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First Quantum Profit Beats Estimates on Record Copper Output

First Quantum Minerals Ltd. (FM) posted a fourth-quarter profit that beat analyst estimates as it raised copper output to a record and lowered production costs.

Net income declined 30 percent to $131 million from $187 million, the Vancouver-based company said in a statement. That beat the $121 million average of three analysts surveyed by Bloomberg. Sales rose 16 percent to $897 million while earnings per share fell to 22 cents from 39 cents.

The results “look solid, with EPS slightly above both ours and consensus estimates,” Louise Collinge, a London-based analyst at Investec Plc, said in a note today. “We reiterate our Buy recommendation given First Quantum’s strong growth profile from 2015 onwards.”

Canada’s biggest copper producer, which acquired Inmet Mining Corp. in a C$5 billion ($4.5 billion) hostile takeover last year, included earnings and output from three mines it inherited from that deal. It plans to invest $6.43 billion to produce 320,000 metric tons of copper from the first quarter of 2018 at the Cobre Panama project, part of the Inmet deal.

First Quantum sold its copper at $3.26 a pound in the quarter, 6 percent lowered than a year earlier.

Copper output in the fourth quarter rose 35 percent to 114,791 tons while production cost declined 13 percent to $1.23 a pound, First Quantum said. Nickel production advanced 25 percent to 12,634 tons while the cost of producing a ton of the metal fell 26 percent to $4.51 a pound, it said.

Annual copper production rose 34 percent to 412,281 tons while nickel output gained 31 percent to 386,057 tons.

The company targets 418,000 to 444,000 tons of copper output and 42,000 to 47,000 tons of nickel this year, according to the statement.

The producer, which spent $2.6 billion last year to expand output, is planning capital expenditure of $2.1 billion this year, investing $600 million each in its Sentinel mine in Zambia and the Cobre Panama project. The 300,000-ton Sentinel project will start production in the second half, First Quantum said.

To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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