First Quantum Minerals Ltd. (“First Quantum” or “the Company”)
(TSX: FM) is pleased to announce that the Company’s Board of
Directors has approved the S3 Expansion at the Kansanshi mine and
the Enterprise nickel project.
“First Quantum has been working constructively
with the Government of Zambia’s New Dawn administration as part of
their efforts to reform the mining sector, attract investment and
increase Zambia’s copper production. The approval of the projects
reflects First Quantum’s increased confidence in the investment
climate in Zambia,” commented Tristan Pascall, Chief Executive
Officer. “The S3 Expansion and the Enterprise nickel project are a
key part of our brownfield growth strategy. The Kansanshi mine has
been a cornerstone asset for First Quantum for 15 years and the S3
Expansion will expand production and extend the mine life for
another two decades. The low-cost, high-grade Enterprise nickel
project is well placed to supply the rapidly growing electric
vehicle battery sector. The approval of these two projects is an
important milestone for the Company’s path towards responsible
production growth of the metals needed for the global green energy
transition.”
Work on both projects will start immediately.
The Company is re-commencing detailed engineering works for the S3
Expansion to determine purchase orders for key long-lead items,
including the SAG mill, ball mill and in-pit crushing station. A
mining contractor will be mobilized for the Enterprise nickel
project in order to commence pre-stripping of the pit in June 2022.
The development timeline and capital commitments of both projects
remains consistent with the three-year guidance recently provided
by the Company on January 17, 2022.
ZAMBIAN INVESTMENT CLIMATE
The approval of the projects follows the efforts
of the New Dawn administration to enhance both the investment
climate for mining and to seek commitments from the mining sector
to contribute to the national economy and to corporate social
responsibility. These initiatives will help establish a platform
for more stable, durable and responsible mining in Zambia.
The Government of Zambia’s (the “Government”)
commitments address the ease of doing business in Zambia, covering
areas such as expediting immigration procedures in exchange for
commitments for local employment levels, competitive pricing of
power transmission and power procurement from independent sources
which in turn will support renewable energy projects, and measures
to ensure the ease of importing and exporting goods.
The approvals follow the re-introduction of the
deductibility of mineral royalties for corporate income tax
assessment purposes that became effective January 2022. This
measure realigned Zambia with international best practice. The
Government’s commitment to improve the predictability of the mining
fiscal regime also provides the certainty needed to support large
capital investments in Zambia.
Furthermore, First Quantum and the Government
have successfully resolved all points of contention that have been
stumbling blocks to progress on the S3 Expansion and Enterprise
nickel project. This includes reaching agreement in respect to the
outstanding value-added tax receivable sum and an approach for
repayment based on offsets against future mining taxes and
royalties.
S3 EXPANSION
The S3 Expansion is expected to transition the
current selective high-grade, medium-scale operation to a
medium-grade, larger-scale mining operation that will be more
appropriate for the higher proportion of primary, lower-grade
sulphide ores at depth. As outlined in the NI 43-101 Technical
Report filed in September 2020, the S3 Expansion, when completed,
will comprise of a standalone 25 million tonne per annum (“Mtpa”)
processing plant with a new larger mining fleet that will increase
Kansanshi’s total annual throughput to 53 Mtpa. Once the expansion
is completed, copper production from Kansanshi is expected to
average approximately 250 thousand tonnes per annum (“Ktpa”) for
the remaining life of mine to 2044.
A significant portion of the initial
construction works for the S3 Expansion have been previously
undertaken with much of the civil and structural work onsite
completed. The remaining work includes completion of the remaining
engineering design works, procurement and installation of
equipment, electrics, controls and infrastructure. The S3
processing train will comprise of a 28-megawatt SAG mill and a
22-megawatt ball mill. The open pit mine will be expanded to
increase the supply of sulphide ore from the Main Pit and extend
into the South East Dome deposit. The expanded mining fleet will
use similar ultra-class equipment as First Quantum’s other key
mines and will benefit from new electrical loading and drilling
equipment along with the extension of the current electric trolley
assist infrastructure.
In parallel with the expansion of the mine and
processing facilities, the Company plans to increase the throughput
capacity of the Kansanshi smelter from 1.38 Mtpa to 1.65Mtpa of
concentrate. This will enable the smelter to produce over 400 Ktpa
of copper anode.
The total capital expenditures associated with
the S3 Expansion is expected to be $1.25 billion, which includes
$900 million on the S3 plant and mine fleet and $350 million for
pre-stripping of the South East Dome pit. Approximately $800
million of this spending is included in the Company’s current
three-year guidance released on January 17, 2022 with the balance
falling beyond the guidance period. First production from the S3
Expansion is expected in 2025.
ENTERPRISE NICKEL PROJECT
The Enterprise nickel sulphide deposit is
located 12 kilometers northwest of the Sentinel copper mine. As
outlined in the NI 43-101 Technical Report filed in March 2020,
proven and probable reserves at Enterprise total 34.7 million
tonnes of ore at 0.99% nickel.
The Enterprise nickel project will consist of a
single, main open pit and one extension to the southwest. It will
utilize the existing 4 Mtpa nickel circuit that was previously
built as part of the original Sentinel processing complex. The main
workstream to bring the project online will be the pre-strip of
waste. The development timeline for Enterprise is expected to be
approximately twelve months. At full production, Enterprise is
expected to produce an average of 30 Ktpa of nickel in high-grade
concentrate.
The total capital expenditures associated with
the Enterprise nickel project is expected to be approximately $100
million. Pre-stripping of the Enterprise pit of $60 million is
included in the three-year guidance provided earlier this year
along with $40 million related to infrastructure and plant
commissioning. Expected first nickel production of 5,000 to 10,000
tonnes of nickel in 2023 is included in the Company’s three-year
guidance.
RESPONSIBLE MINING
The S3 Expansion and the Enterprise nickel
project underlines First Quantum’s continued standing as the
largest private sector employer and the largest contributor to
corporate social responsibility in the mining sector in Zambia. The
Company is committed to local procurement and the advancement of
Zambian small and medium sized business development in North
Western Province. Power for both projects will be supplied
predominantly from renewable sources, including the existing
hydropower within Zambia, as well as potential wind and solar power
projects that are under consideration by third parties.
For further information, visit our website at
www.first-quantum.com or contact:
Bonita To, Director, Investor Relations (416)
361-6400 Toll-free: 1 (888) 688-6577E-Mail: info@fqml.com
CAUTIONARY STATEMENT ON FORWARD-LOOKING
INFORMATION
Certain statements and information herein,
including all statements that are not historical facts, contain
forward-looking statements and forward-looking information within
the meaning of applicable securities laws. The forward-looking
statements include estimates, forecasts and statements as to: the
expected timing of completion of the S3 Expansion, the Enterprise
nickel project; expected production, processing and sales volumes;
the completion of engineering design works; procurement and
installation of equipment, electricals, controls and
infrastructure; and the anticipated amount and timing of capital
expenditures associated with the S3 Expansion and the Enterprise
nickel project. The forward-looking information and statements
herein are subject to the impact of ore grades on future
production, the successful and timely completion of the S3
Expansion and the Enterprise nickel project; construction,
production, operational, labour or marketing disruptions as a
result of the COVID-19 global pandemic or otherwise; capital
expenditure and mine production costs; the outcome of mine
permitting and other required permitting; the outcome of legal
proceedings which involve the Company; information with respect to
the future price of copper, gold, nickel, silver, iron, cobalt,
pyrite, zinc and sulphuric acid; estimated mineral reserves and
mineral resources; First Quantum’s exploration and development
program; estimated future expenses, exploration and development
capital requirements; the Company’s hedging policy, and goals and
strategies; plans, targets and commitments regarding climate
change-related physical and transition risks and opportunities
(including intended actions to address such risks and
opportunities); greenhouse gas emissions, energy efficiency and
sources of power and carbon intensity; the use of renewable energy
sources; the design, development and operation of the Company’s
projects and future reporting regarding climate change and
environmental matters; the Company’s expectations regarding
increased demand for copper and nickel; the Company’s project
pipeline and development and growth plans. Often, but not always,
forward-looking statements or information can be identified by the
use of words such as “plans”, “expects” or “does not expect”, “is
expected”, “budget”, “scheduled”, “estimates”, “forecasts”,
“intends”, “anticipates” or “does not anticipate” or “believes” or
variations of such words and phrases or statements that certain
actions, events or results “may”, “could”, “would”, “might” or
“will” be taken, occur or be achieved.
With respect to forward-looking statements and
information contained herein, the Company has made numerous
assumptions including among other things, assumptions about
continuing production at all operating facilities, the price of
copper, gold, nickel, silver, iron, cobalt, pyrite, zinc and
sulphuric acid, anticipated costs and expenditures (including
capital expenditures required for completion of the S3 Expansion
and the expansion of the Kansanshi smelter); the success of
Company’s actions and plans to reduce greenhouse gas emissions and
carbon intensity of its operations and the ability to achieve the
Company’s goals. Forward-looking statements and information by
their nature are based on assumptions and involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements, or industry results, to be
materially different from any future results, performance or
achievements expressed or implied by such forward looking
statements or information. These factors include, but are not
limited to, future production volumes and costs, the temporary or
permanent closure of uneconomic operations, costs for inputs such
as oil, power and sulphur, political stability in Zambia, Panama,
Peru, Mauritania, Finland, Spain, Turkey, Argentina and Australia,
adverse weather conditions in Zambia, Panama, Finland, Spain,
Turkey, Mauritania, and Australia, labour disruptions, potential
social and environmental challenges (including the impact of
climate change), power supply, mechanical failures, water supply,
procurement and delivery of parts and supplies to the operations,
the production of off-spec material and events generally impacting
global economic, political and social stability. For mineral
resource and mineral reserve figures appearing or referred to
herein, varying cut-off grades have been used depending on the
mine, method of extraction and type of ore contained in the
orebody.
See the Company’s Annual Information Form for
additional information on risks, uncertainties and other factors
relating to the forward-looking statements and information.
Although the Company has attempted to identify factors that would
cause actual actions, events or results to differ materially from
those disclosed in the forward-looking statements or information,
there may be other factors that cause actual results, performances,
achievements or events not as anticipated, estimated or intended.
Also, many of these factors are beyond First Quantum’s control.
Accordingly, readers should not place undue reliance on
forward-looking statements or information. The Company undertakes
no obligation to reissue or update forward-looking statements or
information as a result of new information or events after the date
hereof except as may be required by law. All forward-looking
statements made and information contained herein are qualified by
this cautionary statement.
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