EXPANSION DRIVE The Kansanshi smelter mine was built by First Quantum as part of a series of expansions at the Kansanshi mine
Canada-based mining and metals company First Quantum has concluded its first full quarter of commercial operations at its Kansanshi smelter, in north Zambia, where it processed 254 709 t of concentrate to produce 57 085 t of copper anode.
The smelter, which is adjacent to First Quantum’s Kansanshi mine was built as part of a series of expansions at the mine, the largest copper mine in Africa since it began operating in 2005. Kansanshi has the capacity to produce more than 340 000 t/y of copper and 120 000 oz/y of gold.
Further highlighted in First Quantum’s third-quarter results was an average copper recovery of 97.8% and improved copper production, sales and C1 cash costs quarter-on-quarter and on the previous comparable period.
Of the 107 485 t of copper produced by First Quantum at C1 cash costs of $1.18/lb, 104 613 t have been sold. In the 2014 third quarter, First Quantum produced 101 53 t of copper at $1.44/lb, selling 99 132 t.
First Quantum partly attributes the improvement to the ramp-up of its Sentinel copper mine, in Zambia, which expects to produce between 30 000 t and 40 000 t of copper by year-end. The benefits of the Kansanshi smelter, the lower fuel cost and First Quantum’s company-wide cost improvement programme are also noted as contributing factors.
The company forecasts copper production for 2015 of between 380 000 t and 400 000 t.
However, First Quantum’s reduction of costs by 26c was impinged by the lower realised copper price, which fell from $3.11/lb in the 2014 comparable period to $2.28/lb in the quarter under review.
Further, the company stated that its net loss of $427-million, attributable to First Quantum’s shareholders, includes a $471-million deferred income tax charge triggered by the reinstatement of corporate tax in Zambia that became effective on July 1. This was at the same time that the Zambian government reduced mineral royalties from 20% to 9%.
In addition, an unrealised foreign exchange loss of $94-million was also posted on the revaluation of the Zambian value added tax receivable, owing to the depreciation of the kwacha against the US dollar in the third quarter.
Complicating matters further has been the country’s intermittent power supply. However, First Quantum reports that the Zambian power supply is stabilising with full power currently being provided to the Kansanshi complex and to the one power line currently connected to Sentinel.
In addition, the second power line to Sentinel has been completed and, as of November 9, was expected to be energised, allowing Sentinel to ramp up towards commercial production levels by the end of 2015.
“Good operations at all our facilities, combined with the benefits from our cost and cash containment efforts and the excellent operation of our new smelter, yielded solid results for the quarter. While we are pleased with this, further strengthening of the balance sheet and cost reductions remain key priorities for the entire company,” advises First Quantum chairperson and CEO Philip Pascall.