First Quantum Minerals – Quantum Leap For Shareholders

First Quantum Minerals (Photo credit: Wikipedia)

First Quantum Minerals* (FM : TSX : $19.03

First Quantum bucked the trend, rallying on its best results for at least two years and a big Q2/12
beat.

Adjusted EPS came in at US$0.30, well ahead of the consensus estimate of US$0.22

The result beat on sales volumes, price received and cash costs. Copper, gold and nickel sales beat by 5%, 6% and
6%, (although production was not as good: copper production was 4% higher, gold production was in line, and nickel
production was 13% lower). Realized copper price of US$3.21/lb was higher than analyst estimates of US$3.12/lb. While
copper cash cost of US$1.53/lb came in higher than analyst estimates US$1.68/lb.

Payable nickel cash cost of US$5.70/lb was better than forecasts of US$5.85/lb. To top it off, lower than expected depreciation and a tax rate 32%compared to expectations of 42% also helped.

Cash metrics,

EBITDA of US$275 million beat forecasts of US$242 million, and operating cashflow before working capital of US$220 million was solidly ahead of US$197 million. 2012 production, cash cost and capex guidance are mostly unchanged, the exception being that nickel cash cost guidance (Ravensthorpe) has been reduced to US$6.50/lb Ni, down from US$6.60-6.80. Notably, the cash balance at the end of the quarter was US$857 million. The remaining 2012 capex to achieve guidance is about US$750 million.