First Quantum revenues soar on copper gains

Vancouver – Southern African copper producer First Quantum Minerals (FM-T) reaped the benefits of higher mine output coupled with improved metal prices in 2004 to post significant earnings.

The company booked US$113.5 million in revenues for 2004, up 88% from the US$60.5 million in 2003. Net earnings came in at US$28 million or US47 per share, a substantial increase over the previous year’s US$4.6 million or US9 per share.

Copper production for the year came in at 41,546 tonnes, a 41% increase over 2003 output of 29,513 tonnes. The boost in Bwana Mkubwa production was the primary contributor to 2004’s strong performance. First Quantum realized an average copper price of US$1.13 per pound for the year as compared to the US75 per pound seen in 2003.

The company’s wholly owned Bwana Mkubwa SX-EW operation in Zambia processed over 980,000 tonnes of oxide ore in 2004 with an average grade of 4.8% acid soluble copper. Recoveries came in at 88% with cash costs of US46 per pound. The plant also produced over 140,000 tonnes of sulphuric acid over the year however sales were down due to a 27% increase in acid consumption through the leach circuit. A new ore delivery system improved throughput and an increase in electrical current flow enabled more copper to be plated at the electrowinning circuit.

The 100%-owned Lonshi copper mine in the Democratic Republic of Congo (DRC), which feeds ore to the Bwana Mkubwa SX-EW plant, saw mining of 669,000 tonnes of ore grading 5.5% copper in 2004. The 6% drop in ore mined, as compared to 2003, was more than offset by a 15% increase in grade. To meet the increased demand for ore-feed at Bwana Mkubwa, the company significantly increased its mining fleet at Lonshi and developed a revised mining plan. The new plan, factoring in higher copper prices, saw a boost in reserves and will use an increased stripping ratio of 12-to-1 versus the previous 8-to-1.

First Quantum has completed construction at its 80%-owned Kansanshi copper-gold project and commenced waste stripping and stockpiling of ore in 2004. The new 330Kv power line is in place feeding power to the site where the processing circuit is being commissioned. Mining at the main pit has focused on sulphide ores, as the sulphide circuit was the first completed, with production of over 440 tonnes of copper concentrate by year-end. Full commercial production, including the oxide circuit, is anticipated by April-2005.

Work on the Frontier (formerly Lufua) project in the DRC saw an independent resource estimate in mid-2004. The 87.6-million tonne resource of 1.17% copper contains a high-grade cobalt resource of 5.6 million tonnes grading 0.169%. An infill drilling program aimed at upgrading the resource to reserves has been completed with metallurgical testing and a prefeasibility study expected to be finalized by mid-2005.

Following the recent purchase of 80%-interest in the Guelb Moghrein copper-gold deposit in Mauritania, the company will be updating the historical measured and indicated resource of 23.7 million tonnes at 1.9% copper and 1.4 gram gold per tonne to fall in compliance with National Instrument 43-101. First Quantum plans development of the project with production by late-2005.

Additionally, the company realized a gain of about US$16 million upon its sale of 4.03-million shares of Anvil Mining (AVM-T) in February-2005.

The stellar year has prompted First Quantum to commence dividend payments. An inaugural dividend of 6 per share will be paid to shareholders in late-April.

Shares in First Quantum have seen an appreciable increase over the past year, rallying from a low of $11.50 per share to a recent close of over $25, near its annual high of $26.33. The company, with 61.2-million shares outstanding, posts a market capitalization of over $1.5 billion.