First Quantum Minerals Q2 Earnings Call Highlights

Second-quarter performance improved: Copper production rose 4% sequentially to just over 100,000 metric tons, while revenue increased 8% to $1.5 billion and EBITDA climbed 23% to $400 million, helped by higher copper prices and stronger Zambian output. Cobre Panamá resumed limited processing: First Quantum began producing concentrate from stockpiled ore ahead of schedule and expects its first shipment in August. The stockpiles could support roughly 12 months of processing, but a full restart remains dependent on Panamanian government approvals and would require expanding the workforce. Financial risks remain significant: Net debt rose to $5.4 billion, fuel costs and prior hedge losses pressured results, and the company is now fully exposed to spot copper and gold prices after completing its hedge program. An independent audit found Cobre Panamá largely compliant, while a government commission reviews recommendations on the mine’s future. First Quantum Minerals reported higher second-quarter copper production, revenue and EBITDA as operations improved at its Zambian assets and the company began processing stockpiled ore at Cobre Panamá. Chief Executive Officer Tristan Pascall said total copper production rose 4% from the first quarter to just over 100,000 metric tons, supported by higher output at Sentinel and the June start of concentrate production from Cobre Panamá stockpiles. Copper sales totaled 93,300 tons, about 7,000 tons below production because of timing differences between production and sales. Revenue increased 8% to $1.5 billion during the quarter, while EBITDA rose 23% to $400 million, Chief Financial Officer Ryan MacWilliam said. Higher copper prices and increased sales supported the results, though higher fuel and contracted costs, hedge losses and costs related to the preservation and safe management program at Cobre Panamá affected profitability. First Quantum recommissioned Cobre Panamá’s Train 3 milling circuit in May and produced its first concentrate from stockpiled ore in June, ahead of its prior third-quarter target. The operation processed 2.1 million tons of ore during the second quarter and produced approximately 3,200 tons of copper in concentrate. Pascall said the company has subsequently transferred processing from Train 3 to Train 2 as part of its maintenance-cycling strategy. The remaining trains, regrind areas and column areas have been undergoing inspections, repairs and preventive maintenance. The company expects its first concentrate shipment from Cobre Panamá in August. Concentrate grades are expected to be lower while maintenance work continues in the regrind and columns areas. At current processing rates and spot copper prices, Pascall said First Quantum expects Cobre Panamá’s free cash flow to be neutral to positive. The company estimates its stockpiles contain 38 million tons of mineralized ore with about 70,000 tons of recoverable copper, sufficient for roughly 12 months of processing at current rates. First Quantum has about 3,000 people on site at Cobre Panamá, including approximately 1,000 skilled Panamanians who have returned to or newly joined the operation. Pascall said a full production restart would require a workforce of about 6,000 people. If approvals for a full restart are secured, the company believes it could reach 80% to 90% of throughput within six to nine months, with the remaining optimization dependent on securing highly skilled workers. The company has spent about $60 million to date on the stockpile processing program, within its previously guided $250 million requirement. MacWilliam said the $250 million comprises $50 million of working-capital outflows.