First Quantum Minerals (TSX: FM) announced its financial and operational results for the third quarter of 2024, showing resilience amid ongoing challenges. The company reported net earnings attributable to shareholders of $108 million, or $0.13 per share, and adjusted earnings of $119 million, or $0.14 per share. Both earnings and production figures remain substantially lower than the same period in 2023 when the company reported net earnings of $325 million ($0.47 per share). However, these results mark a significant turnaround compared to Q2 2024, where the company posted a net loss of $46 million.

Gross profit for Q3 2024 was $456 million, a 37% increase from $333 million in the second quarter of 2024, but a considerable 31% decline compared to the $660 million reported in Q3 2023. Similarly, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) rose by 55% quarter-over-quarter to $520 million in Q3 2024, compared to $336 million in Q2, though still down by 46% from the $969 million recorded in the same period last year.

Copper production in Q3 2024 totaled 116,088 tonnes, a 13% increase from the 102,709 tonnes produced in Q2 2024. This growth is notable but falls short of Q3 2023 production, which reached 221,550 tonnes, a result driven by halted operations at the Cobre Panamá mine. The company has adjusted to these changes but remains underperforming compared to its previous year’s figures, as its flagship mine in Panama remains in a state of preservation.

“While it is pleasing to see continued strong operational performance from the Zambian operations during the third quarter, this was marred by a tragic accident in September resulting in the death of a colleague at Kansanshi,” said CEO Tristan Pascall.

The unfortunate incident Pascall referenced involved the death of a worker at the Kansanshi mine in Zambia in September, underscoring the dangers associated with mining operations. The company has expressed its condolences and pledged ongoing support for the worker’s family. This tragic event comes despite otherwise strong production performance from Kansanshi, which reported its highest copper output since Q4 2021.

In Q3 2024, Kansanshi produced 49,810 tonnes of copper, an impressive 20% increase from 41,507 tonnes in Q2 2024, and significantly higher than the 39,600 tonnes produced in the same quarter of 2023. Gold production at the mine also rose sharply, reaching 31,659 ounces, up from 23,575 ounces in Q2 and well above the 19,946 ounces produced in Q3 2023. The improved copper and gold output came from increased feed grades and enhanced milling processes.

The copper C1 cash cost—a measure of the direct cost of copper production—fell 9% quarter-over-quarter to $1.57 per pound, down from $1.73 in Q2 2024. This was largely due to higher copper production and lower fuel costs. However, compared to Q3 2023, when C1 costs stood at $1.42 per pound, costs have risen as a result of inflationary pressures and the power supply issues in Zambia.

Cobre Panamá, one of First Quantum’s largest assets, remains in a state of preservation and safe management (P&SM), with no production occurring since early 2024. This ongoing shutdown has significantly impacted the company’s overall production and earnings.

In Q3 2023, Cobre Panamá contributed 112,734 tonnes of copper and 45,996 ounces of gold to First Quantum’s totals, making its absence in 2024 glaring. The company incurred approximately $13 million per month during Q3 2024 to maintain the site, including labor, maintenance, and environmental preservation expenses. These costs are expected to decrease slightly to between $11 million and $13 million per month for the remainder of the year.

Panama’s new administration, led by President José Mulino, has pledged to address the future of Cobre Panamá by early 2025. First Quantum continues to engage with Panamanian authorities, although the company has also initiated arbitration proceedings under both the Canada-Panama Free Trade Agreement and the International Chamber of Commerce as a protective measure.

In a bid to manage its financial obligations and mitigate risks associated with fluctuating copper prices, First Quantum has ramped up its hedging activities. As of October 22, 2024, the company has secured zero-cost copper collar contracts for 245,400 tonnes, with prices ranging from $4.18 to $5.01 per pound. This hedging strategy is designed to protect against downside risk while still allowing the company to benefit from potential price increases.

First Quantum also took steps to strengthen its balance sheet by securing a $425 million unsecured term loan facility for its FQM Trident project, replacing a previous facility that was set to mature in December 2025. The new facility has a maturity date of September 2028, providing the company with more flexibility in managing its debt.

Net debt rose by $154 million during the quarter, bringing the total to $5.59 billion, an increase from $5.44 billion at the end of Q2 2024. This increase was primarily driven by planned capital expenditures and working capital requirements. Despite the rise, First Quantum remains committed to maintaining a strong financial position.

In light of strong operational performance year-to-date, First Quantum has updated its 2024 production guidance. Copper production is now expected to reach between 400,000 and 420,000 tonnes, an increase from the previous range of 370,000 to 420,000 tonnes. The higher estimate reflects the strong output from Kansanshi and other Zambian operations.

Gold production guidance has also been raised, with the company now expecting between 120,000 and 135,000 ounces, up from the previous range of 95,000 to 115,000 ounces. This increase is driven by higher-than-anticipated grades at Kansanshi. Nickel production guidance remains unchanged at 22,000 to 25,000 tonnes.

First Quantum Minerals last traded at $18.37 on the TSX.

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