3 2021
Q4 2020
22002211
2020
Purchase and deposits on property, plant and
equipment
Sustaining capital expenditure and deferred stripping
Project capital expenditure
Total capital expenditure
277
121
156
277
274
126
148
274
172
100
72
172
995
457
538
995
610
322
288
610
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 54
8989
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
NNoonn--GGAAAAPP RReeccoonncciilliiaattiioonnss
The following tables provide a reconciliation of C13, C33 and AISC3 to the consolidated financial statements:
FFoorr tthhee qquuaarrtteerr
eennddeedd DDeecceemmbbeerr 3311,,
22002211
CCoobbrree
PPaannaammaa
KKaannssaannsshhii SSeennttiinneell
GGuueellbb
MMoogghhrreeiinn
LLaass
CCoorrppoorraattee
CCrruucceess ÇÇaayyeellii PPyyhhäässaallmmii CCooppppeerr
&& ootthheerr RRaavveennsstthhoorrppee
TToottaall
((448855))
((229955))
((229944))
((5500))
((2266))
((1100))
((88))
((11,,116688))
((1155))
((9944))
((11,,227777))
CCoosstt ooff ssaalleess11,,22
Adjustments:
Depreciation
By-product credits2
Royalties
Treatment and refining
charges
Freight costs
Finished goods
Other
Adjustments:
Depreciation
(excluding
depreciation in
finished goods)
Royalties
Other
TToottaall ccoosstt ((CC33))33
CCaasshh ccoosstt ((CC11)) 33
Adjustments:
General and
administrative
expenses
Sustaining capital
expenditure and
deferred stripping4
Royalties
Lease payments
AAIISSCC33
AISC (per lb) 3
Cash cost – (C1)
(per lb) 3
Total cost – (C3)
(per lb) 3
154
48
16
(30)
(1)
12
20
71
63
57
(7)
-
19
9
70
-
61
(15)
(11)
(11)
8
6
17
1
(2)
-
9
(2)
-
-
-
-
-
1
-
3
4
1
(1)
-
(5)
2
((66))
CCaasshh ccoosstt ((CC11))33
((226666))
((8833))
((119922))
((2211))
((2255))
-
4
-
-
-
-
-
330044
113366
113366
((5555))
((1122))
2255
3377
((44))
((559977))
-
-
-
((229911))
((113366))
((88))
((44))
((11,,003322))
((44))
((559977))
-
-
-
-
((2255))
((112255))
((113366))
((33))
((44))
((888866))
2
-
-
-
-
-
13
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
6
4
-
-
8
-
331144
114422
114400
((5555))
((1122))
3333
5500
(68)
((666655))
(8)
(4)
(1)
((229999))
((114400))
((99))
(81)
((11,,111133))
(68)
((666655))
(3)
((2288))
4
(4)
-
((112211))
((114400))
((33))
(71)
((995577))
$11.15
$10.93
$12.87
(146)
(16)
(4)
((443322))
((226666))
(60)
(57)
(3)
((220033))
((8833))
(75)
(61)
(2)
((333300))
((119922))
(12)
(4)
(8)
(47)
(57)
-
(43)
(61)
-
(34)
(16)
(2)
((333300))
$1.94
(4)
(1)
1
((2255))
((2211))
-
-
(1)
-
-
-
-
((2255))
((2255))
(6)
(1)
-
((1133))
((66))
(1)
-
-
-
(1)
(1)
(1)
-
((88))
((119911))
((330044))
((2222))
((2277))
$1.67
$2.39
$4.57
$4.32
$0.62
$2.93
$2.05
$1.57
$0.79
$1.51
$4.11
$4.01
($0.44)
$2.81
$1.39
$2.55
$1.78
$2.59
$4.01
$4.10
$1.19
$2.81
$2.39
1 Total cost of sales per the Consolidated Statement of Earnings (Loss) in the Company’s annual audited consolidated financial statements.
2 Refinery-backed credits presented net within revenues (see “Precious Metal Stream Arrangement”).
3 C1 cash cost (C1), total costs (C3), and all-in sustaining costs (AISC) are non-GAAP ratios which 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”.
4 Sustaining capital is a non-GAAP financial measure 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”.
9090
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 55
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
FFoorr tthhee yyeeaarr eennddeedd
DDeecceemmbbeerr 3311,, 22002211
CCoobbrree
PPaannaammaa
KKaannssaannsshhii SSeennttiinneell
GGuueellbb
MMoogghhrreeiinn
LLaass
CCoorrppoorraattee
CCrruucceess ÇÇaayyeellii PPyyhhäässaallmmii CCooppppeerr
&& ootthheerr RRaavveennsstthhoorrppee
TToottaall
((11,,771111))
((11,,004455))
((11,,111166))
((220088))
((9988))
((5577))
((3311))
((44,,226666))
((3355))
((334499))
((44,,665500))
CCoosstt ooff ssaalleess11,,22
Adjustments:
Depreciation
By-product credits2
Royalties
Treatment and refining
charges
Freight costs
Finished goods
Other
579
208
61
(112)
(5)
27
41
220
220
192
(26)
-
(24)
13
270
-
203
(56)
(41)
10
16
36
114
9
(10)
-
12
2
13
-
2
-
-
3
-
18
14
8
(5)
(5)
(7)
2
1
21
-
11,,113377
557777
447755
(2)
((221111))
-
-
1
((5511))
2211
7755
CCaasshh ccoosstt ((CC11))33
((991122))
((445500))
((771144))
((4455))
((8800))
((3322))
((1100))
((22,,224433))
Adjustments:
Depreciation
(excluding
depreciation in
finished goods)
Royalties
Other
(564)
(61)
(16)
(224)
(192)
(9)
(270)
(203)
(8)
TToottaall ccoosstt ((CC33))33
((11,,555533))
((887755))
((11,,119955))
CCaasshh ccoosstt ((CC11)) 33
(912)
(450)
(714)
(29)
(10)
(21)
(1)
((11,,111199))
(9)
-
((8833))
(45)
(2)
(1)
(8)
-
-
-
((447755))
((3344))
((9933))
((6611))
((1111))
((33,,887711))
(80)
(32)
(10)
((22,,224433))
Adjustments:
General and
administrative
expenses
Sustaining capital
expenditure and
deferred stripping4
Royalties
Lease payments
(43)
(21)
(33)
(2)
(4)
(1)
(106)
(61)
(5)
(182)
(192)
-
(149)
(203)
-
(1)
(9)
-
-
(2)
(2)
(5)
(8)
(1)
-
-
-
-
((110044))
((444433))
((447755))
((88))
AAIISSCC33
((11,,112277))
((884455))
((11,,009999))
((5577))
((8888))
((4477))
((1100))
((33,,227733))
AISC (per lb)3
Cash cost – (C1)
(per lb) 3
Total cost – (C3)
(per lb) 3
$1.61
$1.96
$2.21
$1.66
$2.91 $1.56
$1.61
$1.88
$1.31
$1.04
$1.44
$1.38
$2.67 $0.99
$1.54
$1.30
$2.22
$2.03
$2.40
$2.31
$3.10 $2.01
$1.71
$2.23
3
-
-
-
-
-
32
--
-
-
-
--
-
-
-
-
-
--
-
-
-
34
22
13
-
-
10
5
11,,117744
559999
448888
((221111))
((5511))
3311
111122
((226655))
((22,,550088))
(34)
((11,,115533))
(13)
(5)
((448888))
((3399))
((331177))
((44,,118888))
(265)
((22,,550088))
(13)
((111177))
(14)
(13)
(1)
((445577))
((448888))
((99))
((330066))
((33,,557799))
$9.87
$8.59
$10.24
1 Total cost of sales per the Consolidated Statement of Earnings (Loss) in the Company’s annual audited consolidated financial statements.
2 Refinery-backed credits presented net within revenues (see “Precious Metal Stream Arrangement”).
2 C1 cash cost (C1), total costs (C3), and all-in sustaining costs (AISC) are non-GAAP ratios which 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”.
3 Sustaining capital is a non-GAAP financial measure 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”.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 56
9191
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
FFoorr tthhee qquuaarrtteerr
eennddeedd DDeecceemmbbeerr 3311,,
22002200
CCoobbrree
PPaannaammaa
KKaannssaannsshhii SSeennttiinneell
GGuueellbb
MMoogghhrreeiinn
LLaass
CCoorrppoorraattee
CCrruucceess ÇÇaayyeellii PPyyhhäässaallmmii CCooppppeerr
&& ootthheerr RRaavveennsstthhoorrppee
TToottaall
((330088))
((225555))
((333322))
((4466))
((8811))
((1122))
((99))
((11,,004433))
((88))
((6688))
((11,,111199))
107
39
9
(24)
(1)
(12)
3
60
54
30
(6)
-
(1)
4
90
-
45
(17)
(18)
26
1
9
37
4
(3)
-
-
(3)
(2)
48
-
1
-
-
(1)
(2)
(35)
3
3
1
(1)
(1)
(2)
1
(8)
1
5
-
(1)
-
-
1
331188
113388
9900
((5522))
((2200))
1100
55
(3)
((555544))
CCaasshh ccoosstt ((CC11)) 33
(187)
(114)
(205)
CCoosstt ooff ssaalleess11,,22
Adjustments:
Depreciation
By-product credits2
Royalties
Treatment and refining
charges
Freight costs
Finished goods
Other
Adjustments:
Depreciation
(excluding
depreciation in
finished goods)
Royalties
Other
TToottaall ccoosstt ((CC33)) 33
CCaasshh ccoosstt ((CC11)) 33
Adjustments:
General and
administrative
expenses
Sustaining capital
expenditure and
deferred stripping4
Royalties
Lease payments
Other
AAIISSCC33
AISC (per lb) 3
Cash cost – (C1)
(per lb) 3
Total cost – (C3)
(per lb) 3
(110)
(9)
(3)
(309)
(187)
(57)
(30)
(3)
(204)
(114)
(75)
(45)
(2)
(327)
(205)
(11)
(49)
(4)
1
(16)
(2)
(1)
1
(84)
(35)
(3)
(1)
1
(11)
(8)
(1)
((330066))
-
(1)
(5)
(3)
((9900))
((66))
((995566))
((555544))
(8)
(5)
(10)
1
(3)
-
-
-
-
-
-
((2255))
((110000))
((9900))
((22))
((11))
(29)
(30)
-
(1)
(34)
(45)
(1)
-
(1)
(4)
-
-
-
(1)
-
-
(1)
(1)
-
-
(35)
(9)
(1)
-
(240)
$1.72
(179)
(295)
(6)
(39)
(10)
(3)
((777722))
$1.59
$2.04
$0.36
$1.70 $1.37
$2.21
$1.77
$1.34
$1.01
$1.44
$0.09
$1.56 $0.96
$2.06
$1.28
$2.22
$1.81
$2.28
$1.07
$3.76 $1.52
$2.93
$2.20
-
-
-
-
-
-
8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
4
3
-
-
(2)
1
332266
114422
9933
((5522))
((2200))
88
1144
(54)
((660088))
(9)
(3)
(1)
((331155))
((9933))
((77))
(67)
((11,,002233))
(54)
((660088))
(3)
((2288))
-
(3)
(1)
(1)
((110000))
((9933))
((33))
((22))
(62)
((883344))
$6.09
$5.39
$6.78
1 Total cost of sales per the Consolidated Statement of Earnings (Loss) in the Company’s annual audited consolidated financial statements.
2 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 year ended December 31, 2020 has been revised for this change. Sales revenues and cost of sales for the fourth quarter of 2020
have both been reduced by $39 million compared to the previous reported values (see “Precious Metal Stream Arrangement”).
3 C1 cash cost (C1), total costs (C3) and all-in sustaining costs (AISC) are non-GAAP ratios which 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”.
4 Sustaining capital is a non-GAAP financial measure 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”.
9292
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 57
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
FFoorr tthhee yyeeaarr eennddeedd
DDeecceemmbbeerr 3311,, 22002200
CCoobbrree
PPaannaammaa
KKaannssaannsshhii SSeennttiinneell
GGuueellbb
MMoogghhrreeiinn
LLaass
CCoorrppoorraattee
CCrruucceess ÇÇaayyeellii PPyyhhäässaallmmii CCooppppeerr
&& ootthheerr RRaavveennsstthhoorrppee
TToottaall
((11,,005522))
((11,,007755))
((999900))
((119977))
((334455))
((5588))
((3388))
((33,,775555))
((1144))
((222244))
((33,,999933))
CCoosstt ooff ssaalleess11,,22
Adjustments:
Depreciation
By-product credits2
Royalties
Treatment and refining
charges
Freight costs
Finished goods
Other
400
124
24
(79)
(4)
-
18
247
229
111
(34)
(11)
13
6
261
-
112
(48)
(40)
(18)
(11)
40
139
9
(13)
-
1
1
215
-
5
-
(1)
-
1
22
10
2
(5)
(4)
(3)
1
5
20
-
11,,119900
552222
226633
(3)
((118822))
-
1
1
((6600))
((66))
1177
CCaasshh ccoosstt ((CC11)) 44
(569)
(514)
(734)
(20)
(125)
(35)
(14)
((22,,001111))
Adjustments:
Depreciation
(excluding
depreciation in
finished goods)
Royalties
Other
(400)
(24)
(10)
(246)
(111)
(11)
(270)
(112)
(6)
TToottaall ccoosstt ((CC33)) 44
(1,003)
(882)
(1,122)
CCaasshh ccoosstt ((CC11)) 44
(569)
(514)
(734)
(40)
(215)
(23)
(5)
((11,,119999))
(9)
(1)
(70)
(20)
(5)
-
(345)
(125)
(2)
1
(59)
(35)
-
-
((226633))
((2277))
(19)
((33,,550000))
(14)
((22,,001111))
Adjustments:
General and
administrative
expenses
Sustaining capital
expenditure and
deferred stripping5
Royalties
Lease payments
Other
AAIISSCC44
AISC (per lb)4
Cash cost – (C1)
(per lb) 4
Total cost – (C3)
(per lb) 4
(26)
(24)
(34)
(1)
(7)
(1)
-
-
-
-
-
((9933))
((331199))
((226633))
((99))
((22))
(74)
(24)
(3)
-
(696)
$1.60
(105)
(111)
(3)
(2)
(126)
(112)
(2)
-
(10)
(9)
-
-
-
(5)
(1)
-
(4)
(2)
-
-
(759)
(1,008)
(40)
(138)
(42)
(14)
((22,,669977))
$1.60
$1.92
$0.70
$1.15 $1.53
$1.55
$1.63
$1.31
$1.09
$1.40
$0.38
$1.05 $1.24
$1.48
$1.21
$2.30
$1.86
$2.14
$1.20
$2.88 $2.14
$2.03
$2.11
3
-
-
-
-
-
11
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24
11,,221177
8
7
-
-
(2)
583
553300
227700
((118822))
((6600))
((88))
8866
(129)
((22,,114400))
(25)
((11,,222244))
(7)
(2)
((227700))
((2299))
(163)
((33,,666633))
(129)
((22,,114400))
(6)
((9999))
(3)
(7)
(1)
(1)
((332222))
((227700))
((1100))
((33))
(147)
((22,,884444))
$6.46
$5.72
$7.19
1 Total cost of sales per the Consolidated Statement of Earnings (Loss) in the Company’s annual audited consolidated financial statements.
2 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 year ended December 31, 2020 has been revised for this change. Sales revenues and cost of sales for the full year 2020 have
both been reduced by $129 million compared to the previous reported values (see “Precious Metal Stream Arrangement”).
3 Includes restart costs at Ravensthorpe.
4 C1 cash cost (C1), total costs (C3), and all-in sustaining costs (AISC) are non-GAAP ratios which 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”.
5 Sustaining capital is a non-GAAP financial measure 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”.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 58
9393
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
RReeaalliizzeedd MMeettaall PPrriicceess
Realized metal prices are used by the Company to enable management to better evaluate sales revenues in each reporting period.
Realized metal prices are calculated as gross metal sales revenues divided by the volume of metal sold in lbs. Net realized metal
price is inclusive of the treatment and refining charges (TC/RC) and freight charges per lb.
EEBBIITTDDAA aanndd AAddjjuusstteedd EEaarrnniinnggss
EBITDA and adjusted earnings, which are non-GAAP financial measures, and adjusted earnings per share, which is a non-GAAP
ratio, are the Company’s adjusted earnings metrics, and are used to evaluate operating performance by management. These
measures do not have a standardized meaning under IFRS and might not be comparable to similar measures disclosed by other
issuers. The Company believes that the adjusted metrics presented are useful measures of the Company’s underlying operational
performance as they exclude certain impacts which the Company believes are not reflective of the Company’s underlying
performance for the reporting period. These include impairment and related charges, foreign exchange revaluation gains and
losses, gains and losses on disposal of assets and liabilities, one-time costs related to acquisitions, dispositions, restructuring
and other transactions, revisions in estimates of restoration provisions at closed sites, debt extinguishment and modification
gains and losses, the tax effect on unrealized movements in the fair value of derivatives designated as hedged instruments, and
adjustments for expected phasing of Zambian VAT receipts.
CCaallccuullaattiioonn ooff OOppeerraattiinngg CCaasshh FFllooww ppeerr SShhaarree aanndd NNeett DDeebbtt
Cash flows from operating activities per share is a non-GAAP ratio and is calculated by dividing the operating cash flow calculated
in accordance with IFRS by the basic weighted average common shares outstanding for the respective period.
Net debt is comprised of bank overdrafts and total debt less unrestricted cash and cash equivalents.
NET DEBT1
QQ44 22002211
QQ33 22002211
QQ44 22002200
QQ44 22001199
Cash and cash equivalents
1,859
1,918
Bank overdraft
Current debt
Non current debt
Net debt1
EBITDA1
Operating profit
Depreciation
Other adjustments:
-
313
7,599
6,053
-
746
7,474
6,302
950
36
871
7,452
7,409
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
722
314
775
288
357
326
22002211
2,598
1,174
1,138
615
838
7,360
7,675
22002200
695
1,217
225
-
15
-
240
Foreign exchange (gain) loss
(13)
(180)
32
(159)
Impairment expense
Other expense
Revisions in estimates of restoration provisions at
closed sites
Total adjustments excluding depreciation
EBITDA1
44
12
6
49
1,085
-
4
(1)
(177)
886
-
8
2
42
725
44
20
7
(88)
3,684
2,152
1 EBITDA is a non-GAAP financial measure 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. EBITDA was previously named comparative EBITDA, the composition remains the
same. See “Regulatory Disclosures”.
9494
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 59
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Net earnings (loss) attributable to shareholders of the
Company
Adjustments attributable to shareholders of the
Company:
Adjustment for expected phasing of Zambian VAT
Loss on redemption of debt
Other
Total adjustments to EBITDA1 excluding
depreciation
Tax and minority interest adjustments
Adjusted earnings (loss)1
Earnings (loss) per share as reported
Adjusted earnings (loss) per share2
QQ44 22002211
QQ33 22002211
QQ44 22002200
22002211
22002200
247
303
9
832
(180)
(2)
21
-
49
(9)
306
$0.36
$0.44
4
-
-
(177)
67
197
$0.44
$0.29
(5)
(3)
11
42
(1)
53
$0.01
$0.08
16
21
-
(88)
45
826
$1.21
$1.20
(80)
5
5
240
(36)
(46)
($0.26)
($0.07)
1 EBITDA and adjusted earnings (loss) are non-GAAP financial measures which do not have standardized meaning prescribed by IFRS and might not be comparable to
similar financial measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Adjusted earnings (loss) per share is a non-GAAP ratio which does not have standardized meaning prescribed by IFRS and might not be comparable to similar financial
measures disclosed by other issuers. Adjusted earnings (loss) and EBITDA were previously named comparative earnings (loss) and comparative EBITDA, respectively,
and the composition remains the same. See “Regulatory Disclosures” for further information.
SSiiggnniiffiiccaanntt JJuuddggmmeennttss,, EEssttiimmaatteess aanndd AAssssuummppttiioonnss
Many of the amounts disclosed in the financial statements involve the use of judgments, estimates and assumptions. These
judgments and estimates are based on management’s knowledge of the relevant facts and circumstances at the time, having
regard to prior experience, and are continually evaluated.
SSiiggnniiffiiccaanntt jjuuddggmmeennttss
Determination of ore reserves and resources
Judgments about the amount of product that can be economically and legally extracted from the Company’s properties are
made by management using a range of geological, technical and economic factors, history of conversion of mineral deposits
to proven and probable reserves, as well as data regarding quantities, grades, production techniques, recovery rates,
production costs, transport costs, commodity demand, commodity prices and exchange rates. This process may require
complex and difficult geological judgments to interpret the daa. The Company uses qualified persons (as defined by the
Canadian Securities Administrators’ National Instrument 43-101) to compile this data.
Changes in the judgments surrounding proven and probable reserves may impact the carrying value of property, plant and
equipment, restoration provisions included in provisions and other liabilities, recognition of deferred income tax amounts and
depreciation.
Achievement of commercial production
Once a mine or smelter reaches the operating levels intended by management, depreciation of capitalized costs begins.
Significant judgment is required to determine when certain of the Company’s assets reach this level.
Management considers several factors, including, but not limited to the following:
o
o
completion of a reasonable period of commissioning;
consistent operating results achieved at a pre-determined level of design capacity and indications exist that
this level will continue;
o mineral recoveries at or near expected levels;
o
and the transfer of operations from development personnel to operational personnel was completed.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 60
9595
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
Taxes
Judgment is required in determining the recognition and measurement of deferred income tax assets and liabilities on the
balance sheet. In the normal course of business, the Company is subject to assessment by taxation authorities in various
jurisdictions. These authorities may have different interpretations of tax legislation or tax agreements than those applied by
the Company in computing current and deferred income taxes. These different judgments may alter the timing or amounts of
taxable income or deductions. The final amount of taxes to be paid or recovered depends on a number of factors including
the outcome of audits, appeals and negotiation. Amounts to be recovered and the timings of recoveries with respect to
indirect taxes, such as VAT, are subject to judgment which, in the instance of a change of circumstances, could result in
material adjustments.
The Company operates in a specialized industry and in a number of tax jurisdictions. As a result, its income is subject to
various rates of taxation. The breadth of its operations and the global complexity and interpretation of tax regulations require
assessment and judgement of uncertainties and of the taxes that the Company will ultimately pay. These are dependent on
many factors, including negotiations with tax authorities in various jurisdictions, outcomes of tax litigation and resolution of
disputes. The resolution of these uncertainties may result in adjustments to the Company’s tax assets and liabilities.
Management assesses the likelihood and timing of taxable earnings in future periods in recognizing deferred income tax
assets on unutilized tax losses. Future taxable income is based on forecast cash flows from operations and the application of
existing tax laws in each jurisdiction. Forecast cash flows are based on life of mine projections.
To the extent that future cash flows and taxable income differ significantly from forecasts, the ability of the Company to realize
the net deferred income tax assets recorded at the balance sheet date could be impacted. In addition, future changes in tax
laws could limit the ability of the Company to obtain tax deductions in future periods from deferred income tax assets.
Precious metal stream arrangement
On October 5, 2015, the Company finalized an agreement with Franco-Nevada for the delivery of precious metals from the
Cobre Panama project. Franco-Nevada have provided $1 billion deposit to the Cobre Panama project against future deliveries
of gold and silver produced by the mine. A further stream was completed on March 26, 2018, with an additional $356 million
received from Franco-Nevada.
Management has determined that the under the terms of the agreement the Company meets the ‘own-use’ exemption criteria
under IFRS 9: Financial Instruments. The Company also retains significant business risk relating to the operation of the mine
and as such has accounted for the proceeds received as deferred revenue.
Management has exercised judgement in determining the appropriate accounting treatment for the Franco-Nevada
streaming agreement. Management has determined, with reference to the agreed contractual terms in conjunction with the
Cobre Panama reserves and mine plan, that funds received from Franco-Nevada constitute a prepayment of revenues
deliverable from future Cobre Panama production.
Assessment of impairment indicators
Management applies significant judgement in assessing each cash-generating units and assets for the existence of
indicators of impairment at the reporting date. Internal and external factors are considered in assessing whether indicators
of impairment are present that would necessitate impairment testing. Significant assumptions regarding commodity prices,
production, operating costs, capital expenditures and discount rates are used in determining whether there are any indicators
of impairment. These assumptions are reviewed regularly by senior management and compared, where applicable, to
relevant market consensus views.
The Company’s most significant cash generating units (“CGU”) are longer-term assets and therefore their value is assessed
on the basis of longer-term pricing assumptions. Shorter-term assets are more sensitive to short term commodity prices
assumptions that are used in the review of impairment indicators.
SSiiggnniiffiiccaanntt aaccccoouunnttiinngg eessttiimmaatteess
Estimates are inherently uncertain and therefore actual results may differ from the amounts included in the financial statements,
potentially having a material future effect on the Company’s consolidated financial statements. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are addressed below:
Determination of mineral reserves and life of mine plan
9696
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 61
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
Reserves are estimates of the amount of product that can be economically and legally extracted from the Company’s
properties. Estimating the quantity and/or grade of reserves requires the size, shape and depth of ore bodies or fields to be
determined by analyzing geological data such as drilling samples. Following this, the quantity of ore that can be extracted in
an economical manner is calculated using data regarding the life of mine plans and forecast sales prices (based on current
and long-term historical average price trends).
The majority of the Company’s property, plant and equipment are depreciated over the estimated lives of the assets on a
units-of-production basis. The calculation of the units-of-production rate, and therefore the annual depreciation expense
could be materially affected by changes in the underlying estimates which are driven by the life of mine plans. Changes in
estimates can be the result of actual future production differing from current forecasts of future production, expansion of
mineral reserves through exploration activities, differences between estimated and actual costs of mining and differences in
the commodity prices used in the estimation of mineral reserves.
Management made significant estimates of the strip ratio for each production phase. Waste material stripping costs in excess
of this ratio, and from which future economic benefit will be derived from future access to ore, will be capitalized to mineral
property and depreciated on a units-of-production basis.
Changes in the proven and probable reserves estimates may impact the carrying value of property, plant and equipment,
restoration provisions, recognition of deferred income tax amounts and depreciation.
Review of asset carrying values and impairment charges
Management’s determination of recoverable amounts includes estimates of mineral prices, recoverable reserves, and
operating, capital and restoration costs are subject to certain risks and uncertainties that may affect the recoverability of
mineral property costs. The calculation of the recoverable amount can also include assumptions regarding the appropriate
discount rate and inflation and exchange rates. Although management has made its best estimate of these factors, it is
possible that changes could occur in the near term that could adversely affect management’s estimate of the net cash flow
to be generated from its projects.
Estimation of the amount and timing of restoration and remediation costs
Accounting for restoration provisions requires management to make estimates of the future costs the Company will incur to
complete the restoration and remediation work required to comply with existing laws, regulations and agreements in place
at each mining operation and any environmental and social principles the Company is in compliance with. The calculation of
the present value of these costs also includes assumptions regarding the timing of restoration and remediation work,
applicable risk-free interest rate for discounting those future cash outflows, inflation and foreign exchange rates and
assumptions relating to probabilities of alternative estimates of future cash outflows. Actual costs incurred may differ from
those amounts estimated. Also, future changes to environmental laws and regulations could increase the extent of restoration
work required to be performed by the Company. Increases in future costs could materially impact the amounts charged to
operations for restoration. A 10% increase in costs would result in an increase to restoration provisions of $76 million at
December 31, 2021.
The provision represents management’s best estimate of the present value of the future restoration and remediation costs.
The actual future expenditures may differ from the amounts currently provided; any increase in future costs could materially
impact the amounts included in the liability disclosed in the consolidated balance sheet. Estimation and assumptions relating
to the timing of VAT receivables in Zambia
In addition to the recoverability of VAT receivables being a key judgment, certain assumptions are determined by
management in calculating the present value of these recoveries regarding the timing of recoveries. In assessing the timing
of recoveries, management considers publicly available information with respect to the fiscal situation in Zambia as well as
the level of refunds and offsets provided historically, and a Zambian risk-free rate is then applied to calculate the valuation to
calculate the present value. Changes to the timings could materially impact the amounts charged to finance costs. The impact
of repayments being one year later than estimated at December 31, 2021, would lead to a decrease to the carrying value and
an increase to finance costs of $36 million.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 62
9797
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) (in United States dollars, tabular amounts in millions, except where noted)
FFiinnaanncciiaall rriisskk mmaannaaggeemmeenntt
CCrreeddiitt rriisskk
The Company’s credit risk is primarily attributable to cash and bank balances, short-term deposits, derivative instruments and
trade and other receivables. The Company’s exposure to credit risk is represented by the carrying amount of each class of
financial assets, including commodity contracts, recorded in the consolidated balance sheet.
The Company limits its credit exposure on cash held in bank accounts by holding its key transactional bank accounts with highly
rated financial institutions. The Company manages its credit risk on short-term deposits by only investing with counterparties that
carry investment grade ratings as assessed by external rating agencies and spreading the investments across these
counterparties. Under the Company’s risk management policy, allowable counterparty exposure limits are determined by the
level of the rating unless exceptional circumstances apply. A rating of investment grade or equivalent is the minimum allowable
rating required as assessed by international credit rating agencies. Likewise, it is the Company’s policy to deal with banking
counterparties for derivatives who are rated investment grade or above by international credit rating agencies and graduated
counterparty limits are applied depending upon the rating.
Exceptions to the policy for dealing with relationship banks with ratings below investment grade are reported to, and approved
by, the Audit Committee. As at December 31, 2021, substantially all cash and short-term deposits are with counterparties of
investment grade.
The Company’s credit risk associated with trade accounts receivable is managed through establishing long-term contractual
relationships with international trading companies using industry-standard contract terms. 44% of the Company’s trade
receivables are outstanding from three customers together representing 19% of the total sales for the year. No amounts were
past due from these customers at the balance sheet date. The Company continues to trade with these customers. Revenues
earned from these customers are included within the Kansanshi, Sentinel, Panama and Çayeli segments. Other accounts
receivable consist of amounts owing from government authorities in relation to the refund of value-added taxes applying to inputs
for the production process and property, plant and equipment expenditures, prepaid taxes and amounts held in broker accounts.
The VAT receivable due from government authorities includes $644 million at December 31, 2021, which is past due (December
31, 2020: $349 million).
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the
Company’s maximum exposure to credit risk. Expected credit losses on trade and other receivables at December 31, 2021,
amount to nil.
LLiiqquuiiddiittyy rriisskk
The Company manages liquidity risk by maintaining cash and cash equivalent balances and available credit facilities to ensure
that it is able to meet its short-term and long-term obligations as and when they fall due. Company-wide cash projections are
managed centrally and regularly updated to reflect the dynamic nature of the business and fluctuations caused by commodity
price and exchange rate movements.
In addition, the Company was obligated under its corporate revolving credit and term loan facility to maintain liquidity and satisfy
various covenant ratio tests on a historical cash flow basis. These ratios were in compliance during the year ended December 31,
2021, and December 31, 2020. If the Company breaches a covenant in its Financing Agreements, this would be an event of default
which, if un-addressed, would entitle the lenders to make the related borrowings immediately due and payable and if made
immediately due and payable all other borrowings would also be due and payable.
MMaarrkkeett rriisskkss
CCoommmmooddiittyy pprriiccee rriisskk
The Company is subject to commodity price risk from fluctuations in the market prices of copper, gold, nickel, zinc and other
elements.
As part of the hedging program, the Company has elected to apply hedge accounting for a portion of copper and nickel sales. For
the year ended December 31, 2021, a fair value loss of $9 million (2020: fair value loss of $401 million) was recognized on
derivatives designated as hedged instruments through accumulated other comprehensive income and a fair value loss of $902
million (2020: fair value loss of $48 million) was recognized through sales revenues.
9898
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 63
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
For the year ended December 31, 2021, the Company had copper zero cost collar unmargined sales contracts for 52,500 tonnes
at weighted average prices of $3.61 per lb to $4.69 per lb outstanding with maturities to June 2022. In addition, the Company has
nickel zero cost collar unmargined sales contracts for 500 tonnes at weighted average prices of $7.71 per lb to $8.58 per lb
outstanding with maturities to May 2022. As at December 31 2021 the company had not entered into any unmargined copper or
nickel forward sales.
The Company is also exposed to commodity price risk on diesel fuel required for mining operations and sulphur required for acid
production. The Company’s risk management policy allows for the management of these exposures through the use of derivative
financial instruments. As at December 31, 2021, and December 31, 2020, the Company had not entered into any sulphur
derivatives and as at December 31, 2021 had not entered into any fuel forward contracts.
The Company’s commodity price risk related to changes in fair value of embedded derivatives in accounts receivable reflecting
copper, nickel, gold and zinc sales provisionally priced based on the forward price curve at the end of each quarter.
IInntteerreesstt rraattee rriisskk
The majority of the Company’s interest expense is fixed however it is also exposed to an interest rate risk arising from interest
paid on floating rate debt and the interest received on cash and short-term deposits.
Deposits are invested on a short-term basis to ensure adequate liquidity for payment of operational and capital expenditures. To
date, no interest rate management products are used in relation to deposits.
The Company manages its interest rate risk on borrowings on a net basis. The Company has a policy allowing floating-to-fixed
interest rate swaps targeting 50% of exposure over a five-year period. As at December 31, 2021, and December 31 2020, the
Company held no floating-to-fixed interest rate swaps.
FFoorreeiiggnn eexxcchhaannggee rriisskk
The Company’s functional and reporting currency is USD. As virtually all of the Company’s revenues are derived in USD and the
majority of its business is conducted in USD, foreign exchange risk arises from transactions denominated in currencies other
than USD. Commodity sales are denominated in USD, the majority of borrowings are denominated in USD and the majority of
operating expenses are denominated in USD. The Company’s primary foreign exchange exposures are to the local currencies in
the countries where the Company’s operations are located, principally the Zambian kwacha (“ZMW”), Australian dollar (“A$”)
Mauritanian ouguiya (“MRU”), the euro (“EUR”) and the Turkish lira (“TRY”); and to the local currencies suppliers who provide
capital equipment for project development, principally the A$, EUR and the South African rand (“ZAR”).
The Company’s risk management policy allows for the management of exposure to local currencies through the use of financial
instruments at a targeted amount of up to 100% for exposures within one year down to 50% for exposures in five years.
CCaappiittaall mmaannaaggeemmeenntt
The Company’s objectives when managing capital are to continue to provide returns for shareholders, and comply with lending
requirements while safeguarding the Company’s ability to continue as a going concern. The Company considers the items
included in equity to be capital.
The Company manages the capital structure and makes adjustments in light of changes in economic conditions and the risk
characteristics of the Company’s assets. In order to maintain or adjust the capital structure, the Company may adjust the amount
of dividends paid to shareholders, issue new shares, or sell assets to reduce debt.
The Company uses a combination of short-term and long-term debt to finance its operations and development projects. Typically,
floating rates of interest are attached to short-term debt, and fixed rates on senior notes.
DDiisscclloossuurree CCoonnttrroollss aanndd PPrroocceedduurreess
The Company’s disclosure controls and procedures are designed to provide reasonable assurance that all relevant information
is communicated to senior management, to allow timely decisions regarding required disclosure.
An evaluation of the effectiveness of the Company’s disclosure controls and procedures, as defined under the rules of the
Canadian Securities Administrators, was conducted as of December 31, 2021, under the supervision of the Company’s Audit
Committee and with the participation of management. Based on the results of the evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the
period covered by this report in providing reasonable assurance that the information required to be disclosed in the Company’s
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 64
9999
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) (in United States dollars, tabular amounts in millions, except where noted)
annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed,
summarized and reported in accordance with the securities legislation.
The Company’s controls and procedures remain consistent with those disclosed in the Company’s annual MD&A for the year
ended December 31, 2021.
IInntteerrnnaall CCoonnttrrooll OOvveerr FFiinnaanncciiaall RReeppoorrttiinngg ((““IICCFFRR””))
Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of the Company’s
financial reporting and the preparation of financial statements in compliance with IFRS. The Company’s internal control over
financial reporting includes policies and procedures that:
pertain to the maintenance of records that accurately and fairly reflect the transactions of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with IFRS;
ensure the Company’s receipts and expenditures are made only in accordance with authorization of management and the
Company’s directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized transactions that could have a
material effect on the annual or interim financial statements.
There have been no changes in the Company’s ICFR during the year ended December 31, 2021 that have materially affected, or
are reasonably likely to materially affect, the Company’s ICFR.
An evaluation of the effectiveness of the Company’s internal control over financial reporting was conducted as of December 31,
2021 by the Company’s management, including the Chief Executive Officer and Chief Financial Officer, based on the Control -
Integrated Framework (2013) established by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.
Based on this evaluation, management has concluded that the Company’s internal controls over financial reporting were
effective.
LLiimmiittaattiioonnss ooff CCoonnttrroollss aanndd PPrroocceedduurreess
The Company’s management, including the Chief Executive Officer and Chief Financial Officer, believe that any disclosure
controls and procedures or internal control over financial reporting, no matter how well conceived and operated, can provide only
reasonable and not absolute assurance that the objectives of the control system are met. Further, the design of a control system
reflects the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and
instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities
that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized
override of the control. The design of any systems of controls is also based in part upon certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud
may occur and not be detected.
100100
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 65
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
SUMMARY QUARTERLY INFORMATION
The following unaudited tables set out a summary of certain quarterly and annual results for the Company:
QQ11 2200
QQ22 2200
QQ33 2200
QQ44 2200
22002200
QQ11 2211
QQ22 2211
QQ33 2211
QQ44 2211
22002211
864
1,150
1,348
4,377
1,445
1,525
1,513
1,849
6,332
CCoonnssoolliiddaatteedd ooppeerraattiioonnss
SSaalleess rreevveennuueess11
Copper
Gold
Nickel
Other
TToottaall ssaalleess rreevveennuueess
Cobre Panama1
Kansanshi
Sentinel
Guelb Moghrein
Ravensthorpe
Sales hedge program gain (loss)
Other
TToottaall ssaalleess rreevveennuueess
Gross profit
EBITDA4
Net earnings (loss) attributable to
shareholders of the Company
Adjusted earnings (loss)4
1,015
101
3
26
1,145
361
349
235
67
-
29
104
1,145
147
434
(62)
(79)
85
27
23
999
92
351
252
78
19
86
121
999
141
352
(156)
(84)
Net debt4
7,615
7,658
Basic earnings (loss) per share
($0.09)
($0.23)
Adjusted earnings (loss) per share5
($0.11)
($0.12)
Diluted earnings (loss) per share
($0.09)
($0.23)
124
61
29
114
68
32
1,364
1,562
402
423
340
71
62
(49)
115
471
416
526
84
75
(114)
104
1,364
1,562
346
641
29
64
7,545
$0.04
$0.09
$0.04
443
725
9
53
7,409
$0.01
$0.08
$0.01
424
159
110
5,070
1,326
1,539
1,353
300
156
(48)
444
5,070
1,077
2,152
(180)
(46)
7,409
($0.26)
($0.07)
($0.26)
113
29
35
123
99
35
120
64
50
114
62
36
1,622
1,782
1,747
2,061
724
418
531
77
39
838
458
525
112
107
777
505
449
69
71
821
633
527
55
69
(257)
(338)
(204)
(103)
90
80
80
59
1,622
1,782
1,747
2,061
540
811
142
150
7,062
$0.21
$0.22
$0.21
625
902
140
173
6,751
$0.20
$0.25
$0.20
613
886
303
197
6,302
$0.44
$0.29
$0.44
784
1,085
247
306
6,053
$0.36
$0.44
$0.36
470
254
156
7,212
3,160
2,014
2,032
313
286
(902)
309
7,212
2,562
3,684
832
826
6,053
$1.21
$1.20
$1.20
Dividends declared per common share
(CDN$ per share)
Cash flows per share from operating
activities5
$0.005
-
$0.005
-
$0.010
$0.005
-
$0.005
-
$0.010
$0.69
$0.23
$0.66
$0.77
$2.34
$1.08
$0.99
$1.02
$1.10
$4.19
Basic weighted average shares (000’s)3
688,093
688,123
688,806
688,939
688,469
688,771
688,457
688,852
688,691
688,674
CCooppppeerr ssttaattiissttiiccss
Total copper production (tonnes)
195,285
169,059
211,396
203,171
778,911
205,064
199,689
209,859
201,823
816,435
Total copper sales (tonnes)
189,953
159,944
197,533
217,041
764,471
210,734
203,790
194,278
213,087
821,889
Realized copper price (per lb)5
TC/RC (per lb)
Freight charges (per lb)
Net realized copper price (per lb)5
Cash cost – copper (C1) (per lb)5
All-in sustaining cost (AISC) (per lb)5
Total cost – copper (C3) (per lb)5
GGoolldd ssttaattiissttiiccss
$2.56
(0.11)
(0.03)
$2.42
$1.30
$1.64
$2.19
$2.60
(0.10)
(0.05)
$2.45
$1.20
$1.62
$2.08
$2.77
(0.10)
(0.03)
$2.64
$1.07
$1.48
$1.97
$2.97
(0.11)
(0.04)
$2.82
$1.28
$1.77
$2.20
$2.74
(0.10)
(0.04)
$2.60
$1.21
$1.63
$2.11
$3.25
(0.12)
(0.02)
$3.11
$1.24
$1.72
$2.10
$3.55
(0.12)
(0.04)
$3.39
$1.29
$1.91
$2.21
$3.68
(0.11)
(0.04)
$3.53
$1.26
$1.87
$2.22
$4.08
(0.11)
(0.03)
$3.94
$1.39
$2.05
$2.39
$3.64
(0.12)
(0.03)
$3.49
$1.30
$1.88
$2.23
Total gold production (ounces)
68,788
54,651
72,926
68,747
265,112
78,048
81,375
78,124
74,945
312,492
Total gold sales (ounces)2
73,782
54,591
78,013
70,905
277,291
77,391
85,291
79,773
79,403
321,858
Net realized gold price (per ounce)5
$1,488
$1,604
$1,766
$1,771
$1,662
$1,661
$1,670
$1,683
$1,677
$1,673
NNiicckkeell ssttaattiissttiiccss
Nickel produced (contained tonnes)
Nickel produced (payable tonnes)
Nickel sales (contained tonnes)
Nickel sales (payable tonnes)
Net realized price (per payable lb)5
--
--
--
--
--
1,979
1,579
1,791
1,429
$8.51
5,113
4,102
4,986
4,016
$6.88
5,603
4,534
5,343
4,342
$7.11
12,695
10,215
12,120
9,787
$7.37
4,642
3,843
2,357
1,969
$6.67
4,543
3,789
6,910
5,777
$7.79
4,248
3,531
4,055
3,392
$8.50
3,385
2,855
3,756
3,175
$8.88
16,818
14,018
17,078
14,313
$8.05
1 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 year ended December 31, 2020 has been revised for this change. Sales revenues and cost of sales for the full year 2020 have
both been reduced by $129 million compared to the previous reported values (see “Precious Metal Stream Arrangement”).
2 Excludes refinery-backed gold credits purchased and delivered under the precious metal streaming arrangement. See “Precious Metal Stream Arrangement”.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 66
101101
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
3 Fluctuations in average weighted shares between quarters reflects shares issued and changes in levels of treasury shares held for performance share units.
4 EBITDA and adjusted earnings (loss) are non-GAAP financial measures and net debt is a supplementary financial measure. These measures do not have standardized
meanings under IFRS and might not be comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
5 All-in sustaining costs (AISC), copper C1 cash cost (copper C1), and total copper cost (C3), realized metal prices, adjusted earnings (loss) per share and cash flows from
operating activities per share are non-GAAP ratios. These measures do not have standardized meanings under IFRS and might not be comparable to similar measures
disclosed by other issuers. See “Regulatory Disclosures” for further information.
APPENDICES
PRODUCTION
Copper production (tonnes)1
Cobre Panama
Kansanshi cathode
Kansanshi concentrate
Kansanshi total
Sentinel
Guelb Moghrein
Las Cruces
Çayeli
Pyhäsalmi
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
22002211
22002200
80,030
87,242
65,520
331,000
205,548
10,071
10,379
13,298
39,170
51,953
41,868
40,608
39,332
162,989
169,534
51,939
60,197
2,588
2,805
3,532
732
50,987
59,931
4,091
3,222
3,693
693
52,630
202,159
221,487
62,993
232,688
251,216
7,369
18,845
28, 491
10,234
3,534
891
13,652
14,799
3,292
54,352
13,334
4,483
Total copper production (tonnes)
201,823
209,859
203,171
816,435
778,911
Gold production (ounces)
Cobre Panama
Kansanshi
Guelb Moghrein
Other sites2
32,800
34,546
6,552
1,047
36,649
32,249
8,174
1,052
25,295
141,637
84,667
29,515
128,199
128,409
13,115
38,431
47,637
822
4,225
4,399
Total gold production (ounces)
74,945
78,124
68,747
312,492
265,112
Nickel production (contained tonnes) – Ravensthorpe
3,385
4,248
5,603
16,818
12,695
1 Production is presented on a contained basis, and is presented prior to processing through the Kansanshi smelter.
2 Other sites include Çayeli and Pyhäsalmi.
102102
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 67
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
SALES
Copper sales volume (tonnes)
Cobre Panama
Kansanshi cathode
Kansanshi anode
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
22002211
22002200
86,112
83,261
65,770
341,078
208,787
11,122
8,985
13,115
38,731
49,883
48,750
39,438
38,150
156,596
153,245
Kansanshi concentrate
-
-
-
-
20,019
Kansanshi total
Sentinel anode
Sentinel concentrate
Sentinel total
Guelb Moghrein
Las Cruces
Çayeli
Pyhäsalmi
Total copper sales (tonnes)
Gold sales volume (ounces)
Cobre Panama
Kansanshi
Guelb Moghrein
Other sites1
59,872
48,423
51,265
195,327
223,147
34,061
30,654
49,772
148,494
159,481
24,026
20,438
29,203
84,318
72,250
58,087
51,092
78,975
232,812
231,731
4,359
2,914
978
765
4,522
3,234
2,902
844
7,365
9,915
2,672
1,079
23,614
14,322
11,343
3,393
29,899
54,852
11,443
4,612
213,087
194,278
217,041
821,889
764,471
34,409
36,295
8,189
510
35,914
33,961
8,822
1,076
25,669
145,185
86,862
29,021
125,338
131,248
14,885
46,661
53,217
1,330
4,674
5,964
Total gold sales (ounces)2
79,403
79,773
70,905
321,858
277,291
Nickel sales volume (contained tonnes) –
Ravensthorpe
3,756
4,055
5,343
17,078
12,120
1 Other sites include Çayeli and Pyhäsalmi.
2 Excludes refinery-backed gold credits purchased and delivered under precious metal streaming arrangement.
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 68
103103
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
SALES REVENUES
QQUUAARRTTEERRLLYY
FFUULLLL YYEEAARR
QQ44 22002211
QQ33 22002211
QQ44 22002200
Cobre Panama1
- copper
- gold
- silver
Kansanshi
- copper cathode
- copper anode
- copper concentrate
- gold
- other
Sentinel
- copper anode
- copper concentrate
Guelb Moghrein
- copper
- gold
- magnetite
- copper
- copper
Las Cruces
Çayeli
- zinc, gold and silver
Pyhäsalmi
- copper
- zinc, pyrite, gold and silver
Ravensthorpe
-nickel
Corporate2
Sales revenues1
-cobalt
Copper
Gold
Nickel
Silver
Other
773
37
11
106
463
-
63
1
323
204
38
13
4
29
8
4
7
5
63
6
(97)
2,061
1,849
114
62
11
25
725
43
9
84
361
-
60
-
281
168
38
15
16
30
21
3
8
5
65
6
(191)
1,747
1,513
120
64
11
39
22002211
2,952
166
42
356
432
32
7
94
267
1,438
-
55
-
350
176
47
27
10
70
14
4
9
3
71
4
(110)
1,562
1,348
114
68
9
23
-
219
1
1,339
693
199
79
35
131
85
14
31
21
264
22
(875)
7,212
6,332
470
254
47
109
22002200
1,202
101
23
303
913
93
229
1
979
374
161
89
50
332
53
11
26
20
148
8
(46)
5,070
4,377
424
159
28
82
1 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 year ended December 31, 2020 has been revised for this change. Sales revenues and cost of sales for the full year 2020 have
both been reduced by $129 million compared to the previous reported values (see “Precious Metal Stream Arrangement”).
2 Corporate sales include sales hedges (see “Hedging Programs” for further discussion).
2,061
1,747
1,562
7,212
5,070
104104
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 69
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
UNIT CASH COSTS (PER LB)1
CCoobbrree PPaannaammaa22
Mining
Processing
Site administration
TC/RC and freight charges
By-product credits
Copper cash cost (C1) (per lb)
Copper all-in sustaining cost (AISC) (per lb)
Total copper cost (C3) (per lb)
KKaannssaannsshhii
Mining
Processing
Site administration
TC/RC and freight charges
By-product credits
Total smelter costs
Copper cash cost (C1) (per lb)
Copper all-in sustaining cost (AISC) (per lb)
Total copper cost (C3) (per lb)
SSeennttiinneell
Mining
Processing
Site administration
TC/RC and freight charges
Total smelter costs
Copper cash cost (C1) (per lb)
Copper all-in sustaining cost (AISC) (per lb)
Total copper cost (C3) (per lb)
RRaavveennsstthhoorrppee
Mining
Processing
Site administration
TC/RC and freight charges
By-product credits
Nickel cash cost (C1) (per lb)
Nickel all-in sustaining cost (AISC) (per lb)
Total nickel cost (C3) (per lb)
GGuueellbb MMoogghhrreeiinn
Copper cash cost (C1) (per lb)
Copper all-in sustaining cost (AISC) (per lb)
Total copper cost (C3) (per lb)
LLaass CCrruucceess
QQ44 22002211
QQUUAARRTTEERRLLYY
QQ33 22002211
QQ44 22002200
FFUULLLL YYEEAARR
22002211
22002200
$0.40
1.00
0.07
0.35
(0.25)
$1.57
$1.94
$2.55
$0.53
0.73
(0.30)
0.14
(0.48)
0.17
$0.79
$1.67
$1.78
$0.47
0.59
0.13
0.26
0.06
$1.51
$2.39
$2.59
$2.51
7.86
1.09
0.32
(0.85)
$10.93
$11.15
$12.87
$4.11
$4.57
$5.01
$0.35
0.83
0.06
0.32
(0.29)
$1.27
$1.55
$2.24
$0.56
0.65
0.10
0.15
(0.56)
0.17
$1.07
$2.08
$2.12
$0.46
0.50
0.10
0.24
0.07
$1.37
$2.16
$2.33
$2.22
6.92
0.87
0.31
(0.74)
$9.58
$11.66
$11.32
$1.61
$1.95
$2.37
$0.27
1.02
0.06
0.27
(0.28)
$1.34
$1.72
$2.22
$0.60
0.55
0.07
0.12
(0.48)
0.15
$1.01
$1.59
$1.81
$0.40
0.60
0.10
0.27
0.07
$1.44
$2.04
$2.28
$1.77
3.30
0.45
0.25
(0.38)
$5.39
$6.09
$6.78
$0.09
$0.36
$1.07
$0.36
0.86
0.06
0.31
(0.28)
$1.31
$1.61
$2.22
$0.56
0.67
0.00
0.14
(0.50)
0.17
$1.04
$1.96
$2.03
$0.46
0.56
0.11
0.24
0.07
$1.44
$2.21
$2.40
$2.24
5.92
0.82
0.31
(0.70)
$8.59
$9.87
$10.24
$1.38
$1.66
$2.31
$0.36
0.89
0.05
0.28
(0.27)
$1.31
$1.60
$2.30
$0.62
0.54
0.09
0.16
(0.46)
0.14
$1.09
$1.60
$1.86
$0.43
0.57
0.08
0.24
0.08
$1.40
$1.92
$2.14
$1.94
3.36
0.54
0.24
(0.36)
$5.72
$6.46
$7.19
$0.38
$0.70
$1.20
Copper cash cost (C1) (per lb)
$4.01
$2.46
$1.56
$2.67
$1.05
ÇÇaayyeellii
Copper cash cost (C1) (per lb)
$(0.44)
$1.15
$0.96
$0.99
$1.24
PPyyhhäässaallmmii
Copper cash cost (C1) (per lb)
$2.81
$1.86
$2.06
$1.54
$1.48
1 All-in sustaining costs (AISC), C1 cash cost (C1), C3 total cost (C3) are non-GAAP ratios, and do not have standardized meaning prescribed by IFRS and might not be
comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Refinery-backed credits presented net within revenues – (see “Precious Metal Stream Arrangement”).
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 70
105105
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
(in United States dollars, tabular amounts in millions, except where noted)
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain statements and information herein, including all statements that are not historical facts, contain forward-looking
statements and forward-looking information within the meaning of applicable securities laws. The forward-looking statements
include estimates, forecasts and statements as to the Company’s expectations of production and sales volumes, and expected
timing of completion of project development at Enterprise and post-completion construction activity at Cobre Panama and are
subject to the impact of ore grades on future production, the potential of production disruptions, potential production, operational,
labour or marketing disruptions as a result of the COVID-19 global pandemic, capital expenditure and mine production costs, the
outcome of mine permitting, other required permitting, the outcome of legal proceedings which involve the Company, information
with respect to the future price of copper, gold, nickel, silver, iron, cobalt, pyrite, zinc and sulphuric acid, estimated mineral
reserves and mineral resources, First Quantum’s exploration and development program, estimated future expenses, exploration
and development capital requirements, the Company’s hedging policy, and goals and strategies. Often, but not always, forward-
looking statements or information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is
expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate” or “believes” or
variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or
“will” be taken, occur or be achieved.
With respect to forward-looking statements and information contained herein, the Company has made numerous assumptions
including among other things, assumptions about continuing production at all operating facilities, the price of copper, gold, nickel,
silver, iron, cobalt, pyrite, zinc and sulphuric acid, anticipated costs and expenditures and the ability to achieve the Company’s
goals. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown
risks, uncertainties and other factors which may cause the actual results, performance or achievements, or industry results, to be
materially different from any future results, performance or achievements expressed or implied by such forward-looking
statements or information. These factors include, but are not limited to, future production volumes and costs, the temporary or
permanent closure of uneconomic operations, costs for inputs such as oil, power and sulphur, political stability in Panama,
Zambia, Peru, Mauritania, Finland, Spain, Turkey, Argentina and Australia, adverse weather conditions in Panama, Zambia,
Finland, Spain, Turkey, Mauritania, and Australia, labour disruptions, potential social and environmental challenges (including the
impact of climate change), power supply, mechanical failures, water supply, procurement and delivery of parts and supplies to
the operations, the production of off-spec material and events generally impacting global economic, political and social stability.
For mineral resource and mineral reserve figures appearing or referred to herein, varying cut-off grades have been used
depending on the mine, method of extraction and type of ore contained in the orebody.
See the Company’s Annual Information Form for additional information on risks, uncertainties and other factors relating to the
forward-looking statements and information. Although the Company has attempted to identify factors that would cause actual
actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be
other factors that cause actual results, performances, achievements or events not as anticipated, estimated or intended. Also,
many of these factors are beyond First Quantum’s control. Accordingly, readers should not place undue reliance on forward-
looking statements or information. The Company undertakes no obligation to reissue or update forward-looking statements or
information as a result of new information or events after the date hereof except as may be required by law. All forward-looking
statements made and information contained herein are qualified by this cautionary statement.
106
106
First Quantum Minerals Ltd. | Q4 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS 71
FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD.
CCoonnssoolliiddaatteedd BBaallaannccee SShheeeettss
(expressed in millions of U.S. dollars)
Management’s Responsibility for Financial Reporting
MMaannaaggeemmeenntt’’ss RReessppoonnssiibbiilliittyy ffoorr FFiinnaanncciiaall RReeppoorrttiinngg
Note
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
AAsssseettss
The consolidated financial statements of First Quantum Minerals Ltd. have been prepared by and are the responsibility of the
CCuurrrreenntt aasssseettss
Company’s management. The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and, where appropriate,
Cash and cash equivalents
reflect management’s best estimates and judgments based on currently available information.
4
Trade and other receivables
11,,885599
662222
Management has developed and is maintaining a system of internal controls to obtain reasonable assurance that the
Inventories
Company’s assets are safeguarded, transactions are authorized and financial information is reliable.
Current portion of other assets
11,,331144
113388
8
5
The Company’s independent auditors, PricewaterhouseCoopers LLP, who are appointed by the shareholders, conduct an
33,,993333
audit in accordance with Canadian generally accepted auditing standards. Their report outlines the scope of their audit and
NNoonn--ccuurrrreenntt aasssseettss
gives their opinion on the consolidated financial statements.
Cash and cash equivalents - restricted cash
The Audit Committee of the Board of Directors meets periodically with management and the independent auditors to review
Non-current VAT receivable
the scope and results of the annual audit, and to review the consolidated financial statements and related financial reporting
Property, plant and equipment
matters prior to approval of the consolidated financial statements.
Goodwill
1199,,228833
223377
664444
5500
4b
7
6
950
737
1,333
88
3,108
40
349
19,468
237
544
152
338
9
13
8
Signed by
Hannes Meyer
661199
118822
332222
Hannes Meyer
Chief Financial Officer
2255,,227700
24,236
Chief Financial Officer
Investment in joint venture
Deferred income tax assets
Signed by
Other assets
Philip K.R. Pascall
TToottaall aasssseettss
Philip K.R. Pascall
Chairman and Chief Executive Officer
LLiiaabbiilliittiieess
Chairman and Chief Executive Officer
February 15, 2022
CCuurrrreenntt lliiaabbiilliittiieess
February 15, 2022
Bank overdrafts
Trade and other payables
Current taxes payable
Current debt
Current portion of provisions and other liabilities
NNoonn--ccuurrrreenntt lliiaabbiilliittiieess
Debt
Provisions and other liabilities
Deferred revenue
Deferred income tax liabilities
TToottaall lliiaabbiilliittiieess
EEqquuiittyy
Share capital
--
771199
336633
331133
228833
36
762
164
871
602
11,,667788
2,435
77,,559999
22,,330099
11,,338866
880044
7,452
2,286
1,433
595
1133,,777766
14,201
55,,556688
44,,552222
5,629
3,695
10
11
10
11
12
13
14
Retained earnings
The accompanying notes are an integral part of these consolidated financial statements.
Accumulated other comprehensive income (loss)
Total equity attributable to shareholders of the Company
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 2
((7722))
1100,,001188
(455)
8,869
Non-controlling interests
TToottaall eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
11,,447766
1111,,449944
2255,,227700
1,166
10,035
24,236
AApppprroovveedd bbyy tthhee bbooaarrdd ooff DDiirreeccttoorrss aanndd aauutthhoorriizzeedd ffoorr iissssuuee oonn FFeebbrruuaarryy 1155,, 22002222..
SSiiggnneedd bbyy
SSiimmoonn SSccootttt,, DDiirreeccttoorr
SSiiggnneedd bbyy
RRoobbeerrtt HHaarrddiinngg,, DDiirreeccttoorr
The accompanying notes are an integral part of these consolidated financial statements.
107
107
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 4
2021 ANNUAL REPORT2021 ANNUAL REPORT
Independent Auditor’s Report
Independent auditor’s report
To the Shareholders of First Quantum Minerals Ltd.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of First Quantum Minerals Ltd. and its subsidiaries (together, the Company) as at
December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in
accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (IFRS).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated statements of earnings (loss) for the years ended December 31, 2021 and 2020;
the consolidated statements of comprehensive income (loss) for the years ended December 31, 2021
and 2020;
the consolidated statements of cash flows for the years ended December 31, 2021 and 2020;
the consolidated balance sheets as at December 31, 2021 and 2020;
the consolidated statements of changes in equity for the years ended December 31, 2021 and 2020;
and
the notes to the consolidated financial statements, which include significant accounting policies and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2
T: +1 416 863 1133, F: +1 416 365 8215
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
108
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FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD.
Key audit matters
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2021. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2021. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Key audit matter
How our audit addressed the key audit matter
How our audit addressed the key audit matter
Goodwill impairment assessment
Goodwill impairment assessment
Our approach to addressing the matter included
the following procedures, among others:
Our approach to addressing the matter included
the following procedures, among others:
Refer to note 2 – Significant accounting policies,
note 3 – Significant judgments, estimates and
assumptions and note 7 – Goodwill to the
consolidated financial statements.
Refer to note 2 – Significant accounting policies,
note 3 – Significant judgments, estimates and
assumptions and note 7 – Goodwill to the
consolidated financial statements.
Evaluated how management determined the
recoverable amount of the Cobre Panama
CGU, which included the following:
Evaluated how management determined the
recoverable amount of the Cobre Panama
CGU, which included the following:
Goodwill arising on business combinations is
Goodwill arising on business combinations is
allocated to each of the Company’s cash-
allocated to each of the Company’s cash-
generating units or groups of cash-generating
generating units or groups of cash-generating
units (CGUs) that is expected to benefit from the
units (CGUs) that is expected to benefit from the
synergies of the combination. The recoverable
synergies of the combination. The recoverable
amount of the cash-generating unit to which
amount of the cash-generating unit to which
goodwill has been allocated is tested for
goodwill has been allocated is tested for
impairment at the same time every year. Goodwill
impairment at the same time every year. Goodwill
of $237 million was assigned to the Cobre
of $237 million was assigned to the Cobre
Panama CGU. The annual impairment test has
Panama CGU. The annual impairment test has
been performed as at December 31, 2021. For the
been performed as at December 31, 2021. For the
purpose of the goodwill impairment test, the
purpose of the goodwill impairment test, the
recoverable amount of Cobre Panama CGU has
recoverable amount of Cobre Panama CGU has
been determined by management using a fair
been determined by management using a fair
value less costs of disposal method based on a
value less costs of disposal method based on a
discounted cash flow model over a period of
discounted cash flow model over a period of
33 years, taking account of assumptions that
33 years, taking account of assumptions that
would be made by market participants. The future
would be made by market participants. The future
cash flows used in this model are inherently
cash flows used in this model are inherently
uncertain and could materially change over time
uncertain and could materially change over time
as a result of changes to the key assumptions
as a result of changes to the key assumptions
which included: ore reserves and resources
which included: ore reserves and resources
estimates, commodity prices, discount rate, future
estimates, commodity prices, discount rate, future
production costs and future capital expenditure.
production costs and future capital expenditure.
Ore reserves and resources are estimated based
Ore reserves and resources are estimated based
on the National Instrument 43-101 compliant
on the National Instrument 43-101 compliant
Tested the appropriateness of the fair
Tested the appropriateness of the fair
value less costs of disposal method and
the mathematical accuracy of the
discounted cash flow model.
value less costs of disposal method and
the mathematical accuracy of the
discounted cash flow model.
Tested the underlying data used in the
discounted cash flow model.
discounted cash flow model.
Tested the underlying data used in the
The work of management’s experts was
used in performing the procedures to
evaluate the reasonableness of the
assumptions associated with the ore
reserves and resources estimates. As a
basis for using this work, the competence,
capabilities and objectivity of
management’s experts was evaluated, the
work performed was understood and the
appropriateness of the work as audit
evidence was evaluated. The procedures
performed also included evaluation of the
methods and assumptions used by
management’s experts, tests of the data
used by management’s experts and an
evaluation of their findings.
The work of management’s experts was
used in performing the procedures to
evaluate the reasonableness of the
assumptions associated with the ore
reserves and resources estimates. As a
basis for using this work, the competence,
capabilities and objectivity of
management’s experts was evaluated, the
work performed was understood and the
appropriateness of the work as audit
evidence was evaluated. The procedures
performed also included evaluation of the
methods and assumptions used by
management’s experts, tests of the data
used by management’s experts and an
evaluation of their findings.
Evaluated the reasonableness of key
Evaluated the reasonableness of key
assumptions such as commodity prices
and future production costs and future
capital expenditure, by (i) comparing
assumptions such as commodity prices
and future production costs and future
capital expenditure, by (i) comparing
109
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2021 ANNUAL REPORT2021 ANNUAL REPORT
Key audit matter
Key audit matters
How our audit addressed the key audit matter
report produced by qualified persons
(management’s experts).
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2021. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
We considered this a key audit matter due to the
subjectivity and complexity in applying audit
procedures to test the key assumptions used by
management in determining the recoverable
amount of the Cobre Panama CGU, which
involved significant judgment from management.
Professionals with specialized skill and knowledge
in the field of valuation assisted in performing
certain procedures.
Refer to note 2 – Significant accounting policies,
note 3 – Significant judgments, estimates and
assumptions and note 7 – Goodwill to the
consolidated financial statements.
Goodwill impairment assessment
Assessment of impairment indicators for
property, plant and equipment
Goodwill arising on business combinations is
allocated to each of the Company’s cash-
generating units or groups of cash-generating
units (CGUs) that is expected to benefit from the
synergies of the combination. The recoverable
amount of the cash-generating unit to which
Refer to note 2 – significant accounting policies,
goodwill has been allocated is tested for
note 3 – Significant judgments, estimates and
impairment at the same time every year. Goodwill
assumptions and note 6 – Property, plant and
of $237 million was assigned to the Cobre
equipment to the consolidated financial
Panama CGU. The annual impairment test has
statements.
been performed as at December 31, 2021. For the
purpose of the goodwill impairment test, the
recoverable amount of Cobre Panama CGU has
been determined by management using a fair
value less costs of disposal method based on a
discounted cash flow model over a period of
33 years, taking account of assumptions that
would be made by market participants. The future
cash flows used in this model are inherently
uncertain and could materially change over time
as a result of changes to the key assumptions
which included: ore reserves and resources
estimates, commodity prices, discount rate, future
production costs and future capital expenditure.
Ore reserves and resources are estimated based
on the National Instrument 43-101 compliant
The Company’s property, plant and equipment
(PP&E) carrying value was $19,283 million as of
December 31, 2021 covering multiple cash-
generating units (CGUs) of the Company.
Management applies significant judgment in
assessing the CGUs and assets for the existence
of indicators of impairment at the reporting date.
Internal and external factors are considered in
assessing whether indicators of impairment are
present that would necessitate impairment testing.
Factors regarding commodity prices, production,
operating costs, capital expenditures and discount
rates are used in determining whether there are
any indicators of impairment.
commodity prices with external market
and industry data; and (ii) comparing
future production costs and future capital
expenditure to recent actual production
costs and actual capital expenditure
incurred of the Cobre Panama CGU, and
How our audit addressed the key audit matter
assessing whether these assumptions
were consistent with evidence obtained in
Our approach to addressing the matter included
other areas of the audit, as applicable.
the following procedures, among others:
Professionals with specialized skill and
Evaluated how management determined the
knowledge in the field of valuation
recoverable amount of the Cobre Panama
assisted in assessing the reasonableness
CGU, which included the following:
of the discount rate.
Tested the disclosures made in the
consolidated financial statements.
Tested the appropriateness of the fair
value less costs of disposal method and
the mathematical accuracy of the
discounted cash flow model.
Our approach to addressing the matter included
the following procedures, among others:
Tested the underlying data used in the
Evaluated the reasonableness of
discounted cash flow model.
management’s assessment of indicators of
impairment, which included the following:
Assessed the completeness of external or
internal factors that could be considered
as indicators of impairment of the
Company’s PP&E, by considering
evidence obtained in other areas of the
audit.
The work of management’s experts was
used in performing the procedures to
evaluate the reasonableness of the
assumptions associated with the ore
reserves and resources estimates. As a
basis for using this work, the competence,
capabilities and objectivity of
management’s experts was evaluated, the
work performed was understood and the
appropriateness of the work as audit
evidence was evaluated. The procedures
performed also included evaluation of the
methods and assumptions used by
management’s experts, tests of the data
used by management’s experts and an
evaluation of their findings.
Assessed commodity prices and discount
rates, by comparing to external market
and industry data and production,
operating costs and capital expenditures
by considering the current and past
performance of the CGUs and evidence
obtained in other areas of the audit, as
applicable.
Evaluated the reasonableness of key
assumptions such as commodity prices
and future production costs and future
capital expenditure, by (i) comparing
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110
FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD.
Key audit matter
Key audit matters
How our audit addressed the key audit matter
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2021. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
We considered this a key audit matter due to the
significance of the PP&E and subjectivity in
applying procedures to evaluate audit evidence
relating to the significant judgments made by
management in its assessment of indicators of
impairment.
How our audit addressed the key audit matter
Key audit matter
Goodwill impairment assessment
Other information
Our approach to addressing the matter included
the following procedures, among others:
discounted cash flow model.
Tested the appropriateness of the fair
Tested the underlying data used in the
Refer to note 2 – Significant accounting policies,
note 3 – Significant judgments, estimates and
assumptions and note 7 – Goodwill to the
consolidated financial statements.
value less costs of disposal method and
Our opinion on the consolidated financial statements does not cover the other information and we do not
the mathematical accuracy of the
and will not express an opinion or any form of assurance conclusion thereon.
discounted cash flow model.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
Evaluated how management determined the
Management is responsible for the other information. The other information comprises the Management’s
recoverable amount of the Cobre Panama
Discussion and Analysis which we obtained prior to the date of this auditor’s report and the information,
CGU, which included the following:
other than the consolidated financial statements and our auditor’s report thereon, included in the annual
report, which is expected to be made available to us after that date.
Goodwill arising on business combinations is
allocated to each of the Company’s cash-
generating units or groups of cash-generating
units (CGUs) that is expected to benefit from the
synergies of the combination. The recoverable
amount of the cash-generating unit to which
goodwill has been allocated is tested for
impairment at the same time every year. Goodwill
of $237 million was assigned to the Cobre
Panama CGU. The annual impairment test has
been performed as at December 31, 2021. For the
purpose of the goodwill impairment test, the
recoverable amount of Cobre Panama CGU has
been determined by management using a fair
value less costs of disposal method based on a
discounted cash flow model over a period of
33 years, taking account of assumptions that
would be made by market participants. The future
cash flows used in this model are inherently
uncertain and could materially change over time
as a result of changes to the key assumptions
which included: ore reserves and resources
estimates, commodity prices, discount rate, future
production costs and future capital expenditure.
Ore reserves and resources are estimated based
on the National Instrument 43-101 compliant
The work of management’s experts was
used in performing the procedures to
If, based on the work we have performed on the other information that we obtained prior to the date of this
evaluate the reasonableness of the
auditor’s report, we conclude that there is a material misstatement of this other information, we are
assumptions associated with the ore
required to report that fact. We have nothing to report in this regard. When we read the information, other
reserves and resources estimates. As a
than the consolidated financial statements and our auditor’s report thereon, included in the annual report,
basis for using this work, the competence,
if we conclude that there is a material misstatement therein, we are required to communicate the matter to
capabilities and objectivity of
those charged with governance.
management’s experts was evaluated, the
work performed was understood and the
appropriateness of the work as audit
evidence was evaluated. The procedures
performed also included evaluation of the
methods and assumptions used by
Management is responsible for the preparation and fair presentation of the consolidated financial
management’s experts, tests of the data
statements in accordance with IFRS, and for such internal control as management determines is
used by management’s experts and an
necessary to enable the preparation of consolidated financial statements that are free from material
evaluation of their findings.
misstatement, whether due to fraud or error.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Evaluated the reasonableness of key
assumptions such as commodity prices
and future production costs and future
capital expenditure, by (i) comparing
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2021 ANNUAL REPORT2021 ANNUAL REPORT
Key audit matters
In preparing the consolidated financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2021. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
Those charged with governance are responsible for overseeing the Company’s financial reporting
our opinion thereon, and we do not provide a separate opinion on these matters.
process.
Key audit matter
How our audit addressed the key audit matter
Auditor’s responsibilities for the audit of the consolidated financial statements
Goodwill impairment assessment
Our approach to addressing the matter included
the following procedures, among others:
discounted cash flow model.
Tested the appropriateness of the fair
Tested the underlying data used in the
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
Evaluated how management determined the
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
recoverable amount of the Cobre Panama
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
CGU, which included the following:
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
Refer to note 2 – Significant accounting policies,
note 3 – Significant judgments, estimates and
assumptions and note 7 – Goodwill to the
consolidated financial statements.
value less costs of disposal method and
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
the mathematical accuracy of the
professional judgment and maintain professional skepticism throughout the audit. We also:
discounted cash flow model.
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Goodwill arising on business combinations is
allocated to each of the Company’s cash-
generating units or groups of cash-generating
units (CGUs) that is expected to benefit from the
synergies of the combination. The recoverable
amount of the cash-generating unit to which
goodwill has been allocated is tested for
impairment at the same time every year. Goodwill
of $237 million was assigned to the Cobre
Panama CGU. The annual impairment test has
been performed as at December 31, 2021. For the
purpose of the goodwill impairment test, the
recoverable amount of Cobre Panama CGU has
been determined by management using a fair
value less costs of disposal method based on a
discounted cash flow model over a period of
33 years, taking account of assumptions that
estimates and related disclosures made by management.
would be made by market participants. The future
cash flows used in this model are inherently
uncertain and could materially change over time
as a result of changes to the key assumptions
which included: ore reserves and resources
estimates, commodity prices, discount rate, future
production costs and future capital expenditure.
Ore reserves and resources are estimated based
on the National Instrument 43-101 compliant
The work of management’s experts was
used in performing the procedures to
evaluate the reasonableness of the
assumptions associated with the ore
reserves and resources estimates. As a
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
basis for using this work, the competence,
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
capabilities and objectivity of
effectiveness of the Company’s internal control.
management’s experts was evaluated, the
work performed was understood and the
appropriateness of the work as audit
evidence was evaluated. The procedures
performed also included evaluation of the
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
methods and assumptions used by
based on the audit evidence obtained, whether a material uncertainty exists related to events or
management’s experts, tests of the data
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
used by management’s experts and an
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
evaluation of their findings.
to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
assumptions such as commodity prices
and future production costs and future
capital expenditure, by (i) comparing
Evaluated the reasonableness of key
112
112
FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
Key audit matters
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2021. These matters were
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
business activities within the Company to express an opinion on the consolidated financial
our opinion thereon, and we do not provide a separate opinion on these matters.
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
How our audit addressed the key audit matter
Key audit matter
Goodwill impairment assessment
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
Our approach to addressing the matter included
the following procedures, among others:
Refer to note 2 – Significant accounting policies,
note 3 – Significant judgments, estimates and
assumptions and note 7 – Goodwill to the
consolidated financial statements.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
Evaluated how management determined the
recoverable amount of the Cobre Panama
CGU, which included the following:
Tested the appropriateness of the fair
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
discounted cash flow model.
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
value less costs of disposal method and
the mathematical accuracy of the
discounted cash flow model.
Tested the underlying data used in the
The engagement partner on the audit resulting in this independent auditor’s report is James Lusby.
/s/PricewaterhouseCoopers LLP
Goodwill arising on business combinations is
allocated to each of the Company’s cash-
generating units or groups of cash-generating
units (CGUs) that is expected to benefit from the
synergies of the combination. The recoverable
amount of the cash-generating unit to which
goodwill has been allocated is tested for
impairment at the same time every year. Goodwill
of $237 million was assigned to the Cobre
Panama CGU. The annual impairment test has
been performed as at December 31, 2021. For the
purpose of the goodwill impairment test, the
recoverable amount of Cobre Panama CGU has
Chartered Professional Accountants, Licensed Public Accountants
been determined by management using a fair
value less costs of disposal method based on a
discounted cash flow model over a period of
33 years, taking account of assumptions that
would be made by market participants. The future
cash flows used in this model are inherently
uncertain and could materially change over time
as a result of changes to the key assumptions
which included: ore reserves and resources
estimates, commodity prices, discount rate, future
production costs and future capital expenditure.
Ore reserves and resources are estimated based
on the National Instrument 43-101 compliant
Toronto, Ontario
February 15, 2022
The work of management’s experts was
used in performing the procedures to
evaluate the reasonableness of the
assumptions associated with the ore
reserves and resources estimates. As a
basis for using this work, the competence,
capabilities and objectivity of
management’s experts was evaluated, the
work performed was understood and the
appropriateness of the work as audit
evidence was evaluated. The procedures
performed also included evaluation of the
methods and assumptions used by
management’s experts, tests of the data
used by management’s experts and an
evaluation of their findings.
Evaluated the reasonableness of key
assumptions such as commodity prices
and future production costs and future
capital expenditure, by (i) comparing
113
113
2021 ANNUAL REPORT2021 ANNUAL REPORT
CCoonnssoolliiddaatteedd SSttaatteemmeennttss ooff CCaasshh FFlloowwss
CCoonnssoolliiddaatteedd SSttaatteemmeennttss ooff EEaarrnniinnggss ((LLoossss))
(expressed in millions of U.S. dollars)
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Consolidated Statements of Earnings (Loss)
22002211
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Note
2020
CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess
Net earnings (loss)
Adjustments for
Depreciation
Sales revenues
Income tax expense
Cost of sales
Impairment and related charges
GGrroossss pprrooffiitt
Share-based compensation expense
Exploration
Net finance expense
Adjustment for expected phasing of Zambian VAT
General and administrative
Unrealized foreign exchange loss (gain)
Impairment and related charges
Loss on redemption of debt
Other income (expense)
Deferred revenue amortization
OOppeerraattiinngg pprrooffiitt
Share of loss (profit) loss in joint venture
Other
Finance income
Finance costs
Taxes paid
Adjustment for expected phasing of Zambian VAT
Movements in non-cash operating working capital
Long-term incentive plans
Loss on redemption of debt
Net cash from operating activities
EEaarrnniinnggss bbeeffoorree iinnccoommee ttaaxxeess
CCaasshh fflloowwss ffrroomm ((uusseedd bbyy)) iinnvveessttiinngg aaccttiivviittiieess
Income tax expense
Purchase and deposits on property, plant and equipment
NNeett eeaarrnniinnggss ((lloossss))
Acquisition of Korea Panama Mining Corp (“KPMC”)
Interest paid and capitalized to property, plant and equipment
NNeett eeaarrnniinnggss ((lloossss)) aattttrriibbuuttaabbllee ttoo::
Other
Non-controlling interests
Net cash used by investing activities
Shareholders of the Company
CCaasshh fflloowwss ffrroomm ((uusseedd bbyy)) ffiinnaanncciinngg aaccttiivviittiieess
EEaarrnniinnggss ((lloossss)) ppeerr sshhaarree aattttrriibbuuttaabbllee ttoo
Net movement in trading facility
tthhee sshhaarreehhoollddeerrss ooff tthhee CCoommppaannyy
Movement in restricted cash
NNeett eeaarrnniinnggss ((lloossss)) (($$ ppeerr sshhaarree))
Proceeds from debt
Repayments of debt
Basic
Net proceeds from (payments to) joint venture (KPMC)
Diluted
Transactions with non-controlling interests
WWeeiigghhtteedd aavveerraaggee sshhaarreess oouuttssttaannddiinngg ((000000’’ss))
Dividends paid to shareholders of the Company
Basic
Dividends paid to non-controlling interests
Diluted
Interest paid
Other
TToottaall sshhaarreess iissssuueedd aanndd oouuttssttaannddiinngg ((000000’’ss))
Net cash used by financing activities
IInnccrreeaassee iinn ccaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss –– bbeeggiinnnniinngg
ooff yyeeaarr
Exchange gain (losses) on cash and cash equivalents
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss –– eenndd ooff
yyeeaarr
Cash and cash equivalents and bank overdrafts comprising:
Cash and cash equivalents
Bank overdrafts
Notes
18,19
17
13
18
20
16
4c
20
10
22
12
9,22
21
4c
10
13
6,23
9
6
15
10
10
10
15
9,11b
15
11d
15
15
14a
11,,008899
22002211
11,,117744
77,,221122
881122
((44,,665500))
4444
22,,556622
3333
666600
((2200))
1166
((111188))
((220055))
((4444))
2211
221188
((9999))
(224)
2020 (revised-
Note 12)
1,217
5,070
256
(3,993)
-
1,077
31
738
(15)
(80)
180
(99)
-
5
(268)
(56)
((7755))
22,,559988
((1188))
6655
33,,445522
((772255))
((445555))
45
695
17
66
2,129
(313)
(804)
((1166))
((1188))
((9944))
((2211))
22,,888855
11,,990011
((881122))
((999955))
11,,008899
((110000))
((44))
11
225577
((11,,009988))
883322
((228800))
((1100))
33,,220044
(186)
80
(17)
(5)
1,613
32
(256)
(610)
(224)
(100)
-
37
(44)
(673)
(180)
49
(11)
4,017
((33,,337788))
11..2211
(3,963)
(0.26)
((6644))
11..2200
226633
((55))
668888,,667744
((3377))
669911,,771122
((552211))
((1133))
669911,,110022
((884411))
994466
991144
((11))
11,,885599
11,,885599
--
(40)
(0.26)
-
(5)
688,469
(2)
(574)
688,469
(14)
690,317
(543)
397
523
(6)
914
950
(36)
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
114
114
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 1
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 3
FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD.
CCoonnssoolliiddaatteedd BBaallaannccee SShheeeettss
CCoonnssoolliiddaatteedd SSttaatteemmeennttss ooff CCoommpprreehheennssiivvee IInnccoommee
(expressed in millions of U.S. dollars)
((LLoossss))
(expressed in millions of U.S. dollars)
Consolidated Statements of Comprehensive
Income (Loss)
(expressed in millions of U.S. dollars)
DDeecceemmbbeerr 3311,,
22002211
Note
AAsssseettss
Note
CCuurrrreenntt aasssseettss
NNeett eeaarrnniinnggss ((lloossss))
Cash and cash equivalents
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee ((lloossss))
Trade and other receivables
Items that have been/may subsequently be reclassified to net
earnings (loss):
Inventories
Current portion of other assets
Cash flow hedges reclassified to net earnings (loss)
24
22002211
11,,008899
11,,885599
662222
11,,331144
440011
113388
33,,993333
((99))
4
5
8
December 31,
2020
2020
(224)
950
737
1,333
88
(8)
3,108
(401)
Movements on unrealized cash flow hedge positions
NNoonn--ccuurrrreenntt aasssseettss
Items that will not subsequently be reclassified to net earnings
Cash and cash equivalents - restricted cash
(loss):
Non-current VAT receivable
Fair value loss on investments
Property, plant and equipment
TToottaall ccoommpprreehheennssiivvee iinnccoommee ((lloossss)) ffoorr
tthhee yyeeaarr
Goodwill
Investment in joint venture
TToottaall ccoommpprreehheennssiivvee iinnccoommee ((lloossss)) ffoorr tthhee ppeerriioodd aattttrriibbuuttaabbllee
ttoo::
Deferred income tax assets
Non-controlling interests
Other assets
Shareholders of the Company
TToottaall aasssseettss
TToottaall ccoommpprreehheennssiivvee iinnccoommee ((lloossss)) ffoorr tthhee yyeeaarr
LLiiaabbiilliittiieess
CCuurrrreenntt lliiaabbiilliittiieess
Bank overdrafts
Trade and other payables
Current taxes payable
Current debt
Current portion of provisions and other liabilities
NNoonn--ccuurrrreenntt lliiaabbiilliittiieess
Debt
Provisions and other liabilities
Deferred revenue
Deferred income tax liabilities
TToottaall lliiaabbiilliittiieess
EEqquuiittyy
Share capital
Retained earnings
4b
8
6
7
9
13
8
10
11
10
11
12
13
14
5500
40
664444
((99))
1199,,228833
11,,447722
223377
661199
118822
225577
332222
11,,221155
2255,,227700
11,,447722
--
771199
336633
331133
228833
349
(1)
19,468
(634)
237
544
152
(44)
338
(590)
24,236
(634)
36
762
164
871
602
11,,667788
2,435
77,,559999
22,,330099
11,,338866
880044
7,452
2,286
1,433
595
1133,,777766
14,201
55,,556688
44,,552222
((7722))
1100,,001188
11,,447766
1111,,449944
2255,,227700
5,629
3,695
(455)
8,869
1,166
10,035
24,236
Accumulated other comprehensive income (loss)
Total equity attributable to shareholders of the Company
Non-controlling interests
TToottaall eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
AApppprroovveedd bbyy tthhee bbooaarrdd ooff DDiirreeccttoorrss aanndd aauutthhoorriizzeedd ffoorr iissssuuee oonn FFeebbrruuaarryy 1155,, 22002222..
SSiiggnneedd bbyy
SSiimmoonn SSccootttt,, DDiirreeccttoorr
SSiiggnneedd bbyy
RRoobbeerrtt HHaarrddiinngg,, DDiirreeccttoorr
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
115
115
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 4
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 2
2021 ANNUAL REPORT2021 ANNUAL REPORT
CCoonnssoolliiddaatteedd SSttaatteemmeennttss ooff CCaasshh FFlloowwss
(expressed in millions of U.S. dollars)
CCoonnssoolliiddaatteedd SSttaatteemmeennttss ooff CCaasshh FFlloowwss
Consolidated Statements of Cash Flows
Note
(expressed in millions of U.S. dollars)
(expressed in millions of U.S. dollars)
CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess
22002211
2020
Net earnings (loss)
Adjustments for
Depreciation
CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess
Income tax expense
Net earnings (loss)
Impairment and related charges
Adjustments for
Share-based compensation expense
Depreciation
Net finance expense
Income tax expense
Adjustment for expected phasing of Zambian VAT
Impairment and related charges
Unrealized foreign exchange loss (gain)
Share-based compensation expense
Loss on redemption of debt
Net finance expense
Deferred revenue amortization
Adjustment for expected phasing of Zambian VAT
Share of loss (profit) loss in joint venture
Unrealized foreign exchange loss (gain)
Other
Loss on redemption of debt
Deferred revenue amortization
Taxes paid
Share of loss (profit) loss in joint venture
Movements in non-cash operating working capital
Other
Long-term incentive plans
Net cash from operating activities
Taxes paid
CCaasshh fflloowwss ffrroomm ((uusseedd bbyy)) iinnvveessttiinngg aaccttiivviittiieess
Movements in non-cash operating working capital
Purchase and deposits on property, plant and equipment
Long-term incentive plans
Acquisition of Korea Panama Mining Corp (“KPMC”)
Net cash from operating activities
Interest paid and capitalized to property, plant and equipment
CCaasshh fflloowwss ffrroomm ((uusseedd bbyy)) iinnvveessttiinngg aaccttiivviittiieess
Other
Purchase and deposits on property, plant and equipment
Net cash used by investing activities
Acquisition of Korea Panama Mining Corp (“KPMC”)
CCaasshh fflloowwss ffrroomm ((uusseedd bbyy)) ffiinnaanncciinngg aaccttiivviittiieess
Interest paid and capitalized to property, plant and equipment
Net movement in trading facility
Other
Movement in restricted cash
Net cash used by investing activities
Proceeds from debt
CCaasshh fflloowwss ffrroomm ((uusseedd bbyy)) ffiinnaanncciinngg aaccttiivviittiieess
Repayments of debt
Net movement in trading facility
Net proceeds from (payments to) joint venture (KPMC)
Movement in restricted cash
Transactions with non-controlling interests
Proceeds from debt
Dividends paid to shareholders of the Company
Repayments of debt
Dividends paid to non-controlling interests
Net proceeds from (payments to) joint venture (KPMC)
Interest paid
Transactions with non-controlling interests
Other
Dividends paid to shareholders of the Company
Net cash used by financing activities
Dividends paid to non-controlling interests
IInnccrreeaassee iinn ccaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss
Interest paid
Other
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss –– bbeeggiinnnniinngg
ooff yyeeaarr
Net cash used by financing activities
Exchange gain (losses) on cash and cash equivalents
IInnccrreeaassee iinn ccaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss –– eenndd ooff
yyeeaarr
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss –– bbeeggiinnnniinngg
ooff yyeeaarr
Cash and cash equivalents and bank overdrafts comprising:
Exchange gain (losses) on cash and cash equivalents
Cash and cash equivalents
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss –– eenndd ooff
Bank overdrafts
yyeeaarr
Cash and cash equivalents and bank overdrafts comprising:
Cash and cash equivalents
Bank overdrafts
11,,008899
Note
22002211
18,19
11,,117744
13
20
16
18,19
13
4c
20
16
10
12
4c
9,22
10
12
9,22
6,23
9
6
6,23
9
6
10
10
881122
11,,008899
4444
3333
11,,117744
666600
881122
1166
4444
((220055))
3333
2211
666600
((9999))
1166
((7755))
((220055))
((1188))
2211
33,,445522
((9999))
((445555))
((7755))
((1188))
((1188))
((9944))
33,,445522
22,,888855
((445555))
((1188))
((999955))
((9944))
((110000))
22,,888855
((44))
11
((999955))
((11,,009988))
((110000))
((44))
((228800))
11
((1100))
((11,,009988))
33,,220044
(224)
2020
1,217
256
(224)
-
31
1,217
738
256
(80)
-
180
31
5
738
(56)
(80)
45
180
17
5
2,129
(56)
(313)
45
(186)
17
(17)
2,129
1,613
(313)
(186)
(610)
(17)
(100)
1,613
-
37
(610)
(673)
(100)
-
49
37
(11)
(673)
4,017
10
10
((33,,337788))
((228800))
(3,963)
49
9,11b
11d
10
10
9,11b
11d
((6644))
((1100))
226633
33,,220044
((55))
((33,,337788))
((3377))
((6644))
((552211))
226633
((1133))
((55))
((884411))
((3377))
((552211))
994466
((1133))
991144
((884411))
((11))
994466
(40)
(11)
-
4,017
(5)
(3,963)
(2)
(40)
(574)
-
(14)
(5)
(543)
(2)
397
(574)
(14)
523
(543)
(6)
397
11,,885599
991144
((11))
11,,885599
--
11,,885599
11,,885599
--
914
523
(6)
950
(36)
914
950
(36)
The accompanying notes are an integral part of these consolidated financial statements.
116
116
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 3
The accompanying notes are an integral part of these consolidated financial statements.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 3
FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD.
CCoonnssoolliiddaatteedd BBaallaannccee SShheeeettss
CCoonnssoolliiddaatteedd BBaallaannccee SShheeeettss
CCoonnssoolliiddaatteedd BBaallaannccee SShheeeettss
CCoonnssoolliiddaatteedd BBaallaannccee SShheeeettss
(expressed in millions of U.S. dollars)
(expressed in millions of U.S. dollars)
(expressed in millions of U.S. dollars)
(expressed in millions of U.S. dollars)
Consolidated Balance Sheets
(expressed in millions of U.S. dollars)
AAsssseettss
AAsssseettss
CCuurrrreenntt aasssseettss
AAsssseettss
AAsssseettss
CCuurrrreenntt aasssseettss
CCuurrrreenntt aasssseettss
Cash and cash equivalents
CCuurrrreenntt aasssseettss
Cash and cash equivalents
Cash and cash equivalents
Trade and other receivables
Cash and cash equivalents
Trade and other receivables
Trade and other receivables
Inventories
Trade and other receivables
Inventories
Inventories
Current portion of other assets
Inventories
Current portion of other assets
Current portion of other assets
Current portion of other assets
NNoonn--ccuurrrreenntt aasssseettss
NNoonn--ccuurrrreenntt aasssseettss
NNoonn--ccuurrrreenntt aasssseettss
Cash and cash equivalents - restricted cash
NNoonn--ccuurrrreenntt aasssseettss
Cash and cash equivalents - restricted cash
Cash and cash equivalents - restricted cash
Non-current VAT receivable
Cash and cash equivalents - restricted cash
Non-current VAT receivable
Non-current VAT receivable
Property, plant and equipment
Non-current VAT receivable
Property, plant and equipment
Property, plant and equipment
Goodwill
Property, plant and equipment
Goodwill
Goodwill
Investment in joint venture
Goodwill
Investment in joint venture
Investment in joint venture
Deferred income tax assets
Investment in joint venture
Deferred income tax assets
Deferred income tax assets
Other assets
Deferred income tax assets
Other assets
Other assets
TToottaall aasssseettss
Other assets
TToottaall aasssseettss
TToottaall aasssseettss
LLiiaabbiilliittiieess
TToottaall aasssseettss
LLiiaabbiilliittiieess
CCuurrrreenntt lliiaabbiilliittiieess
LLiiaabbiilliittiieess
LLiiaabbiilliittiieess
CCuurrrreenntt lliiaabbiilliittiieess
CCuurrrreenntt lliiaabbiilliittiieess
Bank overdrafts
CCuurrrreenntt lliiaabbiilliittiieess
Bank overdrafts
Bank overdrafts
Trade and other payables
Bank overdrafts
Trade and other payables
Trade and other payables
Current taxes payable
Trade and other payables
Current taxes payable
Current taxes payable
Current debt
Current taxes payable
Current debt
Current debt
Current portion of provisions and other liabilities
Current debt
Current portion of provisions and other liabilities
Current portion of provisions and other liabilities
Current portion of provisions and other liabilities
NNoonn--ccuurrrreenntt lliiaabbiilliittiieess
NNoonn--ccuurrrreenntt lliiaabbiilliittiieess
NNoonn--ccuurrrreenntt lliiaabbiilliittiieess
Debt
NNoonn--ccuurrrreenntt lliiaabbiilliittiieess
Debt
Provisions and other liabilities
Debt
Debt
Provisions and other liabilities
Provisions and other liabilities
Deferred revenue
Provisions and other liabilities
Deferred revenue
Deferred revenue
Deferred income tax liabilities
Deferred revenue
Deferred income tax liabilities
Deferred income tax liabilities
TToottaall lliiaabbiilliittiieess
Deferred income tax liabilities
TToottaall lliiaabbiilliittiieess
TToottaall lliiaabbiilliittiieess
EEqquuiittyy
TToottaall lliiaabbiilliittiieess
EEqquuiittyy
Share capital
EEqquuiittyy
EEqquuiittyy
Share capital
Share capital
Retained earnings
Share capital
Retained earnings
Retained earnings
Accumulated other comprehensive income (loss)
Retained earnings
Accumulated other comprehensive income (loss)
Total equity attributable to shareholders of the Company
Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss)
Total equity attributable to shareholders of the Company
Total equity attributable to shareholders of the Company
Non-controlling interests
Total equity attributable to shareholders of the Company
Non-controlling interests
Non-controlling interests
TToottaall eeqquuiittyy
Non-controlling interests
TToottaall eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
TToottaall eeqquuiittyy
TToottaall eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
Note
Note
4
5
4
8
5
8
4b
6
4b
7
6
9
7
13
9
8
13
8
10
11
10
11
10
11
10
12
11
13
12
13
14
14
DDeecceemmbbeerr 3311,,
22002211
Note
DDeecceemmbbeerr 3311,,
22002211
December 31,
DDeecceemmbbeerr 3311,,
DDeecceemmbbeerr 3311,,
2020
22002211
22002211
December 31,
2020
Note
December 31,
December 31,
2020
2020
11,,885599
662222
11,,885599
4
11,,331144
662222
5
113388
11,,331144
8
33,,993333
113388
4
5
8
33,,993333
5500
664444
5500
4b
4b
11,,885599
11,,885599
662222
662222
950
737
950
11,,331144
11,,331144
1,333
737
113388
113388
88
1,333
33,,993333
33,,993333
3,108
88
950
950
737
737
1,333
1,333
88
88
3,108
3,108
3,108
5500
5500
664444
664444
40
349
40
40
40
349
349
6
7
9
8
1199,,228833
664444
6
223377
1199,,228833
7
9
661199
223377
118822
661199
332222
118822
8
2255,,227700
332222
13
13
1199,,228833
1199,,228833
19,468
349
223377
223377
237
19,468
661199
661199
118822
118822
332222
332222
544
237
152
544
338
152
2255,,227700
2255,,227700
24,236
338
2255,,227700
24,236
--
771199
--
336633
771199
331133
336633
228833
331133
--
--
771199
771199
336633
336633
331133
331133
228833
228833
36
762
36
164
762
871
164
602
871
10
10
11
11
11,,667788
228833
11,,667788
10
11
12
77,,559999
10
22,,330099
77,,559999
11
11,,338866
22,,330099
12
13
13
880044
11,,338866
11,,667788
11,,667788
2,435
602
2,435
77,,559999
77,,559999
7,452
22,,330099
22,,330099
2,286
7,452
11,,338866
11,,338866
1,433
2,286
880044
880044
595
1,433
1133,,777766
880044
1133,,777766
1133,,777766
14,201
595
1133,,777766
14,201
14
55,,556688
14
44,,552222
55,,556688
((7722))
44,,552222
55,,556688
55,,556688
5,629
44,,552222
44,,552222
3,695
5,629
((7722))
((7722))
(455)
3,695
1100,,001188
((7722))
1100,,001188
1100,,001188
8,869
(455)
11,,447766
1100,,001188
11,,447766
11,,447766
1,166
8,869
1111,,449944
11,,447766
1111,,449944
1111,,449944
10,035
1,166
2255,,227700
1111,,449944
2255,,227700
2255,,227700
24,236
10,035
19,468
19,468
237
237
544
544
152
152
338
338
24,236
24,236
36
36
762
762
164
164
871
871
602
602
2,435
2,435
7,452
7,452
2,286
2,286
1,433
1,433
595
595
14,201
14,201
5,629
5,629
3,695
3,695
(455)
(455)
8,869
8,869
1,166
1,166
10,035
10,035
24,236
24,236
AApppprroovveedd bbyy tthhee bbooaarrdd ooff DDiirreeccttoorrss aanndd aauutthhoorriizzeedd ffoorr iissssuuee oonn FFeebbrruuaarryy 1155,, 22002222..
AApppprroovveedd bbyy tthhee bbooaarrdd ooff DDiirreeccttoorrss aanndd aauutthhoorriizzeedd ffoorr iissssuuee oonn FFeebbrruuaarryy 1155,, 22002222..
AApppprroovveedd bbyy tthhee bbooaarrdd ooff DDiirreeccttoorrss aanndd aauutthhoorriizzeedd ffoorr iissssuuee oonn FFeebbrruuaarryy 1155,, 22002222..
TToottaall lliiaabbiilliittiieess aanndd eeqquuiittyy
2255,,227700
24,236
SSiiggnneedd bbyy
SSiiggnneedd bbyy
AApppprroovveedd bbyy tthhee bbooaarrdd ooff DDiirreeccttoorrss aanndd aauutthhoorriizzeedd ffoorr iissssuuee oonn FFeebbrruuaarryy 1155,, 22002222..
SSiimmoonn SSccootttt,, DDiirreeccttoorr
SSiiggnneedd bbyy
SSiiggnneedd bbyy
RRoobbeerrtt HHaarrddiinngg,, DDiirreeccttoorr
SSiimmoonn SSccootttt,, DDiirreeccttoorr
SSiimmoonn SSccootttt,, DDiirreeccttoorr
SSiiggnneedd bbyy
SSiiggnneedd bbyy
SSiiggnneedd bbyy
SSiiggnneedd bbyy
RRoobbeerrtt HHaarrddiinngg,, DDiirreeccttoorr
RRoobbeerrtt HHaarrddiinngg,, DDiirreeccttoorr
SSiimmoonn SSccootttt,, DDiirreeccttoorr
The accompanying notes are an integral part of these consolidated financial statements.
RRoobbeerrtt HHaarrddiinngg,, DDiirreeccttoorr
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
117
117
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 4
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 4
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 4
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 4
2021 ANNUAL REPORT2021 ANNUAL REPORT
CCoonnssoolliiddaatteedd SSttaatteemmeennttss ooff CCaasshh FFlloowwss
CCoonnssoolliiddaatteedd SSttaatteemmeennttss ooff CChhaannggeess iinn EEqquuiittyy
(expressed in millions of U.S. dollars)
(expressed in millions of U.S. dollars)
Consolidated Statements of Changes in Equity
22002211
(expressed in millions of U.S. dollars)
Note
2020
CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess
Net earnings (loss)
Adjustments for
Depreciation
Income tax expense
SShhaarree
ccaappiittaall
RReettaaiinneedd
eeaarrnniinnggss
AAccccuummuullaatteedd
ootthheerr
ccoommpprreehheennssiivvee
iinnccoommee ((lloossss))
TToottaall eeqquuiittyy
aattttrriibbuuttaabbllee ttoo
sshhaarreehhoollddeerrss ooff
tthhee CCoommppaannyy
18,19
13
11,,008899
(224)
NNoonn--
11,,117744
ccoonnttrroolllliinngg
1,217
iinntteerreessttss TToottaall eeqquuiittyy
881122
256
44,,552222
((7722))
1100,,001188
11,,447766
Impairment and related charges
Balance at December 31, 2020
55,,662299
33,,669955
Share-based compensation expense
Net earnings
Net finance expense
Other comprehensive
Adjustment for expected phasing of Zambian VAT
income
Unrealized foreign exchange loss (gain)
--
Total comprehensive income
Loss on redemption of debt
--
--
883322
883322
--
Deferred revenue amortization
Transactions with non-
controlling interests
Share of loss (profit) loss in joint venture
--
Other
Share-based compensation
expense
3333
((110000))
Taxes paid
Acquisition of treasury shares
Movements in non-cash operating working capital
Net cash from share awards
Long-term incentive plans
Dividends
Net cash from operating activities
Balance at December 31, 2021
CCaasshh fflloowwss ffrroomm ((uusseedd bbyy)) iinnvveessttiinngg aaccttiivviittiieess
55,,556688
66
--
--
--
--
--
((55))
Purchase and deposits on property, plant and equipment
Acquisition of Korea Panama Mining Corp (“KPMC”)
Interest paid and capitalized to property, plant and equipment
Other
Net cash used by investing activities
CCaasshh fflloowwss ffrroomm ((uusseedd bbyy)) ffiinnaanncciinngg aaccttiivviittiieess
Net movement in trading facility
Movement in restricted cash
Balance at December 31, 2019
Proceeds from debt
Repayments of debt
Net loss
Share
capital
Retained
earnings
5,615
-
3,880
(180)
Net proceeds from (payments to) joint venture (KPMC)
Other comprehensive loss
-
Transactions with non-controlling interests
-
Total comprehensive loss
Dividends paid to shareholders of the Company
-
Dividends paid to non-controlling interests
Share-based compensation
31
expense
Interest paid
(180)
-
Other
Acquisition of treasury shares
Net cash used by financing activities
Net cash from share awards
IInnccrreeaassee iinn ccaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss
(23)
6
-
-
Dividends
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss –– bbeeggiinnnniinngg
ooff yyeeaarr
Balance at December 31, 2020
Exchange gain (losses) on cash and cash equivalents
3,695
5,629
(5)
-
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aanndd bbaannkk oovveerrddrraaffttss –– eenndd ooff
yyeeaarr
Cash and cash equivalents and bank overdrafts comprising:
Cash and cash equivalents
Bank overdrafts
((445555))
--
338833
338833
--
--
--
--
--
20
88,,886699
16
883322
338833
4c
11,,221155
10
12
--
9,22
3333
((110000))
66
((55))
6,23
9
6
Accumulated
other
comprehensive
loss
Total equity
attributable to
shareholders of
the Company
10
(45)
-
(410)
(410)
-
-
-
-
9,450
10
(180)
10
9,11b
(410)
11d
(590)
31
(23)
6
(5)
(455)
8,869
4444
11,,116666
3333
225577
666600
--
1166
((220055))
225577
2211
((9999))
9900
((7755))
((1188))
--
33,,445522
((445555))
((1188))
--
--
-
1100,,003355
31
11,,008899
738
338833
(80)
180
11,,447722
5
(56)
9900
45
17
3333
2,129
(313)
((110000))
(186)
66
((9944))
((3377))
22,,888855
(17)
((4422))
1,613
1111,,449944
((999955))
((110000))
((44))
11
((11,,009988))
(610)
(100)
-
37
(673)
Non-
controlling
((228800))
((1100))
1,212
33,,220044
interests Total equity
49
(11)
10,662
4,017
((33,,337788))
(44)
(3,963)
(224)
((6644))
-
226633
(44)
((55))
((3377))
-
((552211))
((1133))
-
((884411))
-
994466
(2)
991144
1,166
((11))
11,,885599
11,,885599
--
(40)
(410)
-
(634)
(5)
(2)
31
(574)
(14)
(23)
(543)
6
397
(7)
523
10,035
(6)
914
950
(36)
The accompanying notes are an integral part of these consolidated financial statements.
118
118
The accompanying notes are an integral part of these consolidated financial statements.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 3
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 5
FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars)
1. NATURE OF OPERATIONS
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 currently 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 at 5:00pm (Eastern Time) on May 2, 2022.
The Company is registered and domiciled in Canada, and its registered office is Suite 2600, Three Bentall Centre, P.O. Box 49314,
595 Burrard Street, Vancouver, BC, Canada, V7X 1L3.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies used in the preparation of these consolidated financial statements are described below.
aa)) BBaassiiss ooff pprreesseennttaattiioonn
These consolidated financial statements have been prepared in compliance with International Financial Reporting Standards
(“IFRS”). For these purposes, IFRS comprise the standards issued by the International Accounting Standards Board (“IASB”) and
Interpretations issued by the IFRS Interpretations Committee (“IFRICs”).
These consolidated financial statements have been prepared under the historical cost convention, with the exception of
derivative assets and liabilities and investments which are measured at fair value.
These consolidated financial statements have been prepared on a going concern basis. In making the assessment that the
Company is a going concern, management have taken into account all available information about the future, which is at least,
but is not limited to, twelve months from December 31, 2021.
Following the declaration on March 11, 2020, of a pandemic by the World Health Organization, the restrictions imposed by
governments around the world has had a significant impact on the global economy, which have impacted the Company. Port
congestion and a global shortage of containers in particular has led to delays and disruptions impacting sales shipments in
Zambia of anode, but with bulk shipping of concentrates less affected. The Company has also experienced some minor
disruptions and additional costs on freight shipments out of Asia. Expected credit losses on financial assets remain immaterial at
December 31, 2021. Commodity price risk continues to be managed through the Company’s hedging program (see note 24).
At December 31, 2021, the Company had $755 million of committed undrawn senior debt facilities and $1,859 million of net
unrestricted cash, as well as future cash flows in order to meet all current obligations as they become due. The Company was in
compliance with all existing facility covenants as at December 31, 2021.
bb)) PPrriinncciipplleess ooff ccoonnssoolliiddaattiioonn
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its “subsidiaries”). Control is achieved where the Company has the right to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee. The results of subsidiaries acquired
or disposed of during the year are included in the consolidated statement of earnings from the effective date of acquisition or up
to the effective date of disposal, as appropriate.
The principal operating subsidiaries are Kansanshi Mining Plc (“Kansanshi”), Minera Panama S.A. (“MPSA” or “Cobre Panama”),
Kalumbila Minerals Limited (“Sentinel”), First Quantum Mining and Operations Limited (“FQMO”), Mauritanian Copper Mines
SARL(“Guelb Moghrein”), FQM Australia Nickel Pty Limited (“Ravensthorpe”), Cobre Las Cruces S.A. (“Las Cruces”), Çayeli Bakir
Isletmeleri A.S. (“Çayeli”), Pyhäsalmi Mine Oy (“Pyhäsalmi”) and Metal Corp Trading AG (“Metal Corp”). The exploration
subsidiaries include Minera Antares Peru S.A.C. (“Haquira”) as well as the subsidiary, Corriente Argentina S.A. (“Taca Taca”)
which relates to the Taca Taca project. All the above operating subsidiaries are 100% owned, with the exception of Ravensthorpe
(70%), Kansanshi (80%) and Cobre Panama, in which the Company holds a 90% interest, 10% of which is held indirectly through
the joint venture, Korea Panama Mining Corp (“KPMC”), a jointly controlled Canadian entity acquired in November 2017.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 6
119
119
2021 ANNUAL REPORT2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
NNoonn--ccoonnttrroolllliinngg iinntteerreessttss
At December 31, 2021, POSCO owned 30% of Ravensthorpe, ZCCM Investments Holdings Plc (“ZCCM”, a Zambian government
controlled entity) owned 20% of Kansanshi and KPMC owned 20% of Cobre Panama. A non-controlling interest of 33% is held by
African Energy Resources Ltd, a publicly listed entity, in the Company’s consolidated subsidiary, African Energy Holdings SRL.
Through the operations in Zambia and Panama, there are a number of transactions with the respective governments in the
ordinary course of business, including taxes, royalties, utilities and power. The Company is limited in its ability to use the assets
of Kansanshi and Cobre Panama as a result of the agreement with the other owners of these subsidiaries.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Company’s equity
therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and
the non-controlling interest’s share of changes in equity since the date of the combination
cc)) AAccccoouunnttiinngg ppoolliicciieess
FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn
The presentation currency and the functional currency of the Company and all of the Company’s operations is the USD. The
Company’s foreign currency transactions are translated into USD at the rate of exchange in effect at the date of the transaction.
Monetary assets and liabilities are translated using period end exchange rates with any gains and losses included in the
determination of net earnings. Non-monetary assets and liabilities are translated using historical rates.
IInnvveennttoorriieess
Product inventories comprise ore in stockpiles, work-in-progress and finished goods. Product inventories are recorded at the
lower of average cost and net realizable value. Cost includes materials, direct labour, other direct costs and production overheads
and depreciation of plant, equipment and mineral properties directly involved in the mining and production processes. Costs are
determined primarily on the basis of average costs for ore in stockpiles and on a first-in first-out basis for work-in-progress and
finished goods.
Waste material stripping costs related to production at, or below, the life-of-phase strip ratio are inventoried as incurred, with the
excess capitalized to mineral property and depreciated in future periods.
When inventories have been written down to net realizable value, a new assessment of net realizable value is made at each
subsequent reporting date that the inventory is still held.
Consumable stores are valued at the lower of purchase cost and net realizable value and recorded as a current asset.
PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt
(i) Mineral properties and mine development costs
Exploration and evaluation costs are expensed in the period incurred. Property acquisition costs and amounts paid under
development option agreements are capitalized. Development costs relating to specific properties are capitalized once
management determines a property will be developed. A development decision is made based upon consideration of project
economics, including future metal prices, reserves and resources, and estimated operating and capital costs. Capitalization of
costs incurred and proceeds received during the development phase ceases when the property is capable of operating at levels
intended by management.
Property acquisition and mine development costs, including costs incurred during the production phase to increase future output
by providing access to additional reserves (deferred stripping costs), are deferred and depreciated on a units-of-production basis
over the component of the reserves to which they relate.
ii) Property, plant and equipment
Property, plant and equipment are recorded at cost less accumulated depreciation. Costs recorded for assets under construction
include all expenditures incurred in connection with the development and construction of the assets. No depreciation is recorded
until the assets are substantially complete and ready for productive use. Where relevant, the Company has estimated residual
values on certain plant and equipment.
120120
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 7
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
Property, plant and equipment are depreciated using either the straight-line or units-of-production basis over the shorter of the
estimated useful life of the asset or the life of mine. Depreciation calculated on a straight-line basis is as follows for major asset
categories:
Office equipment
Furniture and fittings
Infrastructure and buildings
Motor vehicles
33%
15%
2%-5%
20%-25%
Depreciation on equipment utilized in the development of assets, including open pit and underground mine development, is
depreciated and recapitalized as development costs attributable to the related asset.
(iii) Borrowing costs
Borrowing costs attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost
of the asset until such time as the asset is substantially complete and ready for its intended use or sale. Where funds have been
borrowed specifically to finance an asset, the amount capitalized is the actual borrowing costs incurred. Where the funds are
used to finance an asset form part of general borrowings, the amount capitalized is calculated using a weighted average of rates
applicable to relevant general borrowings of the Company during the period.
BBuussiinneessss ccoommbbiinnaattiioonnss aanndd ggooooddwwiillll
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred
by the Company. The results of businesses acquired during the year are included in the consolidated financial statements from
the effective date of when control is obtained. The identifiable assets, liabilities and contingent liabilities of the business which
can be measured reliably are recorded at provisional fair values at the date of acquisition. Provisional fair values are finalized
within twelve months of the acquisition date. Acquisition-related costs are expensed as incurred.
Goodwill arising in a business combination is measured as the excess of the sum of the consideration transferred and the amount
of any non-controlling interest over the net identifiable assets acquired and liabilities assumed.
AAsssseett iimmppaaiirrmmeenntt
(i) Property, plant and equipment
The Company performs impairment tests on property, plant and equipment, mineral properties and mine development costs
when events or changes in circumstances occur that indicate the assets may not be recoverable. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not
possible to estimate the recoverable amount of an individual asset, for example due to no distinctive cash flows, the Company
estimates the recoverable amount of the cash-generating unit to which the assets belong. Cash-generating units are individual
operating mines, smelters or exploration projects.
Recoverable amount is the higher of fair value less costs of disposal and value in use. Fair value less costs of disposal is
determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between
knowledgeable and willing parties. For mining assets this would generally be determined based on the present value of the
estimated future cash flows arising from the continued development, use or eventual disposal of the asset. In assessing these
cash flows and discounting them to present value, assumptions used are those that an independent market participant would
consider appropriate. Value in use is the estimated future cash flows expected to arise from the continuing use of the assets in
their present form and from their disposal, discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount
of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in net
earnings.
Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the
revised estimate of its recoverable amount, such that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A
reversal of an impairment loss is recognized in net earnings immediately.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 8
121121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
(ii) Goodwill
Goodwill arising on business combinations is allocated to each of the Company’s cash-generating units (or groups of cash-
generating units) that is expected to benefit from the synergies of the combination. Goodwill is allocated to the lowest level at
which the goodwill is monitored by the Company’s board of directors for internal management purposes. The recoverable amount
of the cash-generating unit to which goodwill has been allocated is tested for impairment at the same time every year.
Any impairment loss is recognized in net earnings immediately. Impairment of goodwill is not subsequently reversed.
RReessttoorraattiioonn pprroovviissiioonnss
The Company recognizes liabilities for constructive or legislative and regulatory obligations, including those associated with the
reclamation of mineral properties and property, plant and equipment, when those obligations result from the acquisition,
construction, development or normal operation of assets. Provisions are measured at the present value of the expected
expenditures required to settle the obligation using a pre-tax discount rate reflecting the time value of money and risks specific
to the liability. The liability is increased for accretion expense, representing the unwinding of the discount applied to the provision,
and adjusted for changes to the current market-based risk-free discount rate, and the amount or timing of the underlying cash
flows needed to settle the obligation. The associated restoration costs are capitalized as part of the carrying amount of the related
long-lived asset and depreciated over the expected useful life of the asset or expensed in the period for closed sites.
RReevveennuuee rreeccooggnniittiioonn
The Company produces copper, gold, nickel, silver and zinc products which are sold under pricing arrangements where final
prices are set at a specified date based on market prices.
The Company identifies contracts with customers, the performance obligations within it, the transaction price and its allocation
to the performance obligations.
Revenues are recognized when control of the product passes to the customer and are measured based on expected
consideration. Control typically passes on transfer of key shipping documents which typically occurs around the shipment date.
Shipping services provided are a separate performance obligation and the revenue for these services is recognized over time.
For bill-and-hold arrangements, whereby the Company invoices but retains physical possession of products, revenue recognition
is also subject to the arrangement being substantive, as well as the product concerned being separately identifiable, ready for
transfer and not transferable to another customer.
For provisionally priced sales, changes between the prices recorded upon recognition of revenue and the final price due to
fluctuations in metal market prices result in the existence of an embedded derivative in the accounts receivable. This is recorded
at fair value, with changes in fair value classified as a component of cost of sales.
The Company recognizes deferred revenue in the event it receives payments from customers before a sale meets criteria for
revenue recognition. The transaction price is adjusted to reflect any significant financing component at the rate that reflects the
credit characteristics of the entity receiving the financing.
CCuurrrreenntt aanndd ddeeffeerrrreedd iinnccoommee ttaaxxeess
Tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent
that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in
other comprehensive income or directly in equity, respectively.
Current tax expense is calculated using income tax rates that have been enacted or substantively enacted at the balance sheet
date. Periodically, the positions taken by the Company with respect to situations in which applicable tax regulation is subject to
interpretation are evaluated to establish provisions, where appropriate, on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is recognized on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the liability
method. Deferred income tax liabilities are generally recognized for all taxable temporary differences, and deferred income tax
assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will
be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not recognized
if the temporary difference arises from goodwill or from the initial recognition of assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
122122
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 9
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
Deferred income tax assets and liabilities are not recognized in respect of taxable temporary differences associated with
investments in subsidiaries and associates where the timing of the reversal of the temporary differences can be controlled by the
Company and it is probable that temporary differences will not reverse in the foreseeable future.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realized, based on income tax rates and income tax laws that have been enacted or substantively
enacted by the balance sheet date. The measurement of deferred income tax liabilities and assets reflects the tax consequences
that would follow from the manner in which the Company expects to recover or settle the carrying amount of its assets and
liabilities.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities, and when they relate to income taxes levied by the same taxation authority and the Company intends to
settle its current tax assets and liabilities on a net basis.
SShhaarree--bbaasseedd ccoommppeennssaattiioonn
The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognized as
an expense, with a corresponding increase in equity, over the vesting period of the options. The amount recognized as an expense
is adjusted to reflect the number of options for which the related service and non-market performance conditions are expected
to be met, such that the amount ultimately recognized is based on the number of options that meet the related service and non-
market performance conditions at the vesting date.
For share-based payment options with non-vesting conditions, the grant-date fair value of the share-based payment is measured
to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
The Company grants stock options under its stock option plan and performance stock units (“PSUs”), restricted stock units
(“RSUs”) and key restricted stock units (“KRSUs”) under its long-term incentive plan to directors and employees. The Company
expenses the fair value of stock options, PSUs, RSUs and KRSUs granted over the vesting period, with a corresponding increase
in equity.
The fair value of stock options is determined using an option pricing model that takes into account, as of the grant date, the
exercise price, the expected life of the option, the current price of the underlying stock and its expected volatility, expected
dividends on the stock, and the risk-free interest rate over the expected life of the option. Cash consideration received from
employees when they exercise the options is credited to capital stock.
PSUs typically vest at the end of a three-year period if certain performance and vesting criteria, based on the Company’s share
price performance relative to a representative group of other mining companies, have been met. The fair value of PSUs is
determined using a valuation model that takes into account, as of the grant date, the expected life of the PSU, expected volatility,
expected dividend yield, and the risk-free interest rate over the life of the PSU to generate potential outcomes for share prices,
which are used to estimate the probability of the PSUs vesting at the end of the performance measurement period.
RSUs typically vest at the end of a three-year period and the fair value of RSUs is determined by reference to the share price of
the Company at the date of grant.
KRSUs vest in tranches over a four to eight-year period and the fair value of RSUs is determined by reference to the share price
of the Company at the date of grant.
Details of share-based compensation are disclosed in note 16.
EEaarrnniinnggss ppeerr sshhaarree
Earnings per share are calculated using the weighted average number of shares outstanding during the period. Shares acquired
under the long-term incentive plan are treated as treasury shares and are deducted from the number of shares outstanding for
the calculation of basic earnings per share. Diluted earnings per share are calculated using the treasury share method whereby
all “in the money” share based arrangements are assumed to have been exercised at the beginning of the period and the proceeds
from the exercise are assumed to have been used to purchase common shares at the average market price during the period.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 10
123123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
FFiinnaanncciiaall iinnssttrruummeennttss
The Company’s financial instruments consist of cash and cash equivalents, bank overdrafts, restricted cash, trade and other
receivables, investments, trade and other payables, derivative instruments, debt and amounts due to joint ventures.
Financial assets are classified as measured at amortized cost, fair value through other comprehensive income (“FVOCI”) and fair
value through profit and loss (“FVTPL”). Financial liabilities are measured at amortized cost or FVTPL.
(i) Cash and cash equivalents, bank overdrafts and restricted cash
Cash and cash equivalents and bank overdrafts comprise cash at banks and on hand and other short-term investments with initial
maturities of less than three months. Restricted cash comprises cash deposits used to guarantee letters of credit issued by the
Company or held for escrow purposes.
Cash and cash equivalents and restricted cash are measured at amortized cost. Cash pooling arrangements are presented on a
gross basis unless physical cash settlement of balances has been made at the balance sheet date.
(ii) Trade and other receivables
Provisionally priced sales included in trade and other receivables are classified as FVTPL. All other trade receivables are classified
as amortized cost financial assets and are recorded at the transaction price, net of transaction costs incurred and expected credit
losses.
(iii) Investments
Investments are designated as FVOCI. Fair value is determined in the manner described in note 24. Unrealized gains and losses
are recognized in other comprehensive income.
(iv) Derivatives and hedging
A portion of the Company’s metal sales are sold on a provisional basis whereby sales are recognized at prevailing metal prices
when title transfers to the customer and final pricing is not determined until a subsequent date, typically two months later. The
Company enters into derivative contracts to directly offset the exposure to final pricing adjustments on the provisionally priced
sales contracts. The Company also periodically enters into derivative instruments to mitigate cash flow exposure to commodity
prices, foreign exchange rates and interest rates. Derivative financial instruments, including embedded derivatives related to the
provisionally priced sales contracts, are classified as fair value through profit or loss and measured at fair value as determined by
active market prices and valuation models, as appropriate. Valuation models require the use of assumptions concerning the
amount and timing of estimated future cash flows and discount rates. In determining these assumptions, the Company uses
readily observable market inputs where available or, where not available, inputs generated by the Company. Changes in the fair
value of derivative instruments are recorded in net earnings.
At the inception of a designated hedging relationship, the Company documents the relationship between hedging instruments
and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The
Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether derivatives that are used
in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized
in other comprehensive income. The time value of hedges for the year-ended December 31, 2021 of $8 million (December 31,
2020: $3 million) is also recognized in other comprehensive income.
Amounts accumulated in equity are reclassified to the Statements of Earnings in the periods when the hedged item affects net
earnings.
(v) Trade and other payables, debt and amounts due to joint ventures
Trade payables, debt and amounts due to joint ventures are classified as amortized cost financial liabilities and are recognized
initially at fair value, net of transaction costs incurred, and are subsequently stated at amortized cost. For debt, any difference
between the amounts originally received, net of transaction costs, and the redemption value is recognized in net earnings over
the period to maturity using the effective interest rate method.
124124
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 11
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
Exchanges of instruments and modifications to debt are assessed using quantitative and qualitative factors to consider whether
the exchange or modification constitutes an extinguishment of the original financial liability and establishment of a new financial
liability. In the case of extinguishment, any fees or costs incurred are recognized in the Statement of Earnings. Where the terms
in an exchange or modification are not assessed to be substantially different, a modification gain or loss is recognized at an
amount equal to the difference between the modified cash flows discounted at the original effective interest rate and the carrying
value of the debt. The carrying value of the debt is adjusted for this modification gain or loss, directly attributable transaction
costs, and any cash paid to or received from the debt holder.
(vi) Impairment of financial assets
Expected credit losses (“ECL”) are recognized for financial assets held at amortized cost. This is based on credit losses that result
from default events that are possible within a 12-month period, except for trade receivables, whose ECLs are on a simplified
lifetime basis, and any financial assets for which there has been a significant increase in credit risk since initial recognition, for
which ECLs over the lifetime are recognized.
IInnvveessttmmeennttss iinn jjooiinntt vveennttuurreess
Joint arrangements whereby joint control exists are accounted for using the equity method and presented separately in the
balance sheet. The investment is initially recognized at cost and adjusted thereafter for the post-acquisition share of profit or loss.
Further detail of the investment in joint venture is provided in note 9.
dd)) AAddooppttiioonn ooff nneeww SSttaannddaarrddss
Amendments to IFRS 7, IFRS 9 / IAS 39, and IFRS 16 for Interest Rate Benchmark Reform, effective January 1, 2021, have had no
impact on the financial statements and are not expected to have a significant impact on our interest rate risk or risk management.
The Company’s senior debt facility and the Kalumbila term loan are subject to USD LIBOR, which will cease publication in 2023.
On amendment of contractual terms of borrowings for the reform, the Company will record no modification gain or loss, instead
revising the effective interest rate.
ee)) AAccccoouunnttiinngg ssttaannddaarrddss iissssuueedd bbuutt nnoott yyeett eeffffeeccttiivvee
Standards and interpretations issued but not yet effective up to the date of issuance of the financial statements are listed below.
This listing of standards and interpretations issued are those that the Company reasonably expects to have an impact on
disclosures, financial position or performance when applied at a future date.
Amendments to IAS 16, Property, Plant and Equipment—Proceeds before Intended Use
•
Effective on January 1, 2022, the amendments to IAS 16 require that entities are no longer able to deduct the net
proceeds from selling any items from an asset’s carrying amount before it is capable of operating in the manner
intended by management. Instead, the proceeds should be recognized in accordance with applicable standards and in
particular applying the measurement requirements of IAS 2 for the cost of those items. The Amendments to IAS 16 may
impact the Company’s development projects.
Annual Improvements to IFRS Standards 2018-2020 Cycle- Amendments to IFRS 1 First-time Adoption of International Standards,
IFRS 9 Financial Instruments, and IFRS 16 Leases
•
Effective on January 1, 2022, the amendments include an update to IFRS 9 regarding fees included in the quantitative
test used to determine whether an exchange of debt instruments or modification of terms is accounted for as an
extinguishment or a modification. The fees are to include only fees paid or received between the borrower and lender
or received by either the borrower or lender on the other’s behalf. The Company regularly reviews its financing
arrangements and further modifications or exchanges will be assessed under the updated quantitative test.
Amendments to IAS 12 – Income Taxes –Deferred Tax related to Assets and Liabilities arising from a Single Transaction
•
Effective on January 1, 2023, the amendments remove the exemption for deferred tax arising on transactions that, on
initial recognition, give rise to equal amounts of taxable and deductible temporary differences. The Company’s leases
and restoration provisions may be affected by the Amendments.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 12
125125
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
3. SIGNIFICANT JUDGEMENT, ESTIMATE AND ASSUMPTIONS
Many of the amounts disclosed in the financial statements involve the use of judgments, estimates and assumptions. These
judgments and estimates are based on management’s knowledge of the relevant facts and circumstances at the time, having
regard to prior experience, and are continually evaluated.
((ii)) SSiiggnniiffiiccaanntt jjuuddggmmeennttss
• Determination of ore reserves and resources
Judgments about the amount of product that can be economically and legally extracted from the Company’s properties are made
by management using a range of geological, technical and economic factors, history of conversion of mineral deposits to proven
and probable reserves as well as data regarding quantities, grades, production techniques, recovery rates, production costs,
transport costs, commodity demand, commodity prices and exchange rates. This process may require complex and difficult
geological judgments to interpret the data. The Company uses qualified persons (as defined by the Canadian Securities
Administrators’ National Instrument 43-101) to compile this data.
Changes in the judgments surrounding ore reserves and resources may impact the carrying value of property, plant and
equipment (note 6), restoration provisions included in provisions and other liabilities (note 11), recognition of deferred income
tax amounts (note 13) and depreciation (note 6).
• Achievement of commercial production
Once a mine or smelter reaches the operating levels intended by management, depreciation of capitalized costs begins.
Significant judgment is required to determine when certain of the Company’s assets reach this level.
Management considers several factors, including, but not limited to the following:
•
•
completion of a reasonable period of commissioning;
consistent operating results achieved at a pre-determined level of design capacity and indications exist that this level
will continue;
• mineral recoveries at or near expected levels;
•
and the transfer of operations from development personnel to operational personnel has been completed.
• Taxes
Judgment is required in determining the recognition and measurement of deferred income tax assets and liabilities on the balance
sheet. In the normal course of business, the Company is subject to assessment by taxation authorities in various jurisdictions.
These authorities may have different interpretations of tax legislation or tax agreements than those applied by the Company in
computing current and deferred income taxes. These different judgments may alter the timing or amounts of taxable income or
deductions. The final amount of taxes to be paid or recovered depends on a number of factors including the outcome of audits,
appeals and negotiation. Amounts to be recovered and the timings of recoveries with respect to indirect taxes, such as VAT, are
subject to judgment which, in the instance of a change of circumstances, could result in material adjustments.
The Company operates in a specialized industry and in a number of tax jurisdictions. As a result, its income is subject to various
rates of taxation. The breadth of its operations and the global complexity and interpretation of tax regulations require assessment
and judgement of uncertainties and of the taxes that the Company will ultimately pay. These are dependent on many factors,
including negotiations with tax authorities in various jurisdictions, outcomes of tax litigation and resolution of disputes. The
resolution of these uncertainties may result in adjustments to the Company’s tax assets and liabilities.
Management assesses the likelihood and timing of taxable earnings in future periods in recognizing deferred income tax assets
on unutilized tax losses. Future taxable income is based on forecast cash flows from operations and the application of existing
tax laws in each jurisdiction. Forecast cash flows are based on life of mine projections.
To the extent that future cash flows and taxable income differ significantly from forecasts, the ability of the Company to realize
the net deferred income tax assets recorded at the balance sheet date could be impacted. In addition, future changes in tax laws
could limit the ability of the Company to obtain tax deductions in future periods from deferred income tax assets are disclosed in
note 13.
126126
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 13
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
• Precious metal stream arrangement
On October 5, 2015, the Company finalized an agreement with Franco-Nevada Corporation (“Franco-Nevada”) for the delivery of
precious metals from the Cobre Panama project. Franco-Nevada have provided $1 billion deposit to the Cobre Panama project
against future deliveries of gold and silver produced by the mine. A further agreement was completed on March 26, 2018, with
an additional $356 million received from Franco-Nevada.
Management has determined that under the terms of the agreements the Company meets the ‘own-use’ exemption criteria under
IFRS 9: Financial Instruments. The Company also retains significant business risk relating to the operation of the mine and as
such has accounted for the proceeds received as deferred revenue.
Management has exercised judgement in determining the appropriate accounting treatment for the Franco-Nevada streaming
agreements. Management has determined, with reference to the agreed contractual terms in conjunction with the Cobre Panama
reserves and mine plan, that funds received from Franco-Nevada constitute a prepayment of revenues deliverable from future
Cobre Panama production.
• Assessment of impairment indicators
Management applies significant judgement in assessing the cash-generating units and assets for the existence of indicators of
impairment at the reporting date. Internal and external factors are considered in assessing whether indicators of impairment are
present that would necessitate impairment testing. Significant assumptions regarding commodity prices, production, operating
costs, capital expenditures and discount rates are used in determining whether there are any indicators of impairment. These
assumptions are reviewed regularly by senior management and compared, where applicable, to relevant market consensus
views.
The Company’s most significant CGUs are longer-term assets and therefore their value is assessed on the basis of longer-term
pricing assumptions. Shorter-term assets are more sensitive to short term commodity prices assumptions that are used in the
review of impairment indicators.
The carrying value of property, plant and equipment and goodwill at the balance sheet date is disclosed in note 6 and note 7
respectively, and by mine location in note 23.
Asset impairments are disclosed in note 20.
((iiii)) SSiiggnniiffiiccaanntt aaccccoouunnttiinngg eessttiimmaatteess
Estimates are inherently uncertain and therefore actual results may differ from the amounts included in the financial statements,
potentially having a material future effect on the Company’s consolidated financial statements. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are addressed below:
• Determination of ore reserves and life of mine plan
Reserves are estimates of the amount of product that can be economically and legally extracted from the Company’s properties.
Estimating the quantity and/or grade of reserves requires the size, shape and depth of ore bodies or fields to be determined by
analyzing geological data such as drilling samples. Following this, the quantity of ore that can be extracted in an economical
manner is calculated using data regarding the life of mine plans and forecast sales prices (based on current and long-term
historical average price trends).
The majority of the Company’s property, plant and equipment are depreciated over the estimated lives of the assets on a units-
of-production basis. The calculation of the units-of-production rate, and therefore the annual depreciation expense could be
materially affected by changes in the underlying estimates which are driven by the life of mine plans. Changes in estimates can
be the result of actual future production differing from current forecasts of future production, expansion of mineral reserves
through exploration activities, differences between estimated and actual costs of mining and differences in the commodity prices
used in the estimation of mineral reserves.
Management made significant estimates of the strip ratio for each production phase. Waste material stripping costs in excess of
this ratio, and from which future economic benefit will be derived from future access to ore, will be capitalized to mineral property
and depreciated on a units-of-production basis.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 14
127127
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
Changes in the proven and probable reserves estimates may impact the carrying value of property, plant and equipment (note 6),
restoration provisions (note 11), recognition of deferred income tax amounts (note 13) and depreciation (note 6).
• Review of asset carrying values and impairment charges
Management’s determination of recoverable amounts includes estimates of mineral prices, recoverable reserves, and operating,
capital and restoration costs are subject to certain risks and uncertainties that may affect the recoverability of mineral property
costs. The calculation of the recoverable amount can also include assumptions regarding the appropriate discount rate and
inflation and exchange rates. Although management has made its best estimate of these factors, it is possible that changes could
occur in the near term that could adversely affect management’s estimate of the net cash flow to be generated from its projects.
• Estimation of the amount and timing of restoration and remediation costs
Accounting for restoration provisions requires management to make estimates of the future costs the Company will incur to
complete the restoration and remediation work required to comply with existing laws, regulations and agreements in place at
each mining operation and any environmental and social principles the Company is in compliance with. The calculation of the
present value of these costs also includes assumptions regarding the timing of restoration and remediation work, applicable risk-
free interest rate for discounting those future cash outflows, inflation and foreign exchange rates. Actual costs incurred may differ
from those amounts estimated. Also, future changes to environmental laws and regulations could increase the extent of
restoration work required to be performed by the Company. Increases in future costs could materially impact the amounts
charged to operations for restoration. A 10% increase in costs would result in an increase to restoration provisions of $76 million
at December 31, 2021.
The provision represents management’s best estimate of the present value of the future restoration and remediation costs. The
actual future expenditures may differ from the amounts currently provided; any increase in future costs could materially impact
the amounts included in the liability disclosed in the consolidated balance sheet. The carrying amount of the Company’s
restoration provision is disclosed in note 11c.
• Estimation and assumptions relating to the timing of VAT receivables in Zambia
In addition to the recoverability of VAT receivables being a key judgment, certain assumptions are determined by management
in calculating the adjustment for expected phasing of VAT receipts. In assessing the expected phasing adjustment, management
considers publicly available information with respect to the fiscal situation in Zambia as well as the level of refunds and offsets
provided historically, and a Zambian risk-free rate as disclosed in note 4c is then applied to calculate the phasing adjustment.
Changes to the timings could materially impact the amounts charged to finance costs. The impact of repayments being one year
later than estimated at December 31, 2021, would lead to a decrease to the carrying value and an increase to finance costs of
$36 million. The carrying amount of the Company’s VAT receivables is disclosed in note 4b.
4. TRADE RECEIVABLES
aa)) TTrraaddee aanndd ootthheerr rreecceeiivvaabblleess
Trade receivables
VAT receivable (current)
Other receivables
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
446666
1177
113399
662222
583
13
141
737
128128
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 15
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
bb)) VVAATT rreecceeiivvaabbllee
Kansanshi Mining PLC
Kalumbila Minerals Limited
First Quantum Mining and Operations Limited (Zambia)
VAT receivable from the Company’s Zambian operations
Other
Total VAT receivable
Less: current portion, included within trade and other receivables
Non-current VAT receivable
cc)) VVAATT rreecceeiivvaabbllee bbyy tthhee CCoommppaannyy’’ss ZZaammbbiiaann ooppeerraattiioonn
Receivable at date of claim
Impact of depreciation of Zambian Kwacha against U.S. dollar 1
Receivable at the period end exchange rate
Adjustment for expected phasing for non-current portion2
Total receivable
CCoonnssiissttiinngg::
Current portion, included within trade and other receivables
Non-current VAT receivable3
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
228844
332244
3366
664444
1177
666611
((1177))
664444
178
154
17
349
13
362
(13)
349
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
997755
((118888))
778877
((114433))
664444
--
664444
855
(379)
476
(127)
349
-
349
1 The impact of appreciation of the Zambian Kwacha against the U.S. dollar in the year ended December 31, 2021 on the Company’s Zambian operations VAT receivable
of $191 million is equal to the unrealized foreign exchange gain on the total Kwacha receivable and is included within other expense (note 22) in the Statement of
Earnings (Loss). It does not include foreign exchange losses realized on receipts.
2 The adjustment for expected phasing for non-current portion represents the application of a Zambian risk-free rate to the expected phasing of VAT between 13 months
and 6 years from the reporting date. In assessing the expected phasing adjustment, management considers publicly available information with respect to the fiscal
situation in Zambia as well as the level of refunds and offsets provided historically. This adjustment for expected phasing, an expense of $16 million, has been recognized
in the year ended December 31, 2021, (December 31, 2020: credit of $80 million). Discussions with the relevant government authorities are ongoing and management
continues to consider that the outstanding VAT claims are fully recoverable, however final resolution may vary from the amounts recorded.
3A Zambia risk-free rate of 6% is applied to calculate the adjustment for expected phasing of non-current portion.
dd)) AAggiinngg aannaallyyssiiss ooff VVAATT rreecceeiivvaabbllee ffoorr tthhee CCoommppaannyy’’ss ZZaammbbiiaann ooppeerraattiioonnss
Receivable at date of claim
238
438
93
96
110
<< 11 yyeeaarr
11--33 yyeeaarrss
33--55 yyeeaarrss
55--88 yyeeaarrss
>> 88 yyeeaarrss
Impact of appreciation
(depreciation) of Zambian Kwacha
against U.S. dollar
Non-current VAT due
Adjustment for expected phasing
Total VAT receivable from Zambian
operations
43
228811
((5511))
223300
(69)
336699
((6677))
330022
(39)
5544
((1100))
4444
(55)
(68)
4411
((77))
3344
4422
((88))
3344
TToottaall
975
(188)
778877
((114433))
664444
The movement in VAT receivable at date of claim is net of offsets received in the year ended December 31, 2021, of $71 million.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 16
129129
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
5. INVENTORIES
Ore in stockpiles
Work-in-progress
Finished product
Total product inventory
Consumable stores
6. PROPERTY, PLANT AND EQUIPMENT
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
117799
4444
226600
448833
883311
196
29
313
538
795
11,,331144
1,333
Net book value, as at
December 31, 2020
Additions
Disposals
Transfers between categories
Restoration provision (note 11c)
Impairments (note 20)
Capitalized interest (note 21)
Depreciation charge (note 18)
Net book value, as at December 31,
2021
Cost
Accumulated depreciation
MMiinneerraall pprrooppeerrttiieess aanndd mmiinnee
ddeevveellooppmmeenntt ccoossttss
PPllaanntt aanndd
eeqquuiippmmeenntt
CCaappiittaall wwoorrkk--
iinn--pprrooggrreessss
OOppeerraattiinngg
mmiinneess
DDeevveellooppmmeenntt
pprroojjeeccttss
TToottaall
1100,,227788
880044
77,,223399
11,,114477
1199,,446688
--
((3377))
447766
--
((1188))
--
((666677))
1100,,003322
1155,,998822
((55,,995500))
11,,006699
--
((669966))
--
--
44
--
11,,118811
11,,118811
--
--
--
220055
((3366))
((1144))
--
((447744))
66,,992200
99,,662255
((22,,770055))
--
--
1155
--
((1122))
--
--
11,,115500
11,,115500
--
11,,006699
((3377))
--
((3366))
((4444))
44
((11,,114411))
1199,,228833
2277,,993388
((88,,665555))
Mineral properties and mine
development costs
Plant and
equipment
Capital work-
in-progress
Operating
mines
Development
projects
Total
Net book value, as at December 31,
2019
Additions
Disposals
Transfers between categories
Restoration provision (note 11c)
Depreciation charge (note 18)
Net book value, as at
December 31, 2020
Cost
Accumulated depreciation
10,802
-
(17)
340
-
(847)
10,278
15,627
(5,349)
851
605
-
(652)
-
-
804
804
-
7,182
1,137
19,972
-
-
302
107
(352)
7,239
9,470
(2,231)
-
-
10
-
-
1,147
1,147
-
605
(17)
-
107
(1,199)
19,468
27,048
(7,580)
130130
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 17
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
Included within capital work-in-progress and mineral properties – operating mines at December 31, 2021, is an amount of $829
million related to capitalized deferred stripping costs (December 31, 2020: $720 million).
7. GOODWILL
Goodwill of $237 million arose through the acquisition of Inmet Mining Corporation (“Inmet”) in 2013 after the application of IAS
12 – Income taxes, due to the requirement to recognize a deferred tax liability calculated as the tax effect of the difference
between the fair value of the assets acquired and their respective tax bases. Goodwill is not deductible for tax purposes. The
goodwill was assigned to the Cobre Panama cash-generating unit.
The carrying value of the Cobre Panama cash-generating unit at December 31, 2021, was $10,327 million inclusive of the Cobre
Panama power station, and deferred revenue (December 31, 2020: $10,473 million).
The annual impairment test has been performed at December 31, 2021. For the purposes of the goodwill impairment test, the
recoverable amount of the Cobre Panama cash-generating unit has been determined using a fair value less costs of disposal
calculation based on a discounted cash flow model over a period of 33 years, which uses a post-tax discount rate, taking account
of assumptions that would be made by market participants. The future cash flows used in this model are inherently uncertain and
could materially change over time as a result of changes to the following key assumptions which included: ore reserves and
resources estimates, commodity prices, discount rates, future production costs and future capital expenditure. Reserves and
resources are estimated based on the National Instrument 43-101 compliant report produced by qualified persons. The
production profile used in the cash flow model is consistent with the reserves and resource volumes approved as part of the
Company’s process for the estimation of proven and probable reserves. Such production volumes are dependent on a number of
variables, including the recovery of metal from the ore, production costs, duration of mining rights, and the selling price of
extracted minerals. Commodity prices are management’s estimates of the views of market participants, including a long-term
copper price of $3.45 per lb. The estimates are derived from the median of consensus forecasts. A nominal discount rate of 9.0%
(December 31, 2020: 9.0%) has been applied to future cash flows, derived from Cobre Panama’s weighted average cost of capital
(in nominal terms). Future production costs and future capital expenditure are based on the latest available engineering reports
and are consistent with technical reports prepared in accordance with National Instrument 43-101 Standards of Disclosure for
Mineral Projects. The measurement is classified as level 3 in the fair value hierarchy (see note 24).
The calculated recoverable amount of the cash-generating unit exceeds the carrying value of Cobre Panama at December 31,
2021, and therefore no impairment charge has been recognized.
8. OTHER ASSETS
Prepaid expenses
KPMC shareholder loan
Other investments
Derivative instruments (note 24)
Total other assets
Less: current portion of other assets
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
112299
228844
99
3388
446600
((113388))
332222
110
292
16
8
426
(88)
338
First Quantum Minerals Ltd. | 31December 2021 CONSOLIDATED FINANCIAL STATEMENTS 18
131131
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
9. JOINT VENTURE
On November 8, 2017, the Company completed the purchase of a 50% interest in KPMC from LS-Nikko Copper Inc. KPMC is
jointly owned and controlled with Korea Mine Rehabilitation and Mineral Resources Corporation (“KOMIR”) and holds a 20%
interest in Cobre Panama. The purchase consideration of $664 million comprised the acquisition consideration of $635 million
and the reimbursement of cash advances of $29 million with $179 million paid on closing. The final consideration of $100 million
was paid in November 2021.
A $619 million investment in the joint venture representing the discounted consideration value and the Company’s proportionate
share of the profit or loss in KPMC to date is recognized. For the year ended December 31, 2021, the profit attributable to KPMC
was $150 million (December 31, 2020: $90 million loss). The profit or loss in KPMC relates to the 20% equity accounted share of
loss reported by MPSA, a subsidiary of the Company. The material assets and liabilities of KPMC are an investment in MPSA of
$418 million, shareholder loans receivable from the Company (note 11b) and shareholder loans payable of $1,310 million (note
24) due to the Company and its joint venture partner KOMIR.
10. DEBT
DDrraawwnn ddeebbtt
Senior notes:
First Quantum Minerals Ltd. 7.25% due April 2023
First Quantum Minerals Ltd. 6.50% due March 2024
First Quantum Minerals Ltd. 7.50% due April 2025
First Quantum Minerals Ltd. 6.875% due March 2026
First Quantum Minerals Ltd. 6.875% due October 2027
First Quantum Minerals Ltd. senior debt facility
Kalumbila term loan
Trading facilities
Total debt
Less: current maturities and short term debt
UUnnddrraawwnn ddeebbtt
First Quantum Minerals Ltd. senior debt facility
Trading facilities
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(f)
(h)
11,,000000
884466
11,,334477
999944
11,,448888
22,,115511
5555
3311
77,,991122
((331133))
77,,559999
775555
554499
1,599
845
1,346
993
1,487
1,632
110
311
8,323
(871)
7,452
600
129
The movement in total debt of $411 million is inclusive of deferred charges that are consequently not reflected in financing activities in the Consolidated Statement of
Cash Flows.
aa)) FFiirrsstt QQuuaannttuumm MMiinneerraallss LLttdd.. 77..2255%% dduuee AApprriill 22002233
The notes are part of the senior obligations of the Company and are guaranteed by certain of the Company's subsidiaries. Interest
is payable semi-annually.
The Company and its subsidiaries are subject to certain restrictions on asset sales, payments, incurrence of indebtedness and
issuance of preferred stock.
The Company may redeem some or all of the notes at any time on or after April 1, 2020, at redemption prices ranging from
103.625% in the first year to 100% in the final year, plus accrued interest. Although part of this redemption feature indicates the
existence of an embedded derivative, the value of this derivative is not significant.
On December 7, 2021 the Company redeemed $600 million of its outstanding 7.250% Senior Notes due April, 2023. The portion
of the outstanding 2023 Notes to be redeemed was allocated on a lottery drawing basis at a redemption price (the “Redemption
Price”) of 101.813% of the principal amount thereof, plus accrued and unpaid interest. The aggregate principal amount
outstanding following such partial redemption of the 2023 Notes is $1,000 million.
132132
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 19
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
bb)) FFiirrsstt QQuuaannttuumm MMiinneerraallss LLttdd.. 66..5500%% dduuee MMaarrcchh 22002244
In February 2018, the Company issued $850 million in senior notes due in 2024, bearing interest at an annual rate of 6.50%. The
Company and its subsidiaries are subject to certain restrictions on asset sales, payments, incurrence of indebtedness and
issuance of preferred stock.
The notes are part of the senior obligations of the Company and are guaranteed by certain subsidiaries of the Company. Interest
is payable semi-annually.
The Company may redeem some or all of the notes at any time on or after September 1, 2020, at redemption prices ranging from
103.25% in the first year to 100% from September 2022, plus accrued interest. Although part of this redemption feature indicated
the existence of an embedded derivative, the value of this derivative is not significant.
cc)) FFiirrsstt QQuuaannttuumm MMiinneerraallss LLttdd.. 77..5500%% dduuee AApprriill 22002255
The notes are part of the senior obligations of the Company and are guaranteed by certain subsidiaries of the Company. Interest
is payable semi-annually.
The Company may redeem some or all of the notes at any time on or after April 1, 2020, at redemption prices ranging from
105.625% in the first year to 100% from 2023, plus accrued interest. Although part of this redemption feature indicates the
existence of an embedded derivative, the value of this derivative is not significant.
The Company and its subsidiaries are subject to certain restrictions on asset sales, payments, incurrence of indebtedness and
issuance of preferred stock.
dd)) FFiirrsstt QQuuaannttuumm MMiinneerraallss LLttdd.. 66..887755%% dduuee MMaarrcchh 22002266
In February 2018, the Company issued $1 billion in senior notes due in 2026, bearing interest at an annual rate of 6.875%. The
Company and its subsidiaries are subject to certain restrictions on asset sales, payments, incurrence of indebtedness and
issuance of preferred stock.
The notes are part of the senior obligations of the Company and are guaranteed by certain subsidiaries of the Company. Interest
is payable semi-annually.
The Company may redeem some or all of the notes at any time on or after March 1, 2021, at redemption prices ranging from
105.156% in the first year to 100% from 2024, plus accrued interest. Although part of this redemption feature indicates the
existence of an embedded derivative, the value of this derivative is not significant.
ee)) FFiirrsstt QQuuaannttuumm MMiinneerraallss LLttdd.. 66..887755%% dduuee OOccttoobbeerr 22002277
On September 17, 2020, the Company announced the offering and pricing of $1,500 million of 6.875% Senior Notes due 2027 at
an issue price of 100.00%. Settlement took place on October 1, 2020. The Company and its subsidiaries are subject to certain
restrictions on asset sales, payments, incurrence of indebtedness and issuance of preferred stock.
The notes are part of the senior obligations of the Company and are guaranteed by certain subsidiaries of the Company. Interest
is payable semi-annually.
The Company may redeem some or all of the notes at any time on or after October 15, 2023, at redemption prices ranging from
103.44% in the first year to 100% from October 2025, plus accrued interest. In addition, until October 15, 2023, the Company may
redeem up to 35% of the principal amount of notes, in an amount not greater than the net proceeds of certain equity offerings, at
a redemption price of 106.875% plus accrued interest. Although part of this redemption feature indicates the existence of an
embedded derivative, the value of this derivative is not significant.
ff))
FFiirrsstt QQuuaannttuumm MMiinneerraallss LLttdd.. sseenniioorr ddeebbtt ffaacciilliittyy
In October 2021, the Company signed a Term Loan and Revolving Credit Facility (“RCF”), together “The 2021 Facility”, replacing
the previous $2.7 billion Term Loan and RCF Facility which was extinguished with no extinguishment gain or loss. The 2021
Facility comprises a $1.625 billion Term Loan Facility and a $1.3 billion RCF. Interest is charged at LIBOR plus a margin. This
margin can change relative to a certain financial ratio of the Company. The 2021 Facility has an accordion feature to increase it
by up to $150 million before the end of November 2022 and, if actioned, to be applied to increase the Term Loan and RCF in
proportion to the committed amounts of each at the time the accordion is actioned.
Transaction costs for the new facilities were deducted from the principal drawn on initial recognition.
At December 31, 2021, $545 million of the RCF had been drawn, leaving $755 million available for the Company to draw.
First Quantum Minerals Ltd. | 31December 2021 CONSOLIDATED FINANCIAL STATEMENTS 20
133133
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
The Facility was used to fully prepay and cancel amounts outstanding on the existing facility, to fully prepay and cancel a bilateral
bank facility for $175 million signed in April 2021 and for general corporate purposes.
gg)) KKaalluummbbiillaa tteerrmm llooaann
On February 5, 2018, Kalumbila Minerals Limited, the owner of the Sentinel copper mine, signed a $230 million unsecured term
loan facility (the “Kalumbila Facility”) with an initial termination date of December 31, 2020 (with the right of Kalumbila Minerals
Limited to request an extension of one or two years subject to lender consent). The facility was upsized to $400 million in March
2018 in accordance with the accordion feature of the facility agreement. Repayments on the facility commenced in December
2019, with a repayment of $57 million and a further repayment of the same amount in June 2020.
This loan was partly repaid in November 2020, with $175 million repaying in full or part, the existing lenders, and a reduced
commitment of $111 million was agreed with termination date of December 31, 2021, Kalumbila Minerals Limited had the right
to request an extension of one further year, subject to lender consent. The principal outstanding at December 31, 2021 was
extended for a period of 12 months. The full principal outstanding at December 31, 2021, $55 million, is due within 12 months.
hh)) TTrraaddiinngg ffaacciilliittiieess
The Company’s metal marketing division has six uncommitted borrowing facilities totaling $580 million. The facilities are used to
finance purchases and the term hedging of copper, gold and other metals, undertaken by the metal marketing division. Interest
on the facilities is calculated at the bank’s benchmark rate plus a margin. The loans are collateralized by physical inventories.
11. PROVISIONS AND OTHER LIABILITIES
aa)) PPrroovviissiioonnss aanndd OOtthheerr LLiiaabbiilliittiieess
Amount owed to joint venture (note 11b) 1
Restoration provisions (note 11c)
Derivative instruments (note 24)
Other loans owed to non-controlling interests (note 11d)
Liabilities directly associated with assets held for sale
Leases
Retirement provisions
Deferred revenue (note 12)
Other deferred revenue
Other
Total other liabilities
Less: current portion
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
11,,331100
773311
5577
117766
2288
2266
5500
110033
2299
8822
22,,559922
((228833))
22,,330099
1,327
821
452
-
-
30
50
91
22
95
2,888
(602)
2,286
1 The shareholder loan is due from the Company’s Cobre Panama operation to KPMC, a 50:50 joint venture between the Company and KOMIR.
134134
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 21
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
bb)) AAmmoouunntt OOwweedd ttoo JJooiinntt VVeennttuurree
BBaallaannccee aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Funding provided to MPSA for the development of Cobre Panama
Interest accrued
Repayment
BBaallaannccee aatt eenndd ooff yyeeaarr dduuee ttoo KKPPMMCC
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
11,,332277
--
111199
((113366))
11,,331100
1,238
28
115
(54)
1,327
In September 2013, the Company and KPMC entered into a shareholder loan agreement with Minera Panama S.A (“MPSA”) for
development of the Cobre Panama project, in which KPMC is a 20% shareholder. Interest is calculated semi-annually at an annual
rate of 9%. In November 2017, the Company acquired a 50% interest in KPMC from LS-Nikko Copper Inc. inclusive of the above
shareholder loans. The assets and liabilities of KPMC are an investment in MPSA, a subsidiary of the Company, a loan receivable
from MPSA, and loans due to shareholders. Interest income and expense earned on these loans are on the same terms.
As at December 31, 2021, the accrual for interest payable is $370 million (December 31, 2020: $387 million) and is included in
the carrying value of the amount owed to the joint venture, as this has been deferred under the loan agreement. Amounts due to
KPMC are specifically excluded from the calculation of net debt as defined under the Company’s banking covenant ratios.
cc)) RReessttoorraattiioonn pprroovviissiioonnss
The Company has restoration and remediation obligations associated with its operating mines, processing facilities, closed sites
and development projects. The following table summarizes the movements in the restoration provisions:
BBaallaannccee aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Changes in estimate – operating sites (note 6)
Changes in estimate – closed sites (note 22)
Other adjustments
Transfer to liabilities directly associated with assets held for sale (11a)
Accretion expense (note 21)
BBaallaannccee aatt yyeeaarr eenndd
Less: current portion
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
882211
((3366))
77
((4444))
((2288))
1111
773311
((33))
772288
699
107
-
4
-
11
821
(5)
816
The Company has issued letters of credit which are guaranteed by cash deposits, classified as restricted cash on the balance
sheet at December 31, 2021, totaling $8 million (December 31, 2020: $12 million).
The restoration provisions have been recorded initially as a liability based on management’s best estimate of cash flows, using a
risk-free discount rate between 1.1% and 1.9% and an inflation factor between 2.0% and 8.0%. Reclamation activity is expected
to occur over the life of each of the operating mines, a period of up to 33 years, with the majority payable in the years following
the cessation of mining operations.
dd)) OOtthheerr llooaannss oowweedd ttoo nnoonn--ccoonnttrroolllliinngg iinntteerreessttss
On September 30, 2021,the Company completed the sale of a 30% equity interest in Ravensthorpe. Consideration paid of $240
million comprised cash for equity of $90 million and loans acquired of $150 million. Additional subsequent loans and accrued
interest amounted to $23 million and $3 million respectively.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 22
135135
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
12. DEFERRED REVENUE
BBaallaannccee aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr
Accretion of finance costs (note 21)
Amortization of gold and silver revenue
BBaallaannccee aatt tthhee eenndd ooff tthhee yyeeaarr
Less: current portion (included within provisions and other liabilities) (note 11a)
Non-current deferred revenue
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
11,,552244
6644
((9999))
11,,448899
((110033))
11,,338866
1,516
64
(56)
1,524
(91)
1,433
FFrraannccoo--NNeevvaaddaa PPrreecciioouuss MMeettaall SSttrreeaamm AArrrraannggeemmeenntt
The Company, through its subsidiary, MPSA, has a precious metal streaming arrangement with Franco-Nevada. The arrangement
comprises two tranches. Under the first phase of deliveries under the first tranche (“Tranche 1”) Cobre Panama will supply
Franco-Nevada 120 ounces of gold and 1,376 ounces of silver for each 1 million pounds of copper produced, deliverable within
5 days of eligible copper concentrate sales. Under the first phase of deliveries under the second tranche (“Tranche 2”) Cobre
Panama will supply Franco-Nevada a further 30 ounces of gold and 344 ounces of silver for each 1 million pounds of copper
produced, deliverable within 5 days of eligible copper concentrate sales.
Tranche 1 was finalized on October 5, 2015 which provided for $1 billion of funding to the Cobre Panama project. Under the terms
of Tranche 1, Franco-Nevada, through a wholly owned subsidiary, agreed to provide a $1 billion deposit to be funded on a pro-
rata basis of 1:3 with the Company’s 80% share of the capital costs of Cobre Panama in excess of $1 billion. The full Tranche 1
deposit amount has been fully funded to MPSA. Tranche 2 was finalized on March 16, 2018, and $356 million was received on
completion. Proceeds received under the terms of the precious metals streaming arrangement are accounted for as deferred
revenue.
The amount of precious metals deliverable under both tranches is indexed to total copper-in-concentrate sold by Cobre Panama.
Under the terms of Tranche 1 the ongoing payment of the Fixed Payment Stream is fixed per ounce payments of $437.37 per oz
gold and $6.56 per oz silver subject to an annual inflation adjustment for the first 1,341,000 ounces of gold and 21,510,000 ounces
of silver (approximately the first 20 years of expected deliveries). Thereafter the greater of $437.37 per oz for gold and $6.56 per
oz for silver, subject to an adjustment for inflation, and one half of the then prevailing market price. Under Tranche 2 the ongoing
price per ounce for deliveries is 20% of the spot price for the first 604,000 ounces of gold and 9,618,000 ounces of silver
(approximately the first 25 years of production), and thereafter the price per ounce rises to 50% of the spot price of gold and silver.
In all cases, the amount paid is not to exceed the prevailing market price per ounce of gold and silver.
The Company commenced the recognition of delivery obligations under the terms of the Franco Nevada precious metal stream
arrangement in June 2019 following the first sale of copper concentrate. Deferred revenue will continue to be recognized as
revenue over the life of the mine, which is expected to be 33 years. The Company uses refinery-backed credits as the mechanism
for satisfying its delivery obligations under the arrangement. In the year ended December 31, 2021, $237 million was delivered
under the stream (year ended December 31, 2020: $129 million).
The Company has amended its accounting in respect of the delivery of non-financial items (refinery-backed gold and silver
credits) into its precious metal stream arrangement, from presenting as a cost of sale to net within sales revenues. The year
ended December 31, 2020 has been revised for this change. Sales revenues and cost of sales have both reduced by $129
million compared to the previous reported values.
136136
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 23
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
13. INCOME TAX EXPENSES
The significant components of the Company’s income tax expense are as follows:
Current income tax expense
Deferred income tax expense (credit)
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
663344
117788
881122
334
(78)
256
The income taxes shown in the consolidated statements of earnings differ from the amounts obtained by applying statutory
rates to the earnings before income taxes due to the following:
Earnings before income taxes
Income tax expense at Canadian statutory rates
Difference in foreign tax rates
Non-deductible expenses
Losses not recognized
Impact of foreign exchange
Income tax expense
22002211
2020
AAmmoouunntt $$
%%
Amount $
%
11,,990011
551133
((228811))
117744
335588
4488
881122
2277
((1155))
99
1199
33
4433
32
9
(5)
114
172
(34)
256
27
(16)
356
538
(106)
800
Losses not recognized consists largely of hedge losses and financing costs incurred in Canada, where such losses cannot be
used to offset operating income in other countries.
The deferred income tax assets and liabilities included on the balance sheet are as follows:
Deferred income tax assets
Deferred income tax liabilities
The significant components of the Company’s deferred income taxes are as follows:
Temporary differences relating to property, plant and equipment
Unused operating losses
Temporary differences relating to non-current liabilities (including restoration
provisions)
Temporary differences relating to inventory
Unrealized foreign exchange loss and phasing of Zambian VAT receivable
Other
Net deferred income tax liabilities
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
118822
((880044))
((662222))
22002211
((11,,119944))
330044
112288
2255
9944
2211
((662222))
152
(595)
(443)
2020
(1,198)
438
120
23
148
26
(443)
The Company believes that it is probable that the results of future operations will generate sufficient taxable income to realize
the above noted deferred income tax assets.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 24
137137
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
The Company has unrecognized deductible temporary differences relating to operating loss carryforwards that may be available
for tax purposes in Canada totaling $5,414 million (December 31, 2020: $4,101 million) expiring between 2025 and 2041, and in
the United States of America totaling $18 million (December 31, 2020: $19 million) expiring between 2022 and 2038.
The Company also has unrecognized deductible temporary differences relating to restoration provisions of $164 million in
Panama, (December 31, 2020: $168 million), $40 million in Canada (December 31, 2020: $70 million) and $34 million in Finland
(December 31, 2020: $37 million) relating to ARO for which no deferred tax asset is recognized.
The Company has non-Canadian resident subsidiaries that have undistributed earnings of $5,643 million (December 31, 2020:
$3,737 million). These undistributed earnings are not expected to be repatriated in the foreseeable future and the Company has
control over the timing of such, therefore taxes that may apply on repatriation have not been provided for.
14. SHARE CAPITAL
aa)) CCoommmmoonn SShhaarreess
Authorized
Unlimited common shares without par value Issued
Balance as at December 31, 2020
Shares issued through Dividend Reinvestment Plan
Shares issued through Share Option Plan
Balance as at December 31, 2021
NNuummbbeerr ooff
sshhaarreess
((000000’’ss))
669900,,331177
44
778811
669911,,110022
The balance of share capital at December 31, 2021 was $5,642 million (December 31, 2020: $5,642 million).
On January 6, 2020, the Company announced adoption of a Shareholders Rights Plan. The Shareholders Rights Plan (“the Rights Plan”) applies in the event of any person
or persons acting in concert having beneficial ownership of 20% or more of the Company’s outstanding common shares without having complied with bid provisions
under the Rights Plan. In the occurrence of such an event, each outstanding common share has a right attached to it to purchase additional common shares of the
Company, at a substantial discount to the then market price.
bb)) TTrreeaassuurryy sshhaarreess
The Company established an independent trust to purchase, on the open market, the common shares pursuant to the long-term
incentive plan (note 16a). The Company consolidates the trust as it is subject to control by the Company. Consequently, shares
purchased by the trust to satisfy obligations under the long-term incentive plan are recorded as treasury shares in shareholders’
equity. Generally, dividends received on shares held in the trust will be paid to plan participants in cash as received.
Balance as at December 31, 2019
Shares purchased
Shares vested
Balance as at December 31, 2020
Shares purchased
Shares vested
Balance as at December 31, 2021
The balance of shares held in the trust as at December 31, 2021 was $190 million (December 31, 2020: $114 million).
NNuummbbeerr ooff
sshhaarreess
((000000’’ss))
22,,336622
11,,661188
((11,,779922))
22,,118888
44,,000099
((11,,119966))
55,,000011
138138
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 25
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
cc)) DDiivviiddeennddss
On February 15, 2022, the Company declared a final dividend of CDN$0.005 per share, or $3 million, in respect of the financial
year ended December 31, 2021 (February 16, 2021: CDN$0.005 per share or $3 million) to be paid on May 6, 2022 to shareholders
of record on April 14, 2022.
On July 27, 2021, the Company declared an interim dividend of CDN$0.005 per share, in respect of the financial year ended
December 31, 2021 (July 28, 2020: CDN$0.005 per share or $3 million), paid on September 21, 2021 to shareholders of record on
August 30, 2021.
15. EARNINGS (LOSS) PER SHARE
Basic and diluted earnings (loss) attributable to shareholders
of the Company
Basic weighted average number of shares outstanding
(000’s of shares)
Potential dilutive securities:
Diluted weighted average number of shares outstanding
(000’s of shares)
Earnings (loss) per common share – basic (expressed in $ per share)
Earnings (loss) per common share – diluted (expressed in $ per share)
22002211
2020
883322
(180)
668888,,667744
688,469
33,,003388
-
669911,,771122
688,469
11..2211
11..2200
(0.26)
(0.26)
16. SHARE BASED COMPENSATION AND RELATED PARTY TRANSACTIONS
aa)) LLoonngg--tteerrmm iinncceennttiivvee ppllaannss
The Company has a long-term incentive plan (the “Plan”), which provides for the issuance of performance stock units (“PSUs”),
restricted stock units (“RSUs”) in such amounts as approved by the Company’s Compensation Committee. Included in general
and administrative expense is share-based compensation expense of $24 million (December 31, 2020: $19 million) related to this
Plan.
Under the Plan, each PSU entitles participants, which includes directors, officers, and employees, to receive up to one-and-a-half
common shares of the Company at the end of a three-year period if certain performance and vesting criteria, which are based on
the Company’s performance relative to a representative group of other mining companies, have been met. The fair value of each
PSU is recorded as compensation expense over the vesting period. The fair value of each PSU is estimated using a Monte Carlo
Simulation approach. A Monte Carlo Simulation is a technique used to approximate the probability of certain outcomes, called
simulations, based on normally distributed random variables and highly subjective assumptions. This model generates potential
outcomes for stock prices and allows for the simulation of multiple stocks in tandem resulting in an estimated probability of
vesting.
Under the Plan, each RSU entitles the participant to receive one common share of the Company subject to vesting criteria. RSU
grants typically vest fully at the end of the three-year period. The fair value of each RSU is recorded as compensation expense
over the vesting period. The fair value of each RSU is estimated based on the market value of the Company’s shares at the grant
date and an estimated forfeiture rate of 11.5% (December 31, 2020: 11.5%).
The Company has a long term compensation scheme for the next generation of operational business leaders (current directors
do not participate in the scheme), KRSUs. The scheme allows for full vesting over eight years with partial vesting commencing in
the fourth year. The objectives of the scheme are to promote a long-term strategic focus amongst participants and to facilitate
the Company’s management succession plans as the roles of the founding directors transition during the scheme period.
Included in general and administrative expense is share-based compensation expense of $7 million (December 31, 2020: $8
million) related to this Plan.
The Company will meet its obligations under the scheme through market purchases.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 26
139139
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
PPeerrffoorrmmaannccee ssttoocckk uunniittss
Outstanding - beginning of year
Granted
Vested
Forfeited
Outstanding - end of year
RReessttrriicctteedd ssttoocckk uunniittss
Outstanding - beginning of year
Granted
Vested
Forfeited
Outstanding - end of year
KKeeyy rreessttrriicctteedd ssttoocckk uunniittss
Outstanding – beginning of year
Granted
Forfeited
Outstanding - end of year
22002211
22002200
NNuummbbeerr ooff uunniittss
((000000’’ss))
NNuummbbeerr ooff uunniittss
((000000’’ss))
33,,662200
559955
((555577))
((225555))
33,,440033
55,,002288
11,,007777
((663399))
((331166))
55,,115500
66,,668800
--
((336600))
66,,332200
3,130
1,641
(705)
(446)
3,620
3,411
2,891
(1,010)
(264)
5,028
4,400
2,280
-
6,680
The following assumptions were used in the Monte Carlo Simulation model to calculate compensation expense in respect of
the PSUs granted in the following years:
Risk-free interest rate
Vesting period
Expected volatility
Expected forfeiture per annum
Weighted average probability of vesting
22002211
00..4466%%
33 yyeeaarrss
4400..55%%
44%%
4499..77%%
22002200
0.18%
3 years
46.3%
4%
57.1%
bb)) SShhaarree ooppttiioonn ppllaann
Share options for common shares in the Company are granted to certain management. Options are exercisable at a price equal
to the closing quoted price of the Company’s shares on the date of grant. The vesting period varies from one to three years.
Options are forfeited if the employee leaves the Company before the options vest. If the options remain unexercised after a period
of five years from the grant date the options expire.
Each share option converts into one common share on exercise. An amount equal to the share price at the date of grant is payable
by the recipient on the exercise of each option. The options carry neither rights to dividends nor voting rights.
Options may be exercised at any time from the date of vesting to the date of their expiry.
140140
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 27
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
SShhaarree ooppttiioonnss
Outstanding - beginning of year
Vested
Forfeited
Expired
Outstanding - end of year
Exercisable - end of year
22002211
22002200
NNuummbbeerr ooff uunniittss
((000000’’ss))
NNuummbbeerr ooff uunniittss
((000000’’ss))
33,,333333
((778822))
((8855))
((1133))
22,,445533
11,,990011
4,333
(906)
(94)
-
3,333
2,035
Volatility was calculated with reference to the Company’s historical share price volatility up to the grant date to reflect a term
approximate to the expected life of the option.
The Company recognized total expenses of $2 million (December 31, 2020: $4 million) related to equity-settled share-based
payments on share options issued under the above plan for the year ended December 31, 2021.
cc)) KKeeyy mmaannaaggeemmeenntt ccoommppeennssaattiioonn
Key management personnel include the members of the senior management team and directors.
Salaries, fees and other benefits
Bonus payments
Share based compensation
Total compensation paid to key management
dd)) OOtthheerr rreellaatteedd ppaarrttyy ttrraannssaaccttiioonnss
22002211
22002200
33
22
55
1100
4
1
5
10
Amounts paid to related parties were incurred in the normal course of business and on an arm’s length basis. During the year,
$11 million (December 31, 2020: $6 million) was paid to parties related to key management for chartering aircraft,
accommodation, machinery and services. As at December 31, 2021, nil (December 31, 2020: nil) was included in trade and other
payables concerning related party amounts payable.
17. SALES REVENUES1
Copper
Gold
Nickel
Silver
Other
1Refinery-backed credits presented net within revenue – see note 12
22002211
66,,333322
447700
225544
4477
110099
2020
4,377
424
159
28
82
77,,221122
5,070
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 28
141141
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
18. COST OF SALES
Costs of production1
Depreciation
Movement in inventory
Movement in depreciation in inventory
22002211
((33,,445566))
((11,,114411))
((2200))
((3333))
2020
(2,773)
(1,199)
(3)
(18)
((44,,665500))
(3,993)
1Refinery-backed credits presented net within revenue – see note 12
2Includes favourable movement on operational provisions following the conclusion on the arbitration case on electricity prices charged by ZESCO
19. EXPENSES BY NATURE
Depreciation
Employment costs, benefits and contractor
Raw materials and consumables
Royalties
Repairs and maintenance
Fuel
Freight
Utilities
Change in inventories
Other
22002211
(1,174)
(1,004)
(831)
(488)
(323)
(271)
(253)
(171)
(20)
(253)
2020
(1,217)
(855)
(762)
(270)
(275)
(212)
(203)
(203)
(3)
(108)
((44,,778888))
(4,108)
1Refinery-backed credits presented net within revenue – see note 12
2 Expenses presented above include cost of sales, general and administrative and exploration expenses.
20. IMPAIRMENT AND RELATED CHARGES
An impairment of $44 million has been recognized in relation to the Sese power project, specific housing assets constructed at
the Sentinel mine for its employees, and exploration activities, separate from the Company’s development projects.
142142
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 29
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
21. FINANCE COSTS
Interest expense on debt (note 10)
Interest expense on other financial liabilities
Interest expense on financial liabilities measured at
amortized cost
Related party interest
Finance cost accretion on deferred revenue
Accretion on restoration provision (note 11c)
Total finance costs
Less: interest capitalized (note 6)
22. OTHER INCOME (EXPENSE)
Foreign exchange gains (losses) 1
Change in restoration provision for closed properties (11c)
Share of profit (loss) in joint venture (note 9)
Other income (expenses)
22002211
2020
((553322))
((33))
((553355))
((111199))
((6644))
((1111))
((772299))
44
((772255))
22002211
115599
((77))
7755
((99))
221188
(590)
(24)
(614)
(115)
(64)
(11)
(804)
-
(804)
2020
(225)
-
(45)
2
(268)
1 The majority of foreign exchange gains are unrealized gains and include $191 million for the year ended December 31, 2021, arising on translating the Zambian VAT
receivable (see note 4c) at the period end exchange rate. Realized losses include $51 million arising on Zambian VAT offsets received in the year ended December 31,
2021.
23. SEGMENTED INFORMATION
The Company’s reportable operating segments are individual mine development projects or mine operations. Each of the mines
and development projects report information separately to the CEO, the chief operating decision maker.
The Corporate & other segment is responsible for the evaluation and acquisition of new mineral properties, regulatory reporting,
treasury and finance and corporate administration. Included in the Corporate & other segment is the Company’s metal marketing
division which purchases and sells third party material, and the exploration projects.
The Company’s operations are subject to seasonal aspects, in particular the rain season in Zambia. The rain season in Zambia
generally starts in November and continues through April, with the heaviest rainfall normally experienced in the months of
January, February and March. As a result of the rain season, mine pit access and the ability to mine ore is lower in the first quarter
of the year than other quarters and the cost of mining is higher.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 30
143143
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnddeennsseedd CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
EEaarrnniinnggss bbyy sseeggmmeenntt
For the year ended December 31, 2021, segmented information for the statement of earnings (loss) is presented as follows:
CCoosstt ooff ssaalleess
((eexxcclluuddiinngg
ddeepprreecciiaattiioonn))
((11,,113322))
((882255))
((884466))
((117722))
((331155))
((8855))
((3399))
((3300))
((3322))
DDeepprreecciiaattiioonn
((557799))
((222200))
((227700))
((3366))
((3344))
((1133))
((1188))
((11))
((33))
((33,,447766))
((11,,117744))
RReevveennuuee
33,,116600
22,,001144
22,,003322
331133
228866
113311
9999
5522
((887755))
77,,221122
OOppeerraattiinngg
pprrooffiitt ((lloossss)) 11
IInnccoommee ttaaxx
((eexxppeennssee))
ccrreeddiitt
11,,443344
11,,002255
996688
110033
((6611))
4400
4444
1199
((997744))
22,,559988
--
((339922))
((334499))
((2288))
2277
((88))
((2255))
((66))
((3311))
((881122))
OOtthheerr
((1155))
5566
5522
((22))
22
77
22
((22))
((6644))
3366
Cobre Panama2
Kansanshi 3
Sentinel
Guelb Moghrein
Ravensthorpe4
Las Cruces
Çayeli
Pyhäsalmi
Corporate & other 5
Total
1 Operating profit (loss) less net finance costs and taxes equals net earnings (loss) for the period on the consolidated statement of earnings.
2 Cobre Panama is 20% owned by KPMC, a joint venture.
3 Kansanshi Mining Plc, the most significant contributor to the Kansanshi segment, is 20% owned by ZCCM, a Zambian government owned entity.
4 Ravensthorpe is 30% owned by POSCO.
5 Revenue includes hedge gains and losses recognized on forward sales and zero cost collar options.
6Refinery-backed credits presented net within revenue – see note 12
For the year ended December 31, 2020, segmented information for the statement of earnings is presented as follows:
CCoosstt ooff ssaalleess
((eexxcclluuddiinngg
ddeepprreecciiaattiioonn))
RReevveennuuee
DDeepprreecciiaattiioonn
Cobre Panama2
Kansanshi 3
Sentinel
Las Cruces
Guelb Moghrein
Çayeli
Pyhäsalmi
Ravensthorpe
Corporate & other 4
1,326
1,539
1,353
332
300
64
46
156
(46)
(652)
(828)
(729)
(130)
(157)
(36)
(33)
(200)
(11)
(400)
(247)
(261)
(215)
(40)
(22)
(5)
(24)
(3)
Total
5,070
(2,776)
(1,217)
OOppeerraattiinngg
pprrooffiitt ((lloossss)) 11
IInnccoommee ttaaxx
((eexxppeennssee))
ccrreeddiitt
261
345
267
(36)
95
7
10
(75)
(179)
695
-
(142)
(106)
8
(22)
(25)
(2)
28
5
(256)
OOtthheerr
(13)
(119)
(96)
(23)
(8)
1
2
(7)
(119)
(382)
1 Operating profit (loss) less net finance costs and taxes equals net earnings (loss) for the period on the consolidated statement of earnings.
2 Cobre Panama is 20% owned by KPMC, a joint venture.
3 Kansanshi Mining Plc, the most significant contributor to the Kansanshi segment, is 20% owned by ZCCM, a Zambian government owned entity.
4 Revenue includes hedge gains and losses recognized on forward sales and zero cost collar option
5Refinery-backed credits presented net within revenue – see note 12
144144
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 31
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
BBaallaannccee sshheeeett bbyy sseeggmmeenntt
Segmented information on balance sheet items is presented as follows:
DDeecceemmbbeerr 3311,, 22002211
December 31, 2020
NNoonn--ccuurrrreenntt
aasssseettss11
TToottaall aasssseettss
TToottaall
lliiaabbiilliittiieess
Non-current
assets 1
Total assets
Total liabilities
Cobre Panama 2
1111,,773355
1122,,336644
33,,223322
11,919
12,505
3,201
Kansanshi 3
Sentinel
Las Cruces
Guelb Moghrein
Çayeli
Pyhäsalmi
Ravensthorpe4
Corporate & other5
22,,448811
22,,992233
3300
3333
5566
99
886677
11,,446633
55,,008877
33,,667788
8855
112233
9911
3333
11,,008866
22,,772233
997788
666677
111177
5533
5522
4455
440022
88,,223300
2,488
2,945
32
48
64
10
802
1,483
Total
1199,,559977
2255,,227700
1133,,777766
19,791
4,052
3,485
102
154
105
34
963
2,836
24,236
840
488
153
48
37
46
255
9,133
14,201
1 Non-current assets include $19,283 million of property plant and equipment (December 31, 2020: $19,468 million) and exclude financial instruments, deferred tax
assets, VAT receivable and goodwill.
2 Cobre Panama is 20% owned by KPMC, a joint venture.
3 Kansanshi Mining Plc, the most significant contributor to the Kansanshi segment, is 20% owned by ZCCM, a Zambian government owned entity. This segment includes
the Kansanshi smelter.
4 Ravensthorpe is 30% owned by POSCO.
5 Included within the corporate segment are assets relating to the Haquira project, $694 million (December 31, 2020: $692 million), and to the Taca Taca project, $454
million (December 31, 2020: $445 million).
CCaappiittaall eexxppeennddiittuurree bbyy sseeggmmeenntt
Additions to non-current assets other than financial instruments, deferred tax assets and goodwill represent additions to property,
plant and equipment, for which capital expenditure is presented as follows:
Cobre Panama
Kansanshi
Sentinel
Las Cruces
Guelb Moghrein
Çayeli
Ravensthorpe
Corporate & other
Total
22002211
2020
336600
224422
221188
22
88
1111
112299
2255
999955
267
111
148
2
10
4
55
13
610
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 32
145145
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
GGeeooggrraapphhiiccaall iinnffoorrmmaattiioonn
RReevveennuuee bbyy ddeessttiinnaattiioonn11
China
Singapore
India
Zambia
Japan
Spain
South Korea
Germany
South Africa
Bulgaria
Egypt
Brazil
Taiwan
Other
Hedge losses2
Total
22002211
2020
22,,992288
11,,330044
887733
669944
661133
449933
337733
226677
114488
113399
110088
7711
6622
4411
((990022))
77,,221122
1,985
615
342
518
144
505
188
72
247
80
52
125
44
201
(48)
5,070
1 Presented based on the ultimate destination of the product if known. If the eventual destination of the product sold through traders is not known, then revenue is
allocated to the location of the product at the time when control passes.
2 Relates to hedge losses recognized on forward sales and zero cost collar options.
3Refinery-backed credits presented net within revenue – see note 12
4 For the year ended December 31, 2021, the Company has one customer that individually accounts for more than 10% of the Company’s total revenue. This customer
represents approximately 22% of total revenue (2020: 15%).
146146
First Quantum Minerals Ltd. | 31December 2021 CONSOLIDATED FINANCIAL STATEMENTS 33
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
NNoonn--ccuurrrreenntt aasssseettss bbyy llooccaattiioonn
Panama
Zambia
Australia
Peru
Argentina
Spain
Mauritania
Turkey
Finland
Other
Investments, deferred income tax assets, goodwill, restricted cash, other
deposits and VAT receivable
22002211
2020
1111,,773355
55,,339922
11,919
5,422
887722
669944
445544
3300
3333
5566
99
808
690
445
32
48
64
10
332222
353
1199,,559977
19,791
11,,774400
1,337
2211,,333377
21,128
24. FINANCIAL INSTRUMENTS
The Company classifies its financial assets as amortized cost, FVOCI or FVTPL. Financial liabilities are measured at amortized
cost or FVTPL.
The following provides the classification of financial instruments by category at December 31, 2021:
FFiinnaanncciiaall aasssseettss
Trade and other receivables 1
Due from KPMC (note 8)
Derivative instruments in designated hedge relationships
Other derivative instruments 2
Investments 3
FFiinnaanncciiaall lliiaabbiilliittiieess
Trade and other payables
Derivative instruments in designated hedge relationships
Other derivative instruments 2
Leases
Liability to joint venture
Other loans owed to non-controlling interest
Debt
AAmmoorrttiizzeedd
ccoosstt44
FFaaiirr vvaalluuee
tthhrroouugghh
pprrooffiitt oorr lloossss
FFaaiirr vvaalluuee
tthhrroouugghh OOCCII
113399
228844
--
--
--
771199
--
--
2266
11,,331100
117766
77,,991122
446666
--
--
3388
--
--
--
4488
--
--
--
--
--
--
--
--
99
--
99
--
--
--
--
--
TToottaall
660055
228844
--
3388
99
771199
99
4488
2266
11,,331100
117766
77,,991122
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 34
147147
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
1 Commodity products are sold under pricing arrangements where final prices are set at a specified future date based on market commodity prices. Changes between
the prices recorded upon recognition of revenue and the final price due to fluctuations in commodity market prices give rise to an embedded derivative in the accounts
receivable related to the provisionally priced sales contracts.
2 Other derivative instruments related to provisionally priced sales contracts are classified as fair value through profit or loss and recorded at fair value, with changes in
fair value recognized as a component of cost of sales.
3 Investments held by the Company are held at fair value through other comprehensive income.
4The fair value of financial assets and liabilities measured at amortized cost is comparable to the carrying value due to the short term to maturities or due to the rates
of interest approximating market rates.
The following provides the classification of financial instruments by category at December 31, 2020:
FFiinnaanncciiaall aasssseettss
Trade and other receivables 1
Due from KPMC (note 6)
Derivative instruments in designated hedge relationships
Other derivative instruments 2
Investments 3
FFiinnaanncciiaall lliiaabbiilliittiieess
Trade and other payables
Derivative instruments in designated hedge relationships
Other derivative instruments 2
Leases
Liability to joint venture
Debt
Amortized
cost4
Fair value
through
profit or loss
Fair value
through OCI
141
292
-
-
-
762
-
-
30
1,327
8,323
583
-
-
5
-
-
-
48
-
-
-
-
-
3
-
16
-
404
-
-
-
-
Total
724
292
3
5
16
762
404
48
30
1,327
8,323
1 Commodity products are sold under pricing arrangements where final prices are set at a specified future date based on market commodity prices. Changes between
the prices recorded upon recognition of revenue and the final price due to fluctuations in commodity market prices give rise to an embedded derivative in the accounts
receivable related to the provisionally priced sales contracts.
2 Other derivative instruments related to provisionally priced sales contracts are classified as fair value through profit or loss and recorded at fair value, with changes in
fair value recognized as a component of cost of sales.
3 Investments held by the Company are held at fair value through other comprehensive income.
4The fair value of financial assets and liabilities measured at amortized cost is comparable to the carrying value due to the short term to maturities or due to the rates
of interest approximating market rates.
FFaaiirr VVaalluueess
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest
priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2
Inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3
Inputs for the asset or liability that are not based on observable market data.
148148
First Quantum Minerals Ltd. | 31December 2021 CONSOLIDATED FINANCIAL STATEMENTS 35
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
The following table sets forth the Company’s assets and liabilities measured at fair value on the balance sheet at December 31,
2021:
FFiinnaanncciiaall aasssseettss
Derivative instruments – LME contracts 1
Derivative instruments – OTC contracts 2
Investments 3
FFiinnaanncciiaall lliiaabbiilliittiieess
Derivative instruments – LME contracts 1
Derivative instruments – OTC contracts 2
LLeevveell 11
LLeevveell 22
LLeevveell 33
TToottaall ffaaiirr
vvaalluuee
3388
--
99
4411
--
--
--
--
--
1166
--
--
--
--
--
3388
--
99
4411
1166
1Futures for copper, nickel, gold and zinc were purchased on the London Metal Exchange (“LME”) and London Bullion Market and have direct quoted prices, therefore
these contracts are classified within Level 1 of the fair value hierarchy.
2 The Company’s derivative instruments are valued by the Company’s brokers using pricing models based on active market prices. All forward swap contracts held by
the Company are OTC and therefore the valuation models require the use of assumptions concerning the amount and timing of estimated future cash flows and
discount rates using inputs which can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the
fair value hierarchy. Derivative assets are included within other assets on the balance sheet and derivative liabilities are included within provisions and other liabilities
on the balance sheet.
3 The Company’s investments in marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair
value hierarchy. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable security multiplied by the quantity of shares
held by the Company.
The following table sets forth the Company’s assets and liabilities measured at fair value on the balance sheet at December 31,
2020, in the fair value hierarchy:
FFiinnaanncciiaall aasssseettss
Derivative instruments – LME contracts 1
Derivative instruments – OTC contracts 2
Investments 3
FFiinnaanncciiaall lliiaabbiilliittiieess
Derivative instruments – LME contracts 1
Derivative instruments – OTC contracts 2EErrrroorr!! BBooookkmmaarrkk nnoott ddeeffiinneedd..
Level 1
Level 2
Level 3
Total fair
value
4
-
16
24
-
-
4
-
-
428
-
-
-
-
-
4
4
16
24
428
1 Futures for copper, nickel, gold and zinc were purchased on the London Metal Exchange (“LME”) and London Bullion Market and have direct quoted prices, therefore
these contracts are classified within Level 1 of the fair value hierarchy.
2 The Company’s derivative instruments are valued by the Company’s brokers using pricing models based on active market prices. All forward swap contracts held by
the Company are OTC and therefore the valuation models require the use of assumptions concerning the amount and timing of estimated future cash flows and
discount rates using inputs which can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the
fair value hierarchy. Derivative assets are included within other assets on the balance sheet and derivative liabilities are included within provisions and other liabilities
on the balance sheet.
3 The Company’s investments in marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair
value hierarchy. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable security multiplied by the quantity of shares
held by the Company.
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 36
149149
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
FFiinnaanncciiaall rriisskk mmaannaaggeemmeenntt
CCrreeddiitt rriisskk
The Company’s credit risk is primarily attributable to cash and bank balances, short-term deposits, derivative instruments and
trade and other receivables. The Company’s exposure to credit risk is represented by the carrying amount of each class of
financial assets, including commodity contracts, recorded in the consolidated balance sheet.
The Company limits its credit exposure on cash held in bank accounts by holding its key transactional bank accounts with highly
rated financial institutions. The Company manages its credit risk on short-term deposits by only investing with counterparties that
carry investment grade ratings as assessed by external rating agencies and spreading the investments across these
counterparties. Under the Company’s risk management policy, allowable counterparty exposure limits are determined by the
level of the rating unless exceptional circumstances apply. A rating of investment grade or equivalent is the minimum allowable
rating required as assessed by international credit rating agencies. Likewise, it is the Company’s policy to deal with banking
counterparties for derivatives who are rated investment grade or above by international credit rating agencies and graduated
counterparty limits are applied depending upon the rating.
Exceptions to the policy for dealing with relationship banks with ratings below investment grade are reported to, and approved
by, the Audit Committee. As at December 31, 2021, substantially all cash and short-term deposits are with counterparties of
investment grade.
The Company’s credit risk associated with trade accounts receivable is managed through establishing long-term contractual
relationships with international trading companies using industry-standard contract terms. 44% of the Company’s trade
receivables are outstanding from three customers together representing 19% of the total sales for the year. No amounts were
past due from these customers at the balance sheet date. The Company continues to trade with these customers. Revenues
earned from these customers are included within the Kansanshi, Sentinel, Panama and Cayeli segments. Other accounts
receivable consist of amounts owing from government authorities in relation to the refund of value-added taxes applying to inputs
for the production process and property, plant and equipment expenditures, prepaid taxes and amounts held in broker accounts.
Significant credit risk exposures to any single counterparty or group of counterparties having similar characteristics are as
follows:
Commodity traders and smelters (Trade and other receivables)
Government authorities (VAT receivable)
Total
December 31,
2021
660055
666611
11,,226666
December 31,
2020
724
362
1,086
The VAT receivable due from government authorities includes $644 million at December 31, 2021, which is past due
(December 31, 2020: $349 million). See note 4c.
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the
Company’s maximum exposure to credit risk. Expected credit losses on trade and other receivables at December 31, 2021,
are insignificant.
LLiiqquuiiddiittyy rriisskk
The Company manages liquidity risk by maintaining cash and cash equivalent balances and available credit facilities to ensure
that it is able to meet its short-term and long-term obligations as and when they fall due. Company-wide cash projections are
managed centrally and regularly updated to reflect the dynamic nature of the business and fluctuations caused by commodity
price and exchange rate movements.
150150
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 37
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
The Company had the following balances and facilities available to them at the balance sheet dates:
Cash and cash equivalents and bank overdrafts – unrestricted cash
Working capital balance1
Undrawn debt facilities (note 10)
December 31,
2021
11,,885599
779911
11,,330044
December 31,
2020
914
1,107
729
1 Working capital includes trade and other receivables (note 4), inventories (note 5), current prepaid expenses (note 8), current trade and other payables, current taxes
payable, current leases (note 11) and current deferred revenue (note 11).
Contractual and other obligations as at December 31, 2021 are as follows:
CCaarrrryyiinngg
VVaalluuee
CCoonnttrraaccttuuaall
CCaasshhfflloowwss
<< 11 yyeeaarr
11 –– 33 yyeeaarrss
33 –– 55 yyeeaarrss
TThheerreeaafftteerr
Debt – principal
t
Debt – finance charges
Trading facilities
Trade and other payables
Derivative instruments
Liability to joint venture1
Other loans owed to non-
controlling interest2
Current taxes payable
Deferred payments
Leases
Commitments
Restoration provisions
77,,888811
--
3311
771199
5577
11,,331100
117766
336633
5500
2266
--
773311
77,,992266
11,,668844
3311
771199
5577
22,,220077
226622
336633
5500
3300
112299
11,,114444
228833
446622
3311
771199
5577
--
2233
336633
55
1100
112222
33
22,,776600
33,,338833
11,,550000
774411
--
--
--
--
--
--
1100
1133
77
4477
337788
--
--
--
--
--
--
1100
55
--
5577
110033
--
--
--
22,,220077
223399
--
2255
22
--
11,,003377
55,,111133
1111,,334444
1144,,660022
22,,007788
33,,557788
33,,883333
1 Refers to distributions to KPMC, a joint venture that holds a 20% non-controlling interest in MPSA of which the Company has joint control, and not scheduled
repayments.
2 Refers to liability with POSCO, an entity that holds a 30% non-controlling interest in FQM Australia Holdings Pty Ltd (“Ravensthorpe”), of which the Company has full
control.
Contractual and other obligations as at December 31, 2020 are as follows:
CCaarrrryyiinngg
VVaalluuee
CCoonnttrraaccttuuaall
CCaasshhfflloowwss
<< 11 yyeeaarr
11 –– 33 yyeeaarrss
33 –– 55 yyeeaarrss
TThheerreeaafftteerr
Debt – principal
t
Debt – finance charges
Trading facilities
Trade and other payables
Derivative instruments
Liability to joint venture1
Joint venture
id
i
Current taxes payable
Deferred payments
Leases
Commitments
Restoration provisions
8,012
-
311
762
452
1,327
94
164
50
30
-
821
8,061
2,147
311
762
452
2,387
100
164
50
34
50
1,147
561
513
311
762
452
-
100
164
5
9
50
40
2,800
869
2,200
524
-
-
-
-
-
-
10
14
-
49
-
-
-
-
-
-
10
6
-
48
12,023
15,665
2,967
3,742
2,788
2,500
241
-
-
-
2,387
-
-
25
5
-
1,010
6,168
1 Refers to distributions to KPMC, a joint venture that holds a 20% non-controlling interest in MPSA of which the Company has joint control, and not scheduled
repayments.
First Quantum Minerals Ltd. | 31December 2021 CONSOLIDATED FINANCIAL STATEMENTS 38
151151
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
MMaarrkkeett rriisskkss
a) Commodity price risk
The Company is subject to commodity price risk from fluctuations in the market prices of copper, gold, nickel, zinc and other
elements.
As part of the hedging program, the Company has elected to apply hedge accounting for a portion of copper and nickel sales.
For the year ended December 31, 2021, a fair value loss of $9 million (2020: fair value loss of $401 million) has been recognized
on derivatives designated as hedged instruments through accumulated other comprehensive income and a fair value loss of
$902 million (2020: fair value loss of $48 million) has been recognized through sales revenues.
As at the year ended December 31, 2021, the Company had copper zero cost collar unmargined sales contracts for 52,500
tonnes at weighted average prices of $3.61 per lb to $4.69 per lb outstanding with maturities to June 2022. In addition, the
Company has nickel zero cost collar sales contracts for 500 tonnes at weighted average prices of $7.71 per lb to $8.58 per lb
outstanding with maturities to May 2022. As at December 31 2021 the company had not entered into any unmargined copper
or nickel forward sales.
The Company is also exposed to commodity price risk on diesel fuel required for mining operations and sulphur required for
acid production. The Company’s risk management policy allows for the management of these exposures through the use of
derivative financial instruments. As at December 31, 2021, and December 31, 2020, the Company had not entered into any
sulphur derivatives and as at December 31, 2021 had not entered into any fuel forward contracts. A collar structure for coal
purchases is currently in place until December 2023.
The Company’s commodity price risk related to changes in fair value of embedded derivatives in accounts receivable reflecting
copper, nickel, gold and zinc sales provisionally priced based on the forward price curve at the end of each quarter.
DDeerriivvaattiivveess DDeessiiggnnaatteedd aass HHeeddggeedd IInnssttrruummeennttss
The Company has elected to apply hedge accounting with the following contracts expected to be highly effective in offsetting
changes in the cash flows of designated future sales. Commodity contracts outstanding as at December 31, 2021, were as
follows:
CCoommmmooddiittyy ccoonnttrraaccttss::
Copper zero cost collar
Nickel zero cost collar
OOppeenn PPoossiittiioonnss
((ttoonnnneess))
AAvveerraaggee
CCoonnttrraacctt pprriiccee
CClloossiinngg MMaarrkkeett
pprriiccee
MMaattuurriittiieess
TThhrroouugghh
5522,,550000
$$33..6611--$$44..6699//llbb
$$44..4400//llbb
JJuunnee 22002222
550000
$$77..7711--$$88..5588//llbb
$$88..5555//llbb
MMaayy 22002222
As at December 31, 2020, the following commodity contracts were outstanding:
CCoommmmooddiittyy ccoonnttrraaccttss::
Copper forward
Open Positions
(tonnes/ litres)
Average
Contract price
Closing Market
price
Maturities
Through
152,125
$2.86/lb
$3.51/lb December 2021
Copper zero cost collar
174,400
$2.83-$3.07/lb
$3.51/lb December 2021
Nickel forward
Fuel forward
OOtthheerr DDeerriivvaattiivveess
3,213
60,408,600
$6.89/lb
$0.34/lt
$7.50/lb
October 2021
$0.38/lt
April 2021
As at December 31, 2021, the Company had entered into the following derivative contracts for copper, gold and nickel in order to
reduce the effects of fluctuations in metal prices between the time of the shipment of metal from the mine site when the sale is
provisionally priced and the date agreed for pricing the final settlement.
152152
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 39
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
Excluding the contracts noted above, as at December 31, 2021, the following derivative positions were outstanding:
OOppeenn PPoossiittiioonnss
((ttoonnnneess//oozz))
AAvveerraaggee
CCoonnttrraacctt pprriiccee
CClloossiinngg MMaarrkkeett
pprriiccee
MMaattuurriittiieess
TThhrroouugghh
EEmmbbeeddddeedd ddeerriivvaattiivveess iinn pprroovviissiioonnaallllyy pprriicceedd ssaalleess ccoonnttrraaccttss::
Copper
Gold
Nickel
CCoommmmooddiittyy ccoonnttrraaccttss::
Copper
Gold
Nickel
116622,,337700
$$44..3355//llbb
$$44..4400//llbb
MMaayy 22002222
5511,,224477
$$11,,880066//oozz
$$11,,880066//oozz
AApprriill 22002222
998822
$$88..9955//llbb
$$99..4499//llbb
MMaayy 22002222
116611,,995500
$$44..3355//llbb
$$44..4400//llbb
MMaayy 22002222
5511,,224499
$$11,,880066//oozz
$$11,,880066//oozz
AApprriill 22002222
998844
$$88..9955//llbb
$$99..4499//llbb
MMaayy 22002222
As at December 31, 2020, the following derivative positions were outstanding:
EEmmbbeeddddeedd ddeerriivvaattiivveess iinn pprroovviissiioonnaallllyy pprriicceedd ssaalleess ccoonnttrraaccttss::
Open Positions
(tonnes/oz)
Average
Contract price
Closing Market
price
Maturities
Through
Copper
Gold
Nickel
CCoommmmooddiittyy ccoonnttrraaccttss::
Copper
Gold
Nickel
146,677
$3.46/lb
$3.51/lb
April 2021
43,103
3,176
$1,829/oz
$1,891/oz
April 2021
$7.55/lb
$7.50/lb
February 2021
146,174
$3.46/lb
$3.51/lb
April 2021
42,730
3,174
$1,829/oz
$1,891/oz
April 2021
$7.55/lb
$7.50/lb
February 2021
A summary of the fair values of unsettled derivative financial instruments for commodity contracts recorded on the consolidated
balance sheet.
CCoommmmooddiittyy ccoonnttrraaccttss::
Asset position
Liability position
DDeecceemmbbeerr 3311,,
22002211
December 31,
2020
3388
((5577))
8
(452)
The following table shows the impact on net earnings from changes in the fair values of financial instruments of a 10% change
in the copper and gold commodity prices, based on prices at December 31, 2021. There is no impact of these changes on
other comprehensive income except indirectly through the impact on the fair value of investments. The impact of a 10%
movement in commodity prices is as follows:
Copper
Gold
Nickel
AAvveerraaggee ccoonnttrraacctt pprriiccee oonn
DDeecceemmbbeerr 3311
IImmppaacctt ooff pprriiccee cchhaannggee oonn
nneett eeaarrnniinnggss
22002211
22002200
22002211
22002200
$$44..3355//llbb
$$11,,880066//oozz
$$88..9955//llbb
$3.46/lb
$1,829/oz
$7.55/lb
-
-
-
-
-
-
First Quantum Minerals Ltd. | 31December 2021 CONSOLIDATED FINANCIAL STATEMENTS 40
153153
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
b)
Interest rate risk
The majority of the Company’s interest expense is fixed however it is also exposed to an interest rate risk arising from interest
paid on floating rate debt and the interest received on cash and short-term deposits.
Deposits are invested on a short-term basis to ensure adequate liquidity for payment of operational and capital expenditures. To
date, no interest rate management products are used in relation to deposits.
The Company manages its interest rate risk on borrowings on a net basis. The Company has a policy allowing floating-to-fixed
interest rate swaps targeting 50% of exposure over a five-year period. As at December 31, 2021, and December 31 2020, the
Company held no floating-to-fixed interest rate swaps.
At December 31, 2021, the impact on cash interest payable of a 100 basis point change in interest rate would be as follows:
DDeecceemmbbeerr 3311,,
22002211
IImmppaacctt ooff iinntteerreesstt rraattee cchhaannggee
oonn nneett eeaarrnniinnggss
100 basis point
increase
100 basis
point
Interest-bearing deposits, cash at bank and bank overdrafts
Floating rate borrowings drawn
1,859
2,235
14
(21)
(14)
21
At December 31, 2020, the impact on cash interest payable of a 100 basis point change in interest rate would be as follows:
DDeecceemmbbeerr 3311,,
22002200
IImmppaacctt ooff iinntteerreesstt rraattee cchhaannggee
oonn nneett eeaarrnniinnggss
100 basis point
increase
100 basis
point
Interest-bearing deposits, cash at bank and bank overdrafts
Floating rate borrowings drawn
914
2,053
7
(27)
(7)
27
c) Foreign exchange risk
The Company’s functional and reporting currency is USD. As virtually all of the Company’s revenues are derived in USD and
the majority of its business is conducted in USD, foreign exchange risk arises from transactions denominated in currencies
other than USD. Commodity sales are denominated in USD, the majority of borrowings are denominated in USD and the
majority of operating expenses are denominated in USD. The Company’s primary foreign exchange exposures are to the local
currencies in the countries where the Company’s operations are located, principally the Zambian Kwacha (“ZMW”), Australian
dollar (“A$”) Mauritanian ouguiya (“MRU”), the euro (“EUR”) and the Turkish lira (“TRY”); and to the local currencies suppliers
who provide capital equipment for project development, principally the A$, EUR and the South African rand (“ZAR”).
The Company’s risk management policy allows for the management of exposure to local currencies through the use of financial
instruments at a targeted amount of up to 100% for exposures within one year down to 50% for exposures in five years.
154154
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 41
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
As at December 31, 2021, the Company is exposed to currency risk through the following assets and liabilities denominated in
currencies other than USD:
CAD
GBP
AUD
ZMW
EUR
TRY
ZAR
MRU
Others
Total
CCaasshh aanndd ccaasshh
eeqquuiivvaalleennttss
TTrraaddee aanndd ootthheerr
rreecceeiivvaabblleess
IInnvveessttmmeennttss
FFiinnaanncciiaall
lliiaabbiilliittiieess
1
1
7
4
21
-
2
-
1
37
-
-
1
4
25
-
-
-
-
30
1
-
2
-
-
-
-
-
-
3
2
6
49
17
35
11
4
1
-
125
Based on the above net exposures as at December 31, 2021, a 10% change in all of the above currencies against the USD
would result in a $6 million increase or decrease in the Company’s net earnings and would result in a $nil million increase or
decrease in the Company’s other comprehensive income.
As at December 31, 2020, the Company is exposed to currency risk through the following assets and liabilities denominated
in currencies other than USD:
CCaasshh aanndd ccaasshh
eeqquuiivvaalleennttss
TTrraaddee aanndd ootthheerr
rreecceeiivvaabblleess
IInnvveessttmmeennttss
FFiinnaanncciiaall
lliiaabbiilliittiieess
CAD
GBP
AUD
ZMW
EUR
TRY
ZAR
MRU
Total
2
1
9
3
17
-
3
-
35
3
-
4
6
9
-
-
-
22
-
-
1
-
-
-
-
-
1
2
7
52
14
44
4
8
-
131
Based on the above net exposures as at December 31, 2020, a 10% change in all of the above currencies against the USD
would result in a $7 million increase or decrease in the Company’s net earnings and would result in a $nil million increase or
decrease in the Company’s other comprehensive income.
CCaappiittaall mmaannaaggeemmeenntt
The Company’s objectives when managing capital are to continue to provide returns for shareholders, and comply with lending
requirements while safeguarding the Company’s ability to continue as a going concern. The Company considers the items
included in equity to be capital.
The Company manages the capital structure and makes adjustments in light of changes in economic conditions and the risk
characteristics of the Company’s assets. In order to maintain or adjust the capital structure, the Company may adjust the
amount of dividends paid to shareholders, issue new shares, or sell assets to reduce debt.
The Company uses a combination of short-term and long-term debt to finance its operations and development projects.
Typically, floating rates of interest are attached to short-term debt, and fixed rates on senior notes.
First Quantum Minerals Ltd. | 31December 2021 CONSOLIDATED FINANCIAL STATEMENTS 42
155155
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
25. COMMITMENTS AND CONTINGENCIES
CCaappiittaall CCoommmmiittmmeennttss
The Company has committed to $129 million (December 31, 2020: $50 million) in capital expenditures.
OOtthheerr CCoommmmiittmmeennttss && CCoonnttiinnggeenncciieess
Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to
time. The Company is routinely subject to audit by tax authorities in the countries in which it operates and has received a number
of tax assessments in various locations, including Zambia, which are currently at various stages of progress with the relevant
authorities. The outcome of these audits and assessments are uncertain however the Company is confident of its position on the
various matters under review.
PPaannaammaa CCoonnssttiittuuttiioonnaall PPrroocceeeeddiinnggss
In February 1996, the Republic of Panama and MPSA, now a subsidiary of the Company, entered into a mining concession
contract in respect of the Cobre Panama project (“Concession Contract”).
On February 26, 1997, Contract-Law No. 9 (“Law 9”) was passed by the Panamanian National Assembly. Law 9 granted the status
of national law to the Concession Contract, establishing a statutory legal and fiscal regime for the development of the Cobre
Panama project. On December 30, 2016, the Government of Panama signed and issued Resolution No. 128 by which it extended
the Concession Contract held by MPSA for a second 20-year term commencing March 1, 2017 up to February 28, 2037. The
Company remains eligible for consideration of a third 20-year term of the Concession Contract commencing March 1, 2037.
In September 2018, the Company became aware of a ruling of the Supreme Court of Panama (“Supreme Court”) in relation to the
constitutionality of Law 9. The Company understands that the ruling of the Supreme Court with respect to the constitutionality of
Law 9 relates to the enactment of Law 9 and does not affect the legality of the Concession Contract itself, which remains in effect,
and allows continuation of the development and operation of the Cobre Panama project by MPSA.
In respect of the Supreme Court ruling on Law 9, the Company notes the following:
•
•
•
•
•
The Supreme Court decision was in respect of ongoing legal filings made since 2009 with regard to specific
environmental petitions.
In reviewing the process of approval of Law 9 of 1997, the Supreme Court found that the National Assembly had failed
to consider whether Law 9 complied with applicable legislation at the time, namely Cabinet Decree 267 of 1969.
The applicable Cabinet Decree of 1969, which was repealed in 1997 by Law 9, required the Ministry of Commerce and
Industry (“MICI”) to issue a request for proposals before awarding the Law 9 mining concession.
The Attorney General of Panama provided two formal opinions favourable to the constitutionality of Law 9 as required
in this type of proceedings by Panamanian law.
The Supreme Court ruling did not make a declaration as to the annulment of the MPSA Concession Contract.
In 2018, MPSA submitted filings to the Supreme Court for ruling, prior to the ruling in relation to the constitutionality of Law 9
taking effect. On September 26, 2018, the Government of Panama issued a news release affirming support for Cobre Panama.
The release confirmed that MICI considers that the MPSA Mining Concession contract, and its extension, remains in effect in all
its parts. In July 2021, the Supreme Court responded to the requests for clarifications submitted by MPSA, ruling them
inadmissible. This means that the original ruling that Law 9 is unconstitutional has been upheld. The unconstitutionality ruling
was published in the Official Gazette on December 22, 2021. The Company understands that the ruling’s effects are non-
retrospective, pursuant to the Code of Judicial Proceedings, which means that the enactment of the contract in 1997 and its
extension in 2017 granted until the year 2037, remain unaffected. As of the date of this report, the Cobre Panama project
continues steady and uninterrupted operations.
The current Government of Panama (“GOP”), inaugurated on July 1, 2019, established a multidisciplinary commission including
the Minister of Commerce and Industries (mining regulator), Minister of Environment, and Minister of Employment to discuss the
Law 9 matter and seek resolution. In July 2021, the GOP announced the appointment of a high-level commission of senior
government ministers and officials, chaired by the Minister of Commerce, to discuss the Company’s concession contract. In
September 2021, the Ministry of Commerce publicly announced the culmination of the high-level formal discussions on two
topics being environmental and labour matters. On December 22, 2021, the unconstitutionality ruling was gazetted, after the
requests for clarification submitted by MPSA had been deemed inadmissible in July 2021.
156156
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 43
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
During January 2022, the Government of Panama tabled a new proposal, namely that the GOP should receive $375 million in
benefits per year from Cobre Panama and that the existing revenue royalty will be replaced by a gross profit royalty. The parties
continue to finalize the detail behind these principles, including the appropriate mechanics that would achieve the desired
outcome, the necessary protections to the Company’s business for downside copper price and production scenarios and to
ensuring that the new contract and legislation are both durable and sustainable.
Once an agreement is concluded and the full contract is documented, it is expected that newly drafted legislation would be put
to the National Assembly. The Company welcomes the transparency of the robust ministerial commission process and is hopeful
that this matter can be concluded shortly.
ZZaammbbiiaann PPoowweerr
In June 2018, without any warning, ZESCO reduced power supply to the Kansanshi operation. The reduction was due to Kansanshi
and Sentinel’s rejection of ZESCO’s demand for payment of higher tariffs, contrary to the existing contractual agreements
between the parties.
On June 26, 2018, Kansanshi sought an injunction against ZESCO before the English courts, as the contracts on tariff are
governed by English law. On June 28, 2018, ZESCO resisted the application and requested an extension to respond. On July 6,
2018, the Court awarded Kansanshi’s request by way of a sanctioned consent order (“Order”) which requires ZESCO to restore
the full capacity as demanded by Kansanshi. In turn, Kansanshi is required to deposit the difference between the contractual tariff
and the disputed higher tariff into a segregated account until an arbitration between Kansanshi and ZESCO on these facts are
concluded. The Order continues to apply as ZESCO is restrained from making any reductions without incurring further sanction
from the Court.
On August 22, 2018, Kansanshi served on ZESCO a Notice of Arbitration in respect of these facts. The arbitration hearing
concluded in July 2021 and the Tribunal issued its award in November 2021. The Tribunal found in favor of Kansanshi on the key
issues including the appropriate tariff and the return to Kansanshi of the funds held in the segregated account pursuant to the
Order. In December 2021 the Tribunal awarded Kansanshi its costs of the arbitration and rejected ZESCO’s application for
interpretation of various parts of the Tribunal’s award. Kansanshi is now engaged in pursuing ZESCO’s compliance with the
Tribunal’s orders.
Despite this dispute, the Company’s operations generally maintain a constructive relationship with ZESCO, particularly with
regards to the management of technical and supply issues. Operational and technical dialogue between the parties is expected
to continue in the normal course.
KKaannssaannsshhii MMiinnoorriittyy PPaarrttnneerr
In October 2016, the Company, through its subsidiary Kansanshi Holdings Limited, received a Notice of Arbitration from ZCCM
International Holdings PLC (“ZCCM”) under the Kansanshi Mining PLC (“KMP”) Shareholders Agreement. ZCCM is a 20%
shareholder in KMP and filed the Notice of Arbitration against Kansanshi Holdings Limited (“KHL”), the 80% shareholder, and
against KMP. The Company also received a Statement of Claim filed in the Lusaka High Court naming additional defendants,
including the Company, and certain directors and an executive of the named corporate defendants. Aside from the parties, the
allegations made in the Notice of Arbitration and the High Court for Zambia were the same. The Company is firmly of the view
that the allegations are in their nature inflammatory, vexatious and untrue.
The dispute was stated as a request for a derivative action, requiring ZCCM to obtain permission to proceed in each forum of the
Arbitration and the Lusaka High Court. The dispute arose from facts originating in 2007, and concerned the rate of interest paid
on select deposits by KMP with the Company. The deposits were primarily retained for planned investment by KMP in Zambia. In
particular, KMP deposits were used to fund a major investment program at Kansanshi, including the successful construction and
commissioning of the Kansanshi smelter and expansion of the processing plant and mining operations. The entirety of the deposit
sums has been paid down from the Company to KMP, with interest. The interest was based on an assessment of an arm’s length
fair market rate, which is supported by independent third-party analysis. ZCCM disputed that interest rate paid to KMP on the
deposits was sufficient.
In July 2019, the Arbitral Tribunal issued a final award in favour of KMP (the “Arbitral Award”). The parties have reached an
agreement on costs, in total exceeding US$1 million payable by ZCCM, bringing this particular matter to an end.
First Quantum Minerals Ltd. | 31December 2021 CONSOLIDATED FINANCIAL STATEMENTS 44
157157
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
In parallel, several preliminary procedural applications to dismiss the High Court Action were lodged on behalf of the Company,
and other defendants, in the Lusaka High Court. By a decision dated January 25, 2018, the Lusaka High Court used its discretion
to rectify ZCCM’s procedural errors. The Court granted leave to the Company, FQM Finance, a wholly-owned subsidiary of the
Company, and the individual defendants to appeal against this decision and the litigants have agreed to a stay pending the appeal.
The appeal hearing took place on November 21, 2018, with submissions made by all parties. The Court of Appeal delivered
judgment on January 11, 2019, dismissing the appeal. An appeal to the Supreme Court of Zambia was heard on April 24, 2019,
and has been dismissed. The High Court was scheduled to resume hearing two further procedural applications, including
whether ZCCM is allowed to maintain the derivative action. However, before these hearings could take place the defendants
brought an application requesting dismissal of the case on grounds of abuse of process/ res judicata, on the basis that the action
cannot be allowed to continue for risk of producing conflicting judgment from the London arbitration, which has already
adjudicated the facts of this particular complaint. ZCCM objected to the defendants’ application. ZCCM also tried to bring an
application to set aside the registration of the Arbitral Award in Zambia. The defendants’ resisted this application. Both
applications had an oral hearing in October 2019.
However, after the October 2019 hearing, ZCCM pursued a challenge to the registration of the Arbitral Award on grounds that it
was not enforceable because it had complied with the costs payment order of the Arbitral Award. KMP opposed ZCCM’s
challenge and made submissions to the Registrar that an Arbitration Award is eligible for registration despite compliance with
costs orders. On February 13, 2020, the Registrar accepted KMP’s position and dismissed ZCCM’s challenge to the registration
of the Arbitration Award. Accordingly, the Lusaka High Court proceeded to rule on the abuse of process application. By way of a
ruling dated March 23, 2020, the Lusaka High Court agreed with KMP’s application that the process, if it were to be allowed to
continue before it, would risk conflicting judgements and would be res judicata. Accordingly, ZCCM’s derivative action case was
dismissed, with costs awarded to KMP against ZCCM. On April 6, 2020, ZCCM sought permission to appeal to the Court of Appeal
on grounds that the High Court judge erred in fact and in law. KMP objected to the appeal. The Court of Appeal delivered its
judgment on January 13, 2021, dismissing all grounds of appeal with the exception of one ground raised by the ZCCM and
awarded costs to the Defendants. With regards to the remaining ground, the Court of Appeal held that the determination of this
ground of appeal would be inconsequential as the matter should have been determined earlier than now and is therefore now
moot. On January 27, 2021, ZCCM filed a notice of motion for leave to appeal to the Supreme Court. ZCCM filed skeleton
arguments in respect of the motion for leave to appeal to Supreme Court in reply to those of KMP on April 23, 2021, and the
remaining defendants on April 26, 2021. A hearing on the matter was held on April 29, 2021, and judgement was reserved. On
August 11, 2021, ZCCM submitted a new summons for leave to appeal to the Supreme Court. KMP submitted its response on
August 27, 2021, opposing leave to appeal. On October 4, 2021, the Supreme Court dismissed ZCCM’s application in its entirety
with costs awarded to KMP. On October 19, 2021, ZCCM submitted a notice of motion for leave to appeal to a full bench (3 judges)
of the Supreme Court. KMP submitted its response on November 26, 2021. ZCCM submitted its heads of arguments on January
10, 2022. The hearing occurred on January 18, 2022. The Supreme Court panel which consisted of the Deputy Chief Justice and
two other Supreme Court Judges, indicated that according to the Court, the High Court proceedings by ZCCM were a nullity from
the very beginning, so their appeal should fail. The Company awaits the Supreme Court’s actual decision as it was reserved.
In addition, on November 11, 2019, Kansanshi Holding Ltd (KHL) filed a UNCITRAL Rules based Request for Arbitration against
ZCCM and KMP (as Nominal Respondent) in connection with a Cash Management Services Agreement dated August 19, 2019.
KHL seeks a declaration that the CMSA is an arm’s length contract. The CMSA provides for cash management services whereby
KMP would deposit with the Group’s treasury subsidiary certain of its cash balances for management by FQML’s treasury
function. All cash managed and deposited is callable on demand by KMP and attracts commercial interest rates. Under the
shareholder agreement between the Group and ZCCM, related party transactions are required to be on an arms’ length basis.
This arbitration was held virtually in a hearing between October 19 to 23, 2020. The parties are now awaiting the Final Award in
the arbitration. The Partial Final Award was issued in the first quarter of 2021. The arbitral panel held a Case Management
Conference on June 25, 2021, with a focus on the legal issues expressly identified in the Partial Final Award for resolution and
relief in a Final Award. The parties have conferred on the table of matters that remain to be determined, which are scheduled to
be heard by the Tribunal on November 9, 2021. The parties reached a settlement on the remaining matters on November 30,
2021 and the Tribunal issued the Final Award by Consent on January 12, 2022.
KKaannssaannsshhii DDeevveellooppmmeenntt AAggrreeeemmeenntt
On May 19, 2020, KMP filed a Request for Arbitration against the GRZ with the International Centre for Settlement of International
Disputes (“ICSID”). This arbitration is confidential. KMP’s claims concern breaches of certain contractual provisions of a
development agreement between GRZ and KMP (the “Development Agreement”) and international law. The amount in dispute is
158158
First Quantum Minerals Ltd. | 31 December 2021 CONSOLIDATED FINANCIAL STATEMENTS 45
FIRST QUANTUM MINERALS LTD. | 2021 ANNUAL REPORT
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
(expressed in millions of U.S. dollars)
to be quantified at a later stage, however it is believed to be material. The Tribunal is now fully consisted and has held its first
Case Management Conference, setting the hearing date for the adjudication of the merits for March 14 to 18, 2022. KMP
submitted its Memorial and corresponding documents on January 25, 2021. GRZ filed its Memorial on Jurisdiction and Counter-
Memorial of Defence and Counterclaim on July 9, 2021. The parties have exchanged requests for production of documents. The
parties produced documents ordered by the Tribunal on November 1, 2021. KMP submitted its Reply Memorial on February 11,
2022. The hearing in this matter is scheduled for January 2023.
26. POST BALANCE SHEET EVENTS
DDiivviiddeenndd ddeeccllaarreedd
The Company has declared a final dividend of CAD$0.005 per share, in respect of the financial year ended December 31, 2021.
The final dividend together with the interim dividend of CAD$0.005 per share is a total of CAD$0.01 per share for the 2021
financial year.
First Quantum Minerals Ltd. | 31December 2021 CONSOLIDATED FINANCIAL STATEMENTS 46
159159
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
BOARD OF DIRECTORS
PHILIP K.R. PASCALL
Chairman of the Board and Chief Executive Officer
Mr. Pascall graduated from Sussex University in England with an honours degree
in Control Engineering, and later completed an MBA at the University of Cape
Town. He worked in general management positions in South Africa from 1973; and
in the mining industry there from 1977 with RTZ, and E.L. Bateman, and from 1981,
in Australia. He was the Project Manager of the Argyle Diamond Project and then
Executive Chairman and part-owner of Nedpac Engineering between 1982 and 1990.
During this time, Mr. Pascall was involved in a wide variety of mineral projects in
Australia, New Zealand, South East Asia, Chile, the United States, and Zimbabwe.
After selling his share of Nedpac in 1990, Mr. Pascall was a consultant in the mining
industry, including a period with Rio Tinto’s Hamersley Iron, and with various projects
in Zimbabwe and Zambia. He is a co-founder and has been Chairman and Chief
Executive Officer of the Company since 1996.
ROBERT HARDING
Lead Independent Director, Chair of the Nominating and Governance Committee
Mr. Harding is a well-known and respected executive in the Canadian
business community. He graduated with a Bachelor of Mathematics from
the University of Waterloo in 1980 and received his Chartered Accountant
designation the following year. Mr. Harding began his career at a major
accounting firm before joining Hees International (now Brookfield) where
he served in progressively senior roles including Controller, Chief Financial
Officer, Chief Operating Officer, and ultimately, Chief Executive Officer in 1992.
He retired from the Board of Brookfield Asset Management, where he was
Chairman from 1997–2010, in 2019.
ANDREW ADAMS
Independent Director, Chair of Compensation Committee
Mr. Adams obtained his degree in Social Science from Southampton University and
qualified as a Chartered Accountant in the United Kingdom in 1981. He worked for
the Anglo American group of companies for 12 years up to 1999, his final position
being Vice President and Chief Financial Officer of AngloGold North America based
in Denver, Colorado. Mr. Adams worked for Aber Diamond Corporation as Vice
President and Chief Financial Officer from 1999 to 2003. Recent board roles include
independent non-executive Director of Torex Gold Resources and Chairman of the
Board of TMAC Resources Inc.
160
160
FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD. CLIVE NEWALL
President and Director
Mr. Newall graduated from the Royal School of Mines, Imperial College, England in
1971 with an honours degree in Mining Geology, and was awarded an MBA from the
Scottish Business School at Strathclyde University. He has worked in mining and
exploration throughout his career, having held senior management positions with
Amax Exploration Inc., the Robertson Group plc. and was a non-executive Director
of Gemfields plc and Baker Steel Resource Trust Limited. Mr. Newall is a co-founder
and has been President and Director of the Company since its start-up in 1996. He is
also a non-executive Director of Marimaca Copper Corp.
KATHLEEN HOGENSON
Independent Director, Chair of EHS & CSR Committee
Ms. Hogenson has extensive operational, leadership and executive
experience in the oil and gas sector worldwide having served as an
executive at Santos Limited and Unocal Corporation. Currently, she is the
Chief Executive Officer of Zone Oil & Gas, a company she founded in 2008.
Ms. Hogenson is also an independent director at Verisk Analytics, a New
Jersey based publicly traded data analytics and risk assessment firm. She
previously served on the board of Parallel Petroleum LLC, Cimarex Energy
Co. and in an advisory role at Samsung Oil & Gas, LLC and Samsung C&T
from 2008 to 2015. She also serves on the Advisory Board of The Women’s
Global Leadership Conference and was a speaker at the Harvard Business
School Women’s Conference. Ms. Hogenson earned a Bachelor of Science
in Chemical Engineering from The Ohio State University.
SIMON SCOTT
Independent Director, Chair of the Audit Committee
Mr. Scott has over 20 years of experience in the mining industry. Between 2010
and 2016, he was Chief Financial Officer of Lonmin plc, a London Stock Exchange
listed platinum mining company and was acting CEO between 2012 and 2013. Prior
to that, Mr. Scott was Chief Financial Officer of Aveng Limited, a Johannesburg
Stock Exchange listed construction company providing products and services to
the mining industry globally. Mr. Scott also held a variety of senior management
positions in Anglo American Platinum Limited including as acting CFO. His early
career was spent in various financial positions, including as CFO Southern Africa
for JP Morgan Chase. Mr. Scott is a Chartered Accountant and holds degrees in
both accounting and commerce from the University of the Witwatersrand in South
Africa. He is currently a Non-Executive Director of AngloGold Ashanti Holdings plc.,
a global gold mining company and Sylvania Platinum Limited, a PGMs producing
company listed on the London Stock Exchange’s Alternative Investment Market.
161
161
2021 ANNUAL REPORT2021 ANNUAL REPORT DIRECTORS
continued
PETER ST. GEORGE
Independent Director
Mr. St. George worked in the investment banking industry for over 30 years holding
senior positions in the United Kingdom and Australia including acting as Chief
Executive/Co-Chief Executive Officer of Salomon Smith Barney Australia and its
predecessor, Natwest Markets Australia to 2001. He subsequently served on a number
of other public and private company boards most recently as a non-executive Director
of Dexus Property Group, an ASX-listed Australian property group specializing in office,
industrial and retail properties. Mr. St. George qualified as a Chartered Accountant in
South Africa and holds an MBA from the University of Cape Town.
JOANNE WARNER
Independent Director
Dr. Warner has considerable global asset management experience in
the metals, mining and energy sectors, having served as Head of Global
Resources for Colonial First State Global Asset Management from 2010 – 2017
(previously the Senior Portfolio Manager from 2003 – 2007). She is currently a
Non-Executive Director of Geo40 Limited, a pioneering company focused on
the extraction of silica and other minerals from geothermal fluids and Deterra
Royalties Limited, a mining royalty company listed on the ASX. Dr. Warner
earned a Bachelor of Applied Science (Applied Chemistry) from the University
of Technology, Sydney and holds a D.Phil. in Solid State Chemistry from the
University of Oxford, England.
KEVIN MCARTHUR
Independent Director
Mr. McArthur has over 40 years of experience focused on mining operations,
corporate development and executive management. He currently serves as a
Director of Royal Gold, Inc. Mr. McArthur recently served as a non-executive Chair
of Boart Longyear Limited from 2019 to 2021, Chief Executive Officer of Tahoe
Resources Inc. from 2009 to 2015 and as Executive Chair from 2015 to 2019. Prior
experience includes CEO of Goldcorp Inc. from 2006 to 2008 and CEO of Glamis
Gold Ltd. from 1999 to 2006. His earlier career focused on mine operations and
project development with Glamis Gold, BP Minerals and Homestake Mining
Company. Mr. McArthur obtained a degree in Mining Engineering from the
University of Nevada in 1979.
162
162
FIRST QUANTUM MINERALS LTD. FIRST QUANTUM MINERALS LTD. Our Board of Directors is ultimately
responsible for the stewardship and
long-term success of First Quantum.
Acting with integrity towards employees,
investors and host communities is
essential to our success and to
generating shareholder value.
163
SHAREHOLDER INFORMATION
MANAGEMENT AND OFFICERS
OF THE COMPANY
TRANSFER AGENT
AND REGISTRAR
COMPUTERSHARE
INVESTOR SERVICES INC.
510 Burrard Street, 3rd Floor
Vancouver, British Columbia
Canada V6C 3B9
Email: service@computershare.com
Toll-free in North America +1 800 564 6253
Outside of North America +1 514 982 7555
AUDITORS
PricewaterhouseCoopers LLP
PwC Tower
18 York Street, Suite 2600
Toronto, Ontario, Canada M5J 0B2
EXCHANGE LISTINGS
Common Shares
Toronto Stock Exchange
Symbol: FM
Depository Receipts
Lusaka Stock Exchange
Symbol: FQMZ
ANNUAL MEETING
OF SHAREHOLDERS
Thursday, May 5, 2022 at 9:00am EDT
Virtual
PHILIP K.R. PASCALL
Chairman of the Board,
Chief Executive Officer
HANNES MEYER
Chief Financial Officer
SARAH ROBERTSON
Corporate Secretary
JULIET WALL
General Manager Finance
ZENON WOZNIAK
Director, Projects
TRISTAN PASCALL
Chief Operations Officer
JOHN GREGORY
Group Consulting Mining Engineer
164
164
CORPORATE DIRECTORY
CONTACT US
www.first-quantum.com
info@fqml.com
REGISTERED OFFICE
Suite 2600, Three Bentall Centre
P.O. Box 49314
595 Burrard Street, Vancouver
British Columbia, Canada V7X 1L3
Tel
+1 416 361 6400
Toll-free +1 888 688 6577
Fax
+1 416 368 4692
HEAD OFFICE
CANADA
330 Bay Street, Suite 1101
Toronto, Ontario, Canada M5H 2S8
Tel
+1 416 361 6400
Toll-free +1 877 961 6400
Fax
+1 416 368 4692
CORPORATE OFFICES
UNITED KINGDOM
4th Floor, The Charlotte Building
17 Gresse Street, London W1T 1QL
Tel
Fax
+44 207 291 6630
+44 207 291 6655
AUSTRALIA
Level 1, 24 Outram Street
West Perth, Western Australia 6005
Tel
Fax
+61 (0)8 9346 0100
+61 (0)8 9226 2522
SOUTH AFRICA
2nd Floor, Building 3
16 Desmond Street, Kramerville
Johannesburg 2090, South Africa
Tel
Fax
+27 11 409 4900
+27 11 452 5323
101537
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