Base Metals

Copper Investing

Year-on-year increases in copper production at Kansanshi and Sentinel in Zambia, and the much smaller Guelb Moghrein mine in Mauritania, pushed First Quantum’s copper production up 4 percent overall in Q3.

Canada’s First Quantum Minerals (TSX:FM) has increased its copper guidance for 2018 in its September quarterly report off the back of increased production at its African copper mines.

Year-on-year increases in copper production at Kansanshi and Sentinel in Zambia, and the much smaller Guelb Moghrein mine in Mauritania, meant that overall, First Quantum posted a 4 percent increase in copper production in Q3, reporting 151,241 tonnes of the red metal produced across six operational mines.

The smaller Las Cruces (Spain), Çayeli (Turkey) and Pyhäsalmi mines (Finland), which collectively represent around 15 percent of copper production this quarter, saw small decreases in production easily offset by the larger Zambian operations.

Looking at year-to-date production numbers, Kansanshi, Sentinel and Çayeli are ahead of 2017 numbers, while Las Cruces, Guelb Moghrein and Pyhäsalmi are behind — though not by much.

The positive numbers from First Quantum’s copper operations have resulted in copper guidance for the year being revised upwards to 595,000 tonnes based on performance so far at Kansanshi.

CEO of First Quantum, Philip Pascall, said: “The success in the quarter provided the opportunity to increase our copper and zinc production guidance, slightly adjust our gold production expectation while maintaining our projected low unit cost of production.”

Pascall added that First Quantum remains on track to deliver significant production growth in the coming years with the development of Cobre Panama in Central America.

Cobre Panama is projected to produce 150,000-plus tonnes of copper in 2019, ramping up to between 270,000-300,000 tonnes in 2020 for nameplate production by 2021 at 330,000-350,000 tonnes of copper per annum, meaning its destined to be by far the largest copper-producing asset in First Quantum’s portfolio.

Cobre Panama, which is the subject of scrutiny in Panama over the the law used to grant its original mineral concession being deemed unconstitutional, is 80 percent complete, according to First Quantum.

While the company is yet to release any updates on any storm clouds over Cobre Panama, in September it said it was confident it could proceed developing the project as the ruling from the Supreme Court applied to the laws used to grant the concession, and not the concession itself. In its quarterly report, the company reiterated that the Government of Panama had issued a press release confirming support for Cobre Panama following the ruling.

For political news around its Zambian operations, the company said it was assessing the potential impact of changes to the Zambian mining tax regime scheduled to take effect in January next year.

In other commodities, zinc production was up a huge 67 percent — though volumes are much smaller than copper, with 7,348 tonnes produced in Q3 — guidance for the year was upped to 25,000 tonnes thanks to Pyhäsalmi’s performance, which accounts for the lion’s share of First Quantum’s zinc output.

Gold guidance on the other hand was revised down to 180,000 ounces for the year “to reflect grade related reductions for both Kansanshi and Guelb Moghrein,” said the company.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.


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