First Quantum Minerals (FQM) has achieved its highest-ever annual copper production of 779,000 tonnes, recording an 11 per cent increase from 2019, attributable to record-breaking production at Sentinel and the resilience of its other operations, particularly Cobre Panama.
Sentinel mine in Kalumbila, North-Western Province, achieved record copper production of 251,000 tonnes for the full year, 31,000 tonnes more than 2019 due to continued higher throughput and favourable grades, said the company, when it announced its 2020 Preliminary Production and 2021-2023 Guidance figures this week.
Meanwhile, its Kansanshi mine was 221,000 tonnes in 2020, down 11,000 tonnes from the 232,000 tonnes produced in 2019 due to lower grades and oxide recoveries.
FQM has gradually ramped up production at Sentinel since it began commercial production in November 2016, while the more-established Kansanshi mine is reaching a point where additional substantial investment is now required to sustain output levels.
It stressed the production figures are preliminary and subject to final adjustment, and that the final production figures will be confirmed in the Company’s financial results for the fourth quarter and year ended December 31, 2020.
The company further revealed that global capital spending in 2020 was approximately US$50 million lower than the previously issued guidance of US$675 million and that capital expenditure of $950 million is expected in 2021 and 2022, which includes US$40 million in each year on the smelter expansion at Kansanshi.
“2021 and 2022 also includes a total of approximately $100 million in capital expenditures deferred from 2020,” it added.
“In 2023, capital expenditure is expected to be $1,050m and includes $270 million for the proposed S3 expansion at Kansanshi. This project is subject to board approval and the timing could be accelerated or delayed depending on capital availability, commodity prices, and the Zambian fiscal regime.
“Sustaining capital expenditure is on average approximately $250m per year but is expected to be up to US$40 million higher in 2021 with planned maintenance of the Kansanshi smelter,” said the company.
The mining firm further explained that its 2021- 2023 guidance is based on several assumptions and estimates as of December 31, 2020, including assumptions about metal prices and anticipated costs and expenditures.
“The unprecedented challenges presented by COVID-19 pose some additional risk to the accuracy of forward-looking information. Production guidance and cost guidance includes current assumptions on the impact of COVID-19 on operations. Guidance involves estimates of known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different,” it added.
FQM said it will continue to maintain defensive health and sanitary protocols, and support the government health authorities in each jurisdiction to combat the spread of COVID-19.
The Company says that will continue to employ measures to ensure a minimal spread of the contagion and the health and wellbeing of our workforce continues to be a priority.
First Quantum contributed the majority of government revenue generated from the extractive sector in 2019, according to the latest Zambia Extractive Industry Transparency Initiative (ZEITI) report.
According to the report, the mining giant’s two Zambian subsidiaries, Kansanshi Mining Plc (20 percent owned by the Zambian government through ZCCM-IH) and Kalumbila Minerals Ltd, contributed K5.7 billion and K2.6 billion respectively, representing 31 percent and 14.4 percent of total payments in the year.
FQM’s total contribution of K9,347 billion – which includes K973.65 million from First Quantum Mining and Operations – represented 51 percent of the K18.4 billion total revenue generated from the sector and paid to the government in 2019. The payments included VAT, PAYE, Mineral Royalty Tax, Import Tax, and Income Tax, as well as other payment flows.
