First Quantum Minerals Ltd.

Good morning, ladies and gentlemen, and welcome to the first Quantum Minerals quarterly results conference call. I would now like to turn the meeting over to Bonita Toh, Director, Investor Relations. Please go ahead, Ms. Toh.

Thank you, Operator. Hello, and thank you, everybody, for joining First Quantum's fourth quarter and 2021 year-end conference calls. On our call today will be Tristan Pascal, our Chief Operating Officer, who will provide an overview of the operations and performance during the quarter. He will be followed by Hannes Meyer, our Chief Financial Officer, who will review the results of the financial results. Tristan will wrap things up with an overview of our strategic priorities. And after that, we'll open up the lines to take questions. Before I hand it over to Tristan, there are a few items to mention. A copy of today's presentation can be found on our website. This event is also being recorded and a replay will be available. As well, all dollar amounts mentioned today are in U.S. dollars unless otherwise noted. And finally, today's presentation may contain forward-looking statements, so I encourage you to review by two of our presentations. And with that, I will hand it over to you, Tristan.

Thank you, Benita. Hi, everyone. Thank you for joining us today on our call to discuss the fourth quarter and year-end results. Despite the ongoing challenges of the global pandemic, First Quantum was able to deliver another year of solid copper production growth with a record amount of copper produced for the 2021 year. We ended the year in a strong position as fourth quarter results benefited from continued strong copper prices, the rolling off of our hedge book and continued strong operational performance. This enabled us to continue to deliver on our ongoing commitment of reducing debt which Hannes will speak to you more in his presentation today. Before going into the operational performance during the quarter, I would like to begin with updates to other commitments we made last quarter and also to provide some commentary on discussions with our host governments in the countries we operate. I am pleased that since our last quarterly call, First Quantum was able to deliver on two significant commitments. Firstly, on January 17, We announced that we have set targets to reduce our Scope 1 and Scope 2 greenhouse gas emissions by 30% by 2025 and by 50% by 2030. And we have provided more information on these targets in the TCFD-aligned climate change report available on our website. It was important to us to set targets based on real tangible solutions. We are pleased that the solutions identified are not expected to result in significant incremental capital or operating costs and do not rely on the use of offsets to achieve these targets. First Quantum is now well positioned to deliver the copper that is essential to meet the global challenges posed by climate change with a significantly lower carbon footprint. Another announcement made the same day was that of a cautious but more meaningful dividend framework for our shareholders. This policy, which Hannes will also discuss in more detail, highlights our confidence in the strong outlook for the business. Moving on to discussions in our host countries. In Zambia, discussions with the government of Zambia are focused on ensuring that the appropriate and enduring investment conditions exist for First Quantum to advance the Consangie S3 expansion and the Enterprise Nickel project. The removal of the non-deductibility of royalties for tax purposes, which became effective at the start of this year, was an important step towards the approval of these projects. Also, the discussions are seeking an agreed mechanism for repayment of VAT owed to the company and for predictable returns in the future. These discussions continue to be constructive, such that we are hopeful that we can advance both these projects this year as reflected in our guidance. In Panama, discussions with the government are ongoing. During January 2022, the government of Panama tabled a new proposal, namely that the government of Panama should receive US$375 million in benefits per year from Cobra Panama, and that the existing revenue royalty would be replaced by a gross profit royalty. The parties continue to finalise the details behind these principles, including the appropriate mechanics that would achieve the desired outcome. the necessary protections to the company's business for downside copper price and production scenarios, and to ensure that the new contract and legislation are both durable and sustainable. We continue to welcome the transparency of the robust ministerial commission process and we are hopeful that we can conclude this matter shortly. Once an agreement is concluded and the full contract is documented, it is expected that the newly drafted legislation would be put to the National Assembly. Turning to our operations for the full year 2021, First Quantum achieved its highest ever annual copper production of 816,435 tonnes, attributable to record-breaking production of Cobra Panama and the resilience of our other operations in dealing with the ongoing challenges brought about by COVID-19. For the fourth quarter, total copper production was 201,823 tonnes, down 4% quarter over quarter on lower production at Cobra Panama, while Kansanshi and Sentinel continued at consistent production levels. The difficult shipping environment on containerized shipping capacity that we experienced in Q3 continued into the fourth quarter. This had an impact on our sales and shipments out of Zambia in particular, and are expected to continue throughout the first quarter of 2022. The majority of the company's products are transported in bulk and this sector has been less affected by shipping constraints. Cobra Panama's performance of 331,000 tonnes over the year was strong, exceeding initial 2021 guidance and achieving the top end of our revised guidance. In Q4, production was down 8% quarter over quarter to 80,000 tonnes on expected lower ore grades and an unplanned seven-day shutdown of Unit 2 of the power plant, which impacted mill tonnage. There was also planned maintenance on Unit 1 at the power plant during the quarter, which was completed at the end of January. Year-to-date production has also been affected by two mill relines in January at Cobra Panama. Looking ahead, mill throughput is expected to ramp up over the course of 2022 to achieve between 85 and 90 million tonnes for the year. Grades and recoveries are expected to be consistent with 2021 levels, but will fluctuate from quarter to quarter. With the recent escalation in global energy prices, it is worth noting that we had increased exposure to spot prices for electricity in Panama during the fourth quarter while we had the planned maintenance to Unit 1. However, with the maintenance complete, costs are already moving back in line with the collar on coal prices for the mine. This prevents further exposure to increases in the coal price until December 2023. Can Sanchi achieve copper production of 202,000 tonnes in 2021? reflecting the reduction in oxide ore and the ongoing challenge of the selective high ore grade methodology at Kansanshi in advance of the approval of the S3 project. Q4 was another consistent quarter, delivering copper production of 52,000 tonnes, as a slight decline in throughput was offset by improved grades. Looking ahead for 2022, process ore at Kansanshi is expected to be slightly higher compared to 2021. However, grades are expected to decline over the course of the year from Q4 2021 levels. Sentinel achieved copper production of 233,000 tonnes for the full year, despite a ball mill trunnion failure in Q1 last year and a lower grade profile relative to 2020. In Q4, Sentinel produced over 60,000 tonnes of copper, as record quarterly throughput rates equivalent to 60 million tonnes per annum offset lower grades in the quarter. The interdilation of the fourth in-pit crusher at Sentinel has been completed, which is expected to enable the process plant to achieve throughput rates equivalent to 62 million tonnes per annum. On slides nine and 10, we provide information on our three-year guidance. For 2022, we are guiding for 810 to 880,000 tonnes of copper production. 2022, however, has so far got off to a slow start. At Cobra Panama, as I noted earlier, the quarter was impacted by a seven-day unplanned shutdown of the second unit of the power plant, as well as two mill relines in January. The tight containerised shipping environment continues to be felt in the first quarter, which impacts anode shipments out of Zambia. At Sentinel, the first quarter will be a ramp-up period towards 62 million tonnes per annum and was impacted by lower grades. By 2022, it's expected to have a slightly higher grade profile overall. We will not see this improvement until after the first quarter. Our three-year production guidance includes completion of the CP100 expansion in 2023 and Cobra Panama operating at 100 million tonnes per annum from 2024 onwards. While S3 remains subject to board approval, we have included limited production from S3 in 2024. Likewise, Enterprise is also subject to board approval. Our guidance includes first nickel production from Enterprise in 2023. We also show Ravensfort ramping up to 25,000 to 30,000 tonnes of nickel production, supported by the completion of the Shoemaker Levy project in Q4 last year. With regard to CAPEX, approximately $2.2 billion will be spent over the three-year period, of which $1 billion relates to Consanchi, the S3 project, $830 million to Cobra Panama, and $60 million to Enterprise, and $15 million to our Gwell-McGrain project in Mauritania. The ongoing challenges presented by the global pandemic have continued throughout the first quarter with the Omicron variant present on several sites. Fortunately, our employees and communities are not experiencing as severe symptoms from this wave as with previous variants. The company continues to employ measures to ensure minimal spread, and the health and wellbeing of our workforce continues to be a priority, including maximising vaccination rates and booster vaccination campaigns for 2022. After the huge efforts by personnel across 2020 and 2021 in dealing with the impact of the pandemic to operations, we are investing in our people to support them and ensure retention of staff. At Cobra Panama, our CapEx guidance includes new expenditure to upgrade camps.