Earnings call transcript: First Quantum Minerals faces challenges in Q1 2023

First Quantum Minerals Ltd. (FQM), with a market capitalization of $13.3 billion, reported a challenging first quarter of 2023, with a decline in both revenue and EBITDA. Despite these setbacks, the company remains confident in its strategic initiatives, including the Kansanshi S3 expansion project, which is nearing completion. The earnings call highlighted key financial metrics and operational updates, providing insight into the company’s current position and future outlook. According to InvestingPro data, the company maintains a FAIR financial health rating, suggesting balanced operational performance despite current challenges.

Key Takeaways

• Q1 revenue decreased by 5% quarter-over-quarter.
• EBITDA dropped by 17%, reflecting operational challenges.
• Net loss attributable to shareholders stood at $23 million.
• Kansanshi S3 expansion project is 83% complete and on budget.
• Copper production faced cost increases, with C1 costs up 16%.

Company Performance

First Quantum Minerals experienced a decline in performance during Q1 2023, with revenue and EBITDA both decreasing compared to the previous quarter. The company attributed these declines to increased operational costs and maintenance issues, particularly in its copper production operations. Despite these challenges, the company is making progress on strategic projects that are expected to enhance future performance.

Financial Highlights

• Revenue: Down 5% quarter-over-quarter.
• EBITDA: Fell 17% compared to the previous quarter.
• Net loss: $23 million attributable to shareholders.
• Copper C1 costs: Increased by 16% to $1.95 per pound.
• Net debt: Increased by $257 million to $5.8 billion.
• Liquidity: Strong at $1.6 billion, with $743 million in cash and an undrawn revolver of $880 million.

Outlook & Guidance

First Quantum Minerals provided forward guidance, projecting significant copper production across its operations for 2025. The Kansanshi mine is expected to produce between 160,000 and 190,000 tonnes of copper and 100,000 to 110,000 ounces of gold. The Sentinel and Enterprise mines are also forecasted to contribute substantially to the company’s output. The completion of the Kansanshi S3 expansion is anticipated to be a pivotal moment for the company, expected by mid-year.

Executive Commentary

CEO Tristan Pascal expressed confidence in the company’s future, stating, "We remain confident in the outlook for the company." He emphasized the importance of the Kansanshi S3 expansion, referring to it as a "turning point for the company." Pascal also highlighted the company’s proactive financial management, noting that "our financial actions... have provided the company with meaningful headroom in our balance sheet."

Risks and Challenges

• Operational Costs: Increasing copper production costs could pressure margins.
• Market Uncertainty: Potential U.S. tariffs and economic uncertainty may impact demand.
• Maintenance Issues: Ongoing maintenance challenges, particularly at the Sentinel mine, need addressing.
• Cobre Panama: The suspension of operations at Cobre Panama poses a significant financial burden.
• Power Supply: Dependence on imported power in Zambia could lead to future supply risks.

Q&A

During the earnings call, analysts inquired about the status of the Cobre Panama situation, with management indicating that they are open to dialogue with the government and that a mine reopening could take 6-9 months. Questions also focused on the power situation in Zambia, where the company has secured power contracts through Q1 2027 and is exploring renewable energy options.

Full transcript - First Quantum Minerals Ltd (FM) Q1 2025:

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the First Quantum Minerals Limited First Quarter twenty twenty five Results Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

I would now like to turn the conference over to Bonita Toh, Director, Investor Relations. Please go

Bonita Toh, Director, Investor Relations, First Quantum Minerals: Thank you, operator, and thank you, everyone, for joining us today to discuss our first quarter results. During the call, we will be making forward looking statements. As such, I encourage you to read the cautionary notes that accompany this presentation, our MD and A and the related news release. As a reminder, the presentation is available on our website and that all dollar references are in U. S.

Dollars unless otherwise noted. On today’s call are Tristan Pascal, our Chief Executive Officer Ryan McGilliam, our Chief Financial Officer and Rudy Badenhorst, our Chief Operating Officer. And with that, I will turn the call over to Tristan for opening remarks.

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Thank you, Benita, and thank you everybody for joining us today on our first quarter update. It’s been an eventful period since our Q1 results. Uncertainty from shifting trade policy has increased concerns about global growth. While there is not a material direct impact on our business from the tariffs and we continue to see strong physical demand for copper in the current market, the potentially weaker outlook for global growth reinforces our focus on lean and safe operations and continuous work to strengthen the balance sheet and drive cost and capital disciplines. Since November 2023, we have taken deliberate and strategic actions to safeguard our business and protect the long term growth of the company in a potential scenario of a significant slowdown.

This included a $500,000,000 copper prepay agreement in February of last year and we are pleased to announce with our first quarter results that we have supplemented this agreement with another three year term for an additional $500,000,000 copper prepay. During the quarter, we also successfully completed an additional US1 billion dollars note offering that allowed us to retire a portion of our 2027 notes. We also implemented a copper hedging strategy that we have actively over a year. Additionally, our meaningful gold production from Kansanshi and Guell McCrane will also act as a natural hedge in a potential broad downturn. Whilst our financial initiatives are important actions in building our resilience, the strength of the company’s business has always been with the quality of our assets.

This is embedded in the culture of First Quantum from overseeing construction and expansions right through to lean and safe production. The company has consistently demonstrated our ability to deliver strong results through our consistent track record in operational excellence and continuous improvement. And we remain on track for 2025 for continued safe productivity in Zambia to which Rudy will cover in his operational review. In Panama, the country made progress on social security reform during the first quarter and passed legislation on March 18. As well, President Molino made public comments that he will approve the shipment of the copper concentrate and the restart of the power plant.

Whilst we continue of these approvals with the President’s public comments, we engaged in constructive arbitration discussions with the government’s legal counsel. On April 2, the company terminated its ICC arbitration and suspended the FTA arbitration. And we are committed to engaging with the government and the people of Panama on resolution for the Cobre Panama mine. In the meantime, the company continues with its public outreach within the country on the benefits of the mine. Cobre Panama remains an important and strategic resource of copper, which is a critical metal for the renewable energy transition and ongoing upliftment in developing economies.

The mine has always operated in an environmentally and socially responsible manner and has the potential to employ over 5,000 additional Panamanians and create over 40,000 direct and indirect Panamanian jobs. Cobre Panama was purchasing approximately $20,000,000 per week from Panamanian companies and would have provided over $500,000,000 in taxes per year in taxes royalties and social securities to the country. Since the suspension of operations in November 2023, as ordered by the previous government, the country of Panama has lost over $750,000,000 in accumulated contributions to government and $1,500,000,000 in expenditures with local companies. I would like to reiterate that the company is committed to a fair and transparent process towards an equitable resolution for the country of Panama and its people. On to Zambia, whilst the rainy season brought steady rainfall, the reservoir levels at Lake Kariba currently remain at relatively low levels and a return to normal hydroelectricity power generation will take time.

As such, the company continues to proactively manage supplementary power arrangements and has sufficient import arrangements in place until the end of twenty twenty six to cover 60% of the pound needs of our Zambian operations, including the Kansanshi S3 expansion. With our first quarter results, I am pleased to share that Mr. Peter Buzzi and Ambassador Brian Nichols have been nominated to be appointed at our upcoming Annual General Meeting in May. Mr. Buzzi brings with him over twenty five years in capital markets experience, whilst Ambassador Nichols previously served as The United States Assistant Secretary Of State for Western Hemisphere Affairs with over thirty five years of experience in international relations, crisis management and trade development across Latin America, Africa and Asia.

I would also like to personally thank Andrew Adams and Joanne Warner, who will both be retiring at our AGM. With that, I would now hand the call over to Guy to review the operations.

Rudy Badenhorst, Chief Operating Officer, First Quantum Minerals: Thank you, Tristan, and thank you everybody for joining our call today. As Tristan mentioned, we had the seasonal impact of rainy season in Zambia during the quarter, and it was pleasing to see that the mitigation conducted over the last few years on dewatering and added pumping capacity minimal impact on our operations from the weather. In Zambia in the first quarter, the imported power contracts that we initiated last year interruptions at both Zambian operations. In addition, given the volatility of the copper price since the end of the quarter, the operational side of the business is focusing on lean and safe cost efficient operations. Kansanshi, we produced 47,000 tonnes of copper during the first quarter, a slight decline from the fourth quarter due to lower feed grades as the swap of the mixed and sulphide mills that allowed for higher volume in the fourth quarter returned to normal by the end of last year.

Gold production continued to be strong with nearly 30,000 ounces produced in the first quarter. While the gold production, along with the strong gold price, provided a nice for us during the quarter, copper C1 cash cost of one

Conference Operator: Pardon the interruption. The deteriorating audio quality is making it challenging to understand the presenters.

Rudy Badenhorst, Chief Operating Officer, First Quantum Minerals: While the gold production along with a strong gold price.

Conference Operator: Please resume where you left us. Sorry, thank you for your patience.

Rudy Badenhorst, Chief Operating Officer, First Quantum Minerals: Thank you. Gold production continued to be strong with nearly 30,000 ounces produced in the first quarter. While the gold production along with a strong gold price provided a nice tailwind for us during the quarter, copper C1 cash cost of $1.34 per pound was $0.13 quarter over quarter due to lower copper production along with higher sulfur costs. We remain well on track for our 2025 production guidance of 160,000 to 190,000 tons of copper and 100,000 to 110,000 ounces of gold. There is a scheduled six week maintenance shutdown of the smelter in the current quarter.

Over to Sentinel, The operations reported 46,000 tonnes of copper in the first quarter, approximately 10,000 tonnes lower than the previous quarter, while cash costs increased to $2.55 per pound as a result of the lower production volumes. During the quarter, monitoring of the ball mills identified early symptoms of fatigue related to weakening of flange bolts on the mill shelves. This phenomenon is appearing in some mills around the world of similar age by the same manufacturer. We are working closely with the original equipment manufacturer as well as specialist engineering consultants to minimize the impact of the maintenance for the Sattig. We continue to expect Sentinel to achieve its 2025 production guidance of two hundred two hundred and thirty thousand tons.

A four day full maintenance shutdown of the Sentinel plant is planned in the second quarter of twenty twenty five followed by tailings thickener upgrades in the second half of twenty twenty five. There will be a continued focus at Sentinel to increase throughput and to drive lean and safe cost effective operations. Additionally, grades are expected to be higher in the second half of the year and as such, we expect steady improvement of copper production over the course of the year. For the first quarter of twenty twenty five, Enterprise produced 4,600 tonnes of nickel, a 25% increase over the previous quarter due to the ramp up in ore supply to the plant as we mined through the difficult fault zone that impacted the fourth quarter last year. Grades were lower quarter over quarter as a result of our higher proportion of transitional ore.

Nickel cash cost of $4.78 per pound was $0.16 higher than the previous quarter due to higher freight costs. 2025 production guidance remains unchanged at 15,000 to 25,000 tonnes of nickel. Four day full maintenance shutdown of the enterprise plant is planned in the second quarter of this year. The focus for 2025 will maintain our ore quality and grade control through ongoing reverse circulation drilling. Over to Cobre Panama, which has been in preservation and safe management since November 2023.

Costs in the first quarter were approximately $13,000,000 per month and expected to remain in this range until formal approval is received for export of copper concentrate and the restart of the power plant. Thank you. And I will now hand the call over to Ryan to review the financials.

Ryan McGilliam, Chief Financial Officer, First Quantum Minerals: Thank you, Rudy. On the market side, copper prices were solid during the quarter on the back of a tight concentrate market. Prices have fallen post quarter end. U. S.

Tariff announcements have reduced the outlook for global economic growth. We expect continued volatility ahead given the uncertainty around trade policy, but it is pleasing to see the continued strong physical market in China. The LME price averaged $4.24 per pound during the quarter. This was up 2% from Q4, albeit materially below The U. S.

COMEX benchmark price due to potential tariffs on copper imports into The U. S. Quarter over quarter revenue was down 5% which resulted in the 17% fall in EBITDA. The reduction in revenue was driven by lower copper and gold sales, which was somewhat mitigated by higher prices for both metals. The Q1 net loss attributable to shareholders was $23,000,000 On to costs.

Copper C1 costs were up 16% to $1.95 per pound driven by Sentinel’s lower production and stockpile drawdowns along with higher Zambian employee and maintenance costs. This was partially offset by stronger gold price product sales from Kinsanshi, which reduced overall C1 cash costs by $07 Remaining input prices were stable, including Zambian power rates. On to the balance sheet, where we’ve remained active in our management of liquidity and debt maturities. We were pleased to complete an opportunistic $1,000,000,000 senior unsecured notes offering on the March 5. The timing was driven by both favorable spreads and the high yield market backdrop at the time.

The proceeds were used to reduce near term maturities by $750,000,000 and enhance liquidity by $250,000,000 This new bond extends our debt maturity profile out to 02/1933. After the quarter end, we also entered into a supplemental three year five hundred million dollars prepayment for future copper deliveries at spot market prices with similar terms and a repayment profile to the previous prepayment. These combined actions increased our short term liquidity by about $750,000,000 We continue to explore other initiatives to strengthen our balance sheet, including a potential minority partnership in our Zambian business. Net debt increased in the quarter by $257,000,000 to 5,800,000,000.0 This increase was mainly due to unfavorable working capital movements and capital spend. These working capital movements were driven by higher trade receivables due to late March shipments and the impact of underlying copper price fluctuations on our provisionally priced sales.

We expect this to unwind through quarter two. Liquidity remains strong at $1,600,000,000 at quarter end, comprising of $743,000,000 in cash and $880,000,000 of undrawn revolver. We also continue our hedging strategy from last year with a realized gain of $3,000,000 for the quarter. Since inception in Q2 twenty twenty four, the total program gain is $38,000,000 More than half of our copper sales are hedged via collars for the rest of 2025 through to June 2026, with an average floor of $4.14 per pound and cap of $4.75 per pound. This strategy stabilizes cash flows from a material portion of our production, while we complete S3 and focus on resolution in Panama.

So in summary, our financial focus is on ensuring strong cost and capital discipline, on continuing to extend our debt maturity profile, on maintaining our strong liquidity position and on benefiting from the hedge book in place, all of which puts us in a solid position to deal with any future volatility. I’ll now hand the call back to Tristan.

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Thank you, Ryan. Before opening the call for Q and A, I would like to provide an update on the progress of the Kansanshi S3 expansion project. During the quarter, 20% of major systems at the 25,000,000 tonne per annum concentrator began early commissioning in parallel with the completion of construction. The majority of the 33kV distribution network and substations were energized, which allowed for the SAG mill and Gielus mill drive to be commissioned. In addition, water was introduced to the site for the raw water pond and process water tank.

Remaining construction work continues with a focus on completing the remaining piping and electrical scope in particular. By the end of the quarter, the project achieved 83% construction completion. Configuration of the plant control system achieved 84 completion and operational readiness, which includes onboarding and training of the workforce reached 75% completion. We continue to make good progress on the S3 expansion project at Kansanshi and it remains on budget at $1,250,000,000 and well on track for completion by midyear. In closing, I would like to reiterate our key priorities for this year.

Firstly, towards resolving the situation in Panama and we look forward to constructive discussions with the government for a resolution of the situation. Secondly, along with the actions taken to date, we will continue with the proactive management of our balance sheet and liquidity position. Thirdly, we will continue our focus on safe and lean productive operational performance. And finally, the successful delivery of the Kansanshi S3 expansion project. I remain confident in the outlook for the company.

Our financial actions, along with other initiatives forthcoming, have provided the company with meaningful headroom in our balance sheet and our operations remain steady, reliable and lean. The startup of the S3 expansion at Kansanshi is only a few months away and will be a turning point for the company returning it to a position of free cash flow generation. Over the last eighteen months, the company has become more efficient and focused, and this has prepared us well for any challenge, including those presented to us by the current macroeconomic environment. We will continue to take active proactively, strategically and always with a long term view. Thank you.

This brings our prepared remarks to an end. Operator, we can open the call for Q and A.

Conference Operator: Thank you. We will now begin the analyst question and answer session. Analysts are permitted to ask one question and one follow-up and are welcome to rejoin the queue if they have more. The first question comes from Enrique Marquez with Goldman Sachs. Please go ahead.

Enrique Marquez, Analyst, Goldman Sachs: Hi. Thanks for taking my question. We heard the Panama’s President addressing the nation yesterday regarding the mine situation, potential solutions as well as the timeline to get the solution by end of the year. Would be great if you could give us more color on what exactly these options are and if you see this timeline as feasible? And if the mine actually reopens by end of the year, how long should it take to fully ramp up?

Thank you.

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Thanks, Enrique. Thanks for the question. And also thank you to your team for publishing your explanatory notes on the comments by the President of Panama on Tuesday. We did see some misunderstandings of the English translations in some newswire. Those have been corrected, but your note was very helpful to understand the President’s statement.

So in terms of his statement, President Molino has been consistent in saying that he will address the issue of the mine following social security and I think those comments on Tuesday reinforce that. He did talk about various routes for resolution. At this stage, we think it’s too early for us to comment on that. And we certainly welcome the President’s comments around that once suspension of arbitration is in place, he would make a call for the parties to engage in dialogue. And certainly, we will engage in that dialogue.

But in terms of what the outcome will be, we think it’s too early for us to comment on at this point in time. In terms of dates and ramp up, certainly, we would be interested in getting the matter resolved as quickly as possible. In terms of ramp up, look, to get our view was it would take six to nine months to get to around 80% of throughput on the process plant. But to get to 100,000,000 tonnes per annum, that last stage of optimization will be fairly involved and take a further degree of time to get there.

Conference Operator: The next question comes from Orest Wowkodaw with Scotiabank. Just

Enrique Marquez, Analyst, Goldman Sachs: following up on the previous question. Is there any exact time line at this point where you expect those negotiations to begin on a restart?

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Orest, thanks the question. No, not particularly. What we did hear from the President and consistent with his previous comments is that once suspension of arbitration was in place that he would call for dialogue between the parties. We’re ready for that dialogue. I think it’s important to the country of Panama, to the people of Panama that we get on with that.

We did put aside and suspend the arbitrations. We consistently repeated that arbitration is not our preferred course of action and come to resolution would be in the best interest for the benefit of the country.

Rudy Badenhorst, Chief Operating Officer, First Quantum Minerals: So as a follow-up, is

Enrique Marquez, Analyst, Goldman Sachs: there anything left for First Quantum to do in terms of meeting the President’s request in order to engage in discussions?

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: No, not on our side as far as I’m aware Orest. Okay. Thank you.

Conference Operator: The next question comes from Matthew Murphy BMO Capital Markets. Please go ahead.

Matthew Murphy, Analyst, BMO Capital Markets: Hi. Yes, it kind of feels like things are starting to progress on the Panama front. How does it make you think about the partner and sale options at this point? Is that kind of on hold and you see how Panama pans out over the next few quarters? Or is it still a priority to further improve the balance sheet?

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Thanks Matthew. I assume you’re talking about the Zambia partnership. Ryan do you want to

Ryan McGilliam, Chief Financial Officer, First Quantum Minerals: take that Yes. Sure. Hi Matt. The Zambia partnership is really discussions are a reflection of a broader strategic desire to work more with partners where there’s the right partner that makes sense for us and them. So we wouldn’t tie it specifically to any discussions or progress around Panama.

It’s really that broader strategic initiative that catalyze the partner in Ravensthorpe that catalyzed the partner with Rio Tinto and La Grana and the fact that Zambia has made really positive strides in recent years to reform its mining sector has attracted interest from different parts of the world. And we are seeing if that might eventuate into a sensible partnership. At this stage, while the discussions continue, still have to go through those and see where they get to. And if at the end of them, there’s something that makes sense for us, makes sense for Zambia, makes sense for potential partner, and then we’ll update in due course.

Matthew Murphy, Analyst, BMO Capital Markets: Okay. And then just as a follow-up, does the gold price make you think about options with your gold exposure to improve the balance sheet?

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Yes, go ahead Ron.

Ryan McGilliam, Chief Financial Officer, First Quantum Minerals: Yes, so certainly the gold price hitting record high has provided an important tailwind on our costs. We saw a $07 benefit in Q1 relative to Q4 last year in our C1 cost due to that increase in gold price coupled with the strong gold production at coming out of Kintanshi and increasingly out of Guadalmagray with the CL plant up and online there. And yes, I mean there are a range of financing options available to us. You saw through the course of this quarter, we issued the bond, we’ve done a copper prepay, there are options around gold, whether it’s gold prepay, gold streams and other tools in the toolbox. And I think whenever you’re sitting with high quality assets and two strategically important commodities, you’re going to have a wide range of options and that’s what we’ve demonstrated and which we expect will continue to be the case going forward and indeed pleasing to see the strong gold price that we’ve seen in recent months.

Conference Operator: The next question comes from Ionis Maslowitz with Morgan Stanley. Please go ahead.

Ionis Maslowitz, Analyst, Morgan Stanley: Yes, hello. Thank you for taking my question. Looking at the developments in Panama, feels like things are moving in the right direction. But I wanted to ask you, now that you have discontinued the ICC process and suspended the FDA arbitration, what’s your legal recourse going forward if things do not progress the way you anticipate?

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Hi, Ernest. Yes, thank you. So we’ve been very willing to do that and to take those courses of action to open space for engagement. And the suspension of arbitration provides the opportunity for engagement, for dialogue with the Government of Panama. The suspension can be continued through request from both parties.

And certainly, we would be constructive in that process. But in the long term, all our legal rights are protected. And ultimately, there can be reversion back arbitration. Again, that’s not our preferred outcome. We would seek to get to resolution through engagement.

Conference Operator: The next question comes from Lawson Winder with Bank of America Securities. Please go ahead.

Lawson Winder, Analyst, Bank of America Securities: Good morning. Thank you very much, operator. And then hello, Tristan, Rudy and Ryan, thank you for today’s update. Wanted to ask about Panama as well. And it makes a lot of sense that you’ve gone ahead and suspended the arbitrations or put one on hold and canceled the other.

The other parties involved have not yet done so. And it seems the government of Panama is willing to engage as long as First Quorum is willing to take this step. Is that a fair statement? Or is there still an expectation that the government would like to see some of the other arbitrations suspended as well?

Rudy Badenhorst, Chief Operating Officer, First Quantum Minerals: Yes. Thanks, Lawson. And look, I

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: so I’m speaking only from what we see publicly public statements because we can’t speak for the Government of Panama. But my understanding from the President’s comments over the course of the week is that they are looking for those other suspensions. Certainly from our side, we believe we’ve done everything to get ready for those to prepare the ground for that engagement. And certainly, we’re ready and able for those engagements to take place.

Lawson Winder, Analyst, Bank of America Securities: Yes. Your openness to communicate with the government has been, I think, very helpful. I wanted to also just follow-up on the power situation in Zambia. So 60% imported, I think, is the highest that you guys have ever done historically. Is there room to keep moving that up should that situation arise?

I mean and could you maybe also give us some color on where the power is coming from and then how you think about those current options today and how those might potentially increase should that need arise?

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Thanks, Lawson. Rudy, do you want to take that one?

Rudy Badenhorst, Chief Operating Officer, First Quantum Minerals: Yes, no problem. Hi, Lawson. Thanks for the question. The rainy season in Zambia is lingering somewhat. As of last week, we still had 100 millimeters event at Northwest Province.

So the rain is lasting a little bit longer. We’ve seen very good river flows in the northern part of Zambezi. Last week, 02/2009, it gives a second while Big Falls is still sitting at about 2,200. So there is still quite a lot of water that needs to come down over the next month or in a bit into Kariba and we look forward to see what that does to the lake levels. However, when we are fully aware that one season is not going to resolve it and we expect to see the emergency power restrictions and the obviously then the broadly importation of power not seizing until sort of second half of twenty twenty six.

And deliberately as a result of that, we have taken preemptive steps to secure power through third party imports other than ZESCO because ZESCO is importing as well, all the way through to Q1 twenty twenty seven. Principally, sits at around 60% of our power needs will then directly imported through third party providers and the remainder comes from ZESCO. The contracts that we have in place at the moment for that duration does allow for upside and we are quite comfortable that if there is any need for additional power that we would be able to secure that without too much of an issue. The power originates mainly as far as our direct imports to those providers from South Africa, Mozambique, a little bit from Malawi. There are some interconnectors being finalized from Tanzania, which opens up really a big power source from Ethiopia coming through into Tanzania and Zambia over the next two years.

And along with that, you’re well aware of the fact that we’ve entered into an arrangement with Total Energy for four thirty megawatts of wind and solar power. That comes into effect towards the middle of ’twenty six all the way through to ’twenty eight. We secured 100 megawatts of solar power at the base load of 25 megawatts coming into play in the third quarter of this year from within country solar at Kariba. And we continue to invest into the grid in Zambia, stabilized voltage and help ZESCO protect their grid against fluctuations from interconnectors to neighboring countries.

Conference Operator: The next question comes from Myles Allsop with UBS. Please go ahead.

Ionis Maslowitz, Analyst, Morgan Stanley: Great. Thank you. Could you just confirm whether the environmental audit has started yet? I presume it hasn’t, so I can’t see any comments around it. And how long will that take?

First question.

Rudy Badenhorst, Chief Operating Officer, First Quantum Minerals: Thanks, Mark. So the status of

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: the environmental audit was that the terms of reference went through public consultation back in February and we understand now those terms of reference are in the process of being finalized. The logistics around appointment of the company currently of the company involved, the auditor, currently sit with the regulator, and we’re waiting to hear back on in terms of the formal notification around who that is and the time before that. In the meantime, we have had a CADESA audit that is Miambimenti, the Ministry of Environment’s independent order that came through last month and completed their regular audit of the site on environmental matters. Their finding was that Cobre Panayag was 100% compliant on all environmental obligations. We’ve provided that audit publicly on the website.

It’s available to see. But in the meantime, yes, Myles, we’re waiting to hear back from governments on the wider audit of environmental.

Ionis Maslowitz, Analyst, Morgan Stanley: Okay. Thanks. And then you mentioned earlier around this ball mill issue potentially at Sentinel. Could you just provide a little bit more detail around that and what the scenarios are? Will this potentially result in extended outage or can it be managed within the normal maintenance schedule?

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Sure. Rudy, could you take that one, please?

Rudy Badenhorst, Chief Operating Officer, First Quantum Minerals: Thanks, Bob. Well, The fatigue relates to the bolts on the shell of the mill flanges, not the mill itself. And it mainly relates to the ball mill in Train two on the discharge end. Our condition monitoring team picked it up quite early, so intervention is of a tune. We are working with the OEMs and other mill specialists to understand the core reason for the phenomena.

So in the meantime, however, it’s a nuisance downtime of the ball mill where the SAG continues to run during this downtime, thus tons per hour through that specific mill train is just lower for the period the ball mill stands. It’s not a complete outage. Going forward, we are confident that we will address the low bolt issue and we don’t foresee an extended downtime on the year.

Conference Operator: The next question comes from Dalton Baretto with Canaccord Genuity. Please go ahead.

Matthew Murphy, Analyst, BMO Capital Markets: Thanks, operator. Good morning, Tristan and team. Just staying in Panama here, Tristan, I understand that for the FDA arbitration, the suspension isn’t sort of a permanent thing and that you have to keep renewing it. Can you tell me how often you have to renew it and what you’d need to see from the government of Panama to keep renewing it?

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Yes. Thanks, Dalton. So we’re very happy to put aside the arbitration. Again, it’s not our preferred pathway and outcome. We want to be in engagement.

And we’ve given the space for that to happen. But yes, both parties would need to mutually agree and go back to keep moving forward. And that’s up to the parties as we intend to go forward together. We would just need to see constructive progress. We have every reason to think that’s the case.

And we note the President’s comments this week in which he was saying that once all the suspension of arbitrations were in place that he would be calling for dialogue between the parties and we look forward to joining that dialogue.

Rudy Badenhorst, Chief Operating Officer, First Quantum Minerals: Great. Thanks, Tristan. And then maybe just as a follow-up, one of

Matthew Murphy, Analyst, BMO Capital Markets: the things President Molinea was adamant about on Tuesday night was that contract law would not be the pathway forward just given what’s happened. And there may not be a short answer to this, but can you sort of talk about what some of

Lawson Winder, Analyst, Bank of America Securities: the legal pathways forward could be?

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Sure, Dalton. Thanks. Yes, the President did make those comments and I think he’s been consistent in saying he’s repeatedly said that any agreement will not relate to a contract law because Law nine and then Law four or six have not been successful. They haven’t proved to be durable. So in his comments, I’d just point out, he also pointed out the economic impact to the country of the mine closure and that many well paid jobs have been lost, particularly for young people.

Suppliers have been badly affected and it’s affected the country’s economic outlook. We believe the President is looking for solution that would be durable, which has not been the case with the previous contract law approach. And ultimately, we’re in complete agreement. We would be focused on a legal solution that is durable and fair for both parties, for all parties involved, including the people of Panama. But I think Dalton, at the moment, it’s too early to comment on what the potential solutions might look like.

Conference Operator: This concludes the question and answer session. I would like to turn the conference back over to to Tristan Pascal for any closing remarks. Please go ahead.

Tristan Pascal, Chief Executive Officer, First Quantum Minerals: Thanks, operator. And I’d like to thank everybody for joining the call today for your interest and time. And I look forward to speaking to

Rudy Badenhorst, Chief Operating Officer, First Quantum Minerals: you again at our next update.

Conference Operator: This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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