First Quantum Minerals Q2 Earnings Call Highlights

Key Points

• Second-quarter performance improved: Copper production rose 4% sequentially to just over 100,000 metric tons, while revenue increased 8% to $1.5 billion and EBITDA climbed 23% to $400 million, helped by higher copper prices and stronger Zambian output.
• Cobre Panamá resumed limited processing: First Quantum began producing concentrate from stockpiled ore ahead of schedule and expects its first shipment in August. The stockpiles could support roughly 12 months of processing, but a full restart remains dependent on Panamanian government approvals and would require expanding the workforce.
• Financial risks remain significant: Net debt rose to $5.4 billion, fuel costs and prior hedge losses pressured results, and the company is now fully exposed to spot copper and gold prices after completing its hedge program. An independent audit found Cobre Panamá largely compliant, while a government commission reviews recommendations on the mine’s future.

First Quantum Minerals TSE: FM reported higher second-quarter copper production, revenue and EBITDA as operations improved at its Zambian assets and the company began processing stockpiled ore at Cobre Panamá.

Chief Executive Officer Tristan Pascall said total copper production rose 4% from the first quarter to just over 100,000 metric tons, supported by higher output at Sentinel and the June start of concentrate production from Cobre Panamá stockpiles. Copper sales totaled 93,300 tons, about 7,000 tons below production because of timing differences between production and sales.

Revenue increased 8% to $1.5 billion during the quarter, while EBITDA rose 23% to $400 million, Chief Financial Officer Ryan MacWilliam said. Higher copper prices and increased sales supported the results, though higher fuel and contracted costs, hedge losses and costs related to the preservation and safe management program at Cobre Panamá affected profitability.

Cobre Panamá Stockpile Processing Begins

First Quantum recommissioned Cobre Panamá’s Train 3 milling circuit in May and produced its first concentrate from stockpiled ore in June, ahead of its prior third-quarter target. The operation processed 2.1 million tons of ore during the second quarter and produced approximately 3,200 tons of copper in concentrate.

Pascall said the company has subsequently transferred processing from Train 3 to Train 2 as part of its maintenance-cycling strategy. The remaining trains, regrind areas and column areas have been undergoing inspections, repairs and preventive maintenance. The company expects its first concentrate shipment from Cobre Panamá in August.

Concentrate grades are expected to be lower while maintenance work continues in the regrind and columns areas. At current processing rates and spot copper prices, Pascall said First Quantum expects Cobre Panamá’s free cash flow to be neutral to positive. The company estimates its stockpiles contain 38 million tons of mineralized ore with about 70,000 tons of recoverable copper, sufficient for roughly 12 months of processing at current rates.

First Quantum has about 3,000 people on site at Cobre Panamá, including approximately 1,000 skilled Panamanians who have returned to or newly joined the operation. Pascall said a full production restart would require a workforce of about 6,000 people. If approvals for a full restart are secured, the company believes it could reach 80% to 90% of throughput within six to nine months, with the remaining optimization dependent on securing highly skilled workers.

The company has spent about $60 million to date on the stockpile processing program, within its previously guided $250 million requirement. MacWilliam said the $250 million comprises $50 million of working-capital outflows, $100 million of capital expenditures and $100 million of commissioning operating costs. First Quantum expects to exclude the full amount from adjusted EBITDA, including a remaining $60 million adjustment in the second half.

Audit Review Remains Central to Mine’s Future

A comprehensive independent audit of Cobre Panamá was published during the quarter, with Pascall describing it as an extensive review involving site visits, interviews and thousands of documents. The audit gave the operation an overall score of 87.73 out of 100 and found it to be professionally managed and technically sound, according to the company.

The audit found that 361 of 370 commitments were fulfilled, while seven were partially compliant. Pascall said the areas requiring improvement mainly concerned long-term reforestation, biodiversity and restoration programs, rather than acute environmental incidents. He said the company was aware that some reforestation work had been delayed during the mine’s suspension.

A ministerial commission in Panama is reviewing the audit and is expected to provide recommendations on the mine’s future to the president. Pascall said First Quantum does not have a clear timeline for a government decision and will follow the government’s process. The company’s arbitration remains suspended, though Pascall said its rights are protected and it could reinitiate the process if necessary.

Zambian Operations Support Production Outlook

At Kansanshi, copper production totaled 44,000 tons, down about 1,000 tons sequentially as the S3 and mixed circuits underwent maintenance. However, the S3 concentrator achieved its highest monthly throughput since commissioning in May and operated above design capacity throughout the quarter.

First Quantum maintained Kansanshi’s 2026 copper production guidance at 175,000 to 205,000 tons and gold guidance at 110,000 to 120,000 ounces. The company expects to gradually introduce harder, higher-grade fresh ore from the Southeast Dome into the S3 circuit during the second half.

Sentinel produced 50,000 tons of copper, up 5,000 tons from the first quarter, as higher grades and recoveries more than offset lower throughput from a planned five-day plant shutdown. The company maintained Sentinel’s annual copper guidance of 190,000 to 220,000 tons and said production should be weighted toward the second half as throughput and grades improve.

Enterprise produced just over 11,000 tons of nickel, down 9% quarter over quarter, primarily because of the same plant shutdown. Nickel production guidance remains 30,000 to 40,000 tons for the year.

Costs, Liquidity and Development Projects

MacWilliam said elevated diesel prices remain a cost headwind, with diesel averaging $1.59 per liter during the second quarter compared with $0.91 per liter in the first quarter. The company left its C1 cash-cost guidance unchanged, but said that if current fuel, kwacha and gold prices persist, there is roughly $0.25 per pound upside risk to the guidance.

First Quantum also completed its copper and gold hedge program during the quarter, recording hedge losses of $159 million for copper and $5 million for gold. With the hedge book settled, the company is now fully exposed to spot copper and gold prices. MacWilliam said management currently plans to remain unhedged, although it could reconsider hedging if capital spending or balance-sheet conditions warrant added protection.

Net debt increased by $123 million to $5.4 billion, reflecting capital expenditures, tax and interest payments, partly offset by EBITDA and working-capital movements. Liquidity stood at about $2 billion at quarter-end, including $771 million in cash and $1.25 billion of undrawn revolving-credit capacity.

On development projects, Pascall said First Quantum published a technical report for La Granja in Peru showing an estimated resource of 23 million tons of copper, 600 million ounces of silver and 6.7 million ounces of gold. The company is focusing on permitting, environmental and social baseline studies, and stakeholder engagement.

At Taca Taca in Argentina, First Quantum continues to advance environmental approvals, water assessments and an application under the country’s RIGI investment incentive regime. MacWilliam said the company is considering potential project financing, partners and metal-streaming alternatives, but that its immediate focus remains on de-risking the project.

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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