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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT 2023 PRODUCTION
707,678
707,678
tonnes Cu
tonnes Cu
GUELB MOGHREIN | Akjoujt, MAURITANIA
:
Ownership: 100%
GUELB MOGHREIN | Akjoujt, MAURITANIA
:
Ownership: 100%
Primary: Copper
Primary: Copper
Secondary: Gold
Secondary: Gold
2023 Production: Copper 13kt, Gold 26koz
2023 Production: Copper 13kt, Gold 26koz
LA GRANJA | Cajamarca Region, PERU
LA GRANJA | Cajamarca Region, PERU
Ownership: 55% (partnership with Rio Tinto)
Ownership: 55% (partnership with Rio Tinto)
Primary: Copper
Primary: Copper
HAQUIRA | Apurimac Region, PERU
HAQUIRA | Apurimac Region, PERU
Ownership: 100%
Ownership: 100%
Primary: Copper
Primary: Copper
TACA TACA | Salta Provence, ARGENTINA
TACA TACA | Salta Provence, ARGENTINA
Ownership: 100%
Ownership: 100%
Primary: Copper
Primary: Copper
Secondary: Gold, Molybdenum
Secondary: Gold, Molybdenum
COBRE PANAMÁ | Colón Province, PANAMA
COBRE PANAMÁ | Colón Province, PANAMA
Ownership: 90%
Ownership: 90%
Primary: Copper
Primary: Copper
Secondary: Gold, Molybdenum, Silver
Secondary: Gold, Molybdenum, Silver
2023 Production: Copper 331kt, Gold 130koz
2023 Production: Copper 331kt, Gold 130koz
LEGEND
LEGEND
Operations
Operations
Exploration Project
Exploration Project
First Quantum is
a global mining
company primarily
producing copper,
with secondary
production in nickel,
gold and silver.
We are an experienced and proven
developer and operator of large-scale,
open-pit copper mines in a variety of
terrains on four continents. Our unique
approach allows us to apply our in-house
technical, engineering, construction and
technical skills to our projects.
Our results-driven culture has helped
drive successful growth, and we
focus on provid ing tangible benefits
in everything we do for investors,
employees and the many communities
that surround our operations.
LAS CRUCES | Sevilla Province, SPAIN
LAS CRUCES | Sevilla Province, SPAIN
Ownership: 100%
Ownership: 100%
Primary: Copper
Primary: Copper
2023 Production: Copper 4kt
2023 Production: Copper 4kt
ÇAYELI | Rize Province, TURKEY
ÇAYELI | Rize Province, TURKEY
Ownership: 100%
Ownership: 100%
Primary: Copper
Primary: Copper
Secondary: Zinc
Secondary: Zinc
2023 Production: Copper 11kt, Zinc 4kt
2023 Production: Copper 11kt, Zinc 4kt
KANSANSHI | North-Western Province, ZAMBIA
KANSANSHI | North-Western Province, ZAMBIA
Ownership: 80% , 100% Economic rights
Ownership: 80% , 100% Economic rights
Primary: Copper
Primary: Copper
Secondary: Gold
Secondary: Gold
2023 Production: Copper 135kt, Gold 69koz
2023 Production: Copper 135kt, Gold 69koz
SENTINEL | North-Western Province, ZAMBIA
SENTINEL | North-Western Province, ZAMBIA
Ownership: 100%
Ownership: 100%
Primary: Copper
Primary: Copper
2023 Production: Copper 214kt
2023 Production: Copper 214kt
ENTERPRISE | North-Western Province, ZAMBIA
ENTERPRISE | North-Western Province, ZAMBIA
Ownership: 100%
Ownership: 100%
Primary: Nickel
Primary: Nickel
2023 Production: Nickel 5kt
2023 Production: Nickel 5kt
RAVENSTHORPE | Western Australia, AUSTRALIA
RAVENSTHORPE | Western Australia, AUSTRALIA
Ownership: 75.7%
Ownership: 75.7%
Primary: Nickel
Primary: Nickel
Secondary: Cobalt
Secondary: Cobalt
2023 Production: Nickel 22kt
2023 Production: Nickel 22kt
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2023 ANNUAL REPORT
FIRST QUANTUM MINERALS LTD.
FIRST QUANTUM MINERALS LTD.
2023 ANNUAL REPORT
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FIRST QUANTUM MINERALS LTD.
2023 ANNUAL REPORT
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Enterprise
TABLE OF CONTENTS
Our Properties
CEO Message to Shareholders
Financial Report
Management’s Discussion and Analysis
Consolidated Financial Statements
Independent Auditor’s Report
In Memory of Philip Pascall
Board of Directors
Shareholder Information
Corporate Directory
IFC
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10
11
83
85
137
138
141
142
FIRST QUANTUM MINERALS LTD.
2023 ANNUAL REPORT
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CEO MESSAGE TO SHAREHOLDERS
First Quantum remains uniquely
positioned as a copper-focused
producer with exceptional operating
teams, optionality in its project
pipeline and an in-house projects
team to execute these projects.
TRISTAN PASCALL Chief Executive Officer
2023 was a significant year for First Quantum, having
reached record copper production at Cobre Panamá, the
ramp up of Enterprise creating the largest nickel mine in
Africa, and the passing of our Chair and co-founder, Philip
Pascall. Following political unrest in Panama, we ended
the year with Cobre Panamá being placed into Preservation
and Safe Management. However, with the deeply
embedded culture instilled by Philip that encourages
entrepreneurialism, problem solving and resilience, the
Company marked the start of 2024 with the completion of
a complex refinancing package that bolstered the balance
sheet, giving us the necessary time and space to reach a
resolution in Panama and to complete the S3 Expansion
project at Kansanshi.
In March 2023, after several years of negotiations, First
Quantum successfully agreed and finalized a concession
contract with the Government of Panama to secure the
future of the Cobre Panamá mine. The agreement was
approved through the country’s National Assembly and
sanctioned as Law 406 by the President on October 20,
2023. Soon thereafter, civil unrest gained momentum in
the country with road blockages and protests against the
government and the mining contract. The road blockages
impacted people and businesses all over the country,
including at Cobre Panamá, and illegal blockades at the
Punta Rincon port prevented deliveries of essential
supplies for our power plant; this eventually forced the mine
to ramp down and production stopped. On November 28,
2023, Panama’s
the Supreme
Cour t in Panama declared Law 406 unconstitutional.
Independence Day,
Currently, mining activities are suspended at Cobre
Panamá, however, the illegal blockades around the mine
and at the port have dissipated, allowing for the delivery
of critical supplies. We are now working with the Ministry
of Commerce and Industry on preserving environmental
stability and asset integrity whilst audits and reviews
are undertaken. This work will likely last into the next
administration in Panama with elections being held on
May 5 this year; a new president will take office in July.
We acknowledge there has been strong opposition to the
mine in Panama among certain parts of society. And we
have said that we could have done things differently and
communicated more broadly in the country and we are
keen to put that right. It’s important for us to engage with
people across Panama more effectively. We are working
to do this.
In the meantime, in order to protect our shareholders and
our investment in Panama, First Quantum has issued a
notice of intent to commence international arbitration
under the Canada-Panama Free Trade Agreement and to
separately initiate arbitration through the International
Chamber of Commerce over the concession contract.
However, arbitration, is not our preferred route; we remain
committed to Panama and being a part of a long-term
solution that delivers the best outcome for the country,
Panamanians, our workforce and the local communities
around the mine.
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
As we navigate through this period of preservation and
safe management at Cobre Panamá, I want to reaffirm
that our commitment to the environment in Panama remains
paramount. Cobre Panamá has always implemented
best-in-class environmental management practices and
remains committed to its responsibilities on a transparent
basis. As with all our mine sites, we adhere to stringent
international standards to minimize our ecological footprint
and preserve and restore natural habitats.
It is with deep regret that we lost three of our colleagues
from our Kansanshi and Sentinel operations in 2023.
I extend my deepest sympathies to their families and
friends. The health and safety of our workforce is our
top priority and it is important that we learn from such
incidents to help prevent future occurrences. As such,
we will continue to embed our THNK! culture into every
aspect of our operations. We recognize that critical to
this culture is a leadership style that is supportive and
prioritizes safety whilst supporting employees to meet
their responsibilities. We will seek to improve our health
and safety practices across the business continuously.
In September 2023, the Company was deeply saddened
by the passing of Philip Pascall, co-founder and Chair
since the inception of First Quantum in 1996 and CEO
until May 2022. Under his leadership, Philip instilled an
entrepreneurial and bold culture that saw the Company
grow from a 10,000 tonne tailings re-processor to one of the
world’s largest copper producers. A titan of the industry,
Philip’s spirit and generosity profoundly impacted the
lives of many at First Quantum and in the communities
around our mines. The greatest source of Philip’s pride
was the impact of the many community programs that
First Quantum conducted, bringing improved standards
of health and education, including many clinics and
schools,
in often very remote places. Consequently,
First Quantum is the largest contributor to corporate
social responsibility in Zambia. This was recognised
last October, when Philip was posthumously bestowed
with the Order of the Eagle of Zambia Third Division by
President Hakainde Hichilema. It was a tremendous
Cobre Panamá
honour for me to accept this award on Philip’s behalf.
I wish to thank Robert Harding for taking on the role of
Chair of the Board in 2023 and also the rest of the Board
for their support during a period of significant flux for the
Company.
While 2023 posed some challenges, the year was also
marked by several important achievements. We hosted
our inaugural virtual ESG Day that outlined our practical
and pragmatic approach to a number of ESG areas key
to our business. I am very proud of this work, the
commitment of our operations to the surrounding
communities and our commitment to produce copper in
a safe and environmentally responsible manner. Moreover,
to address the misperceptions of mining that still exist
and to elucidate the many benefits of the industry, we will
continue to improve communications. We have now stepped
up our media campaign in Panama in order to provide
transparency on facts and dispel the misinformation that
last year. We are
gained traction at the close of
Trident
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Through these efforts in openness
and transparency, we hope
to showcase our world-class
environmental standards and the
benefits the mine brings to the
country, as well as the important role
that Panama can play in the global
renewable ‘green’ energy transition.
S3 Expansion
also engaging Panamanians more directly through mine
tours for government officials, civil society organizations
and community members. Through these efforts in
openness and transparency, we hope to showcase our
world-class environmental standards and the benefits
the mine brings to the country, as well as the important
role that Panama can play in the global renewable ‘green’
energy transition.
project, one of the world’s largest undeveloped copper
ore bodies. Adding this major project to our portfolio, as
the operator, will give First Quantum one of the leading
copper growth profiles in the industry. We look forward
to working with Rio Tinto on this exciting development
whilst sharing know-how and technical expertise and
also, potentially, on working on future base metals
opportunities.
The Cobre Panamá CP100 Expansion was completed
ahead of schedule, which speaks to the strong capabilities
of our in-house projects team. The operation achieved
a monthly production record in October prior to being
placed on preservation and safe management in November.
Enterprise in Zambia, the largest nickel mine in Africa,
has now delivered its first ore and produced its first
nickel; commercial production will be achieved in 2024.
Alongside our nickel production at Ravensthorpe in
Australia, First Quantum is excited to deliver this energy
transition metal into the renewable energy market and
in particular into battery technologies.
In 2023, we were also pleased to have signed a new
partnership with Rio Tinto to move forward the La Granja
As part of our ongoing commitment to decarbonise our
mining operations, we have formed a technology
partnership with Hitachi Construction Machinery for
the development of Hitachi’s first battery-only mining
trucks. After successful tests in Japan, the first truck
will be delivered to Zambia in April and following
assembly, trials in the Kansanshi pit will commence in
May. This is an important milestone towards the future
commercialization of battery technology and will be
enabled by the ongoing expansion of our trolley assist
networks which are already reducing our diesel emissions.
is the
Looking forward, the next growth project
Kansanshi S3 Expansion. The $1.25 billion project is a key
part of our ongoing commitment to Zambia, which has
been made easier by the continuing stable investment
Cobre Panamá
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
climate in the country under the current administration.
The new mining fleet is being delivered through 2024
and the first trucks and shovels are already in service
pre-stripping the new South East Dome pit. Deliveries
of major long lead equipment continue as per the
plan and the overall project remains on budget and
on schedule to ramp up in the second half of 2025.
When commissioned in 2025 this project will return the
Company to a position of strong free cash flow.
Our focus has been on ensuring that we have a
balance sheet that supports the completion of the
Kansanshi S3 Expansion project, independent of the
timing of a resolution in Panama. At the start of 2024,
it was pleasing to announce a holistic approach to
strengthen the balance sheet that comprised of a $500
million copper prepay agreement, an amendment and
extension of our $2.2 billion corporate bank facilities,
a $1.6 billion bond offering and a $1.15 billion equity
bought deal offering. The bond and equity offerings
were substantially oversubscribed and it was humbling
to receive this strong endorsement from the investment
community.
lenders,
like
bondholders and shareholders for their support on
these transactions and their confidence in the outlook
of the Company. Looking forward to the year ahead, the
Company remains fo cus e d on adv ancing additional
in a disciplined manner.
balance sheet
thank our
initiatives
I would
to
Additionally, we will continue our commitment to
operational excellence whilst delivering the Kansanshi
S3 Expansion project. First Quantum remains uniquely
positioned as a copper-focused producer with
exceptional operating teams, optionality in its project
pipeline and an in-house projects team to execute
these projects.
Finally, I would like to extend my whole-hearted thanks
to our shareholders for their continued support. As a
Company, we value your continued faith in our ability
and vision.
looking ahead after a
challenging year, I am confident that First Quantum
will emerge operationally stronger, whilst delivering
on its plans to strengthen its balance sheet. I look
forward to continuing this journey with you in 2024.
In turn, and
TRISTAN PASCALL
Chief Executive Officer
Kansanshi – S3 Expansion
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
2023 ANNUAL REPORT
MANAGEMENT’S
DISCUSSION
& ANALYSIS
10
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT INDEX
OVERVIEW
FULL YEAR HIGHLIGHTS
FOURTH QUARTER HIGHLIGHTS
ENVIRONMENT, SOCIAL AND GOVERNANCE
COBRE PANAMÁ UPDATE
DEVELOPMENT PROJECTS
EXPLORATION
OTHER DEVELOPMENTS
GUIDANCE
SUMMARY OPERATIONAL RESULTS
OPERATIONS REVIEW
SUMMARY FINANCIAL RESULTS
LIQUIDITY AND CAPITAL RESOURCES
ZAMBIAN VAT
JOINT VENTURE
RAVENSTHORPE OWNERSHIP INTEREST
RELATED PARTY TRANSACTIONS
PRECIOUS METAL STREAM ARRANGEMENT
MATERIAL LEGAL PROCEEDINGS
REGULATORY DISCLOSURES
SUMMARY QUARTERLY INFORMATION
APPENDICES
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
12
13
16
19
19
20
23
23
24
28
34
44
53
59
60
60
60
61
62
63
77
78
82
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FIRST QUANTUM MINERALS LTD.2023 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,
Turkey, Australia and Mauritania, and a development project in Zambia. The Company’s Cobre Panamá mine was placed
into a phase of Preservation and Safe Management (“P&SM”) in November 2023. The Company is progressing the Taca
Taca copper-gold-molybdenum project in Argentina and is exploring La Granja and the Haquira copper deposits in Peru.
The Company’s shares are publicly listed for trading on the Toronto Stock Exchange.
This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the audited consolidated financial
statements of the Company for the year ended December 31, 2023. The Company’s results have been prepared in
accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”); 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.sedarplus.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 20, 2024.
OVERVIEW
Fiscal year 2023 was a challenging year for First Quantum, most notably in the first and final quarter. At Cobre Panamá,
mining operations were suspended for 15 days in February 2023 following the temporary suspension of copper concentrate
loading operations by the Panama Maritime Authority (“AMP”). Upon return to normal operations at the port, Cobre Panamá
successfully returned to full production levels in March 2023, followed by strong operational performance in the second and
third quarters and the successful completion of CP 100 Expansion project. In the fourth quarter of 2023, Cobre Panamá
experienced illegal blockades throughout the month of November at the Punta Rincón port and at the roads to the site that
prevented the delivery of supplies that were necessary to operate the power plant. As a result, the Company suspended
production at the Cobre Panamá mine at the end of November 2023 and placed the mine into a phase of Preservation and
Safe Management (“P&SM”).
In March 2023, the Company successfully agreed and finalized the draft of the concession contract (the “Refreshed
Concession Contract”) with the Government of Panama (“GOP”) to secure the long-term future of the Cobre Panamá mine.
On October 20, 2023, the National Assembly in Panama passed Bill 1100 for the approval of the Refreshed Concession
Contract for the Cobre Panamá mine. On the same day, the President of Panama, Laurentino Cortizo, sanctioned Bill 1100
into Law 406 that was subsequently published in the Official Gazette. On November 28, 2023, the Supreme Court of Justice
of Panama declared Law 406 unconstitutional. The ruling of the Supreme Court was subsequently published in the Official
Gazette on December 2, 2023. The Supreme Court did not order the closure of the Cobre Panamá mine.
On December 19, 2023, the Minister for Panama’s Ministry of Commerce and Industries (“MICI”) announced plans for Cobre
Panamá following the ruling of the Supreme Court. The validity of Panama’s mineral resource code which was established
more than 50 years ago was reiterated by the Minister given the absence of retroactivity of the Supreme Court ruling. As part
of these plans, a temporary phase of environmental Preservation and Safe Management would be established until June
2024, during which intervening period independent audits, review and planning activities would be undertaken. It was stated
that Panama would be the first country in the world to implement a sudden mine closure of this magnitude, and therefore the
planning is estimated by the GOP to take up to two years, and 10 years or more to implement. The Minister also announced
plans to consider the economic impacts of the halt to operations of Cobre Panamá at both a national and local level. The
Company is of the view, supported by the advice of legal counsel, that it has acquired rights with respect to the operation of
the Cobre Panamá project, as well as rights under international law.
Presidential and national legislative elections will take place in May 2024, with a new president, GOP cabinet and National
Assembly assuming office in July 2024.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 3
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
In January 2024, the Company and MICI had discussions related to a formalized P&SM program and the associated costs
for Cobre Panamá. Additionally, the Company hosted a large delegation from MICI and the Ministry of the Environment
(“MiAmbiente”), as well as other government departments and a broad range of civil society organizations to demonstrate
the measures that are being undertaken as part of the P&SM program. At the request of MICI, Cobre Panamá delivered a
preliminary draft for the first phase of P&SM on January 16, 2024. The previous illegal blockages around the mine have
since dissipated, allowing for delivery by road and sea of the necessary supplies to conduct the P&SM program.
At the Zambian operations, particularly at Sentinel, excessive rainfall experienced during the rainy season presented
challenging mining conditions in the first quarter of 2023. Strong progress has been made over the course of the year on the
S3 Expansion project at Kansanshi with the majority of the capital expenditure scheduled for 2024 and first production
planned for 2025. The Enterprise nickel mine delivered first production and sales of nickel concentrate during 2023 and is
expected to achieve commercial production in 2024.
At the Ravensthorpe nickel and cobalt mine, a decision was made subsequent to the year-end to scale back mining
operations and associated processing activities as a result of continued low nickel prices. A new operating plan has been
developed under which Ravensthorpe aims to maintain production from ore stockpiles and suspend mining from the
Shoemaker Levy ore body. The high-pressure acid leach (“HPAL”) circuit will also be bypassed and ore will be exclusively
processed through the atmospheric leach circuit. Production from existing ore stockpiles is expected for 18 months after
which time, mining at Hale Bopp and Halley’s ore bodies is expected to commence.
As previously announced in the Company’s news release dated January 15, 2024, which is available at www.sedarplus.com,
the Company suspended its dividend as a result of Cobre Panamá being in a phase of P&SM. Additionally, planned capital
programs have been reduced or re-phased by approximately $400 million in 2024 and $250 million in 2025. This reflects a
halt in capital spend at Cobre Panamá and proactive initiatives to offset capital inflation in the Zambian business. The
Company has commenced discussions with its banking partners and the bond markets to address its debt facilities. The
Company is further evaluating a range of alternatives to maintain a robust financial position and preserve value for its
shareholders, including exploring the sale of smaller mines and interests in its larger mining assets.
FULL YEAR HIGHLIGHTS
Operational and Financial
Full year copper production of 708 thousand tonnes (“kt”) was achieved in 2023, a 9% decrease from the prior year. After the
successful completion of the CP100 Expansion project, Cobre Panamá delivered annual copper production of 331kt before
halting operations in November 2023 and placing the mine into a phase of P&SM. Zambian production of 349kt was 10%
lower than 2022 due to a combination of lower throughput at both sites and lower grades at Kansanshi. Consequently,
financial performance reflected lower copper sales volumes from lower copper production, coupled with lower net realized
copper prices1.
Despite the challenging operating environment, First Quantum achieved strong operational improvement with each of the
three major copper operations over the course of 2023 with increasing production at Cobre Panamá on the strong ramp-up
of the CP100 Expansion, steady recovery at Sentinel from the impact of the heavy rains experienced in the first quarter and
challenges from mining very hard rock in lower levels of the pit later in the year, and improved production at Kansanshi with
continued focus on mining cutbacks with historically higher grades.
> Cobre Panamá achieved copper production of 331kt for the full year, a decrease of 6% from 2022, reflecting the
temporary suspension of mining operations in the first quarter and the halting of mining operations in the fourth quarter of
2023, which more than offset the impact of higher average copper grades and a strong ramp-up of the CP100 Expansion
project. Cobre Panamá operated at an annualized throughput rate of 93 million tonnes for the month of October 2023.
This combined with higher grades and improving recoveries allowed the operation to achieve monthly record production
of 41,543 tonnes. With very limited resources, the site was able to continue production through November 2023,
producing just over 21 thousand tonnes before halting production. Cobre Panamá’s operations are currently under P&SM
and approximately 121 thousand dry metric tonnes of copper concentrate remains onsite following disruptions at the
1 Realized metal price is a non-GAAP ratio, and does not have a standardized meaning 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 4
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
Punta Rincón port. The sale of this concentrate will result in a net cash inflow of approximately $225 million at current
market prices.
> Sentinel achieved copper production of 214kt for the full year, 28kt lower than the prior year due to lower throughput.
Production in the first quarter of 2023 was impacted by excessive rainfall that resulted in the accumulation of water in the
high-grade area of the Stage 1 pit, which was subsequently cleared by mid-May 2023. Mining volumes and mill
throughput improved in the second half of 2023 but were lower than anticipated due to the mining of very hard rock in the
lower levels of the pit.
> Kansanshi recorded copper production of 135kt for the full year, 11kt lower than 2022. This reflects the lower throughput
from the sulphide circuit due to lower milling rates caused by the treatment of competent ore combined with overall lower
grades due to high-grade material being supplemented by lower grade material from stockpiles.
> Ravensthorpe produced 22 thousand contained tonnes of nickel, a 1% increase from 2022.
> Total gold production for the year was 227 thousand ounces (“koz”), a 20% decrease from the prior year, mainly
attributable to the halting of mining operations at Cobre Panamá, lower gold grades at Kansanshi and lower grades and
throughput at Guelb Moghrein.
> Total copper sales volumes of 674kt was 34kt lower than production mainly due to port disruptions at Cobre Panamá in
the fourth quarter of 2023.
> Copper C1 cash cost1 of $1.82 per pound (“lb”) for 2023 was $0.06 per lb higher than the prior year, attributable to lower
production at both Zambian operations and Cobre Panamá, lower by-product credits and higher consumables, partially
offset by the impact of favourable exchange rates. Copper AISC1 of $2.46 per lb for the 2023 was $0.11 per lb higher than
the prior year, reflecting the higher copper C1 cash cost1, increased stripping2 and sustaining capital expenditures2
particularly at Kansanshi.
> Development of brownfield and greenfield projects continued in 2023:
•
•
•
•
•
Kansanshi S3 Expansion: Through the course of 2023, the S3 Expansion achieved key milestones, including
commissioning approximately 30% of the mining fleet and progressing 80% of the engineering. Earthworks and
civil works continued to progress and project procurement was approximately 70% committed. The majority of the
capital spend is expected to occur in 2024, with first production expected in 2025.
Enterprise: First ore was fed to the plant in February 2023. First production of nickel concentrate was achieved in
the second quarter with first concentrate sale made in the third quarter of 2023. The ramp-up continues to
commercial production and full plant throughput in 2024.
CP100 Expansion: The CP100 Expansion project was completed and commissioned ahead of schedule in the first
quarter of 2023. With the expansion facilities periodically demonstrating nameplate capacity in the second quarter,
CP100 Expansion contributed to the higher copper production into the third quarter of 2023.
La Granja: In March 2023 the Company entered into an agreement to acquire 55% interest in La Granja from Rio
Tinto, which was completed in August 2023. The Company is focused on engagement with the local community
around the project, validation drilling and completion of an engineering study.
Haquira: The drilling campaign started at the Haquira East deposit in September 2023 and the Company is aiming
to extend the drilling program into Haquira West and other targets in the area of the project on an appropriate
timetable.
> Power Supply Agreement with Zambian Electricity Supply Corporation Limited (“ZESCO”): In November 2023, the
Company entered into a ten-year power supply agreement with ZESCO which secures 100% certified renewable energy
supply for Kansanshi and Trident mines in Zambia.
> Conversion of ZCCM dividend rights to royalty rights: In April 2023, the Company’s subsidiary, Kansanshi Mining Plc
(“KMP”) and its partner, ZCCM Investment Holdings PLC (“ZCCM-IH”), completed the transaction to convert ZCCM-IH’s
dividend rights in KMP into royalty rights.
1 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”.
2 Deferred stripping and sustaining capital expenditure 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 5
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
> Net loss for the year attributable to shareholders of the Company of $954 million ($1.38 basic loss per share) and
adjusted earnings1 of $261 million ($0.38 adjusted earnings per share2), represents a significant reduction from the prior
year’s net earnings attributable to shareholders of the Company of $1,034 million ($1.50 basic earnings per share) and
adjusted earnings1 of $1,064 million ($1.54 adjusted earnings per share2).
• Net loss for the year is attributable to a higher income tax expense of $757 million recognized in the year
ended December 31, 2023 compared to a $320 million expense recognized in the same period in 2022,
reflecting a higher effective tax rate mainly from a change in legislation in Panama, and other expenses that
include an $18 million restructuring expense for severance payments at Cobre Panamá; a $31 million
restructuring expense in the third quarter following a corporate reorganization at Kansanshi and an impairment
charge of $854 million in respect to Ravensthorpe following increased pressure on margins from higher costs
and the deterioration of nickel prices.
• Gross profit of $1,292 million and EBITDA1 of $2,328 million for the full year 2023 decreased 41% and 30%,
respectively, compared to 2022, mainly due to lower net realized prices2 for copper and nickel and lower sales
volumes, mainly as a result of unsold concentrate from Cobre Panamá.
• Cash flows from operating activities of $1,427 million ($2.07 per share2) for 2023 were $905 million or 39%
lower than the prior year, reflecting lower EBITDA1.
> Net Debt: Net debt3 increased by $728 million during the year to $6,420 million as at December 31, 2023. At December
31, 2023, total debt was $7,379 million. During the year, the Company redeemed at par an aggregate of $1,150 million
principal amount of senior unsecured notes, of which $850 million related to the Senior Notes due 2024 was redeemed
in the first quarter of 2023, and $300 million related to the Senior Notes due 2025 was redeemed in the second quarter
of 2023. The Company's debt position increased due to a one-time payment of $567 million to the Government of
Panama on November 16, 2023 in respect to taxes and royalties for the period from December 2021 to October 2023.
> Dividends declared: An interim dividend of CDN$0.08 per share, in respect of the financial year ended December 31,
2023 was paid on September 19, 2023 to shareholders of record on August 28, 2023. On January 15, 2024, the
Company announced that it suspended its dividend as a result of Cobre Panamá being in a phase of P&SM.
> Balance sheet initiatives: With Cobre Panamá in a phase of P&SM, the Company is employing a number of measures
to prudently allow for the planned capital spending elsewhere across First Quantum’s business, most notably the S3
Expansion at Kansanshi, which will further strengthen cash flows when it is commissioned in 2025. The Company is
advancing several initiatives in 2024 to give optionality and flexibility:
•
•
•
•
•
Copper Prepayment Agreement ("Prepayment Agreement"): After the reporting period, the Company
signed a $500 million 3-year prepayment agreement with Jiangxi Copper at competitive rates. The agreement
provides for the delivery of 50kt of copper anode per annum from Kansanshi payable at market prices. The
prepaid amount will reduce in line with deliveries over the second and third years of the prepayment
agreement. Proceeds will be used towards general corporate purposes and to increase liquidity.
Dividend suspension: On January 15, 2024, the Board suspended the semi-annual dividend. The Board will
review the Company’s financial policy on an ongoing basis and adjust the dividend approach when appropriate.
Capital expenditure reductions: Planned capital programs across the Company have been reduced or re-
phased by approximately $400 million in 2024 and $250 million in 2025. The Company remains committed to
delivering the S3 Expansion project at Kansanshi in 2025.
Operating costs and other reductions: Following a detailed review of all operating and administrative costs,
the Company identified savings which will offset recent inflationary pressures. The cost savings initiatives
include a change in strategy at Ravensthorpe to temporarily remove higher cost production.
Working capital: The Company is also targeting reductions in working capital requirements and savings in the
procurement of materials, supplies and third party service costs where possible.
1 Adjusted earnings (loss) and EBITDA 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”.
2 Adjusted earnings (loss) per share, cash flows from operating activities per share, and realized metal prices 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”
3 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”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 6
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
•
•
Assets and stake sales: A sales process for the Las Cruces mine in Spain is well-advanced with strong
interest given the strategic location and processing capabilities of the project. Following a number of inbound
expressions of interest, the Company is evaluating the possibility of a minority investment by strategic investors
in the Company’s Zambian business.
Financing activity: The Company continues to take a proactive approach to managing its balance sheet and
the refinancing of its near-term debt maturities. An ongoing process between the Company and its banking
partners is materially advanced, with a high degree of alignment regarding amendment and extension. A
conclusion on these amendments is expected in the near term. The Company is also assessing a range of
alternatives across the capital markets to maintain a robust financial position and preserve value for its
shareholders.
However, the current situation at Cobre Panamá has impacted the EBITDA1 generating potential of the Company, putting at
risk the Company’s ability to meet the net debt2 to EBITDA1 ratio covenant as defined in its current senior banking facilities.
Current forecasts for 2024, before taking into account future balance sheet initiatives, indicate the Company may breach the
prevailing net debt2 to EBITDA1 ratio covenant during the coming twelve months, which results in the existence of a material
uncertainty that casts a significant doubt about the Company’s ability to continue as a going concern. Accordingly, disclosure
of this material uncertainty has been made in the notes to the consolidated financial statements.
Management has a strong expectation that certain balance sheet initiatives initiated earlier this year will be realized in the
near term. The disclosure of material uncertainty does not include potential changes in the Company's covenants, which are
materially advanced in discussions with the Company's banking partners nor the financing initiatives described in more detail
above, which would significantly reduce the risk of breaching covenants if realized. Some of these alternatives require the
agreement of other parties and, although believed to be reasonable and achievable, are nevertheless outside the
Company’s direct control. In light of the actions already taken and the alternatives available to the Company, the
consolidated financial statements have been prepared on a going concern basis. In making the assessment that the
Company continues to be 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, 2023.
FOURTH QUARTER HIGHLIGHTS
Copper production and sales of 160kt and 128kt, respectively for the quarter were lower by 46kt and 71kt, respectively
compared to the same period in 2022 as production was halted at the Cobre Panamá mine at the end of November 2023
and placed the mine into a phase of P&SM.
> Cobre Panamá’s copper production of 63kt for the quarter was lower than production of 90kt for the same quarter in
2022, reflecting the ramp down of the ore processing operations due to illegal blockades at the Punta Rincón port and
roads to site in November 2023. Cobre Panamá achieved record monthly throughput of 93 million tonnes and record
monthly copper production of 41,543 tonnes in October 2023.
> Sentinel’s copper production of 60kt for the quarter was lower than production of 73kt for the same quarter in 2022 due to
lower throughput. Mine production and processing plant throughput was impacted by the mining of very hard rock from
the lower levels in Stages 1 and 2 of the open pit.
> Kansanshi’s copper production of 32kt for the quarter was lower than production of 35kt for the same quarter in 2022
from the impact of lower feed grades and lower throughput.
> Gold production of 53koz for the quarter was lower than production of 70koz for same quarter in 2022 due to the halting
of mining operations at Cobre Panamá as well as lower grades at Kansanshi.
> Ravensthorpe’s nickel production of 5kt for the quarter was 1kt lower for the same quarter in 2022.
> Enterprise’s nickel production totaled 3kt for the quarter. First concentrate sale was achieved in the third quarter of 2023
with nickel production of 2kt. Higher nickel production for the fourth quarter of 2023 was achieved due to improved grades
and a ramp up in throughput.
1 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”.
2 Net debt is a supplementary 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 7
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
> Copper C1 cash cost1 of $1.82 per lb for the quarter was lower by $0.04 per lb and copper AISC1 of $2.52 per lb for the
quarter was higher by $0.10 per lb compared to the same quarter in 2022. The lower C1 cash cost1 for the quarter was
mainly due to a reduction in maintenance costs, a reduction in employee costs driven by a corporate reorganization at
Kansanshi and favourable exchange rate movements. Copper AISC1 of $2.52 per lb for the quarter was $0.10 per lb
higher than the prior quarter due to higher capitalized stripping2 and sustaining capital expenditures2 particularly at
Kansanshi.
> Net loss attributable to shareholders of the Company of $1,447 million ($2.09 basic loss per share) and adjusted loss3
of $259 million ($0.37 adjusted loss per share1).
• Gross profit of $87 million and EBITDA3 $273 million.
• Cash flows used by operating activities of $185 million ($0.27 per share1).
• Net loss for the quarter is attributed to higher income tax expense of $642 million recognized in the quarter
compared to a $6 million income tax recovery recognized in the same period in 2022, reflecting higher effective
tax rate mainly from a change in legislation in Panama and an impairment charge of $854 million in respect to
Ravensthorpe.
> Net debt4 increased by $783 million during the quarter, attributable to a one-time payment of $567 million to the
Government of Panama on November 16, 2023 in respect to taxes and royalties for the period from December 2021 to
October 2023 and reduced EBITDA3 generation following the disruptions experienced at Cobre Panamá.
CONSOLIDATED OPERATING HIGHLIGHTS
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
2023
2022
160,200
127,721
221,550
Copper production (tonnes)1
Copper sales (tonnes)2
Gold production (ounces)
Gold sales (ounces)3
Nickel production (contained tonnes)4
Nickel sales (contained tonnes)5
1 Production is presented on a contained basis, and is presented prior to processing through the Kansanshi smelter.
2 Sales exclude the sale of copper anode produced from third-party concentrate purchased at Kansanshi. Sales of copper anode attributable to third-party
concentrate purchases were 10,965 tonnes and 40,134 tonnes for the fourth quarter and full year ended December 31, 2023, respectively, (8,651 tonnes and
13,379 tonnes for the fourth quarter and full year ended December 31, 2022).
775,859
782,236
270,775
283,226
674,316
226,885
218,946
223,052
206,007
198,912
707,678
20,074
21,529
53,325
23,220
77,106
26,252
70,493
59,568
73,125
45,365
5,705
6,840
7,313
5,749
5,719
7,046
3 Excludes refinery-backed gold credits purchased and delivered under the precious metal streaming arrangement (see “Precious Metal Stream Arrangement”).
4 Nickel production includes 2,751 tonnes and 4,527 tonnes of pre-commercial production from Enterprise for the fourth quarter and full year ended December 31,
2023.
5 Nickel sales (contained tonnes) includes 1,554 tonnes and 1,651 tonnes of pre-commercial sales from Enterprise for the fourth quarter and full year ended
December 31, 2023, respectively.
1 Copper C1 cash cost (copper C1) and copper all-in sustaining cost (copper AISC), adjusted earnings (loss) per share, and cash flows from operating activities per
share, 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 and sustaining capital expenditure are non-GAAP financial measure 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 Adjusted earnings (loss) and EBITDA 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”.
4 Net debt is a supplementary 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 8
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
CONSOLIDATED FINANCIAL HIGHLIGHTS
QUARTERLY
FULL YEAR
Sales revenues
Gross profit
Net earnings (loss) attributable to
shareholders of the Company
Basic net earnings (loss) per share
Diluted net earnings (loss) per share
Cash flows from (used by) operating
activities3
Net debt1
EBITDA1,2
Adjusted earnings (loss)1
Adjusted earnings (loss) per share3
Cash cost of copper production (C1) (per
lb)3,4
Total cost of copper production (C3) (per
lb)3,4,5
Copper all-in sustaining cost (AISC) (per
lb)3,4,5
Realized copper price (per lb)3
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
Ravensthorpe deferred tax write-off
Total adjustments to EBITDA1
excluding depreciation2
Tax adjustments
Minority interest adjustments
1,218
87
(1,447)
($2.09)
($2.09)
Q4 2023
Q3 2023
Q4 2022
2,029
660
1,832
361
2023
6,456
1,292
325
117
(954)
$0.47
$0.47
$0.17
$0.17
($1.38)
($1.38)
(185)
594
237
1,427
6,420
273
(259)
($0.37)
5,637
969
359
$0.52
5,692
647
151
$0.22
6,420
2,328
261
$0.38
$1.82
$1.42
$1.86
$1.82
2022
7,626
2,200
1,034
$1.50
$1.49
2,332
5,692
3,316
1,064
$1.54
$1.76
$2.77
$2.29
$2.79
$2.76
$2.73
$2.52
$2.02
$2.42
$2.46
$3.62
$3.70
$3.56
$3.76
(1,447)
325
117
(954)
20
160
1,031
273
(15)
–
61
(12)
56
(49)
–
6
160
1,129
(22)
271
$2.35
$3.90
1,034
190
–
(155)
(7)
(296)
(259)
–
359
(6)
151
(296)
261
2
1,064
Adjusted earnings (loss)1
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 under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Adjusted earnings (loss) 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”.
2 Adjustments to EBITDA in 2023 relate principally to an impairment expense of $854 million relating to Ravensthorpe and $46 million to exploration assets, royalty
expense of $28 million related to 2022 pursuant to Law 406, royalties payable to ZCCM-IH for the year ended December 31, 2022, foreign exchange revaluations
and a restructuring expense of $49 million (2022 - foreign exchange revaluations and non-recurring costs relating to previously sold assets).
3 Adjusted earnings (loss) per share, realized metal prices, copper all-in sustaining cost (copper AISC), copper C1 cash cost (copper C1), cash flows from
operating activities per share 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”.
4 Excludes the sale of copper anode produced from third-party concentrate purchased at Kansanshi. Sales of copper anode attributable to third-party concentrate
purchases were 10,965 tonnes and 40,134 tonnes for the fourth quarter and full year ended December 31, 2023, respectively, (8,651 and 13,379 tonnes for the
fourth quarter and full year ended December 31, 2022).
5 Copper C3 and AISC for the year ended December 31, 2023 exclude $18 million royalty attributable to ZCCM-IH relating to the year ended December 31, 2022.
Copper C3 and AISC for the quarter and year ended December 31, 2023 exclude the 2022 impact of $28 million royalty pursuant to Law 406 in Panama.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 9
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
ENVIRONMENT, SOCIAL AND GOVERNANCE (“ESG”)
Pioneering full battery dump truck trials for fully electric mining
Hitachi Construction Machinery Co.,Ltd. (“Hitachi”) completed the construction of the full battery dump truck that was
shipped to the Kansanshi mine in January 2024. The technological feasibility trials are expected to start in mid-2024.
The development and trials of the full battery dump truck, in partnership with Hitachi, will leverage First Quantum’s industry-
leading trolley assist expertise. This will be key to the next phase of the Company’s climate change strategy as it seeks to
reduce greenhouse gas emissions (“GHG”) associated with mining operations.
Zambian mines secure 100% renewable power with new Power Supply Agreement (“PSA”)
On November 27, 2023, a 10-year PSA was signed between the Company and ZESCO, the Zambian state energy provider.
As part of the agreement, ZESCO is committed to supplying 100% certified renewable power, principally hydroelectricity, to
Trident and Kansanshi.
This agreement marks an important step in the Company’s GHG emissions reduction plan and underlines the Company’s
commitment to sustainability, and lowering the carbon intensity of its responsibly mined copper production.
The Company continues to support advancement of the Total Eren and Chariot Energy 400MW solar and wind renewable
energy project in Zambia.
ESG Reporting
The latest sustainability reports can be found in the ESG Analyst Centre on the Company’s website: https://www.first-
quantum.com. These include the TCFD-aligned Climate Change Reports, ESG Reports, Tax Transparency and
Contributions to Government Reports, as well as Company’s sustainability policies. The Company hosted its inaugural virtual
ESG Day in June 2023. A replay of the webcast can be found on the Presentations and Events page on the Company’s
website: https://first-quantum.com.
Health & Safety
The health and safety of the Company’s employees and contractors is a top priority and the Company is focused on the
continuous strengthening and improvement of the safety culture at all of its operations. Tragically, on February 1, 2023, there
was a fatal road traffic accident in the Sentinel pit involving a dump truck and a light vehicle. Also, during the month of
November 2023, there were two separate fatal accidents at the Zambian operations involving a contractor at Kansanshi and
another contractor at Sentinel. The site emergency response teams attended immediately to these accidents and the
appropriate local authorities were notified. These tragic incidents were subject to internal and external investigation, as well
as a Board review, and the Company is committed to improve practices such as pit segregation, review of contractor
operations and training from these incidents.
The Lost Time Injury Frequency Rates (“LTIFR”) is an area of continued focus and a key performance metric for the
Company. The Company’s rolling 12-month LTIFR is 0.04 per 200,000 hours worked as of December 31, 2023 (2022: 0.06).
COBRE PANAMÁ UPDATE
Introduction
In March 2023, the Company and the GOP reached agreement on the terms and conditions of a Refreshed Concession
Contract that would govern the relationship of the parties upon entering into effect, for which purposes the approval from the
National Assembly of Panama would be required. The Refreshed Concession Contract had an initial 20-year term with a 20-
year extension option and possible additional extension for life of mine. In April 2023, the Refreshed Concession Contract
was subjected to a public consultation process. Having successfully completed such process, the Company and the GOP
signed the Refreshed Concession Contract on June 26, 2023 and it was subsequently countersigned by the National
Comptroller of Panama. The Refreshed Concession Contract was presented before the Commerce Committee of the
National Assembly of Panama, that recommended the amendment of certain terms of the contract. The Company and GOP
agreed to modifications to the agreement based on these recommendations after a brief period of negotiation and, the GOP
cabinet approved the amended terms on October 10, 2023. The Refreshed Concession Contract, with amended terms, was
resubmitted to and approved by the Commerce Committee of the National Assembly of Panama on October 17, 2023.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 10
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
On October 20, 2023, the National Assembly in Panama approved Bill 1100, being the proposal for approval of the
Refreshed Concession Contract for the Cobre Panamá mine. President Laurentino Cortizo sanctioned Bill 1100 into Law
406, which was subsequently published in the Official Gazette. Law 406 approved the Refreshed Concession Contract for
the Cobre Panamá mine on October 20, 2023.
On October 26, 2023, a claim was lodged with the Supreme Court of Justice of Panama asserting that Law 406 was
unconstitutional.
On November 3, 2023, the National Assembly of Panama approved Bill 1110, which President Cortizo sanctioned into Law
407 and was published the same day in the Official Gazette. Law 407 declared a mining moratorium for an indefinite
duration within Panama, including preventing any new mining concession from being granted or any existing mining
concessions from being renewed or extended.
On November 16, 2023, in accordance with its contractual obligations to the Republic of Panama under Law 406, the
Company made tax and royalty payments of $567 million in respect of the period from December 2021 to October 2023.
After four days of deliberation, on November 28, 2023, the Supreme Court issued a ruling declaring Law 406
unconstitutional and stating that the effect of the ruling is that the Refreshed Concession Contract no longer exists. The
ruling was subsequently published in the Official Gazette on December 2, 2023. The Supreme Court did not order the
closure of the Cobre Panamá mine.
On December 19, 2023, the Minister for MICI announced plans for Cobre Panamá following the ruling of the Supreme Court.
As part of these plans, a temporary phase of environmental Preservation and Safe Management would be established until
June 2024, during which intervening period independent audits, review and planning activities would be undertaken. The
planning is estimated by the GOP to take up to two years, and 10 years or more to implement. The Minister also announced
plans to consider the economic impacts of the halt to operations of Cobre Panamá at both a national and local level.
Preservation and Safe Management (“P&SM”)
Cobre Panamá experienced illegal blockades in November 2023 at the Punta Rincón port and at the roads to the site that
prevented the delivery of supplies that were necessary to operate the power plant, which led to the suspension of production
at the end of November 2023 and placed the mine into a phase of P&SM.
Cobre Panamá currently remains in a phase of P&SM. Approximately 1,400 workers remain on site to run the P&SM
program. Further reductions to a headcount below 1,000 workers may follow depending on environmental stewardship
programs. Previous illegal blockages around the mine have since dissipated, allowing for the delivery by road and at port of
necessary supplies to conduct the P&SM program.
In January 2024, the Company and MICI had preliminary discussions related to a formalized P&SM program and the
associated funding of P&SM costs. These costs are expected to range from $15 to $20 million per month and further
reductions could follow depending on environmental stewardship programs. On January 11, 2024, Cobre Panamá hosted a
large delegation, including the Ministers from MICI and MiAmbiente, as well as other government departments and a broad
range of civil society organizations, to demonstrate the measures that are being undertaken as part of the P&SM program.
At the request of MICI, Cobre Panamá delivered a preliminary draft for the first phase of formalized P&SM on January 16,
2024.
The Company has commenced international arbitration processes including notification under the Free Trade Agreement
(“FTA”) between Canada and Panama, and under the International Court of Arbitration (“ICC”) relating to the Refreshed
Concession Contract. The FTA provides for, among other things, arbitration before the International Centre for Settlement of
Investment Disputes (“ICSID”), which is seated in Washington, D.C.
DEVELOPMENT PROJECTS
Brownfield Projects
Kansanshi S3 Expansion
The S3 Expansion will transition Kansanshi from the current, more selective high-grade, medium-scale operation to a
medium-grade, larger-scale mining operation. The majority of the capital spend on the S3 Expansion is expected to occur in
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 11
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
2024, with first production expected in 2025. Detailed design is largely complete, and incorporates enhancements and
efficiencies introduced by up-to-date equipment and the learnings of the Sentinel and Cobre Panamá operations. The first 11
ultra-class trucks and first electric shovel are commissioned and are in service on site.
Through the course of 2023, the S3 Expansion achieved key milestones, including commissioning approximately 30% of the
mining fleet and progressing 80% of the engineering. Earthworks and civil works continued to progress and project
procurement was approximately 70% committed at the end of the quarter. Deliveries of major long lead equipment such as
mills, primary crusher and thickeners commenced in the third quarter of 2023 and will continue through to the second quarter
of 2024. Construction continues across all disciplines and excavation of the primary crusher position commenced during the
quarter.
Work is also underway to increase throughput capacity of the Kansanshi smelter to 1.6 Mtpa from the current capacity level
of 1.38 Mtpa. The capacity increase is expected to be achieved partly through enhancing copper concentrate grades by
lowering the carbon and pyrite content of the Kansanshi and Sentinel concentrate feeds. 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. During the quarter, major engineering as well as the procurement of major equipment was completed. Site
construction continued on schedule with ongoing delivery of steelwork, duct work and equipment.
Enterprise
Enterprise is a nickel deposit located 12 kilometres away from Sentinel in the North Western Province of Zambia. It is
expected to be a low-cost, high-grade, low-GHG intensive nickel sulphide project.
Plant refurbishment and commissioning activities were completed on schedule in the first quarter of 2023. First nickel
concentrate was produced during the second quarter and first sales were realized during the third quarter, with the
concentrate quality achieving the required nickel and magnesium oxide content. The plant has fully demonstrated the
capacity to operate at nameplate capacity however, the plant has been producing steadily at 70% capacity on a monthly
basis in line with the mining ore feed plan, allowing for blending and recovery optimization of the transitional ore. The
monthly mining volumes aided in accelerating the opening of the ore footprint in order to bolster plant feed and fill capacity.
As more fresh ore is exposed and mined in the first half of 2024, the recoveries are expected to consistently improve
towards design values. All major infrastructures were completed ahead of the onset of the wet season.
The focus remains on stripping of waste and the final ramp-up of the process plant to full production capacity which was
challenged by the metallurgical characteristics of the shallow ore. Oxide and high talc material impacted recoveries, and the
ore profile has been updated to reflect the classification of material. However, a good understanding of the process impact of
this material has been developed and, with the throughput stabilized, the recovery rate is steadily increasing.
The commissioning of the talc scalping circuit in the second half of 2023 has improved the ability to handle high talc ores
and increase the feed rates on this material. The cleaner circuit expansion, columns and Jameson cell flotation technology is
progressing towards commissioning in early 2024 and is expected to support further improvements in concentrate quality
and recovery. Plant recovery and concentrate quality are continuously improving as the sulphide ore quality increases, as
consistent with expectations from the geo-metallurgical understanding of the deposit. Additional mining equipment, such as
drills, are being mobilized to the mining operation in line with the contractor mobilization strategy and operational targets to
ensure continuous ore production and delivery.
Full operation plant capacity is limited by steady ore availability, whilst process plant recovery is limited by the metallurgical
characteristics of the shallow ore, with the latter steadily increasing as fresh ore is exposed and mined consistently.
Commercial production and consistent full plant throughput is expected in 2024.
Las Cruces Underground Project
On February 20, 2024, the Company filed an updated NI 43-101 Technical Report on Mineral Resources and Reserves for
the Las Cruces Underground Project. The purpose of the Technical Report is to update the 2022 Mineral Resources
estimate, declare a Mineral Reserves estimate and to provide commentary on the project development strategy. Polymetallic
Primary Sulphides (Underground) Measured and Indicated Mineral Resources have increased from 36.2 million tonnes from
the January 2022 Technical Report to 41.4 million tonnes with the copper equivalent grade decreasing from 2.51% to 2.29%.
There is an additional 5.0 million tonnes of Polymetallic Primary Sulphides tabled as stockpiles and 0.9 million tonnes of
Secondary Sulphide (Underground Measured and Indicated Mineral Resources).
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 12
21
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
In 2021, the Las Cruces mine transitioned from open-pit mining to re-processing of high-grade tailings, with production now
completed. Work on the Las Cruces Underground Project continues to advance, with an engineering study completed during
the fourth quarter of 2023.
The mining license for the project was received in June 2021 and the water concession license for the project was granted in
March 2023.
Greenfield Projects
Taca Taca
Taca Taca, located in the Salta province of Argentina, is the most advanced of the Company’s greenfield projects and is one
of the largest, highest-quality copper projects globally. It will consist of an open-pit copper mine and ore processing plant to
produce up to 275,000 tonnes of copper per year along with gold and molybdenum by-products. With an initial mine life of 32
years and a large resource base, Taca Taca will be a long-life asset.
The Company continues to progress through the project pre-development and engineering works. The primary
Environmental and Social Impact Assessment (“ESIA”) for the project, which covers the principal proposed project activities,
was submitted to the Secretariat of Mining of Salta Province in 2019 and supplementary information on tailings and waste
management were filed to the authority in 2022. In June 2023, the Company received a second set of observations to the
ESIA from the mining authority and submitted its responses in October 2023. The Company anticipates receiving the ESIA
approval in 2024 with subsequent proceedings for construction and operations permits along with necessary approvals to
follow.
In November 2022, the Salta Production Minister signed Resolution 191/2022, approving the environmental pre-feasibility for
the Taca Taca 345 kilovolt (“kV”) power line development. The 345kV line will require detailed construction permits and the
final ESIA to be approved, but the preliminary environmental aspects have been approved. An additional environmental pre-
feasibility ESIA was filed with the relevant authorities in 2021 related to the proposed bypass and access road construction
for the project which approval is underway.
The project will also require approval of concessions for borefield water supply for the mine. The Phase III groundwater
exploration campaign successfully concluded during the second quarter of 2023, with eighteen pumping wells constructed,
tested and positive results obtained. The initial water use permit applications were submitted during the second quarter of
2023 and granting of the concessions are expected to follow the Mining ESIA approval.
La Granja
As announced on August 27, 2023, the Company finalized an agreement with Rio Tinto to progress the La Granja copper
project in northern Peru. La Granja is one of the largest undeveloped copper resources in the world with a published Inferred
Mineral Resource of 4.32 billion tonnes at 0.51% copper, and has potential for substantial expansion. La Granja is located in
the district of Querocoto in the northern region of Cajamarca, Peru, approximately 90 kilometres northeast of Chiclayo, at an
altitude of between 2,000 and 2,800 metres.
Following the completion of conditions including regulatory approvals from the Government of Peru, First Quantum acquired
a 55% interest in the project for a consideration of $105 million and became the operator of La Granja. As part of the
agreement with Rio Tinto, the Company is obliged to invest a further $546 million (the “initial funding”) in the project over a
period of not more than ten years. The Company’s capital expenditure guidance for the project is expected to be $100 million
over the period 2024 to 2026, with the majority of the spending occurring in the back end of the guidance period.
Part of the initial funding will be used to complete an engineering study over the next two to three years, after which the
remaining balance of the initial funding is expected to be spent on construction of the project contingent on a positive
investment decision. Upon satisfaction of the initial funding amount, all subsequent expenditures will be applied on a pro-rata
basis according to share ownership of the project.
Work over the initial years will continue to progress on community engagement and on the engineering study. Following the
transition in project ownership, community engagement has been positive and increased local community participation in
project support activities is planned over the course of 2024. The engineering study will focus on developing an updated
geological resource and reserve model, which will require additional infill drilling to upgrade Inferred Resources to Measured
and Indicated categories. The necessary permits and land agreements to carry out the planned drill program were
established in the fourth quarter, and the drilling campaign commenced shortly thereafter and is now well underway. Initial
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 13
22
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
batches of samples have been dispatched for analysis, and a geotechnical evaluation program is being established.
Additional metallurgical studies to establish optimal processing configurations will be carried out in parallel, together with a
high-level project layout and configuration of associated infrastructure requirements and logistical routes.
Haquira
Haquira is located in the Apurímac region of Peru, and is a longer-dated greenfield project for the Company. Negotiations for
land access to support a drill program were resumed and agreements were reached with three local communities during the
second quarter of 2023. This has enabled a drilling campaign to start at the Haquira East deposit in September 2023.
The Company continues to upgrade camp facilities and is working with local suppliers of goods and services. In addition, the
current exploration permit is being renewed and amended to enable further drilling. Following a successful public
participation workshop with the local communities as required by applicable law, the Company filed the renewal application
in November 2023, which is being reviewed by the competent mining authority. Approval is expected in the second quarter of
2024. Concurrently, the Company has resumed dialogue with the remaining communities with the aim to extend the drilling
program into Haquira West and other targets in the area of the project.
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 Finland and Australia. Near-mine exploration programs are focused on Çayeli in
Turkey, as well as satellite targets around the Kansanshi and Trident operations in Zambia. Some encouraging targets have
emerged from reconnaissance surveys around Çayeli with follow-up drilling currently in progress.
During the quarter, early stage reconnaissance surveys continued on greenfield porphyry targets in Chile and Argentina.
Several sediment hosted copper targets were the subject of initial drill testing in Australia.
In Zambia, some substantial airborne geophysical surveys are in progress whilst a series of regional and near mine targets
were drilled during the quarter. Planning has commenced for a more systematic brownfields exploration program around
Sentinel and Enterprise. Furthermore, a renewed development agreement has been executed with Mimosa Resources
(“Mimosa”) which provides for the development of the Kashime copper project in Mkushi, Zambia. The agreement will see
Mimosa’s current ownership of 37.5% grow into a majority ownership of 75.0% upon satisfaction of key development stages
and provides for the Company to conduct exploration within the wider license area with any discoveries exceeding one
million tonnes being majority owned by the Company.
In the coming quarter, drilling will commence on a new porphyry copper target in the La Rioja province of Argentina and a
series of mafic-hosted nickel-copper targets in Finland.
OTHER DEVELOPMENTS
Zambian Power Supply
During the quarter, a 10-year Power Supply Agreement was signed between the Company and ZESCO with tariffs agreed
for a period of 10 years and with power supplied exclusively from certified renewable sources, predominantly hydroelectricity.
The Kariba Lake level closed the fourth quarter of 2023 at 477.23 meters (“m”), compared to 475.60m recorded at the same
time last year. The rainy 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. However, the lower than normal rains
experienced in the current rainy season have resulted in a reduction in water allocation for ZESCO’s electricity generation.
ZESCO is currently implementing mitigation measures to address the lower water allocation. No extended power restrictions
are expected for the Zambian mining operations beyond normal fluctuations on the national grid.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 14
23
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
GUIDANCE
Guidance is based on a number of assumptions and estimates as of December 31, 2023, 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.
Production, cash cost and capital expenditure guidance for 2024 to 2026 remain unchanged from the News Release "First
Quantum Minerals Announces 2023 Preliminary Production, 2024 - 2026 Guidance and Balance Sheet Initiatives" dated
January 15, 2024.
Guidance is presented excluding Cobre Panamá as the mine remains in a phase of P&SM with production halted.
In January 2024, the Company and MICI had preliminary discussions related to the P&SM program and the associated
funding of P&SM costs. These costs are expected to range from $15 - $20 million per month and further reductions could
follow depending on environmental stewardship programs.
PRODUCTION GUIDANCE
000’s
Copper (tonnes)
Gold (ounces)
Nickel (contained tonnes)
PRODUCTION GUIDANCE BY OPERATION1
Copper production guidance (000’s tonnes)
Kansanshi
Trident - Sentinel
Other sites
Gold production guidance (000’s ounces)
Kansanshi
Guelb Moghrein
Other sites
Nickel production guidance (000’s tonnes)
Ravensthorpe
Trident - Enterprise
2024
370 – 420
95 – 115
22 – 37
2024
130 – 150
220 – 250
20
65 – 75
28 – 38
2
12 – 17
10 – 20
2025
400 – 460
120 – 140
26 – 41
2025
170 – 200
210 – 240
20
85 – 95
34 – 44
1
11 – 16
15 - 25
2026
400 – 460
140 – 165
36 – 51
2026
180 – 210
210 – 240
10
90 – 105
49 – 59
1
11 – 16
25 – 35
1 Production is stated on a 100% basis as the Company consolidates all operations.
Kansanshi copper production in 2024 is in line with prior year guidance and 2025 guidance reflects the continued strong
progress of the S3 Expansion project. The progressive increase in copper production over the three-year guidance period is
attributable to the S3 Expansion, which is expected to come online during the second half of 2025. A proportion of the initial
feed for S3 will be sourced from lower grade stockpiles in order to fill the concentrator, reducing feed grade. Production is
expected to increase from 2027 as increased ore from the South East Dome deposit at in-situ grades is fed into the plant,
replacing the stockpile feed at lower grade. Gold production at Kansanshi has been revised from prior year’s guidance, in
line with an improved understanding of the sources of sulphide copper-gold mineralization at depth.
Sentinel copper production reflects a more even mining sequence for ore and waste movement and sustaining capital1
requirements, in particular the ongoing opening up of the pit at Phase 3 in 2024 and looking ahead to Phase 4 in future
years. This approach provides for improved mining productivities, trolley assist and waste dump profiles and also improves
storm-water management and the sequencing of in-pit crusher moves. As such, year-on-year guidance for Sentinel is based
on an optimal and sustainable balance of grades, ore hardness and volumes, with slightly lower grades expected in 2025
and 2026 than 2024.
Guelb Moghrein gold production reflects the commissioning of the Carbon-in-Leach plant in the first half of 2024. Gold
production in 2024 for other sites is in line with prior year guidance.
1 Sustaining capital is a non-GAAP financial measure 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 15
24
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
At Ravensthorpe, weak nickel prices, lower payabilities and high operating costs have resulted in significant margin pressure
leading to the decision to scale back operations. The priority is to improve cash operating margins while still maintaining
asset integrity to avoid compromising the future operation of the mine at full capacity. Mining at Shoemaker-Levy will be
suspended and both High Pressure Acid Leach circuits will be bypassed. Existing ore stockpiles will be processed through
the Atmospheric Leach circuit. This will substantially reduce mining and processing costs, albeit at slightly lower recoveries
in the process plant. Stockpiles are expected to be sufficient for eighteen months of production, after which time Hale Bopp
and Halley’s ore bodies will be mined. The change in strategy is reflected in the nickel production guidance with grades and
recoveries impacted, while at the same time preserving the higher-grade Shoemaker Levy orebody until nickel prices
recover and operating margins improve.
CASH COST1 AND ALL-IN SUSTAINING COST1
Total Copper
C1 (per lb)1
AISC (per lb)1
2024
$1.80 – $2.05
2025
$1.80 – $2.05
2026
$1.80 – $2.05
$2.70 – $3.00
$2.85 – $3.15
$2.80 – $3.10
Total Nickel
C1 (per lb)1
AISC (per lb)1
1 C1 cash cost (C1), and all-in sustaining cost (AISC) are non-GAAP ratios, and do not have a standardized meaning prescribed by IFRS and might not be
2024
$7.00 – $8.50
2026
$5.00 – $6.25
2025
$5.50 – $7.00
$8.40 – $10.40
$6.50 – $7.80
$7.70 – $9.70
comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
C1 copper cash cost1 guidance reflects the production impacts from the suspension of operations at Cobre Panamá.
Excluding Cobre Panamá, C1 cash costs1 for 2024 are in line with prior year as current inflationary pressures, lower copper
production from Sentinel and reduced by-product gold credits from Kansanshi are offset by cost saving initiatives, lower fuel
prices and a weaker Zambian kwacha.
AISC1 cash cost guidance reflects the volume impact of the absence of Cobre Panamá production, coupled with higher
royalties in line with increased copper price assumptions. The higher AISC1 in 2025 reflects increased capital expenditures
for fleet replacement at Kansanshi before normalizing in 2026 as production increases.
Unit cost guidance assumes a gold price of $1,800 per ounce, average Brent crude oil price of $90 per barrel, Zambian
kwacha/USD exchange rate of 21 and royalties based on consensus copper prices. Unit cost guidance assumes a sulphur
price of $150 per tonne at Ravensthorpe.
Unit cost guidance does not include any P&SM costs in respect of Cobre Panamá.
Total nickel unit cost guidance excludes Enterprise in 2024. Enterprise nickel unit cost guidance is included from its expected
first full year of commercial production in 2025 with C1 nickel cash costs1 of $4.00 to $6.00 per lb and $3.50 to $6.00 per lb
in 2026. Commercial production is expected in 2024.
PURCHASE AND DEPOSITS ON PROPERTY, PLANT & EQUIPMENT
Capitalized stripping1
Sustaining capital1
Project capital1
Total capital expenditure
2024
180 – 230
260 – 290
810 – 880
2025
180 – 230
450 – 480
570 – 590
1,250 – 1,400
1,200 – 1,300
2026
280 – 310
280 – 320
290 – 320
850 – 950
1 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”.
Capital expenditure continues to experience inflationary cost increases driven by higher shipping rates, steel prices, power
costs, labour rates and general inflation. Guidance reflects these cost increases as well as additional scope increases and
the timing of expenditures, including approximately $235 million of expenditure carried over from 2023 related mainly to the
S3 Expansion and smelter expansion projects at Kansanshi, in-pit crusher relocations at Sentinel, as well as other sustaining
1 C1 cash cost (C1) and All-in sustaining cost (AISC) are 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”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 16
25
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
capital1 mostly related to mobile fleet replacements. However, strategic measures have been implemented to offset the
impact of these inflationary increases and deferred expenditure through optimizing and prioritizing capital expenditure.
Total capital expenditure for the S3 Expansion project remains unchanged at $1.25 billion, with approximately $215 million
spent to date and approximately $545 million committed. The S3 Expansion includes the development and construction of
the S3 process plant circuit and mining fleet acquisitions. Across the three-year guidance period, capital expenditure for the
S3 Expansion project is expected to be approximately $780 million with the majority of the spend planned over 2024 and
2025. Pre-strip activities for the South East Dome pit are expected to continue through 2025, of which $220 million is
included in the S3 project capital1 within the guidance period. First production from S3 continues to be expected in H2 2025.
In addition to the S3 Expansion project, project capital1 in the three-year guidance period includes approximately:
•
•
•
•
$200 million at Kansanshi for the expansion of the smelter, expansion of the tailings facility and the relocation of an
in-pit crusher,
$130 million in capital expenditures at Sentinel for the relocation of in-pit crushers,
$100 million for La Granja development, with a majority of the spending occurring in the back end of the guidance
period, predominantly on community engagement, metallurgical and engineering studies,
$45 million for additional trolley line installations across Kansanshi and Sentinel.
The three-year guidance includes capital expenditure that is expected to drive better sustainability performance as well as
improving the cost structures and productivity of the business. These include:
•
•
•
•
Upgrade of the Kansanshi smelter to increase processing capacity, which reduces downstream GHG emissions
from the transport and refining of copper concentrate produced by Kansanshi and Sentinel,
Expansion of trolley assist infrastructure across the Zambian operations to lower diesel consumption and
associated mine fleet GHG emissions, as well as offering the potential for future integration with battery mining
trucks,
Relocation and installation of in-pit crushers at the Zambian operations to optimize haul cycle efficiency and reduce
mine fleet diesel consumption,
Investments at Trident to enhance the social infrastructure serving both our workforce and local communities,
• Water initiatives at various operations for the management of water quality and reuse by operations, and
•
Community engagement in relation to the La Granja development project in Peru.
Sustaining capital expenditure1 ranges between $260 million and $480 million over the guidance period with an increase at
Kansanshi in 2025 reflecting increased fleet replacement programs.
Capital expenditure guidance excludes capitalized pre-commercial production results and excludes any capital expenditure
for Cobre Panamá.
Interest
Interest expense on debt for the year ended December 31, 2023 was $556 million. Interest expense on debt for the full year
2024 is expected to be approximately $610 - $630 million and excludes interest accrued on related party loans to Cobre
Panamá and Ravensthorpe, a finance cost accreted on the precious metal streaming arrangement, capitalized interest
expense and accretion on asset retirement obligation.
Cash outflow on interest paid for the year ended December 31, 2023 was $527 million and is expected to be approximately
$555 - $575 million for the full year 2024. This figure excludes interest paid on related party loans to Cobre Panamá and
Ravensthorpe and capitalized interest paid.
Capitalized interest for the year ended December 31, 2023 was $26 million. Capitalized interest is expected to be
approximately $55 million for the full year 2024.
1 Project capital and sustaining capital are a non-GAAP financial measure 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 17
26
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
A significant proportion of the Company’s interest expense is incurred in jurisdictions where no tax credit is recognized.
Tax
The adjusted effective tax rate for 2023 was 55% due to the impact of interest expense for which there is no tax credit in
Canada, and includes taxes and royalties payments made pursuant to Law 406.
The effective tax rate for 2024 excluding Cobre Panamá and interest expense is expected to be approximately 30%.
Depreciation
Depreciation expense for the three months and year-ended December 31, 2023 was $226 million and $1,121 million
respectively. The full year 2024 depreciation expense excluding Cobre Panamá is expected to be between $630 million and
$660 million. Whilst under P&SM, depreciation at Cobre Panamá is expected to be $90 million to $120 million on an
annualised basis.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 18
27
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
SUMMARY OPERATIONAL RESULTS
Production
FOURTH QUARTER
QUARTERLY COPPER PRODUCTION BY OPERATION
QUARTERLY GOLD PRODUCTION BY OPERATION
206
8
73
195
9
64
30
35
92
90
s
e
n
n
o
T
0
0
0
'
187
8
139
54
9
36
29
65
35
90
222
5
64
40
113
160
5
60
32
63
70
1
7
24
67
7
25
35
38
s
e
c
n
u
O
0
0
0
'
73
7
20
46
53
5
17
31
53
1
7
16
29
48
8
16
24
Q3 2022 Q4 2022 Q1 2023
Q2 2023 Q3 2023 Q4 2023
Q3 2022 Q4 2022 Q1 2023
Q2 2023 Q3 2023 Q4 2023
Cobre Panamá
Kansanshi
Sentinel
Other
Cobre Panamá
Kansanshi
Guelb Moghrein
Other
Copper production of 160kt for the fourth quarter of 2023 was 22% lower than the same quarter of 2022.
•
•
•
Cobre Panamá’s lower quarterly copper production in the fourth quarter of 2023 reflected the disruption to mining
operations and the eventual halting of production in the month of November 2023. Cobre Panamá achieved record
monthly throughput of 93 million tonnes and record monthly copper production of 41,543 tonnes in October 2023.
Sentinel’s copper production for the fourth quarter of 2023 was impacted by the mining of very hard rock from the
lower levels in Stages 1 and 2 of the open pit.
Kansanshi’s lower copper production for the fourth quarter of 2023 was due to lower feed grades and lower
throughput.
Gold production of 53kt was 24% lower than the same quarter of 2022, mainly attributable to lower production at Cobre
Panamá on suspension of mining operations and at Kansanshi due to mining in lower gold mineralization zones.
Nickel production at Ravensthorpe of 5kt, a 20% decrease from the same quarter of 2022. Nickel production for the fourth
quarter of 2023 was impacted by longer than planned acid plant shutdown in November 2023.
Nickel production at Enterprise totaled 3kt, following first nickel production of 2kt in the second quarter of 2023.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 19
28
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
FULL YEAR
YEAR-TO-DATE COPPER PRODUCTION BY OPERATION
YEAR-TO-DATE GOLD PRODUCTION BY OPERATION
776
38
242
146
350
s
e
n
n
o
T
0
0
0
'
708
28
214
135
331
283
2
31
110
140
s
e
c
n
u
O
0
0
0
'
227
2
26
69
130
December 31, 2022
December 31, 2023
December 31, 2022
December 31, 2023
Cobre Panamá
Kansanshi
Sentinel
Other
Cobre Panamá
Kansanshi
Guelb Moghrein
Other
Copper production of 708kt in the year ended December 31, 2023 was a 9% reduction from the same period in 2022.
•
•
•
Cobre Panamá’s copper production was interrupted for 15 days during the first quarter of 2023 as a result of the
temporary suspension of concentrate loading operations by AMP. Following the temporary interruption to
production, the operations ramped-up successfully and delivered strong performance with advances in plant
availability and mill processing rates, combined with the continued successful ramp-up of the CP100 Expansion
project. The disruption and the eventual halting of mining operations in November 2023 negatively impacted
copper production for the year.
Sentinel experienced excessive rainfall during the first quarter of 2023, which resulted in water accumulation in the
pit, created challenging mining conditions and restricted access to areas with higher-grade ore. Mining production
continued to be impacted by excess water until mid-May 2023, after which mining volumes improved and
continued to increase in the second half of 2023. Mining and processing volumes, however, were lower than
anticipated due to the mining of very hard rock in lower levels of the pit.
Kansanshi’s copper production was lower than the same period in 2022 due to lower feed grades and lower
throughput on the sulphide circuit, particularly from the highly competent ore from lower elevations of the main pit.
Gold production of 227kt was 20% lower than the comparable period in 2022, mainly attributable to lower production at
Kansanshi due to the reduction of ore mined from high-vein areas which contain higher grade gold.
Nickel production at Ravensthorpe of 22kt, a 1% increase from the comparable period in 2022.
Nickel production at Enterprise totalled 5kt.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 20
29
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Sales Volumes
FOURTH QUARTER
QUARTERLY COPPER SALES BY OPERATION
QUARTERLY GOLD SALES BY OPERATION
199
9
199
10
60
37
s
e
n
n
o
T
0
0
0
'
72
32
93
85
177
8
51
31
87
150
8
40
32
70
219
4
59
42
114
128
6
55
31
36
65
1
10
19
60
1
9
16
s
e
c
n
u
O
0
0
0
'
52
1
5
17
49
1
5
16
35
34
29
27
77
7
24
46
45
6
19
20
Q3 2022 Q4 2022 Q1 2023
Q2 2023 Q3 2023 Q4 2023
Q3 2022 Q4 2022 Q1 2023
Q2 2023 Q3 2023 Q4 2023
Cobre Panamá
Kansanshi 1
Sentinel
Other
Cobre Panamá
Kansanshi
Guelb Moghrein
Other
1 Copper sales include third-party sales of concentrate, cathode and anode attributable to Kansanshi. Sales exclude the sale of copper anode produced from third-
party concentrate purchased at Kansanshi. Sales of copper anode attributable to third-party concentrate purchases were 10,965 tonnes for the three months
ended December 31, 2023 (8,651 tonnes for the three months ended December 31, 2022).
Copper sales volumes of 128kt for the fourth quarter of 2023 were 36% lower than the same quarter of 2022 due to lower
production at Cobre Panamá and at Sentinel, and port disruptions at Cobre Panamá, which prevented the shipment of 121
thousand dry metric tonnes of copper concentrate. The sale of this concentrate will result in a net cash inflow of
approximately $225 million at current market prices.
Gold sales volumes of 45koz for the fourth quarter of 2023 were 24% lower than the same quarter of 2022, principally due
to lower production and sales at Cobre Panamá.
Nickel sales volumes were 4kt at Ravensthorpe for the fourth quarter of 2023.
Nickel sales volumes were 1.6kt at Enterprise for the fourth quarter of 2023, which made its first nickel sale in September
2023.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 21
30
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
FULL YEAR
YEAR-TO-DATE COPPER SALES BY OPERATION
YEAR-TO-DATE GOLD SALES BY OPERATION
782
39
241
159
343
s
e
n
n
o
T
0
0
0
'
271
4
31
101
135
s
e
c
n
u
O
0
0
0
'
674
28
205
135
306
223
1
24
76
122
December 31, 2022
December 31, 2023
December 31, 2022
December 31, 2023
Cobre Panamá
Kansanshi 1
Sentinel
Other
Cobre Panamá
Kansanshi
Guelb Moghrein
Other
1 Copper sales include third-party sales of concentrate, cathode and anode attributable to Kansanshi. Sales exclude the sale of copper anode produced from third-
party concentrate purchased at Kansanshi. Sales of copper anode attributable to third-party concentrate purchases were 40,134 tonnes for the year ended
December 31, 2023 (13,379 tonnes for the year ended December 31, 2022).
Copper sales volumes in the year ended December 31, 2023 were 14% lower compared to the same period in 2022,
reflecting lower production at each of the three major copper operations and port disruptions at Cobre Panamá, which
prevented the shipment of 121 thousand dry metric tonnes of copper concentrate. The sale of this concentrate will result in a
net cash inflow of approximately $225 million at current market prices.
Gold sales volumes decreased by 18% compared to the same period in 2022, reflecting the decreased gold production at
Kansanshi and the halting of production and sales at Cobre Panamá.
Nickel sales volumes for the year ended December 31, 2023 were 22kt and 1.7kt at Ravensthorpe and Enterprise,
respectively.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 22
31
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Cash Costs1
FOURTH QUARTER
QUARTERLY COPPER C1 CASH COST1
QUARTERLY COPPER AISC1
b
l
r
e
p
$
3.00
2.80
2.60
2.40
2.20
2.00
1.80
1.60
1.40
1.20
1.00
1.82
1.86
2.24
1.98
1.82
1.42
b
l
r
e
p
$
4.00
3.75
3.50
3.25
3.00
2.75
2.50
2.25
2.00
1.75
1.50
1.25
2.34
2.42
2.87
2.64
2.52
2.02
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Cobre Panamá
Sentinel
Kansanshi
Total
Cobre Panamá
Sentinel
Kansanshi
Total
Total copper C1 cash cost1 of $1.82 per lb for the fourth quarter of 2023 was $0.04 per lb lower than the same quarter of
2022, mainly due to a reduction in maintenance costs, and a reduction in employee costs driven by a corporate
reorganization at Kansanshi.
Total copper AISC1 of $2.52 per lb was $0.10 per lb higher than the same quarter of 2022, reflecting higher capitalized
stripping2 and sustaining capital expenditures2 at Kansanshi.
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 Capitalized stripping and sustaining capital are a non-GAAP financial measure 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 23
32
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
FULL YEAR
b
l
r
e
p
$
2.75
2.50
2.25
2.00
1.75
1.50
1.25
1.00
YEAR-TO-DATE COPPER C1 CASH COST1
YEAR-TO-DATE COPPER AISC1
1.76
1.82
b
l
r
e
p
$
3.75
3.50
3.25
3.00
2.75
2.50
2.25
2.00
1.75
2.35
2.46
December 31, 2022
December 31, 2023
December 31, 2022
December 31, 2023
Cobre Panamá
Sentinel
Kansanshi
Total
Cobre Panamá
Sentinel
Kansanshi
Total
Total copper C1 cash cost1 of $1.82 per lb for the year ended December 31, 2023 was $0.06 per lb higher than 2022,
driven by lower production.
Total copper AISC1 of $2.46 per lb was $0.11 per lb higher than the same period in 2022, resulting from the higher copper
C1 cash costs1 and higher sustaining capital expenditures2.
Please see the appendices from page 78 onward for further details on production and sales volumes by operation as well
as sales revenues and cash costs.
1 Copper C1 cash cost (copper C1), and copper all-in sustaining costs (copper AISC) are non-GAAP ratios which do not have a standardized meaning prescribed
by IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
2 Sustaining capital expenditure is a non-GAAP financial measure which do not have a standardized meaning prescribed by IFRS and might not be comparable to
similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 24
33
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
OPERATIONS REVIEW
Cobre Panamá
Waste mined (000’s tonnes)
Ore mined (000’s tonnes)
Copper ore milled (000’s tonnes)1
Copper ore grade processed (%)
Copper recovery (%)
Concentrate grade (%)
Copper production (tonnes)
Copper sales (tonnes)
Gold production (ounces)
Gold sales (ounces)2
Silver production (ounces)
Silver sales (ounces)2
Copper all-in sustaining cost (AISC) (per
lb)3,5
Copper cash cost (C1) (per lb)3
Total copper cost (C3) (per lb)3,5
Financial results ($ 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 revenues
QUARTERLY
FULL YEAR
Q4 2023
10,675
10,681
11,649
0.56
96
27.3
62,616
35,809
30,986
19,861
512,967
302,004
Q3 2023
21,157
24,309
24,548
0.51
91
27.3
112,734
113,616
45,996
45,959
891,967
905,670
Q4 2022
18,495
24,733
21,887
0.46
89
26.2
89,652
85,330
38,302
34,208
757,655
723,955
2023
71,866
75,751
77,647
0.47
91
26.6
330,863
306,417
129,854
121,554
2022
63,860
100,250
86,145
0.45
90
26.6
350,438
343,448
139,751
134,660
2,724,347
2,531,450
2,813,129
2,762,737
$1.71
$1.52
$2.01
$1.85
$1.45
$2.22
$1.19
$1.99
$1.63
$2.54
$1.47
$2.34
$1.91
$1.56
$2.49
257
10
(10)
2
1
20
280
857
14
21
2
10
26
930
626
13
1
2
7
25
674
2,340
2,768
48
(1)
8
22
96
48
15
8
23
97
2,513
2,959
Gross profit
EBITDA4
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
867
1,418
1,065
1,665
433
600
189
337
25
131
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 a
standardized meaning under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures” for further
information.
4 EBITDA is a non-GAAP 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” for further information.
5 Royalties in C3 and AISC costs for the quarter and year ended December 31, 2023 exclude the 2022 impact of $28 million attributable to payments pursuant of
Law 406 in Panama.
Fourth Quarter
During the quarter, 11.6 million tonnes of ore with an average head grade of 0.56% copper were processed, achieving
recoveries of 96% and resulting in a quarterly production of 62,616 tonnes of copper. Prior to the disruptions from the illegal
blockades, Cobre Panamá operated at an annualized throughput rate of 93 million tonnes for the month of October 2023.
This combined with higher grades and improving recoveries allowed the operation to achieve monthly record production of
41,543 tonnes. With very limited resources, the site was able to continue production through November 2023, producing just
over 21 thousand tonnes before halting production.
Copper production for the quarter was 30% lower and total ex-pit mining of 21.4 million tonnes for the quarter was 51%
lower than the same quarter of 2022, as operations were ramped-down in November 2023 due to power restriction from
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 25
34
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
insufficient coal on site to produce power stemming from the protests at the port facility and the eventual suspension of
mining operations in December 2023.
Copper C1 cash cost1 of $1.45 per lb was $0.18 per lb lower than the same quarter of 2022. This was due to lower
maintenance, contractor and fuel costs, coupled with higher production before operations were halted. Costs for the month
of December 2023 have been excluded from C1 cash cost1 and categorized as P&SM. Copper AISC1 of $1.71 per lb was
$0.30 per lb lower than the same quarter of 2022, primarily due to the lower C1 cash cost1 and lower royalty costs.
The power plant continued to benefit from the collars in the coal supply contract, with the ceiling price exercised since July
2021. The coal supply contract ended at the end of 2023.
Sales revenues for the fourth quarter of 2023 were $280 million, 58% lower than the same quarter of 2022, mainly as a
result of lower metal sales as approximately 121 thousand dry metric tonnes of copper concentrate remains unsold. Gross
profit of $25 million for the quarter was $164 million lower than the same quarter of 2022 reflecting lower sales revenues.
Full Year
Copper production during the first quarter was suspended in February 2023 for 15 days as a result of export restrictions
imposed by AMP. Following the temporary interruption to production, the operations ramped-up successfully and delivered
strong performance with advances in plant availability and mill processing rates.
During the year ended December 31, 2023, 78 million tonnes of ore with an average grade of 0.47% copper were processed
with recoveries of 91%. This resulted in copper and gold production of 330,863 tonnes and 129,854 ounces, respectively.
Copper production for the year ended December 31, 2023 was 6% lower than the comparable period of 2022 as a result of
disruption of mining operations in the first and fourth quarter of 2023.
Copper C1 cash cost1 for the year ended December 31, 2023 was $1.47 per lb, $0.09 per lb lower than same period in 2022.
This was a result of higher capitalized stripping2 and lower fuel costs. Copper AISC1 of $1.85 per lb was $0.06 per lb lower
than the same period in 2022, due to lower C1 cash cost1, but increased sustaining capital expenditures2 and capitalized
stripping2.
Sales revenues for the year ended December 31, 2023 were $2,513 million, 15% lower than 2022 as a result of lower
realized copper prices1 and lower sales volumes as approximately 121 thousand dry metric tonnes of copper concentrate
remains unsold. Gross profit was $867 million for the year ended December 31, 2023, a 19% decrease from 2022, reflecting
lower sales revenues.
Outlook
Cobre Panamá currently remains in a phase of P&SM with production halted and production guidance has been suspended.
Approximately 1,400 workers remain on site to run the P&SM program. Further reductions to a headcount below 1,000
workers may follow depending on environmental stewardship programs. Previous illegal blockages around the mine have
since dissipated, allowing for the delivery by road and at port of necessary supplies to conduct the P&SM program. In
January 2024, the Company and MICI had preliminary discussions related to the P&SM program and the associated funding
of P&SM costs. These costs are expected to range from $15 - $20 million per month and further reductions could follow
depending on environmental stewardship programs. At the request of MICI, Cobre Panamá delivered a preliminary draft for
the first phase of P&SM on January 16, 2024.
Approximately 121 thousand dry metric tonnes of copper concentrate remains onsite following disruptions at the Punta
Rincón port. The sale of this concentrate will result in a net cash inflow of approximately $225 million at current market
prices.
1 Copper all-in sustaining costs (copper AISC), Copper C1 cash cost (copper C1), and realized metal prices are non-GAAP ratios, do not have a standardized
meaning under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Sustaining capital expenditure and capitalized stripping are non-GAAP financial measures, which do not have standardized meanings prescribed by IFRS and
might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 26
35
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
Kansanshi
Waste mined (000’s tonnes)
Ore mined (000’s tonnes)
Sulphide ore milled (000’s tonnes)1
Sulphide ore grade processed (%)
Sulphide copper recovery (%)
Sulphide concentrate grade (%)
Mixed ore milled (000’s tonnes)1
Mixed ore grade processed (%)
Mixed copper recovery (%)
Mixed ore concentrate grade (%)
Oxide ore milled (000’s tonnes)1
Oxide ore grade processed (%)
Oxide copper recovery (%)
Oxide concentrate grade (%)
Copper production (tonnes)2
Copper smelter
Concentrate processed 3
Copper anodes produced (tonnes)3
Smelter copper recovery (%)
Acid tonnes produced (000’s)
Copper sales (tonnes)4
Gold production (ounces)
Gold sales (ounces)
Copper all-in sustaining cost (AISC) (per
lb)5,6,7
Copper cash cost (C1) (per lb)5,6
Total copper cost (C3) (per lb)5,6,7
Financial results ($ millions)
Copper
Gold
Other
Total sales revenues
QUARTERLY
FULL YEAR
Q4 2023
14,276
Q3 2023
12,079
Q4 2022
20,028
5,607
3,178
0.50
87
20.5
1,903
0.61
66
22.5
1,678
0.80
77
19.7
6,588
3,055
0.59
88
20.8
1,938
0.67
69
18.4
1,848
1.02
79
18.1
6,984
3,207
0.65
89
21.9
2,017
0.63
73
18.6
2,011
0.60
60
10.3
2023
59,877
23,313
12,446
0.51
88
19.7
7,773
0.63
71
19.1
7,232
0.83
76
17.2
2022
75,878
28,205
13,160
0.71
89
22.8
7,713
0.63
74
17.8
7,866
0.57
64
11.7
31,887
39,600
34,802
134,827
146,282
291,697
76,563
98
266
31,295
16,718
19,396
$3.83
$2.43
$3.69
362,543
91,217
98
328
41,820
19,946
23,704
$2.84
$1.63
$2.73
340
37
–
377
432
42
1
475
1,281,364
1,304,839
315,860
304,914
98
1,166
135,385
68,970
76,169
$3.47
$2.27
$3.48
1,455
140
3
1,598
97
1,247
159,007
109,617
101,015
$3.11
$2.18
$3.31
1,502
174
30
1,706
322,984
80,279
98
301
32,496
24,479
16,156
$3.55
$2.81
$3.96
324
26
6
356
(17)
39
Gross profit (loss)
EBITDA5
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 Trident and third-party concentrate processed.
167
113
369
61
12
594
132
382
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 Trident). Sales exclude
the sale of copper anode produced from third-party concentrate purchased at Kansanshi. Sales of copper anode attributable to third-party concentrate purchases
were 10,965 tonnes and 40,134 tonnes for the three and twelve months ended December 31, 2023, respectively, (8,651 and 13,379 tonnes for the three and
twelve months ended December 31, 2022).
5 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. These measures do not have a standardized meaning under IFRS and might not be comparable to similar financial measures disclosed
by other issuers. See “Regulatory Disclosures” for further information.
6 Excludes purchases of copper concentrate from third parties treated through the Kansanshi smelter.
7 C3 and AISC costs in the year ended December 31, 2023, exclude royalties attributable to ZCCM-IH relating to the year ended December 31, 2022.
Fourth Quarter
Kansanshi produced 31,887 tonnes of copper during the fourth quarter of 2023, 8% lower than the same quarter of 2022 due
to lower feed grades and lower throughput. Lower throughput was primarily due to mining constraints in M17 resulting in
slower mining rates and the stockpiling of material from M15 and M17 due to acid volume restrictions. Sulphide grades were
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 27
36
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
lower than the same quarter of 2022 due to the blending of low grade stockpiled ore to mitigate the impact of highly
competent ore on mill rates. Oxide grades improved mainly due to high grade material from M15 and M17. Gold production
of 16,718 ounces for the fourth quarter of 2023 was 32% lower than the same quarter of 2022 mainly due to the reduction of
ore mined from high-vein areas which contain higher gold grades.
Copper C1 cash cost1 of $2.43 per lb was $0.38 per lb lower than the same quarter in 2022, due to a reduction in
maintenance costs, a reduction in employee costs driven by an internal corporate reorganization, favorable exchange rate
movement and higher capitalized stripping2. Copper AISC1 of $3.83 per lb was $0.28 per lb higher than the same quarter in
2022 due to higher royalties, capitalized stripping2 and sustaining capital expenditure2, offset by lower copper C1 cash
costs1.
Sales revenues of $377 million were 6% higher than the same quarter of 2022, reflecting an increase in realized copper
prices1. Gross profit of $12 million was higher than the same quarter of 2022, reflecting higher sales revenues and higher
capitalized costs.
Full Year
Kansanshi produced 134,827 tonnes of copper in the year ended December 31, 2023, which was 8% lower than the same
period in 2022 due to lower feed grades and lower throughput on the sulphide circuit, impacted by highly competent ore from
lower elevations of M11 in the main pit, with feed supplemented from low grade stockpiles. The variability of grades in ore
stockpiles also impacted grades. In addition acid production was lower than 2022 due to smelter downtime, resulting in
restricted plant feed of high GAC material through the oxide circuit.
Gold production for the year ended December 31, 2023 of 68,970 ounces is 37% lower than the same period in 2022, mainly
due to the reduction of ore mined from high-vein areas which contain higher gold grades.
Copper C1 cash cost1 of $2.27 per lb for the year ended December 31, 2023 was $0.09 per lb higher than the same period
in 2022, mainly due to lower production and an increase in electricity prices charged by ZESCO under a new power supply
agreement. These increases were partially offset by a reduction in employee costs driven by an internal corporate
reorganization. Copper AISC1 of $3.47 per lb was $0.36 per lb higher than the same period in 2022, driven by higher copper
C1 cash costs1 higher capitalized stripping2 and higher sustaining capital expenditure2.
Sales revenues of $1,598 million for the year ended December 31, 2023 were 6% lower than 2022 due to lower sales
volumes and lower realized copper prices1. Gross profit for the year ended December 31, 2023 of $132 million was
$250 million lower than the same period in 2022 due to lower sales revenues and the additional royalty payable to ZCCM-IH.
Kansanshi Copper Smelter
Fourth Quarter
The smelter treated 291,697 DMT of concentrate, producing 76,563 tonnes of copper anode and 266,000 tonnes of
sulphuric acid. The concentrate grade treated in the quarter was 27%.
Full Year
The smelter treated 1,281,364 DMT of concentrate, producing 315,860 tonnes of copper anode and 1,166,000 tonnes of
sulphuric acid. The concentrate grade treated during the period was 25%.
Outlook
Production guidance for 2024 is 130,000 – 150,000 tonnes of copper and 65,000 – 75,000 ounces of gold.
Kansanshi copper production in 2024 is at similar levels as 2023. Copper and gold production in 2025 includes production
associated with the S3 Expansion. Through the course of 2023, the S3 Expansion achieved key milestones, including
commissioning approximately 30% of the mining fleet, and progressing 80% of the engineering. Earthworks and civil works
continued to progress and project procurement was approximately 70% committed at the end of the quarter. The majority of
the capital spend on the S3 Expansion is expected to occur in 2024, with first production expected in 2025.
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 a standardized
meaning under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Capitalized stripping and sustaining capital expenditure 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 28
37
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
Trident - Sentinel copper mine and Enterprise nickel mine
Waste mined (000’s tonnes)
Ore mined (000’s tonnes)
Copper ore milled (000’s tonnes)1
Copper ore grade processed (%)
Copper recovery (%)
Copper production (tonnes)
Concentrate grade (%)
Copper sales (tonnes)
Copper all-in sustaining cost (AISC) (per
lb)2
Copper cash cost (C1) (per lb)2
Total copper cost (C3) (per lb)2
Nickel production (tonnes)
Nickel sales (tonnes)
Financial results ($ millions)
Sales revenues – Copper
Sales revenues – Nickel
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
23,188
10,626
11,932
0.55
91
59,964
28.4
55,112
$2.51
$1.85
$2.72
2,751
21,732
11,623
12,732
0.56
90
63,805
28.5
58,600
$2.32
$1.65
$2.46
1,556
1,554
97
419
19
466
2
23,485
14,721
15,456
0.52
90
73,409
27.8
71,642
$2.25
$1.55
$2.42
–
–
535
–
2023
86,053
42,997
49,221
0.49
90
2022
95,335
56,219
58,868
0.46
90
214,046
242,451
28.0
28.3
205,160
241,162
$2.67
$1.98
$2.88
4,527
1,651
1,644
21
$2.43
$1.69
$2.66
–
–
1,980
–
Total sales revenues
Gross profit 3
EBITDA2
1 Measured in dry metric tonnes (“DMT”)
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. These measures do not have a standardized meaning under IFRS and might not be comparable to similar measures disclosed by other
issuers. See “Regulatory Disclosures” for further information.
1,665
1,980
228
258
702
468
112
183
432
438
158
169
535
970
665
3 Gross Profit for the year ended December 31, 2023 includes cost of sales of $21 million related to the pre-commercial sales at Enterprise
Fourth Quarter
At the Sentinel mine, copper production of 59,964 tonnes for the fourth quarter of 2023 was 18% lower than the same
quarter of 2022 due to lower throughput. Mine production and process plant throughput was impacted by the mining of very
hard rock from the lower levels in Stages 1 and 2 of the open pit. Mining productivity however continued to improve during
the quarter with improved blast fragmentation and reduced congestion with the commencement of the stage 3 (Western Cut-
back) mining.
C1 cash cost1 of $1.85 per lb for the fourth quarter of 2023 was $0.30 per lb higher than the same quarter of 2022, reflecting
lower production and higher maintenance and contractor costs. Copper AISC1 for the fourth quarter of 2023 of $2.51 per lb
was $0.26 per lb higher than the same quarter of 2022, reflecting the higher C1 cash cost1.
Copper sales revenues of $419 million was $116 million lower than the same quarter of 2022, reflecting lower sales volumes
despite the higher realized copper prices1. Sales revenues comprise of both concentrate and anode sales, with a higher
proportion of revenue realized from copper anodes.
Gross profit of $112 million was $57 million lower than the same quarter of 2022, reflecting lower revenues.
Full Year
At the Sentinel mine, copper production of 214,046 tonnes for the year was 12% lower than the comparable period in 2022
due to lower throughput. There was excessive rainfall during the rainy season in the first quarter of 2023, which was the
highest total rainfall experienced in 25 years. This resulted in the accumulation of water in the high-grade area of the Stage 1
pit, which was cleared by mid-May 2023. Saturated ground conditions significantly impacted mining rates due to poor road
conditions and water in the pit prevented access to working faces, particularly in the lower benches of Stage 1. Mining
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 a standardized
meaning 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 29
38
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
volumes improved in June 2023 and continued to increase in the second half of 2023, however lower than anticipated due to
the mining of very hard rock in lower levels of the pit.
C1 cash cost1 of $1.98 per lb for the year ended December 31, 2023 was $0.29 per lb higher than the same period in 2022,
reflecting lower copper production and higher maintenance, consumable, and contractor costs. Copper AISC1 of $2.67 per lb
was $0.24 per lb higher than the same period of 2022 due to higher C1 cash cost1.
Copper sales revenues of $1,644 million were $336 million lower than the same period in 2022, due to lower copper sales
volumes and lower realized copper prices1. Sales revenues comprise of both concentrate and anode sales, with a higher
proportion of revenue realized from copper anodes.
Gross profit of $432 million was $233 million lower than the same period in 2022, reflecting lower revenues.
Outlook
Sentinel
Copper production guidance for 2024 is 220,000 – 250,000 tonnes of copper.
The major focus for 2024 at Sentinel will be on the development of Stage 3 (Western Cut-back) in order to enable improved
mining productivities and increased availability of softer material from higher elevations. The wet weather preparations and
improved storm water management processes have been implemented to mitigate the risk of water accumulation as
experienced in previous raining seasons. Two in-pit crushers are planned to be moved during the year, with a major mid-life
outage planned for a rope shovel during the second quarter. Continued focus will remain on the expansion of the trolley
assist network as well as mine-to-mill process optimization.
Enterprise
Production guidance in 2024 for Enterprise is 10,000 – 20,000 contained tonnes of nickel.
The plant has been producing steadily at 70% capacity on a monthly basis in line with the mining ore feed plan, allowing for
blending and recovery optimization of the transitional ore. The monthly mining volumes aided in accelerating the opening of
the ore footprint in order to bolster plant feed and fill capacity. As more fresh ore is exposed and mined in the first half of
2024, the recoveries are expected to consistently improve towards design values. The focus remains on stripping of waste
and the final ramp-up of the process plant to full production capacity which was challenged by the metallurgical
characteristics of the shallow ore. Oxide and high talc material impacted recoveries, and the ore profile has been updated to
reflect the classification of material. However, a good understanding of the process impact of this material has been
developed and, with the throughput stabilized, the recovery rate is steadily increasing.
The commissioning of the talc scalping circuit in the second half of 2023 has improved the ability to handle high talc ores
and increase the feed rates on this material. The cleaner circuit expansion, columns and Jameson cell flotation technology is
progressing towards commissioning in early 2024 and is expected to support further improvements in concentrate quality
and recovery. Full operation plant capacity is limited by steady ore availability, whilst process plant recovery is limited by the
metallurgical characteristics of the shallow ore, with the latter steadily increasing as fresh ore is exposed and mined
consistently. Commercial production and consistent full plant throughput is expected in 2024.
As a result of recent changes to IFRS, sales proceeds and related costs associated with nickel sold during the pre-
commercial ramp-up phase are required to be recognized through earnings rather than being capitalized.
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 a standardized
meaning 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 30
39
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
Ravensthorpe
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)
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
581
1.07
84
4,562
4,165
3,360
3,055
633
1.10
87
5,490
5,652
4,034
4,133
696
1.16
81
5,705
6,840
4,450
5,216
2023
2,605
1.10
85
21,725
21,569
15,942
15,797
2022
2,629
1.16
79
21,529
20,074
18,501
16,768
$16.08
$11.46
$11.10
$12.22
$10.45
$11.78
$14.18
$9.48
$11.73
$9.32
$11.70
$9.95
$12.20
$8.83
$10.72
Sales revenues
53
85
164
332
476
Gross profit (loss)
EBITDA1
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 a standardized meaning under IFRS and might not be comparable to similar financial measures disclosed by other
issuers. See “Regulatory Disclosures” for further information.
(124)
(55)
(29)
(41)
(67)
(15)
40
24
34
78
Fourth Quarter
Nickel production for the fourth quarter of 2023 was 4,562 contained tonnes of nickel, a 20% decrease from the same
quarter of 2022. Production over the quarter decreased due to a longer than expected acid plant shutdown in November
2023 as a result of extensive repairs required to two beds of the main converter and an overrun in scheduled tank
refurbishments. A major High Pressure Acid Leach (“HPAL”) descale, other tank descales and improvement modifications in
the beneficiation plant were also completed during the shutdown.
Nickel C1 cash cost1 for the fourth quarter of 2023 was $11.78 per lb, a 26% increase from the same quarter of 2022,
reflecting lower nickel production and payability and lower by-product credits due to lower cobalt prices, offset by lower
sulphur and diesel prices and lower diesel volume consumed. AISC1 of $16.08 per lb for the fourth quarter of 2023 is 45%
higher than the same quarter of 2022, driven by higher nickel C1 cash costs1 and higher sustaining capital expenditure2
related to improvement projects.
Sales revenues in the fourth quarter of 2023 were $53 million, a decrease compared to the same quarter of 2022 due to
lower sales volumes as a result of lower production, a sharp decrease in nickel prices and lower payability. The net realized
nickel price1 was $7.53 per lb for the fourth quarter of 2023, a 45% decrease from $13.67 per lb in the same quarter of 2022.
Nickel payabilities continued to be adversely impacted by discontinuities between benchmark nickel quotations and the
broader nickel market.
Gross loss of $55 million in the fourth quarter of 2023 reflected lower net realized nickel prices1 and lower sales volumes.
Full Year
Nickel production for the year ended December 31, 2023 was 21,725 contained tonnes, a 1% increase from the same period
in 2022.
Nickel C1 cash cost1 for the year ended December 31, 2023 was $9.95 per lb, a 13% increase from 2022, reflecting lower
nickel payability and lower by-product credits due to lower cobalt prices, offset by lower sulphur and diesel prices, lower
diesel volume consumed and favourable foreign exchange differences. AISC1 of $12.22 per lb for the year ended December
1 C1 cash cost (C1), all-in sustaining cost (AISC), 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 Sustaining capital expenditure is a non-GAAP financial measure 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 31
40
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
31, 2023 is 17% higher than the same period in 2022, driven by higher nickel C1 cash cost1 and higher sustaining capital
expenditure2.
Sales revenues for the year ended December 31, 2023 were $332 million, a 30% decrease to the same period in 2022. The
decrease in revenue was due to a decrease in net realized nickel prices1 and payability which were partially offset by a
decrease in sales volumes.
Gross loss of $124 million for the year ended December 31, 2023 was a decrease of $158 million compared to the same
period in 2022 due to lower revenue. The net realized nickel price1 for the year ended December 31, 2023 was $9.07 per lb,
a 24% decrease from the comparable period in 2022. The average LME Nickel price for the twelve months was $9.74 per lb.
Outlook
The LME Nickel price has weakened in 2023 and operating costs have increased which has resulted in significant margin
pressure. A new operating plan has been developed under which Ravensthorpe aims to maintain production of nickel and
cobalt from ore stockpiles, suspend mining from the Shoemaker Levy ore body and bypass of both HPALs with existing
stockpiles to be processed through the Atmospheric Leach circuit. Under this scenario, nickel production from existing
stockpiles is planned to continue for approximately 18 months and will provide substantial mining and processing cost
reductions. After which time, mining at Hale Bopp and Halley’s ore bodies will commence for an additional 18 months.
The pivot in strategy results in lower year-over-year production with recoveries and grades also impacted; however,
preserves the higher grade Shoemaker Levy ore body until nickel prices recover and operating margin improves.
Production guidance for 2024 is 12,000 – 17,000 contained tonnes of nickel.
Environmental and technical studies on the wind farm project continues with submission for environmental approval
expected in 2024.
Guelb Moghrein
Copper production (tonnes)
Copper sales (tonnes)
Gold production (ounces)
Gold sales (ounces)
Magnetite concentrate production
(WMT)1
Magnetite concentrate sales (WMT)1
Copper all-in sustaining cost (AISC) (per
lb)2
Copper cash cost (C1) (per lb)2
Financial results ($ millions)
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
3,246
2,775
3,481
2,700
5,327
5,539
3,624
6,765
7,292
3,765
7,434
8,601
2023
13,014
12,717
26,363
23,546
2022
13,313
12,522
30,845
30,852
126,187
123,933
148,502
546,989
645,061
133,154
135,138
140,055
636,586
559,349
$2.73
$3.77
$3.19
$2.96
$2.24
$3.18
$2.57
$2.44
$2.47
$2.00
Sales revenues
43
54
56
207
214
Gross profit
EBITDA2
1 Magnetite concentrate production and sales volumes are measured in wet metric tonnes (“WMT”).
2 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. These
measures do not have a standardized meaning under IFRS and might not be comparable to similar measures disclosed by other issuers. See “Regulatory
Disclosures” for further information.
19
27
4
2
6
4
3
6
36
27
Fourth Quarter and Full Year
Copper production for the fourth quarter of 2023 was 7% lower than the same quarter in 2022 due to lower throughput and
recoveries impacted by the nature of material fed from the ore stockpile as the mine transitions to its next phase. Copper
production for the year ended December 31, 2023 was 2% lower than the same period in 2022, due to lower recoveries and
throughput.
1 C1 cash cost (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 Sustaining capital expenditure is a non-GAAP financial measures, which does not have standardized meanings prescribed by IFRS and might not be comparable
to similar financial measures disclosed by other issuers. See “Regulatory Disclosures”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 32
41
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Gold production for the fourth quarter and full year ended December 31, 2023 was 28% and 15% lower, respectively,
compared to the same periods in 2022 as a result of lower grades and throughput.
Magnetite production for the fourth quarter and full year ended December 31, 2023 were in both cases 15% lower compared
to the same periods in 2022 due to lower feed grade.
Copper C1 cash cost1 of $2.24 per lb for the fourth quarter was $0.33 per lb lower than the same period in 2022, attributable
to lower fuel consumption and prices. Copper C1 cash cost1 of $2.44 lb for the year was $0.44 per lb higher than the prior
year due to lower production and higher employee costs.
Sales revenues for the fourth quarter and full year ended December 31, 2023 were 23% and 3% lower, respectively,
compared to the same periods in 2022 due to lower gold and magnetite volumes. Gross profit for the fourth quarter and full
year ended December 31, 2023 was 1 million and 8 million lower, respectively, than the comparable periods in 2022,
attributable to lower sales revenues.
Outlook
Production in 2024 is expected to be approximately 11,000 tonnes of copper and 28,000 to 38,000 ounces of gold, and
485,000 WMT of magnetite concentrate. Production forecast in 2024 includes a full relining of the SAG mill in the first quarter
of 2024.
The stripping of Cutback 4 in the main pit is progressing well and expected to extend mining operations to the end of 2025.
Construction of the Carbon-in-Leach (“CIL”) plant is ongoing, with commissioning planned for the second quarter of 2024.
Çayeli
Copper production (tonnes)
Copper sales (tonnes)
Zinc production (tonnes)
Zinc sales (tonnes)
Copper all-in sustaining cost (AISC) (per
lb)1
Copper cash cost (C1) (per lb)1
Financial results ($ millions)
Sales revenues
Gross profit (loss)
EBITDA1
QUARTERLY
FULL YEAR
Q4 2023
2,487
2,805
374
4,142
Q3 2023
2,636
1,079
1,459
–
Q4 2022
2,434
2,918
303
–
2023
11,036
10,583
3,597
4,142
$2.90
$2.59
$3.01
$2.55
$2.31
$1.80
$2.46
$1.97
25
5
9
8
(1)
1
19
4
7
83
18
31
2022
11,456
14,098
3,132
4,230
$2.17
$1.67
120
53
69
1 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. These
measures do not have a standardized meaning under IFRS and might not be comparable to similar measures disclosed by other issuers. See “Regulatory
Disclosures” for further information.
Fourth Quarter and Full Year
Copper production for the three months ended December 31, 2023 was broadly in line with the same period of 2022.
Copper production for the full year ended December 31, 2023 was slightly lower compared to the same period in 2022 due
to lower copper head grades.
Zinc production for the full year ended December 31, 2023 was slightly higher compared to the same period in 2022 due to
higher throughput and higher zinc recovery.
Copper C1 cash cost1 of $2.31 per lb for the fourth quarter was $0.15 per lb lower than the same period in 2022, attributable
to higher by-product credits. Copper C1 cash cost1 of $1.97 lb for the year was $0.30 per lb higher than the prior year due to
higher employee costs and lower by-product credits.
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”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 33
42
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Gross profit for the year ended December 31, 2023 was $1 million higher than the same period in 2022 due to higher sales
revenues related to the timing of shipments. Gross profit for the year ended December 31, 2023 was $35 million lower than
same period in 2022 due to a decrease in sales revenues with lower sales volumes and lower realized metal prices1.
Outlook
Production for 2024 is expected to be 9,000 tonnes of copper and 3,000 tonnes of zinc.
Las Cruces
Copper cathode production (tonnes)
Copper cathode sales (tonnes)
Financial results ($ millions)
Sales revenues
Gross loss
EBITDA1
QUARTERLY
FULL YEAR
Q4 2023
–
–
–
(6)
(9)
Q3 2023
–
207
Q4 2022
2,229
2,236
2
(13)
(14)
18
(6)
(6)
2023
3,892
4,054
36
(32)
(38)
2022
9,557
9,570
85
(20)
(22)
1 EBITDA is a non-GAAP financial measure, and does not have a standardized meaning under IFRS and might not be comparable to similar measures disclosed
by other issuers. See “Regulatory Disclosures” for further information.
Fourth Quarter and Full Year
The operation completed re-processing of high grade tailings in June 2023, with the final sale of copper cathodes in July
2023.
Gross loss of $6 million for the fourth quarter of 2023 included care and maintenance costs of $8 million. Gross loss for the
year ended December 31, 2023 of $32 million included care and maintenance costs of $28 million.
Outlook
In January 22, 2024, the project secured a €23.3 million subsidy from the Spanish Treasury (“Ministerio de Hacienda”).
On February 20, 2024, the Company filed an updated NI 43-101 Technical Report on Mineral Resources and Reserves for
the Las Cruces Underground Project. The purpose of the Technical Report is to update the 2022 Mineral Resources
estimate, declare a Mineral Reserves estimate and to provide commentary on the project development strategy. Polymetallic
Primary Sulphides (Underground) Measured and Indicated Mineral Resources have increased from 36.2 million tonnes from
the January 2022 Technical Report to 41.4 million tonnes with the copper equivalent grade decreasing from 2.51% to 2.29%.
There is an additional 5.0 million tonnes of Polymetallic Primary Sulphides tabled as stockpiles and 0.9 million tonnes of
Secondary Sulphide (Underground Measured and Indicated Mineral Resources).
The proposed project comprises a new dual drift access underground mine producing up to 2.0Mtpa, feeding the
Polymetallic Refinery (“PMR”), which has a design throughput of up to 2.2 Mtpa, allowing for the additional processing of
existing stockpiles. The total initial capital cost estimate for this project is $846 million, consisting of two major components,
one for the construction of the PMR and the other for costs associated with the development of an underground mine, and
includes contingency of 14% or $104 million. Steady state life of mine ("LOM") annual production is expected to be 41,000
tonnes copper equivalent at cash costs for copper, net of by-product, of US$0.39 per pound. The mine life is expected to
exceed 20 years of production, following a project period consisting of a 6-month pre-project development phase followed by
a 25-month construction period.
In addition, a process is currently underway to sell some of the Company’s smaller mining assets including the sale of the
Las Cruces mine, which is well-advanced with strong interest given the strategic location and processing capabilities of the
project.
1 Realized metal price is non-GAAP ratio which does not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial
measures disclosed by other issuers. See “Regulatory Disclosures”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 34
43
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
SUMMARY FINANCIAL RESULTS
Sales revenues
Gross profit (loss)
Cobre Panamá
Kansanshi
Trident
Ravensthorpe
Corporate & other
Total gross profit
Exploration
General and administrative
Impairment expense
Other income (expense)
Net finance expense1
Adjustment for expected phasing of
Zambian VAT
Income tax recovery (expense)
Net earnings (loss)
Net earnings (loss) attributable to:
Non-controlling interests
Shareholders of the Company
Adjusted earnings (loss)2
Earnings (Loss) per share
Basic
Diluted
Adjusted2
QUARTERLY
Q4 2023
Q3 2023
Q4 2022
1,218
2,029
1,832
FULL YEAR
2023
6,456
25
12
112
(55)
(7)
87
(13)
(37)
(900)
(121)
(146)
(20)
(642)
(1,792)
(345)
(1,447)
(259)
$(2.09)
$(2.09)
$(0.37)
433
113
158
(29)
(15)
660
(6)
(39)
–
(30)
(158)
15
(67)
375
50
325
359
189
(17)
169
24
(4)
361
(9)
(40)
–
2
(147)
(56)
6
117
–
117
151
$0.47
$0.47
$0.52
$0.17
$0.17
$0.22
2022
7,626
1,065
382
665
34
54
867
132
432
(124)
(15)
1,292
2,200
(30)
(142)
(900)
(142)
(613)
49
(757)
(1,243)
(289)
(954)
261
$(1.38)
$(1.38)
$0.38
(26)
(136)
–
203
(582)
(190)
(320)
1,149
115
1,034
1,064
$1.50
$1.49
$1.54
Basic weighted average number of
shares (in 000’s)
691,674
691,137
691,053
690,876
690,516
1 Net finance expense comprises finance income and finance costs.
2 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. See “Regulatory Disclosures”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 35
44
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Sales Revenues
FOURTH QUARTER
QUARTERLY REVENUE BY COMMODITY
QUARTERLY REVENUE BY OPERATION
1,832
44
157
77
1,554
s
n
o
i
l
l
i
M
$
1,218
29
70
66
1,053
s
n
o
i
l
l
i
M
$
1,832
267
535
356
674
1,218
123
438
377
280
Q4 2022
Q4 2023
Q4 2022
Q4 2023
Copper
Gold
Nickel
Other
Cobre Panamá
Kansanshi
Trident
Other
Sales revenues for the fourth quarter of 2023 of $1,218 million were 34%, or $614 million, lower than the same quarter of
2022, reflecting decreases in copper and nickel sales revenues of $501 million and $87 million respectively, attributable to
lower sales volumes.
Copper sales revenues for the fourth quarter of 2023 of $1,053 million were 32%, or $501 million, lower than the same
quarter of 2022 reflecting lower copper sales volumes, which were 36% lower than the same quarter of 2022, partially offset
by a 1% increase in the net realized copper price1. The lower copper sales volumes were attributable to placing Cobre
Panamá on P&SM with operations halted from November, and a reduction in Trident sales volumes.
The net realized price1 for copper of $3.44 per lb for the fourth quarter of 2023 was 1% higher than the same quarter of
2022. This compares to an increase of 2% in the average LME price of copper for the same period to $3.70 per lb.
Nickel sales revenues of $70 million for the fourth quarter of 2023 were 55%, or $87 million, lower than the same quarter of
2022, reflecting lower sales volumes and lower net realized metal prices1.
The net realized price1 for nickel of $7.53 per lb for the fourth quarter of 2023 was 45% lower than the same quarter of 2022.
Gold sales revenues for the fourth quarter of 2023 of $66 million were 14%, or $11 million, lower than the same quarter of
2022, arising from lower gold sales volumes, being partially offset by higher net realized metal prices1. The lower gold sales
revenues were primarily attributable to decreased sales volumes from Cobre Panamá.
The cost for the purchase of refinery-backed gold and silver credits recognized within Cobre Panamá sales revenues was
$51 million compared to $58 million in the same quarter of 2022.
1 Realized metal price is a non-GAAP ratio, and does not have a standardized meaning 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 36
45
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
FULL YEAR
YEAR-TO-DATE REVENUE BY COMMODITY
YEAR-TO-DATE REVENUE BY OPERATION
7,626
248
441
382
6,555
s
n
o
i
l
l
i
M
$
6,456
155
341
319
5,641
s
n
o
i
l
l
i
M
$
7,626
981
1,980
1,706
2,959
6,456
680
1,665
1,598
2,513
December 31, 2022
December 31, 2023
December 31, 2022
December 31, 2023
Copper
Gold
Nickel
Other
Cobre Panamá
Kansanshi
Trident
Other
Sales revenues for the year ended December 31, 2023 of $6,456 million were 15%, or $1,170 million, lower than the
comparable period of 2022, reflecting the decreases in copper and nickel sales revenues of $914 million and $100 million
respectively. Gold sales revenues reduced by $63 million, or 16%, compared to the same period in 2022.
Copper sales revenues of $5,641 million were 14%, or $914 million, lower than the comparable period in 2022 reflecting the
lower net realized copper price1 and lower copper sales volumes. Total copper sales volumes for the full year of 2023
decreased 14% compared to the same period of 2022, attributable to lower production at Sentinel, Kansanshi and Cobre
Panamá due to the mine being placed on P&SM with operations halted from November. Zambian production was lower than
2022 due to a combination of lower throughput at both sites and lower grades at Kansanshi.
The net realized price1 for copper of $3.58 per lb in 2023 was 4% lower than the same period in 2022. This compares to a
decrease of 4% in the average LME price of copper for the same period to $3.85 per lb.
Nickel sales revenues of $341 million were 23%, or $100 million, lower than the comparable period of 2022, reflecting lower
net realized metal prices1 throughout the period offset by increased nickel sales volumes. The first nickel sales revenues at
Enterprise were recognized during the third quarter, contributing revenues of $21 million for the year.
The net realized price1 for nickel of $9.07 per lb in 2023 was 24% lower than the comparable period in 2022.
Gold sales revenues in 2023 of $319 million were 16%, or $63 million, lower than the comparable period in 2022, reflecting
lower gold sales volumes, partially offset by higher realized metal prices1. Kansanshi gold sales revenues reduced by $34
million, attributable to lower sales volumes at this operation. Cobre Panamá gold sales revenues reduced $16 million, with
operations halted in November. The cost for the purchase of refinery-backed gold and silver credits recognized within
revenues in December 2023 was $240 million, $11 million higher than the same period in 2022.
1 Realized metal price is a non-GAAP ratio, and does not have a standardized meaning 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 37
46
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Copper selling price (per lb)
Q4 2023
Q3 2023
Q4 2022
QUARTERLY
Average LME cash price
Realized copper price1
Treatment/refining charges (“TC/RC”)
(per lb)
Freight charges (per lb)
Net realized copper price1
FULL YEAR
2023
$3.85
$3.76
2022
$3.99
$3.90
$3.70
$3.62
$3.79
$3.70
$3.63
$3.56
($0.13)
($0.15)
($0.12)
($0.15)
($0.13)
($0.05)
$3.44
($0.02)
$3.53
($0.04)
$3.40
($0.03)
$3.58
($0.03)
$3.74
Gold selling price (per oz)
Average LBMA cash price
Net realized gold price1,2
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
$1,974
$1,835
$1,929
$1,764
$1,728
$1,574
2023
$1,941
$1,786
2022
$1,800
$1,665
QUARTERLY
FULL YEAR
Nickel selling price (per payable lb)
Q4 2023
Q3 2023
Q4 2022
2023
$9.74
2022
$11.61
Average LME cash price
Net realized nickel price1
1 Realized metal prices are a non-GAAP ratio, do not have a standardized meaning under IFRS and might not be comparable to similar financial measures
$13.67
$11.47
$9.07
$8.96
$7.53
$9.23
$7.82
$11.93
disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Excludes gold revenues recognized under the precious metal stream arrangement.
Given the volatility in commodity prices, significant variances may arise between average market price and net realized
prices1 due to the timing of sales during the period.
Gross Profit
Fourth Quarter
Gross profit in Q4 2022
Lower net realized prices1
Lower sales volumes and change in sales mix
Lower by-product contribution
Higher cash costs
Lower royalty expense2
Lower depreciation
361
(23)
(330)
(29)
(30)
3
101
Positive impact of foreign exchange on operating costs
Gross profit in Q4 20233
1 Realized metal price is a non-GAAP ratio, does not have a standardized meaning under IFRS and might not be comparable to similar financial measures
87
34
disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Royalty expense in the fourth quarter includes the royalty impact of 2022 and 2023, attributable to payments pursuant of Law 406 in Panama.
3 Gross profit is reconciled to EBITDA by including exploration costs of $13 million, general and administrative costs of $37 million, share of loss in joint venture of
$58 million, and adding back depreciation of $226 million and other expense of $68 million (a reconciliation of EBITDA is included in “Regulatory Disclosures”).
1 Realized metal price is a non-GAAP ratio, does not have a standardized meaning 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 38
47
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
QUARTERLY GROSS PROFIT BY OPERATION
361
20
169
189
(17)
s
n
o
i
l
l
i
M
$
87
112
12
25
(62)
Q4 2022
Q4 2023
Cobre Panamá
Kansanshi
Trident
Other
Gross profit for the fourth quarter of 2023 was $87 million, a decrease of $274 million, or 76%, from the same quarter in
2022, attributable primarily to lower sales volumes, and lower net realized prices1 and higher cash costs, partially offset by
reduced depreciation and a favourable foreign exchange impact.
Full Year
Gross profit in 2022
Lower net realized prices1
Lower sales volumes and change in sales mix
Lower by-product contribution
Higher cash costs
Lower royalty expense2
Lower depreciation
2,200
(373)
(545)
(116)
(131)
69
109
Positive impact of foreign exchange on operating costs
Gross profit in 20233
1 Realized metal price is a non-GAAP ratio, does not have a standardized meaning under IFRS and might not be comparable to similar financial measures
1,292
79
disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Royalty expense in the twelve months to date includes the impact of the sale of the 3.1% royalty interest in KMP to ZCCM-IH, its minority shareholder.
3 Gross profit is reconciled to EBITDA by including exploration costs of $30 million, general and administrative costs of $142 million, share of loss in joint venture of
$18 million, and adding back depreciation of $1,121 million and other expense of $105 million (a reconciliation of EBITDA is included in “Regulatory Disclosures”).
1 Realized metal price is a non-GAAP ratio, and does not have a standardized meaning 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 39
48
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
YEAR-TO-DATE GROSS PROFIT BY OPERATION
2,200
88
665
382
1,065
s
n
o
i
l
l
i
M
$
1,292
432
132
867
(139)
December 31, 2022
December 31, 2023
Cobre Panamá
Kansanshi
Trident
Other
Gross profit for the year ended December 31, 2023 was $1,292 million, a decrease of $908 million, or 41%, from the same
period in 2022, attributable to lower sales volumes and net realized copper prices1 combined with higher operating costs.
Operating costs have been impacted by higher prices for consumables and maintenance arising from inflationary pressures
experienced in 2022. This was partially mitigated by lower fuel, freight, and royalty costs, and the positive impact of foreign
exchange on operating costs.
Net Earnings (Loss)
Fourth Quarter
Net loss attributable to shareholders of the Company for the fourth quarter of 2023 was $1,447 million, $1,564 million lower
compared to earnings of $117 million in the same quarter of 2022. The net loss increase was attributable to the impairment
charge, an increase in tax expense, lower gross profit, an increase in the expense for the expected phasing of Zambian VAT,
and an increase in other expense.
An impairment charge of $900 million was recognized which includes $854 million at Ravensthorpe with significant margin
pressure on the back of weak nickel prices, lower payabilities and high operating costs. Impairment expenses also include
$46 million in respect of exploration assets.
An income tax expense of $642 million was recognized in the fourth quarter of 2023, compared with a $6 million income tax
recovery recognized in the same quarter of 2022, reflecting applicable statutory tax rates that range from 20% to 30% for the
Company’s operations. The income tax expense includes a derecognition of a deferred tax asset of $160 million at
Ravensthorpe, and $433 million of income, withholding and mining taxes at Panama pursuant to Law 406. The effective tax
rate for the quarter was 56%, which included Law 406 legislation.
Net finance expense principally consists of interest on debt of $144 million, related party interest of $9 million, and accretion
of deferred revenue of $15 million, offset by interest capitalized of $6 million and finance income of $28 million.
Other expense of $121 million is $123 million higher than incurred in the same quarter of 2022. Foreign exchange loss of
$43 million was recognized compared to a $25 million foreign exchange loss in the same quarter of 2022. A $58 million
share of loss in Korea Panama Mining Corporation (“KPMC”) was recognized in the quarter, compared to $4 million
recognized in the same quarter of 2022. An $18 million restructuring expense has been recognized in the quarter, in relation
to severance costs at Cobre Panamá.
Net finance expense of $146 million was $1 million lower than the fourth quarter of 2022.
1Realized metal price is a non-GAAP ratio, and does not have a standardized meaning 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 40
49
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
An expense of $20 million reflecting the expected phasing of the Zambian VAT was recognized in the quarter, compared with
an expense of $56 million recognized in the same quarter of 2022.
Basic loss per share was $2.09 during the quarter compared to $0.17 earnings per share in the same quarter of 2022.
Full Year
Net loss attributable to shareholders of the Company of $954 million for the year ended December 31, 2023 was $1,988
million lower compared to earnings of $1,034 million in same period in 2022. The net loss change was attributable to the
impairment charge, an increase in the tax expense, lower gross profit, and higher other expense. This was partially offset by
a credit in the adjustment for the expected phasing of Zambian VAT.
An impairment charge of $900 million was recognized which includes $854 million at Ravensthorpe with significant margin
pressure on the back of weak nickel prices, lower payabilities and high operating costs. Impairment expenses also include
$46 million in respect of exploration assets.
An income tax expense of $757 million was recognized in the year ended December 31, 2023, compared to a $320 million
expense recognized in the same period in 2022, reflecting applicable statutory tax rates that range from 20% to 30% for the
Company’s operations. The income tax expense includes a derecognition of a deferred tax asset of $160 million at
Ravensthorpe, and $433 million of income, withholding and mining taxes at Panama pursuant to Law 406.
Net finance expense of $613 million was $31 million higher than the same period of 2022 reflecting increased interest rates.
Net finance expense principally consisted of interest on debt of $556 million, related party interest of $92 million, accretion of
deferred revenue of $61 million, offset by capitalized interest of $26 million and finance income of $106 million.
Other expense of $142 million is $345 million lower than other income of $203 million incurred in the same period in 2022.
Foreign exchange loss of $67 million, compared to a foreign exchange gain of $184 million in the same period in 2022,
which included the impact of an agreement reached in respect of the outstanding VAT receivable. During the year $49 million
of restructuring expense was recognized which included an $18 million restructuring expense for severance payments at
Cobre Panamá and a $31 million restructuring expense in relation to a corporate reorganization at Kansanshi. An $18
million share of loss in KPMC was recognized in the year to December 31, 2023, compared to the $44 million gain
recognized in the comparable period of 2022. Other expenses in the comparable period included a charge of $40 million for
non-recurring costs in connection with previously sold assets.
A credit of $49 million reflecting the expected phasing of the Zambian VAT was recognized in the year ended December 31,
2023, compared with an expense of $190 million recognized in the same period of 2022.
Basic loss per share was $1.38 during the year ended December 31, 2023, compared to earnings per share of $1.50 in the
same period of 2022.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 41
50
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
Adjusted Earnings (Loss)1
FOURTH QUARTER
QUARTERLY ADJUSTED EARNINGS (LOSS)1
QUARTERLY ADJUSTED EARNINGS (LOSS) PER SHARE2
s
n
o
i
l
l
i
M
$
151
131
8
140
(128)
Q4 2022
$0.22
$0.14
$0.11
e
r
a
h
s
r
e
p
$
$0.52
$0.12
$(0.37)
Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023
72
24
(139)
(216)
(259)
Q4 2023
Cobre Panamá
Kansanshi
Trident
Other
Adjusted earnings (loss) per share
Adjusted loss1 for the quarter ended December 31, 2023 of $259 million decreased by $410 million from adjusted earnings1
of $151 million the comparative period in 2022. Adjusted loss per share2 of $0.37 in the fourth quarter compares to adjusted
earnings per share2 of $0.22 in the same quarter of 2022. The principal items not included in adjusted loss1 in the quarter are
an impairment expense of $900 million with $854 million relating to Ravensthorpe and $46 million to exploration assets, a
deferred tax write-off at Ravensthorpe of $160 million, foreign exchange losses of $43 million, the royalty expense of $28
million attributable to payments related to 2022 pursuant to Law 406 in Panama, a restructuring expense $18 million related
to severance payments at Cobre Panamá, and the adjustment for expected phasing of Zambian VAT of $20 million. Where
relevant, adjustments are effected for minority interest and joint venture ownership.
The effective tax rate, on an adjusted basis, for the quarter ended December 31, 2023 was 206%. A reconciliation of
adjusted metrics is included in “Regulatory Disclosures”.
1 Adjusted earnings (loss) 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.
2 Adjusted earnings (loss) 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”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 42
51
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
FULL YEAR
YEAR-TO-DATE ADJUSTED EARNINGS1
YEAR-TO-DATE ADJUSTED EARNINGS PER SHARE2
1,064
482
288
809
(515)
s
n
o
i
l
l
i
M
$
261
270
135
499
(643)
December 31, 2022
December 31, 2023
Cobre Panamá
Kansanshi
Trident
Other
$1.54
e
r
a
h
s
r
e
p
$
$0.38
December 31, 2022
December 31, 2023
Adjusted earnings per share
Adjusted earnings1 for the year ended December 31, 2023 of $261 million decreased by $803 million from the same period
in 2022. Adjusted earnings per share2 of $0.38 in the year ended December 31, 2023 compares to adjusted earnings per
share2 of $1.54 in the same period of 2022.
The principal items not included in adjusted earnings1 are an impairment expense of $900 million with $854 million relating to
Ravensthorpe and $46 million to exploration assets, a deferred tax write-off at Ravensthorpe of $160 million, foreign
exchange losses of $67 million, a restructuring expense of $49 million, of which $18 million relates to severance payments at
Cobre Panamá and $31 million arising from the corporate reorganization at Kansanshi, the royalty expense of $28 million
attributable to payments related to 2022, pursuant of Law 406 in Panama, and the adjustment for expected phasing of
Zambian VAT of $49 million. Where relevant, adjustments are effected for minority interest and joint venture ownership.
The effective tax rate for the year ended December 31, 2023, on an adjusted basis, was 55% due to the impact of interest
expense, for which there is no tax credit in Canada, and includes taxes and royalties payments made pursuant to Law 406. A
reconciliation of adjusted metrics is included in “Regulatory Disclosures”.
1 Adjusted earnings (loss) 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.
2 Adjusted earnings (loss) 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”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 43
52
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
LIQUIDITY AND CAPITAL RESOURCES
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
2023
Cash flows from (used by) operating
activities
Cash flows used by investing activities
Cash flows from (used by) financing
activities1
Exchange losses on cash and cash
equivalents
Net cash inflow (outflow)
Cash and cash equivalents and bank
overdrafts
(185)
(335)
224
–
(296)
594
(474)
259
(2)
377
2022
2,332
237
1,427
(312)
(1,380)
(1,170)
(26)
(776)
(1,331)
–
–
(101)
(729)
(2)
(171)
959
1,255
1,688
959
1,688
Total assets
23,758
24,841
25,080
23,758
25,080
Total current liabilities
Total long-term liabilities
Net debt2
Cash flows from (used by) operating
activities per share3
1 Interest paid excludes $6 million and $26 million capitalized to property, plant and equipment for the fourth quarter and full year ended December 31, 2023,
1,738
11,105
5,692
2,007
10,973
6,420
1,951
10,319
5,637
2,007
10,973
6,420
1,738
11,105
5,692
($0.27)
$0.86
$0.34
$2.07
$3.38
respectively, presented in cash flows used by investing activities (three months and year-ended December 31, 2022: $8 million and $24 million).
2 Net debt is a supplementary financial measure, 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”.
3 Cash flows from (used by) 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”.
FOURTH QUARTER
Cash Flows from (used by) Operating Activities
Cash flows used by operating activities for the fourth quarter were $422 million lower than the same quarter of 2022,
attributable to lower EBITDA1 and higher taxes paid partially offset by favourable movements on working capital. Cobre
Panamá pursuant to Law 406 made a tax and royalty payment of $567 million.
Cash Flows used by Investing Activities
Investing activities comprise of capital expenditures of $344 million which were $27 million higher than the same quarter of
2022. Higher expenditure was attributable to spending on the S3 project at Kansanshi partially offset by lower spend at
Cobre Panamá.
Cash Flows from (used by) Financing Activities
Cash flows from financing activities of $224 million for the fourth quarter of 2023 included a net inflow of $484 million on total
debt.
Interest paid of $230 million is included within cash flows from financing activities which excludes $6 million of capitalized
interest, and is $148 million higher than the $82 million paid in the fourth quarter of 2022, reflecting timing of bond interest
payments and higher interest rates on the Company’s floating rate debt. Net payments of $30 million were paid to KPMC, a
50:50 joint venture between the Company and Korea Mine Rehabilitation and Mineral Resources Corporation (“KOMIR”).
FULL YEAR
Cash Flows from Operating Activities
Cash flows from operating activities for the year were $905 million lower than the same period of 2022, reflecting lower
EBITDA1 and higher taxes paid, partially offset by lower working capital outflows. MPSA, pursuant to Law 406 made a tax
and royalty payment of $567 million.
1 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 44
53
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Cash Flows used by Investing Activities
Investing activities of $1,380 million for the year comprise the asset acquisition of the La Granja project for $105 million and
included capital expenditures of $1,300 million which was $133 million higher than 2022, reflecting increased capital
expenditure on the S3 project at Kansanshi and spending on the Enterprise project, offset by reduced capital expenditure
spend in Cobre Panamá with construction on the CP 100 Expansion project completed in the first quarter of 2023 and being
placed on P&SM from the end of November, at as well as lower expenditure in Ravensthorpe with the completion of the
Shoemaker Levy project in 2022.
Cash Flows used by Financing Activities
Cash flows used by financing activities of $776 million for the year included a $17 million net movement on total debt.
Included within this, were the proceeds of $1,300 million of Senior Notes due 2031, the redemption at par, of $300 million of
the Senior Notes due in 2025, the redemption of $850 million of the Senior Notes due in 2024, the scheduled term loan
repayments of $455 million, and movements on the revolving credit facility and trading facilities.
Interest paid of $527 million is included within cash flows from financing activities for the year which excludes $26 million of
capitalized interest; and is $79 million higher than the $448 million of interest paid in 2022, reflecting higher interest rates on
the Company’s floating rate debt. In addition, net payments of $109 million were paid to KPMC.
During the year, dividends paid to shareholders were $93 million.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 45
54
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
Liquidity
FOURTH QUARTER
QUARTERLY NET DEBT 1 MOVEMENT
501
102
6,420
5,637
344
236
(273)
(127)
Closing Net Debt1
at Sept. 30, 2023
EBITDA1
Working
capital 2
Capital
expenditure
Interest paid3
Taxes paid4
Other 5
Closing Net Debt1
at Dec. 31, 2023
1 EBITDA is a non-GAAP financial measure and net debt is a supplementary financial measure. These measures do not have a standardized meaning under
IFRS and might not be comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Working capital includes a $20 million outflow related to long-term incentive plans.
3
Interest paid includes $6 million of interest capitalized to property plant and equipment.
4 Taxes paid includes a tax and royalty payment of $479 million, based on a taxable margin, pursuant to Law 406 up to December 2, 2023.
5 Other includes net payments to joint venture of $30 million, top-up taxes of $76 million to $375 million for the year 2022 at Cobre Panamá pursuant to law
406, restructuring costs of $18 million, non-cash adjustments relating to amortization of gold and silver streaming revenue of $20 million partially offset by
interest received of $15 million and share of underlying losses of joint venture of $23 million.
Net debt1 increased by $783 million during the quarter to $6,420 million at December 31, 2023 with total debt at $7,379
million.
1Net 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”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 46
55
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
FULL YEAR
5,692
43
(2,328)
YEAR-TO-DATE NET DEBT 1 MOVEMENT
625
93
337
6,420
553
1,300
105
Closing Net Debt1
at Dec. 31, 2022
EBITDA 1
Working
capital 2
Capital
expenditure
La
Granja
Interest
paid 3
Taxes
paid
Dividends
paid
Other 4
Closing Net Debt1
at Dec. 31, 2023
1 EBITDA is a non-GAAP financial measure and net debt is a supplementary financial measure. These measures do not have a standardized meaning under
IFRS and might not be comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
2 Working capital includes a $151 million outflow related to long-term incentive plans.
3
Interest paid includes $26 million of interest capitalized to property plant and equipment.
4 Other includes net payments to joint venture of $109 million, top-up taxes of $76 million to $375 million for the year 2022 at Cobre Panamá pursuant to law
406, restructuring costs of $49 million, a restricted cash reclassification of $25 million and non-cash adjustments relating to amortization of gold and silver
revenue of $96 million and share of underlying earnings of joint venture of $17 million, partially offset by interest received of $50 million.
Net debt1 increased by $728 million during the year ended December 31, 2023 to $6,420 million. At December 31, 2023,
total debt was $7,379 million.
During the year, the Company redeemed at par an aggregate of $1,150 million principal amount of senior unsecured notes,
of which $850 million related to the Senior Notes due 2024 redeemed in full at par in the first quarter of 2023. On May 17,
2023 the Company announced the offering and pricing of $1,300 million of 8.625% Senior Notes due 2031 at an issue price
of 100.00%. Settlement took place on May 30, 2023.
Proceeds of the new bonds were used to repay $970 million principal amount of the existing revolving credit facility and,
following the Company’s notice of redemption on May 18, 2023, the redemption at par of $300 million of the Company’s
outstanding Senior Notes due in 2025.
The Company may from time to time enter into derivative contracts to ensure that the exposure to the price of copper on
future sales are managed to ensure stability of cash flows. At February 20, 2024, the Company had no outstanding copper
or nickel derivatives designated as hedged instruments.
1Net 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”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 47
56
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Liquidity Outlook
At December 31, 2023, the Company had total commitments of $347 million, principally related to the S3 project at
Kansanshi.
Contractual and other obligations as at December 31, 2023 are as follows:
Contractual
Cash flows
< 1 year 1 – 3 years
3 – 5 years
Thereafter
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
Carrying
Value
7,235
–
144
831
62
1,156
7,268
1,821
144
831
62
1,736
202
251
27
18
20
–
647
10,342
27
18
22
347
1,267
13,794
625
544
144
831
62
–
–
27
2
7
347
6
3,843
670
1,500
327
–
–
–
–
28
–
4
11
–
22
–
–
–
–
223
–
4
3
–
42
2,595
4,578
2,099
1,300
280
–
–
–
1,736
–
–
8
1
–
1,197
4,522
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 Holdings, an entity that holds a 24.3% non-controlling interest in FQM Australia Holdings Pty Ltd (“Ravensthorpe”), of which the
Company has full control.
S&P downgraded FQM to a B credit rating on December 7, 2023 following the declaration by Panama's Supreme Court that
the concession to operate Cobre Panamá is unconstitutional. The Company was also placed on CreditWatch Negative
owing to S&P concerns that operational disruptions at Cobre Panamá could lead to an increase in leverage and weakening
liquidity should the disruption be prolonged.
Fitch maintained a B+ credit rating on December 12, 2023, but placed the Company on Rating Watch Negative following the
Supreme Court Ruling.
At December 31, 2023, the Company had $250 million of committed undrawn senior debt facilities and $959 million of net
unrestricted cash (inclusive of overdrafts), 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, 2023.
After the reporting period, the Company signed a $500 million 3-year prepayment agreement with Jiangxi Copper at
competitive market rates. The agreement provides for the delivery of 50kt of anode per annum from Kansanshi at payable at
market prices with the prepaid amount reducing after 12 months in line with deliveries over the last 2 years. Proceeds of the
prepayment will be used for General Corporate Purposes and to increase liquidity.
In the fourth quarter of 2023, Cobre Panamá experienced illegal blockades throughout the month of November at the Punta
Rincón port and at the roads to the site that prevented the delivery of supplies that were necessary to operate the power
plant; as a result, the Company suspended production at the Cobre Panamá mine at the end of November 2023 and placed
the mine into a phase of Preservation and Safe Management (“P&SM”). In this phase, First Quantum has and continues to
employ a number of measures to prudently allow for the planned capital spending for the S3 Expansion project at Kansanshi
to continue, while comprehensively addressing the Company’s leverage. The Company has a number of alternatives that it
is actively pursuing in this regard. These initiatives include:
•
Suspension of the semi-annual dividend.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 48
57
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
•
•
•
•
•
Reductions or re-phasing of other capital programs by approximately $400 million in 2024 and $250 million in
2025. This reflects a halt in capital spend at Cobre Panamá and proactive initiatives to offset capital inflation in the
Zambian business.
A detailed review of all operating and administrative costs, whereby the Company has identified savings to offset
the inflationary impact on operating costs. This includes a change in strategy at Ravensthorpe to only process ore
stockpiles through the Atmospheric Leach circuit for the next eighteen months, which substantially reduces mining
and processing costs and protects operating margins while nickel prices are suppressed.
Targeting reductions in its working capital requirements and identifying savings in the procurement of materials,
supplies and third party service costs where possible.
The sales process for the Las Cruces mine in Spain is well-advanced with strong interest given the strategic
location and processing capabilities of the project. Following a number of inbound expressions of interest, the
Company is evaluating the possibility of a minority investment by strategic investors the Company’s Zambian
business.
The Company continues to take a proactive approach to managing its balance sheet and the refinancing of its
near-term debt maturities. An ongoing process between the Company and its banking partners is materially
advanced, with a high degree of alignment regarding amendment and extension. A conclusion on these
amendments is expected in the near term. The Company is also assessing a range of alternatives across the
capital markets to maintain a robust financial position and preserve value for its shareholders.
However, the current situation at Cobre Panamá has impacted the EBITDA1 generating potential of the Company, putting at
risk the Company’s ability to meet the net debt2 to EBITDA1 ratio covenant as defined in its current senior banking facilities.
Current forecasts for 2024, before taking into account future balance sheet initiatives, indicate the Company may breach the
prevailing net debt2 to EBITDA1 ratio covenant during the coming twelve months, which results in the existence of a material
uncertainty that casts a significant doubt about the Company’s ability to continue as a going concern. Accordingly, disclosure
of this material uncertainty has been made in the notes to the consolidated financial statements.
Management has a strong expectation that certain balance sheet initiatives initiated earlier this year will be realized in the
near term. The disclosure of material uncertainty does not include potential changes in the Company's covenants, which are
materially advanced in discussions with the Company's banking partners nor the financing initiatives described in more detail
above, which would significantly reduce the risk of breaching covenants if realized. Some of these alternatives require the
agreement of other parties and, although believed to be reasonable and achievable, are nevertheless outside the
Company’s direct control. In light of the actions already taken and the alternatives available to the Company, the
consolidated financial statements have been prepared on a going concern basis. In making the assessment that the
Company continues to be 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, 2023.
Equity
As at December 31, 2023, the Company had 693,599,174 common shares outstanding.
Hedging Programs
The Company has hedging programs for 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.
As at December 31, 2023, the Company held no derivatives designated as hedged instruments.
1 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”.
2 Net debt is a supplementary 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 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 49
58
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
COMMODITY CONTRACTS
Asset position
Liability position
December 31, 2023
14
(62)
December 31, 2022
15
(117)
Provisional Pricing and Derivative Contracts
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 to
five months later. The difference between final price and provisional invoice price is recognized in net earnings (loss). In
order to mitigate the impact of these adjustments on net earnings (loss), 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, 2023, the following derivative positions in provisionally priced sales and commodity contracts not
designated as hedged instruments were outstanding:
Open Positions
(tonnes/oz)
Average
Contract price
Closing Market
price
Maturities
Through
Embedded derivatives in provisionally priced
sales contracts:
Copper
Gold
Nickel
Commodity contracts:
Copper
Gold
Nickel
109,097
14,070
1,191
109,175
14,077
1,188
$3.75/lb
$2,049/oz
$7.69/lb
$3.75/lb
$2,049/oz
$7.69/lb
$3.84/lb
$2,078/oz
April 2024
April 2024
$7.39/lb
March 2024
$3.84/lb
$2,078/oz
April 2024
April 2024
$7.39/lb
March 2024
As at December 31, 2023, substantially all of the Company’s metal sales contracts subject to pricing adjustments were
hedged by offsetting derivative contracts.
Refer to Note 24 of the Company’s Consolidated Financial Statements for further information regarding financial instruments,
fair value measurements and financial risk management.
Foreign Exchange
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 $22 million per year.
ZAMBIAN VAT
In 2022, the Company reached an agreement with the GRZ for repayment of the outstanding VAT claims based on offsets
against future corporate income tax and mineral royalty tax payments. This commenced July 1, 2022.
The total VAT receivable accrued by the Company’s Zambian operations at December 31, 2023, was $652 million, of which
$314 million relates to Kansanshi, $302 million relates to FQM Trident, with the balance of $36 million attributable to other
Zambian subsidiaries providing support services.
Offsets of $143 million against other taxes due have been granted and cash refunds of $124 million during the year ended
December 31, 2023. In the year ended December 31, 2022, offsets of $154 million were granted and cash refunds of $72
million were received.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 50
59
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
The Company considers that the outstanding VAT claims are fully recoverable and has classified all VAT balances due to the
Zambian operations based on the expected recovery period. As at December 31, 2023, amounts totalling $131 million are
presented as current.
A $20 million expense adjustment for Zambian VAT receipts has been recognized in net earnings (loss) in the quarter ended
December 31, 2023, representing the expected phasing of recoverability of the receivable amount. An expense of $56
million had previously been recognized in the quarter ended December 31, 2022.
VAT receivable by the Company’s Zambian operations
Balance at beginning of the year
Movement in claims, net of foreign exchange movements
Adjustment for expected phasing for non-current portion
At December 31, 2023
December 31,
2023
639
(36)
49
652
AGING ANALYSIS OF VAT RECEIVABLE FOR THE COMPANY’S ZAMBIAN OPERATIONS
Receivable at the period end
Adjustment for expected phasing
Total VAT receivable from Zambian operations
< 1 year 1-3 years 3-5 years 5-8 years > 8 years
Total
80
–
80
246
(104)
142
315
(108)
207
120
(29)
91
175
(43)
132
936
(284)
652
As at December 31, 2023, a VAT payable to ZCCM-IH of $52 million, net of adjustment for expected phasing of payments,
has been recognized.
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 Panamá. 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 $645 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, 2023, the profit
attributable to KPMC was $55 million (December 31, 2022: $88 million). The profit in KPMC relates to the 20% equity
accounted share of profit reported by MPSA, a subsidiary of the Company. The material assets and liabilities of KPMC are
an investment in MPSA of $497 million, shareholder loans receivable of $1,156 million from the Company and shareholder
loans payable of $1,200 million due to the Company and its joint venture partner KOMIR.
At December 31, 2023, the Company’s subsidiary, MPSA, owed to KPMC $1,156 million (December 31, 2022: $1,256 million
and December 31, 2021: $1,310 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.
RAVENSTHORPE OWNERSHIP INTEREST
During the third quarter, the Company’s interest in Ravensthorpe increased from 70.0% to 75.7% following an equity raise
which POSCO Holdings, the minority shareholder, elected not to participate in.
RELATED PARTY TRANSACTIONS
Amounts paid to related parties were incurred in the normal course of business and on an arm’s length basis. During the
year, $6 million (December 31, 2022: $10 million) was paid to parties related to key management for chartering aircraft,
accommodation, machinery and services. As at December 31, 2023, $1 million (December 31, 2022: $nil) was included in
trade and other payables concerning related party amounts payable. For further information, refer to Note 16 of the
Company's Consolidated Financial Statements.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 51
60
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
PRECIOUS METAL STREAM ARRANGEMENT
Arrangement Overview
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 Panamá 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 Panamá 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 Panamá
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 Panamá 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. The amount of precious metals deliverable under both tranches is indexed to total copper-in-concentrate sold by
Cobre Panamá.
GOLD STREAM
Delivered (oz)
Delivery terms
Threshold
Ongoing cash payment
SILVER STREAM
Delivered (oz)
Delivery terms
Threshold
TRANCHE 1
0 to 808,000
TRANCHE 2
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
$457.35/oz (+1.5% annual
inflation)
20% market price
TRANCHE 1
0 to 9,842,000
TRANCHE 2
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
$6.86/oz (+1.5% annual 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 $457.35 per oz for gold and $6.86 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.
Accounting
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 Panamá 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.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 52
61
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
Gold and silver revenues recognized under the terms of the precious metal streaming arrangement are indexed to copper
sold from the Cobre Panamá 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.
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
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
2023
2022
12
20
32
16
26
42
15
25
40
56
96
56
97
152
153
(51)
(66)
(58)
(240)
(229)
MATERIAL LEGAL PROCEEDINGS
Panama
Introduction
On March 8, 2023, MPSA and the Republic of Panama announced they had reached agreement on the terms and conditions
of a refreshed concession contract (“Refreshed Concession Contract”). MPSA and the GOP signed the Refreshed
Concession Contract on June 26, 2023, and it was subsequently countersigned by the National Comptroller of Panama. The
Refreshed Concession Contract was presented before the Commerce Committee of the National Assembly of Panama, who
recommended the amendment of certain terms of the contract. The Company and GOP agreed to modifications to the
agreement based on these recommendations after a brief period of negotiation. The GOP cabinet approved the amended
terms of the Refreshed Concession Contract on October 10, 2023, and MPSA and the Republic entered into the agreement
the next day. On October 20, 2023, the National Assembly in Panama approved Bill 1100, being the proposal for approval of
the Refreshed Concession Contract for the Cobre Panamá mine. On the same day, President Laurentino Cortizo sanctioned
Bill 1100 into Law 406 and this was subsequently published in the Official Gazette.
Panamá Constitutional Proceedings and Mining Moratorium.
On October 26, 2023, a claim was lodged with the Supreme Court of Justice of Panama asserting that Law 406 was
unconstitutional. MPSA was not a party to that proceeding. The petitioner argued that Law 406, which gave legal effect to
the Refreshed Concession Contract, was unconstitutional.
On November 3, 2023, the National Assembly of Panama approved Bill 1110, which President Cortizo sanctioned into Law
407 and which was published the same day in the Official Gazette. Law 407 declares a mining moratorium for an indefinite
duration within Panama, including preventing any new mining concession from being granted or any existing mining
concessions from being renewed or extended.
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”.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 53
62
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
On November 28, 2023, the Supreme Court issued a ruling declaring Law 406 unconstitutional and stating that the effect of
the ruling is that the Refreshed Concession Contract no longer exists. The ruling was subsequently published in the Official
Gazette on December 2, 2023. The Supreme Court did not order the closure of the Cobre Panamá mine.
On December 19, 2023, the Minister for Commerce and Industry announced plans for Cobre Panamá following the ruling of
the Supreme Court. The validity of Panama’s mineral resource code which was established more than 50 years ago was
reiterated by the Minister given the absence of retroactivity of the Supreme Court ruling. As part of these plans, a temporary
phase of environmental Preservation and Safe Management would be established until June 2024, during which intervening
period independent audits, review and planning activities would be undertaken. It was stated that Panama would be the first
country in the world to implement a sudden mine closure of this magnitude, and therefore the planning is estimated by the
GOP to take up to two years, and 10 years or more to implement. The Minister also announced plans to consider the
economic impacts of the halt to operations of Cobre Panamá at both a national and local level. The Company is of the view,
supported by the advice of legal counsel, that it has acquired rights with respect to the operation of the Cobre Panamá
project, as well as rights under international law.
Presidential and national legislative elections will take place in May 2024, with a new president, GOP cabinet and National
Assembly assuming office in July 2024.
Arbitration Proceedings
Steps towards two arbitration proceedings have been taken by the Company. One under the Canada-Panama Free Trade
Agreement (FTA), and another one as per the arbitration clause of the Refreshed Concession Contract.
1. On November 29, 2023, MPSA initiated arbitration before the International Chamber of Commerce’s International Court
of Arbitration (“ICC”) pursuant to the ICC’s Rules of Arbitration and Clause 46 of the Refreshed Concession Contract, to
protect its rights under Panamanian law and the Refreshed Concession Contract that the GOP agreed to in October
2023. The arbitration clause of the contract provides for arbitration in Miami, Florida.
2. On November 14, 2023, First Quantum submitted a notice of intent to the GOP initiating the consultation period required
under the Canada-Panama Free Trade Agreement (“FTA”). Under the terms of the FTA, First Quantum may initiate
arbitration after at least six months have elapsed since the events giving rise to a claim. First Quantum is entitled to
seek any and all relief appropriate in arbitration, including but not limited to damages and reparation for Panama’s
breaches of the Canada-Panama FTA. These breaches include, among other things, the GOP’s failure to permit MPSA
to lawfully operate the Cobre Panamá mine prior to the Supreme Court’s November 2023 decision, and the GOP’s
pronouncements and actions concerning closure plans and Preservation and Safe Management at Cobre Panamá.
Kansanshi Development Agreement
In May 2020, KMP filed a Request for Arbitration against the GRZ with the International Centre for Settlement of International
Disputes. KMP’s claims concerned breaches of certain contractual provisions of a development agreement between GRZ
and KMP and international law. Pursuant to the wider reset arrangements concluded between the Company and GRZ in May
2022, these proceedings have now been settled.
REGULATORY DISCLOSURES
Seasonality
The Company’s results as discussed in this MD&A are subject to seasonal aspects, in particular the rainy season in Zambia.
The rainy 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 rainy 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.
Off-Balance Sheet Arrangements
The Company had no off-balance sheet arrangements as of the date of this report.
Non-GAAP Financial Measures and Ratios
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
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 54
63
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
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.
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 MD&A, 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.
Calculation of Cash Cost, All-In Sustaining Cost, Total Cost, Sustaining Capital Expenditure and
Deferred Stripping Costs Capitalized
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.
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.
Purchase and deposits on property, plant
and equipment
Sustaining capital expenditure and
deferred stripping
Project capital expenditure
Total capital expenditure
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
2023
344
370
317
1,300
159
185
344
169
201
370
134
183
317
590
710
1,300
2022
1,167
492
675
1,167
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 55
64
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Non-GAAP Reconciliations
The following tables provide a reconciliation of C12, C32 and AISC2 to the consolidated financial statements:
Cobre
Panamá Kansanshi Sentinel
Guelb
Moghrein
Las
Corporate
Cruces Çayeli Pyhäsalmi Copper
& other Ravensthorpe Enterprise
Total
(255)
(365)
(307)
(41)
(6)
(20)
(4)
(998)
(6)
(108)
(19) (1,131)
(4)
14
For the three
months ended
December 31,
2023
Cost of sales1
Adjustments:
Depreciation
By-product
credits
Royalties
Treatment and
refining charges
Freight costs
Finished goods
Other4
Cash cost
(C1)2,4
Adjustments:
Depreciation
(excluding
depreciation in
finished goods)
Royalties5
Other
Total
(C3)2,4,5
Adjustments:
General and
administrative
expenses
Sustaining capital
expenditure and
deferred
stripping3
Royalties5
Lease payments
AISC2,4,5
AISC (per lb)2,4,5
Cash cost – (C1)
(per lb)2,4
Total cost – (C3)
(per lb)2,4,5
80
22
25
53
37
27
75
–
29
3
24
1
(18)
(5)
(15)
(2)
–
(75)
39
–
(1)
87
(11)
(6)
2
–
–
(3)
(1)
(182)
(167)
(233)
(18)
4
4
1
(2)
(1)
4
–
1
3
–
–
–
(1)
216
90
83
(42)
(12)
(83)
–
135
(10)
(1)
(611)
(108)
(52)
(76)
(3)
–
(4)
(1)
(244)
3
(1)
(27)
(29)
(7)
(5)
(1)
(1)
cost
(288)
(253)
(343)
(23)
Cash cost (C1)2,4
(182)
(167)
(233)
(18)
(1)
–
(15)
–
–
(55)
(14)
(2)
(924)
(10)
(1)
(611)
(1)
–
(33)
(2)
–
(135)
(1)
(1)
(15)
$2.90
$2.31
–
–
(55)
(2)
(1)
(836)
–
–
–
$2.52
$1.82
$2.77
(10)
(9)
(12)
(1)
(30)
(60)
(42)
(1)
3
–
(27)
(29)
–
(1)
(1)
–
(219)
(263)
(317)
(21)
$1.71
$1.45
$3.83
$2.51
$2.73
$2.43
$1.85
$2.24
$2.22
$3.69
$2.72
$3.07
–
$3.02
–
–
–
–
–
7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19
–
–
226
92
85
(42)
(12)
(61)
146
(697)
2
2
–
–
3
1
(86)
(13)
–
(253)
(2)
–
–
–
(57)
(14)
(101)
–
(1,021)
(86)
–
(697)
(4)
–
(37)
(24)
–
(159)
(2)
–
(116)
$16.08
$11.78
$14.18
(57)
(2)
(952)
–
–
–
–
–
–
–
–
–
–
10
–
4
–
–
4
–
–
–
–
–
–
–
–
–
1 Total cost of sales per the Consolidated Statement of Earnings (loss) in the Company’s annual audited consolidated financial statements.
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 expenditure and deferred stripping 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”.
4 Excludes purchases of copper concentrate from third parties treated through the Kansanshi Smelter.
5 Royalties in C3 and AISC costs for the quarter and year ended December 31, 2023 exclude the 2022 impact of $28 million attributable to payments pursuant of
Law 406 in Panama.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 56
65
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
For the three
months ended
December 31,
2022
Cost of sales1
Adjustments:
Depreciation
By-product
credits
Royalties
Treatment and
refining charges
Freight costs
Finished goods
Other
Cash cost
(C1)2,4
Adjustments:
Depreciation
(excluding
depreciation in
finished goods)
Royalties
Other
Total cost
(C3)2,4
Cash cost (C1)2,4
Adjustments:
General and
administrative
expenses
Sustaining
capital
expenditure and
deferred
stripping3
Royalties
Lease payments
AISC2,4
AISC (per lb)2,4
Cash cost – (C1)
(per lb)2,4
Total cost – (C3)
(per lb)2,4
Cobre
Panamá Kansanshi Sentinel
Guelb
Moghrein
Las
Corporate
Cruces Çayeli Pyhäsalmi Copper
& other Ravensthorpe Enterprise
Total
(485)
(373)
(366)
(53)
(24)
(15)
(11) (1,327)
(4)
(140)
–
(1,471)
(1)
17
151
47
12
60
31
21
91
1
45
4
30
2
(33)
(6)
(17)
(1)
–
(13)
10
–
(15)
71
(16)
17
4
–
(1)
1
–
–
–
–
–
1
4
4
1
1
1
4
–
311
114
81
(2)
(1)
(60)
(1)
(1)
–
–
4
1
(17)
(8)
91
(311)
(211)
(241)
(18)
(19)
(13)
(2)
(815)
(156)
(61)
(89)
(4)
–
(3)
(1)
(314)
(12)
(4)
(21)
(45)
(3)
(3)
(2)
–
–
–
(1)
–
–
–
(81)
(10)
(483)
(296)
(378)
(24)
(19)
(17)
(3) (1,220)
(311)
(211)
(241)
(18)
(19)
(13)
(2)
(815)
(14)
(9)
(11)
–
(2)
–
–
(36)
(46)
(24)
(52)
(3)
–
(2)
–
(127)
(12)
(21)
(45)
(2)
–
(1)
–
–
(1)
–
(1)
–
–
–
(81)
(2)
(383)
(265)
(350)
(23)
(22)
(16)
(2) (1,061)
$2.01
$1.63
$3.55
$2.25
$3.19
$4.33
$3.01
$0.00
$2.42
$2.81
$1.55
$2.57
$4.02
$2.46
$0.00
$1.86
$2.54
$3.96
$2.42
$3.35
$4.09
$3.31
$0.00
$2.79
–
–
–
–
–
5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8
7
–
–
16
1
(91)
–
–
–
–
–
–
–
–
327
122
88
(60)
(17)
8
97
(906)
(16)
–
(330)
(7)
(2)
–
–
(88)
(12)
(116)
–
(1,336)
(91)
–
(906)
(4)
–
(40)
(7)
–
(134)
(7)
–
–
–
(88)
(2)
(109)
–
(1,170)
$11.10
$9.32
$11.70
–
–
–
1 Total cost of sales per the Consolidated Statement of Earnings (loss) in the Company’s annual audited consolidated financial statements.
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 expenditure and deferred stripping 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”.
4 Excludes purchases of copper concentrate from third parties treated through the Kansanshi Smelter.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 57
66
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
For the year
ended
December 31,
2023
Cost of sales1
Adjustments:
Depreciation
By-product
credits
Royalties
Treatment and
refining charges
Freight costs
Finished goods
Other4
Cash cost
(C1)2,4
Adjustments:
Depreciation
(excluding
depreciation in
finished goods)
Royalties5
Other
Total cost (C3)2,4
Cash cost (C1)2,4
Adjustments:
General and
administrative
expenses
Sustaining capital
expenditure and
deferred
stripping3
Royalties5
Lease payments
AISC2,4,5
AISC (per lb)2,4,5
Cash cost – (C1)
(per lb)2,4
Total cost – (C3)
(per lb)2,4,5
Cobre
Panamá Kansanshi Sentinel
Guelb
Moghrein
Las
Corporate
Cruces Çayeli Pyhäsalmi Copper
& other Ravensthorpe Enterprise
Total
(1,646)
(1,466)
(1,212)
(188)
(68)
(65)
(19) (4,664)
(23)
(456)
(21) (5,164)
3
1,065
(2)
531
170
69
221
143
137
282
–
110
(156)
(23)
(46)
–
(66)
72
–
6
322
(25)
(21)
13
12
110
6
(8)
–
(1)
–
–
–
1
–
–
–
28
16
10
5
(7)
(5)
1
–
17
–
–
–
(3)
450
328
(240)
(30)
(84)
–
435
(1,026)
(660)
(899)
(69)
(39)
(45)
(2) (2,740)
(554)
(219)
(283)
(13)
–
(16)
(4) (1,089)
(41)
(15)
(119)
(110)
(15)
(12)
(1,636)
(1,013)
(1,304)
(1,026)
(660)
(899)
(6)
(1)
(89)
(69)
(1)
(5)
–
–
–
–
(282)
(43)
(40)
(66)
(6) (4,154)
(39)
(45)
(2) (2,740)
(46)
(31)
(42)
(3)
(2)
(2)
–
(126)
(177)
(199)
(158)
(5)
–
(6)
(41)
(2)
(119)
(110)
–
(1)
(6)
–
(1)
(1)
(5)
(1)
–
–
–
(545)
(282)
(5)
(1,292)
(1,009)
(1,210)
(83)
(43)
(59)
(2) (3,698)
$1.85
$1.47
$3.47
$2.67
$2.96
$4.91
$2.55
$2.27
$1.98
$2.44
$4.57
$1.97
$2.34
$3.48
$2.88
$3.17
$4.67
$2.87
–
–
–
$2.46
$1.82
$2.76
–
–
–
–
–
25
–
2
–
–
2
–
–
–
–
–
–
–
–
–
58
12
17
–
–
15
5
–
1,121
–
–
–
–
21
–
462
345
(240)
(30)
(48)
465
(349)
–
(3,089)
(55)
–
(1,142)
(17)
(6)
(427)
(349)
–
–
(299)
(49)
–
(4,579)
–
(3,089)
(16)
–
(142)
(45)
–
(590)
(17)
(1)
(428)
$12.22
$9.95
$12.20
–
–
(299)
(6)
–
(4,126)
–
–
–
1 Total cost of sales per the Consolidated Statement of Earnings (loss) in the Company’s annual audited consolidated financial statements.
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 expenditure and deferred stripping 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”.
4 Excludes purchases of copper concentrate from third parties treated through the Kansanshi Smelter.
5 Royalties in C3 and AISC costs exclude the 2022 impact of $18 million attributable to the 3.1% sale of a gross royalty interest in KMP to ZCCM-IH and exclude
the 2022 impact of $28 million attributable to payments pursuant of Law 406 in Panama.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 58
67
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Cobre
Panamá Kansanshi Sentinel
Guelb
Moghrein
Las
Corporate
Cruces Çayeli Pyhäsalmi Copper
& other Ravensthorpe Enterprise
Total
(1,894)
(1,324)
(1,315)
(187)
(105)
(67)
(33) (4,925)
(59)
(442)
–
(5,426)
(in United States dollars, tabular amounts in millions, except where noted)
For the year
ended
December 31,
2022
Cost of sales1
Adjustments:
Depreciation
By-product
credits
Royalties
Treatment and
refining charges
Freight costs
Finished goods
Other4
Cash cost
(C1)2,4
Adjustments:
Depreciation
(excluding
depreciation in
finished goods)
Royalties
Other
Total cost
(C3)2,4
Cash cost (C1)2
Adjustments:
General and
administrative
expenses
Sustaining
capital
expenditure and
deferred
stripping3
608
190
57
226
204
135
314
1
188
(130)
(25)
(55)
–
(17)
31
–
(45)
(9)
115
17
20
13
118
6
(6)
–
(7)
–
–
1
–
–
1
2
18
19
17
7
(7)
(9)
–
–
3
1,183
22
–
552
394
(2)
(225)
–
1
–
(54)
(14)
186
(1,155)
(678)
(875)
(61)
(85)
(40)
(9) (2,903)
(616)
(225)
(306)
(14)
–
(17)
(3) (1,181)
(57)
(16)
(135)
(188)
(11)
(10)
(6)
(1)
(1)
(1)
(7)
–
–
–
(394)
(39)
(1,844)
(1,049)
(1,379)
(82)
(87)
(64)
(12) (4,517)
(1,155)
(678)
(875)
(61)
(85)
(40)
(9) (2,903)
(49)
(28)
(37)
(2)
(4)
(1)
–
(121)
(151)
(145)
(159)
(5)
–
(5)
–
(465)
1
–
–
–
–
–
58
–
–
–
–
–
–
–
–
–
–
–
–
–
–
46
31
20
–
–
(23)
6
–
1,230
–
–
–
–
–
–
583
414
(225)
(54)
(37)
250
(362)
–
(3,265)
(50)
–
(1,231)
(20)
(6)
–
–
(414)
(45)
(438)
–
(4,955)
(362)
–
(3,265)
(15)
–
(136)
(27)
–
(492)
(20)
(1)
–
–
(414)
(9)
(425)
–
(4,316)
$10.45
$8.83
$10.72
–
–
–
Royalties
(57)
(135)
(188)
Lease payments
(4)
–
(2)
(6)
–
(1)
(2)
(7)
–
–
–
(394)
(8)
AISC2,4
AISC (per lb)2,4
Cash cost – (C1)
(per lb)2,4
Total cost – (C3)
(per lb)2,4
(1,416)
(986)
(1,261)
(74)
(92)
(53)
(9) (3,891)
$1.91
$3.11
$2.43
$2.47
$4.35
$2.17
$1.99
$2.35
$1.56
$2.18
$1.69
$2.00
$4.05
$1.67
$1.91
$1.76
$2.49
$3.31
$2.66
$2.77
$4.15
$2.64
$2.56
$2.73
1 Total cost of sales per the Consolidated Statement of Earnings (loss) in the Company’s annual audited consolidated financial statements.
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 expenditure and deferred stripping 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”.
4 Excludes purchases of copper concentrate from third parties treated through the Kansanshi Smelter.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 59
68
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
Realized Metal Prices
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.
EBITDA and Adjusted Earnings
EBITDA and adjusted earnings (loss), which are non-GAAP financial measures, and adjusted earnings (loss) 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.
Calculation of Operating Cash Flow per Share and Net Debt
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 DEBT
Cash and cash equivalents
Bank overdraft
Current debt
Non-current debt
Net debt
EBITDA
Q4 2023
Q3 2023
Q4 2022
1,157
1,265
1,688
198
769
6,610
6,420
10
808
6,084
5,637
–
575
6,805
5,692
Q4 2021
1,859
–
313
7,599
6,053
Operating profit (loss)
Depreciation
Other adjustments:
Foreign exchange loss (gain)
Impairment expense4
Share of results of joint venture
Royalty payable1,2
Restructuring expense3
Other expense (income)5
Revisions in estimates of restoration
provisions at closed sites
Total adjustments excluding depreciation
EBITDA
QUARTERLY
Q4 2023
Q3 2023
Q4 2022
(984)
226
43
900
35
28
18
11
(4)
1,031
273
585
323
23
–
–
–
31
8
(1)
61
969
314
327
25
–
–
–
–
(5)
(14)
6
647
FULL YEAR
2023
78
1,121
67
900
35
46
49
28
4
1,129
2,328
2022
2,241
1,230
(184)
–
–
–
–
46
(17)
(155)
3,316
1 The year ended December 31, 2023, include royalty attributable due to ZCCM-IH of $18 million relating to the year ended December 31, 2022.
2 The quarter and year ended December 31, 2023, pursuant to Law 406, include payments of $28 million income taxes, withholding and mining taxes related to
2022 which has been recognized in royalty expense.
3 The quarter and year ended December 31, 2023 include $18 million from the severance package at Cobre Panamá and for the year ended December 31, 2023,
following a corporate reorganization within the Kansanshi segment include a restructuring expense of $31 million.
4 An impairment charge against property, plant and equipment of $854 million has been recognized at Ravensthorpe following an impairment test for the year
ended December 31, 2023, along with $46 million in respect of exploration assets.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 60
69
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
5 Other expenses includes a charge of $40 million for non-recurring costs in connection with previously sold assets for the year ended December 31, 2022.
Net earnings (loss) attributable to
shareholders of the Company
Adjustments attributable to shareholders
of the Company:
Adjustment for expected phasing of
Zambian VAT
Total adjustments to EBITDA excluding
depreciation
Ravensthorpe deferred tax charge1
Tax adjustments
Minority interest adjustments
Adjusted earnings (loss)
Basic earnings (loss) per share as
reported
Diluted earnings (loss) per share
Adjusted earnings (loss) per share
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
2023
(1,447)
325
117
(954)
2022
1,034
20
(15)
56
(49)
190
1,129
(155)
1,031
160
273
(296)
(259)
61
–
(12)
–
359
6
–
(22)
(6)
151
160
271
(296)
261
($2.09)
$0.47
$0.17
($1.38)
($2.09)
($0.37)
$0.47
$0.52
$0.17
$0.22
($1.38)
$0.38
–
(7)
2
1,064
$1.50
$1.49
$1.54
1
In the current year to December 31, 2023 the Company derecognized $160 million of deferred tax assets in Ravensthorpe.
Significant Judgments, Estimates 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.
Significant judgments
> Assessment of impairment indicators
Management applies significant judgment 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.
As at December 31, 2023, the carrying amount of the net assets of the Company is more than its market capitalisation. The
share price is impacted by a number of factors including P&SM at Cobre Panamá and balance sheet considerations. The
Company completed an analysis of the recoverable amounts of its cash-generating units to compare against their respective
carrying values as of December 31, 2023. An impairment charge of $900 million has been recognized which includes
impairments for Ravensthorpe and other exploration assets (Refer to Note 20). The recoverable amount of Cobre Panamá
has been determined using a fair value less costs of disposal calculation based on a cash flow model covering different
possible scenarios, including the process of international arbitration and various levels of operation. In addition, judgment is
applied to the probability assigned to scenarios considered for Cobre Panamá (Refer to Note 7). The recoverable amount of
other cash-generating units exceeds the carrying value as at December 31, 2023, and therefore no further impairment
charge has been recognized.
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.
For exploration projects, management considers indicators including the Company’s continued ability and plans to further
develop the projects and title of mineral properties required to advance the projects to assess the existence of impairment
indicators.
The Company’s most significant cash-generating units 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.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 61
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
> Control over Cobre Panamá
The Company suspended production at the Cobre Panamá mine at the end of November 2023 and placed the mine into a
phase of P&SM. The Company evaluated whether it still maintained effective power over the mine and related operations,
and has consolidated MPSA and the Cobre Panamá mine on the basis of control, effectively exercising power over the
relevant activities related to the mine, it's exposure to variable returns, and impact on the returns of the operation through its
managerial involvement.
> Control over La Granja UK Holdings Limited
Management considered various factors, including the legal form of the shareholding, in determining that the Company has
control over La Granja UK Holdings Limited.
In determining whether the acquisition of La Granja constituted a business or an asset acquisition, management considered
whether substantially all of the fair value of the gross assets acquired were concentrated in a single identifiable asset or a
group of similar identifiable assets (the ‘concentration test’) and concluded that this was evident. The acquisition has
therefore been accounted for as an asset acquisition.
Rio Tinto’s 45% non-controlling interest in La Granja is recognized on consolidation. Management considered accounting
treatments for non-controlling interests on asset acquisitions and concluded to measure non-controlling interest arising by
reference to the fair value of consideration paid for a 55% holding, as would have been an accounting option had the
acquisition been considered a business combination. The non-controlling interest is subsequently adjusted for the change in
the non-controlling interest’s share of net assets in La Granja, which can be and is different to its share of result.
In assessing the fair value of consideration paid, management concluded that $546 million of initial funding that the
Company is responsible for does not constitute deferred consideration, and therefore the consideration for the acquisition
was $105 million that was paid to Rio Tinto for a 55% shareholding.
> 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, restoration provisions included in provisions and other liabilities, deferred revenue, 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:
•
•
•
•
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.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 62
71
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (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. 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 judgment 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.
The Company operates in certain jurisdictions that have increased degrees of political and sovereign risk. Tax legislation in
these jurisdictions is developing and there is a risk that fiscal reform changes with respect to existing investments could
unexpectedly impact application of the tax legislation. Following due public consultation and regulatory signoff, the
National Assembly in Panama approved Bill 1100, being the proposal for approval of the Refreshed Concession Contract
for the Cobre Panamá mine on October 20, 2023. On the same day, President Laurentino Cortizo sanctioned Bill 1100 into
Law 406, which was subsequently published in the Official Gazette. Law 406 approved the concession contract for the
Cobre Panamá mine on October 20, 2023. On November 16, 2023, in accordance with its contractual obligations to the
Republic of Panama under Law 406, the Company made tax and royalty payments of $567 million in respect of the period
from December 2021 to October 2023. On November 28, 2023, the Supreme Court of Justice of Panama announced that
it declared Law 406 unconstitutional. The ruling was subsequently published in the Official Gazette on December 2, 2023.
As the ruling on unconstitutionality is not retroactive, the Company has recorded all payments of taxes and royalties that
were calculated based on a taxable margin as current tax expense as per Law 406 up to December 2, 2023. Subsequent
to December 2, 2023, the Company has recorded all taxes and royalties as per the general income tax and mining code.
Taxes are disclosed in note 13 of the financial statements.
> 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 Panamá project. Franco-Nevada have provided $1 billion deposit to the Cobre
Panamá 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 judgment 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
Panamá reserves and mine plan, that funds received from Franco-Nevada constitute a prepayment of revenues deliverable
from future Cobre Panamá production
Significant accounting estimates
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
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 63
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
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.
Changes in the proven and probable reserves estimates may impact the carrying value of property, plant and equipment,
restoration provisions, deferred revenue, 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
resources, and operating, capital and restoration costs and tax regulations applicable to the cash-generating unit’s
operations 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.
The sensitivity of carrying values to changes in the assumptions are set out in note 7 Goodwill and Note 20 Impairment and
related charges.
> 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 $62 million at December 31, 2023.
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 timing of 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 an appropriate discount rate as disclosed in note 4c, which is then applied to calculate
the phasing adjustment based on the estimated timing of recoverability. 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, 2023,
would lead to a decrease to the carrying value and an increase to finance costs of $58 million.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 64
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
Financial instruments risk exposure
Credit risk
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, 2023, 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. 51% 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, Trident, 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 $521 million at December 31, 2023, which is past due
(December 31, 2022: $639 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,
2023, are insignificant.
Liquidity risk
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.
The Company was in compliance with all existing facility covenants as at December 31, 2023. The current situation at Cobre
Panamá has impacted the EBITDA generating potential of the Company, putting at risk the Company’s ability to meet the net
debt to EBITDA ratio covenant as defined in its current senior banking facilities. Current forecasts for 2024, before taking into
account future balance sheet initiatives, indicate the Company may breach the prevailing net debt to EBITDA ratio covenant
during the coming twelve months, which results in the existence of a material uncertainty that casts a significant doubt about
the Company’s ability to continue as a going concern. The Company is significantly advanced in discussions with its banking
partners to renegotiate this covenant and extend its bank loan facilities. In addition, the Company has undertaken a number
of actions to reduce cash outflows, manage its debt and working capital, and increase EBITDA, while also developing a
range of portfolio-related options including exploring the sale of smaller mines and interests in its larger mining assets.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 65
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
Market risks
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.
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, 2023, and December 31, 2022, the Company had not entered into any
derivatives or 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.
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, 2023, and December 31
2022, the Company held no floating-to-fixed interest rate swaps.
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.
Capital management
The Company takes a balanced approach to capital management in order to safeguard its ability to continue operate as a
going concern, ensuring sufficient liquidity is available for continued growth, cognizant of the requirements of shareholders
and debt holders 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. The Company is significantly advanced in discussions with its banking partners to
address the terms and extend the maturities of its bank loan facilities. The Company has undertaken a number of actions to
reduce cash outflows, manage its debt and working capital, and increase EBITDA, while also developing a range of portfolio-
related options including exploring the sale of smaller mines and interests in its larger mining assets. These actions include
the suspension of the Company’s dividend presently.
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.
Disclosure Controls and Procedures
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.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 66
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
An evaluation of the effectiveness of the Company’s disclosure controls and procedures, as defined under the National
Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings, was conducted as of December 31,
2023, 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 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.
Since the December 31, 2023 evaluation, there have been no adverse changes to the Company’s controls and procedures
and they continue to remain effective.
Internal Control over Financial Reporting (“ICFR”)
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, 2023 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, 2023 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.
Limitations of Controls and Procedures
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.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 67
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FIRST QUANTUM MINERALS LTD.2023 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:
Consolidated operations
2021
Q1 22
Q2 22
Q3 22
Q4 22
2022
Q1 23
Q2 23
Q3 23
Q4 23
2023
Sales revenues
Copper
Gold
Nickel
Other
Total sales revenues
Cobre Panamá
Kansanshi
Trident
Guelb Moghrein
Ravensthorpe
Sales hedge program loss
Other
6,332 1,862 1,670 1,469 1,554 6,555 1,333 1,464 1,791 1,053 5,641
470
117
101
87
77
382
254
120
156
64
55
78
109
157
441
62
44
248
76
98
51
63
89
35
114
84
40
66
70
29
319
341
155
7,212 2,163 1,904 1,727 1,832 7,626 1,558 1,651 2,029 1,218 6,456
3,160
741
837
707
674 2,959
606
697
930
280 2,513
2,014
596
395
359
356 1,706
388
358
475
377 1,598
2,032
555
453
437
535 1,980
349
410
468
438 1,665
313
46
286
132
(902)
309
(3)
96
58
63
(2)
100
54
56
214
63
117
164
476
100
–
53
–
(5)
47
296
–
52
47
94
–
45
54
85
–
17
43
53
–
207
332
–
27
141
Total sales revenues
7,212 2,163 1,904 1,727 1,832 7,626 1,558 1,651 2,029 1,218 6,456
Gross profit
EBITDA3
Net earnings (loss) attributable to
shareholders of the Company
Adjusted earnings (loss)3
Total assets
Current liabilities
Total long-term liabilities
Net debt3
Basic earnings (loss) per share
Adjusted earnings (loss) per share4
Diluted earnings (loss) per share
Dividends declared per common share
(CDN$ per share)
Cash flows per share from operating
activities4
2,562
908
629
302
361 2,200
280
265
660
87 1,292
3,684 1,180
906
583
647 3,316
518
568
969
273 2,328
832
385
419
113
117 1,034
75
93
325 (1,447)
(954)
826
480
337
96
151 1,064
76
85
359
(259)
261
25,270 25,544 25,224 24,966 25,080 25,080 24,495 24,272 24,841 23,758 23,758
1,678 1,836 1,862 1,590 1,738 1,738 1,662 1,952 1,951 2,007 2,007
12,098 11,787 11,030 11,035 11,105 11,105 10,617 10,134 10,319 10,973 10,973
6,053 5,815 5,339 5,329 5,692 5,692 5,780 5,650 5,637 6,420 6,420
$1.21 $0.56 $0.61 $0.16 $0.17 $1.50 $0.11 $0.13 $0.47 ($2.09) ($1.38)
$1.20 $0.70 $0.49 $0.14 $0.22 $1.54 $0.11 $0.12 $0.52 ($0.37) $0.38
$1.20 $0.56 $0.60 $0.16 $0.17 $1.49 $0.11 $0.13 $0.47 ($2.09) ($1.38)
$0.010 $0.005
$– $0.160
$– $0.165 $0.130
$– $0.080
$– $0.210
$4.19 $0.97 $1.31 $0.76 $0.34 $3.38 $0.43 $1.04 $0.86 ($0.27) $2.07
Basic weighted average shares (000’s)2 688,674 690,130 690,237 690,726 691,053 690,516 690,457 690,219 691,137 691,674 690,876
Copper statistics
Total copper production (tonnes)
Total copper sales (tonnes)6
Realized copper price (per lb)4
816,435 182,210 192,668 194,974 206,007 775,859 138,753 187,175 221,550 160,200 707,678
821,889 196,702 187,642 198,980 198,912 782,236 150,287 177,362 218,946 127,721 674,316
$3.64 $4.45 $4.19 $3.43 $3.56 $3.90 $3.95 $3.75 $3.70 $3.62 $3.76
TC/RC (per lb)
(0.12)
(0.12)
(0.14)
(0.12)
(0.12)
(0.13)
(0.14)
(0.15)
(0.15)
(0.13)
(0.15)
Freight charges (per lb)
(0.03)
(0.04)
(0.03)
(0.03)
(0.04)
(0.03)
(0.02)
(0.03)
(0.02)
(0.05)
(0.03)
Net realized copper price (per lb)4
Cash cost – copper (C1) (per lb)4,5
All-in sustaining cost (AISC) (per lb)4,5,7
Total cost – copper (C3) (per lb)4,5,7
$3.49 $4.29 $4.02 $3.28 $3.40 $3.74 $3.79 $3.57 $3.53 $3.44 $3.58
$1.30 $1.61 $1.74 $1.82 $1.86 $1.76 $2.24 $1.98 $1.42 $1.82 $1.82
$1.88 $2.27 $2.37 $2.34 $2.42 $2.35 $2.87 $2.64 $2.02 $2.52 $2.46
$2.23 $2.65 $2.73 $2.75 $2.79 $2.73 $3.30 $2.92 $2.29 $2.77 $2.76
Gold statistics
Total gold production (ounces)
Total gold sales (ounces)1
Net realized gold price (per ounce)4
Nickel statistics
Nickel produced (contained tonnes)8
Nickel produced (payable tonnes)
Nickel sales (contained tonnes)
Nickel sales (payable tonnes)
Net realized price (per payable lb)4
312,492
70,357
74,959
67,417
70,493 283,226
47,874
52,561
73,125
53,325 226,885
321,858
76,195
69,998
65,014
59,568 270,775
51,941
48,640
77,106
45,365 223,052
$1,673
$1,772
$1,736
$1,546
$1,574
$1,665
$1,766
$1,797
$1,764
$1,835
$1,786
16,818
14,018
17,078
14,313
5,122
4,743
4,350
4,037
4,853
4,348
2,892
2,443
5,849
4,960
5,992
5,072
5,705
21,529
4,450
18,501
6,840
20,074
5,216
16,768
5,917
4,344
5,846
4,322
5,976
4,366
5,906
4,287
7,046
5,177
5,749
4,204
7,313
26,252
5,363
19,250
5,719
23,220
4,216
17,029
$8.05
$13.52
$10.09
$9.76
$13.67
$11.93
$10.25
$9.50
$8.96
$7.53
$9.07
1 Excludes refinery-backed gold credits purchased and delivered under the precious metal streaming arrangement. See “Precious Metal Stream Arrangement”.
2 Fluctuations in average weighted shares between quarters reflects shares issued and changes in levels of treasury shares held for performance share units.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 68
77
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
3 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 meanings under IFRS and might not be comparable to similar measures disclosed by other issuers. See “Regulatory Disclosures” for further
information.
4 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 a standardized meaning under IFRS and might not be comparable to
similar measures disclosed by other issuers. See “Regulatory Disclosures” for further information.
5 Excludes purchases of copper concentrate from third parties treated through the Kansanshi Smelter.
6 Sales of copper anode attributable to anode produced from third-party purchased concentrate are excluded.
7 Royalties in C3 and AISC costs exclude the 2022 impact of $18 million attributable to the 3.1% sale of a gross royalty interest in KMP to ZCCM-IH and exclude
the 2022 impact of $28 million attributable to payments pursuant of Law 406 in Panama.
8 Nickel production includes 2,751 tonnes and 4,527 tonnes for the three and twelve months ended December 31, 2023, respectively, of pre-commercial production
from Enterprise, which is not included in earnings or C1, C3 and AISC calculations.
APPENDICES
PRODUCTION
Copper production (tonnes)1
Cobre Panamá
Kansanshi cathode
Kansanshi concentrate
Kansanshi total
Sentinel
Guelb Moghrein
Las Cruces
Çayeli
Pyhäsalmi
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
2023
2022
62,616
6,423
25,464
31,887
59,964
3,246
–
2,487
–
112,734
10,369
29,231
39,600
63,805
2,775
–
2,636
–
89,652
5,001
29,801
34,802
73,409
3,481
2,229
2,434
–
330,863
30,654
104,173
134,827
214,046
13,014
3,892
11,036
–
350,438
20,625
125,657
146,282
242,451
13,313
9,557
11,456
2,362
Total copper production (tonnes)
160,200
221,550
206,007
707,678
775,859
Gold production (ounces)
Cobre Panamá
Kansanshi
Guelb Moghrein
Other sites2
Total gold production (ounces)
Nickel production (contained tonnes)
Enterprise
Ravensthorpe
Total nickel production (contained
tonnes)
30,986
16,718
5,327
294
53,325
2,751
4,562
7,313
45,996
19,946
6,765
418
73,125
1,556
5,490
7,046
38,302
24,479
7,434
278
70,493
–
5,705
5,705
129,854
68,970
26,363
1,698
226,885
4,527
21,725
26,252
139,751
109,617
30,845
3,013
283,226
–
21,529
21,529
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.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 69
78
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
SALES
Copper sales volume (tonnes)
Cobre Panamá
Kansanshi cathode
Kansanshi anode3
Kansanshi total3
Sentinel anode
Sentinel concentrate
Sentinel total
Guelb Moghrein
Las Cruces
Çayeli
Pyhäsalmi
Total copper sales (tonnes)
Gold sales volume (ounces)
Cobre Panamá
Kansanshi
Guelb Moghrein
Other sites1
Total gold sales (ounces)2
Nickel sales volume (contained tonnes)
Ravensthorpe
Enterprise
Total Nickel sales (contained tonnes)
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
2023
2022
35,809
6,879
24,416
31,295
37,676
17,436
55,112
2,700
–
2,805
–
113,616
9,393
32,427
41,820
48,740
9,860
58,600
3,624
207
1,079
–
85,330
5,781
26,715
32,496
47,703
23,939
71,642
3,765
2,236
2,918
525
306,417
29,343
106,042
135,385
165,642
39,518
205,160
12,717
4,054
10,583
–
343,448
23,751
135,256
159,007
169,899
71,263
241,162
12,522
9,570
14,098
2,429
127,721
218,946
198,912
674,316
782,236
19,861
19,396
5,539
569
45,365
4,165
1,554
5,719
45,959
23,704
7,292
151
77,106
5,652
97
5,749
34,208
16,156
8,601
603
59,568
6,840
–
6,840
121,554
76,169
23,546
1,783
223,052
21,569
1,651
23,220
134,660
101,015
30,852
4,248
270,775
20,074
–
20,074
1 Other sites include Çayeli and Pyhäsalmi.
2 Excludes refinery-backed gold credits purchased and delivered under precious metal streaming arrangement.
3 Copper sales include third-party sales of concentrate, cathode and anode attributable to Kansanshi. Sales of copper anode attributable to third-party concentrate
purchases were 10,965 tonnes and 40,134 tonnes for the fourth quarter and full year ended December 31, 2023, respectively, (8,651 and 13,379 tonnes for the
fourth quarter and full year ended December 31, 2022).
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 70
79
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT (in United States dollars, tabular amounts in millions, except where noted)
SALES REVENUES
Cobre Panamá
- copper
- gold
- silver
Kansanshi
- copper cathode
- copper anode
- gold
- other
Trident - Sentinel
- copper anode
- copper
concentrate
Trident - Enterprise - nickel
Guelb Moghrein
- copper
Las Cruces
Çayeli
- gold
- magnetite
- copper
- copper
- zinc, gold and
silver
Pyhäsalmi
- copper
- zinc, pyrite, gold
and silver
- nickel
- cobalt
Ravensthorpe
Corporate1
Sales revenues
Copper
Gold
Nickel
Silver
Other
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
257
19
4
55
285
37
–
302
117
19
19
11
13
–
18
7
–
2
51
2
–
1,218
1,053
66
70
5
24
857
57
16
76
356
42
1
397
69
2
27
13
14
2
7
1
–
4
82
3
3
2,029
1,791
114
84
15
25
626
36
12
46
278
26
6
375
160
–
27
15
14
18
19
–
5
4
157
7
1
1,832
1,554
77
157
12
32
2023
2,340
132
41
241
1,214
140
3
1,372
272
21
94
44
69
36
72
11
–
13
320
12
9
6,456
5,641
319
341
42
113
2022
2,768
148
43
216
1,286
174
30
1,452
528
–
97
53
64
85
103
17
21
22
445
31
43
7,626
6,555
382
441
48
200
1 Corporate sales include sales hedges (see “Hedging Programs” for further discussion).
1,218
2,029
1,832
6,456
7,626
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 71
80
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(in United States dollars, tabular amounts in millions, except where noted)
UNIT CASH COSTS (PER LB)1,2
Cobre Panamá
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)
Kansanshi
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)
Sentinel
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)
Ravensthorpe
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)
Guelb Moghrein
Copper cash cost (C1) (per lb)
Copper all-in sustaining cost (AISC) (per lb)
Total copper cost (C3) (per lb)
Las Cruces
Copper cash cost (C1) (per lb)
Çayeli
Copper cash cost (C1) (per lb)
Pyhäsalmi
Copper cash cost (C1) (per lb)
QUARTERLY
FULL YEAR
Q4 2023
Q3 2023
Q4 2022
2023
2022
$0.33
0.88
0.10
0.42
(0.28)
$1.45
$1.71
$2.22
$0.99
1.08
0.49
0.19
(0.52)
0.20
$2.43
$3.83
$3.69
$0.30
0.74
0.08
0.36
(0.29)
$1.19
$1.52
$1.99
$0.72
0.90
0.15
0.18
(0.45)
0.13
$1.63
$2.84
$2.73
$0.43
1.02
0.08
0.35
(0.25)
$1.63
$2.01
$2.54
$1.48
1.10
0.20
0.20
(0.42)
0.25
$2.81
$3.55
$3.96
$0.34
0.91
0.09
0.38
(0.25)
$1.47
$1.85
$2.34
$1.11
1.01
0.26
0.18
(0.46)
0.17
$2.27
$3.47
$3.48
$0.44
0.95
0.07
0.35
(0.25)
$1.56
$1.91
$2.49
$1.20
1.00
0.15
0.18
(0.57)
0.22
$2.18
$3.11
$3.31
$0.70
$0.61
$0.54
$0.74
$0.59
0.58
0.19
0.28
0.10
$1.85
$2.51
$2.72
$2.23
7.89
1.51
0.52
(0.37)
$11.78
$16.08
$14.18
$2.24
$2.73
$3.07
0.51
0.18
0.23
0.12
$1.65
$2.32
$2.46
$1.91
6.14
1.42
0.41
(0.40)
$9.48
$11.46
$11.73
$3.18
$3.77
$4.13
0.52
0.15
0.27
0.07
$1.55
$2.25
$2.42
$1.54
7.19
0.77
0.48
(0.66)
$9.32
$11.10
$11.70
$2.57
$3.19
$3.35
0.68
0.20
0.24
0.12
$1.98
$2.67
$2.88
$1.90
6.68
1.29
0.43
(0.35)
$9.95
$12.22
$12.20
$2.44
$2.96
$3.17
0.61
0.15
0.26
0.08
$1.69
$2.43
$2.66
$1.55
6.95
0.74
0.43
(0.84)
$8.83
$10.45
$10.72
$2.00
$2.47
$2.77
$–
$–
$4.02
$4.57
$4.05
$2.31
$1.80
$2.46
$1.97
$1.67
$–
$–
$–
$–
$1.91
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 Excludes purchases of copper concentrate from third parties treated through the Kansanshi Smelter.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 72
81
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
(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; the status
of Cobre Panamá and the P&SM program, including the potential impact of the status of Cobre Panamá on the Company’s
leverage and liquidity; the Company’s agreement with the Government of Panama regarding the long term future of Cobre
Panamá and approval of the same by the National Assembly of Panama; expected timing of completion of project
development at Enterprise and the impact of ore grades on future production, potential production, operational, labour or
marketing disruptions, including 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 and arbitration proceedings which
involve the Company, the impact of any changes to tax legislation, 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; plans, targets and commitments regarding climate
change-related physical and transition risks and opportunities (including intended actions to address such risks and
opportunities), greenhouse gas emissions, energy efficiency and carbon intensity; use of renewable energy sources, future
reporting regarding climate change and environmental matters, design, development and operation of the Company’s
projects including the S3 Expansion and scale-back at Ravensthorpe; the Company’s expectations regarding increased debt
management initiatives and the impact of such initiatives on liquidity and leverage; the Company’s expectations regarding it’s
ability to meet debt covenants in its senior banking facilities and to renegotiate and extend such facilities; the Company’s
expectations regarding financing activity and the use of proceeds from the Prepayment Agreement; the Company’s project
pipeline and development and growth plans; and the timing of the presidential and national legislative elections in Panama
and engagement with the administration thereafter. Often, but not always, forward-looking statements or information can be
identified by the use of words such as “aims”, “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, the success of
Company’s actions and plans to reduce greenhouse gas emissions and carbon intensity of its operations, 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 and legislative and regulatory reform. 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.
First Quantum Minerals Ltd. | Q4 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 73
82
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT 2023 ANNUAL REPORT
CONSOLIDATED
FINANCIAL
STATEMENTS
83
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT Management’s Responsibility for Financial Reporting
The consolidated financial statements of First Quantum Minerals Ltd. have been prepared by and are the responsibility of
the Company’s management. The consolidated financial statements have been prepared in accordance with IFRS
Accounting Standards as issued by the International Accounting Standards Board and, where appropriate, reflect
management’s best estimates and judgments based on currently available information.
Management has developed and is maintaining a system of internal controls to obtain reasonable assurance that the
Company’s assets are safeguarded, transactions are authorized and financial information is reliable.
The Company’s independent auditors, PricewaterhouseCoopers LLP, who are appointed by the shareholders, conduct an
audit in accordance with Canadian generally accepted auditing standards. Their report outlines the scope of their audit and
gives their opinion on the consolidated financial statements.
The Audit Committee of the Board of Directors meets periodically with management and the independent auditors to review
the scope and results of the annual audit, and to review the consolidated financial statements and related financial reporting
matters prior to approval of the consolidated financial statements.
Signed by Signed by
Tristan Pascall Ryan MacWilliam
Chief Executive Officer
Chief Financial Officer
February 20, 2024
84
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Independent auditor’s report
To the Shareholders of First Quantum Minerals
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of First Quantum Minerals and its subsidiaries (together, the Company) as at
December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in
accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board
(IFRS Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated statements of earnings (loss) for the years ended December 31, 2023 and 2022;
the consolidated statements of comprehensive income (loss) for the years ended December 31, 2023
and 2022;
the consolidated statements of cash flows for the years ended December 31, 2023 and 2022;
the consolidated statements of financial position as at December 31, 2023 and 2022;
the consolidated statements of changes in equity for the years ended December 31, 2023 and 2022;
and
the notes to the consolidated financial statements, comprising material accounting policy information
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 2500, Toronto, Ontario, Canada M5J 0B2
T: +1 416 863 1133, F: +1 416 365 8215, ca_toronto_18_york_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
85
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT Material uncertainty related to going concern
We draw attention to note 2 to the consolidated financial statements, which describes events or conditions
that indicate the existence of a material uncertainty that may cast significant doubt about the Company’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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, 2023. 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. In addition to the matter
described in the Material uncertainty related to going concern section, we have determined the matters
described below to be the key audit matters to be communicated in our report.
Key audit matter
How our audit addressed the key audit matter
Impairment Assessment related to Cobre
Panama CGU
Our approach to addressing the matter included the
following procedures, among others:
Refer to note 2 – Material accounting policies,
note 3 – Significant judgments, estimates and
assumptions, note 7 – Goodwill and note 25 –
Commitments and contingencies to the
consolidated financial statements.
As at December 31, 2023, the carrying value
assigned to the Cobre Panama CGU was $237
million.
The recoverable amount of the CGU to which
goodwill has been allocated is tested for
impairment at the same time at the end of every
year or earlier if any indicator of impairment exists.
The recoverable amount is the higher of fair value
less costs of disposal and value in use. If the
recoverable amount of an asset or CGU is
estimated to be less than its carrying value, the
carrying value of the asset or CGU is reduced to its
recoverable amount.
Tested how management estimated the
recoverable amount of the Cobre Panama
CGU, which included the following:
– Tested the appropriateness of the fair
value less costs of disposal method and
tested the mathematical accuracy of the
underlying cash flow models.
–
Tested the underlying data used in the
discounted cash flow models.
– Evaluated the reasonableness of
assumptions such as the probability
assigned to each scenario, commodity
prices, future costs and capital expenditure
and future fiscal regime for the various
operating scenarios by (i) obtaining and
assessing evidence, which includes
external information, regarding
management’s assessment of probability
weight to each scenario; (ii) comparing
commodity prices with external market and
industry data; (iii) comparing future
production costs and future capital
expenditure to recent actual production
costs and actual capital expenditure
86
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT Key audit matter
How our audit addressed the key audit matter
incurred by the Cobre Panama CGU, and
assessing whether these assumptions
were consistent with evidence obtained in
other areas of the audit, as applicable; and
(iv) assessing fiscal regime applicable to
the Cobre Panama CGU.
– 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 were 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 and tests of the
data used by management’s experts and
an evaluation of their findings.
– Professionals with specialized skill and
knowledge in the field of valuation were
used to assist in evaluating the
appropriateness of the cash flow model
used and the reasonableness of discount
rate.
Tested the disclosures made in the
consolidated financial statements.
As at December 31, 2023, the carrying value of the
net assets of the Company is more than its market
capitalization.
Management performed an impairment test of the
Cobre Panama CGU as at December 31, 2023. For
the purposes of the impairment test, the
recoverable amount of the Cobre Panama CGU
has been determined using a fair value less costs
of disposal method based on cash flow models
covering various possible scenarios, including the
process of international arbitration and various
levels of operation, and which uses a post-tax
discount rate, taking account of assumptions that
would be made by market participants. The
outcome of the scenarios considered remains
uncertain. The future cash flows used in the various
scenarios of the models are inherently uncertain
and could materially change over time as a result of
changes, where applicable, to assumptions such as
the probability of the various scenarios occurring;
the ore reserves and resources estimates,
commodity prices, discount rates, future costs and
capital expenditure and estimates related to the
fiscal regime for the operating scenarios; and
estimates related to potential arbitral recoveries.
For the applicable scenarios, reserves and
resources are estimated based on the National
Instrument 43-101 compliant report produced by
qualified persons (management’s experts).
In light of this assessment by management, the
calculated recoverable amount of the Cobre
Panama CGU exceeds the carrying value of the
Cobre Panama CGU as at December 31, 2023,
and therefore no impairment charge has been
recognized.
87
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT Key audit matter
How our audit addressed the key audit matter
We considered this a key audit matter due to the
subjectivity and complexity in performing
procedures to test the assumptions used by
management in determining the recoverable
amount of the Cobre Panama CGU, which involved
significant judgment from management. The audit
effort involved the use of professionals with
specialized skill and knowledge in the field of
valuation.
IImpairment assessment of PP&E and other
assets of the Ravensthorpe cash generating
unit (CGU)
Refer to note 2 – Material accounting policies,
note 3 – Significant judgments, estimates and
assumptions, note 6 – Property, plant and
equipment and note 20 – Impairment and related
charges to the consolidated financial statements.
Our approach to addressing the matter included the
following procedures, among others:
Tested how management estimated the
recoverable amount of the Ravensthorpe CGU,
which included the following:
– Tested the appropriateness of the method
and tested the mathematical accuracy of
the underlying cash flow models.
As at December 31, 2023, the carrying values of
PP&E and other assets amounted to $18,583
million and $352 million, respectively, portions of
which related to the Ravensthorpe CGU.
Management performs impairment tests on PP&E
when events or changes in circumstances occur
that indicate the assets may not be recoverable.
Where it is not possible to estimate the recoverable
amount of an individual asset, management
estimates the recoverable amount of the CGU to
which the assets belong. 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. The recoverable amount is
the higher of fair value less costs of disposal and
value in use. If the recoverable amount of an asset
or CGU is estimated to be less than its carrying
value, the carrying value of the asset or CGU is
reduced to its recoverable amount.
For the Ravensthorpe CGU, weak nickel prices,
lower payabilities and high operating costs have
resulted in significant margin pressure.
– Tested underlying data used in the
discounted cash flow model.
– Evaluated the reasonableness of
assumptions by comparing short-term and
long-term consensus nickel prices and
sulphur price per tonne with external
market and industry data; and assessing
whether these assumptions were
consistent with evidence obtained in other
areas of the audit.
– Professionals with specialized skill and
knowledge in the field of valuation assisted
us in assessing the appropriateness of the
discounted cash flow model, and the
reasonableness of the discount rate used
within the model.
Tested the disclosures, including the sensitivity
analysis, made in the consolidated financial
statements with regard to the impairment
assessments of PP&E and other assets for the
Ravensthorpe CGU.
88
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT Key audit matter
How our audit addressed the key audit matter
An impairment test was performed by management
using a discounted cash flow model based on
estimated future cash flows, which included
assumptions such as short-term and long-term
consensus nickel prices and sulphur price per
tonne and discount rate.
An impairment charge of $854 million was
recognized against PP&E and other assets due to
the recoverable amount being lower than the
carrying value.
We considered this a key audit matter due to the
significant audit effort and subjectivity in performing
procedures to test significant assumptions used by
management in determining the recoverable
amount of the Ravensthorpe CGU. The audit effort
involved the use of professionals with specialized
skill and knowledge in the field of valuation.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis, which we obtained prior to the date of this auditor’s report and the information,
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.
Our opinion on the consolidated financial statements does not cover the other information and we do not
and will not express any form of assurance conclusion thereon.
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.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard. When we read the information, other
than the consolidated financial statements and our auditor’s report thereon, included in the annual report,
if we conclude that there is a material misstatement therein, we are required to communicate the matter to
those charged with governance.
89
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
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.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of the consolidated financial statements
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
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
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.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
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.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
90
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
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 overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
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.
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.
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
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.
The engagement partner on the audit resulting in this independent auditor’s report is James Lusby.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Ontario
February 20, 2024
91
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT Consolidated Statements of Earnings (Loss)
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Sales revenues
Cost of sales
Gross profit
Exploration
General and administrative
Impairment and related charges
Other income (expense)
Operating profit
Finance income
Finance costs
Adjustment for expected phasing of Zambian VAT
Earnings (loss) before income taxes
Income tax expense
Net earnings (loss)
Net earnings (loss) attributable to:
Non-controlling interests
Shareholders of the Company
Earnings (loss) per share attributable to
the shareholders of the Company
Net earnings (loss) ($ per share)
Basic
Diluted
Weighted average shares outstanding (000’s)
Basic
Diluted
Note
2023
2022
17
18
20
22
21
4c
13
15
15
15
15
15
6,456
(5,164)
1,292
(30)
(142)
(900)
(142)
78
106
(719)
49
(486)
(757)
(1,243)
(289)
(954)
7,626
(5,426)
2,200
(26)
(136)
–
203
2,241
80
(662)
(190)
1,469
(320)
1,149
115
1,034
(1.38)
(1.38)
1.50
1.49
690,876
690,876
690,516
692,987
Total shares issued and outstanding (000’s)
14a
693,599
692,505
The accompanying notes are an integral part of these consolidated financial statements
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 1
92
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Consolidated Statements of Comprehensive Income (Loss)
(expressed in millions of U.S. dollars)
Net earnings (loss)
Other comprehensive income (loss)
Items that have been/may subsequently be reclassified to net earnings (loss):
Cash flow hedges reclassified to net earnings (loss)
Movements on unrealized cash flow hedge positions
Items that will not subsequently be reclassified to net earnings (loss):
Fair value gain on investments
Total comprehensive income (loss) for
the year
Total comprehensive income (loss) for the year attributable to:
Non-controlling interests
Shareholders of the Company
Total comprehensive income (loss) for the year
Note
2023
(1,243)
2022
1,149
24
8
–
–
–
9
–
4
(1,243)
1,162
(289)
(954)
(1,243)
115
1,047
1,162
The accompanying notes are an integral part of these consolidated financial statements
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 2
93
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Consolidated Statements of Cash Flows
(expressed in millions of U.S. dollars)
Cash flows from operating activities
Net earnings (loss)
Adjustments for
Depreciation
Income tax expense
Impairment and related charges
Share-based compensation expense
Net finance expense
Adjustment for expected phasing of Zambian VAT
Foreign exchange
Deferred revenue amortization
Share of loss (profit) in joint venture
Other
Taxes paid
Movements in operating working capital
Movements in trade and other receivables
Movements in inventories
Movements in trade and other payables
Long-term incentive plans
Net cash from operating activities
Cash flows used by investing activities
Purchase and deposits on property, plant and equipment
Acquisition of La Granja
Interest paid and capitalized to property, plant and equipment
Interest received
Net cash used by investing activities
Cash flows used by financing activities
Net movement in trading facility
Movement in restricted cash
Proceeds from debt
Repayments of debt
Net payments to joint venture (KPMC)
Transactions with non-controlling interests
Dividends paid to shareholders of the Company
Dividends paid to non-controlling interests
Interest paid
Other
Net cash used by financing activities
Decrease in cash and cash equivalents and bank overdrafts
Cash and cash equivalents and bank overdrafts – beginning of year
Exchange losses on cash and cash equivalents
Cash and cash equivalents and bank overdrafts – end of year
Cash and cash equivalents and bank overdrafts comprising:
Cash and cash equivalents
Bank overdrafts
Note
2023
2022
(1,243)
1,149
18
13
20
16
4c
12
9,22
13
6,23
6
6
10
10
10
9,11b
11d
1,121
757
900
50
613
(49)
23
(96)
18
1
(625)
277
(147)
(22)
(151)
1,427
(1,300)
(105)
(26)
51
(1,380)
24
(25)
2,759
(2,800)
(109)
–
(93)
–
(527)
(5)
(776)
(729)
1,688
–
959
1,157
(198)
1,230
320
–
47
582
190
(175)
(97)
(44)
23
(548)
(111)
(144)
39
(129)
2,332
(1,167)
–
(24)
21
(1,170)
89
41
2,532
(3,168)
(41)
4
(75)
(255)
(448)
(10)
(1,331)
(169)
1,859
(2)
1,688
1,688
–
The accompanying notes are an integral part of these consolidated financial statements
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 3
94
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Consolidated Statements of Financial Position
(expressed in millions of U.S. dollars)
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current portion of other assets
Non-current assets
Cash and cash equivalents - restricted cash
Non-current VAT receivable
Property, plant and equipment
Goodwill
Investment in joint venture
Deferred income tax assets
Other assets
Total assets
Liabilities
Current liabilities
Bank overdrafts
Trade and other payables
Current taxes payable
Current debt
Current portion of provisions and other liabilities
Non-current liabilities
Debt
Provisions and other liabilities
Deferred revenue
Deferred income tax liabilities
Total liabilities
Equity
Share capital
Retained earnings
Accumulated other comprehensive loss
Total equity attributable to shareholders of the Company
Non-controlling interests
Total equity
Total liabilities and equity
Basis of presentation and Going Concern (Note 2a)
Note
December 31,
2023
December 31,
2022
4
5
8
4b
6
7
9
13
8
10
11
10
11
12
13
1,157
586
1,593
123
3,459
34
521
18,583
237
645
50
229
23,758
198
831
27
769
182
2,007
6,610
2,069
1,420
874
12,980
5,411
4,895
(59)
10,247
531
10,778
23,758
1,688
890
1,458
133
4,169
9
519
19,053
237
663
163
267
25,080
–
771
53
575
339
1,738
6,805
2,106
1,337
857
12,843
5,492
5,468
(59)
10,901
1,336
12,237
25,080
Approved by the board of Directors and authorized for issue on February 20, 2024.
Signed by
Simon Scott, Director
Signed by
Robert Harding, Director
The accompanying notes are an integral part of these consolidated financial statements
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 4
95
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Consolidated Statements of Changes in Equity
(expressed in millions of U.S. dollars)
Balance at December 31,
2022
Net loss
Other comprehensive
income
Total comprehensive loss
Share-based compensation
expense
Acquisition of treasury shares
and cash from share awards
Dividends
Transactions with non-
controlling interests (Note: 6,
11d, 25)
Balance at December 31, 2023
Share
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Total equity
attributable to
shareholders of
the Company
Non-
controlling
interests
Total
5,492
5,468
(59)
10,901
1,336
12,237
–
–
–
50
(145)
(954)
–
(954)
–
–
14
(109)
–
490
–
–
–
–
–
–
–
(954)
(289)
(1,243)
–
–
–
(954)
(289)
(1,243)
50
(145)
(95)
–
–
–
50
(145)
(95)
490
(516)
(26)
5,411
4,895
(59)
10,247
531
10,778
Balance at December 31, 2021
Net earnings
Other comprehensive
income
Total comprehensive income
Share-based compensation
expense
Acquisition of treasury shares
and cash from share awards
Dividends
Other
Share
capital
5,568
–
–
–
47
(129)
–
6
Retained
earnings
4,522
1,034
–
1,034
–
–
(88)
–
Accumulated
other
comprehensive
loss
(72)
–
13
13
–
–
–
–
Total equity
attributable to
shareholders of
the Company
Non-
controlling
interests
10,018
1,034
1,476
115
Total
11,494
1,149
13
–
13
1,047
115
1,162
47
(129)
(88)
6
–
–
(255)
–
47
(129)
(343)
6
Balance at December 31, 2022
5,492
5,468
(59)
10,901
1,336
12,237
The accompanying notes are an integral part of these consolidated financial statements
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 5
96
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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,
Turkey, Australia and Mauritania, and a development project in Zambia. The Company’s Cobre Panamá mine was placed
into a phase of Preservation and Safe Management (“P&SM”) in November 2023. The Company is progressing the Taca
Taca copper-gold-molybdenum project in Argentina and is exploring La Granja and the Haquira copper deposits in Peru.
The Company’s shares are publicly listed for trading on the Toronto Stock Exchange.
The Company is registered and domiciled in Canada, and its registered office is 1133 Melville Street, Suite 3500, The Stack,
Vancouver, BC, Canada, V6E 4E5.
2. MATERIAL ACCOUNTING POLICIES
The significant accounting policies used in the preparation of these consolidated financial statements are described below.
a) Basis of presentation and going concern
The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the
International Accounting Standards Board (“IFRS”) and, where appropriate, reflect management’s best estimates and
judgments based on currently available information.
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.
At December 31, 2023, the Company had $250 million of committed undrawn senior debt facilities and $959 million of net
unrestricted cash (inclusive of overdrafts), 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, 2023. Expected credit
losses on financial assets remain immaterial at December 31, 2023.
Cobre Panamá experienced illegal blockades throughout the month of November at the Punta Rincón port and at the roads
to the site that prevented the delivery of supplies that are necessary to operate the power plant and the Company
suspended production at the Cobre Panamá mine at the end of November 2023 and placed the mine into a phase of
Preservation and Safe Management (“P&SM”).
The current situation at Cobre Panamá has impacted the EBITDA generating potential of the Company, putting at risk the
Company’s ability to meet the net debt to EBITDA ratio covenant as defined in its current senior banking facilities. Current
forecasts for 2024, before taking into account future balance sheet initiatives, indicate the Company may breach the
prevailing net debt to EBITDA ratio covenant during the coming twelve months, which results in the existence of a material
uncertainty that casts a significant doubt about the Company’s ability to continue as a going concern. The Company is
significantly advanced in discussions with its banking partners to renegotiate this covenant and extend its bank loan
facilities. In addition, the Company has undertaken a number of actions to reduce cash outflows, manage its debt and
working capital, and increase EBITDA, while also developing a range of portfolio-related options including exploring the sale
of smaller mines and interests in its larger mining assets. Some of these options are necessarily based on the agreement of
other parties and, although believed to be reasonable and achievable, are nevertheless outside the Company’s direct
control.
In the light of the actions already taken and the alternatives available to the Company, 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, 2023. These consolidated financial statements do not include the adjustments to the amounts
and classification of assets and liabilities and the reported revenues and expenses that would be necessary should the
Company be unable to continue as a going concern. These adjustments may be material.
b) Principles of consolidation
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
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 6
97
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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 Panamá S.A. (“MPSA” or “Cobre
Panamá”), FQM Trident Limited (“Trident”) (formerly Kalumbila Minerals Limited), 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 FQM
Trading AG (“FQM Trading”) (formerly Metal Corp Trading AG). The exploration subsidiaries include Minera Antares Peru
S.A.C. (“Haquira”), the subsidiary, Corriente Argentina S.A. (“Taca Taca”) which relates to the Taca Taca project, and Minera
La Granja S.A.C. (Peru) ("La Granja") which the Company acquired a 55% stake in from Rio Tinto in August 2023. All the
above operating subsidiaries are 100% owned, with the exception of Ravensthorpe (75.7%), Kansanshi, in which the
Company holds an 80% interest, with the ZCCM-IH dividend rights attributed to their 20% ownership converted to a 3.1%
royalty right during the year, and Cobre Panamá, 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.
Non-controlling interests
At December 31, 2023, POSCO Holdings owned 24.3% (2022: 30%) of Ravensthorpe, KPMC owned 20% of Cobre Panamá
and Rio Tinto owned 45% of La Granja.
On April 4, 2023 the Company’s subsidiary, Kansanshi Mining Plc “KMP” and ZCCM Investments Holdings Plc “ZCCM-IH” (a
Zambian government controlled entity) completed the agreement to convert ZCCM-IH’s dividend rights to a 3.1% royalty
interest in KMP. Accordingly, the non-controlling interest in the consolidated financial statements has been derecognized.
Refer to note 25.
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 Panamá 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.
c) Accounting policies
Foreign currency translation
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.
Inventories
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.
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Property, plant and equipment
(i) Mineral properties and mine development costs
Exploration and evaluation costs are expensed in the period incurred unless there is an expectation that future economic
benefit is probable. Property acquisition costs, development costs and amounts paid under development option agreements
are capitalized. Development decisions are made based upon consideration of project economics, including future metal
prices, reserves and resources, and estimated operating and capital costs.
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.
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.
(iv) Business combinations and goodwill
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.
Asset impairment
(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 "CGU" to which the assets belong. Cash-
generating units are individual operating mines, smelters or exploration and development projects.
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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.
(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 at the end
of every year or earlier if an indicator of impairment exists.
Any impairment loss is recognized in net earnings immediately. Impairment of goodwill is not subsequently reversed.
Restoration provisions
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. 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.
Revenue recognition
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.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 9
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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.
Current and deferred income taxes
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.
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.
Share-based compensation
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.
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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 KRSUs 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.
Earnings per share
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.
Financial instruments
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 or overdrafts 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, bank overdrafts 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
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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.
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.
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.
Investments in joint ventures
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 details of the investments in joint ventures are provided in note 9.
d) Adoption of new Standards
In May 2023, the International Accounting Standards Board (“IASB”) issued amendments to IAS 12, Income Taxes (IAS 12),
to clarify the application of IAS 12 to income taxes arising from tax law enacted or substantively enacted related to the Pillar
Two model rules published by the Organization for Economic Co-operation and Development (OECD). The amendments
require a mandatory temporary exception to recognizing and disclosing information about deferred tax assets and liabilities
related to Pillar Two income taxes. This amendment was effective immediately upon its release. The amendments also
require known or reasonably estimable information that explain an entity's exposure to Pillar Two income taxes in regions
where the legislation is enacted or substantively enacted (see note 13).
Amendments, effective January 1, 2023, to IAS 8 regarding how companies should distinguish changes in accounting
policies from changes in accounting estimates, and to IAS 12 regarding removing the exemption for deferred tax arising on
transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences, have had
no significant impact on the financial statements.
e) Accounting standards issued but not yet effective
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.
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Amendments to IAS 1 – Non-current Liabilities with Covenants (Amendments to IAS 1)
•
Effective on January 1, 2024, the amendments clarify how conditions with which an entity must comply within
twelve months after the reporting period affect the classification of a liability. The amendment is not expected to
have a significant impact on the financial statements..
Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
•
Effective on January 1, 2024, the amendment clarifies how a seller-lessee subsequently measures sale and
leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The amendment is
not expected to have a significant impact on the financial statements.
Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
•
Effective on January 1, 2024, the amendment clarifies to add disclosure requirements, and ‘signposts’ within
existing disclosure requirements, that ask entities to provide qualitative and quantitative information about supplier
finance arrangements. The amendment is not expected to have a significant impact on the financial statements.
3. SIGNIFICANT JUDGMENTS, ESTIMATES 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.
(i) Significant judgments
• Assessment of impairment indicators
Management applies significant judgment 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.
As at December 31, 2023, the carrying amount of the net assets of the Company is more than its market capitalisation. The
share price is impacted by a number of factors including P&SM at Cobre Panamá and balance sheet considerations. The
Company completed an analysis of the recoverable amounts of its cash-generating units to compare against their respective
carrying values as of December 31, 2023. An impairment charge of $900 million has been recognized which includes
impairments for Ravensthorpe and other exploration assets (Refer to Note 20). The recoverable amount of Cobre Panamá
has been determined using a fair value less costs of disposal calculation based on a cash flow model covering different
possible scenarios, including the process of international arbitration and various levels of operation. In addition, judgment is
applied to the probability assigned to scenarios considered for Cobre Panamá (Refer to Note 7). The recoverable amount of
other cash-generating units exceeds the carrying value as at December 31, 2023, and therefore no further impairment
charge has been recognized.
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.
For exploration projects, management considers indicators including the Company’s continued ability and plans to further
develop the projects and title of mineral properties required to advance the projects to assess the existence of impairment
indicators.
The Company’s most significant cash-generating units 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.
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
• Control over Cobre Panamá
The Company suspended production at the Cobre Panamá mine at the end of November 2023 and placed the mine into a
phase of P&SM. The Company evaluated whether it still maintained effective power over the mine and related operations,
and has consolidated MPSA and the Cobre Panamá mine on the basis of control, effectively exercising power over the
relevant activities related to the mine, it's exposure to variable returns, and impact on the returns of the operation through its
managerial involvement.
• Control over La Granja UK Holdings Limited
Note 6 provides details on the acquisition of a 55% shareholding in La Granja from Rio Tinto. Management considered
various factors, including the legal form of the shareholding, in determining that the Company has control over La Granja UK
Holdings Limited.
In determining whether the acquisition of La Granja constituted a business or an asset acquisition, management considered
whether substantially all of the fair value of the gross assets acquired were concentrated in a single identifiable asset or a
group of similar identifiable assets (the ‘concentration test’) and concluded that this was evident. The acquisition has
therefore been accounted for as an asset acquisition.
Rio Tinto’s 45% non-controlling interest in La Granja is recognized on consolidation. Management considered accounting
treatments for non-controlling interests on asset acquisitions and concluded to measure non-controlling interest arising by
reference to the fair value of consideration paid for a 55% holding, as would have been an accounting option had the
acquisition been considered a business combination. The non-controlling interest is subsequently adjusted for the change in
the non-controlling interest’s share of net assets in La Granja, which can be and is different to its share of result.
In assessing the fair value of consideration paid, management concluded that $546 million of initial funding that the
Company is responsible for does not constitute deferred consideration, and therefore the consideration for the acquisition
was $105 million that was paid to Rio Tinto for a 55% shareholding.
• 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), deferred revenue (note 12),
recognition of deferred income tax amounts (note 13) and depreciation (note 7).
• 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
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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. 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 judgment 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.
The Company operates in certain jurisdictions that have increased degrees of political and sovereign risk. Tax legislation in
these jurisdictions is developing and there is a risk that fiscal reform changes with respect to existing investments could
unexpectedly impact application of the tax legislation. Following due public consultation and regulatory signoff, the National
Assembly in Panama approved Bill 1100, being the proposal for approval of the Refreshed Concession Contract for the
Cobre Panamá mine on October 20, 2023. On the same day, President Laurentino Cortizo sanctioned Bill 1100 into Law
406, which was subsequently published in the Official Gazette. Law 406 approved the concession contract for the Cobre
Panamá mine on October 20, 2023. On November 16, 2023, in accordance with its contractual obligations to the Republic of
Panama under Law 406, the Company made tax and royalty payments of $567 million in respect of the period from
December 2021 to October 2023. On November 28, 2023, the Supreme Court of Justice of Panama announced that it
declared Law 406 unconstitutional. The ruling was subsequently published in the Official Gazette on December 2, 2023.
As the ruling on unconstitutionality is not retroactive, the Company has recorded all payments of taxes and royalties that
were calculated based on a taxable margin as current tax expense as per Law 406 up to December 2, 2023. Subsequent to
December 2, 2023, the Company has recorded all taxes and royalties as per the general income tax and mining code. Taxes
are disclosed in note 13.
• 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 Panamá project. Franco-Nevada have provided $1 billion deposit to the Cobre
Panamá 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 judgment 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
Panamá reserves and mine plan, that funds received from Franco-Nevada constitute a prepayment of revenues deliverable
from future Cobre Panamá production.
(ii) Significant accounting estimates
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
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 15
106
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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
(note 6), restoration provisions (note 11), deferred revenue (note 12), recognition of deferred income tax amounts (note 13)
and depreciation (note 7).
• Review of asset carrying values and impairment charges
Management’s determination of recoverable amounts includes estimates of mineral prices, recoverable reserves and
resources, and operating, capital and restoration costs and tax regulations applicable to the cash-generating unit’s
operations 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.
The sensitivity of carrying values to changes in the assumptions are set out in note 7 Goodwill and Note 20 Impairment and
related charges.
•
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 $62 million at December 31, 2023.
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 timing of 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 an appropriate discount rate as disclosed in note 4c, which is then applied to calculate
the phasing adjustment based on the estimated timing of recoverability. 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, 2023,
would lead to a decrease to the carrying value and an increase to finance costs of $58 million. The carrying amount of the
Company’s VAT receivables is disclosed in note 4b.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 16
107
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
4. TRADE RECEIVABLES
a) Trade and other receivables
Trade receivables
VAT receivable (current)
Other receivables
b) VAT receivable
Kansanshi Mining Plc ("KMP")
FQM Trident 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
c) VAT receivable by the Company’s Zambian operations
Balance at beginning of the year
Movement in claims, net of foreign exchange movements
Adjustment for expected phasing for non-current portion
At December 31, 2023
December 31,
2023
272
153
161
586
December 31,
2022
491
135
264
890
December 31,
2023
314
302
36
652
22
674
(153)
521
December 31,
2022
287
297
55
639
15
654
(135)
519
December 31,
2023
639
(36)
49
652
During the year ended December 31, 2023, the Company was granted offsets of $143 million and cash refunds of $124
million with respect to VAT receivable balances. During the year ended December 31, 2022, offsets of $154 million were
granted and cash refunds of $72 million were received.
In 2022, the Company reached agreement in respect of the outstanding Zambian value-added tax receivable sum including
an approach for repayment based on offsets against future corporate income taxes and mineral royalties. This has resulted
in adjustments to reflect the agreed receivable amount to be repaid, and the revised expected phasing of recoverability of
that receivable amount. These adjustments have been presented in Other income and Adjustment for expected phasing of
Zambian VAT in the Statement of Earnings, respectively. The adjustment for expected phasing for the non-current portion
represents the application of an appropriate discount rate of 12% to the expected recovery of VAT based on the agreement
that has been reached for the offsetting of the VAT receivable against future corporate income taxes and mineral royalties
This adjustment for expected phasing, a credit of $49 million, has been recognized in net earnings (loss) in the year ended
December 31, 2023 (year ended December 31, 2022: expense of $190 million). As at December 31, 2023, amounts totalling
$131 million are presented as current (December 31, 2022: $120 million).
On April 4, 2023 the Company’s subsidiary, KMP and ZCCM Investments Holdings Plc "ZCCM-IH" completed the agreement
to convert ZCCM-IH's dividend rights to a 3.1% royalty interest in KMP. The transaction also provides for 20% of the KMP
VAT refunds as at June 30, 2022 to be paid to ZCCM-IH, as and when these are received by KMP from the Zambia Revenue
Authority ("ZRA)". As at December 31, 2023, a VAT payable to ZCCM-IH of $52 million, net of adjustment for expected
phasing of payments, has been recognized. See note 25.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 17
108
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
d) Aging analysis of VAT receivable for the Company’s Zambian operations
Receivable at the period end
Adjustment for expected phasing
Total VAT receivable from Zambian
operations
< 1 year
1-3 years
3-5 years
5-8 years
> 8 years
80
–
80
246
(104)
315
(108)
142
207
120
(29)
91
175
(43)
132
Total
936
(284)
652
5. INVENTORIES
Ore in stockpiles
Work-in-progress
Finished product
Total product inventory
Consumable stores
December 31,
2023
171
37
410
618
975
1,593
December 31,
2022
177
48
289
514
944
1,458
Approximately 121 thousand dry metric tonnes of copper concentrate, equivalent to a cost of $128 million, remains unsold at
Cobre Panamá following disruptions at the Punta Rincón port.
6. PROPERTY, PLANT AND EQUIPMENT
Mineral properties and mine
development costs
Exploration
and
development
projects
Operating
mines
Total
Plant and
equipment
Capital work-
in-progress
Net book value, as at
December 31, 2022
Additions
Acquisitions
Disposals
Transfers between categories
Conversion of non-controlling
interest rights (note 25)
Restoration provision (note 11c)
Impairments (note 20)
Capitalized interest (note 21)
Depreciation charge (note 18)
Net book value, as at December 31,
2023
Cost
Accumulated depreciation
9,892
–
–
(44)
881
–
–
(584)
–
(696)
9,449
16,421
(6,972)
1,356
1,382
–
–
(1,295)
–
–
(4)
26
–
1,465
1,465
–
6,631
1,174
19,053
–
–
–
347
(73)
65
(250)
–
(447)
–
201
–
67
–
–
(46)
–
–
1,382
201
(44)
–
(73)
65
(884)
26
(1,143)
6,273
1,396
18,583
9,906
(3,633)
1,396
–
29,188
(10,605)
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 18
109
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Plant and
equipment
Capital work-
in-progress
Mineral properties and mine
development costs
Exploration and
development
projects
Operating
mines
Total
Net book value, as at
December 31, 2021
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,
2022
Cost
Accumulated depreciation
10,032
1,181
6,920
1,150
19,283
–
(17)
615
–
–
–
(738)
9,892
16,463
(6,571)
1,157
–
(1,006)
–
–
24
–
1,356
1,356
–
–
–
369
(167)
–
–
(491)
–
–
22
2
–
–
–
1,157
(17)
–
(165)
–
24
(1,229)
6,631
1,174
19,053
9,826
(3,195)
1,174
–
28,819
(9,766)
Included within capital work-in-progress and mineral properties – operating mines at December 31, 2023, is an amount of
$949 related to capitalized deferred stripping costs (December 31, 2022: $913 million). For the year December 31, 2023,
$26 million of interest was capitalized (year ended December 31, 2022: $24 million). The amount of capitalized interest was
determined by applying the weighted average cost of borrowings of 7.5% (December 31, 2022: 9%) to the accumulated
qualifying expenditures.
On August 27, 2023 the Company announced that it had acquired a 55% stake in the La Granja project in Peru from Rio
Tinto for $105 million, becoming the operator. The transaction has been accounted for as asset acquisition with the principal
asset acquired, the La Granja project, recorded as an addition to mineral properties in the period. Accordingly, an $86 million
non-controlling interest has been recognized in the consolidated financial statements. The Company is responsible for $546
million of initial funding, part of which will be used to complete a feasibility study, following which the remaining majority of
the initial funding is expected to be spent on construction of the project following a positive investment decision. Upon
satisfaction of the initial funding amount, all subsequent expenditures will be applied on a pro-rata basis according to equity
ownership of the project.
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 Panamá cash-generating unit.
The carrying value of the Cobre Panamá cash-generating unit at December 31, 2023, was $10,553 million inclusive of the
Cobre Panamá power station, and deferred revenue (December 31, 2022: $10,319 million).
The annual impairment test has been performed as at December 31, 2023. For the purposes of the goodwill impairment test,
the recoverable amount of Cobre Panamá has been determined using a fair value less costs of disposal calculation based
on a cash flow model covering different possible scenarios, including the process of international arbitration and various
levels of operation, which uses a post-tax discount rate, taking account of assumptions that would be made by market
participants. The outcome of the scenarios considered, and potential associated recoveries remains uncertain.
The future cash flows used in the various scenarios of the model are inherently uncertain and could materially change over
time as a result of changes , where applicable, to ore reserves and resources estimates, commodity prices, discount rates,
future costs and capital expenditure, estimates related to the fiscal regime, and estimates related to potential arbitral
recoveries for Cobre Panamá. For the applicable scenarios, reserves and resources are estimated based on the National
Instrument 43-101 compliant report produced by qualified persons adjusted for updates by management since the last
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 19
110
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
report. The various cash flow model scenarios used remain consistent with the reserves and resource volumes approved as
part of the Company’s estimation of proven and probable reserves in determining the recoverable value of Cobre Panamá.
Such 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 $3.90 per lb. The estimates are derived from the median
of consensus forecasts. A nominal discount rate of 10.0% (December 31, 2022: 10.5%) has been applied to future cash
flows. Future costs and 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.
Future Preservation and Safe Management costs assumed in the various cash flow model scenarios are based on
management's latest forecasts and budgets. These costs are expected to range from $15 - $20 million per month and further
reductions could follow depending on environmental stewardship programs. The measurement is classified as level 3 in the
fair value hierarchy.
In light of this assessment by management, the calculated recoverable amount of the cash-generating unit exceeds the
carrying value of Cobre Panamá at December 31, 2023, and therefore no impairment charge has been recognized. An
increase in the discount rate of one per cent, or a reduction in the assumed copper price by 15 cents per pound would result
in the calculated recoverable amount approximately equalling the carrying value, if all other model inputs remained the
same.
8. OTHER ASSETS
Prepaid expenses
KPMC shareholder loan
Other investments
Derivative instruments (note 24)
Total other assets
Less: current portion of other assets
9. JOINT VENTURE
December 31,
2023
133
188
17
14
352
(123)
229
December 31,
2022
152
216
17
15
400
(133)
267
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 Panamá. 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 $645 million investment in the joint venture representing the discounted consideration value and the Company’s
proportionate share of the profit or loss in Korea Panama Mining Corporation (“KPMC”) to date is recognized. For the year
ended December 31, 2023, the loss attributable to KPMC was $55 million (December 31, 2022: $88 million profit). The profit
or loss in KPMC relates to the 20% equity accounted share of profit or loss reported by Minera Panamá S.A. (“MPSA”), a
subsidiary of the Company. The material assets and liabilities of KPMC are an investment in MPSA of $497 million,
shareholder loans receivable of $1,156 million from the Company (note 11b) and shareholder loans payable of $1,200 million
due to the Company and its joint venture partner KOMIR.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 20
111
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
10. DEBT
Drawn debt
Senior Notes:
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. 8.625% due June 2031
First Quantum Minerals Ltd. senior debt facility
FQM Trident term loan
Trading facilities
Total debt
Less: current maturities and short term debt
Undrawn debt
First Quantum Minerals Ltd. senior debt facility
Trading facilities
December 31,
2023
December 31,
2022
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(f)
(h)
–
1,049
997
1,493
1,285
1,987
424
144
7,379
(769)
6,610
250
446
848
1,348
996
1,490
–
2,155
423
120
7,380
(575)
6,805
530
610
In the current year, the Company redeemed at par an aggregate of $850 million principal amount of the Senior Notes due in
2024. $450 million was redeemed on February 25, 2023, and $400 million on March 28, 2023. No Senior Notes due in 2024
remain outstanding post the redemptions.
On May 17, 2023 the Company announced the offering and pricing of $1,300 million of 8.625% Senior Notes due 2031 at an
issue price of 100.00%. Settlement took place on May 30, 2023. 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 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 June 1, 2026, at redemption prices ranging from
104.313% in the first year to 100.000% from June 1 2028, plus accrued interest. In addition, until June 1, 2026, 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 108.625% plus accrued interest.
On May 18, 2023 the Company issued a notice of partial redemption of $300 million of Senior Notes due 2025. The 2025
notes were redeemed at 100% of the principal amount, plus accrued and unpaid interest to the redemption date on May 31,
2023.
a) First Quantum Minerals Ltd. 6.50% due March 2024
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 were subject to certain restrictions on asset sales, payments, incurrence of
indebtedness and issuance of preferred stock.
In the current year, the Company redeemed at par an aggregate of $850 million principal amount of the Senior Notes due in
2024. $450 million was redeemed on February 25, 2023, and $400 million on March 28, 2023. No Senior Notes due in 2024
remain outstanding post the redemptions.
b) First Quantum Minerals Ltd. 7.50% due April 2025
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.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 21
112
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
The Company and its subsidiaries are subject to certain restrictions on asset sales, payments, incurrence of indebtedness
and issuance of preferred stock.
c) First Quantum Minerals Ltd. 6.875% due March 2026
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.
d) First Quantum Minerals Ltd. 6.875% due October 2027
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.
e) First Quantum Minerals Ltd. 8.625% due June 2031
On May 17, 2023 the Company announced the offering and pricing of $1,300 million of 8.625% Senior Notes due 2031 at an
issue price of 100.00%. Settlement took place on May 30, 2023. 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 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 June 1, 2026, at redemption prices ranging from
104.313% in the first year to 100.000% from June 1 2028, plus accrued interest. In addition, until June 1, 2026, 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 108.625% plus accrued interest. Although part of this redemption feature indicates
the existence of an embedded derivative, the value of this derivative is not significant.
f)
First Quantum Minerals Ltd. senior debt facility
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 SOFR plus a
margin. This margin can change relative to a certain financial ratio of the Company.
Repayments on the term loan commenced in December 2022 and are due every six months thereafter. The Facility has a
single net debt to EBITDA ratio covenant set at 3.5 times over the Facility term. Transaction costs for the new facilities were
deducted from the principal drawn on initial recognition.
At December 31, 2023, $1,050 million of the RCF had been drawn, leaving $250 million available for the Company to draw.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 22
113
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
g) FQM Trident term loan
On February 5, 2018, FQM Trident, the owner of the Sentinel copper mine and Enterprise Nickel mine, signed a $230 million
unsecured term loan facility (the “Previous Facility”). The facility was upsized to $400 million in March 2018 in accordance
with the accordion feature of the facility agreement.
On December 2, 2022, FQM Trident signed a $425 million unsecured term loan facility (the “FQM Trident Facility”) with a
termination date of December 31, 2025 to replace the Previous Facility, which matured in December 2022. Repayments on
the FQM Trident Facility commence in March 2024 and are due every six months thereafter. The FQM Trident Facility
matures in December 2025.
The principal outstanding under the FQM Trident Facility as at December 31, 2023 was $425 million.
h) Trading facilities
The Company’s metal marketing division has six uncommitted borrowing facilities totalling $590 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
a) Provisions and other liabilities
Amount owed to joint venture (note 11b)1
December 31,
2023
December 31,
2022
1,156
1,256
–
555
Leases
Retirement provisions
Deferred revenue (note 12)
Liabilities directly associated with assets held for sale
Other loans owed to non-controlling interests (note 11d)
Restoration provisions (note 11c)
VAT payable to ZCCM-IH 2
Derivative instruments (note 24)
647
52
62
202
18
20
18
–
9
67
2,251
(182)
2,069
1 The shareholder loan is due from the Company’s Cobre Panamá operation to KPMC, a 50:50 joint venture between the Company and KOMIR.
2 On April 4, 2023 the Company’s subsidiary, KMP and ZCCM-IH completed the agreement to convert ZCCM-IH’s dividend rights to a 3.1% royalty interest in KMP.
The transaction also provides for 20% of the KMP VAT refunds as at June 30, 2022 to be paid to ZCCM-IH, as and when these are received by KMP from the
ZRA. Refer to note 25.
Other deferred revenue
Less: current portion
Total other liabilities
6
114
2,106
2,445
(339)
Other
118
117
190
40
20
29
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 23
114
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
b) Amount owed to joint venture
Balance at the beginning of the year
Interest accrued (note 21)
Repayment
Balance at end of year due to KPMC
December 31,
2023
1,256
92
(192)
1,156
December 31,
2022
1,310
114
(168)
1,256
As at December 31, 2023, the accrual for interest payable is $216 million (December 31, 2022: $316 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.
c) Restoration provisions
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:
Balance at the beginning of the year
Changes in estimate – operating sites (note 6)
Changes in estimate – closed sites (note 22)
Other adjustments
Accretion expense (note 21)
Balance at year end
Less: current portion
December 31,
2023
555
65
4
6
17
647
(3)
644
December 31,
2022
731
(165)
(17)
(9)
15
555
(3)
552
The Company has issued letters of credit which are guaranteed by cash deposits, classified as restricted cash on the
balance sheet at December 31, 2023, totalling $33 million (December 31, 2022: $7 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 between 4.0% and 4.8% (December 31, 2022, between 3.5% and 4.7%) and an inflation factor
between 2.0% and 20.0% (December 31, 2022, between 2.0% and 11.0%). Reclamation activity is expected to occur over
the life of each of the operating mines, a period of up to 30 years, with the majority payable in the years following the
cessation of mining operations.
d) Other loans owed to non-controlling interests
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 to date amounted to $30 million and $22 million respectively.
During the third quarter, the Company’s interest in Ravensthorpe increased from 70.0% to 75.7% following an equity raise
which POSCO Holdings, the minority shareholder, elected not to participate in.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 24
115
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
12. DEFERRED REVENUE
Balance at the beginning of the year
Accretion of finance costs (note 21)
Amortization of gold and silver revenue
Balance at the end of the year
Less: current portion (included within provisions and other liabilities)
Non-current deferred revenue
December 31,
2023
December 31,
2022
1,455
61
(96)
1,420
–
1,420
1,489
63
(97)
1,455
(118)
1,337
Franco-Nevada Precious Metal Stream Arrangement
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 Panamá
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 Panamá 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 Panamá 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 Panamá 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
Panamá. Under the terms of Tranche 1 the ongoing payment of the Fixed Payment Stream is fixed per ounce payments of
$457.35 per oz gold and $6.86 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 $457.35
per oz for gold and $6.86 per oz for silver, subject to an annual 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 by Cobre Panamá. The Company uses
refinery-backed credits as the mechanism for satisfying its delivery obligations under the arrangement. In the year ended
December 31, 2023, $240 million was delivered under the stream the cost of which are presented net within sales revenues
(year ended December 31, 2022: $229 million).
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 25
116
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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
December 31,
2023
December 31,
2022
605
152
757
243
77
320
Taxes paid of $625 million includes $9 million of VAT receivables that were offset in settlement of Zambian income taxes
payable.
The income taxes shown in the consolidated statements of earnings (loss) differ from the amounts obtained by applying
statutory rates to the earnings before income taxes due to the following:
Earnings (Loss) before income taxes
Income tax expense at Canadian statutory rates
Difference in foreign tax rates
Resource and depletion allowances1
Non-deductible expenses
Losses not recognized2
Recognition and de-recognition of deferred tax
assets3
Prior year taxes relating to Panama4
Mining taxes5
Impact of foreign exchange
Income tax expense
2023
2022
Amount $
%
Amount $
(486)
(131)
(99)
(65)
41
399
179
277
156
—
757
27
20
13
(8)
(82)
(37)
(57)
(32)
—
(156)
1,469
397
(227)
—
30
111
—
—
—
9
320
%
27
(15)
—
2
8
—
—
—
—
22
1 Certain allowances, incentives and tax deductions applicable only to the extractive industry.
2 Consists of financing cost that were incurred in Canada and mining losses incurred in Australia where it is not probable that sufficient taxable income will be
generated.
3 In the current year, the Company derecognized $160 million of deferred tax assets in Ravensthorpe and $19 million in Panama.
4 Pursuant to Law 406 in Panama, the Company paid income taxes, withholding tax and mining taxes relating to 2021 and 2022 years. (December 31, 2022 - $nil
million).
5 Pursuant to Law 406 in Panama, when applicable the Company paid mining taxes based on adjusted gross profits at a rate between 12-16%.
In March 2023, the Company and the Government of Panama ("GOP") agreed to a Refreshed Concession Agreement
contract that provided for an initial 20-year term with a 20-year extension option and possible additional extension for life of
mine. The agreement included an annual minimum contribution of $375 million in Government income, comprised of
corporate taxes, withholding taxes and a profit-based mineral royalty of 12 to 16 percent, with downside protections.
Following due public consultation and regulatory signoff, the National Assembly in Panama approved Bill 1100, being the
proposal for approval of the Refreshed Concession Contract for the Cobre Panamá mine on October 20, 2023. On the same
day, President Laurentino Cortizo sanctioned Bill 1100 into Law 406, which was subsequently published in the Official
Gazette. Law 406 approved the concession contract for the Cobre Panamá mine on October 20, 2023. On November 16,
2023, in accordance with its contractual obligations to the Republic of Panama under Law 406, the Company made tax and
royalty payments of $567 million in respect of the period from December 2021 to October 2023. On November 28, 2023, the
Supreme Court of Justice of Panama announced that it declared Law 406 unconstitutional. The ruling was subsequently
published in the Official Gazette on December 2, 2023.
As the ruling on unconstitutionality is not retroactive, the Company has recorded all payments of taxes and royalties that
were calculated based on a taxable margin as current tax expense as per Law 406 up to December 2, 2023. Subsequent to
December 2, 2023, the Company has recorded all taxes and royalties as per the general income tax and mining code.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 26
117
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Of the $567 million payment, $20 million relates to 2021, $375 million relates to 2022 and $172 million relates to 2023.
Payments for 2023 include corporate taxes, withholding taxes and a profit-based mineral royalty of 12 to 16 percent. Taxes
not calculated based on a taxable margin, which includes a top-up of $76 million to $375 million for the year 2022, are
included in cost of sales and not in tax expense.
The deferred income tax assets and liabilities included on the balance sheet are as follows:
Deferred income tax assets
Deferred income tax liabilities
December 31,
2023
December 31,
2022
50
(874)
(824)
163
(857)
(694)
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
2023
(1,036)
78
54
7
42
31
(824)
2022
(1,140)
279
99
7
45
16
(694)
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.
The Company has unrecognized deductible temporary differences relating to operating loss carryforwards that may be
available for tax purposes in Canada totalling $6,263 million (December 31, 2022: $5,794 million) expiring between 2025
and 2043, and in Australia totalling $683 million (December 31, 2022: $nil) with no expiry date.
The Company has derecognized $160 million of deferred tax assets in Ravensthorpe and $19 million in Panama (December
31, 2022 - $nil).
The Company has unrecognized investment tax credits of $750 million in Panama that was approved as part of Law 406
(December 31, 2022 - $nil).
The Company has non-Canadian resident subsidiaries that have undistributed earnings of $3,145 million (December 31,
2022: $3,853 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.
In August 2023, Finance Canada released, for public consultation, the draft legislation to implement the OECD's Pillar Two
global minimum tax regime with an effective start date of January 1, 2024. The Company operates in a number of tax
jurisdictions. Since the Pillar Two legislation was not effective at the reporting date in any of the jurisdictions that the
Company operates in, the Company has no related current tax exposure. The Company applies the exception to recognising
and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the
amendments to IAS 12 issued in May 2023.
Under the proposed legislation, the Company is liable to pay a top-up tax for the difference between the Pillar Two effective
tax rate for each jurisdiction and the 15% minimum rate. All entities within the Company have a Pillar Two effective tax rate
that exceeds 15%, except for one subsidiary that operates in Switzerland where the average effective tax rate is 12%. If the
top-up tax had applied in 2023, then the profits relating to the Company’s operations in Switzerland for the year ended 31
December 2023 would have been subject to a top-up tax amount that is less than $5 million.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 27
118
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
14. SHARE CAPITAL
a) Common shares
Authorized
Unlimited common shares without par value Issued
Balance as at December 31, 2022
Shares issued through Dividend Reinvestment Plan
Shares issued through Share Option Plan
Balance as at December 31, 2023
Number of
shares
(000’s)
692,505
586
508
693,599
The balance of share capital at December 31, 2023 was $5,668 million (December 31, 2022: $5,653 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.
b) Treasury shares
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, 2021
Shares purchased
Shares vested
Balance as at December 31, 2022
Shares purchased
Shares vested
Balance as at December 31, 2023
Number of
shares
(000’s)
5,001
4,235
(2,979)
6,257
4,495
(3,939)
6,813
The balance of shares held in the trust as at December 31, 2023 was $56 million (December 31, 2022: $130 million).
c) Dividends
On July 25, 2023, the Company declared an interim dividend of CDN$0.08 per share, in respect of the financial year ended
December 31, 2023 (July 26, 2022: CDN$0.16 per share), paid on September 19, 2023 to shareholders of record on August
28, 2023.
On January 15, 2024, the Company announced that it had suspended its final dividend in respect of the financial year ended
December 31, 2023 (February 14, 2023: CDN$0.13 per share) as a result of Cobre Panamá being in a phase of
Preservation and Safe Management.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 28
119
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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)
2023
(954)
2022
1,034
690,876
690,516
–
2,471
690,876
692,987
(1.38)
(1.38)
1.50
1.49
16. SHARE BASED COMPENSATION AND RELATED PARTY TRANSACTIONS
a) Long-term incentive plans
The Company has a long-term incentive plan (the “Plan”), which provides for the issuance of performance stock units
(“PSUs”) and 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 $43 million (December 31, 2022:
$36 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, 2022: 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, 2022: $7 million) related to this Plan.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 29
120
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
The Company will meet its obligations under the scheme through market purchases.
Performance stock units
Outstanding - beginning of year
Granted
Vested
Forfeited
Outstanding - end of year
Restricted stock units
Outstanding - beginning of year
Granted
Vested
Forfeited
Outstanding - end of year
Key restricted stock units
Outstanding – beginning of year
Granted
Vested
Forfeited
Outstanding - end of year
2023
2022
Number of units
(000’s)
Number of units
(000’s)
3,112
1,404
(2,472)
(92)
1,952
6,090
1,154
(2,483)
(413)
4,348
6,010
—
(1,208)
(310)
4,492
3,403
1,632
(1,848)
(75)
3,112
5,150
2,851
(1,651)
(260)
6,090
6,320
280
—
(590)
6,010
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
b) Share option plan
2023
4.49 %
3 years
50.10 %
4.00 %
56.06 %
2022
2.99 %
3 years
35.90 %
4.00 %
44.85 %
The Company has in the past granted share options over common shares in the Company 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 and are fully vested
after 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.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 30
121
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Share options
Outstanding - beginning of year
Exercised
Forfeited
Expired
Outstanding - end of year
Exercisable - end of year
2023
2022
Number of
units
(000’s)
Number of
units
(000’s)
1,307
(508)
(58)
—
741
—
2,453
(750)
(371)
(25)
1,307
1,307
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 $nil (December 31, 2022: $4 million) related to equity-settled share-based
payments on share options issued under the above plan for the year ended December 31, 2023.
c) Key management compensation
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
d) Other related party transactions
2023
2022
5
1
6
12
3
2
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, $6 million (December 31, 2022: $10 million) was paid to parties related to key management for chartering aircraft,
accommodation, machinery and services. As at December 31, 2023, $1 million (December 31, 2022: $nil) was included in
trade and other payables concerning related party amounts payable.
17. SALES REVENUES
Copper
Gold
Nickel
Silver
Other
2023
5,641
319
341
42
113
6,456
2022
6,555
382
441
48
200
7,626
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 31
122
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
18. COST OF SALES
Costs of production
Depreciation
Movement in inventory
Movement in depreciation in inventory
19. EXPENSES BY NATURE1
Depreciation
Employment costs, benefits and contractor
Raw materials and consumables
Royalties2
Repairs and maintenance
Fuel
Freight
Utilities
Change in inventories
Other
2023
(4,081)
(1,143)
38
22
(5,164)
2023
(1,121)
(1,135)
(1,027)
(345)
(379)
(398)
(231)
(219)
38
(519)
(5,336)
2022
(4,229)
(1,229)
33
(1)
(5,426)
2022
(1,230)
(1,150)
(1,081)
(414)
(380)
(477)
(292)
(237)
33
(360)
(5,588)
1 Expenses presented above include cost of sales, general and administrative and exploration expenses.
2 Taxes not calculated based on a taxable margin, which includes a top-up of $76 million to $375 million for the year 2022 at Cobre Panamá, are included in cost of
sales and not in tax expense.
20. IMPAIRMENT AND RELATED CHARGES
Ravensthorpe
Other exploration assets
Impairment of Ravensthorpe
2023
(854)
(46)
(900)
2022
–
–
–
At Ravensthorpe, weak nickel prices, lower payabilities and high operating costs have resulted in significant margin
pressure. A full impairment test was performed using a fair value less costs of disposal method utilizing a discounted
cashflow model based on estimated future cashflows, a discount rate of 7.9%, short-term nickel and long-term consensus
nickel prices of $7.75 and $8.50 per lb respectively, and sulphur price of $150 per tonne. An impairment charge of $854
million was recognized against property, plant and equipment and other assets due to the recoverable amount being lower
than the carrying amount. The remaining carrying value of non-current assets is disclosed in note 23. An increase in the
assumed nickel price by approximately 50 cents per pound or reduction in sulphur price of approximately $50 per tonne
would not result in any change in the level of impairment, if all other model inputs remained the same.
On January 15, 2024, the Company announced the decision to scale back operations, preserving the higher-grade
Shoemaker Levy orebody until nickel prices recover and operating margins improve.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 32
123
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
21. FINANCE COSTS
Interest expense on debt
Interest expense on other financial liabilities
Interest expense on financial liabilities measured at
amortized cost
Related party interest (note 11b)
Finance cost accretion on deferred revenue (note 12)
Accretion on restoration provision
Total finance costs
Less: interest capitalized (note 6)
22. OTHER INCOME (EXPENSE)
Foreign exchange gains (losses)
Change in restoration provision for closed properties (note 11c)
Share in profit (loss) in joint venture (note 9)
Restructuring expense 1
Other expenses
2023
(556)
(19)
(575)
(92)
(61)
(17)
(745)
26
(719)
2023
(67)
(4)
(18)
(49)
(4)
(142)
2022
(476)
(18)
(494)
(114)
(63)
(15)
(686)
24
(662)
2022
184
17
44
–
(42)
203
1 During the year ended December 31, 2023, the Company recognized an $18 million restructuring expense for severance payments at Cobre Panamá and a $31
million restructuring expense in relation to a corporate reorganization within the Kansanshi segment.
23. SEGMENTED INFORMATION
The Company’s reportable operating segments are Cobre Panamá, Kansanshi, Trident, and Ravensthorpe. Each of the
reportable segments report information separately to the CEO, the chief operating decision maker.
The Corporate & other segment includes the Company's remaining operations, Guelb Moghrein, Las Cruces, Çayeli,
Pyhäsalmi, the metal marketing division which purchases and sells third party material, and the exploration projects. The
Corporate & other segment is responsible for the evaluation and acquisition of new mineral properties, regulatory reporting,
treasury and finance and corporate administration.
The Company’s operations are subject to seasonal aspects, in particular the rainy season in Zambia. The rainy 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 rainy 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 2023 CONSOLIDATED FINANCIAL STATEMENTS 33
124
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Earnings (Loss) by segment
For the year ended December 31, 2023, segmented information for the statement of earnings (loss) is presented as follows:
Cost of sales
(excluding
depreciation) Depreciation
Other
Operating
profit (loss) 2,8
Cobre Panamá 3
Kansanshi 4
Trident 5
Ravensthorpe 6
Corporate & other 7
Total
Revenue 1
2,513
1,598
1,665
332
348
(1,115)
(1,245)
(955)
(398)
(330)
(531)
(221)
(278)
(58)
(33)
(35)
(72)
(40)
(855)
(212)
6,456
(4,043)
(1,121)
(1,214)
Income tax
(expense)
credit
(499)
(7)
(106)
(110)
(35)
(757)
832
60
392
(979)
(227)
78
1 Refinery-backed credits presented net within revenue – see note 12.
2 Operating profit (loss) less net finance costs and taxes equals net earnings (loss) for the period on the consolidated statement of earnings (loss).
3 Cobre Panamá is 20% owned by KPMC, a joint venture. In the fourth quarter of 2023, the Company made a payment of $567 million of which $20 million relates
to 2021, $375 million relates to 2022 and $172 million relates to 2023. Taxes and royalties calculated based on a taxable margin of $479 million is included in tax
expense as per Law 406 up to December 2, 2023. See note 13, Income Tax Expenses, for further information.
4 On April 4, 2023 the Company’s subsidiary, KMP and ZCCM-IH completed the agreement to convert ZCCM-IH’s dividend rights to a 3.1% royalty interest in KMP.
Refer to note 20.
5 Trident includes Sentinel copper mine and the Enterprise Nickel development project. $21m of Enterprise Nickel pre-commercial production revenues are
included in the year ended December 31, 2023.
6 Ravensthorpe is 24.3% owned by POSCO Holdings – see note 11d.
7 Corporate & other includes Guelb Moghrein, Las Cruces, Çayeli and Pyhäsalmi.
8 Finance costs of $719 million, including interest expense on debt, are not included within operating profit, refer to note 21, Finance costs
For the year ended December 31, 2022, segmented information for the statement of earnings (loss) is presented as follows:
Cobre Panamá 3
Kansanshi
Trident 4
Ravensthorpe 5
Corporate & other 6
Total
Cost of sales
(excluding
depreciation)
Revenue 1
2,959
1,706
1,980
476
505
(1,286)
(1,098)
(1,001)
(396)
(415)
Depreciation
Other
Operating
profit (loss) 2,7
(608)
(226)
(314)
(46)
(36)
(11)
114
18
1
(81)
41
1,054
496
683
35
(27)
2,241
Income tax
(expense)
credit
–
(70)
(157)
(1)
(92)
(320)
7,626
(4,196)
(1,230)
1 Refinery-backed credits presented net within revenue – see note 12.
2 Operating profit (loss) less net finance costs and taxes equals net earnings (loss) for the period on the consolidated statement of earnings (loss) .
3 Cobre Panamá is 20% owned by KPMC, a joint venture. In the fourth quarter of 2023, the Company made a payment of $567 million of which $20 million relates
to 2021, $375 million relates to 2022 and $172 million relates to 2023. Taxes and royalties calculated based on a taxable margin is included in tax expense as per
Law 406 up to December 2, 2023. See note 13, Income Tax Expenses, for further information.
4 Trident includes Sentinel copper mine and the Enterprise Nickel development project.
5 Ravensthorpe is 24.3% owned by POSCO Holdings (2022: 30%) – see note 11d.
6 Corporate & other includes Guelb Moghrein, Las Cruces, Çayeli and Pyhäsalmi, which were previously reported separately.
7 Finance costs of $662 million, including interest expense on debt, are not included within operating profit, refer to note 21, Finance costs
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 34
125
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Balance sheet by segment
Segmented information on balance sheet items is presented as follows:
Non-current
assets 1
11,533
2,611
2,896
20
1,737
December 31, 2023
Total
liabilities
Total assets
12,322
3,853
3,669
128
3,786
2,923
798
1,072
465
7,722
Non-current
assets 1
11,637
2,435
2,885
784
1,560
December 31, 2022
Total assets
Total liabilities
12,339
3,907
3,599
1,033
4,202
3,127
725
1,053
361
7,577
Cobre Panamá 2
Kansanshi 3
Trident 4
Ravensthorpe 5
Corporate & other 6,7
Total
18,797
23,758
12,980
19,301
25,080
12,843
1 Non-current assets include $18,583 million of property plant and equipment (December 31, 2022: $19,053 million) and exclude financial instruments, deferred tax
assets, VAT receivable and goodwill.
2 Cobre Panamá is 20% owned by KPMC, a joint venture.
3 On April 4, 2023 the Company’s subsidiary, KMP and ZCCM-IH completed the agreement to convert ZCCM-IH’s dividend rights to a 3.1% royalty interest in KMP.
This transaction also provides for 20% of the KMP VAT refunds as at June 30, 2022 to be paid to ZCCM-IH, as and when they are received by KMP from the
ZRA. Refer to note 25.
4 Trident includes Sentinel copper mine and the Enterprise Nickel development project.
5 Ravensthorpe is 24.3% owned by POSCO Holdings (2022: 30%)
6 Included within the corporate segment are assets relating to the Haquira project, $711 million (December 31, 2022: $702 million), to the Taca Taca project, $485
million (December 31, 2022: $474 million), and to the La Granja project, $207 million (December 31, 2022: nil).
7 Corporate & other includes Guelb Moghrein, Las Cruces, Çayeli and Pyhäsalmi.
Purchase and deposits on property, plant and equipment by segment
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 Panamá
Kansanshi
Trident 1
Ravensthorpe
Corporate & other 2
Total
2023
421
426
328
46
79
1,300
2022
587
214
274
37
55
1,167
1 Trident includes Sentinel copper mine and the Enterprise Nickel development project.
2 Corporate & Other additions exclude the asset acquisition of La Granja recorded as an addition of $105 million to mineral properties in the three and nine months
ended September 30 2023 (See note 6).
Geographical information
Revenue by destination 1,2,3
Asia & Oceania
Europe
Africa
Americas
Total
2023
2022
5,156
678
332
290
6,456
5,569
967
557
533
7,626
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 Revenue includes hedge losses recognized on forward sales and zero cost collar options. $nil for the year ended December 31, 2023 (December 31, 2022: $5m).
3 For the year ended December 31, 2023, the Company has one customer that individually accounts for more than 10% of the Company’s total revenue. This
customer represents approximately 12% of total revenue (2022: 14%).
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 35
126
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Non-current assets by location
Panama
Zambia
Peru
Argentina
Mauritania
Spain
Australia
Turkey
Finland
Other
Investments, deferred income tax assets, goodwill, restricted cash, other deposits and VAT
receivable
2023
2022
11,533
5,495
915
483
48
40
27
26
2
228
18,797
11,637
5,308
702
474
39
31
795
53
6
256
19,301
1,502
1,610
20,299
20,911
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, 2023:
Financial assets
Trade and other receivables 1
Due from KPMC (note 8)
Other derivative instruments 2
Investments 3
Financial liabilities
Trade and other payables
Other derivative instruments 2
Leases
Liability to joint venture
Amortized
cost 4
Fair value
through
profit or loss
Fair value
through OCI
272
–
14
–
–
62
–
–
–
–
–
17
–
–
–
–
Total
433
188
14
17
831
62
20
1,156
161
188
–
–
831
–
20
1,156
202
7,379
Other loans owed to non-controlling interest
Debt4
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.
202
7,379
–
–
–
–
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.
4 The fair value of financial assets and liabilities measured at amortized cost, with the exception of debt, is comparable to the carrying value due to the short term to
maturities or due to the rates of interest approximating market rates. The fair value of debt is $6,842 million as at December 31, 2023.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 36
127
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
The following provides the classification of financial instruments by category at December 31, 2022:
Financial assets
Trade and other receivables 1
Due from KPMC (note 8)
Other derivative instruments 2
Investments 3
Financial liabilities
Trade and other payables
Other derivative instruments 2
Leases
Liability to joint venture
Other loans owed to non-controlling interest
Debt
Amortized
cost4
Fair value
through profit
or loss
Fair value
through OCI
264
216
–
–
771
–
29
1,256
190
7,380
491
–
15
–
–
117
–
–
–
–
–
–
–
17
–
–
–
–
–
–
Total
755
216
15
17
771
117
29
1,256
190
7,380
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.
4 The 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.
Fair values
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
Level 2
Level 3
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
or indirectly.
Inputs for the asset or liability that are not based on observable market data.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 37
128
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
The following table sets forth the Company’s assets and liabilities measured at fair value on the balance sheet at December
31, 2023:
Financial assets
Derivative instruments – LME contracts 1
Derivative instruments – OTC contracts 2
Investments 3
Level 1
Level 2
Level 3
Total fair
value
14
–
1
–
–
–
–
–
16
14
–
17
Financial liabilities
Derivative instruments – LME contracts 1
Derivative instruments – OTC contracts 2
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,
57
—
—
—
—
5
57
5
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 classified within Level 1 and Level 3 of the fair value hierarchy. The investments classified within
Level 1 of the fair value hierarchy are valued using quoted market prices in active markets. 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 investments in equity securities in non-public
companies are classified within Level 3 of the fair value hierarchy as the valuation is based on unobservable inputs, supported by little or no market activity.
The following table sets forth the Company’s assets and liabilities measured at fair value on the balance sheet at December
31, 2022, in the fair value hierarchy:
Level 1
Level 2
Level 3
Total fair
value
Financial assets
Derivative instruments – LME contracts 1
Investments 3
Financial liabilities
Derivative instruments – LME contracts 1
Derivative instruments – OTC contracts 2
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,
101
15
17
16
101
–
–
–
–
–
–
–
–
15
17
16
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 classified within Level 1 and Level 3 of the fair value hierarchy. The investments classified within
Level 1 of the fair value hierarchy are valued using quoted market prices in active markets. 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 investments in equity securities in non-public
companies are classified within Level 3 of the fair value hierarchy as the valuation is based on unobservable inputs, supported by little or no market activity.
Financial risk management
Credit risk
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
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 38
129
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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, 2023, 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. 51% 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, Trident, 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.
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,
2023
December 31,
2022
433
674
1,107
755
654
1,409
The VAT receivable due from government authorities includes $521 million at December 31, 2023, which is past due
(December 31, 2022: $639 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,
2023, are insignificant.
Liquidity risk
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.
The Company was in compliance with all existing facility covenants as at December 31, 2023. The current situation at Cobre
Panamá has impacted the EBITDA generating potential of the Company, putting at risk the Company’s ability to meet the net
debt to EBITDA ratio covenant as defined in its current senior banking facilities. Current forecasts for 2024, before taking into
account future balance sheet initiatives, indicate the Company may breach the prevailing net debt to EBITDA ratio covenant
during the coming twelve months, which results in the existence of a material uncertainty that casts a significant doubt about
the Company’s ability to continue as a going concern. The Company is significantly advanced in discussions with its banking
partners to renegotiate this covenant and extend its bank loan facilities. In addition, the Company has undertaken a number
of actions to reduce cash outflows, manage its debt and working capital, and increase EBITDA, while also developing a
range of portfolio-related options including exploring the sale of smaller mines and interests in its larger mining assets.
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,
2023
1,157
1,293
696
December 31,
2022
1,688
1,411
1,140
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).
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 39
130
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Contractual and other obligations as at December 31, 2023 are as follows:
Carrying
Value
Contractual
Cashflows
<1 Year
1-3 years
3-5 years
Thereafter
Debt - principal
Debt - finance charges
Trading facilities
Trade and other payables
Derivative instruments
Liability to joint venture1
Other
loans owed
controlling interest2
to non-
Current taxes payable
Deferred payments
Leases
Commitments
Restoration provisions
7,235
–
144
831
62
7,268
1,821
144
831
62
1,156
1,736
202
251
27
18
20
–
647
27
18
22
347
1,267
625
544
144
831
62
–
–
27
2
7
347
6
3,843
670
1,500
327
1,300
280
–
–
–
–
223
–
4
3
–
–
–
–
1,736
–
–
8
1
–
42
2,099
1,197
4,522
10,342
13,794
2,595
4,578
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 Holdings, an entity that holds a 24.3% 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, 2022 are as follows:
Carrying
Value
Contractual
Cashflows
<1 Year
1-3 years
3-5 years
Thereafter
Debt - principal
Debt - finance charges
Trading facilities
Trade and other payables
Derivative instruments
Liability to joint venture1
Joint venture
Current taxes payable
Deferred payments
Leases
Commitments
Restoration provisions
7,260
–
120
771
117
1,256
190
53
40
29
–
555
7,293
1,426
120
771
117
1,990
251
53
40
26
426
1,073
455
509
120
771
117
–
28
53
4
12
406
3
4,338
676
2,500
241
–
–
–
–
1,990
223
–
20
–
–
–
–
–
–
–
8
4
–
33
1,015
–
–
–
–
28
–
4
11
–
22
–
–
–
–
–
8
10
20
22
3,248
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
10,391
13,586
2,478
5,074
2,786
repayments.
Market risks
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.
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
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 40
131
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
derivative financial instruments. As at December 31, 2023, and December 31, 2022, the Company had not entered into any
derivatives or 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.
Derivatives designated as hedged instruments
As at December 31, 2023 and December 31, 2022, the Company held no commodity contracts designated as hedged
instruments.
Other derivatives
As at December 31, 2023, 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.
Excluding the contracts noted above, as at December 31, 2023, the following derivative positions were outstanding:
Embedded derivatives in provisionally priced sales contracts:
Open Positions
(tonnes/oz)
Average
Contract price
Closing Market
price
Maturities
Through
Copper
Gold
Nickel
Commodity contracts:
Copper
Gold
Nickel
109,097
14,070
1,191
109,175
14,077
1,188
$3.75/lb
$2,049/oz
$7.69/lb
$3.75/lb
$2,049/oz
$7.69/lb
$3.84/lb
$2,078/oz
$7.39/lb
$3.84/lb
$2,078/oz
$7.39/lb
April, 2024
April 2024
March 2024
April 2024
April 2024
March 2024
As at December 31, 2022, the following derivative positions were outstanding:
Open Positions
(tonnes/oz)
Average Contract
price
Closing Market
price
Maturities
Through
Embedded derivatives in provisionally priced sales contracts:
Copper
206,653
Gold
Commodity contracts:
Copper
Gold
51,109
206,925
51,109
$3.73/lb
$1,792/oz
$3.73/lb
$1,792/oz
$3.80/lb
$1,814/oz
April 2023
February 2023
$3.80/lb
$1,814/oz
April 2023
February 2023
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
December 31,
2023
December 31,
2022
14
(62)
15
(117)
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, 2022. There is no impact of these
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 41
132
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
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:
Average contract price on
December 31
Impact of price change on net
earnings (loss)
2023
$3.75/lb
$2,049/oz
$10.59/lb
2022
$3.73/lb
$1,792/oz
n/a
2023
–
–
n/a
2022
–
–
n/a
Copper
Gold
Nickel
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, 2023, and December 31
2022, the Company held no floating-to-fixed interest rate swaps.
At December 31, 2023, the impact on cash interest payable of a 100 basis point change in interest rate would be as follows:
Interest-bearing deposits, cash at bank and bank
overdrafts
Floating rate borrowings drawn
December 31,
2023
Impact of interest rate change on
net earnings (loss)
100 basis point
increase
100 basis point
959
2,555
13
(21)
(13)
21
At December 31, 2022, the impact on cash interest payable of a 100 basis point change in interest rate would be as follows:
Interest-bearing deposits, cash at bank and bank
overdrafts
Floating rate borrowings drawn
c)
Foreign exchange risk
December 31,
2022
Impact of interest rate change on
net earnings (loss)
100 basis point
increase
100 basis point
1,688
2,698
18
(23)
(18)
23
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.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 42
133
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
As at December 31, 2023, 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
Cash and cash
equivalents
Trade and other
receivables
Investments
1
2
3
25
50
–
4
–
2
87
–
–
1
1
7
–
–
–
–
9
1
–
–
–
–
–
–
–
–
1
Financial
liabilities
6
8
72
22
36
9
70
72
(13)
282
Based on the above net exposures as at December 31, 2023, a 10% change in all of the above currencies against the USD
would result in a $19 million increase or decrease in the Company’s net earnings (loss) and would result in a $nil million
increase or decrease in the Company’s other comprehensive income.
As at December 31, 2022, 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
Cash and cash
equivalents
Trade and other
receivables
Investments
1
3
6
6
29
—
2
—
—
47
—
—
3
4
6
—
—
—
—
13
—
—
1
—
—
—
—
—
—
1
Financial
liabilities
3
8
59
1
40
—
3
5
—
119
Based on the above net exposures as at December 31, 2022, 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 (loss) and would result in a $nil million
increase or decrease in the Company’s other comprehensive income.
Capital management
The Company takes a balanced approach to capital management in order to safeguard its ability to continue operate as a
going concern, ensuring sufficient liquidity is available for continued growth, cognizant of the requirements of shareholders
and debt holders 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. The Company is significantly advanced in discussions with its banking partners to
address the terms and extend the maturities of its bank loan facilities. The Company has undertaken a number of actions to
reduce cash outflows, manage its debt and working capital, and increase EBITDA, while also developing a range of portfolio-
related options including exploring the sale of smaller mines and interests in its larger mining assets. These actions include
the suspension of the Company’s dividend presently.
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. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 43
134
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
25. COMMITMENTS AND CONTINGENCIES
Capital commitments
The Company has committed to $347 million (December 31, 2022: $426 million) in capital expenditures, principally related to
the S3 project at Kansanshi.
Other commitments & contingencies
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, 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.
Panama
Introduction
On March 8, 2023, MPSA and the Republic of Panama announced they had reached agreement on the terms and conditions
of a refreshed concession contract (“Refreshed Concession Contract”). MPSA and the GOP signed the Refreshed
Concession Contract on June 26, 2023, and it was subsequently countersigned by the National Comptroller of Panama. The
Refreshed Concession Contract was presented before the Commerce Committee of the National Assembly of Panama, who
recommended the amendment of certain terms of the contract. The Company and GOP agreed to modifications to the
agreement based on these recommendations after a brief period of negotiation. The GOP cabinet approved the amended
terms of the Refreshed Concession Contract on October 10, 2023, and MPSA and the Republic entered into the agreement
the next day. On October 20, 2023, the National Assembly in Panama approved Bill 1100, being the proposal for approval of
the Refreshed Concession Contract for the Cobre Panamá mine. On the same day, President Laurentino Cortizo sanctioned
Bill 1100 into Law 406 and this was subsequently published in the Official Gazette.
Panamá Constitutional Proceedings and Mining Moratorium.
On October 26, 2023, a claim was lodged with the Supreme Court of Justice of Panama asserting that Law 406 was
unconstitutional. MPSA was not a party to that proceeding. The petitioner argued that Law 406, which gave legal effect to
the Refreshed Concession Contract, was unconstitutional.
On November 3, 2023, the National Assembly of Panama approved Bill 1110, which President Cortizo sanctioned into Law
407 and which was published the same day in the Official Gazette. Law 407 declares a mining moratorium for an indefinite
duration within Panama, including preventing any new mining concession from being granted or any existing mining
concessions from being renewed or extended.
On November 28, 2023, the Supreme Court issued a ruling declaring Law 406 unconstitutional and stating that the effect of
the ruling is that the Refreshed Concession Contract no longer exists. The ruling was subsequently published in the Official
Gazette on December 2, 2023. The Supreme Court did not order the closure of the Cobre Panamá mine.
On December 19, 2023, the Minister for Commerce and Industry announced plans for Cobre Panamá following the ruling of
the Supreme Court. The validity of Panama’s mineral resource code which was established more than 50 years ago was
reiterated by the Minister given the absence of retroactivity of the Supreme Court ruling. As part of these plans, a temporary
phase of environmental Preservation and Safe Management would be established until June 2024, during which intervening
period independent audits, review and planning activities would be undertaken. It was stated that Panama would be the first
country in the world to implement a sudden mine closure of this magnitude, and therefore the planning is estimated by the
GOP to take up to two years, and 10 years or more to implement. The Minister also announced plans to consider the
economic impacts of the halt to operations of Cobre Panamá at both a national and local level. The Company is of the view,
supported by the advice of legal counsel, that it has acquired rights with respect to the operation of the Cobre Panamá
project, as well as rights under international law.
Presidential and national legislative elections will take place in May 2024, with a new president, GOP cabinet and National
Assembly assuming office in July 2024.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 44
135
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
Notes to the Consolidated Financial Statements
(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)
Arbitration Proceedings
Steps towards two arbitration proceedings have been taken by the Company. One under the Canada-Panama Free Trade
Agreement (FTA), and another one as per the arbitration clause of the Refreshed Concession Contract.
1. On November 29, 2023, MPSA initiated arbitration before the International Chamber of Commerce’s International Court
of Arbitration (“ICC”) pursuant to the ICC’s Rules of Arbitration and Clause 46 of the Refreshed Concession Contract, to
protect its rights under Panamanian law and the Refreshed Concession Contract that the GOP agreed to in October
2023. The arbitration clause of the contract provides for arbitration in Miami, Florida.
2. On November 14, 2023, First Quantum submitted a notice of intent to the GOP initiating the consultation period required
under the Canada-Panama Free Trade Agreement (“FTA”). Under the terms of the FTA, First Quantum may initiate
arbitration after at least six months have elapsed since the events giving rise to a claim. First Quantum is entitled to
seek any and all relief appropriate in arbitration, including but not limited to damages and reparation for Panama’s
breaches of the Canada-Panama FTA. These breaches include, among other things, the GOP’s failure to permit MPSA
to lawfully operate the Cobre Panamá mine prior to the Supreme Court’s November 2023 decision, and the GOP’s
pronouncements and actions concerning closure plans and Preservation and Safe Management at Cobre Panamá.
Kansanshi Development Agreement
In May 2020, KMP filed a Request for Arbitration against the GRZ with the International Centre for Settlement of International
Disputes. KMP’s claims concerned breaches of certain contractual provisions of a development agreement between GRZ
and KMP and international law. Pursuant to the wider reset arrangements concluded between the Company and GRZ in May
2022, these proceedings have now been settled.
Kansanshi – conversion of ZCCM dividend rights to royalty rights
On April 4, 2023 the Company’s subsidiary, Kansanshi Mining Plc and ZCCM-IH completed the agreement to convert
ZCCM-IH’s dividend rights to a 3.1% royalty interest in Kansanshi Mining Plc. The transaction also provides for 20% of the
KMP VAT refunds as at June 30, 2022 to be paid to ZCCM-IH, as and when these are received by KMP from the ZRA.
Accordingly, the non-controlling interest in the consolidated financial statements has been derecognized, with no gain or loss
arising. An adjustment has been made against the book value of Kansanshi Mining Plc’s mineral property within Property,
Plant and Equipment (note 6) and ZCCM IH’s right to VAT refunds has been recognized as a liability (note 11).
26. POST BALANCE SHEET EVENTS
Copper Prepayment Agreement
After the reporting period, the Company signed a $500 million 3-year copper prepayment agreement with Jiangxi Copper at
competitive market rates ("Prepayment Agreement"). The agreement provides for the delivery of 50kt of copper anode per
annum from Kansanshi payable at market prices. The prepaid amount will reduce in line with deliveries over the second and
third years of the Prepayment Agreement. Proceeds will be used towards general corporate purposes and to increase
liquidity.
First Quantum Minerals Ltd. | 31 December 2023 CONSOLIDATED FINANCIAL STATEMENTS 45
136
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
IN MEMORY OF PHILIP PASCALL
Philip drove First Quantum’s focus on project
execution, operational excellence and social
responsibility and we intend to continue to
build on his substantial legacy.
PHILIP PASCALL (1947-2023)
On September 19, 2023, one of First Quantum’s founders and Chair, Philip Pascall, passed away peacefully at home in Perth,
Western Australia.
Philip co-founded First Quantum in 1996, serving as the Chairman since its inception and Chief Executive Officer until
2022. Under his leadership, Philip instilled an entrepreneurial and bold culture that saw the Company grow from a 10,000
tonnes tailings re-processor with the Bwana Mkubwa project in Zambia to one of the world’s largest copper producers
with operations spanning five continents and employing more than 20,000 people globally. Amongst the many legacies
he leaves behind, the greatest source of Philip’s pride were the many programs for the local communities in which First
Quantum operates, bringing improved standards of health and education in often remote places.
“On behalf of the Board of Directors, we extend our sincerest condolences to the Pascall family and friends,” said Robert
Harding, Chair. “We are all indebted to Phillip for his extraordinary leadership at First Quantum, setting us firmly on the path
to the modern, multi-national mining company that we are today. Philip was a friend and mentor and his passing will be
profoundly felt across the Company and the many people and lives he impacted as a result of his vision.”
“Whilst this is an enormous loss for all of us at First Quantum, Philip would not want us to dwell too long on his passing. He
was always looking forward and was excited by the trajectory of the Company,” said Tristan Pascall, Chief Executive Officer
of First Quantum. “Philip drove First Quantum’s focus on project execution, operational excellence and social responsibility
and we intend to continue to build on his substantial legacy.”
137
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT BOARD OF DIRECTORS
Our Board of Directors is 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.
ROBERT HARDING Independent Chair
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.
Member of: Audit Committee and Nominating & Governance Committee
TRISTAN PASCALL Chief Executive Officer
Tristan Pascall joined First Quantum in 2007. During his time at the Company, he has worked
in a variety of site-based roles from pre-development of projects through construction to
operational responsibilities. In 2015, he was appointed General Manager of Cobre Panamá
with responsibility for the operations through the ramp up and commercial production
phase. Prior to that, Tristan was part of the group that developed, constructed and operated
the Sentinel project in Zambia and also worked on projects at Kansanshi mine and in DRC.
Since 2020, Tristan has held executive leadership roles in the Company based in the UK.
Before joining First Quantum, Tristan spent eight years in corporate finance and investment
banking with a focus on the resources industry. Tristan graduated from the University
of Western Australia with a Bachelor of Engineering and Bachelor of Commerce and
completed an MBA at INSEAD in France.
ANDREW ADAMS Independent Director
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.
Member of: Audit Committee and Human Resources Committee
138
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT ALISON BECKETT
Independent Director,
Chair of the Human Resources Committee
Independent Director Ms Beckett has a career spanning both industry and consulting,
having worked at Conoco (now ConocoPhillips) between 1991 and 2001 in roles across
finance, commercial, gas regulations and strategy. From 2001 until 2020 she was an advisor
providing leadership advisory services at Egon Zehnder. Currently she is Chair of Governors
at Sevenoaks school.
Member of: Audit Committee
GEOFF CHATER Independent Director
Mr Chater is a geologist and corporate director with over 35 years of experience in the
mineral exploration and mining industries operating worldwide. As a capital markets
and corporate strategy consultant, he has focused on transaction-related business
development, strategic review, relationship development, defense, mergers / acquisitions,
equity finance, and communications. As a director, Mr Chater has been involved in the
sale of several public resource companies including Nevsun Resources, Reservoir Minerals,
Valley High Ventures, and Mason Resources. Mr Chater currently serves as an Independent
Director at New Gold Inc. and Principal at Namron Advisors. He previously served as
Corporate Relations Manager at First Quantum Minerals Ltd. (1999-2008), President of
Valley High Ventures Ltd. (2010-2011), President and CEO at Bearing Resources Ltd. (2011-
2012) and Luna Gold Ltd. (2014-2015), Director of Nevsun Resources Ltd. (2016-2018) and
Mason Resources Ltd. (2017-2018). Mr Chater is a graduate of Texas Christian University with
a Bachelor of Science Degree in Geology.
Member of: Human Resources and Nominating & Governance Committee
KATHLEEN HOGENSON
Independent Director, Chair of the
Nominating & Governance 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 and a director at
Tamarack Valley Energy Ltd., a Calgary based publicly traded oil & gas upstream operator.
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.
Member of: Environmental, Health and Safety & CSR Committee
139
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
KEVIN MCARTHUR Independent Director, Chair of the Environmental,
Health and Safety & CSR Committee
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. and Novagold Resources 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.
Member of: Human Resources Committee
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 previously served on the board of AngloGold Ashanti Holdings plc.,
a global gold mining company (2019 - February 2024). He is currently a Non-Executive
Director of Sylvania Platinum Limited, a PGMs producing company listed on the London
Stock Exchange’s Alternative Investment Market.
Member of: Environmental, Health Safety & CSR Committee
DR. 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 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.
Member of: Environmental, Health and Safety & CSR and Human Resources Committee
140
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
SHAREHOLDER INFORMATION
MANAGEMENT & OFFICERS
OF THE COMPANY
TRANSFER AGENT AND REGISTRAR
TRISTAN PASCALL / Chief Executive Officer
RYAN MACWILLIAM / Chief Financial Officer
RUDI BADENHORST / Chief Operating Officer
SARAH ROBERTSON / Corporate Secretary
JULIET WALL / General Manager Finance
ZENON WOZNIAK / Director, Projects
JOHN GREGORY / Director, Mining
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141
FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
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FIRST QUANTUM MINERALS LTD.2023 ANNUAL REPORT
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