FQM.L Regulatory News (FQM)

9 Aug 2007 14:30

First Quantum Minerals Ld09 August 2007 NEWS RELEASE 07-08 August 9, 2007 www.first-quantum.com FIRST QUANTUM MINERALS REPORTS OPERATIONAL AND FINANCIAL RESULTS FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 (All figures expressed in US dollars) First Quantum Minerals Ltd. ("First Quantum" or the "Company", TSX Symbol "FM",LSE Symbol "FQM") is pleased to announce its results for the three months andsix months ended June 30, 2007. The complete financial statements andmanagement discussion and analysis are available for review atwww.first-quantum.com and should be read in conjunction with this news release. Key features for the quarter • Copper production increases 2% compared to the second quarter 2006 • Record production quarter at Kansanshi and Guelb Moghrein but significantly down at Bwana/Lonshi • Guelb Moghrein net earnings increase 229% over the first quarter of 2007 • Net sales revenue decrease 7% and net earnings 18% due to Bwana/ Lonshi, lower favourable provisional pricing adjustments and cost pressures • Operating cash flow before working capital decreases 18% on lower net earnings • Contained copper in concentrate inventory increases to 21,000 tonnes principally due to Mufulira smelter constraints • The Company's shares began trading on the London Stock Exchange main market Key features for the half year to date • Copper production increases 6% to over 96,000 tonnes • Net sales increase 8% on higher volumes and prices • Net earnings decrease 2% due to decline in Bwana/Lonshi earnings, partly offset by Guelb Moghrein contribution • Operating cash flow before working capital decreases 7% on lower net earnings Outlook • Frontier commissioning underway but 2007 production estimate cut from 30,000 to 10,000 tonnes on slower start-up • Bwana/Lonshi production estimate cut from 35,000 to 30,000 tonnes on revised end-of-life plan • Estimated total copper production for 2007 revised down to 215,000 tonnes • Stockpiled copper in concentrate expected to be reduced to normal levels by year end after reduction of 15,000 tonnes of contained copper, which is expected to impact positively on earnings • Kolwezi Project preparatory site works commenced; capital expenditure estimating on track to enable major commitments in 2007 and project start-up in 2009 Key Group results Second quarter (Q2) Q2 2007 Q2 2006 Q2 2005 (Restated) (Restated) % of sales % of sales % of sales Production t Cu 49,979 110 49,180 105 28,673 108Sales t Cu 45,366 100 48,171 100 26,535 100 Net sales USDM 337.6 100 362.5 100 86.5 100Operating profit USDM 210.8 62 283.0 78 45.1 52Net profit USDM 123.1 36 149.5 41 29.4 34 Basic EPS USD $1.83 $2.32 $0.48 Year to date (YTD) YTD 2007 YTD 2006 YTD 2005 (Restated) (Restated) % of sales % of sales % of sales Production t Cu 96,382 107 91,266 109 40,701 106Sales t Cu 89,681 100 84,806 100 38,535 100Net sales USDM 593.7 100 549.7 100 124.7 100 Operating profit USDM 356.6 60 405.0 74 62.8 50Net profit USDM 201.4 34 205.3 37 56.3 45 Basic EPS USD $2.99 $3.25 $0.92 Q2 2007 net sales Q2 2007 Q2 2006 Q2 2005(After TC/RC charges) USD M USD M USD M Kansanshi - copper 242.7 251.8 44.5 - gold 4.7 6.0 0.6Bwana/Lonshi - copper 41.2 104.5 38.9 - acid 0.2 0.2 2.5Guelb Moghrein - copper 41.2 - - - gold 7.6 - - Net sales 337.6 362.5 86.5 Provisional pricing adjustment included above 22.6 60.4 (1.1) Copper selling price USD/lb USD/lb USD/lbCurrent period sales 3.28 3.14 1.55Prior period provisional pricing adjustment 0.23 0.57 (0.02)TC/RC and freight parity charges (0.26) (0.35) (0.11) Realized copper price 3.25 3.36 1.42 Group net sales decrease 7% to $337.6 million despite increases in LME copperprice and production Net sales decreased as a result of a decrease in the tonnes of copper sold (down6% to 45,366 tonnes of copper) and a decrease in the realized copper pricerecognized during the quarter. Group production exceeded the comparative periodof 2006; however, the copper in concentrate stockpile increased by approximately4,200 tonnes during the quarter. The increase in this stockpile was due todelays in shipment to purchasers due to logistical constraints. The Kansanshistockpiles contributed to the increase by approximately 3,400 tonnes due toconcentrate production exceeding the tolled cathode output at the Mufulirasmelter due to operational constraints. Net sales were also impacted by the lower realized copper price despite higherLME copper prices and the decrease in the tolling and refining charge (TC RC)rates. This was the result of a significant positive provisional pricingadjustment during the comparative period of 2006. Kansanshi net sales decrease 4% to $247.4 million despite record production forthe quarter Net sales, compared to the same period in 2006, decreased as a result of lowertonnes of copper sold. Kansanshi reached record production levels this quarterwith a combined copper output of 36,253 tonnes. Copper cathode productionincreased 16% to 20,322 tonnes due to a 20% increase in the amount of oreprocessed compared to the same period in 2006. This was offset by a 12%decrease to 15,931 tonnes of copper in concentrate production despite a 20%increase in the amount of sulphide ore processed as the ore processed was of alower grade. Of this production, approximately 3,400 tonnes of copper inconcentrate was stockpiled due to the operational problems at the Mufulirasmelter, which led to a decrease in sales volumes of 3% to 32,661 tonnes. Inaddition, Kansanshi recognized more significant prior period provisional pricingadjustments in the comparative period for the reasons mentioned above. Bwana/Lonshi net sales decrease 60% to $41.4 million due to low ore availabilityfrom Lonshi Similar to the first quarter of 2007, net sales fell as a result of the lowavailability of high grade ore from the Lonshi pit and the exhaustion ofrun-of-mine grade ore in stockpiles at the Bwana treatment plant. The effectsof the heavy rains during the wet season continued into this quarter as miningwas delayed at the Lonshi pit to reconstruct pit walls, rebuild roads anddewater the pit. Together with the consequences of the temporary border closurein early April, this resulted in a decrease in ore production of 43% compared tothe same period in 2006 and a decrease in copper production (down 51% to 6,676tonnes) at the Bwana SX/EW facility. In addition, the Bwana processing facilitycontinued to purchase low grade ore from external vendors to maintainthroughput. Sales volume decreased 53% to 6,369 tonnes, with the balance of thedecrease resulting from a lower realized copper price. Guelb Moghrein net sales of $48.8 million increase 205% over the prior quarter Sales volumes increased 172% to 6,336 tonnes over the first quarter of 2007 asGuelb's shipments to buyers began to ramp up. Production increased 9% to 7,050tonnes of copper in concentrate over the first quarter resulting in an increaseof approximately 700 tonnes to the copper in concentrate stockpile at the end ofthe period. Production increased as a result of having both mills operationalfor the entire quarter as the second mill came online midway through the firstquarter. This resulted in a 13% increase in the tonnes of ore processed. Thebalance of the net sales increase was due to a 190% increase in gold ounces soldand positive provisional pricing adjustments. Provisional pricing adjustment positive following increase in copper priceduring final settlement periods Included in the above net sales numbers was a total of $22.6 million or $0.23/lbfor positive provisional pricing adjustments related to prior period sales asfinal copper settlements in the second quarter were subject to average LMEprices of $3.46/lb for the quarter compared to the March 31, 2007 forwardaverage LME price of $3.13/lb. As at June 30, 2007, there were 29,448 tonnes of contained copper that wereprovisionally priced at an average LME copper price of $3.43/lb. This revenuewill be subject to future adjustments as a result of movements in the copperprice. Of this amount, 11,986 tonnes had the final price determined in July2007 at $3.62/lb, 12,806 tonnes will be determined in August 2007, 4,421 tonnesin September 2007, and 235 tonnes thereafter. Q2 2007 operating profit Q2 2007 Q2 2006 Q2 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of sales Kansanshi 178.7 53 205.7 57 24.3 28Bwana/Lonshi 1.2 0 77.3 21 20.8 24Guelb Moghrein 30.9 9 - - - -Total operating profit 210.8 62 283.0 78 45.1 52Unit costs USD/lb % of sales1 USD/lb % of sales1 USD/lb % of sales1Cash costs (C1) $1.12 34 $0.87 26 $0.60 42Total costs (C3) $1.38 42 $1.07 32 $0.80 56 1 Calculated as the % of current period selling price Group operating profit decreases 26% to $210.8 million due to processing oflower grade ore Operating profit was negatively affected by both an increase in average cashunit cost of production by 29% to $1.12/lb and a decrease in net sales ascompared to the same period in 2006. Profit margins per pound of copper soldaveraged $2.11, which decreased from the prior period (2006: $2.67/lb). Cashunit costs were negatively affected by the processing of lower grade ores atKansanshi and the poor results at Bwana/Lonshi. Kansanshi operating profit decreases 13% to $178.7 million due to higher unitcosts Kansanshi's average cash unit cost of production increased by 1% to $0.95/lb andthe average total unit cost of production increased by 5% to $1.17/lb comparedto the same period in 2006. This increase was due to an increase in ore costsof 100% and an increase in processing unit costs of 27%, which were offset by adecrease in TC RC and freight parity charges of 63%. The original DFS was basedon a $0.80/lb copper price, and revisions in the reserve model for highercurrent prices resulted in a reduction of the grade of ore treated in the twoprocess routes. The decision to process lower grade ore and higher acidconsuming mixed ores through the leach circuit, resulting in the consequent needfor the outsourcing of a significant quantity of acid at a much higher marginalcost, increased ore costs. In addition, ore costs were negatively impacted byincreased waste stripping and the adoption by the Company of a new deferredstripping policy from 1 January 2007. Increases in oil-based consumables,electricity and wage costs were also contributing factors to the increased oreand processing costs. The TC RC and freight parity charges decreased as the TCRC terms for the majority of Kansanshi's concentrate off-take agreements arebased on annual benchmark terms which for 2007 included the removal of priceparticipation. Kansanshi was also able to increase its shipments directly tothe Mufulira smelter so that no concentrate had to be exported during thequarter. Bwana/Lonshi operating profit of $1.2 million as operation begins recovery fromextreme wet season Bwana copper production continued to be significantly affected by the lack ofavailable high grade ore for processing due to the heavy rainy season. Thisresulted in an increase of the average cash unit cost of production by 246% to$2.39/lb and the average total unit cost of production by 182% to $2.77/lb ascompared to the same period in 2006. Mining unit costs were significantlyimpacted by the previous quarter problems resulting in a 391% increase.However, the average cash unit cost decreased from the prior quarter by 4% asthe Lonshi pit recovers from the heavy wet season and ore availability andproduction significantly improved during the month of June. Guelb Moghrein operating profit of $30.9 million due to increased shipments As well as Guelb Moghrein increasing its shipments to buyers, costs continued todecrease as the average cash unit cost of production decreased by 45% to $0.71/lb and the average total unit cost of production decreased by 34% to $1.09/lbcompared to the previous quarter. The largest contributors to the decrease inthe unit costs were the increase in the gold credit of 129% and the decrease inTC RC and freight parity charges of 35%. The gold credit was impacted by theincrease in shipments during the quarter and the TC RC and freight paritycharges decreased due to the first shipments to smelters in China on betterterms. In addition, ore and processing costs decreased by 11% due to theincrease in copper output. Q2 2007 net profit Q2 2007 Q2 2006 Q2 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of sales Operating profit 210.8 62 283.0 78 45.1 52Corporate costs (5.2) (1) (6.4) (2) (0.1) (1)Derivative gains/(losses) 1.1 - (34.0) (9) (0.7) -Gain on sale of investment 0.7 - - - - -Exploration (2.4) (1) (4.9) (1) (1.1) (1)Interest (net) (5.0) (1) (3.7) (1) (3.0) (3)Tax expense (45.0) (13) (64.1) (18) (7.4) (9)Minority interests (31.9) (10) (20.4) (6) (3.4) (4)Net profit 123.1 36 149.5 41 29.4 34Earnings per share - basic $1.83 $2.32 $0.48 - diluted $1.79 $2.27 $0.47Weighted average sharesoutstanding - basic 67.5 64.6 61.4 - diluted 68.9 66.0 62.7 Group net profit decreases 18% to $123.1 million due to the decreased operatingprofit The decrease in net profit as compared to the same period in 2006 was the resultof the decreased profit margins referred to above and the increase in minorityinterests related to the increasing profitability of Guelb Moghrein. Thesenegative variances were offset by the decrease in derivative losses and taxexpense compared to the same period in 2006. Corporate costs reduced significantly due to lower derivative losses Following the settlement of the majority of derivatives in 2006, the Company wasless exposed to derivative losses resulting from the increasing copper price.In the prior comparative period a loss of $34.0 million was recognized forderivative losses compared to a gain of $1.1 million in the current quarter.After allowing for derivative losses, corporate costs remained stable period onperiod. Exploration costs decrease 51% to $2.4 million due to lower exploration activityat Lonshi A significant portion of the comparative quarter's exploration costs wererelated to the Lonshi ore body. Exploration costs associated with the Lonshiore body decreased in this current quarter. Interest expense, net of interest income, increased 35% to $5.0 million due toincreased debt position With the increase in the Company's long-term debt outstanding, interest expenseincreased compared to the same period in 2006. Q2 2007 cash flow Q2 2007 Q2 2006 Q2 2005 (Restated) (Restated) USD M USD M USD MCash flow from operating activities - before working capital 175.2 213.5 43.2 - after working capital 40.5 142.5 1.6Cash flow from financing activities 38.0 32.1 (20.3)Cash flow from investing activities (114.8) (91.8) (3.8)Net cash flow (36.3) 82.8 (22.5)Cash flow per share - before working capital $2.59 $3.31 $0.70 - after working capital $0.60 $2.21 $0.02 Cash inflow from operating activities decreases 72% to $40.5 million due toworking capital movements Operating cash flow before working capital movements continued to be driven bythe Company's operating results with the decrease of 18% from the same period in2006 being equal to the 18% decrease in net profit. Operating cash flow after working capital movements for the quarter was impactedby increases in accounts receivable of approximately $91.0 million, a build upin inventory of approximately $24.0 million and contributions to the long termincentive plan of approximately $14.0 million. The increase in accountsreceivable was due to the timing factors associated with shipments and saleslate in the second quarter of 2007. The decrease in operating cash flow after working capital movements compared tothe comparative period in 2006 was due to a combination of the reduction in netearnings and income tax payments in the current period at a much higher levelthan in the comparative period. Cash inflow from financing activities increases 18% to $38.0 million due tolong-term debt drawdown Financing activities included a long-term debt draw down of $75.0 million on thecorporate revolving credit and term loan facility associated with development ofthe Frontier project. This draw down was higher than the net draw down incurredin the same period in 2006 resulting in the increase in cash inflow. This wasoffset by an increase in dividend payments during the current quarter ascompared to the same period in 2006. Cash outflow from investing activities increases 25% to $114.8 million due tosinking fund deposit Investing activities included $22.5 million of cash being designated asrestricted under the terms of the corporate revolving credit and term loanfacility during the quarter, which was an increase of $17.5 million compared tothe same period in 2006. YTD 2007 net sales YTD 2007 YTD 2006 YTD 2005 (After TC/RC charges) USD M USD M USD M Kansanshi - copper 455.9 372.2 44.5 - gold 9.5 10.5 0.6Bwana/Lonshi - copper 63.3 166.6 77.1 - acid 0.3 0.4 2.5Guelb Moghrein - copper 54.0 - - - gold 10.7 - -Net sales 593.7 549.7 124.7Provisional pricing adjustment included above (9.7) 30.7 -Copper selling price USD/lb USD/lb USD/lbCurrent period sales 3.20 3.04 1.51Prior period provisional pricing adjustment (0.05) 0.16 -TC/RC and freight parity charges (0.25) (0.32) (0.08)Realized copper price 2.90 2.88 1.43 Group net sales rise 8% to $593.7 million on higher copper production and copperprice Sales volume increased (up 6% to 89,681 tonnes of copper) as a result of highercopper production (up 6% to 96,382 tonnes of copper). However, the Companycontinued to stockpile copper in concentrate by an additional 6,400 tonnes dueto operational problems at the Mufulira smelter and restricted concentrateshipments at Guelb Moghrein. This continued stockpiling did not affect salesvolume comparisons due to similar stockpiling in the same period in 2006. Netsales were also influenced by the higher average copper price for the quarter of$3.20/lb compared to $3.04/lb in the same period in 2006 and the lower TC RC andfreight parity charges under annual contract terms. However, provisionalpricing adjustments to prior period sales had a negative impact in the currentperiod due to the final settlement of copper sold in 2006 at prices lower thanthe December 31, 2006 forward price. The increase in copper production was the result of Kansanshi's increased coppercathode output and increased copper in concentrate shipments to the Mufulirasmelter as well as the achievement of commercial production at Guelb Moghrein inOctober 2006. These increases were offset by a decrease in production at Bwana/Lonshi due to problems associated with the availability of high grade ore forprocessing. Kansanshi net sales increase 22% to $465.4 million despite record wet seasonrainfalls Net sales, compared to the same period in 2006, rose as a result of increasedcopper cathode production and higher copper prices. Increased production (up 9%to 71,653 tonnes) was the result of a 30% increase in copper cathode productionoffset by a 13% decrease in copper in concentrate production. The increase incopper cathode production was the result of a 21% increase in ore throughput andthe commissioning of the new SX/EW facility during the third quarter of 2006,while the decrease in copper in concentrate production was due to the processingof lower grade ore. Sales volume increased 20% to 69,980 tonnes, with thebalance of increased sales revenue coming from the higher average pricereceived. Bwana/Lonshi net sales decrease 62% to $63.6 million due to low ore availabilityfrom Lonshi Net sales fell as a result of the low availability of high grade ore from theLonshi pit and the exhaustion of run-of-mine grade ore in stockpiles at theBwana treatment plant. The heavy rains during the wet season resulted in miningdelays at the Lonshi pit as the Lonshi fleet was used to reconstruct pit wallsand rebuild roads that were damaged from the excessive water. Together with theconsequences of the temporary border closure in March/April, this resulted in adecrease in ore production of 67% compared to the same period of 2006 and adecrease in copper production (down 56% to 11,233 tonnes) at the Bwana SX/EWfacility. These problems required the Bwana processing facility to fullyutilize its low grade ore stockpiles and purchase low grade ore from externalvendors to maintain throughput, resulting in the low copper cathode outputduring the quarter. Sales volume decreased 57% to 11,033 tonnes, with thebalance of the reduced revenue coming from the final pricing of copper sold in2006 at prices lower than the December 31, 2006 provisional forward price. Guelb Moghrein net sales of $64.7 million as shipments begin to ramp up Production continued to increase as commissioning continued followingcommencement in October 2006. Both mills were operating as compared to oneoperational mill in 2006 resulting in an increase in ore processed and totalproduction for the period of 13,496 tonnes. Sales volumes were 35% lower thanproduction, however, shipments improved significantly near the end of the perioddue to sales agreements with new customers being finalised. Provisional pricing adjustment negative following decrease in copper priceduring final settlement periods Included in the above net sales numbers was a total of $9.7 million or $0.05/lbfor negative provisional pricing adjustments related to prior period sales asthe majority of provisionally priced copper at December 31, 2006 settled inJanuary and February and were subject to average LME prices of $2.57/lb for eachmonth compared to the December 31, 2006 provisional price used of $2.87/lb. YTD 2007 operating profit YTD 2007 YTD 2006 YTD 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of sales Kansanshi 323.7 55 292.3 53 24.4 20Bwana/Lonshi (8.3) (1) 112.7 21 38.4 31Guelb Moghrein 41.2 6 - - - -Total operating profit 356.6 60 405.0 74 62.8 50Unit costs USD/lb % of sales1 USD/lb % of sales1 USD/lb % of sales1Cash costs (C1) $1.09 38 $0.85 30 $0.60 42Total costs (C3) $1.35 47 $1.05 36 $0.78 55 1 Calculated as the % of current period selling price Group operating profit decreases 12% to $356.6 million due to ore availabilityat Bwana/Lonshi operation Operating profit was negatively affected by the poor results at Bwana/Lonshi.The lack of high grade ore available for processing contributed to an increasein average cash unit cost of production by 28% to $1.09/lb compared to the sameperiod in 2006. This resulted in average profit margins per pound of coppersold of $1.80, which decreased from the prior period (2006: $2.20/lb). Kansanshi operating profit increases 11% to $323.7 million despite theprocessing of lower grade ore Kansanshi's average cash unit cost of production increased by 2% to $0.90/lb andthe average total unit cost of production increased by 6% to $1.10/lb comparedto the same period in 2006. This increase was due to an increase in ore costsof 100% and an increase in processing unit costs of 28%, which were offset by adecrease in TC RC and freight parity charges of 58%. The original DFS was basedon a $0.80/lb copper price, and revisions in the reserve model for highercurrent prices resulted in a reduction of the grade of ore treated in the twoprocess routes. The decision to process lower grade ore and higher acidconsuming mixed ores through the leach circuit, resulting in the consequent needfor the outsourcing of a significant quantity of acid at a much higher marginalcost, increased ore costs. In addition, ore costs were negatively impacted bythe increase in waste stripping and the adoption by the Company of a newdeferred stripping policy from 1 January 2007. Increases in oil-basedconsumables, electricity and wage costs were also contributing factors to theincreased ore and processing costs. The TC RC and freight parity chargesdecreased as the TC RC terms for the majority of Kansanshi's concentrateoff-take agreements are based on annual benchmark terms which for 2007 includedthe removal of price participation. Kansanshi was also able to increase itsshipments directly to the Mufulira smelter so that the amount of concentratethat had to be exported was reduced. Bwana/Lonshi operating loss of $8.3 million due to extreme wet season Bwana copper production was significantly affected by the lack of available highgrade ore for processing due to the heavy rainy season. This resulted in anincrease of the average cash unit cost of production by 221% to $2.44/lb and theaverage total unit cost of production by 189% to $2.83/lb as compared to thesame period in 2006. Mining unit costs were significantly impacted by thecurrent year problems, which resulted in a 316% increase. Guelb Moghrein operating profit of $41.2 million despite delay in shipments Some Guelb Moghrein concentrate shipments were delayed until late in the periodas new sales agreements were negotiated. Production costs continued to improveover the fourth quarter of 2006 as both the average cash unit cost of productiondecreased by 28% to $0.98/lb and the average total unit cost decreased by 38% to$1.36/lb. This improvement continued to be driven by an increase in copperoutput, an increase in the gold credit and improved production processes as theoperation continues towards steady state since achieving commercial productionin October 2006. YTD 2007 net profit YTD 2007 YTD 2006 YTD 2005 (Restated) (Restated) USD M % of sales USD M % of sales USD M % of sales Operating profit 356.6 60 405.0 74 62.8 50Corporate costs (11.4) (2) (11.4) (2) 0.2 -Derivative gaines/(losses) - - (52.6) (10) (2.7) (2)Gain on sale of investment 0.7 - - - 16.1 13Exploration (5.0) (1) (7.0) (1) (2.2) (2)Interest (net) (9.5) (2) (8.9) (2) (3.6) (4)Tax expense (76.7) (13) (89.1) (16) (10.9) (9) Minority interests (53.3) (8) (30.7) (6) (3.4) (3)Net profit 201.4 34 205.3 37 56.3 45Earnings per share - basic $2.99 $3.25 $0.92 - diluted $2.93 $3.18 $0.90Weighted average sharesoutstanding - basic 67.4 63.2 61.4 - diluted 68.7 64.5 62.7 Group net profit decreases 2% to $201.4 million due to lower profit margins The decrease in net profit as compared to the same period in 2006 was the resultof the decreased profit margins referred to above and the increase in minorityinterests related to the increasing profitability of Guelb Moghrein. Thesenegative variances were offset by the decrease in derivative losses and taxexpense compared to the same period in 2006. Corporate costs decrease significantly due to lower derivative losses Following the settlement of the majority of derivatives in 2006, the Company wasless exposed to derivative losses resulting from the increasing copper price.In the prior comparative period, a loss of $52.6 million was recognized forderivative losses compared to nil in the current period. After allowing forderivative losses, corporate costs remained consistent between the comparativeperiods. Exploration costs decrease 29% to $5.0 million due to lower explorationactivities A significant portion of the comparative period's exploration costs were relatedto the Lonshi ore body. Exploration costs associated with the Lonshi ore bodydecreased in this current period. Interest expense, net of interest income, increased 7% to $9.5 million due toincreased debt position With the increase in the Company's long-term debt outstanding, interest expenseincreased compared to the same period in 2006. YTD 2007 cash flow YTD 2007 YTD 2006 YTD 2005 (Restated) (Restated) USD M USD M USD MCash flow from operating activities - before working capital 294.1 317.3 58.5 - after working capital 115.1 226.4 21.5Cash flow from financing activities 12.2 18.9 4.4Cash flow from investing activities (216.8) (137.9) (19.8)Net cash flow (89.5) 107.4 6.1Cash flow per share - before working capital $4.36 $5.02 $0.35 - after working capital $1.71 $3.58 $0.95 Cash inflow from operating activities decreases 49% to $115.1 million due toworking capital movements Operating cash flow before working capital movements continued to be driven bythe Company's operating results with the decrease, compared to the same periodin 2006, resulting primarily from the decreased net profit in the currentperiod. Operating cash flow after working capital movements was impacted by increases inaccounts receivables of $99.0 million, a build up in inventory of $46.0 millionand contributions to the long term incentive plan of $18.0 million, which allcontributed to the decrease in the current period. The increase in accountsreceivable was due to the timing factors associated with shipments and saleslate in the current period. The decrease in operating cash flow after working capital movements compared tothe same period in 2006 was due to income tax payments in the current period ata much higher level than in the comparative period and contributions to the longterm incentive plan. Cash inflow from financing activities decreases 35% to $12.2 million due toincreased dividend payments The decrease in financing cash inflow was due, primarily, to an increase in thedividends paid compared to the same period in 2006. In addition, financingactivities included the proceeds on net long-term debt draw downs of $52.2million on the corporate revolving credit and term loan facility and repaymentsof $2.8 million on the Kansanshi project completion facility. Cash outflow from investing activities increases 57% to $216.8 million followinginvestment in listed companies Investing activities included the purchase of $65.3 million in shares ofpublicly listed companies held for investment purposes and $144.0 million incontinued capital expansion related to the Frontier project and the Kansanshihigh pressure leach project and sulphide circuit upgrade. Q2 2007 balance sheet Q2 2007 Q4 2006 Q4 2005 (Restated) (Restated) USD M USD M USD MCash 160.0 249.5 82.9Property, plant and equipment 1,186.0 1,068.1 471.3Total assets 2,035.4 1,719.7 745.8Long term debt 337.3 294.9 235.0Total liabilities 899.9 799.9 434.7Shareholders' equity 1,135.5 919.8 311.1Net working capital 390.8 312.8 81.2Net debt to net debt plus equity 14% 5% 33% Group assets rise 18% to $2,035.4 million The Company's positive operating cash flow enabled continued expenditure andinvestment in Company assets. Payments were made to increase inventory by $47.1million, increase investments by $65.3 million, and increase property, plant andequipment by $150.2 million. In addition, accounts receivable increased by$100.7 million due to the timing factors associated with shipments and saleslate in the second quarter of 2007. Inventory balances increased due, mainly, to an additional $19.7 million inconsumable stores, an increase of $14.2 million in ore stockpiles and anincrease in finished product inventory of $11.4 million. As at June 30, 2007,the Company had stockpiled approximately 21,500 tonnes of copper in concentrate. The increase in this stockpile was due, primarily to delays in the shipmentto purchasers due to logistical constraints at Guelb Moghrein. The Kansanshistockpiles also contributed to the increase by approximately 1,500 tonnes due toconcentrate production exceeding the tolled cathode output at the Mufulirasmelter due to operational constraints. The Company continued expenditure on capital investment and investments inpublicly traded companies by acquiring $65.3 million of marketable securities atcost during 2007. The Company recognized an additional $79.2 million ofcomprehensive income due to the appreciation in the fair value of theinvestments at June 30, to a carrying value of $189.7 million. Property, plantand equipment balances increased by $117.9 million, net of depreciation, as theCompany continued developing the Frontier project in the DRC and the highpressure leach project and sulphide circuit upgrade at Kansanshi. Group liabilities increase 13% to $899.9 million Long-term debt increased by $42.4 million due to net draw downs during the yearto assist in the funding of the Frontier project and minority interest payableincreased by $52.1 million due to the positive operating results at Kansanshiand Guelb Moghrein. Shareholders' equity increases 23% to $1,135.5 million Positive earnings of $201.4 million were offset by the payment of dividends inthe amount of $36.4 million. In addition, with the adoption of the newaccounting policy on financial instruments, the Company recognized $65.1 millionof accumulated other comprehensive income, which was directly related to theappreciation of the investments in publicly traded securities. Growth activities Frontier Begins Commissioning At Frontier, the metallurgical plant and infrastructure is substantiallycomplete with electrical commissioning underway. Mechanical commissioning willfollow shortly in a structured manner starting at the crushing section.Temporary electrical power will allow operation of individual sections duringcommissioning but not the entire plant. Full plant commissioning will commenceupon completion of the 220Kv power line which is expected in August. It isanticipated that first material will be fed to the plant before the end of thethird quarter. Mining of the Frontier ore body has made significant progress following the endof the record wet season. A shovel has been moved onto the pit floor followingremoval of the overlying saprolites and the hard rock footprint is beingexpanded. The blasting program has been initiated and the first sulphide orehas been stockpiled. Kolwezi development in DRC The early phases of the Kolwezi Project continued to move forward. Goodprogress has been made on development of the flow sheet and detailed designswhich will form the basis of the project capital cost estimate. An updatedengineering study is expected to be completed during the third quarter of 2007. In parallel with the development of design and capital cost estimatepreparation, the Company will be proceeding with some specific infrastructureworks during the course of this year. The following activities are underway -final negotiations for the Zambia/DRC border post; construction of an accessroad to the site; establishment of site communications and construction camp;and negotiations for power requirements with SNEL. Process plant constructionis targeted to begin from the commencement of the dry season in March 2008. Kansanshi high pressure leach ("HPL") facility autoclave #1 commissioned The HPL facility has been commissioned. One autoclave is running well abovedesign. Its metallurgical performance was in accordance with design andexpectation. This was achieved through considerable refurbishment, research andredesign of many of the valves. The second autoclave will be put into servicewhen similar modified valves become available. The HPL throughput will then operate above design but will be constrained by theoxygen plant capacity. At this stage both autoclaves will be operating wellbelow their limits. Investigations have, therefore, commenced to determineways to best exploit the under utilized capacity. Kansanshi sulphide project construction underway As reported previously, the Company is undertaking an expansion to its sulphidecircuit operations at Kansanshi to target a nominal annual throughput of 12million tonnes. The project detailed engineering and design is 90% complete andsite construction works are underway with earthworks largely complete, concreteworks in progress and structural erection having commenced. Many of theequipment items ordered for the project are either received on site or en routeto site. The main long lead project items are the gyratory crusher, the SAG milland the ball mill and the delivery to site of these items coupled withcompletion of concrete works will directly influence the project completion.Based on progress to date, construction completion and commissioning is expectedin the first half of 2008. Other LSE main market listing completed The Company's shares began trading on the London Stock Exchange's main market onMay 18, 2007. Dividend of CDN 24 cents declared Consistent with the Company's dividend policy, the Company declared an interimdividend for the 2007 year of CDN $0.24 per share. Outlook Group copper production estimate for 2007 revised to approximately 215,000tonnes Based on six month production figures the Company expects to produceapproximately 215,000 tonnes of copper in 2007. This expected productionincludes approximately 145,000 tonnes from Kansanshi, approximately 30,000tonnes (revised down from 35,000 tonnes) from Bwana/Lonshi, approximately 30,000tonnes from Guelb Moghrein, and approximately 10,000 tonnes (revised down from30,000 tonnes) from Frontier. During the remainder of the year, the Company anticipates group C1 cash costs tobe in the range of $1.05 to $1.10 per pound of copper. The copper inconcentrate inventories held at Kansanshi (10,578 tonnes) and Guelb Moghrein(10,897 tonnes) are expected to be reduced to normal operating levels (Kansanshiabout 4,000 tonnes and Guelb Moghrein about 2,500 tonnes) by year end. During July, Kansanshi produced approximately 11,900 tonnes of copper,consisting of 7,200 tonnes of copper cathode and 4,700 tonnes of copper inconcentrate. Bwana/Lonshi produced approximately 2,600 tonnes of copper cathodeand Guelb Moghrein produced approximately 2,800 tonnes of copper in concentrate. In total, the Company produced approximately 17,300 tonnes of copper andrecognized sales of approximately 18,600 tonnes of copper in July. Kansanshi focused on HPL and sulphide expansion Kansanshi continues to operate at a steady rate of production of approximately12,000 tonnes of copper metal per month. During the third quarter, attentionwill continue to focus on both the HPL facility, targeting steady stateproduction from autoclave #1 and start up of autoclave #2, and on constructionactivities for the sulphide circuit expansion. In addition, construction of aCIL (carbon-in-leach) gold facility is underway. The CIL facility will be usedin combination with the HPL facility on a campaign basis to treat gravityconcentrates. Currently, the Company has stockpiled gravity concentratescontaining approximately 27,000 ounces of gold. Realizing the value of thiswill result in a significant earnings credit and positively impact C1 costs.Continuing build-up of the mining fleet is expected to result in increasedproduction in the third and fourth quarters. Bwana/Lonshi 2007 copper production estimate revised to approximately 30,000tonnes The supply of ore from the Lonshi operation returned to normal during the monthof June. Mining at Lonshi continues to be challenging due to high stripping,water inflow management and the narrow mining area in the south end of the pit.Conditions should improve as mining moves to the wider north end of the pit. Looking forward, the Lonshi oxide reserve should be exhausted during the secondquarter of 2008. It is anticipated that about 30,000 tonnes of cathode will beproduced at Bwana during 2007 with the operation producing at an average rate ofapproximately 3,000 tonnes of cathode copper per month for the remainder of 2007and then declining in the first part of 2008. The Company continues to assessthe alternative and most beneficial uses for the Bwana processing plant afterthe Lonshi ore is exhausted. Guelb Moghrein producing copper concentrates at design levels During the second quarter, the process plant at Guelb Moghrein operated atdesign throughput capacity attaining steady operations while improving andoptimizing the flotation circuit. The main focus in the third quarter will beon achieving higher mill availability through better engineering, maintenanceand execution. The average production for the remainder of the year is expected to beapproximately 2,700 tonnes of contained copper per month with planned sales inexcess of 4,000 tonnes contained copper per month. It is expected that theconcentrate stockpile at site will reduce to an operating level of about 2,500tonnes of contained copper (approximately one month's production) by year end.Given the current levels of inventory of concentrate held on site at GuelbMoghrein, the Company believes that it is still premature to forecast unit costguidance for the mine, which will be favourably affected by the credit from thegold by-product in the concentrate inventory. The CIL circuit was taken off line at the beginning of January due to CILtailings storage facility (TSF) constraints. The design of a new CIL TSF is inprogress and construction is expected to be completed in the fourth quarter.The CIL feed is being stored in a temporary impoundment for future treatment.Gold production at Guelb Moghrein is expected to be about 65,000 ounces in 2007. A NI 43-101compliant resource is expected before year end and initialinvestigations into expanding the processing facility are underway. Anexploration program to test coincident magnetic and induced polarizationanomalies will begin shortly with three drill rigs. Frontier project 2007 production estimate revised to approximately 10,000 tonnes Commissioning of the plant has progressed, but installation of the new powerline on the Zambian side of the border is delayed. Combined with the delay inthe start of mine stripping until after the last wet season, copper productionis expected to commence only in the fourth quarter of 2007. Estimated copperproduction for 2007 has therefore been reduced from about 30,000 to about 10,000tonnes of contained copper. Kolwezi Tailings Project Updated capital estimates for the revised process plant will be available intime to make major plant commitments in 2007. Preparatory siteworks havecommenced to meet a schedule for start-up in 2009. The plant is expected tostart at 35,000 tonnes of copper per annum and about 5,500 tonnes per annum ofcobalt. It will be designed for immediate tripling of capacity. On Behalf of the Board of Directors 12g3-2b-82-4461of First Quantum Minerals Ltd. Listed in Standard and Poor's"G. Clive Newall"G. Clive Newall For further information visit our web site at www.first-quantum.com North American contact: Geoff Chater 8th Floor, 543 Granville Street, Vancouver, British Columbia, Canada V6C 1X8 Tel: (604) 688-6577 Fax: (604) 688-3818 Toll Free: 1 (888) 688-6577 E-Mail: info@fqml.com United Kingdom contact: Clive Newall, President1st Floor, Mill House Mill Bay Lane Horsham West Sussex RH12 1TQ United Kingdom Tel: +44 140 327 3484 Fax: +44 140 327 3494 E-Mail: clive.newall@fqml.com. or Hogarth Partnership Ltd. Tel: +44 (0) 20 7357 9477 The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. Certain information contained in this news release "forward-looking statements"within the meaning of the Private Securities Litigation Reform Act of 1995 andforward-looking information under applicable Canadian securities legislation.Such forward-looking statements or information, including but not limited tothose with respect to the prices of gold, copper, cobalt and sulphuric acid,estimated future production, estimated costs of future production, the Company'shedging policy and permitting time lines, involve known and unknown risks,uncertainties, and other factors which may cause the actual results, performanceor achievements of the Company to be materially different from any futureresults, performance or achievements expressed or implied by suchforward-looking statements or information. Such factors include, among others,the actual prices of copper, gold, cobalt and sulphuric acid, the factualresults of current exploration, development and mining activities, changes inproject parameters as plans continue to be evaluated, as well as those factorsdisclosed in the Company's documents filed from time to time with the Alberta,British Columbia, and Ontario Securities Commissions, the Autorite des marchesfinanciers in Quebec, the United States Securities and Exchange Commission andthe London Stock Exchange. The preceding discussion and analysis and financialreview should be read in conjunction with management's discussion of criticalaccounting policies, risk factors and comments regarding forward lookingstatements contained in the unaudited consolidated financial statements for theperiod ended June 30, 2007. The discussion and analysis of the Company'sresults of operations should also be read in conjunction with the auditedconsolidated financial statements and related notes. Summary of quarterly and current year to date results The following table sets out a summary of the quarterly results for the Companyfor the last seven quarters and the current year to date: Summary of Quarterly and Current Year to Date Results (unaudited) 2005 2006 2006 2006 2006 2007 2007 2007Statement of Operations and Retained Q4 Q1 Q2 Q3 Q4 Q1 Q2 YTDEarnings(millions, except where indicated)Revenues Current period copper sales (1) $168.2 $165.6 $295.9 $311.5 $243.7 $265.6 $302.5 $582.9 Prior period provisional copper 6.0 16.9 60.4 11.7 (31.7) (17.5) 22.6 (9.7)adjustments (2) Other revenues 2.7 4.7 6.2 5.2 4.4 8.0 12.5 20.5Total revenues 176.9 187.2 362.5 328.4 216.4 256.1 337.6 593.7Cost of sales (restated) 47.8 53.2 65.2 81.7 88.5 96.7 108.1 204.8Net earnings (restated) 56.7 55.7 149.5 133.2 60.9 78.3 123.1 201.4Basic earnings per share (restated) $0.92 $0.90 $2.32 $2.00 $0.93 $1.16 $1.83 $2.99Diluted earnings per share (restated) $0.89 $0.88 $2.27 $1.96 $0.91 $1.14 $1.79 $2.93 Copper selling price Current period copper sales (per lb) $2.02 $2.32 $3.14 $3.37 $2.89 $2.96 $3.28 $3.20 Prior period provisional adjustments 0.07 0.21 0.57 0.11 (0.35) (0.18) 0.23 (0.05)(per lb)Gross copper selling price (per lb) 2.09 2.53 3.71 3.48 2.54 2.78 3.52 3.15 Tolling and refining charges (per (0.08) (0.12) (0.19) (0.19) (0.08) (0.12) (0.16) (0.14)lb) Freight parity charges (per lb) (0.04) (0.15) (0.16) (0.12) (0.14) (0.12) (0.10) (0.11)Realized copper price (per lb) 1.97 2.26 3.36 3.17 2.32 2.54 3.25 2.90Average LME cash copper price (per lb) 1.95 2.24 3.29 3.48 3.21 2.69 3.46 3.07Realized gold price (per oz) $467 $563 $631 $581 $628 $661 $629 $641Average gold price (per oz) $485 $554 $627 $622 $614 $650 $667 $658 Total copper sold (tonnes)(3) 40,203 36,635 46,930 46,227 41,454 44,315 45,366 89,681Total copper produced (tonnes) (3) 42,220 42,086 49,180 45,480 46,531 46,403 49,979 96,382Total gold sold (ounces) (3) 5,766 8,079 9,611 8,864 6,944 12,004 19,422 31,426 Cash Costs (C1) (per lb) (4) $0.71 $0.81 $0.87 $0.90 $1.00 $1.06 $1.12 $1.09Total Costs (C3) (per lb) (4) $0.89 $1.01 $1.07 $1.13 $1.24 $1.30 $1.38 $1.35 Financial PositionWorking capital (restated) $81.2 $106.9 $245.6 $308.0 $312.8 $246.7 $390.8 $390.8Copper in concentrate inventory(tonnes) Kansanshi 3,803 7,157 8,389 7,242 9,046 7,102 10,578 10,578 Guelb Moghrein - - - 2,345 6,068 10,182 10,897 10,897 Total copper in concentrate 3,803 7,157 8,389 9,587 15,114 17,284 21,475 21,475inventory (tonnes)Total assets (restated) $745.8 $839.5 $1,398.1 $1,574.0 $1,719.7 $1,797.1 $2,035.4 $2,035.4Weighted average # shares (000's) 61,639 61,808 64,564 66,615 67,287 67,318 67,531 67,425 Cash Flows fromOperating activitiesBefore working capital movements $100.1 $103.8 $213.5 $176.3 $70.6 $118.9 $175.2 $294.1(restated)After working capital movements 109.2 83.8 142.8 118.2 129.4 74.8 40.5 115.1(restated)Financing activities (restated) 15.1 (13.2) 32.1 (58.6) 53.1 (25.8) 38.0 12.2Investing activities (restated) (104.7) (46.1) (91.8) (60.1) (122.7) (102.0) (114.8) (216.8)Cash Flows from Operating activitiesper shareBefore working capital movements $1.62 $1.68 $3.31 $2.65 $1.05 $1.77 $2.59 $4.36(restated)After working capital movements $1.77 $1.36 $2.21 $1.77 $1.92 $1.11 $0.60 $1.71(restated) Summary of Quarterly and Current Year to Date Results (unaudited) (continued) 2005 2006 2006 2006 2006 2007 2007 2007 Q4 Q1 Q2 Q3 Q4 Q1 Q2 YTDKansanshi Production StatisticsMiningWaste mined (000's tonnes) 5,240 2,588 5,516 6,683 7,123 5,316 6,681 11,997Ore mined (000's tonnes) 1,499 1,382 2,552 3,220 2,380 2,600 3,371 5,971Ore grade (%) 1.9 1.7 1.4 1.4 1.4 1.5 1.6 1.6Processing (3)Sulphide Ore processed (000's tonnes) 580 782 1,140 1,277 1,212 1,171 1,372 2,543Oxide Ore processed (000's tonnes) 1,039 1,044 1,246 1,401 1,080 1,263 1,499 2,762Contained copper (tonnes) 30,934 32,213 36,981 32,882 31,545 38,231 36,766 74,997Sulphide ore grade processed (%) 2.0 1.9 1.6 1.2 0.9 0.8 1.1 1.0Oxide ore grade processed (%) 1.9 1.7 1.5 1.2 1.6 1.8 1.4 1.6Recovery (%) 96 92 94 95 92 93 99 96Copper cathode produced (tonnes) 18,324 15,796 17,501 17,158 17,201 22,823 20,322 43,145Copper cathode tolled produced (tonnes) - - 1,186 3,036 1,805 5,521 12,204 17,725Copper in concentrate produced (tonnes) 11,234 14,572 16,924 11,984 10,015 7,056 3,727 10,783Concentrate grade (%) 28.7 29.3 25.8 26.4 26.9 25.2 26.6 26.0Combined Costs (per lb) (4)Mining $0.06 $0.10 $0.12 $0.17 $0.14 $0.20 $0.24 $0.22Processing 0.38 0.41 0.44 0.50 0.62 0.54 0.59 0.56Site Administration 0.04 0.03 0.04 0.04 0.04 0.03 0.02 0.03TC RCs and freight parity charges 0.21 0.31 0.42 0.31 0.27 0.14 0.16 0.15Gold / Acid credit (0.04) (0.07) (0.08) (0.07) (0.05) (0.06) (0.06) (0.06)Combined Total Cash Costs (C1) $0.65 $0.78 $0.94 $0.95 $1.02 $0.85 $0.95 $0.90Combined Total Costs (C3) $0.76 $0.93 $1.11 $1.17 $1.21 $1.05 $1.17 $1.10Oxide Circuit Costs (per lb) (4)Mining $0.06 $0.10 $0.12 $0.15 $0.11 $0.16 $0.22 $0.19Processing 0.42 0.51 0.52 0.54 0.70 0.56 0.68 0.61Site Administration 0.04 0.03 0.01 0.02 0.04 0.03 0.02 0.03Oxide Circuit Total Cash Costs (C1) $0.52 $0.64 $0.65 $0.71 $0.85 $0.75 $0.92 $0.83Oxide Circuit Total Costs (C3) $0.63 $0.80 $0.83 $0.92 $1.01 $0.92 $1.12 $1.01Sulphide Circuit Costs (per lb) (4)Mining $0.06 $0.09 $0.12 $0.18 $0.18 $0.28 $0.26 $0.27Processing 0.30 0.28 0.35 0.45 0.52 0.45 0.48 0.47Site Administration 0.05 0.04 0.02 0.02 0.04 0.03 0.02 0.03TC RCs and freight parity charges 0.57 0.68 0.89 0.73 0.62 0.42 0.39 0.40Gold / Acid credit (0.11) (0.16) (0.17) (0.16) (0.13) (0.18) (0.14) (0.16)Sulphide Circuit Total Cash Costs (C1) $0.87 $0.93 $1.21 $1.22 $1.23 $1.00 $1.01 $1.01Sulphide Circuit Total Costs (C3) $0.98 $1.08 $1.38 $1.45 $1.47 $1.25 $1.24 $1.24Revenues (3)Copper cathodes $87.6 $84.8 $142.3 $157.9 $111.6 $170.6 $235.8 $406.4Copper in concentrates 31.9 35.6 109.6 65.3 20.1 42.6 6.9 49.5Gold 2.7 4.5 5.6 5.6 2.8 4.8 4.7 9.5Total revenues $122.2 $124.9 $257.5 $228.8 $134.5 $218.0 $247.4 $465.4 Copper cathode sold (tonnes) 18,505 15,556 17,568 17,181 17,360 22,798 20,207 43,005Copper tolled cathode sold (tonnes) - - 1,186 3,036 1,805 5,521 12,204 17,725Copper in concentrate sold (tonnes) 9,260 9,282 14,528 13,131 8,215 9,000 250 9,250Gold sold (ounces) 5,766 8,079 9,611 8,864 4,427 7,764 7,118 14,882 Summary of Quarterly and Current Year to Date Results (unaudited) (continued) 2005 2006 2006 2006 2006 2007 2007 2007 Q4 Q1 Q2 Q3 Q4 Q1 Q2 YTDBwana/Lonshi Production StatisticsMiningWaste mined (000's tonnes) 5,918 3,241 5,607 5,915 4,081 2,105 3,425 5,530Ore mined (000's tonnes) 209 147 183 110 80 16 94 110Ore grade (%) 6.1 8.4 10.7 11.9 10.4 7.5 6.1 6.3ProcessingOxide Ore processed (000's tonnes) 397 335 314 322 294 242 327 569Contained copper (tonnes) 14,262 13,401 15,625 15,011 13,037 5,007 7,653 12,660Oxide ore grade processed (%) 3.6 4.0 5.0 4.7 4.3 2.1 2.3 2.2Recovery (%) 89 87 87 89 96 91 87 89Copper cathode produced (tonnes) 12,662 11,718 13,569 13,302 12,479 4,557 6,676 11,233Acid produced (tonnes) 72,040 68,195 71,421 63,830 73,901 67,227 69,108 136,335Surplus acid (tonnes) 219 937 910 508 8 586 1,483 2,069Oxide Circuit Costs (per lb) (4)Mining $0.49 $0.51 $0.32 $0.32 $0.34 $1.49 $1.57 $1.54Processing 0.34 0.38 0.35 0.38 0.43 1.05 0.81 0.90Site Administration 0.09 0.10 0.10 0.10 0.07 0.20 0.15 0.17Gold / Acid credit (0.08) (0.09) (0.08) (0.06) (0.09) (0.24) (0.14) (0.18)Oxide Circuit Total Cash Costs (C1) $0.84 $0.90 $0.69 $0.74 $0.75 $2.50 $2.39 $2.44Oxide Circuit Total Costs (C3) $1.16 $1.20 $0.98 $1.00 $1.00 $2.92 $2.77 $2.83RevenuesCopper cathodes $54.7 $62.1 $104.5 $99.3 $75.4 $22.1 $41.2 $63.3 Copper cathodes sold (tonnes) 12,438 11,797 13,648 12,954 12,766 4,664 6,369 11,033 Guelb Moghrein Production StatisticsMiningWaste mined (000's tonnes) - 1,156 1,721 1,660 1,719 1,610 1,400 3,010Ore mined (000's tonnes) - 41 144 179 400 462 539 1,001Ore grade (%) - 1.9 1.9 1.8 1.5 1.4 1.4 1.4Processing (3)Sulphide Ore processed (000's tonnes) - - - - 334 410 464 874Contained copper (tonnes) - - - - 6,552 7,791 8,894 16,685Sulphide ore grade processed (%) - - - - 2.0 1.9 1.9 1.9Recovery (%) - - - - 78 83 79 81Copper concentrate produced (tonnes) - - - - 5,031 6,446 7,050 13,496 Sulphide Circuit Costs (per lb) (4)Mining - - - - $0.13 $0.21 $0.17 $0.19Processing - - - - 0.77 0.56 0.52 0.54Site Administration - - - - 0.08 0.07 0.06 0.07TC RCs and freight parity charges - - - - 0.86 0.66 0.43 0.54Gold / Acid credit - - - - (0.15) (0.21) (0.48) (0.36)Sulphide Circuit Total Cash Costs (C1) - - - - $1.69 $1.29 $0.71 $0.98Sulphide Circuit Total Costs (C3) - - - - $2.18 $1.66 $1.09 $1.36Revenues (3)Copper in concentrates - - - - $5.6 $12.8 $41.2 $54.0Gold - - - - 1.6 3.1 7.6 10.7Total revenues - - - - $7.2 $15.9 $48.8 $64.7 Copper concentrates sold (tonnes) - - - - 1,308 2,332 6,336 8,668Gold sold (ounces) - - - - 2,516 4,240 12,304 16,544 (1) Recognized at the settlement price or the LME copper price at the end of the respective period (2) The provisional adjustment reflects the settlement or provisional price adjustment of prior period coppersales, therefore the sum of the periods will not equal the year to date (3) Copper sold or produced does not include tonnes sold or produced prior to achieving commercial production (4) For the definition of cash and total costs, reference should be made to section 10 Consolidated Balance Sheet As at June 30, 2007 and December 31, 2006 (unaudited, expressed in millions of US dollars, except where indicated) June 30, December 31, 2007 2006 $ $ restated - note 2AssetsCurrent assetsCash and cash equivalents 160.0 249.5Restricted cash 22.5 15.0Accounts receivable (note 10) 243.5 142.8Inventory (note 3) 214.4 167.3Current portion of other assets (note 6) 7.0 10.1 647.4 584.7Investments (note 4) 189.7 45.2Property, plant and equipment (note 5) 1,186.0 1,068.1Other assets (note 6) 12.3 21.7 2,035.4 1,719.7LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities 78.8 84.8Current taxes payable 106.7 110.0Current portion of long-term debt (note 7) 55.6 57.7Current portion of other liabilities (note 8) 15.5 19.4 256.6 271.9Long-term debt (note 7) 281.7 237.2Other liabilities (note 8) 43.0 38.3Future income tax liabilities 181.3 167.3 762.6 714.7Minority interests 137.3 85.2 899.9 799.9Shareholders' equityCapital stock 386.6 396.0Retained earnings 683.8 523.8Accumulated other comprehensive income 65.1 - 1,135.5 919.8 2,035.4 1,719.7Commitments (note 14) Approved by the Board of Directors Peter St George Andrew AdamsDirector Director The accompanying notes are an integral part of these consolidated financial statements. For a copy of the notes visit the Company's website at www.first-quantum.com. Consolidated Statements of Earnings and Comprehensive IncomeFor the three months and six months ended June 30, 2007 and 2006(unaudited, expressed in millions of US dollars, except where indicated) Three months ended Six months ended June 30, June 30, June 30, June 30, 2007 2006 2007 2006 $ $ $ $ restated - restated - note 2 note 2 Sales revenues Copper (note 10) 325.1 356.3 573.2 538.8 Gold 12.3 6.0 20.2 10.5 Acid 0.2 0.2 0.3 0.4 337.6 362.5 593.7 549.7Cost of sales (108.1) (65.2) (204.8) (118.4)Depletion and amortization (18.7) (14.3) (32.3) (26.3)Operating profit 210.8 283.0 356.6 405.0Other expenses/income Exploration (2.4) (4.9) (5.0) (7.0) General and administrative (6.5) (3.7) (12.2) (7.5) Interest (7.5) (5.7) (15.1) (11.9) Other expenses/income (note 11) 5.6 (34.7) 7.1 (53.5) (10.8) (49.0) (25.2) (79.9)Earnings before income taxes and minority 200.0 234.0 331.4 325.1interestsIncome taxes (45.0) (64.1) (76.7) (89.1)Minority interests (31.9) (20.4) (53.3) (30.7)Net earnings for the period 123.1 149.5 201.4 205.3 Comprehensive incomeNet earnings for the period 123.1 201.4 Other comprehensive income, net of tax Unrealized gain on available-for-sale 53.3 67.6 securities Realized gain on available-for-sale (0.5) - securities 52.8 67.6Comprehensive income 175.9 269.0 Earnings per common share Basic $1.83 $2.32 $2.99 $3.25 Diluted $1.79 $2.27 $2.93 $3.18 Weighted average shares outstanding(millions) Basic 67.5 64.6 67.4 63.2 Diluted 68.9 66.0 68.7 64.5 Total shares issued and outstanding 67.7 66.0 67.7 66.0(millions) The accompanying notes are an integral part of these consolidated financial statements. For a copy of the notes visit the Company's website at www.first-quantum.com. Consolidated Statements of Changes in Shareholders' EquityFor the six months and year ended June 30, 2007 and December 31, 2006(unaudited, expressed in millions of US dollars, except where indicated) Six months ended Year ended June 30, December 31, 2007 2006 $ $ restated - note 2 Capital StockCommon SharesBalance - beginning of period 399.6 160.7 Stock options exercised 5.0 4.0 Acquisition of Adastra - 234.9Balance - end of period 404.6 399.6Treasury SharesBalance - beginning of period (15.6) - Shares purchased (17.6) (15.6)Balance - end of period (33.2) (15.6)Contributed SurplusBalance - beginning of period 12.0 5.8 Compensation expense for the period 4.5 6.7 Transfers upon exercise of stock options (1.3) (0.5)Balance - end of period 15.2 12.0Total capital stock 386.6 396.0 Retained earningsBalance - beginning of period as previously reported 539.1 144.8Change in accounting policies Deferred stripping (note 2a) (15.3) (0.3) Financial instruments (note 2b) (5.0) -Net earnings for the period 201.4 399.4Dividends (36.4) (20.1)Balance - end of period 683.8 523.8 Accumulated other comprehensive incomeBalance - beginning of period - Change in accounting policy, net of tax (2.5) Available-for-sale securities, net of tax 67.6Balance - end of period 65.1 Consolidated Statements of Cash FlowsFor the three and six months ended June 30, 2007 and 2006(unaudited, expressed in millions of US dollars, except where indicated) Three months ended Six months ended June 30, June 30, June 30, June 30, 2007 2006 2007 2006 $ $ $ $ restated - restated - note 2 note 2Cash flows from operating activitiesNet earnings for the year 123.1 149.5 201.4 205.3Items not affecting cashDepletion and amortization 18.7 14.3 32.3 26.3Minority interests 31.9 20.4 53.3 30.7Unrealized foreign exchange (gain) loss (0.1) 1.8 0.8 2.5Future income tax expense 1.9 22.0 3.6 29.1Stock-based compensation expense 2.2 1.0 4.5 2.0Unrealized derivative instruments (gain) (3.7) 2.8 (5.0) 18.8lossOther 1.2 1.7 3.2 2.6 175.2 213.5 294.1 317.3Change in non-cash operating working capitalIncrease in accounts receivable (91.4) (103.7) (98.6) (124.6)Increase in inventory (23.6) (25.9) (46.3) (40.8)(Decrease) increase in accounts payable and (6.2) 58.9 (16.4) 74.7accrued liabilitiesLong term incentive plan contribution (13.6) - (17.6) - 40.4 142.8 115.2 226.6Cash flows from financing activitiesProceeds from long-term debt 75.0 82.0 75.0 82.0Repayments of long-term debt - (33.1) (25.6) (45.4)Proceeds on issuance of common shares 1.6 1.5 3.8 3.0Dividends paid (36.4) (14.4) (36.4) (14.4)Deferred premium obligation (2.2) (3.9) (4.6) (6.3) 38.0 32.1 12.2 18.9Cash flows from investing activitiesRestricted cash (22.5) (5.0) (7.5) (9.5)Property, plant and equipment (88.6) (86.6) (144.0) (126.6)Net investments (3.7) (0.2) (65.3) (1.8) (114.8) (91.8) (216.8) (137.9)Effect of exchange rate changes on cash 0.1 (0.3) (0.1) (0.2)(Decrease) increase in cash and cash (36.3) 82.8 (89.5) 107.4equivalentsCash and cash equivalents - beginning of 196.3 107.5 249.5 82.9periodCash and cash equivalents - end of period 160.0 190.3 160.0 190.3 The accompanying notes are an integral part of these consolidated financial statements. For a copy of the notes visit the Company's website at www.first-quantum.com. Segmented InformationFor three months ended June 30, 2007 and 2006(unaudited, expressed in millions of US dollars, except where indicated) For the three months ended June 30, 2007, segmented information is presented asfollows: June 30, 2007 Kansanshi Bwana/ Guelb Frontier Corporate Total Lonshi Moghrein $ $ $ $ $ $Segmented revenues 247.4 52.2 48.8 - 4.4 352.8Less inter-segment revenues - (10.8) - - (4.4) (15.2)Revenues 247.4 41.4 48.8 - - 337.6Cost of sales (58.1) (35.8) (14.2) - - (108.1)Depletion and amortization (10.6) (4.4) (3.7) - - (18.7)Operating profit (loss) 178.7 1.2 30.9 - - 210.8Interest on long-term debt (4.5) - (1.5) - (1.5) (7.5)Other 0.7 (0.6) - - (3.4) (3.3)Segmented profit (loss) 174.9 0.6 29.4 - (4.9) 200.0before undernoted itemsIncome taxes (46.2) (0.2) - - 1.4 (45.0)Minority interests (26.2) - (5.7) - - (31.9)Segmented profit (loss) 102.5 0.4 23.7 - (3.5) 123.1Property, plant and 455.0 44.5 102.1 193.9 390.5 1,186.0equipmentTotal assets 745.9 156.3 194.0 197.7 741.5 2,035.4Capital expenditures 41.2 2.1 1.3 43.3 - 87.9 For the three months ended June 30, 2006, segmented information is presented asfollows: June 30, 2006 restated - note 2 Kansanshi Bwana/ Guelb Frontier Corporate Total Lonshi Moghrein $ $ $ $ $ $Segmented revenues 259.0 111.3 - - 3.7 374.0Less inter-segment revenues (1.1) (6.7) - - (3.7) (11.5)Revenues 257.9 104.6 - - - 362.5Cost of sales (44.6) (20.6) - - - (65.2)Depletion and amortization (7.6) (6.7) - - - (14.3)Operating profit (loss) 205.7 77.3 - - - 283.0Interest on long-term debt (5.5) 0.1 - - (0.3) (5.7)Other (4.2) (3.7) - - (35.4) (43.3)Segmented profit before 196.0 73.7 - - (35.7) 234.0undernoted itemsIncome taxes (52.5) (21.4) - - 9.8 (64.1)Minority interests (20.6) - - - 0.2 (20.4)Segmented profit (loss) 122.9 52.3 - - (25.7) 149.5Property, plant and 369.1 61.8 93.5 33.1 284.3 841.8equipmentTotal assets 706.0 145.1 101.0 33.4 412.7 1,398.2Capital expenditures 37.6 2.1 15.8 17.2 283.5 356.2 Segmented Information For six months ended June 30, 2007 and 2006 (unaudited, expressed in millions of US dollars, except where indicated) For the six months ended June 30, 2007, segmented information is presented asfollows: June 30, 2007 Kansanshi Bwana/ Guelb Frontier Corporate Total Lonshi Moghrein $ $ $ $ $ $Segmented revenues 465.4 82.6 64.7 - 7.8 620.5Less inter-segment revenues - (19.0) - - (7.8) (26.8)Revenues 465.4 63.6 64.7 - - 593.7Cost of sales (121.8) (64.6) (18.4) - - (204.8)Depletion and amortization (19.9) (7.3) (5.1) - - (32.3)Operating profit (loss) 323.7 (8.3) 41.2 - - 356.6Interest on long-term debt (8.9) - (2.9) - (3.3) (15.1)Other (1.3) (1.0) (0.1) - (7.7) (10.1)Segmented profit (loss) 313.5 (9.3) 38.2 - (11.0) 331.4before undernoted itemsIncome taxes (82.1) 2.5 - - 2.9 (76.7)Minority interests (45.8) - (7.5) - - (53.3)Segmented profit (loss) 185.6 (6.8) 30.7 - (8.1) 201.4Property, plant and 455.0 44.5 102.1 193.9 390.5 1,186.0equipmentTotal assets 745.9 156.3 194.0 197.7 741.5 2,035.4Capital expenditures 62.9 2.8 2.9 77.6 6.2 152.4 For the six months ended June 30, 2006, segmented information is presented asfollows: June 30, 2006 restated - note 2 Kansanshi Bwana/ Guelb Frontier Corporate Total Lonshi Moghrein $ $ $ $ $ $Segmented revenues 383.9 179.4 - - 6.0 569.3Less inter-segment revenues (1.1) (12.5) - - (6.0) (19.6)Revenues 382.8 166.9 - - - 549.7Cost of sales (76.7) (41.7) - - - (118.4)Depletion and amortization (13.8) (12.5) - - - (26.3)Operating profit (loss) 292.3 112.7 - - - 405.0Interest on long-term debt (11.2) (0.2) - - (0.5) (11.9)Other (12.3) (5.6) - - (50.1) (68.0)Segmented profit before 268.8 106.9 - - (50.6) 325.1undernoted itemsIncome taxes (64.8) (30.1) - - 5.8 (89.1)Minority interests (30.9) - - - 0.2 (30.7)Segmented profit (loss) 173.1 76.8 - - (44.6) 205.3Property, plant and 369.1 61.8 93.5 33.1 284.3 841.8equipmentTotal assets 706.0 145.1 101.0 33.4 412.7 1,398.2Capital expenditures 61.2 3.1 27.5 23.3 283.5 398.6 This information is provided by RNS The company news service from the London Stock Exchange