Q3 2023 First Quantum Minerals Ltd Earnings Call

Thank you for standing by this is the conference operator, and welcome to the first quantum Minerals Ltd third quarter 2023 results conference call.

As a reminder, all participants are in listen only mode and the conference is being recorded after the presentation. There will be an opportunity to ask question to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing Star then zero.

I would now like to turn the conference over to but needed to.

Please go ahead.

With opening remarks, followed by Rudy Battery horse, our Chief operating officer.

Who will provide an overview of operations.

Cool.

Well I think Williams, our Chief Financial Officer will review, our financial default interest remote rafting after which we'll open up the lines to take questions.

And with that I will now turn the call over to Tristan.

And thank you everybody for joining us on our conference call today to.

To discuss our third quarter results.

I came to you today from our same store on enterprise operations here in Zambia.

I'm pleased that production at our three largest operations continued to improve in the third quarter.

Rudi will provide more detail in his review of operations.

As well, we saw a modest easing with some of our input costs.

As a result of our focus on productivity and cost out third quarter EBITDA of 969 million U S dollars was a meaningful improvement from the second quarter. Despite the continued weakness in the coal price.

Before continuing with details on our third quarter results. It is pleasing to share with you that the concession contract surrounding the Cobre, Panama mine was enacted into law at the end of last week, which marked the final step in revising the labeled legal framework for the mine.

The new law received strong support at the National Assembly with $47.

Five of the new agreements out of the title of the 55 dogs that were registered.

I would like to thank the team in Panama for their hard work and collaboration with the government of Panama to ensure the successful passage of the contracting symbol.

With the law published in the official Gazette first quantum will soon be making payments to cover taxes and royalties for 2022 and the year to date in 2023, which Ron will provide more details on <unk> financial review.

With the legal certainty of cover Panama now established we look forward to continuing our contribution to the economic benefits of the country through employment supplying from local businesses and all our other programs in the country.

Nevertheless, we have seen the protests from various bee groups across the country, which acts as a reminder, that we as a mining company and the industry as a whole.

Need to do more hard work in communicating the many benefits that our mines can bring to the ceramic communities and host countries.

And with that I would like to call what the hand, the call over to Rohit.

Okay.

It was pleasing to see improvements continued from the second quarter with each of the three main operations, having production increases in the third quarter.

Total copper production was nearly 222000 tons during the period.

Up over 34000 tons quarter over quarter.

Grades and throughput improved in each of Cobre, Panama concerned, she and saying Hello.

Copper cone cash cost in the third quarter improved considerably at all three of the operations.

Group wide C. One cost averaged $1 42 per pound during the third quarter.

56 cents per pound improvement over the second quarter, which was primarily driven by the higher production volumes.

Although there was an easing in some input costs, which Ron will speak to in his remarks.

At Cobre, Panama, the operation delivered a record copper production of 113000 tonnes.

25% higher than the second quarter as grade improved and low throughput was higher with the continued successful ramp up of the CB 100 expansion project.

Throughput was over 24 million tons during the quarter and we remain on track to exit 2023 at a consistent and reliable annualized rate of 100 million tonnes through the plant.

Yeah.

There is currently a drop in Panama, which is impacting water levels in the Panama Canal.

And as late to some leasehold restrictions.

At this time, the Cobre, Panama operations are not impacted by the canal with most of the mine supplies sourced from South America and delivered through our own port.

With regards to the concentrate shipments the early impact on Cobre Panama.

Likely longer voyage times for concentrate shipments to customers based in Asia that have not chosen alternative shipping routes.

Moving over to Zambia.

Atkins century copper production of approximately 40000 tons was nearly 5000 tonnes higher than in the second quarter.

Production during the third quarter continued to focus on mining cutbacks at elevated benches with higher grades.

And this is expected to continue into the fourth quarter.

I think to now guide to continued to improve in the third quarter, allowing for copper production to improve by nearly 10000 tons to.

The 64000 tonnes in Q3.

The improved copper production was driven predominantly by higher grades while throughput was challenged by hot all found in the lower table 12 stage, one and two but.

This order all impacting mining crushing and milling rates during the quarter and is expected to continue into the fourth quarter.

As such along with the challenges experienced earlier in the year at St.

2023 production guidance has been lowered for the operation.

Kristian will address in his closing remarks.

Thank you and I'll now hand, the call over to Ryan to review the financials.

Thank you Rudy.

The copper price was broadly flat quarter on quarter, averaging $3 79 per ton in Q3, 1% lower than in Q2.

However, copper prices fell towards the end of the quarter to just over $360 per pound as expectations of higher for longer interest rates with a knock on impact on industrial activity and rising geopolitical tensions have led to a risk off market sentiment.

Despite this copper demand, particularly in China remains robust on the back of continued electric grid and electric vehicle spending are reminded that the lifeblood of the energy transition will flow through couple of things.

As you read you described production was very strong through the quarter and resulted in a 23% increase in copper sales to 219000 tonnes, which is a record for first quantum.

This meant that despite the flat copper price revenues increased by 23% to $2 billion.

As Rudi also noted is a drop in Panama that has led to longer voyage time through the canal for some of our shipments.

Based on the structure of these contracts however, the company's revenue recognition and timing of cash receipt from these shipments is not impacted by these delays.

The record quarterly copper production also benefited unit costs, helping drive copper cone cash costs down 28% to $1 42 per pound.

Cash costs also benefited from higher byproduct credits as well as lower consumable costs as fuel cell phone and explosive prices all reduced compared to the previous quarter.

It is worth noting that Brent crude oil prices increased from $75 per barrel at the beginning of the quarter to $92 per barrel at the end.

By OPEC cuts and tension in the middle East.

This has the potential to impact cost towards the end of the year once existing field inventories are worked through.

Labor costs, it was pleasing to see the <unk>, Panama collective bargaining contract successfully signed in September.

This agreement will be enforced for the next four years, providing more certainty in our labor spend.

More broadly on cost.

We've narrowed our <unk> guidance for the year to $1 75 to $1 85 per pound.

That's my two effects a week of copper production at central and H, one offset by the strong production in Q3 across the other sites and you expected strong into 2023.

Slide 17 highlights the third quarter, EBITDA increased 71% to $969 million the highest in the last year.

The significant increase was as a result of the record quarterly sales and lower costs.

Net earnings attributable to shareholders increased to $325 million and adjusted earnings per share increased to 52 cents.

The effective tax rate has averaged 17% year to date with full year guidance between 40 and 45%.

The effective tax rate in the final quarter will be higher as income tax expense for 2023 as adjusted under the refresh concession contract of Cobre Panama.

As noted in our MD&A. It is intended that the charge relating to the taxes and royalties up to the year in 2022 it.

It will be excluded from 2023 adjusted earnings.

Our full year guidance rate of 40% to 45% reflect 2023 tax and royalty payments Arnie.

I would also note that the anticipated top up under the new structure in Panama is treated as a royalty and not a tax in the calculation of effective tax rates.

Yeah.

Moving on to our balance sheet.

Net debt reduced slightly by $13 million to $5 six $4 billion this quarter.

Despite strong EBITDA growth net debt was impacted by unfavorable changes in working capital. The successful completion of the La Grande acquisition, and the resulting $105 million payment to Rio Tinto and an increase in capex spend of $49 million.

Increase in Capex reflects the steady progress in the <unk> expansion project at <unk>, which Tristan will describe later.

Lastly on capital allocation.

Current copper prices are well below the level needed to incentivize greenfield developments, particularly when one considers the high capex and opex inflation in recent years.

For context in real terms this week's opening costs the price of $3.54 per pound is equivalent or equivalent to a price of around $2 90 per pound in 2018.

Our capital allocation focus therefore remains a strengthening of the balance sheet and less capital intensive brownfield projects like at three rather than allocating any material capital to a portfolio of greenfield projects.

Additionally, with C. P 100 commissioned in Q1 and enterprise not producing nickel concentrate the brownfield expenditure on two of our three key projects is behind us with the production growth to come at Cobre, Panama and enterprise ramp up.

Current liquidity remains strong at $2 3 billion.

Supported by the issuance of the $1 3 billion eight year bonds in the previous quarter.

This positions us well to cover the cobre, Panama taxes, and royalties, which are payable soon as a result of finalizing the legal framework in Panama.

Total payments for the year will be comprised of taxes and royalties wrapped the year end 2022 of $395 million.

Of which $45 million has already paid approximately another $215 million will be payable to cut soon to cover the first three quarters of 2023, resulting in a near term payment of $565 million.

For 2023 as a whole based on current copper prices, we expect a total payment of $375 million for the year that includes the top up payments.

This will result in a total tax and royalties payable for 2022 and 2023 in Panama of $717 million.

And that brings the finance section to an end.

Now I'll hand, the call back to Justin.

Okay.

Thanks for that Brian.

As Rudy noted the first quarter saw production improvements. However, regrettably, we are lowering our copper production forecast for 2023 to 745 to 775000 talents mainly due to seasonal.

At Cobre, Panama. The C. P 100 expansion project continues to ramp up very well there.

Operation continues to achieve periods of design capacity and remains on track to exit the year as a consistent rate of 100 million tons per annum as.

As such we are talking to our copper production guidance for Cobre, Panama. So between 365 to 375000 tons of copper.

Construction of the moly plant continues to progress well and commercially production of that.

Expected in 2024.

At Constancia mining will continue to focus on the upper benches of minus 15, and minus 17, and we expect a strong grades to continue in the fourth quarter.

Constancia continues to perform within our expectations, albeit at the bottom end of the range as such our copper production guidance range is being toxin to between 130 to 140000 tonnes Gulf.

Gold production has been lowered to between 65 to 70000 ounces to reflect gold grades encountered to date.

Current levels of copper and gold production will remain at or near these levels until the S. Three expansion project comes online.

The history expansion continues to progress well we.

Have started receiving long lead items during this past quarter, including the first ultra class trucks and initial component of the mills and primary crusher.

Earth and construction works continue.

And I expect it to accelerate into next year.

We remain on schedule for first production from yesterday or expansion in the second half of 2025.

At Sentinel given the challenges early in the year and the hotter than expected oil counted in the third quarter, we have lowered copper production guidance to between 220 to 230000 tons.

However work is being done to bring in softer ore mining starting in stage, three which should start to meaningfully contribute to all fleet in the second quarter of next year.

As well over the last several months a lot of work is being conducted to better prepare them on for the upcoming rainy season, including mining down the saddle zones between stage, one and two and adding additional pumping capacity.

We continue to review the impact of hard rule on the coming year mine plan, but at this stage, we expect to be able to blend more effectively with a wet season infrastructure being installed.

We will address guidance in January but at this stage, we are holding to our previous outlook for 2024 and 2025.

Yeah.

At enterprise another important milestone was achieved during the quarter with first cycle of the nickel concentrate.

The focus remains on stripping of voice and the final ramp up of the process plant to full production capacity, which is expected next year, we encountered a challenging metallurgical characteristics of the shallow water due to weathering leading to a reduction in that 2023 guidance to between three to 5000 tons of too technical.

Uh huh.

However, a good understanding of the process the impact of this material has been developed and we expect client recovery and concentrate quality to continuously improve as we gain greater exposure to less weathered or deeper in the mine.

Yes.

Lastly, it was with great sadness that we announced the passing about chairman Philip pass school during the quarter.

I'm in Zambia, right now we feel it was customers Lee unenforced work and contribution to the country with the Eagles, Zambia Award Buck President in Chile more yesterday.

So it was a great mentor and inspirational leader in this loss is being felt deeply across the company and the communities that first quantum operates within.

The outreach from the investment in mining community has been tremendous and humbling I would like to sincerely. Thank everybody for their condolences and the sharing of memories wholesaler.

Built on the legacy of the standards of the company, we remain committed to the trajectory of first quantum and we believe we have both the projects and the capability and people to deliver that into the future in an environmentally and socially responsible manner and in a financially disciplined approach cognizant of the.

Leading to continued to improve our balance sheet.

With that I will be happy to take questions now thank you.

Okay.

We will now begin the analyst question and answer session analysts that are permitted to ask one question and one follow up and you're welcome to rejoin the queue if they have money.

To join the question queue you May press.

Then one on your telephone keypad, you will hear a tone acknowledging your question Youre using a speakerphone. Please pick up your handset before pressing any key inventory. Your question. Please press Star then two.

The first question comes from Jackie <unk> with BMO capital markets. Please go ahead.

Thank you very much and.

What you said at the end of your remarks interest in them.

That's unlike condolences to you and the team.

On the testing.

So it's a huge lots to first quantum of course in the whole industry.

My question is on your guidance revisions bolt on those volumes and the card.

It seems like Q3 was a strong quarter across your operations and.

My understanding based on prior comments from from yourselves was that Q4 is expected to be fairly strong as well.

I was wondering if that's changed your expectations for Q4, it's changed or if you just.

Reflecting some more of a cautious outlook.

Just given what we know from from the first half.

For the year.

Yeah.

Yes, Thanks, Jackie and I will ask Ron to provide some more detail, but yeah, we have tightened the guidance and as you say that still tough, particularly at cobre, Panama very strong performance in the quarter and we were very very pleased with the progression with AP 100 expansion.

In terms of the impact that it's having.

What we do see the grades were higher safety 100 during the quarter and they will come off a little bit in the fourth quarter just in the normal course of the mine plan for the year.

Thank you for standing by. This is the conference operator.

Operator: Welcome to the first Quantum Minerals limited third quarter 2023 results conference calls. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question, you may press star then one on your telephone keypad. She do need assistance during the conference calls. You may signal an operator by pressing star then zero.

And so it's not really conservatism, there, but just focus.

On the existing mine plan at Sentinel look we're in a good position to face the wedding season.

And.

Perhaps I can just ask Rudy to comment a little bit more on that where.

Where do you would you just cover that in terms of outlook for the remaining quarter of Sentinel and types also at convention and then Ron If you could just comment on the cash.

Bonita Till: I would now like to turn the conference over to Bonita Till. Please go ahead.

Cash cost outlook. Thank you.

Yes, thanks, Jason.

Hi, Jackie Thanks for that question.

Okay St Centennial.

Yes.

Appearance.

A difficult first half of 2020 theaters out of the impact from the rainy season that we discussed on the last call.

Well, we'd like.

A lot of infrastructure.

Our investment on the ordering capability and capacity at that Sentinel effect.

The tripling its.

Tristan Pascall: With opening remarks followed by Rudi Badenhorst, our chief operating officer, who will provide an overview of our operations. Ryan MacWilliam, our chief financial officer, will review our financial results and for some more wrapped things up after which we will open up the line to take questions.

Input to the ordering capacity to over 10000 cubic meters per hour.

We finalized the.

With final environmental driven.

Bond.

Construction activity getting getting this latter part of Q3.

Tristan Pascall: And with that, I will now turn the call over to Tristan. And thank everybody for joining us in a conference call today to discuss our third quarter results. I'm speaking to you today from our Sentinel Enterprise Operations here in Zambia. I'm pleased that production at our three largest operations continued to improve in the third quarter, which Rudi will provide more detail in his review of operations as well. We saw a modest easing with some of our input costs.

Also finalized pumping water back to the blogs and using it primarily in the plant rather than utilizing a discharging to the environment under the regulatory limits so effectively madden.

That we do not have to hold back and wait for water to be neutralized that same St. Enel before we can discharge because all of that is kind of going into the plant.

Secondly.

The central as well.

The <unk>.

Settle that.

<unk> stage, one and stage two that in the previous wave season resulted in a dampening of water is being completely lined up.

Tristan Pascall: As a result of our focus on productivity and costs, our third quarter EBITDA of $969 million US dollars was a meaningful improvement from the second quarter despite the continued weakness in the copper price. Before continuing with details on our third quarter results, it is pleasing to share with you that the concession contracts surrounding the copper pen on my mind was enacted into law at the end of last week, which marked the final step in revising the legal framework for the mine.

And you know as.

As far as the hard always concerned yes, certainly we experienced some very hot boring the Guatemala stage, one and stage two but during the quarter in mining and in the area of the old block called the mindful.

That's odd kyanite.

And although that will remain with us during the course of the fourth quarter in both of stage, one and two we already noticing drilling and blasting punching through the domain into the one below which house thing likely.

Tristan Pascall: The new law receives strong support of the National Assembly with 47 votes in favour of the new agreement out of a total of the 55 votes that were registered. I would like to thank the team in Panama for their hard work and collaboration with the government of Panama to ensure the successful passage of the contract into law. With the law published in the official Gazette, First Quantum will soon be making payments to cover taxes and royalties for 2022 and the year today in 2023, which Ryan will provide more details on in his financial review.

Softer softer ores.

So we.

Yeah.

And the way we are currently situated in.

Stage, one but.

In the hard stuff and won't migrate out of that towards Q1 Q2 of next year.

We will be with us for the remainder of this year.

And then Jackie maybe if I just jumping on costs. So we still expect to finish within our initial cost guidance. All we've done is we've moved up our bottom and from $1 65 to $1 75, and that's largely a function of what where you described the week production from Sentinel for most of this year, which is somewhat offset by slightly better cost.

Tristan Pascall: With the legal certainty of co-op Panama now established, we look forward to continuing our contribution to the economic benefits of the country through employment, supply from local businesses and all our other programs in the country. Nevertheless, we have seen the protests from various groups across the country, which acts as a reminder that we as a mining company and the industry as a whole need to do more hard work in communicating the many benefits that our mind can bring to the surrounding communities and our host countries.

Inputs, most notably diesel and explosives and what we assumed at the beginning of this year. So we now have a new cost guidance.

$1 75 to $1 85 per pound of copper.

That's super helpful. Thanks, Brian I'm really interested in and if I could ask a follow up.

Rudi Badenhorst: And with that, I would like to call, like to hand the call over to Rue. It was leading to see improvements continue from the second quarter, with each of the three main operations, I think production increases in a third quarter. Total copper production was nearly 222,000 tons during the period. Up over 34,000 tons, quarter over quarter, as grades and throughput improves that each of copper Panama can sent you and Sentinel. Copper C1 cash cross in the third quarter improved considerably at all three of the operations.

Maybe you Ryan.

A number of cash outflow coming up with a with the tax settlement as part of the agreement with the government of Panama and the <unk> acquisition completion and the work you're doing an S. Three and other projects can you can you talk a little bit about your balance sheet, and where you see them.

Where do you see your balance sheets are going over the next couple of quarters, where those cash outflows and so how you expect to fund those through just.

Cash on hand or any other.

Any other way of putting them. Thank you.

Sure Jackie go ahead.

Sure.

Rudi Badenhorst: Group wide C1 costs average $1.42 per pound during the third quarter, a 56 cents per pound improvement over the second quarter, which was primarily driven by the higher production volumes, although there was an easing in some input costs, which I will speak to any remarks. At copper Panama, the operation delivered a record copper production of 113 tons. 25% higher than the second quarter, as grades improved and more throughput was higher with the continued successful ramp up of the CP100 expansion project.

We saw leverage metrics improved through the quarter. We were at two two times net debt to EBITDA at the end of Q2 because of the strong EBITDA performance. We're now.

And just about two times net debt to EBITDA, so pleasing to see that per case or the stronger over the back of strong EBITDA and that was also in a quarter, where we made the $105 million payment to Rio Tinto for Laguardia. So that payment is now behind us in terms of what is ahead as you know we've got the payment.

Associated with the settlement and agreement a new legal framework in Panama that will be paid shortly and we're in a fortunate position, where we have $2 $3 billion of liquidity.

Our strong liquidity on the balance sheet to address that and then going into next year it'll be as before continue to remain disciplined about capital certainly not looking at spending material capital on greenfield projects and being disciplined around the capital that goes into our brownfield projects, which are being advanced.

Rudi Badenhorst: Troupled was over 24 million tons during the quarter, and we remain on track to exit 2023 at a consistent and reliable annualized rate of 100 million tons through the plant. There is currently a drought in Panama, which is impacting water levels in the Panama Canal, and has led to some visual restrictions. At this time, the copper Panama operations are not impacted by the canal with most of the mine supplies sourced from South America and delivered through our own port.

That's super helpful and congratulations again on a on a really great quarter. Thank you.

Okay.

The next question comes from RSV, All CDR at Scotia Bank. Please go ahead.

Hi, good morning, and my condolences as well no doubt Philip lead Gen to the mining industry.

Just following up on Jackie's questions.

Rudi Badenhorst: With regards to concentrated shipments, the only impact on copper Panama are slightly longer voyage times for concentrated shipments to customers based in Asia that have not chosen alternative shipping routes. Moving over to Zambia, at Kensanchi, copper production of approximately 40,000 tons was nearly 5,000 tons higher than in the second quarter. Production during the third quarter continued to focus on mining cutbacks at elevated benches with higher grades, and this is expected to continue into the fourth quarter.

If I'm hearing you correctly I think you said that you expect the harder ore at shutting all to spill over into the first half of 'twenty four.

That's already been factored into the existing guidance or setting all for next year or $2 45 to <unk>.

265000 tons or is the are you finding the ore is harder than what's assumed in the current mine plan and that guidance.

Sure.

I'd say I'm here at Central now and just looking at what the harder material was and look at it Kevin chemically.

Rudi Badenhorst: At Centeno, grades continued to improve in the third quarter, allowing for copper production to improve by nearly 10,000 tons to 64,000 tons in Q3. The improved copper production was driven predominantly by higher grades while throughput was challenged by hard ore found in the lower levels of stage 1 and 2 bits. This harder ore impacting mining, crushing and milling rates during the quarter, and is expected to continue into the fourth quarter.

Altered rather than you know anything you can see delineated or otherwise so it's an area that we really saw as we approach that in terms of jewelry performance.

Rudi Badenhorst: As such, along with a challenge of experience earlier in the year at Sentinel, 2023 production guidance has been lowered for the operation, which Tristan will address in his closing remarks.

The.

Great control drilling and then the production drilling.

So it really didn't affect us in Q3, we are guiding to get through it very much.

For example band that runs through and as I said, that's sort of chemical alteration, so very hard to pick up other than.

Strategical parameter.

But we believe that it is present in the pit and in that horizontal band weed through some of it.

In areas in the bottom of stage, one, but we do see a continued and as Rudy said, we will see that continue to Q4. It was part of the mine plan before.

Ryan MacWilliam: Thank you and I will now hand the call over to Ryan to review the financials. Thank you, Rudi. The copper price was broadly flat quarter on quarter, averaging $3.79 per pound and Q3, 1% lowered and in Q2.

But we did see that during the course of the east did we were going to be costs different areas of the pit that would have provided flexibility the wet weather in Q1, 10th of that flexibility and we will very much more sequential as the year turned out that as we mined stage.

Ryan MacWilliam: However, copper prices fell towards the end of the quarter to just over $360 per pound as expectations of higher for longer interest rates with a knock on impact on industrial activity and rising geopolitical tensions have led to a risk of market sentiment. Despite this, copper demand particularly in China remains robust on the back of continued electric grid and electric vehicle spending, a reminder that the lifeblood of energy transition will flow through copper veins.

And we went to stage, one and I think next year with the additional water infrastructure in place you will see much more of a blended mixed mine plan across the year and that's why we say.

We are where we're at in terms of guidance for next year.

We'll address that in going through the budgets right now at the moment to address that in January but at this stage no reason to preempt that.

Okay.

Ryan MacWilliam: As Rudi described, production was very strong through the quarter and resulted in a 23% increase in copper sales to 2,000 and 19,000 tons, which is a record for First Quantum. This meant that despite the flat copper price, revenues increased by 23% to $2 billion. As Rudi also noted, there's a draft in Panama that has led to longer voice times through the canal for some of our shipments. Based on the structure of these contracts however, the company's revenue recognition and timing of cash receipts on these shipments is not impacted by these delays.

Thank you for that and just as a follow up question from Ryan I didn't quite catch some of the numbers that you disclosed with respect to the upcoming payments here in Q4 can you just give us that total again.

For the total payments I think in Panama relating to both 2022 and and I guess.

What would that be the first three quarters of 'twenty three.

Sure.

So we'll be paying $395 million, which is for all payments up until the end of 2022.

In addition to that we will be paying a large portion of our 2023 taxes and royalties effectively a catch up for this year and that combined number is at $565 million. We do expect across 22, and 23 to pay a total tax and royalties of $770 million, but obviously some of that those payments will occur in 2002.

Ryan MacWilliam: The record quarterly copper production also benefited unit costs, hoping to drive copper C1 cash costs down 28% to $1.42 per pound. Cash costs also benefited from higher byproduct credits as well as lower consumable costs, as fuel, sulphur and explosive prices all reduced compared to the previous quarter. This worth noting that Brent crude oil prices increased from $75 per barrel at the beginning of the quarter to $92 per barrel at the end, driven by OPEC, cuts and pension in the Middle East.

94.

Okay. So that 770 includes a Q4 number in it.

Correct.

Okay, alright, thanks, so much.

The next question comes from Greg Barnes with TD Securities. Please go ahead.

Ryan MacWilliam: This is a potential to impact costs towards the end of the year once existing fuel infantry that work through. On labor costs, it was pleasing to see the co-breaking Panama collective bargaining contract successfully signed in September. This agreement will be enforced for the next four years, providing more certainty in our labor spend. More broadly on costs, we have narrowed our C1 guidance for the year to $1.75 to $1.85 per pound. This motor reflects a week of copper production at Central and H1, or set by the strong production in Q3 across the other sides and the expected strong end to 2023.

Yes, Thank you Tristan with loss 406 now in place.

There are a number of Supreme Court rulings and government actions that relates to law nine.

One of them being the law nine was unconstitutional due all of all the way now and they become really non issues for you.

Okay.

Yes, hi, Greg Thanks.

So certainly we are very pleased to have big.

The contract cost into more.

<unk>.

The process has alleviated a lot of the concern around that.

It was it was it received really good support through the National Assembly.

Ryan MacWilliam: Flight 17 highlights that third quarter EBITDA increased 71% to $969 million for highest in the last year. The significant increase was as a result of the record quarterly sales and lower costs. Net earnings attributable to shareholders increased to $325 million and adjusted earnings per share increased to $0.52. The effective tax rate has averaged 17% here to date, with foliar guidance between 40 and 45%. The effective tax rate in the final quarter will be higher as income tax expense for 2023 is adjusted under the refreshed concession contract declared Panama.

47 <unk> tablet.

Kevin.

55 that would cost and I guess that level of support speaks to the authority.

Of the passing of the contract.

The VA.

<unk> motion, Panama, litigious environment and so on.

On constant ongoing Hong Kong Unconstitutionality proceedings, we not a party to those proceedings.

So we don't have to take out the specific nature.

But it is common practice associated.

In Panama and the other monetary restrictions with challenges like this to be filed.

Ryan MacWilliam: As noted in IMDNA, it is intended that the charge relating to the taxes and royalties up to the year in 2022 will be excluded from 2023 adjusted earnings. So the full year guidance rate of 40% to 45% reflects 2023 tax and royalty payment learning.

Because of the passing and the status the involvement.

And the deliberation that was involved in establishing avid legal framework to go forward winter public to public process. It went through the National Assembly.

We followed that.

Ryan MacWilliam: I would also note that the anticipated top up under the new structure in Panama is treated as a royalty and not a tax and the calculation effect of tax rates.

Understanding the legal process has been the heat.

And the government of Panama, certainly assured us.

At the same once it takes hold emerge from those proceedings, we will be able to take part in the proceedings.

Ryan MacWilliam: Moving on to our balance sheets. Net debt reduced slightly by $13 million to $5.64 billion this quarter. Despite strong EBITDA growth, net debt was impacted by unfavorable changes in working capital. The successful completion of the Lagrani acquisition and the resulting $105 million payment to Rio Tinto, and an increase in capital spend of $49 million. The increase in CapEx reflects the steady progress in the estuary expansion project at Kinsanchi, which Tristan will describe later.

Yeah.

Do you see this as just a normal course of action and litigious environment, but we have confidence in the spanning all of these prices, but it's taken this long to get to this point and again, we're pleased to have it passed into law.

Okay. That's great. Thanks, Thanks, Kristen just a second question and maybe a bit out of left field, but with respect to ravensthorpe.

<unk> continues to lose money.

Ryan MacWilliam: Last year on capital allocation, current copper prices are well below the level needed to incentivize green field developments, particularly when one considers the high CapEx and Optics installation recent years. For context, in real terms, this week's opening cost per price of $3.54 per pound is equivalent to a price of around $2.90 per pound in 2018. Our capital allocation focus therefore remains on strengthening the balance sheet and less capital intensive brown field projects like S3, rather than allocating any material capital to our portfolio of green field projects.

Nickel price is weak and the outlook isn't great and I just noted in the MD&A that it appears that there was a cash call and Posco didn't participate is there any thought about the future operational viability of rate go up from here.

Yes, Thanks, Greg.

But Q3, yes.

Right and so we were impacted by ongoing maintenance.

The feature of the saltwater that we take there.

And that also adaption of applause to the material characteristics of golf Shoemaker Levy.

So for example, magnesium constant and so on and then the density around what comes in from shoe might still having that adaption is ongoing I think it will continue to impact us in Q4, we have a major shots on the acid plant coming up we need to renew the catalyst.

Ryan MacWilliam: Additionally, with CP100 commissioned in Q1, an enterprise now producing nickel concentrate, the brown field expenditure on two of our three key projects is behind us, with the production growth to come as cover Panama and enterprise ramp up. Currently, liquidity remains strong at $2.3 billion, supported by the issuance of the $1.3 billion ATA bond in the previous quarter. This positions as well to cover the cover Panama taxes and royalties, which are payable soon as a result of finalizing the legal framework in Panama.

Did any of that shot will improve significantly the electrical side and the acid plant performance and efficiency.

Really the ongoing focus for us at <unk>.

Just to get to the 30000 ton per annum plant design capacity and that really does start to deliver a lot in terms of maintenance improvements.

Ryan MacWilliam: Total payments for the year will be comprised of tax and royalties for up to the year end 2022 of $395 million, of which $45 million is already paid, and approximately another $250 million will be payable to cut soon to cover the first three quarters of 2023, resulting in a near term payment of $565 million. For 2023 as a whole, based on current copper prices, we expect a total payment of $375 million for the year that includes the top up payment. This will result in a total tax and royalties payable for 2022 and 2023 in Panama of $770 million.

<unk>.

We will.

We put in place those adoptions to the fronting.

Beneficiate than that deal with density in and deal with Beneficiate from Shoemaker Levy and also on the backend on rejects handling and so on but Brian you might comment on.

Posco is decision.

Around there.

The cash improved.

Sure.

I would note firstly on the market side, the nickel price has struggled through Q3 and on top of that pay ability for products like an HP remained low a function of just the sheer amount of volume of nickel that is coming out of Indonesia. So I think for us and everyone in the nickel that has exposure to the nickel sector at the moment, we are spending a lot of time on what we can do to enhance our.

Ryan MacWilliam: And that brings the finance section to an end.

Tristan Pascall: I'll now hand the call back to Tristan. Thanks for that, Rhine. As Rudy noted, the first quarter saw production improvements.

Operating margins in that some of the activities addressed and talked about it. It's only a personal question Greg in terms of Pasco, specifically they had certainly invest in ravensthorpe to procure them HP clinical sulfide plant, which way they were looking to build at this stage that delayed that.

Tristan Pascall: However, regrettably, we are lowering up copper production forecasts of 2023 to $745 to $775,000, mainly due to stencil. At Cobra Panama, the CP100 expansion project continues to ramp up very well. The operation continues to achieve periods of design capacity and remains on track to exit the year of a consistent rate of $100 million per annum. As such, we have tightened our copper production guidance for Cobra Panama to between $365 to $375,000 a call.

And given the volumes that are coming out of Indonesia. So there is less incentive for them to find ravensthorpe going forward given what the strategic rationale for their initial investment growth.

Okay.

Thanks, Brian that's helpful.

The next question comes from Ralph <unk> with eight capital. Please go ahead.

Tristan Pascall: Cooper. Construction of the modelling plant continues to progress well, and commercially production of that union is expected in 2024. At consenting, mining will continue to focus on the upper benches of main 15 and main 17, and we expect the strong grades to continue in the fourth quarter. Consenties continue to perform within our expectations, albeit at the bottom end of the range.

Thanks, operator, good morning, everyone.

Tristan at Sentinel, when you look into Q4 and into 2020 for Ya.

You've address sort of the water issues in the tail events on potential water inflows. So thank you for that could you maybe expand on that and talk a little bit about.

Energy and grid availability and as it pertains to some of the changes you're making in the combination circuit with that finer grind and also how is the mind shaping up for things like maintenance given the increased wherewith is harder ore.

Tristan Pascall: As such, our copper production guidance range has been tightened to between 130 to 140,000 tons. Gold production has been lowered to between 65 to 70,000 ounces to reflect gold rates in cancer to date. Current levels of copper and gold production will remain at or near these levels until the S3 expansion project comes online. The S3 expansion continues to progress well, which has started receiving long lead items during this past quarter, including the first ultra-class trucks and initial components of the mills and primary crusher. Earth and construction works continue, and I expect it to accelerate in the next year when you remain on schedule for first production from the S3 expansion in the second half of 2025.

Yes.

Thanks, Ralph Rudi do you want to answer that question.

And at the end if needed.

Thanks Kristen.

Hi, Walter.

Heavy wet season, when when when it approaches in Zambia. The question of it definitely comes up.

Certainly.

Yes.

Our previous experience.

There is no desire whatsoever to limit.

Guarantee a supply to our operations and certainly we've had a good rainy season loss last year.

We've also just.

In the process of finalizing a long term supply agreements with the electricity provider in that.

Tristan Pascall: At Sentinel, given the challenges early in the year, and the heart of an expected ore accounted in the third quarter, we have lowered copper production guidance to between 220 to 230,000 tons. However, work is being done to bring in soft ore with mining starting in stage 3, which should start to minimically contribute to ore feed in the second quarter of next year. As well, over the last several months, a lot of work has been conducted to better prepare the mines for the upcoming rainy season, including mining down the saddle zone between stage 1 and 2, and adding additional pumping capacity. We continue to review the impact of heart ore on the coming year-mine plan, but at this stage, we expect to be able to blend more effectively with the wet season infrastructure being installed.

Effectively as being agreed for both Janesville income pantry.

And just again drafting final documents there so far that exist as supply is concerned I think there is no concern on our part and certainly as a company. We are also looking at.

Joint ventures with others.

The total for example.

Looking at the installation of renewable energies in Zambia.

So I think that long term, we're fine there.

Or it's just been explained and I said that earlier as well.

19th of July two and running the mine for the odd Kainite.

That's a band that runs through the through the pit.

Tristan Pascall: We will address guidance in January, but at this stage, we are holding to our previous outlook for 2024 and 2025.

And it's.

Been getting us probably double the throughput on the crushers and the and the malls.

Tristan Pascall: At Enterprise, another important milestone was achieved during the quarter with first sale of the nickel concentrate. The focus remains on stripping of waste and the final ramp up of the process plant to full production capacity, which is expected next year.

During the last quarter and it looks like we're punching through that in the month, but now although it will linger in stage two.

But also the availability of the third cut back stage three and then towards the west that we are now actively in in mining.

Tristan Pascall: We encounter challenging metallurgical characteristics of the shallow ore due to weathering, leading to a reduction in our 2023 guidance, so between 3 to 5,000 tons of containment nickel. However, a good understanding of the process impact of this material has been developed, and we expect plant recovery and concentrate quality to continuously improve, as we gain greater exposure to less weathered ore deeper in the mine.

It will deliver or.

At the end of Q1 into Q2 next year makes the blending characteristics how much better so we've had a bit more abrasion in crashes.

This last quarter.

We don't expect to see that prolonging.

And at the moment.

The minute, we had also busy with.

Tristan Pascall: Lastly, it was great sadness that we announced the passing of our chairman, Philip Pascal, during the quarter. I am in Zambia right now, where Philip was posthumously honored for his work and contributions to the country with the Eagle of Zambia award by President Hitchalema yesterday. Philip was a great mentor and inspirational leader, and this loss has been felt deeply across the company and the communities that first quantum operates within. The outreach from the investment in mining community has been tremendous and humbling. We like to sincerely thank everybody for their condolences and their sharing of memories of Philip.

A mind to mold study utilizing the expertise of a vendor to help us with some of those are material.

Selections.

Got you. Thanks, that's helpful.

Ryan.

When do the 'twenty 'twenty four tax installments come due right just thinking a little bit for those front end loaded towards the year end and going forward, how will tax installments payments be made just thinking about timing.

Yeah, I think in general we make the royalty payments on a quarterly basis and.

And then the top App generally come in the first part of it the next year, so youre not going to see US me at a fairly normal approach in terms of timing of taxes and royalties Ralph.

Tristan Pascall: Filth on the legacy of the founder of the company, we remain committed to the trajectory of First Quantum and we believe we are both projects and the capability of people to deliver that into the future in an environmentally and socially responsible manner. And in the financially disciplined approach, covenants into the need to continue to improve our balance sheet.

Okay.

Gotcha.

Thanks, Tim.

The next question comes from Bryce Adams with CIBC capital markets.

Please go ahead.

Tristan and Sam Thanks for the call and well done on the operational results I have another question on Panama and the New mine contract is signed into law, but it sounds like there's still quite a lot of protesting and opposition in the country. Do you think it's a risk that a presidential candidate picks up on this and use it as part of their campaign.

Tristan Pascall: With that, I will be happy to pay questions now. Thank you.

Operator: We will now begin the analyst question and answer session. Analysts are permitted to ask one question and one follow-up and they're welcome to rejoin the queue if they have more. To join the question queue, you may press star, then one on your telephone keypad. You will hear a talent acknowledging your quest. If you're using a speaker phone, please pick up your handsets before pressing any keys to withdraw your question, please press star, then two.

Election, and that a new government in May next year might want to revisit their contract quite a few ifs in there but in terms of risk management is that a scenario that you've thought through and planned for.

Jackie Przybylowski: The first question comes from Jackie Przybylowski, the BMO capital market. Please go ahead. Thanks very much, and I'm just to echo what you said at the end of your remarks, Tristan. I've passed on my condolences to you and the team on the passing of Philip's huge loss to First Quantum, of course, in the whole industry. My question is on your guidance revisions, both on those volumes and the cost. It seems like queue through is a strong order across your operations, and my understanding based on prior comments from yourself was that queue four is expected to be fairly strong as well.

Yes.

Yeah, Hi, Brian. Thanks for the question look again, we were pleased to have the contract passed into more and that was.

You know the.

Outcome in terms of the voice in the National Assembly.

After June Democratic process, which included that.

It was returned to the committee.

And then.

Between the company and government, we addressed the queries that came back from the comedian and back from the Democratic process in which were related to sovereignty and then that went forward into the National Assembly in again.

Jackie Przybylowski: I'm wondering if that's changed if your expectations for queue four is changed, or if you're just reflecting some more of a cautious outlook, just given what we know from the first half of the year. Yes, thanks Jackie, and I'll ask Brian to provide some more detail. But we have tights in the guidance, and as you say, that's built off particularly of Cobra Panama. Very strong performance in the quarter, and we're very pleased with the progress in the CP100 expansion in terms of the impact that it's having.

It was very strongly supported 47 boats in the funnel.

The final rating of the 55 that were that were submitted so it's being thoroughly reviewed by the National Assembly, it's been through the public protest.

Click participation look the protest we acknowledged.

Certainly it highlights the need for us to.

And the industry as a whole to continue to improve disclosure to improve our communication improve their engagement and discussions with benefits of mining around the economy and employment are commute community impact the positive social contribution our environmental standing.

Jackie Przybylowski: What we do see is the grades were higher at CP100 during the quarter, and they will come off a little bit in the fourth quarter, just in the normal course of the mind plan for the year. And so it's not really conservatism there, but just focus on the existing mind plan.

President.

President's comments his message to the to the nation yesterday on the topic and we certainly support his comments on the impact around the new framework in the U a E.

Renewed and strengthened.

Benefits deployed to Panama, and the environmental and social.

Tristan Pascall: At Sentinel, look, we're in a good position to face the wet season, and perhaps I can just ask Rudy to comment a little bit more on that. Rudy, would you just cover that in terms of outlook for the remaining quarter of Sentinel, and perhaps also a consent sheet? And then, Ryan, if you could just comment on the cash cost outlook.

Standing of the contracts in terms of the election yet.

It would be in my next year and the new President will come in place since July we given the process to date, we believe things are in a strong legal standing.

Uh-huh and risk is low, but we have confidence in the legal process today that given the exhaustive process that has been put in place.

Rudi Badenhorst: Thank you. Yes, thanks, Jason. Brian Jackie, thanks for your question. Look at Sentinel. We have experienced a difficult first half of 2023 as a result of the impact on the writing season that we discussed on the last call. But we might, a lot of infrastructure investment on the watering capability and capacity at Centino, effectively tripling its input to the watering capacity to over 10,000 cubic meters per hour. We've finalized the final environmental treatment bond construction activity during this latter part of Q3.

Okay. Thanks, I appreciate the discussion that's it for me.

Sure.

Thanks Ross.

Okay.

The next question comes from Alex Smith.

Morgan Stanley. Please go ahead.

Yes, thanks, very much for the presentation and my condolences as well.

My first question is around.

The gold production outlook, a golf consortia, which is on a better footing now and co brand with ICP 100, progressing well do you have better line of sight on the midterm. Our gold production guidance is there any potential upside or downside versus the published reports on either asset.

Rudi Badenhorst: We've also finalized pumping water back to the plant and using it primarily in the plant rather than neutralizing and discharging to the environment under the regulatory limits. So effectively, meaning that we do not have to hold back and wait for water to be neutralized at Centino before we can discharge because all of that is going into the plant. Secondly, at Centino as well, you know, the settle between stage 1 and stage 2, the previous wet season resulted in the damning of water that has been completely mined up.

Really would you like to take the question on gold guidance. Please.

Thanks system.

Okay.

So we currently.

Going to our budgets.

Budgetary and career planning.

Safe and obviously, we'll update on guidance in Germany.

Gold guidance, especially at <unk>.

I was really delighted.

I like the challenges to the Gulf Coast can sense, you've seen with the a little decline in copper grades.

It's been historically quite a good correlation between the declining copper and.

And the Golar following suit.

Rudi Badenhorst: And, you know, as far as the hard ore is concerned, yes, certainly we experienced some very hard ore in the quantum of stage 1 and stage 2 pits getting the quarter, reminding in the area of the ore block called domain 4, which is as hard kindite. And although that will remain with us during the course of the fourth quarter in both of stage 1 and 2, we are already noticing building and blasting, punching through that domain into the one below, which hosting likely softer, softer ore.

So copper and gold production going forward should be pretty similar to 2023 levels until we see it.

He is the expansion of concentric again.

Okay, great very clear.

And then the second question on the balance sheet.

Despite the very strong cost performance in the quarter do you still have any managed to bring down our net debt.

Part of it of course is there like Groundhog day deal and the outflow, but bigger part is also the working capital investment in the quarter could you provide a bit of color what happened there and would we should we expect a release in Q4 that would temper the tax payments of Cobra. Thank you.

Rudi Badenhorst: So we are in the way we are currently situated in stage 1, but in the hard stuff, it won't migrate out of that towards Q1, Q2 of next year, but certainly will be with us for the remainder of this year. Then, Jackie, maybe if I just jump in on costs, so we still expect to finish within our initial cost guidance. All we've done is we've moved up our bottom end from 165 to 175, and that's largely a function of what really described the week production from Centino for most of this year, which is somewhat offset by slightly better cost inputs, most notably diesel and explosives than what we assumed at the beginning of this year.

Brian do you want to take that.

Sure Kristen.

What you saw at the end of Q2 was receivables were unusually low class and have now moved to a more normalized levels. So I wouldn't expect you to working capital releases are not treated as debt. We're at normalized working cap levels and generally that's just driven by the timing of shipments of copper concentrates, where therefore before or after the end.

In the quarter.

Great. Thanks very much.

The next question comes from Al <unk>.

Alex.

With Stifel. Please go ahead.

Rudi Badenhorst: So we now have a new cost guidance, $1.75 to $1.85 per pound of copper. That's super helpful. Thanks, Ryan, and Rudy and Tristan, and if I could ask a follow-up, maybe, Ryan, you've got a number of cash uploads coming up with the tax settlement as part of this agreement with the government of Panama and the Lagrange acquisition completion and the work you're doing on us through another project. Can you talk a little bit about your balance sheet and where you see your balance sheets are going over the next couple of quarters with those cash uploads, and so how you expect to fund those if it's through cash on hand or any other way of funding them.

Yeah.

Hi, everybody.

Most of my questions have been asked but I wanted to just ask one more here on cobre Panama.

It had a very strong quarter.

And in Q3, all kind of looked like it was firing on all cylinders here I know you are ramping up to 100 million tons, a year, but the quarter already had 98 on an annualized basis.

Is there.

What's the bottleneck here and this mine is there opportunities to get it.

Bob 100 are you going to be going into some harder ore that's going to slow things down I'm just trying to see what the opportunities are for your largest kind of lowest cost mine to deliver to the upside there in future years.

Okay.

Yeah, Thanks, Alex Luca.

Look again.

In the process of updating our budgets and we will come back in January on guidance for the coming years, but in a general comment on on the CP 100, Yeah, we're very pleased with progress.

Rudi Badenhorst: So, we saw leverage metrics improved through the quarter. We were at 2.2 times net debt to Ibitar at the end of Q2 because of the strong Ibitar performance we're now at just above two times net debt to Ibitar. So, pleasing to see that progress or the stronger, the back of stronger Ibitar. And that was also in a quarter where we made the $105 million payment to Rio Tinto for Lagrania. So, that payment is now behind us.

It certainly delivering and again, we have a lot of confidence in being able to achieve a consistent run rate at 100 million by the end of the year look I think we will see.

Hi mine commenced as the high throughput continues.

Rudi Badenhorst: In terms of what, what is ahead? As you know, we've got the payment associated with the settlement and agreement, a new legal framework in Panama that will be paid shortly. And we're in a fortunate position where we have $2.3 billion of liquidity, strong liquidity on the balance sheet to address that. And then going into next year, you know, it'll be as before. Continue to remain disciplined about capital, certainly not looking at spending material capital and green field projects and being disciplined around the capital that goes into our brown field projects, which I think you're going to find. That's super helpful.

Continues on we as I stated we also.

We had.

Higher grades this quarter and next quarters.

Normal course of the mine plan, we do expect slightly lower grades due within within the original setting and so we did talk some guidance for the year.

The overall bottleneck at Cobre, Panama once we resolve that.

Comminution circuit, the frontline screening the.

Dependent crushing and secondary crushing and then also as.

Jackie Przybylowski: Congratulations again on a really great quarter. Thank you.

As we put in place the improved process water supply the bottleneck comes to the Sag Mills and the Sag mill is the biggest capital optimize the process plants.

Greg Barnes: The next question comes from us. Walk it out. Let's go to the bank.

Greg Barnes: Please go ahead.

Rudi Badenhorst: Hi, good morning. And my condolences as well. No doubt Philip legend of the mining industry. Just following up on Jackie's questions. If I'm hearing you correctly, I think you said that you expected that. I think the harder ore at set null to spill over into the first half of 24 has that already been factored into the existing guidance for set null for next year of 245 to 265,000 tons or is the, are you finding that the ore is harder than what's assumed in the current mine plan and that guidance.

Did you decided to put in a new Sag mill, you need everything downstream on glass and so what youre talking about is a new process ponds. We noted at that stage, yet where we are considering.

Processing plants at Cobre Panama.

We want we want to see this run can continue and deliver the $100 million in expansion.

That decision is not in front of us at the moment.

There's optionality around that in the future in terms of copper pricing and balance sheet position and so on but really Alex that's where you get to the bottlenecks next is that but the big Sag Mills and those are the big capital cost a lot to him if you want to grow beyond that.

Rudi Badenhorst: Sure. So I'm here central now and just looking at what that harder material was and it chemically altered rather than anything you can see delineated or otherwise. So it's an area that we really saw as we approached it in terms of, you know, drill performance. The great control drilling and then the production drilling. So really did the fact that's in Q3 we are starting to get through very much a horizontal band that runs through and as I said, it's sort of chemical alterations are very hard to pick up other than, you know, physical parameter.

Okay sounds good thank you very much.

The next question comes from Edward Caso with Deutsche Bank. Please go ahead.

Yeah.

Hi, two questions from my side.

Firstly on consultancy, how should we expect the grade profile next year given the current focus on the high grade cutbacks and secondly, the cornea and you're on the milestones and the timeline to completing the feasibility study.

Yeah.

Thanks, Ed would really do you want to take the first question on the convention.

Rudi Badenhorst: But we believe that it's a present in appearance in that horizontal band, we threw some of it in in areas in the bottom of stage one, but we do see it continue. And as Rudy said, we will see that continue to Q4 it was part of the mine plan before. But we did see that during the course of the year, we were going to be in this across different areas of the pit that would have provided flexibility.

<unk> guidance and grades.

Thank you.

<unk> throughput.

Certainly will improve.

Conceptually as we.

Buying back the 915, 16, 17, capex to the south and removal of.

Rudi Badenhorst: Whether in Q1 hamper that flexibility and we were very much more sequential as the year turned out, that is, we mined stage two and we went to stage one. And I think next year with the additional water infrastructure in place, we'll see much more of a blended mixed mine plan across the year. And that's why we say we are, we're asked in terms of guidance next year. We will address that in that we're going through the budgets right now at the moment to address it in January, but at this stage no reason to preempt that.

Lifestyle around the mine 18 cutback.

Hi, Ed.

Upper benches to do mine easier.

Thanks, and mixed and oxide before we get into competent sulfide.

So they do mind that a little bit easier.

And we are expecting to see our guide today as a result of the strategy for mineralization.

However, the the continues.

No.

The benefit of that through 2023 will be seen in quarter four.

Ryan MacWilliam: Okay, and thank you for that. And just as a follow-up question from Ryan, I didn't quite catch some of the numbers that you disclose with respect to the upcoming payments here in Q4. Can you just give us that total again for the total payments I think in Panama relating to both 2022 and I guess both that be the first three quarters of the 23? So we'll be paying $395 million which is for all payments up until the end of 2022.

I mean this message I guess still is you know.

But this is migrating from a high end guide low volume operation through to a larger volume.

Low grade operation similar to the same time.

Cobre, Panama and that's the reason for a city expansion so until such time as we see.

CA three kick in we'll be looking at similar sort of production levels.

And your.

Your question on legal.

Ryan MacWilliam: In addition to that, we'll be paying a large portion of our 2023 taxes and penalties effectively a catch-up for this year. And that combined number is at $565 million. We do expect across 22 and 23 to pay total tax and penalties of $770 million. But obviously some of those payments will occur in 2024. Okay, so that $770 includes a Q4 number in it? Correct.

We were very pleased to finalize that transaction with Rio Tinto during the quarter.

Ryan MacWilliam: Okay, all right, thanks so much.

Urea.

As a.

Well capitalized industry leader and we're very excited about the opportunity pipeline Mcgraw Hill.

The opportunity to meet a major partner in a large world class ore body.

In a country thats being very raised multiple times and operated for the last 20 years. It is very exciting for us what we see coming from when we were in a financially sound position that we do that in a disciplined manner and look in terms of your question on development timeline initial two to three years is really focused on two key areas of the community.

Greg Barnes: The next question comes from Greg Barnes with TD Securities. Please go ahead. Yes, thank you.

Tristan Pascall: Tristan with law 406 now in place. There are a number of Supreme Court rulings and government actions that relate to law 9. One of them being that law 9 was unconstitutional. Do all those all the way now and they become really non-issues for you? Yeah, hi Greg, thanks. So certainly we're very pleased to have the contract passed into law. The process has alleviated a lot of the concern around that. It was received really good support through the National Assembly.

<unk>.

Number one and that relates to.

<unk> had an excellent program there.

And in terms of World class community engagement, and we will continue that on in terms of the project and the second area is on.

The feasibility and really thats around mostly delineating the ore body not so much in terms of expanding into the radio one of the world's largest undeveloped assets, but more around delineation and the phasing of development of the project. So.

Tristan Pascall: A 47 vote out of the 55 that were cast and I guess that level of support speaks to the authority of the passing of the contract. The unconstitutionality motions with Panama are the litigious environments and so there is ongoing unconstitutionality proceedings. We're not a party to those proceedings. So we don't have the details of specific nature, but it is common practice as I said in Panama and other minor jurisdictions for the challenges like this to be filed.

Mobilizing the first jewelry.

To do the infill drilling to.

Due to the metallurgical test work.

The geotechnical side to upgrade the resource and be able to develop a high level project layoffs on Mcgraw Hill that will be conducted in house.

Tom type of work for that over the next two years would then put us in a position to be able to put all of the engineering studies and so on in place thereafter and develop the asset we expect over a period of around four years. So.

Something in the order of six used as appropriate for the Gras. So in terms of timetable, we still see tech attack.

Tristan Pascall: Because of the passing and the status, the involvement and the deliberation that was involved isn't in establishing now the legal framework to go forward. It went through public process, it went through the National Assembly. We followed the outstanding, the two legal process has been adhered to and the government of Panama certainly assured us of the same. Once the details emerge from those proceedings, we will be able to take part in the proceedings.

As more advanced at this stage, we see that.

There's no sanctions that preceded them that the current farm, we certainly awaiting.

The output of the ESI, a permitting process and also the the final decision and the election in Argentina, and what the incoming government will do.

In terms of improving the potentially improving the Argentina as the destination for investment so.

<unk> it's out there we're very excited about the project, but it will take that time, possibly to use initially and then 68 entitled to develop.

Tristan Pascall: But you know, you see this is just a normal course of action in the litigious environments, but we have confidence in the standing of this process that's taken this long to get to this point. And again, we're pleased to have it passed into law.

Thank you.

Tristan Pascall: Okay, thanks Tristan.

The next question comes from Ian Rossouw with Barclays London. Please go ahead.

Greg Barnes: Just a second question and maybe a bit out of left fuel, but with respect to Raven's thought, it continues to lose money. The medical price is weak and the outlook isn't great. And I just noted in the MDNA that it appears that there was a cash call in Pascall didn't participate.

Thank you just one question from me for Brian just on the outstanding VAT balances within the Zambian operations.

Could you see there was some negative adjustments for four phasing I expect that just for the I.

Ryan MacWilliam: Is there any thought about the future operational liability of Raven's thought from here? Yes, thanks, Greg. Greg, the Q3 at Raven's thought, we were impacted by ongoing maintenance, the future of the saltwater that we take there, and but also adaption of the plants to the material characteristics of shoemaker levee, so, you know, for example, magnesium constant and so on, and the density around what comes in from shoemaker levee. So that adaptions ongoing, I think it will continue to impact us in two forms.

I guess future non current balances.

Is that related to I.

I guess changes on the cost base or is it a pricing assumptions, maybe if you can just provide some details on that please.

Yes, yes that would be a combination of a couple of things.

To say it.

It's quite a it's quite a lot in there, but the balance of it comes out that slight adjustment.

Okay.

Presumably that talks to the future expectation of profitability of convention.

Ryan MacWilliam: Before we have a major shot on the asset plant coming up, we need to renew the catalyst there, and that shot will improve significantly the electrical side and the asset plant performance and efficiency. Really the ongoing focus for us at Raven's thought is to get to the 30,000 ton per annum plant design capacity, and that really does start to deliver a lot in terms of maintenance improvements. We will put in place those adaptions to the front end beneficiation, but deal with density and deal with beneficiation from shoemaker levee and also on the back end on reject handling and so on.

Slightly lower.

Yes.

Yeah exactly so the way that agreement works is we now can deduct cost a set percentage of taxes and royalties.

Each each quarter, and obviously as copper prices move up or down so that number grows or reduces depending on what our taxes or royalties. So thats generally what effects the buffet.

That said a lot of the copper prices, but less we're able to offset it.

And therefore, the longer that that becomes due.

Okay great.

What copper price sort of tick do you use consensus prices, what do you use within that analysis.

That's broadly consensus yet.

Okay. Thanks.

Ryan MacWilliam: But Ryan, you might comment on Pascall's decision around the cash input. Sure, so I would note firstly on the market side, the nickel price has struggled through Q3, and on top of that, payabilities for products like MHP remain low, a function of just the share amount of volume of nickel that is coming out of Indonesia. So I think for us and everyone in the nickel that is exposure to the nickel sector at the moment, we are spending a lot of time on what we can do to enhance operating margins, and that's some of the activities that Tristan talked about.

This concludes the question and answer session I would now like to turn the conference back over to Justin Pascal for any closing remarks. Please go ahead.

Okay.

Thanks, operator, and thank you everybody for joining us today I certainly look forward to our next update with you early in the new year. Thanks, everyone.

Okay.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

Ryan MacWilliam: There's only a person in question, Greg, in terms of Pascall specifically, they're certainly invested in Raven's thought to procure MHP for nickel self-ape plant, which they were looking to build at the stage that delayed that plant given the volume that are coming out of Indonesia. So there's less incentive for them to fund Raven's thought going forward, given what the strategic rationale for their initial investment was. Okay, thanks Ryan, that's helpful.

Sure.

Sure.

Yeah.

Sure.

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Ralph Profiti: The next question comes from Ralph Puthiti with eight capital. Please go ahead. Thanks operator, good morning everyone. Tristan, at Sentinel, when you look into Q4 and into 2024, you've addressed sort of the water issues and the tail events on potential water inflows, so I thank you for that. Can you maybe expand on that and talk a little bit about energy and grid availability as it pertains to some of the changes you're making in the combination circuit with that finer grind.

Ralph Profiti: And also, how is the mind shaping up for things like maintenance given the increased wear with this harder ore? Thanks, Ralph. I, Rudi, do you want to answer that question? I'll come in at the end of the meeting. Hi, Tristan. Hi, Ralph. Look, with heavy wet season, when the, when it approaches and ambient, the question of electricity comes up. Certainly, we have asked our previous experience, there's no desire whatsoever to limit security or supply to our operations, and certainly we've had a good rainy season last year.

Yes.

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Sure.

Sure.

Sure.

Sure.

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Okay.

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Ralph Profiti: We've also just, in the projects of finalizing our long-term power supply agreements with the electricity provider, and that effectively has been agreed for both Central and Lincoln Sanctuary and just a good drafting final documents there. So, as far as electricity supply is concerned, I think we, there's no concern on our part, and certainly as a company, we are also looking at, with joint ventures with others, like the total, for example, looking at the installation of renewable energies in Zambia. So, I think the long-term we find there.

Yeah.

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Rudi Badenhorst: The harder it's just been explained, and I said earlier as well, you know, is mainly situated in the main fall with hard finite, as a band that runs through the pit, and it's been getting us involved, a trouble with throughput on the crushes and the, and the moles, getting the last quarter, and it looks like we're punching through that in the main pit now, although it will linger in stage two, but also the availability of the third gut-back stage three, and towards the west that we are now actively in mining, that will deliver all through the end of Q1 into Q2 next year, makes even more abrasion in our crushes, getting this last quarter, but we don't expect to see that prolonging, and at the moment, we are also busy with a mine-to-mold study utilizing the expertise of a vendor to help us with some of those material selections. Gotcha, thanks, Rui, that's helpful.

Thank you.

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Uh huh.

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Yes.

Yes.

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Okay.

Yes.

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Yeah.

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Rudi Badenhorst: Ryan, when do the 2024 tax installments come to do? Right, just thinking a little bit forward. Are those front-end loaded towards the year and going forward, how will tax installments payments be made, just thinking about timing? Yes, in general, we make the royalty payments on a quarterly basis, and then the top half generally come in the first part of the next year. So you're not going to see us move to a fairly normal approach in terms of timing of taxes and royalties, Rui. Gotcha. Thanks, team.

Bryce Adams: The next question comes from Bryce Adams with CIDC Capital Market. Tristan and Thiem, thanks for the call and well done on the operational results. I have another question on Panama and a new mind contract. It's not into law but it sounds like there's still quite a lot of protesting and opposition in the country.

Tristan Pascall: Do you think it's a risk that a presidential candidate picks up on this and uses it as part of their campaign election and that a new government in May next year might want to revisit that contract? Quite a few ifs in there but in terms of risk management, is that a scenario that you've thought through and planned for? Yes, hi, Bruce. Thanks for the question. Look again, we're pleased to have a contract passed into law and that was the outcome in terms of the toll to the National Assembly after due democratic process, which included that it was returned to the committee.

Tristan Pascall: And then between the company and government, we addressed the queries that came back from the committee and back from the democratic process, which were related to sovereignty. And then that went forward into the National Assembly. Again, it was very strongly supported, 47 votes in the final reading of the 55 that were submitted. So it's been thoroughly reviewed by the National Assembly. It's been through the public protest, the public participation. Look, the protests, we acknowledge and certainly it highlights the need for us to and the industry as a whole to continue to improve, disclose and improve our communication, improve our engagement and discussions of the benefits of mining around economy employment, our community impact.

Tristan Pascall: The positive social contribution, our environmental standing, note the president's comments, his message to the nation yesterday on the topic and certainly support his comments on the impact around the new framework and the new renews and strengthens benefits that flow to Panama and the environmental and social standing of the contracts. In terms of the election, yes, you know, that will be in May next year and the new president will come in place since the last week.

Tristan Pascall: Given the process today, we believe things are in a strong legal standing and risk is low, but we have confidence in the legal process today that given the exhaustive process that has been put in place. Okay, thanks. I appreciate the discussion. That's it for me. Thanks for us.

Ian Rossouw: The next question comes from me on as much as with Morgan Stanley. Please go ahead.

Okay.

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Ryan MacWilliam: Yes, thanks very much for the presentation and then my condolences as well. My first question is around the gold production outlook at both Kansanshi, which is on a better footing now and cobre with SCP-100 progressing well. Do you have better line of sight on the midterm gold production guidance? Is there any potential upside or downside versus the published technical reports on either asset?

Rudi Badenhorst: Rudi, would you like to take the question on Gold Gardens, please? Thanks, Tristan. Thank you, and it's going through our budgetary and three-a-planning process and a lot of things you will update on Gold Grades, especially at Kinsanchi, you know, is really related, or the right to challenges to the Gold Grades Kinsanchi, seen with the overall decline in copper grades. It's been historically quite a good correlation between the decline in copper grades and the Gold Grades following suit. So a copper and gold production going forward should be pretty similar to 2023 levels until we see the history expansion in Kinsanchi again.

Yes.

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Yeah.

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Ryan MacWilliam: Okay, very clear. And then the second question on the balance sheet, despite the very strong cost performance in the quarter, you still haven't managed to bring down and not that. Part of it, of course, is the Lagranjad deal and the outflow, but bigger part is also the working capital investment in the quarter. Could you provide a bit of color what happened there, and should we expect a release in Q4, that would temper the tax payments at Cobra?

Ryan MacWilliam: Thank you. Ron, Diana, do you want to take that? Sure, Tristan. Diana, what you saw at the end of Q2 was receivables were unusually low for us, and they've now moved to more normalized levels. So I wouldn't expect future working capital releases. I'd now treat it as that we're at normalized working capital levels. And generally that's just driven by the timing of shipments of copper concentrates, whether they fall before or after the end of the quarter.

Ryan MacWilliam: Thanks very much.

Edward Goldsmith: The next question comes from Alex. Let's see full. Please go ahead.

Rudi Badenhorst: Hi, everybody. Most of my questions have been asked, but I wanted to just ask one more here on Cobra, Panama. It had a very strong quarter in Q3. It looked like it was firing on all cylinders here. I know you're ramping up to 100 million tons a year, but the quarter already had 98 on an annualized basis. What's the bottleneck here in this mine? Is there opportunities to get it above 100?

Rudi Badenhorst: Are you going to be going into some harder ore that's going to slow things down? I'm just trying to see what the opportunities are for your largest kind of lowest cost mine to deliver to the upside down in future years. Thanks, Alex.

Tristan Pascall: Look again, we're in the process of updating our budgets and we'll come back in January on guidance for the coming years. But in the general comments on the CP 100, yeah, we're very pleased with progress. It's certainly delivering and again, we have a lot of confidence in being able to achieve a consistent run rate of 100 million by the end of the year. Look, I think we will see high maintenance as the higher troops continue on.

Tristan Pascall: As I said, we also, we had higher grades this quarter and next quarter is in the normal course of the mine plan. We do expect slightly lower grade, still within the original setting. So we did tighten guidance for this for the year. But look, the overall bottleneck at Covert Panama, once we resolve the combination circuits, the front end screening, the pedal crushing and secondary crushing, and then also, as we put in place, the improved process water supply, the bottleneck comes to the sag mills and the sag mill is the biggest capital item of the process plant.

Tristan Pascall: If you decide to put in a new sag mill, you need everything downstream on blast. And so what you're talking about is a new process plant. We noted that stage yet where we're considering a second process in plants of Covert Panama. We want to see this run continue and deliver the 100 million expansion. That decision is not in front of us at the moment. There's optionality around that in the future in terms of copper price and balance sheet position and so on. But really, Alex, that's where you get to the bottleneck. Next is at the big sag mills and those are the big capital cost item. If you want to grow beyond that.

Alex: Okay, sounds good. Thank you very much.

Edward Goldsmith: The next question comes from Edward Goldsmith with Deutsche Bank. Please go ahead. Hi, two questions from my side.

Rudi Badenhorst: Firstly, on Konfanchi, how should we think about the great profile next year, given the current focus on the higher grade cutbacks and exactly on the Konja in the outline, the milestones and timelines competing with these birds. Thank you. With Rudi, do you want to take the first question from Konfanchi guidance and grades? Thank you. The quarter-fourth throughput certainly will improve Konfanchi. As we mine back the main 15, 16, 17 cutbacks to the south and removal of waste dump around the main 18 cutback, those higher upper benches do do mind easier going through mixed and oxide before we get into competent sulfide.

Rudi Badenhorst: So we do mind a little bit easier and we're expecting to see higher grades there as a result of the stratiform analysis. However, the continuous, you know, the benefit of that through 2023 will be seen in quarter-four. From primary message, I guess, school is, you know, my grading from a higher grade low volume operation through to a larger volume lower grade operation. Similar to Centinon and Kobra Panema, that's the reason for S3 expansion. So until such time as we see S3Kken, we'll be looking at similar sort of production levels.

Tristan Pascall: And Edward, to your question on Lagrange, we were very pleased to finalize that transaction with Rio Tinto during the quarter. Rio is a well-capitalized industry leader and we're very excited about the opportunity posed by Lagrange in the opportunity to be a major partner in a large war class all-body in a country that's been very raised, multi-built science and operator for the last 20 years is very exciting for us. Obviously coming from when we were in a financially sound position that we do that in a disciplined manner.

Tristan Pascall: But look in terms of your question on development timeline, the initial two to three years is really focused on two key areas with community engagement number one and that relates to Rio had an excellence program there and in terms of world-class community engagement and we will continue that on in terms of the project and the second area is on the feasibility and really that's around mostly delineating the all-body not so much in terms of expanding. It's already one of the world's largest developed assets but more around delineation and the facing of developments of the project.

Tristan Pascall: So we're currently mobilising the first drill rigs to do the infield drilling to do the metallurgical test work to look at the geotechnical side to upgrade the resource and be able to develop a high-level project layout on the ground home. That would be conducted in-house. The timetable for that over the next two years would then give us, put it in a position to be able to put all of the engineering studies and so on in place thereafter and develop the asset we expect over a period of around four years. So something in the order of six years is appropriate for the ground home.

Tristan Pascall: So in terms of timetable we still see takataka is more advanced at this stage. Obviously that is the there's no sanctions to proceed at the current time. We're certainly awaiting the output of the ESIA permitting process and also the final decision and the election of Argentina and what the incoming government will do in terms of improving the potentially improving the Argentina's destination for investment. But the grant is out there. We're very excited by the project but it will take that time possibly to use initially and then six years in total to develop.

Ryan MacWilliam: The next question comes from Ian Rossouw, with Barclays London. Please go ahead. Thank you. Just one question from me for Ryan, just on the outstanding VAT balance within the XAMIAN operations, could you see there was some negative adjustments for phasing expected just for the, I guess, future non-current balances? Is that related to, I guess, changes on the cost base, or is it pricing assumptions? Maybe if you can just provide some details on that please?

Ryan MacWilliam: Yeah, there would be a combination of a couple of things, so it's quite a lot in there, but the balance is, it comes out to that slight adjustment. Okay, presumably that talks to the future expectations of profitability of consenti and being slightly lower. Yeah, exactly. So the way the VAT agreement works is we now can deduct all a set percentage of taxes and royalties each quarter. And obviously, as copper prices move up or down, so that number grows or reduces depending on what our taxes or royalties are.

Ryan MacWilliam: So that's generally what affects the phasing of that. So the lower the copper price is, the less we're able to offset, and therefore the longer that VAT becomes due. Okay, correct. And what copper price sort of do you use consensus prices, or what do you use within that analysis? Yeah, it's broadly content with you.

Ryan MacWilliam: Okay, thanks.

Operator: This concludes the question and answer session.

Tristan Pascall: I would now like to turn the conference back over to Christian Pascal for any closing remarks. Please go ahead. Thanks operator. And thank you everybody for joining us today. I certainly look forward to our next update with you early in the new year. Thanks everyone.

Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day. Thank you very much. [inaudible] I'm right or not, but I'm right or not[inaudible]