First Quantum, the Canada-based copper and gold miner, has reduced its year-end production outlook after operating difficulties at its mines in Africa.
The company revised its annual copper production down from 300,000 tonnes to 280,000 tonnes, and 190,000 ounces of gold, down from 200,000 ounces forecast in March.
In its interim results to June 30, the Toronto and London-listed company said the production revision reflected “lower production to date as well as lower expected ore grades in the short-term”.
Clive Newall, First Quantum’s chief executive, said the company’s longer-term forecast of 470,000 tonnes of copper per year by 2015 remained unchanged.
“It’s just a temporary setback,” he said. ”Our revised forecasts take into account what we’ve missed in the last quarter…everything’s back to normal and the longer term forecast is unchanged.”
Unplanned downtime at the company’s Kansanshi mine in Zambia and Guelb Moghrein mine in Mauritania, as well as mining of lower grade ores, saw copper production fall from 170,464 tonnes to 139,475 tonnes. That was offset by an average realised copper price rising to $3.91 per pound compared with $2.78.
Gold production sustained a more modest fall from 96,113 ounces to 90,233 ounces, compensated by a higher price that boosted gold revenue by 20 per cent to $53.1m in the second quarter compared with the same period last year.
“The operational results are mixed,” said Andy Davidson, an analyst at Numis Securities. “But there’s been good progress on the development projects, particularly the Ravensthorpe nickel project in Australia.”
Ravensthorpe – part of plans to produce 55,000 tonnes of nickel annually in 2015 – is one of a number of copper, gold and nickel projects First Quantum is developing.
Despite lower than expected production the miner benefited from bumper commodity prices – helping to compensate for an exceptional $347m tax payment to the Zambian government – which pushed overall revenue from $1.09bn to $1.36bn.
Pre-tax profits rose from $181.2m to $724.6m, when the company was hit with a $306m impairment charge relating to the closure of its Kolwezi and Frontier mining projects in the Democratic Republic of Congo.
Diluted earnings per share rose to 3.8 cents from a loss of 0.4 cents.
The company, which has been subject to possible takeover rumours, said it would pay an interim dividend of 5.3 cents, up from 3.94 cents previously. First Quantum said it had $1.2bn in cash at the end of June and no net debt.
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