FQM records $420m loss


First Quantum Minerals (FQM) is impressed with effective operations at all its facilities despite recording a loss of more than $420 million after posting revenue of $673 million.

The mining company which recorded a profit during the 2014 third quarter, incurred a loss of 62 cents per share in the 2015 third quarter.

“Good operations at all our facilities combined with the benefits from our cost and cash containment efforts and the excellent operation of our new smelter yielded solid results for the quarter,” FQM Chairperson and Chief Executive Officer, Philip Pascall said with reference to 2015 third quarter results.

He said while management was pleased with the performance, further strengthening of the balance sheet and cost reductions remain key priorities for the company.

FQM President Clive Newall, presenting the company’s third quarter 2015 results, said that the net loss attributable to shareholders of $427 million included a $471 million deferred income tax charge triggered by the reinstatement of corporate tax by the Zambian Government from July 1 this year.

Mr Newall explained that, another setback was the unrealised foreign exchange loss of $94 million on the revaluation of Zambia’s value added tax (VAT) receivable due to the depreciation of the kwacha against the US dollar in the third quarter.

The company has put in place measures aimed at strengthening and protecting cash flows, which are in addition to initiatives which have already been successfully implemented with a firm commitment to reduce net debt by over $1 billion through a combination of asset sales and other strategic ingenuities by the end of the first quarter of 2016.

In a related turn of events, the full quarter operation of the world-class Kansanshi Smelter in Solwezi, yielded positive developments with 254, 709 tonnes of concentrate processed with an average copper recovery above design at 97.8 percent. Production totalled 57, 085 tonnes of copper anode and 229,000 tonnes of sulphuric acid.

According to the third quarter highlights, copper production, sales and cash cost were better than both comparative quarter and second quarter of 2015, which the company said was mainly a reflection  of the ramp-up of Sentinel in Kalumbila, benefits of the Kansanshi smelter, the company-wide cost improvement programme and lower fuel cost.

Mr Newall said production derived 107,485 tonnes, while sales accounted for 104,613 tonnes, with the cash cost—prevailing at $1.18 per pound.

He explained that the company recorded its best quarterly nickel production since the third quarter of 2014 on higher output at Kevitsa in Finland and the steady improvement at Ravensthorpe in Australia.

On the updated full year guidance, the 2015 production guidance for copper and gold lowered while nickel remains within previous guidance range with the cash cost lowering to between $1.20 and $1.35 per pound of copper and between $4.40 and $4.70 per pound for nickel. Capital expenditure for the 2015 estimate remained unchanged at $1.4 billion, inclusive of approximately $600 million for Cobre Panama where FQM’s share is at $360 million, $230 million for capitalised stripping and $200 million for each of Sentinel and sustaining capital.

Mr Newall further revealed that 2016 estimates have been pegged at $1.2 billion, inclusive of $880 million for Cobre Panama where FQM’s share has been revised at $528 million, $200 million for capitalised stripping and $100 million for sustaining capital. – Story courtesy of SUMA SYSTEMS

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