First Quantum Minerals Ltd.

Welcome to the first Quantum Minerals Limited first quarter results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0. I would now like to turn the conference over to Bonita Toke Director of Investor Relations. Please go ahead.

Thank you, operator, and thank you, everybody, for joining us today to discuss our first quarter results. Before we begin, I will draw your attention to the fact that over the course of this call, we will be making several forward-looking statements. And as such, I encourage you to read the cautionary note that accompanies this presentation, our MD&A, and the related news release. As a reminder, the presentation which accompanies this conference call is available on our website and that all dollar references are in U.S. dollars unless otherwise noted. On today's call, Tristan Pascoe, our Chief Operating Officer, will provide an overview of the operations and performance during the quarter, followed by Hannes Meyer, our Chief Financial Officer, who will review the financial results. Tristan will wrap things up, after which we will open up the lines to take questions. And with that, I'll turn the call over to Tristan.

Thank you, Benita. And thank you, everybody, for joining us on a call today. Copper production in the first quarter of 2022 was softer than the previous quarter due to mill and power station maintenance at Cobra Panama and as we saw the impact of an extended rainy season at our Zambian operations. At the same time, our operations faced inflationary pressures particularly from the end of February onwards as the conflict in Ukraine and the associated sanctions imposed upon Russia has led to high energy and input costs. Despite these challenges, the first quarter delivered another record in earnings and profits as a result of continued strong metal prices as our exposure to spot prices has greatly improved with minimal remaining hedges in place. This enabled us to continue to deliver on our ongoing priority of reducing debt, which Hannes will speak to more in his presentation. Before going into the operational performance during the quarter, I will address the changes that we made to guidance yesterday evening. The decision to change our guidance so early in the year was not taken lightly. However, the world has changed since we provided our guidance in January and we felt it important to be transparent on the impact it is having on the company. For the last two years, each of our mines worked and delivered under restrictive conditions presented by the global pandemic, particularly around labour and logistics. While these restrictions have eased, they do nonetheless continue to be present and the Ukraine crisis has laid on a number of further disruptions to an already complex situation. It was paramount that we reset realistic expectations for the year ahead, given the challenges that we see. For 2022, we have lowered our production guidance to a range of 790 to 855,000 tonnes of copper production. The lower guidance reflects the impact on actual progress of mining compared to plan during an extended rainy season at our Zambian operations and high maintenance in Panama. At Sentinel, the wet ground conditions constrained the planned waste stripping and delayed access to high-grade ore in the east of the pit. At both Cobra Panama and Sentinel, grades of the ore fed to the plant were impacted as mine production was behind the budgeted schedule in Q1, largely due to a backlog of truck maintenance which impacted machine availability. This was a direct impact of restrictions on labour and resources during the COVID-19 pandemic and is now subsiding, although the catch-up on truck maintenance may take several months to resolve. At both Sentinel and Cobra Panama, grades are expected to return to planned levels over the coming months. At Kansanshi, the fee grades to the plant were lower than planned and we consider this pattern will likely continue for the remainder of the year. Onto costs. When we released our cost guidance in mid-January, it was based on the inflationary pressures that we were seeing at that time. Since end of February, early March, as a result of the conflict in the Ukraine and the sanctions imposed upon Russia, most of our major input costs such as fuel, explosives, sulphur, freight, reagents and steel have increased significantly globally. I would note that our coal collars at Cobra Panama, in part, have insulated us from the full impact of electricity price inflation. While it is too early to determine if these global cost increases are structural or transitory in nature, the impact of these higher costs cannot be ignored, and we felt more prudent to plan for the year under a conservative cost scenario that assumes these cost pressures remain for the balance of 2022. Moving on to discussions in our host countries. I spent time in the quarter in Zambia meeting with the President and senior ministers in his administration to plot a path forward for our business in Zambia. I'm grateful for their efforts and the collaborative nature of these discussions, which we hope will ensure that the appropriate and enduring investment conditions exist for First Quantum to advance the Consanche S3 expansion and the Enterprise Nickel project. Discussions with the government include seeking an agreed mechanism for repayment of VAT owed to the company. These discussions continue to be constructive such that we are hopeful that we can reach resolution in the very near term and advance both projects this year as reflected in our guidance. In Panama, discussions with the government are ongoing. The parties continue to finalise the details behind the benefits of the $375 million per contribution from Cobra Panama on a gross profit-based royalty. These details include 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. 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, the company produced approximately 182,000 tonnes of copper during the first quarter, down around 10% quarter over quarter for the reasons I noted earlier. We saw some improvements in the shipping environment in January and February, and sales for the quarter totaled 197,000 tonnes. The shipping environment since March has become more challenging due to the Ukraine conflict. China's COVID lockdown, which has impacted its ports, and the recent flooding in Durban in South Africa. This has created congestion and some delays in shipping our products during Q1, mostly in smaller volumes, which are shipped from Zambia and Ravensport in containers. We expected challenging shipping environment to persist for the remainder of this year. With respect to the port of Durban, damage has been extensive from the heavy rains. Some port operations have already resumed, However, priority has been given to shipments of seasonal produce, and it may still take a few months until operations at the port return to normal. In the meantime, the company is rerouting shipments of as much Zambian production as possible via other South African ports, which may themselves experience some capacity constraints. Cobra Panama's performance of 78,000 tonnes for the quarter was impacted by sag mill relines performed early in the quarter as well as the backlog of truck maintenance, which I spoke of earlier. The mills have since ramped up well, and Cobra Panama achieves a record monthly mill throughput of 7.6 million tonnes in March, and we have the benefit of six new trucks which have already arrived on site at the end of Q1 for the Kalina pit. We remain confident that mill throughput will ramp up over the course of 2022 to achieve between 85 and 90 million tonnes for the year. Along with the cost inflation resulting from the Ukraine crisis, Cobra Panama's cash costs of $1.65 per pound were also impacted by exposure to spot prices during the planned maintenance to Unit 1 at the power station that was completed at the end of January. However, with the maintenance complete, costs have moved back in line with the collar and coal prices for the mine. This collar prevents further exposure to increases in the coal price until December 2023. At Constancy, copper production of approximately 42,000 tonnes in the quarter was in part impacted by the rainy season, but production also reflected the nature of the ore body in the reduction in oxide ores and the ongoing challenge of the selective hydrate methodology in sulphide ores. Sentinel's copper production of 52,000 tonnes for the quarter was particularly impacted by the rainy season, where higher than normal rainfall impacted ground conditions and delayed access to high-grade ore in the east of the pit. As noted earlier, also contributing to the restriction of ore movement was limited truck availability and the backlog of truck maintenance due to restrictions on labour and resources during the COVID-19 pandemic. Our revised corporate production guidance assumes great improvement in the second half of this year. The fourth in-pit crusher was successfully commissioned during the quarter, which is expected to stabilise mine ore feed at an annualised rate of 62 million tonnes per annum. Turning to some of our ESG highlights from the quarter, I'd like to start by congratulating our teams at Consantium Sentinel, who were honoured with six awards from the Zambian Responsible Business Awards across various categories, including the 2021 Company of the Year Corporate Social Responsibility Award. These awards recognise organisations who take action while building coalitions across communities. It's great to see our programs in public health support, education and environmental stewardship being recognised. In Mauritania, 132 women recently completed our annual female empowerment program. This targets improving literacy, numeracy and livelihoods in the poorest neighbourhoods of Akjut, close to our Gwelmachrain mine, to improve standards of living. Moving to Panama, where we continue to support the development of our host communities with a range of programs. In February, we were happy to sponsor the World Neighborhood Basketball Tournament, which took place in Cologne. Over 1,100 children took part in the five-day Festival of Sport and Culture, which highlighted the importance of sports in the development and well-being of our communities, as well as our ongoing commitment to supporting them. And with that, I'll turn things over to Hannes, and I'll be back in a few minutes to wrap up.