Maravi

First Quantum profits plunge

First Quantum profits plunge
Written by Nchima Nchito Jr
Thursday, May 14, 2009 3:56:51 PM

FIRST Quantum Minerals (FQM) Limited has recorded a 94 per cent plunge in profits during the first quarter of 2009. And FQM revealed a 16 per cent increment in copper production to 60,838 tonnes for its Kansanshi Copper Mine in Solwezi.

According to Mining Weekly, FQM attributed the drop in profits to a sharp drop in copper prices and a hedging loss.

The company further warned that tight smelter capacity in Zambia could push copper production costs higher if the company was forced to ship its copper concentrate to smelters further afield.

FQM earned US $10.9 million, or 16 US cents a share, in the quarter that ended March 31, 2009. That was a downward dive from a profit of US $182 million, or US $2.7 a share, in the same period last year.

The results were further hit by a US $32.5 million after-tax loss on copper hedges entered early in the quarter to protect the company against a further drop in the metal.

However, rather than continuing to fall, copper rallied 30 percent during the first quarter, resulting in the largely non-cash charge.

And FQM stated that the decrease in copper prices and the continuing local smelter capacity constraints led to a fall in operating profit of Kansanshi mine.

“At the end of the quarter, 13,822 tones of copper in concentrates were stockpiled at site compared to 14,416 tones at December 31, 2008,” the company stated.

FQM added that Kasanshi mine had been adversely hit by the new tax regime, specifically export levies and the increase in the royalty rate that were enacted in the second quarter of 2008.

FQM stated that the increase in copper production at the mine was due to the sulphide circuit expansion which was commissioned during the second quarter of 2008 and continued up to full production in 2008.

“This expansion resulted in a 72 per cent increase in sulphide ore throughput and a 49 per cent increase in copper in concentrate production. This was partially offset by a 13 per cent decline in copper cathode production from the oxide circuit as lower grade ore was processed.” stated FQM.

Labels: FIRST QUANTUM MINING, JOBLOSSES

posted by MrK @ 2:59 PM