First Quantum Q2 2025 slides: EBITDA rises despite production challenges

Introduction & Market Context

First Quantum Minerals Ltd (TSX:FM) released its second quarter 2025 financial and operating results on July 24, 2025, showing improved financial performance despite lower copper production. The company demonstrated progress on key strategic initiatives, including the Kansanshi S3 Expansion project and developments at Cobre Panamá, while continuing to strengthen its balance sheet through debt reduction and hedging strategies.

The quarter saw relatively stable copper prices alongside stronger gold prices, which helped offset some of the production challenges. First Quantum’s proactive approach to financial management has resulted in improved liquidity and reduced net debt, positioning the company to better navigate the current market environment.

Quarterly Performance Highlights

First Quantum reported total copper production of 91,069 tonnes in Q2 2025, representing a 9% decrease from Q1 2025. This decline was primarily attributed to lower grades at the company’s Zambian operations. Despite this production challenge, the company achieved improved financial results, with EBITDA increasing by 6% quarter-over-quarter to $400 million.

As shown in the following chart detailing quarterly production and costs, copper production has been on a declining trend while C1 cash costs have increased:

The company’s copper C1 cash cost rose to $2.00 per lb in Q2 2025, $0.05 per lb higher than in Q1 2025. However, adjusted earnings per share improved to $0.02, up $0.02 from the previous quarter, driven by higher gold sales and stronger realized metal prices.

Gold production remained relatively stable at 37,000 ounces in Q2 2025, with Kansanshi continuing to be the primary contributor. The following chart shows the breakdown of copper production and costs at Kansanshi:

At Sentinel, copper production decreased by 7% quarter-over-quarter to 43,108 tonnes due to mining of lower grades, with C1 cash costs increasing to $2.77 per lb:

The company’s nickel operations at Enterprise also faced challenges, with production decreasing by 14% from Q1 2025 to 4,018 tonnes, while C1 cash costs increased to $5.83 per lb:

Detailed Financial Analysis

First Quantum’s financial performance showed improvement in Q2 2025, with revenue increasing by 3% quarter-over-quarter to $1.2 billion. This growth was driven by higher realized metal prices and increased gold and nickel sales volumes, which helped offset the impact of lower copper production.

The following chart illustrates the trends in copper and gold prices, as well as the company’s realized prices and C1 cash costs:

EBITDA increased by 6% quarter-over-quarter to $400 million, while net earnings attributable to shareholders improved significantly to $18 million, up $41 million from Q1 2025:

The improvement in EBITDA was primarily driven by higher realized metal prices, which contributed an additional $52 million, partially offset by internal factors such as increased cash costs:

The increase in copper C1 cash costs was mainly due to lower grade Zambian production, partially offset by increased by-product credits from stronger gold prices:

First Quantum continued to strengthen its balance sheet, with net debt decreasing by $334 million during the quarter. This reduction was attributed to the receipt of a $500 million copper prepayment and EBITDA generation, partially offset by capital expenditures and interest payments:

The company has maintained a proactive approach to risk management through its hedging strategy. Approximately 60% of planned copper production and sales in 2025 and 40% for the first half of 2026 are protected from spot price movements. Additionally, a new gold hedging program was initiated, covering approximately 40% of planned gold production up to the end of 2026:

Strategic Initiatives

A key focus for First Quantum is the Kansanshi S3 Expansion project, which has reached 91% completion of construction. The project remains on budget and on schedule, with production expected to commence in the second half of 2025. Significant progress has been made, with 50% of systems handed over to commissioning and 92% of configuration of plant control systems completed:

Another important development was the approval of the Preservation and Safe Management (P&SM) Plan for Cobre Panamá by the Government of Panama on May 30, 2025. This approval has allowed for the export of copper concentrate, with the first vessel dispatched in June 2025, followed by second and third vessels in July. The restart of the thermoelectric power plant is expected in Q4 2025, with pre-commissioning inspections already underway.

First Quantum has also made progress on sustainability initiatives during the quarter, including local supplier development in Zambia, support for Zambia’s energy transition through a long-term clean energy agreement, and engagement with indigenous communities in Panama.

Forward-Looking Statements

First Quantum maintained its 2025 production guidance, projecting total copper production of 380,000-440,000 tonnes, gold production of 135,000-155,000 ounces, and nickel production of 15,000-25,000 tonnes:

The company’s top priorities for 2025 include resolution in Panama, proactive management of balance sheet and liquidity, safe and productive operational performance, and delivery of the Kansanshi S3 Expansion.

CEO Tristan Pascall expressed confidence in the company’s outlook, highlighting the importance of the Kansanshi S3 Expansion as a turning point for the company. The project is expected to contribute significantly to production in the second half of 2025, although initial feed will be sourced from low-grade stockpiles.

First Quantum’s focus on balance sheet management and liquidity has provided the company with meaningful headroom, positioning it to navigate challenges while advancing strategic initiatives. The combination of improved financial performance, progress on key projects, and proactive risk management suggests a cautiously optimistic outlook for the remainder of 2025.

Full presentation:

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