VANCOUVER Nov 10, 2015 (Thomson StreetEvents) -- Edited Transcript of First Quantum Minerals Ltd earnings conference call or presentation Tuesday, November 10, 2015 at 2:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Clive Newall First Quantum Minerals Ltd - President * Juliet Wall First Quantum Minerals Ltd - General Manager, Finance * Zenon Wozniak First Quantum Minerals Ltd - Director of Projects * Philip Pascall First Quantum Minerals Ltd - Chairman and CEO * Libby Senez First Quantum Minerals Ltd. - Group Reporting Controller ================================================================================ Conference Call Participants ================================================================================ * Alain Gabriel Morgan Stanley - Analyst * Matt Murphy UBS - Analyst * Ian Rossouw Barclays Capital - Analyst * Oscar Cabrera BofA Merrill Lynch - Analyst * Chris Welch Pareto Securities - Analyst * Orest Wowkodaw Scotiabank - Analyst * Steve Bristo RBC Capital Markets - Analyst * Brett Levy CRT Capital Group - Analyst * Matt Vittorioso Barclays Capital - Analyst * Matthew Fields BofA Merrill Lynch - Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, ladies and gentlemen, and thank you for standing by. Welcome to the First Quantum Minerals third-quarter 2015 results conference call. (Operator Instructions) As a reminder this conference call is being recorded today Tuesday, November 10, 2015. It is now my pleasure to introduce Mr. Clive Newall, President, as your speaker today. Please go ahead, sir. -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [2] -------------------------------------------------------------------------------- Thanks, operator, and thanks, everyone, for joining us today. From First Quantum we have our Chairman and CEO, Philip Pascall; Director of Projects, Zenon Wozniak; Hannes Meyer, our CFO; Juliet Wall, General Manager, Finance; and Libby Senez, Group Reporting Controller. As usual I must draw your attention to the fact that over the course of this conference call we will be making several forward-looking statements, and as such I encourage you to read the cautionary note for the Company in both our Q3 MD&A and the related results news release, as well as the risk factors particular to our Company which are detailed in our Annual Information Form and available on our website at www.first-quantum.com and on www.SEDAR.com. Following my opening remarks Juliet will go through the financial results, which were published yesterday after the close of market. After that we will be opening the lines for questions. A reminder that the presentation which accompanies this conference call is available on our website at www.first-quantum.com and can be accessed either on the events section or on the Q3 2015 results conference call button under the news section of the home page. As most of you have seen, comparable earnings and cash flow from operations before working capital changes and tax paid for the third quarter amounted to $70 million and $263 million respectively. These quarter results are highest so far this year and were achieved despite metal prices being at their lowest, as well as our Zambian operations having to function with reduced power supply for 12 days. The increase in copper sales volume was a major contributor to the results. This was consistent with how we had anticipated the year unfolding with the ramp up of the smelter. Of course the impact would've been much greater had the copper price been better than the $2.39 per pound that it averaged for the quarter. Nevertheless, the sales volume increase and continued good cost control at all of our operations highly influenced the quarter. Underlying this was solid performances at the mines and the smelter in its first quarter of commercial production. In fact, the smelter has ramped up so well that it has already processed all the copper concentrate that had been stockpiled at Kansanshi over the last two years resulting from the lack of local smelting capacity. And as those of you who were on the visit to the Zambian assets recently, as they saw and heard, it is now actually being held back by the delayed electrification of the second power line for the Sentinel mine, as it needs a blend of Kansanshi and Sentinel concentrate to run optimally. This also has flow-on effects on the Kansanshi oxide circuit as well, since the lower operating level reduces the amount of acid produced and available. There is a positive to all of this, though. With Sentinel ramp up pushed back because of the delayed electrification of the second power line, our team has had the time to apply a good amount of thinking and perform significant test work to find a permanent solution to the issue of fines present in the oil. Part of this fix now is in place and the balance will be completed by the end of the year. So we expect that once Sentinel is provided full power requirements the ramp up to commercial production levels should go smoothly. While we're on the subject of power supply in Zambia, obviously the restrictions imposed on our operations for about 12 days during the quarter were disruptive and unfortunate. Since the restoration of power we have been provided full power to the Kansanshi facility and to the one power line currently connected to Sentinel. Kansanshi and Sentinel have been offered additional powers at premium for a portion of their total power requirements being provided by imports. The effect on power costs for those operations are expected to be around an increase of 5% and 10% respectively. By March of next year we expect normal supply conditions and tariffs should be restored. As we disclosed before, we anticipate the country's generating capacity will improve following the rainy season, which has already begun, and will be further augmented with the approximately 400 megawatts of new power generation capacity expected online in 2016 from projects nearing completion, of which 300 megawatts is thermal and 100 megawatts is from hydro. In our update news release of October 5 we detailed a number of issues that are very important to the Company. Starting with the previous -- the precious metals stream agreement for the Cobre Panama project, following on the finalization of terms of the replacement agreement in October, the agreement was signed earlier this month and first payment of $338 million was received last week. It's fair to say that both we and Franco-Nevada are pleased to have these revised terms finally formalized, announced, and the market focus on it removed. The project itself continues to move along very well, and as we noted its capital estimate has been reduced by 7% to about $5.95 billion on efficiencies achieved to date. Just to put this in perspective, you may recall that the project had -- the original project had an estimated capital by its former owner of $6.2 billion, but that was at 17% lower installed capacity. So to update you on the project's progress, the detailed design of all project areas is complete with only the process plant designs continuing at a rate to simply stay ahead of construction requirements. At the moment the construction work force stands at around 4,250 people. To review the various areas of the project, the port is operational and first mill deliveries have taken place. The export jetty for concentrate export and coal import is in construction, with approximately 60 meters of temporary access platform installed from the shore and piles being driven in three work fronts in deeper water for the balance of the works. The power station construction has prioritized one of the 150 megawatt sets ahead of the other, and boiler and turbine areas are being focused on as key construction activities. At the tailings dam, the parallel construction of both the eastern and northern tailings dam embankment continues, which are now approximately 37% complete. At the process plant, the mill building, structural steel has been erected and the overhead cranes installed and commissioned, which will allow the installation of the mill to commence. Concrete works site-wide are almost 50% complete with 118,000 cubic meters of concrete poured. Structural steeler action continues with 7,400 tonnes erected, representing about 20% of the total project. The mine pre-strip works have commenced at the Botija pit, with a substantial earthworks fleet now moved across onto that activity. While our forecasted final cost for the project has been reduced to $5.95 billion, we do continue to strive for additional savings wherever possible. In regard to the initiatives to strengthen our balance sheet and to maximize cash flows, we have increased the copper hedge program to 208,575 tonnes at an average price of $2.41 per pound, or $5,313 per tonne, over the balance of this year and into next. We will continue to add to this program opportunistically and if considered appropriate going forward. On the amended ENRC promissory note, in addition to the $215 million received in Q3, just over $21 million was received last week. The remaining balance of about $64 million is to be repaid in six equal payments of over $10.6 million starting in January 1 of next year. That's in addition to $1.25 million being paid on December 1 of this year, the results of an annual interest charge of 10% on the outstanding balances. On our objective to reduce net debt, we have put in place the team to carry out a detailed review of all of our assets and to evaluate other strategic initiatives that will lead to that effort. We have recently seen news articles naming some of the assets, but I want to make it clear we believe it is important that we assess all of our assets, no sacred cows, to ensure that whatever direction we pursue it will be based on an informed decision and in our opinion in the best interests of all the Company stakeholders. So as you can see there is and has been for some time a significant effort company-wide to ensure that profitability and cash flow from our mining operations are maximized and protected in these volatile market conditions. And sustained lower commodity prices, and that -- sorry, the volatile market conditions and sustained lower commodity prices. And that cash outflows are limited to essential and economically attractive projects so that our balance sheet integrity is maintained. I believe the benefit of this effort is evident in our results this quarter. While we have been addressing these areas within our control, because metal prices are not, as a major copper producer and investor in additional future capacity we are strong believers in the long-term fundamentals of the metal. However, we do recognize that market sentiment is generally subdued and anticipate continued sideways movement in the short term. But we think that the facts are that demand growth in China has definitely slowed, but at 5% per annum. In absolute terms that's still a large volume of new copper acquired each year, particularly in the light of growth returning to other major economies. At the same time copper stocks remain very low at around 263,000 tonnes, the concentrate market appears to be balanced as far as we can determine, and the scrap market remains very tight. All of these are reassuring indicators. However, while sentiment remains negative, we are not anticipating any significant short-term improvements despite these strong fundamentals. Just before I hand over to Juliet to go over the financial results, I would just like to address the reason our released result is a little bit later than normal this year. As with most companies our annual budget goes through some extensive discussion during this October and November period. And this year was no different, but we also wanted to take feedback from some of our stakeholders on how we might improve our disclosure in some areas. On this I am pleased to say that we intend on disclosing three-year production capital estimates starting in January 2016. As you saw in the Q3 results, we have taken the staff of disclosing the 2016 capital estimate well ahead of the norm. Additionally we're looking at adding an appropriate all-in production cost metric beyond C3 that we believe would be informative to the readers of our financial statements. We've not yet settled on a definition, but rest assured it's a work in progress. I will now ask Juliet to take us through the financial review. -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [3] -------------------------------------------------------------------------------- Thanks, Clive, and good day, everyone. First of all we're going to look at the slide called Q3 2015 highlights. So compared to Q2 2015 copper production increased by 3,000 tonnes, reflecting Sentinel's pre-commercial production and higher Guelb production. Kansanshi was 3,000 tonnes lower due to vested power restrictions, a planned system maintenance shutdown, and lower feed grades. Sentinel contributed 11,000 tonnes pre-commercial production in the quarter, an increase of 5,000 tonnes on Q2. Copper sales volumes you will see increased 24% on Q2 2015, with an 11,000 tonne increase in Kansanshi sales. Nickel production was below Q3 2014 but above Q2 2015, as ramp up continues to progress well at Ravensthorpe. In line with this trend, nickel production at Ravensthorpe is expected to increase to the end of 2015. Guidance for metal production has been revised for all metals based on latest production information. I'll give you some more detail on that later in the presentation. Copper C1 costs of $1.18 per pound was $0.26 lower than Q3 2014. This is based upon cost reduction and efficiencies across the group together with favorable exchange rates resulted in reducing mining and processing costs. Accordingly full-year guidance for copper C1 costs reduces to between $1.20 and $1.35 per pound. Nickel C1 cost of $4.56 per pound is lower than Q2 2015, driven by lower mining and processing costs and higher production. Full-year nickel C1 cost guidance has been reduced to between $4.40 and $4.70 per pound. Comparative EBITDA of $261 million for the quarter was $100 million above Q2 2015, reflecting higher sales volumes, group-wide cost saving initiatives, and a $49 million impact in the reduced Zambian mineral royalty rates, which reduced from 20% to 9% on July 1. The quarter was also favorably impacted by receipt of the $49 million business interruption element of the insurance proceeds from the Ravensthorpe AL tax failure in December 2014. Lower realized metal prices in the quarter partially offset these gains. Net debt of $5.3 billion is $112 million higher than Q2 2015 and in line with forecast, with capital expenditure offsetting EBITDA on plans with fees and the past settlement of ERG debt. The ramp up of the smelter has enabled $69 million worth of reduction in concentrate stockpile at Kansanshi with the additional [annue] to be sold down in Q4 and Q1 2016, and a return to more usual inventory levels later in the year in 2016. Net debt in Q4 will also benefit from $338 million Franco-Nevada receipt on November 6 and additional payments of outstanding amounts from ERG, as Clive has described. As Clive mentioned, we are currently considering a change in our cost reporting design to provide readers of the financial statements with additional visibility of the total costs of our operations and to move more forwards in the practice all-in sustaining production cost metric. We're still finalizing the definition to ensure it most appropriately reflects the true all-in sustaining cost, however we envision moving towards that in Q1 2016 onward. Overall group copper C1 cost at $1.18 per pound was $0.26 below Q3 2014, with a focus on cost reduction and efficiencies as well as favorable exchange rates. Total C3 cost, including royalties and depreciation, was $0.17 lower than Q3 2014 as the cost reductions and efficiencies are partly offset by the increased royalty rate and depreciation charges at Kansanshi. Specifically Kansanshi copper C1 cost reduced $0.23 against Q3 2014 due to the benefit of low cost acid produced by the Kansanshi smelter along with lower fuel costs and cost-saving initiatives. Total C3 cost, including royalties and depreciation, was $0.02 higher in Q3 2015 as royalty rates increased $0.12 and depreciation increase $0.12 after commissioning of the smelter. Guelb Moghrein achieved lower C1 costs against Q3 2014 reflecting fuel savings and ongoing cost reductions and optimization initiatives together with higher production. Now looking at nickel C1 cost; nickel C1 cost at $4.56 per pound was $0.04 higher than Q3 2014, as reductions at Ravensthorpe were offset by Kevitsa. Ravensthorpe nickel C1 cost was $0.19 lower than Q3 2014 due to lower mining and processing costs. Kevitsa's nickel C1 cost was higher than Q3 2014 but lower than Q2 2015, with lower electricity prices and the impact of higher production. Turning to the next side which is called financial overview. So against Q2 2015 gross profit was $49 million higher despite lower prices due to higher sales volumes and the benefit of cost reduction initiatives across the group and the reduction in royalty rates. Gross profit of $103 million for the quarter was $138 million lower than Q3 2014 mainly due to lower revenue from lower metal prices as well as the impact of the higher Zambian royalty. With the increase in the royalty rates to 9%, royalty payments were $40 million higher this quarter than they would have been under last year's rates. Excluding royalties, cash costs were lower than Q3 2014 reflecting reduced fuel prices and cost reduction initiatives across the group. Net debt increased from Q2 2015, with an ongoing capital spend at Cobre Panama partly offset by EBITDA and ERG receipts. The Kansanshi concentrate stockpile was reduced by $69 million in Q2 2015. The concentrate was converted to anode for sale over the next quarter and then moving on into 2016. In future quarters net debt will benefit from Franco-Nevada receipt -- ERG receipts as well as the reduction in anode inventory. Moving onto the next slide, Q3 2015, the waterfall chart for gross profit versus Q2 2015. The waterfall chart details the group's gross profit for Q3 2015 compared to the previous quarter. We've touched on the drivers behind this movement earlier in the presentation, however this slide demonstrates the impact of our improved cost performance and increased sales volume in spite of lower realized prices. Lower cash costs included lower acid costs at Kansanshi, ongoing cost initiatives across the group, as well as the impact of favorable US dollar movement. So looking at the next slide, Q3 2015 gross profit versus Q3 last year 2014, the waterfall chart details the group's gross profit for Q3 2015 compared to the prior-year quarter. This slide demonstrates the extent of the price impact despite the FX benefit on our improved cost performance versus prior year. The next slide is on capital expenditure. The capital expenditure of $375 million in the quarter included $166 million at Cobre Panama, $148 million at Trident including pre-commercial spend in stripping, and $23 million at Kansanshi. Group capital expenditure remained within guidance for 2015 at approximately $1.4 billion, with approximately $600 million on Cobre Panama. SGM share at Cobre Panama spend is forecast at $360 million. Of the remaining group capital spend, $230 million relates to Trident, including Enterprise, and other project spend includes approximately $100 million in the smelter and $40 million on power lines. In addition, guidance includes approximately $230 million capitalized stripping for the group. As part of the ongoing working capital and cash flow management initiative, 2016 capital expenditure is being focused on the projects key to ensuring the Company's long-term operational objectives are met while also giving due consideration to the challenging marketing environment and the need to protect cash flow. As such 2016 capital expenditure is expected to be limited to $1.2 billion, with $880 million spend allocated to Cobre Panama. The remainder relates to capitalized stripping of approximately $0.2 billion and flat CapEx of $0.1 billion. Totaled 2016 net capital expenditure attributable to FQM after contributions received for Cobre Panama is $850 million. So turning to Cobre Panama, total project spend, as Clive said, has been revised down 7% to $5.95 billion, with the project currently approximately 35% complete. The table you will see there breaks out the remaining spend between FQM share and third-party share. So FQM share spend in 2016 is forecast at $528 million. The next slide on long-term debt profile, at Q3 2015 the group has approximately $1.6 billion of undrawn facilities and $276 million of unrestricted cash, with a reduced credit rating of B2 and a bond rating of B3 and no bond principal due until 2019. 2016 to 2018 include repayments on the FQM term loan and the Kansanshi term loan before the first repayments of the bond loan occur during 2019, at which point all major project CapEx spend on Cobre Panama will be complete. And then just moving to the next slide on market guidance. We talked about capital expenditure, so now around production and C cost. Full-year production guidance has been revised for all metals. Copper production estimate is between 380,000 and 400,000 tonnes, and gold between 210,000 and 231,000 ounces. Production guidance for nickel remains within previous guidance, but the range has been narrowed. In addition total physical production at Sentinel is expected to be between 30,000 and 40,000 tonnes of copper, with commercial levels reached by the end of 2015. Full-year guidance for C1 cost has been reduced to between $1.20 and $1.35 per pound for copper and between $4.40 and $4.70 per pound for nickel. Thank you very much, and I will hand it back over to Clive. -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [4] -------------------------------------------------------------------------------- Thanks very much, Juliet. Operator, could you now open the lines for questions please? ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Alain Gabriel, Morgan Stanley. -------------------------------------------------------------------------------- Alain Gabriel, Morgan Stanley - Analyst [2] -------------------------------------------------------------------------------- Good morning, ladies and gentlemen, just two questions if I may. Firstly on the Kansanshi anode build out, Clive, do you mind shedding some color on the reason of the build up? And is it fair to assume that the entire $294 million will be sold by the end of Q1 2016? And the second question is on the concentrate quality at Sentinel. Have you seen any evidence in the last couple of weeks that the quality has been improving? And how quickly will you get to the primary ore at Sentinel? Thank you. -------------------------------------------------------------------------------- Zenon Wozniak, First Quantum Minerals Ltd - Director of Projects [3] -------------------------------------------------------------------------------- Clive, do you want me to answer the anodes question? -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [4] -------------------------------------------------------------------------------- Yes, please do. -------------------------------------------------------------------------------- Zenon Wozniak, First Quantum Minerals Ltd - Director of Projects [5] -------------------------------------------------------------------------------- At Kansanshi the smelter ramp up has been exceeding our expectations. What we've done is converted the concentrate stockpile into anodes and as the marketing (technical difficulties) in not overtelling the product. That puts quite a number of (technical difficulties) in price and by Q1 that will definitely be sold, but I think even by end of the year we would be at a normalized inventory level of about 2 to 3 weeks of smelter supply or smelter production, which is the normal inventory pipeline for marketing of the product. -------------------------------------------------------------------------------- Alain Gabriel, Morgan Stanley - Analyst [6] -------------------------------------------------------------------------------- Thank you. -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [7] -------------------------------------------------------------------------------- Philip, would you want to talk to the concentrate quality question? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [8] -------------------------------------------------------------------------------- Yes. The concentrate that's being produced by Sentinel is largely very adequate for feeding the smelter. There's a certain amount of the concentrate with high insols that's just sent to pressure leach, but increasingly the smelter is quite happy to be handing the material that they have, which has a lot of insol and in some cases quite high copper value. So we're pretty comfortable with the quality of the concentrate, and there are other steady improvements. You asked about the primary ore, and we process it from time to time, but most of what we're handling is still secondary sulfide ore. -------------------------------------------------------------------------------- Alain Gabriel, Morgan Stanley - Analyst [9] -------------------------------------------------------------------------------- Thank you. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- Matt Murphy, UBS. -------------------------------------------------------------------------------- Matt Murphy, UBS - Analyst [11] -------------------------------------------------------------------------------- Hi. Just had a question on Cobre Panama CapEx. So the total spend beyond 2016 of $2.37 billion, if we assume no further reductions in project costs and timeline unchanged, should we think about all of that being spent in 2017? Or could some of that move out further? I thought I heard Juliet say something about spend being done in 2019? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [12] -------------------------------------------------------------------------------- Do you want me to answer that? -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [13] -------------------------------------------------------------------------------- Sure. Carry on. -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [14] -------------------------------------------------------------------------------- The large capital amount that remain of that in terms of actual purchases of mining equipment, a lot of that will be purchased in 2017. But there's quite a significant component which has an indefinable program. And I mean by that obviously the provisions for contingency and some of the owner's costs which are not insignificant, and they would tend to be expenditures that either don't take place at all or would not occur until 2018 and even slightly beyond that depending on when we are capitalizing things. Because you can't really put a program to when you spend contingency, for example. -------------------------------------------------------------------------------- Matt Murphy, UBS - Analyst [15] -------------------------------------------------------------------------------- And how much of the remaining budget would be in that contingency? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [16] -------------------------------------------------------------------------------- We aren't going into the details. It's not insignificant, and we're pretty comfortable with that broad estimate. But the real question you are asking was whether it was all going to be done in 2017. And I think probably -- Zenon, do you have that figure? It wouldn't be any more than half of the (multiple speakers). -------------------------------------------------------------------------------- Zenon Wozniak, First Quantum Minerals Ltd - Director of Projects [17] -------------------------------------------------------------------------------- The contingency hasn't changed, Philip. I think from memory it's about $400 million at the moment, contingency on the (multiple speakers). -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [18] -------------------------------------------------------------------------------- No, the whole of the -- what is spent in 2017 and what is spent past it? I think it's probably split about evenly. -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [19] -------------------------------------------------------------------------------- Yes. In 2017 it's a little bit more than 2016. So just above $1 billion. And that's total, of which our share would probably be more down towards that $636 million to $640 million. -------------------------------------------------------------------------------- Matt Murphy, UBS - Analyst [20] -------------------------------------------------------------------------------- Okay, thanks. And then just one other if I may. In the MD&A I just saw a discussion on $32 million invoice by ZESCO for electricity above agreed-upon rates. I'm just wondering does that relate to -- is this previous to power shortages, or are they trying to bill you more for the temporary power? -------------------------------------------------------------------------------- Libby Senez, First Quantum Minerals Ltd. - Group Reporting Controller [21] -------------------------------------------------------------------------------- This is Libby Senez answering. The $32 million is the invoice above the power supply agreement that's been in place for about a year. -------------------------------------------------------------------------------- Matt Murphy, UBS - Analyst [22] -------------------------------------------------------------------------------- Is that separate? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [23] -------------------------------------------------------------------------------- That predates it. We have seen some negotiations around it, and we were going to talk about the increase in [solid terms] and we are challenging that and it's subject to arbitration, which will happen later. (Technical difficulties) risk or downside to that. -------------------------------------------------------------------------------- Matt Murphy, UBS - Analyst [24] -------------------------------------------------------------------------------- Okay. Thank you. -------------------------------------------------------------------------------- Operator [25] -------------------------------------------------------------------------------- Ian Rossouw, Barclays. -------------------------------------------------------------------------------- Ian Rossouw, Barclays Capital - Analyst [26] -------------------------------------------------------------------------------- Thank you. Just a further follow up on the anodes at Kansanshi. If I add up all the core key data you show and produced, how much anodes you have produced, it's over 100,000 tonnes. And you've sold about 30,000 tonnes of blister and anode. So that implies around 70,000 tonnes of inventory. On the site visit you mentioned there's around 30,000 tonnes of inventory at the beginning of October. So how do you square these two figures, and is it because there is double counting in the anode production? And then just secondly, at Sentinel you were guiding on the site visit that the energizing should happen in the next couple of weeks. And that seems to be delaying a bit longer than expected. If you could just provide a bit more details on that. -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [27] -------------------------------------------------------------------------------- In terms of inventory levels you are correct. The inventory levels as of -- for anode as of Q3 are around about 72,000 tonnes. So that will be gradually reduced more as Hannes has described more towards normal operating levels. (multiple speakers) -------------------------------------------------------------------------------- Zenon Wozniak, First Quantum Minerals Ltd - Director of Projects [28] -------------------------------------------------------------------------------- That level currently is about high 30,000s. I think [cash review] is quite a bit. -------------------------------------------------------------------------------- Ian Rossouw, Barclays Capital - Analyst [29] -------------------------------------------------------------------------------- Okay. -------------------------------------------------------------------------------- Operator [30] -------------------------------------------------------------------------------- Oscar Cabrera, Bank of America Merrill Lynch. -------------------------------------------------------------------------------- Oscar Cabrera, BofA Merrill Lynch - Analyst [31] -------------------------------------------------------------------------------- Thank you, operator. Good morning, everyone. I don't think the second answer was -- if you want to address that before I go ahead with my question. -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [32] -------------------------------------------------------------------------------- Yes perhaps we could -- energizing the power lines which, yes, didn't happen within two weeks of our tour as Ian rightly said. I think, Philip, we are expecting within the next couple of weeks though, is that not correct? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [33] -------------------------------------------------------------------------------- Yes it's been imminent for some time. I think there was some caution from ZESCO because they wanted some reactors installed and commissioned, and I think they are just being slow with that. But in fact at the moment because of the reduction in usage of power in the copper mill and the like, there is more than enough power for us to be running our full capability on the mill and the crushers, and actually doing that at the moment. And that's just power that's provided in the existing line. So I give you an idea today, both trains are running at more of this average throughput and the power supply is fine. But we would like it if they would energize the rest because there's no question that our ore will get harder in due course and obviously make bigger demands on the power. -------------------------------------------------------------------------------- Oscar Cabrera, BofA Merrill Lynch - Analyst [34] -------------------------------------------------------------------------------- Can I go ahead, Clive? -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [35] -------------------------------------------------------------------------------- Yes, please go ahead, Oscar. -------------------------------------------------------------------------------- Oscar Cabrera, BofA Merrill Lynch - Analyst [36] -------------------------------------------------------------------------------- Thank you. Just following up on this inventory question, one of the things that was also mentioned during our site tour was that the other quality of the anode was more on -- to be sold something closer to scrap. So could you comment on the level of inventory, I believe you just mentioned 72,000 tonnes, is all the quality of the anode similar? Or could production over the last four weeks or so have been improved in terms of the anode quality? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [37] -------------------------------------------------------------------------------- The quality of the anode is -- let me just put it this way, we were always going to produce blister copper and cast it in anode shape. And the early molds are really a generic mold. So the expectation is that all of that would be used as blister, not scrap. And it's quality is fine as anode and to be sold to particular customers as anode. Some of it is high in nickel, so the customers for that would be those refiners that have nickel circuits. -------------------------------------------------------------------------------- Oscar Cabrera, BofA Merrill Lynch - Analyst [38] -------------------------------------------------------------------------------- Okay, thank you for clarifying that, Philip. And then the other question is with regards to your sustaining capital. Just based on what you are showing here in your press release, $200 million this year roughly to $100 million in 2016, can you just comment on that? What is the difference? -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [39] -------------------------------------------------------------------------------- Yes. So within sustaining CapEx there will be some phasing sometimes of particularly things like fleet capital expenditures, so that can be in phases. And also within this year Kansanshi will include expenditure on housing and schools. And there will have been some fleet expenditure at Guelb Moghrein as well. So those are two areas that would be higher this year versus next year. -------------------------------------------------------------------------------- Oscar Cabrera, BofA Merrill Lynch - Analyst [40] -------------------------------------------------------------------------------- As Sentinel ramps up should we expect sustaining capital to gravitate towards the $200 million? Is that mostly on the housing and other -- -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [41] -------------------------------------------------------------------------------- No. Our guidance for next year does include Sentinel. -------------------------------------------------------------------------------- Oscar Cabrera, BofA Merrill Lynch - Analyst [42] -------------------------------------------------------------------------------- Yes, but Sentinel is not completely ramped up next year, is it? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [43] -------------------------------------------------------------------------------- Oscar, the equipment that we need for Sentinel site, so there's not in actual terms of if we need trucks or if we need to acquire it. There's a couple that we will use, I think it's two or four trucks or something like that that's coming soon, and there's not much depends off sustaining capital at Sentinel. -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [44] -------------------------------------------------------------------------------- Just in summary, the delta is mainly about $50 million at Kansanshi, and that is with no housing or school and lower drilling or other fleet activity. Guelb also lower trucks compared to the trucks this year, and Las Cruces as well would have had pressed filter cost capitalized as well this year that won't occur next year. And we're also showing -- expecting Sentinel CapEx to be lower as well. -------------------------------------------------------------------------------- Operator [45] -------------------------------------------------------------------------------- Chris Welch, Pareto Securities. -------------------------------------------------------------------------------- Chris Welch, Pareto Securities - Analyst [46] -------------------------------------------------------------------------------- I was wondering if I could get a little bit more clarity on the C1 cash flows at Kansanshi, specifically in regard to the infrastructure of the operating cost of the smelter, and essentially that $0.08 [prang] smelter cost we have for the latest quarter. Is that the sort of level we would expect going forward? Thanks. -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [47] -------------------------------------------------------------------------------- Yes, that was broadly what you should expect. -------------------------------------------------------------------------------- Chris Welch, Pareto Securities - Analyst [48] -------------------------------------------------------------------------------- Okay, but is there any sort -- we've seen the 2TR2 approach holes go down, and I was just wondering what the net -- how you've netted off certain costs for the smelter to introduce the fixed cost? Is that alright? I could put it in an email and get more [curvy lotio] if that was easier. -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [49] -------------------------------------------------------------------------------- That would help if you set it out specifically, because obviously we've got savings coming through on acid costs and various fuel savings as well. And then there's the $0.08 that you mentioned. But please, send an email and we can clarify for you. -------------------------------------------------------------------------------- Chris Welch, Pareto Securities - Analyst [50] -------------------------------------------------------------------------------- Brilliant. Will do. Thank you very much. -------------------------------------------------------------------------------- Operator [51] -------------------------------------------------------------------------------- Orest Wowkodaw, Scotiabank. -------------------------------------------------------------------------------- Orest Wowkodaw, Scotiabank - Analyst [52] -------------------------------------------------------------------------------- Hi, good morning and thanks for taking my question. Your comments in the release about being in compliance with your debt covenants over the next 12 months, can you just confirm that assumes that you were going to sell or erase over $1 billion in these non-core asset sales just given where current spot pricing is? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [53] -------------------------------------------------------------------------------- In getting to that conclusion you've got to consider our savings plan, and in getting to that you cannot assume the end balance still has to happen. In our revised plan we consider the age of second accounts and the ramp up of Sentinel and the continuous operation of other mines. And in that we get to a situation where we say we would be compliant. In the other initiatives that we talked about the additional disposals will just give us additional headroom -- disposals or corporate initiatives that will just give us additional headroom and provide capital. -------------------------------------------------------------------------------- Orest Wowkodaw, Scotiabank - Analyst [54] -------------------------------------------------------------------------------- So just so I'm clear, you're saying that you think you can be in compliance with those covenants at current spot pricing next year even without any asset sales, is that correct? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [55] -------------------------------------------------------------------------------- No. I'm not saying at current spot pricing. The current spot pricing varies quite a bit from day to day. -------------------------------------------------------------------------------- Orest Wowkodaw, Scotiabank - Analyst [56] -------------------------------------------------------------------------------- Sorry, what pricing have you assumed then? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [57] -------------------------------------------------------------------------------- We assume the price of $2.40 for next year, which is probably below the consensus. And I'm just going to remind you as well that we do have over 200,000 tonnes hedged (technical difficulties). Only that will be at least 4 or 5 months just at current sales levels, which is covered at that price. And who knows how long the price will be at this current level, but yes, that is our assumption of the $2.40, which is wasn't -- not too long ago it wasn't that price. -------------------------------------------------------------------------------- Orest Wowkodaw, Scotiabank - Analyst [58] -------------------------------------------------------------------------------- Fair enough. And what nickel price are you assuming in that analysis? -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [59] -------------------------------------------------------------------------------- For next year in our plan we do use a nickel price of $5.50, which is still below recent consensus, however, due to sensitivities specifically around nickel as well utilizing a lower rate. -------------------------------------------------------------------------------- Orest Wowkodaw, Scotiabank - Analyst [60] -------------------------------------------------------------------------------- Okay, I see. Thank you for that. And then just shifting gears, in terms of Sentinel obviously you're not expecting too much improvement here in the fourth quarter. Can you share what you think the outlook looks like for 2016 in regards to the ramp up at Sentinel? Should we anticipate a step change in production levels starting as early as Q1 despite the rainy season? Or is this going to be more of a gradual ramp up in your view next year? Thank you. -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [61] -------------------------------------------------------------------------------- The increase in production at Sentinel is being demonstrated now, but we've never really taken account of what would happen in 2016. And so when we look at 2016 the expectation is that it will be fairly modest during the first four months and then will deliver the kind of output that we currently are seeing for the last 8 months. -------------------------------------------------------------------------------- Orest Wowkodaw, Scotiabank - Analyst [62] -------------------------------------------------------------------------------- Okay. Would that imply production -- annual production somewhere in the 150,000 to 200,000 tonne range? Is that a reasonable assumption? -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [63] -------------------------------------------------------------------------------- I think it's more than that, isn't it? Juliet, do you have a figure on that? -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [64] -------------------------------------------------------------------------------- The upper end would be slightly higher than your upper range. Maybe 150,000 to 220,000 or something like that upper range. -------------------------------------------------------------------------------- Orest Wowkodaw, Scotiabank - Analyst [65] -------------------------------------------------------------------------------- Okay, thank you very much. -------------------------------------------------------------------------------- Operator [66] -------------------------------------------------------------------------------- Steve Bristo, RBC Capital Markets. -------------------------------------------------------------------------------- Steve Bristo, RBC Capital Markets - Analyst [67] -------------------------------------------------------------------------------- Good morning, thanks for taking my question. I was just wondering, I missed that breakdown of 2015 CapEx for the other items. If you could run through that again for me please? -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [68] -------------------------------------------------------------------------------- Was that the guidance number you particularly wanted? -------------------------------------------------------------------------------- Steve Bristo, RBC Capital Markets - Analyst [69] -------------------------------------------------------------------------------- The total guidance and everything that goes into that, because you had mentioned some other, with $40 million for power lines and whatnot. So I wanted you to run through those numbers again for me if you could. -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [70] -------------------------------------------------------------------------------- (Multiple speakers) So the $1.4 billion is $600 million Cobre Panama, of which our share is $360 million. $230 million relates to Trident, including Enterprise, and other project spend includes $100 million on the smelter and $40 million on power line. And in addition there is $230 million of capitalized stripping. And you'll see that on the slide -- there is a slide actually you will find later if you want to refer back to that other sustaining CapEx of about just under $200 million. But you should be able to find a slide which will help you. -------------------------------------------------------------------------------- Steve Bristo, RBC Capital Markets - Analyst [71] -------------------------------------------------------------------------------- Perfect. Thank you very much. -------------------------------------------------------------------------------- Operator [72] -------------------------------------------------------------------------------- Brett Levy, CRT Capital. -------------------------------------------------------------------------------- Brett Levy, CRT Capital Group - Analyst [73] -------------------------------------------------------------------------------- Hi, guys. As you look at your various options, is an equity issuance a potential possibility as you look at -- again, I know you have asset sales as a main item here, but would there be an equity option, equity issuance option as part of all of that? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [74] -------------------------------------------------------------------------------- We have, as we've said in our press release, a number of initiatives that we are working on. One of them is not an equity issue. We don't have any intention of doing that. -------------------------------------------------------------------------------- Brett Levy, CRT Capital Group - Analyst [75] -------------------------------------------------------------------------------- So equity issuance at this point is really not on the table? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [76] -------------------------------------------------------------------------------- That's correct. -------------------------------------------------------------------------------- Brett Levy, CRT Capital Group - Analyst [77] -------------------------------------------------------------------------------- And is slowing down Cobre Panama at all an issue on the table? I'm asking this because in some way given the existing amount of liquidity I'm a little concerned that liquidity gets tight. -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [78] -------------------------------------------------------------------------------- No. We are not intending to slow down Cobre Panama either. -------------------------------------------------------------------------------- Brett Levy, CRT Capital Group - Analyst [79] -------------------------------------------------------------------------------- Is there a trough level of liquidity beyond which you would consider you wouldn't go below? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [80] -------------------------------------------------------------------------------- Sorry? -------------------------------------------------------------------------------- Brett Levy, CRT Capital Group - Analyst [81] -------------------------------------------------------------------------------- A trough level of liquidity. In other words a liquidity level that would not be acceptable to you given your current level of liquidity. Is it like $0.5 billion -- or a level of liquidity that would not be acceptable to you? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [82] -------------------------------------------------------------------------------- Obviously we are planning and scaling is very strong with the liquidity that we have. -------------------------------------------------------------------------------- Brett Levy, CRT Capital Group - Analyst [83] -------------------------------------------------------------------------------- And the last question is under the RCF which expires in 2019, it says $1.6 billion is undrawn. Are there any key covenants in terms of interest coverage or debt to EBITDA or anything else like that, or borrowing base issues? What is the actual level that's available now and what are the key covenants that we should be looking for under that RCF to determine the actual level of liquidity? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [84] -------------------------------------------------------------------------------- The RCF and the term lines got the same covenants. The type of covenant of that would be net debt to EBITDA. $1.6 billion of the RCF is available and we fully complied with the covenant. So all of that is available. -------------------------------------------------------------------------------- Brett Levy, CRT Capital Group - Analyst [85] -------------------------------------------------------------------------------- And what is the debt to EBITDA covenant? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [86] -------------------------------------------------------------------------------- It steps down. So it's $7.5 million is issued and sustaining this year steps down to $4.5 million first half of next year, the second half of next year it's $4.5 million and then second half of 2017 it drop downs to $3.25 million. -------------------------------------------------------------------------------- Brett Levy, CRT Capital Group - Analyst [87] -------------------------------------------------------------------------------- Got it. Thanks very much, guys. -------------------------------------------------------------------------------- Operator [88] -------------------------------------------------------------------------------- Matt Vittorioso, Barclays. -------------------------------------------------------------------------------- Matt Vittorioso, Barclays Capital - Analyst [89] -------------------------------------------------------------------------------- Thanks for taking my question. Most of my questions have been answered, but maybe just a follow up on Brett's line of questioning there. In your prepared remarks you do talk about maintaining I forget what the word was, an appropriate balance sheet or balance sheet integrity. Maybe you could just outline what the goals are around the balance sheet? What do you view as appropriate leverage for global mining company in such an uncertain commodity environment? What are we trying to get to while you continue to spend aggressively on growth? How do you define an appropriate balance sheet? Maybe that would give us some bookends. -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [90] -------------------------------------------------------------------------------- There are various ratios that you can look at. Probably the most appropriate one would be bonds and then there are the banks would be debt to EBITDA. And although we are quite highly [vabrous] at the moment we've invested $2 billion in Sentinel, $900 million or so or a little bit less than that at smelters, and there's quite a bit already at Cobre Panama, none of which -- the smelter is starting to contribute to EBITDA. That will delever as we see Sentinel ramping up, and our ratio step down us 3.25%, and we think a ratio probably somewhere around 2% to 2.5% is probably a level that we -- a sustainable level in the future. During its growth phase when we first spent the money and we were still waiting for EBITDA we're comfortable with our plan and we can delever in the next few years. -------------------------------------------------------------------------------- Matt Vittorioso, Barclays Capital - Analyst [91] -------------------------------------------------------------------------------- Okay. And then maybe just one housekeeping item again on the balance sheet, on the debt side. Is there a quick answer as to why the debt balance related to affiliates -- it seems like as your Korean partner on Cobre contributes its portion to capital it comes in the form of additional debt or a loan. Why is that? Aren't they on the hook for their 20%? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [92] -------------------------------------------------------------------------------- That is correct. We both contribute. So we contribute as First Quantum as a shield alone and our partners contributed in the form of a shield loan as well. On consolidation our share eliminates and that's all reflected. That amount is not included in the covenant ratio. So you eliminate that -- -------------------------------------------------------------------------------- Matt Vittorioso, Barclays Capital - Analyst [93] -------------------------------------------------------------------------------- The $362 million is not in the covenant calculation? -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [94] -------------------------------------------------------------------------------- Correct. That's excluded. -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [95] -------------------------------------------------------------------------------- It's just a shareholder in the subsidiary company. -------------------------------------------------------------------------------- Matt Vittorioso, Barclays Capital - Analyst [96] -------------------------------------------------------------------------------- Okay. That's helpful. Thank you. -------------------------------------------------------------------------------- Operator [97] -------------------------------------------------------------------------------- Matthew Fields, Bank of America Merrill Lynch. -------------------------------------------------------------------------------- Matthew Fields, BofA Merrill Lynch - Analyst [98] -------------------------------------------------------------------------------- Hey, guys, glad to see you finally got the Franco-Nevada cash in the door. Have you spent that already or what are the intentions to spend that cash on? -------------------------------------------------------------------------------- Zenon Wozniak, First Quantum Minerals Ltd - Director of Projects [99] -------------------------------------------------------------------------------- To tie down the revolving credit facility. -------------------------------------------------------------------------------- Matthew Fields, BofA Merrill Lynch - Analyst [100] -------------------------------------------------------------------------------- So $200 million now down to 0? So you have to spend some more? -------------------------------------------------------------------------------- Zenon Wozniak, First Quantum Minerals Ltd - Director of Projects [101] -------------------------------------------------------------------------------- We've got some available and we've got some cash (technical difficulties). -------------------------------------------------------------------------------- Matthew Fields, BofA Merrill Lynch - Analyst [102] -------------------------------------------------------------------------------- Okay, great. And then you freed up Cobre Panama to use as collateral. Can you now freely do project financing at Cobre Panama? -------------------------------------------------------------------------------- Zenon Wozniak, First Quantum Minerals Ltd - Director of Projects [103] -------------------------------------------------------------------------------- That's part of the cash -------------------------------------------------------------------------------- Matthew Fields, BofA Merrill Lynch - Analyst [104] -------------------------------------------------------------------------------- I'm sorry? -------------------------------------------------------------------------------- Zenon Wozniak, First Quantum Minerals Ltd - Director of Projects [105] -------------------------------------------------------------------------------- Yes we could. -------------------------------------------------------------------------------- Matthew Fields, BofA Merrill Lynch - Analyst [106] -------------------------------------------------------------------------------- Okay. And then another source of liquidity that has been mentioned by certain constituents is basically if you finish the power plant at Cobre Panama quickly before the actual mine is up and running you can use that as a lever to raise additional funds. Can you talk about that option as well? -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [107] -------------------------------------------------------------------------------- That's just one of the many work streams that we are evaluating. It's just part of the process we're going through at the moment. -------------------------------------------------------------------------------- Matthew Fields, BofA Merrill Lynch - Analyst [108] -------------------------------------------------------------------------------- And have you been in discussions with the Panamanian government at all over their desire or appetite to purchase power from you? -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [109] -------------------------------------------------------------------------------- We want to keep those things that are commercial, they will remain confidential for the time being. -------------------------------------------------------------------------------- Matthew Fields, BofA Merrill Lynch - Analyst [110] -------------------------------------------------------------------------------- Okay. And lastly I just want to take a step back and look at your overall liquidity here. $1.6 billion of revolver availability, $276 million of cash, $340 million coming in the door from Franco-Nevada, $60 million of additional proceeds from ENRC, and maybe $150 million of working capital improvement. So that's $2.4 billion of liquidity. And your cash obligation to complete Cobre Panama are about $1.7 billion, is that right? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [111] -------------------------------------------------------------------------------- Yes. I think we've got a slide on that, was in slide 9. It's about $1.4 billion and next year. So it's roughly $2 billion for next year going forward. -------------------------------------------------------------------------------- Matthew Fields, BofA Merrill Lynch - Analyst [112] -------------------------------------------------------------------------------- So that means with the steps that you've already taken you're about $700 million over what you need to complete the project? -------------------------------------------------------------------------------- Zenon Wozniak, First Quantum Minerals Ltd - Director of Projects [113] -------------------------------------------------------------------------------- Assuming everything is constant and. Because we do generate EBITDA from our existing operations under some of that. So it's obviously going to investments in that project as well. -------------------------------------------------------------------------------- Matthew Fields, BofA Merrill Lynch - Analyst [114] -------------------------------------------------------------------------------- All right. Thank you very much. -------------------------------------------------------------------------------- Operator [115] -------------------------------------------------------------------------------- Oscar Cabrera, Bank of America/Merrill Lynch. -------------------------------------------------------------------------------- Oscar Cabrera, BofA Merrill Lynch - Analyst [116] -------------------------------------------------------------------------------- Thank you, operator, and thank you for taking my follow up. Just wanted to clarify a couple of things. The first one on your adjusted earnings reported this quarter, did you include the insurance payment for waivers too? -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [117] -------------------------------------------------------------------------------- Yes, Oscar, we included some business interruption elements which is $49 million. And then net of tax that would go down to $34 million. So that is within comparative earnings, the business interruption element. -------------------------------------------------------------------------------- Oscar Cabrera, BofA Merrill Lynch - Analyst [118] -------------------------------------------------------------------------------- So net of tax would be $34 million. Thank you very much. And then the second part is again, during the visit to Zambia there was a mention of the impact that local currency has in Zambia. The kwacha has depreciated significantly. Could you just remind me what the benefit to cost or the local currency has in your cost representative of that? -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [119] -------------------------------------------------------------------------------- Yes. The average exchange rate was eight -- for the quarter was 8 something against 6 this time last year. But your [lecina] has been quite a significant change after the quarter. And the benefit would be mainly in local payroll and other costs of about $5 million potentially sometime -- a month, if you're going from something like 6 to 12. But in the waterfall chart that we showed we do show the actual impact on exchange between each quarter. And obviously an element of that will be kwacha as well as the Australian dollar and euro as well. -------------------------------------------------------------------------------- Oscar Cabrera, BofA Merrill Lynch - Analyst [120] -------------------------------------------------------------------------------- I was just focusing on the Zambian operations. What percentage of cost does that affect? Is it 20%, 30%? -------------------------------------------------------------------------------- Philip Pascall, First Quantum Minerals Ltd - Chairman and CEO [121] -------------------------------------------------------------------------------- Oscar, I would probably say it's less than 20%. Juliet I don't know, 10%? -------------------------------------------------------------------------------- Juliet Wall, First Quantum Minerals Ltd - General Manager, Finance [122] -------------------------------------------------------------------------------- I think it's about 8% -- the relevant one where you would see movement, it's about ZMB1 billion a year or ZMB250 million a quarter. That's mainly all relating to the Kansanshi segment, and then the amount for Sentinel would be a bit lower. -------------------------------------------------------------------------------- Oscar Cabrera, BofA Merrill Lynch - Analyst [123] -------------------------------------------------------------------------------- Thank you. -------------------------------------------------------------------------------- Operator [124] -------------------------------------------------------------------------------- Mr. Newall I'll turn the call back to you at this time, sir, for your closing remarks. -------------------------------------------------------------------------------- Clive Newall, First Quantum Minerals Ltd - President [125] -------------------------------------------------------------------------------- Okay, well thank you, everybody, for attending today. If you have got any follow-up questions please don't hesitate to call either myself or Sharon Loung. We'll endeavor to answer them. Once again thanks and goodbye. -------------------------------------------------------------------------------- Operator [126] -------------------------------------------------------------------------------- Ladies and gentlemen, this does conclude the conference call for today. We thank you all for your participation today. Have a great day, everyone.
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