First Quantum increases guidance on capital expenditure

First Quantum reports that its capital expenditures have been experiencing inflationary cost increases, including higher shipping rates, steel prices, fuel costs, and labour rates. Guidance on capital expenditures for 2023 and 2024 has increased to reflect such cost increases as well as additional increases arising from scope definition, expansion of Environmental, Social and Governance (“ESG”) initiatives and the timing of expenditures, including some expenditure carried over from 2022 and the acceleration of some expenditure related to the Kansanshi S3 Expansion project.

Total capital expenditure for the S3 Expansion project remains unchanged at $1.25 billion, with approximately $40 million spent to date. The S3 Expansion includes the development and construction of the S3 process plant circuit and mining fleet acquisitions. Across the three year guidance period, project capital expenditures for the S3 Expansion project are expected to be approximately $900 million, with the majority of the spend to occur over 2023 and 2024. Pre-strip activities for the South East Dome pit is expected to continue through to 2027, of which $300 million is included in the three-year capital budget for the S3 Expansion.

Project capital in the three-year guidance period includes:

• Additional capital expenditures at Kansanshi, including the expansion of the tailings facility and smelter of approximately $300 million,
• $650 million in capital expenditures at Cobre Panamá for the development of the Colina pit, work on the West Dam, purchase of additional mining fleet, expansion of camp facilities and assembly of the molybdenum flotation and filtration plant,
• $200 million in capital expenditures at Sentinel for the relocation of in-pit crusher 2 and the purchase of additional mining equipment, and
• $35 million for the completion of the Enterprise nickel project.

The three-year guidance includes ESG-related projects within the $2.6 billion project capital expenditures. Each of these projects are expected to also improve cost structure, safety and productivity of the business. These include;

• Upgrade of the Kansanshi smelter to increase processing capacity, which reduces downstream greenhouse gas emissions from the transport and refining of copper concentrate produced by Kansanshi and Sentinel,
• A wind farm at Ravensthorpe to reduce reliance on power from diesel back-up generators, subject to final approval,
• Expansion of trolley assist infrastructure across the Company’s three largest mines to lower diesel consumption and associated mine fleet greenhouse gas emissions,
• Relocation and installation of in-pit crushers to optimize haul cycle efficiency and reduce mine fleet diesel consumption,
• Investments at Cobre Panamá and Trident to enhance the social infrastructure serving both our workforce and local communities, and,
• Water initiatives at various operations for the management of water quality and reuse by operations.

Three-year guidance for project capital expenditure does not include any development expenditure for the Las Cruces Underground Project, Taca Taca or Hacquira.

All company’s major operations have planned for increases in sustaining expenditure, which has been impacted by significant cost inflation as well as an increase in TSF costs and increase in fleet replacement programs. Capital expenditure guidance excludes capitalized pre-commercial production results.