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First Quantum ups 2023, 2024 capex guidance

17th January 2023

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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Canada-headquartered First Quantum has increased its capital expenditure (capex) guidance for 2023 and 2024 to reflect inflationary cost increases on sustaining capital and the timing of expenditures for project capital. This includes the re-phasing of the S3 Expansion, and higher costs for crusher relocations at the mine sites.

The company, which operates mines in Zambia, Australia and Panama, will spend $1.6-billion on capex in 2023, $1.8-billion in 2024 and $1.5-billion in 2025.

First Quantum explained that it had carried over some expenditures from 2022 and that it had accelerated expenditures related to the Kansanshi S3 Expansion project, in Zambia.

Total capex for the S3 Expansion project, however, remains unchanged at $1.25-billion, with $40-million having been spent to date. Across the three-year guidance period, project capex for the S3 Expansion project is expected to be $900-million with the majority to be spent over the next two years.

The mining company in May 2022 approved the S3 Expansion, prolonging the Kansansh mine life by another 20 years. Once the expansion is completed, copper production from Kansanshi is expected to average about 250 000 t/y for the remaining life of mine to 2044.

In the next three years, First Quantum has budgeted an additional $300-million in capex at Kansanshi for the expansion of the tailings facility and a smelter; $650-million at Cobre Panama for the development of the Colina pit, work on the West Dam and purchase of additional mining fleet; $200-million at Sentinel for the relocation of an in-pit crusher and the purchase of additional mining equipment; as well as $35-million for the completion of the Enterprise nickel project.

The ESG-related projects within the three-year, $2.6-billion project capex guidance includes the Kansanshi smelter upgrade to increase processing capacity, which will reduce downstream greenhouse gas emissions from the transport and refining of copper concentrate produced by Kansanshi and Sentinel. The company is also planning a wind farm at Ravensthorpe, in Australia, to reduce its reliance on power from diesel back-up generators.

“Disciplined and responsible growth continue to be a focus at First Quantum. The CP100 Expansion [in Panama] remains on schedule to exit 2023 at 100-million tonnes per annum and work is well under way for the S3 Expansion,” said CEO Tristan Pascall.

He also reported that the Enterprise nickel project, in Zambia, would enter first production this year.

“These projects are a key part of the company’s brownfield growth strategy over the next several years.”

Meanwhile, First Quantum also issued a production guidance for the next three years, with 2023 copper production of 770 000 t to 840 000 t; 2024 output of 765 000 t to 835 000 t and 2025 output of 775 000 to 865 000 t.

Gold production will be 265 000 oz to 295 000 oz in 2023, rising to between 290 000 oz and 320 000 oz in 2024 and between 305 000 oz and 345 000 oz in 2025.

Nickel output will increase from a range of 28 t to 28 t in 2023, to between 34 t and 49 t in 2024 and 45 t and 60 t in 2025.

First Quantum's production guidance is based on normal operations at Cobre Panama, where the company is in a dispute with the government over taxes and royalties.

In 2022, First Quantum achieved production of 776 000 t, which was a reduction of 5% from 2021. Cobre Panama delivered record output 350 000 t, while Sentinel saw a year-on-year increase to 242 000t. Kansanshi’s production of 146 000 t was lower than 2021, owing to lower grades.

Edited by Creamer Media Reporter

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