First Quantum Minerals Q1 Earnings Call Highlights

Key Points

• Operational and financial hit: Total copper production fell to 96,000 tonnes (sales 90,000 tonnes) while Kansanshi’s S3 circuit ran ~25% above design and Enterprise delivered a record 12,000 tonnes of nickel; revenue was down 5%, EBITDA fell ~30% and the company reported an adjusted loss per share of $0.18, prompting an updated C1 cash-cost guidance of $2.15–$2.40/lb.
• Cobre Panamá stockpile restart approved: On April 7, 2026 First Quantum received permission to process stockpiles, adding 30,000–40,000 tonnes of copper to 2026 guidance, with conservative recommissioning at about one‑third capacity and expected cash outflows of ~$250 million for pre‑commissioning over ~three months while management expects processing to be “roughly neutral on a cash basis.”
• Costs, hedges and balance‑sheet moves: Management flagged fuel and a strong Zambian kwacha as key cost risks (consumes ~320m liters diesel annually and targets ~10% fuel savings), reported a $144m Q1 hedge loss with potential Q2 mark‑to‑market losses, issued a $1.5bn 10‑year bond to simplify debt and expects $340m from the sale of Çayeli as net debt rose to $5.3bn.

First Quantum Minerals TSE: FM executives used the company’s first-quarter 2026 results call to outline operational progress in Zambia, higher costs tied to fuel and currency movements, and the next steps for restarting stockpile processing at Cobre Panamá following government approval received in April.

Operational performance: Copper output dips while Kansanshi S3 exceeds design

Chief Operating Officer Rudi Badenhorst said total copper production fell 4% quarter-over-quarter to 96,000 tonnes, driven by lower production at Sentinel and Kansanshi due to grades that were “in line with the mine plan.” Copper sales were 90,000 tonnes, about 6,000 tonnes below production, which Badenhorst attributed to shipment timing and inventory restocking at Kansanshi after strong fourth-quarter sales.

At Kansanshi, copper production was 45,000 tonnes, down about 2,000 tonnes from the previous quarter due to lower feed grades and recoveries. Badenhorst said this was partially offset by higher throughput enabled by the new S3 sulfide circuit. He added that S3 throughput increased steadily and milling rates stabilized around 25% above design capacity, allowing increased processing of long-term lower-grade stockpiles, which reduced overall feed grade versus the prior quarter. He said the grade impact is expected to lessen as stripping increases at Southeast Dome, exposing fresh ore for direct feed into S3.

At Sentinel, copper production also totaled 45,000 tonnes, down nearly 3,000 tonnes quarter-over-quarter due to lower grades and recoveries, partially offset by improved throughput. Badenhorst cited improved reliability of primary crushers and higher tailings thickener throughput. Two upgraded tailings thickener feed wells were installed and commissioned during the quarter, with a third expected early in the second quarter. The Rail-Veyor system moved from commissioning to full operations, and expansion of the trolley assist network continued. In-Pit Crusher 4 was decommissioned for relocation.

Enterprise delivered what Badenhorst described as “excellent performance,” with record quarterly production of 12,000 tonnes of nickel, a 41% increase from the prior quarter due to higher grades and recovery. He said milling rates were moderated to sustain recoveries. In a later exchange, Badenhorst said Enterprise was tracking “very, very well” to guidance and that he did not foresee changes to guidance, while noting stripping activity could be reevaluated in the second half depending on the fuel situation.

Supply chain risks: Fuel and sulfur volatility drive mitigation efforts

Chief Executive Officer Tristan Pascall framed the quarter against “heightened global macroeconomic uncertainty” tied to conflict in the Middle East and its impact on supply chains. He said First Quantum is seeing pressures on cost structures, “particularly in relation to prices for some of our major inputs such as fuel,” along with impacts from the Zambian kwacha exchange rate.

Pascall said the company’s priority is safeguarding operating continuity amid uncertain fuel supply. He noted the company consumes about 320 million liters of diesel annually and currently has at least two months of diesel on site, with plans to extend coverage through monitoring and supply management. He said management believes fuel supply can be actively managed without affecting production.

On cost-reduction actions, Pascall and Badenhorst described operational disciplines and technology already deployed at scale, including In-Pit Crushing and Conveying, Rail-Veyor, fleet electrification, and trolley assist. When asked about potential savings, Pascall said 10% fuel savings is “definitely a realistic target”, citing changes such as shorter haul practices, adjusting idling behavior around shovels, and working with OEMs to reduce idle settings without impacting cycle times.

Pascall also highlighted sulfur supply risks, saying tensions have affected supply and were “further exacerbated with export restrictions” from sulfur-originating countries, including Zambia. He said the Kansanshi smelter produced about 1.1 million tonnes of sulfuric acid in 2025 and that the company is currently self-sufficient in acid, with potential to be in surplus by the end of the second quarter as the smelter expansion ramps up. CFO Ryan MacWilliam later said the company is currently selling about 10,000 tonnes per month of acid, with potential to increase to 20,000 tonnes per month depending on grades, and estimated the incremental sales at current spot prices could be about $3 million per month, while cautioning the situation is evolving.

Financial results: Lower sales volumes, hedge losses, and rising costs

MacWilliam said first-quarter revenue declined 5%, primarily from lower copper and gold sales volumes. Lower revenue and increased hedge losses drove a 30% reduction in EBITDA, and the company posted an adjusted loss per share of $0.18.

Copper C1 cash costs rose 14%, which MacWilliam attributed to lower Zambian production and higher labor costs, with the “continued strength of the Zambian kwacha” cited as a key driver. He said stronger gold prices provided a $0.12 per pound by-product credit, helping offset costs. Nickel C1 costs improved by $0.60 per pound due to strong production, and MacWilliam said Enterprise generated the best margins among the company’s assets in the quarter.

MacWilliam said the company updated its C1 cash cost guidance due to three structural changes discussed on the call:

• Inclusion of low-grade stockpile processing in Panama
• A shift at Guelb Moghrein to a copper-focused production strategy for 2026, treating gold as a by-product
• Updated guidance reflecting the sale of Çayeli

As a result, First Quantum updated its C1 cash cost range to $2.15 to $2.40 per pound, an increase of $0.20 from prior guidance. The company did not change guidance for recent moves in oil, gold and copper prices or the kwacha, but MacWilliam emphasized fuel remains a significant risk, accounting for roughly 15% of the cost base (about 8% direct exposure, with the remainder indirect).

He said current gas oil futures imply a potential $0.20 per pound unit cost increase versus revised guidance from direct and indirect fuel impacts, and a sustained kwacha could add another $0.10. He estimated higher consensus gold prices could offset about $0.05, for a net potential impact of about $0.25 per pound, with many cost effects expected to lag and appear more in the second half of the year. In response to an analyst question, MacWilliam said the company had not yet felt the full impact of higher diesel prices during the quarter due to the lag, noting diesel was around $0.85 per liter before the conflict, versus around $1.60 per liter currently, with spot levels reaching as high as $2 per liter.

Cobre Panamá: Stockpile processing approval, costs, and “cash neutral” outlook

Pascall said the company received formal approval on April 7, 2026 to remove and process stockpiled ore at Cobre Panamá via Resolution No. 27. He said the resolution confirms the material was mined while the concession was in force and is therefore First Quantum’s property, and called it an important step in responsible environmental management.

The updated 2026 guidance includes 30,000 to 40,000 tonnes of copper production from Cobre Panamá. Pascall said the company will take a conservative approach to recommissioning after the site has been under preservation and safe management since November 2023. He said initial inspections suggest asset integrity remains strong, with minor repairs mainly tied to the second cleaner column flotation and concentrate handling circuits. Once operating, management expects to run at about one-third of nameplate capacity and test all three circuits.

MacWilliam said 2026 capital expenditure guidance increased to include $75 million to $100 million of project-specific capital for stockpile processing, and the company expects roughly $100 million in operating costs and $50 million in working capital, for total cash outflows of about $250 million during approximately three months of pre-commissioning. In response to questions, management said the operating cost component is included in revised C1 guidance, while the capital component is reflected in higher CapEx guidance.

Asked how the cash flows should be viewed, Pascall said the company expects stockpile processing to be “roughly neutral on a cash basis,” noting the work aligns with ongoing site costs that had been cited as about $15 million per month, which increases as activity ramps. MacWilliam said the company expects C1 costs from stockpile processing to be about $4.50 per pound initially, falling closer to $3.50 per pound as operations ramp further into next year.

On the scope of permitted activity, Pascall said stockpile approval enables “pretty much everything” involved in operations through to the port, excluding front-end drill and blast and full load-and-haul in the mine, though some mine activity will occur. He said the initial estimate is to get at least 12 trucks operating to haul stockpiles to the plant. He also said a full restart would still take about six to nine months if fresh mining approval is obtained, driven less by pre-strip and more by rebuilding staffing, training, and mine fleet readiness.

Pascall said the company continues to await SGS environmental audit reports 6 and final report 7, expected “imminently.” He referenced audit progress indicating 88.84% progress in early April and said an “overriding finding” was “of no environmental damage,” while noting areas for focus such as reforestation and reporting.

On public opinion, Pascall said the company has used Gallup polling in Panama and cited an April survey indicating 55% support for reopening the mine under conditions of transparency and tangible benefits, and said 61% believed reopening would have a positive economic impact.

Balance sheet and portfolio actions: New bond, debt simplification, and Çayeli sale

MacWilliam said the company issued an upsized $1.5 billion 10-year unsecured bond due 2036, which he described as the company’s longest tenor and lowest coupon. Proceeds were used to repay a portion of the revolving credit facility and to repurchase the remaining $1.35 billion of 2029 secured notes, returning the bond portfolio to a fully unsecured profile. He said the nearest bond maturity is now 2031 and final maturity extends to 2036.

MacWilliam also highlighted the announced sale of Çayeli in Türkiye, which he said will generate $340 million in cash proceeds, including a $50 million advance received in the first quarter.

On hedging, MacWilliam said a collar that settled in the first quarter resulted in a $144 million loss. He said the company has remaining hedges in the second quarter and estimated potential losses at current spot prices of about $154 million on copper and $8 million on gold. He added that the company has no hedges beyond the second quarter, and expects full spot exposure in the second half of the year, saying management is comfortable with that exposure and does not plan to enter new hedges “for the time being.”

Net debt increased by $92 million to $5.3 billion, which MacWilliam said reflected planned capital expenditures, interest and tax outflows, partially offset by EBITDA, the Çayeli advance, and favorable working capital movements.

In closing remarks, Pascall reiterated three priorities: progressing toward a “durable resolution” at Cobre Panamá, maintaining safe and productive operations, and continuing to strengthen the balance sheet to support future growth.

About First Quantum Minerals TSE: FM

First Quantum is engaged in the production of copper, nickel and gold, and related activities including exploration and development. The Company has operating mines located in Zambia, Türkiye and Mauritania. The Company's Cobre Panamá mine was placed into a phase of Preservation and Safe Management in November 2023. The Company's Ravensthorpe mine was placed into a care and maintenance process in May 2024. The Company is progressing the Taca Taca copper-gold-molybdenum project in Argentina and is exploring La Granja and the Haquira copper deposits in Peru.

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