Q4 2023 First Quantum Minerals Ltd Earnings Call

Operator: transcript Emily Beynon Thank you for standing by. This is the conference operator. Welcome to the First Quantum Minerals LTD fourth 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 questions. To join the question queue, you may press, then 1 on your telephone.

Thank you for standing by this is the conference operator, welcome to the first quantum minerals L. T D <unk>.

First quarter 2023 results conference call.

Speaker Change: As a reminder, all participants are in listen only mode and the conference is being recorded.

After the presentation there'll be an opportunity to ask questions 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 Benita toe director of Investor Relations.

Operator: 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 Bonita To, Director of Investor Relations. Please go ahead.

Benita: Please go ahead.

Bonita To: Thank you, operator, and thank you, everyone, for joining us today to discuss our fourth quarter results. During the call, we will be making forward-looking statements. As such, I encourage you to read the cautionary notes that accompany this presentation, our MD&A, and the related news release.

Benita: Thank you operator, and thank you everyone for joining us today to discuss our fourth quarter results.

Benita: During the call we will be making forward looking statements as such I encourage you to read the cautionary notes that accompany this presentation, our MD&A and the related news release as.

Bonita To: As a reminder, the presentation is available on our website and that all dollar references are in U.S. dollars unless otherwise noted. On today's call are Tristan Pascall, our Chief Executive Officer, Ryan McWilliam, our Chief Financial Officer, and Rudy Battenhorst, our Chief Operating Officer. And with that, I will turn the call over to Tristan for his opening remarks.

Benita: As a reminder, the presentation is available on our website and that all dollar references are in U S dollars unless otherwise noted.

Benita: On today's call are supposed to Pascal, our Chief Executive Officer, Ryan Mcwilliams, Our Chief Financial Officer, and really bad enforce our chief operating officer, and with that I will turn the call over to trickle for opening remarks.

Tristan Pascall: Thank you, Benita, and thank you everybody for joining our conference call today to discuss our fourth quarter results. Financial and operating results in the fourth quarter last year were significantly impacted by the situation in Panama. As such, the quarter was challenging, not just for First Quantum but for our investors and our stakeholders in Panama, particularly our workforce, the local communities around us, and our suppliers. However, we have a plan in place to address the challenges thrown up by the circumstances in Panama, focused on delivering future positive cash flows from the Consanche S3 expansion, which will provide us with the necessary time and space for resolution at Cobra Panama. We have made good progress on our balance sheet initiatives to deliver this plan, such as our announcement yesterday on a $500 million copper prepay.

Trickle: Thank you Vanessa.

Trickle: Thank you everybody for joining our conference call today to discuss our fourth quarter results.

Trickle: Financial and operating results in the fourth quarter last year were significantly impacted by the situation in Panama.

Trickle: As such the quarter was challenging not just for first quantum but for investors and all stakeholders in Panama, particularly our workforce to local communities around us and our suppliers.

However, we have we have a plan in place to address the challenges thrown up by the circumstances in Panama focused on delivering the future positive cash flows from the consents you get three expansion, which will provide us the necessary time and space for resolution of Cobre Panama.

We have made good progress on our balance sheet initiatives to deliver this plan such as the announcement yesterday on a $500 million copper prepay.

Tristan Pascall: We are also well advanced in discussions with our lenders, and we will keep the market up-to-date on our program. I will start today's call with an update on the current situation in Panama, followed by an operational update by Rudy. We will keep these updates brief, as understandably the focus is on our balance sheet initiatives, which Ryan will review in detail.

Trickle: We are also well advanced in discussions with our lenders and we will keep the market up to date on our progress.

Speaker Change: I will start today's call with an update on the current situation in Panama.

Speaker Change: Good boy and operational update by Rudy.

Speaker Change: We will keep these updates brief is understandably the focus is on our balance sheet initiatives.

Speaker Change: Which Ron will review in detail.

Tristan Pascall: I will then close the call with our progress on the Consanti S3 expansion project before opening up the lines for Q&A. On our last conference call in October, our refreshed concession contract for the Cobra Panama mine had successfully been passed into law and published in the Official Gazette. Soon thereafter, however, civil unrest gained momentum in the country, with road blockages and protests against the government and also the mining contract.

Speaker Change: I will then close the call with our progress on the consensus U S. Three expansion projects before opening up the lines for Q&A.

Speaker Change: Yeah.

Speaker Change: On our last conference call in October I'll refresh concession contract with the cover Panama mine had successful even passed into law and published in the official Gazette.

Speaker Change: Soon thereafter, however, civil unrest gained momentum in the country with ROI blockages and protests against the government and also the mining contract.

Tristan Pascall: The road blockages impacted people and businesses across the country and also at Cobra Panama, as illegal blockades at the port prevented deliveries of essential supplies for our power plant and eventually forced the mine to ramp down and stop production. The blockades also prevented the shipment of concentrates, to which both Rudy and Ryan will speak shortly. On Panama Independence Day, November 28, after four days of deliberation, the Supreme Court in Panama declared Law 406 unconstitutional.

Speaker Change: The road blockages impacted people and businesses across the country and also at Cobre, Panama is illegal blockades that support prevented deliveries of essential supplies for a power plant and eventually forced the mine to ramp down and stopped production.

Speaker Change: The blockades also prevented the shipment of concentrate to which both Rudy and Ron will speak to shortly.

Speaker Change: On Panama Independent State in November 28, after four days of deliberation, the Supreme Court in Panama declared law for a six month unconstitutional.

Tristan Pascall: This was then followed by an announcement on December 19 by the Minister of MISI that a temporary phase of Environmental Preservation and Safe Management would be established until June 2024 whilst planning, audit, and review activities are undertaken. This period will take us into the next administration in Panama, with elections across the country to be held in May this year and a new president taking office in July. In addition, the Minister noted that it could take up to two years to plan and perhaps ten years or more to implement the measures required following the abrupt halt to operations at Cobra Panama. In early January, the company and MISI had discussions related to a formalized preservation and safe management program and the associated costs. At the government's request, on January 16, we submitted our initial plan to address these critical activities.

Speaker Change: This was then followed by announcement on December nine thing by the Minister of me see that a temporary phase of environmental preservation and safe management would be established until June 2020, full whilst planning audits and review activities are undertaken.

Speaker Change: This period will take us into the next administration in Panama with elections across the country to be held in May this year and the new President taking office in July.

Speaker Change: In addition, the minister noted that it could take up to two years to plan and perhaps 10 years or more to implement measures required following the abrupt halt operations at Cobre Panama.

Speaker Change: In early January the company NBC had discussions related to a formalized preservation and safe management program and the associated costs at.

Speaker Change: At the government's request, we submitted our initial plan to address these critical activities on January 16.

Tristan Pascall: As part of this plan, we've proposed the sale of concentrate on site to fund the initial phase of this critical environmental stability work, estimated at around $15 to $20 million per month, and we currently await a response from MECI on this plan. There is currently no mining activity at Cobra Panama, but blockades around the mine have dissipated, allowing for the delivery of critical supplies for the environmental stewardship of the asset. We have also commenced international arbitration processes, including notification under the Free Trade Agreement between Canada and Panama and with the International Chamber of Commerce's International Court of Arbitration relating to the 2023 concession contract. That being said, arbitration is not our preferred outcome, and we continue to engage in constructive communication with the government as we remain committed to Panama and being a part of a long-term solution that delivers the best outcome for the country and Panamanians.

Speaker Change: As part of this plan, we propose the sale of the concentrate on sought to fund the initial phase of the critic of this critical environmental stability work estimated at around $15 million to $20 million per month, and we currently await to response from me see on this plan.

Speaker Change: Yeah.

Speaker Change: There is currently no mining activity at Cobre, Panama, However, blockades around the mine have dissipated, allowing for the delivery of critical supplies for the environmental stewardship of the asset.

Speaker Change: We have also commenced international arbitration processes, including notification under the free trade agreement between Canada, and Panama and with the International Chamber of Commerce is international court of arbitration relating to the 2023 concession contract.

Speaker Change: That being said arbitration is not our preferred outcome and we continue to engage in constructive communication with the government as we remain committed to Panama and being a part of a long term solution that delivers the best outcome for the country and panamanians.

Speaker Change: Yeah.

Tristan Pascall: As we navigate through this period of preservation and safe management at Cobra Panama, I want to reaffirm that our commitment to the environment is at the forefront. Cobra Panama has always operated under best-in-class environmental management and remains committed to this responsibility on a transparent basis, particularly with regard to tailings and water management. At all our mine sites, we implement best practices and adhere to stringent international standards to minimize our ecological footprint and preserve and restore the natural surroundings. Similarly, our reforestation efforts at Cobra Panama are also world-class and contribute to the livelihoods of many Panamanian farmers.

Speaker Change: As we navigate through this period of preservation and safe management of Cobre, Panama I want to reaffirm that our commitment to the environment is at the forefront.

Speaker Change: Cobre, Panama has always operated under best in class Environmental management and remains committed to this responsibility on a transparent basis, particularly with regards to tailings and water management at.

Speaker Change: All of them on sides, we implement best practices and he too stringent international standards to minimize their ecological footprint and preserve and restore the natural surroundings.

Speaker Change: Similarly, our reforestation efforts at Cobre, Panama also world class and contribute to the likelihood so many panamanian farmers.

Tristan Pascall: We do acknowledge that we need to improve our broad-based communications, and we have made it a priority to address perceptions of mining by the public in Panama. This includes media campaigns to dispel the misinformation and fake news that gained traction at the close of last year, as well as direct engagement through tours to the mine site for government officials, civil society organizations, and community members on an open and transparent basis to demonstrate our best-in-class environmental standards and the benefits of the mine to the country. Panamanians are curious about the mine, with almost half of the people recently polled expressing an interest in visiting to understand more about copper mining. And so yesterday, we launched the Cobra Panama Visitors and Citizen Participation Program.

Speaker Change: We do acknowledge we need to improve our broad based communications and we have made it a priority to address specifics of mining by the public of Panama.

This includes media campaigns to dispel the misinformation and fake news that gain traction at the close of last year.

Speaker Change: As well as direct engagement through tools to the mine site for government officials Civil Society organizations and community members on an open and transparent basis to demonstrate our best in class environmental standards and the benefits of the mine to the country.

Speaker Change: My name is a curious about in the mine with almost half of the people recently polled expressing an interest in visiting to understand more about copper mining.

Speaker Change: And so yesterday, we launched the cobre, Panama visitors and citizen participation program.

Tristan Pascall: We look forward to welcoming some 3,000 people a month who want to learn more about this world-class project that is a huge part of the lives and economy of thousands of citizens and which is also a much-needed contributor to both the global renewable energy transition and to electrification in developing countries around the world. As we continue with our campaigns to inform the Panamanian people about the mine, we are seeing new space begin to open up in Panama where a reasoned debate about the role of mining in the economy and society is increasingly possible. I would now like to hand the call over to Rudy, who will provide an update on operations. Thank you, Tristan.

Speaker Change: We look forward to welcoming some 3000 people per month, who want to learn more about this world class project that is a huge part of our lives and economy of thousands of citizens and which is also a much needed contributor to both the global renewable energy transition and to electrification in developing countries around the world.

Speaker Change: As we continue with our campaigns to inform the Panamanian people about in the mine we are seeing new space begin to open up in Panama, and which are recent debate about the role of money in the economy and society is increasingly possible.

Speaker Change: I would now like to hand, the call over to Rudy who will provide an update on operations.

Speaker Change: Okay.

Rudy: Thank you Justin.

Rudy Battenhorst: Thank you, everybody, for joining our call today. Copper production in the fourth quarter totaled 160,000 tonnes, representing a 28% decrease from core 3. Sales volumes were also impacted, representing only 80% of the quarter's production and down over 40% from the preceding quarter due to the poor disruptions at Global Power. Copper C1 cash cost of $1.82 per pound during the quarter was 40 cents higher than quarter three, largely as a result of the lower production. At Cobre, Panama, the poor disruptions also prevented the delivery of critical supplies to operate the power plant and forced the mine to shut down production.

Rudy: Thank you everybody for joining our call today.

Rudy: Copper production in the fourth quarter totaled 160000 tons.

Rudy: Representing a 28% decrease from quarter three.

Rudy: Sales volumes were also impacted representing 80% of the quarters production them down over 40% from the preceding quarter.

Rudy: Due to the pool, just stood up disruptions at Cobre Panama.

Rudy: Copa C. One cash cost of $1 82 per pound during the quarter was 40 cents higher than quarter three.

Rudy: Largely as a result of the lower production volumes.

Rudy: I'd, probably put them on the port disruptions also prevented the delivery of physical suppliers to operate the power plants and forced the mine to ramp down production.

Rudy Battenhorst: As such, copper production for the fourth quarter was 63,000 tonnes, representing a decrease of 50,000 tonnes from the previous quarter. Copper C1 cash cost of $1.45 per pound was 26 cents higher than the previous quarter due to the lower production volume and the Lower Bipolar Curve. It is worth noting that prior to the disruptions at COVID-Panama... the CP100 expansion facilities were operating very well, which speaks to the strong capabilities of our projects team, and the operation achieved a monthly production record in October and was on track to achieve the top end of its guidance range, which is now suspended. At Kinshanshi, the operation produced approximately 32,000 tons of copper, down from the previous quarter by about 8,000 tons.

Rudy: As such copper production for the fourth quarter was 66000 tonnes, representing a decrease of 50000 tons from the previous quarter.

Rudy: <unk> cash cost of $1 45 per pound was 26 cents higher than the previous quarter due to the lower production volumes and lower byproduct credits.

Rudy: It is worth noting that prior to the disruptions at Cobre Panama.

Rudy: The C. P 100 expansion facilities, we're operating very well.

Rudy: It speaks to the strong capabilities.

Rudy: Projects team.

Rudy: The operation achieved a monthly production record in October and wasn't check to achieve the top end of its guidance range, which is now suspended.

Rudy: That concern she the operation produced approximately 32000 tonnes of copper.

Rudy: From the previous quarter by about 8000 tons.

Rudy Battenhorst: Due to mining constraints in Main 17 and the main pit that impacted mining rates. The latter relates to a misfire that was experienced in one of the blasting blocks that restricted mining activity. This has been addressed and is no longer a concern.

Rudy: Due to mining constraints in mind, 17, and the mindset that impacted mining rates.

Rudy: The latter relates to a misfire that was experienced in one of the blasting block statistics as mining activity.

Rudy: This has been dealt with and it's no longer a constraint.

Rudy Battenhorst: Production was also impacted by acid volume restrictions due to unplanned maintenance of the smelter during the quarter. Additional assets are being procured from the Copper Belt as we rebuild our asset stock. Kansanshi's production for 2023 was 135,000 tons, well within the Garden's Rite.

Rudy: Production was also impacted by asset volume restrictions.

Rudy: Due to unplanned maintenance at the smelter during the quarter.

Rudy: Additional asset is being procured from the copper belt.

Rudy: Asked me to build stocks.

Rudy: And since he's production for 2023 was 135000 tons well within the guidance range.

Rudy Battenhorst: Copper C1 cash cost of $2.43 a pound was 80 cents higher than quarter three, mainly due to lower production and a one-time catch-up charge on new electricity rates. Production guidance for 2024 is expected to be 130,000 to 130,000 tons and 65,000 to 70,000 tons of gold. At Sentinel, the operation continued to be impacted by hard ore in the lower levels of Stage 1 and 2 pits.

Rudy: Copper cone cash cost of $2 43, a pound was 80 cents higher than quarter three.

Rudy: Mainly due to lower production and a one time catch up charge.

Rudy: New electricity rates.

Rudy: Production guidance for 'twenty 'twenty four is expected to be honored and city 250000 tons.

Rudy: 65 to 70000 tons of gold.

Rudy: I think in all the operation continued to be impacted by hot on the lower levels of stage, one and two pits.

Rudy Battenhorst: Copper production was down quarter over quarter to approximately 60,000 tonnes. However, mining productivity improved over the course of the quarter with improved blast fragmentation and reduced congestion with the commencement of Stage 3 Western Crudback Mining. Total production for the year as a whole was 214,000 tons. Falling Short of Guidance, Copper C1's cash cost of $1.85 per pound was 20 cents higher than the preceding quarter. Reflecting the Lower Product.

Rudy: As such copper production was down quarter over quarter.

Rudy: Approximately 60000 tons.

Rudy: Well any productivity all either improves over the course of the quarter was improved blast fragmentation.

Rudy: And the reduced congestion.

Rudy: With the commencement of stage three Wisden cutback mining.

Rudy: Copper production for the year as a whole was 214000 tonnes.

Rudy: Falling short of the guidance.

Rudy: Got to see one cash cost of $1 85, a pound was 20 cents higher than the preceding quarter.

Rudy: Reflecting the lower production.

Rudy Battenhorst: Copper production is expected to be between 220,000 and 250,000 tons this year. With regard to the current rainy season, we have recorded more rain when compared to the 2019-2022 season, but less than we experienced during the last week at Sentinel. There has been significant work on wet weather preparation for the stormwater management process, and measures have been implemented to mitigate the risk of potential water accumulation that was experienced in the previous rainy season. That being said, there will be some seasonal impact on Zambian operations in the first quarter, which is reflected in our annual guide. Thank you, and I would like now to hand over the call to try and review the finances. Thank you, Rudy.

Rudy: Copper production is expected to be between 220 in 250000 tons. This year.

Rudy: With regards to the current rainy season, we have recorded more rain when compared to compare it to the 20th 19 to $22 two season.

Rudy: But less than we experienced during the last week season.

Rudy: At Sentinel.

Rudy: It hasn't been significant work on which way the preparations and storm water management processes have been implemented to mitigate the risk of a potential water accumulation.

Rudy: That was experienced in the previous rainy seasons.

Rudy: That being said.

Rudy: There will be some seasonal impact on the Zambian operations in the first quarter, which is reflected in our annual guidance.

Speaker Change: Thank you and I would like now to hand over the call trying to review the financials.

Speaker Change: Thank you Rudy.

Ryan McWilliam: As Rudy noted, Cobra Panama was in a state of preservation and safe management for much of the fourth quarter. However, the blockades around the mine impacted our ability to ship approximately 121,000 tons of copper concentrate, which was produced prior to the Supreme Court ruling. Sales, therefore, fell by more than production. As a result, revenue declined 40% in the quarter to $1.2 billion.

Speaker Change: As Rudy noted Cobre, Panama, we go to the state of preservation and safe management for much of the fourth quarter the.

Speaker Change: The blockades around the mine impacted our ability to ship approximately 121000 tons of copper concentrate which was produced prior to the Supreme Court ruling.

Speaker Change: Sales, therefore fell by more than production.

Speaker Change: As a result revenue declined 40% in the quarter to $1 $2 billion.

Ryan McWilliam: EBITDA decreased 72% to $273 million. Our net loss attributable to shareholders was $1.447 billion. This was due to a higher income tax expense from Kobe, Panama, and an $854 million impairment at Ravensfield. The nickel market is under pressure due to the continued ramp-up in supply from Indonesia. This has resulted in both lower nickel prices and lower payabilities for Raven. With the muted nickel outlook, we have taken the decision to fully impair Ravensoul.

Speaker Change: EBITDA decreased 72% to $273 million.

Speaker Change: Our net loss attributable to shareholders was $1 47 billion.

Speaker Change: This was due to a higher income tax expense from cobre, Panama and the $854 million impairment at Ravensthorpe.

Speaker Change: The nickel market is under pressure due to the continued ramp up in supply from Indonesia.

Speaker Change: This has resulted in both lower nickel prices and lower pay abilities for Ravensthorpe.

Speaker Change: With the muted nickel outlook, we've taken the decision to fully impair ravensthorpe.

Ryan McWilliam: Across Western Australia, multiple nickel miners have idled production, and it has been pleasing to see the government respond by designating nickel as a strategic mineral and providing royalty relief to support them. Moving on to cost. Copper C1 costs were 28% quarter-on-quarter, were up 28% quarter-on-quarter, to $1.82 per pound, impacted by lower production, higher fuel costs and the impact of once-off adjustments due to the signing of the new power contract in Zambia. Remaining input costs were stable during the quarter. In December, Brent oil prices declined to around $76 per barrel, which should benefit costs in the coming quarter. Now to the balance sheet. Net debt increased by $783 million during the quarter to $6.4 billion.

Speaker Change: Across Western Australia, multiple nickel miners have idle production and has it been pleasing to see the government respond by designating nickel is a strategic mineral and providing royalty relief to support the industry.

Speaker Change: Moving onto costs.

Speaker Change: Copper cone costs were 28% quarter on quarter, we're up 28% quarter on quarter to $1.82 per pound.

Speaker Change: Impacted by lower production.

Speaker Change: Higher fuel costs.

Speaker Change: And the impact of one off adjustments due to the signing of the new pilot contract in Zambia.

Remaining input costs were stable during the quarter.

Speaker Change: And December Brent oil prices decline to around $76 per barrel, which should benefit costs in the coming quarter.

Onto the balance sheet.

Speaker Change: Net debt increased by $783 million during the quarter to $6 $4 billion.

Ryan McWilliam: Equity was $1.2 billion at the end of the year, comprised of $959 million in cash and $250 million of undrawn revolver after we drew on the revolver through the quarter. There were two main drivers for the change in our debt and liquidity. Firstly, as mentioned in our Q3 results, during the fourth quarter, we made a one-time tax payment of $567 million to the Government of Panama. This payment was made prior to the Supreme Court ruling. It was important to make this payment and meet the obligations of Law 406, which preserved the strong arbitration right that we have under this contract with the Government of Panama. This was the largest ever tax payment in Panama's history and a reminder of the contribution that the mine has made to the country. Secondly, net debt increased due to the disruptions to shipping at Cobra Panama and the subsequent preservation and safe management of the mine. As I noted earlier, the disruption at the port prevented us from shipping copper concentrate.

Speaker Change: Liquidity was $1 $2 billion at the end of the year.

Speaker Change: That's comprised of $959 million in cash and $250 million of Undrawn revolver. After we drew on the revolver through the quarter.

Speaker Change: There were two main drivers for the change to our debt liquidity.

Speaker Change: Firstly as mentioned in our Q3 results during the fourth quarter, we made a one time tax payment of $567 million to the government of Panama.

Speaker Change: This payment was made prior to the Supreme Court ruling.

Speaker Change: It was important to make this payment and meet the obligations of low 46, which preserved our strong arbitration rights that we have under this contract with the government of Panama.

Speaker Change: This was the largest ever tax payments in Panama is history.

And as a reminder, for the contribution that the mine has made to the country.

Speaker Change: Secondly, net debt increased due to the disruptions to shifting at Cobre, Panama and the subsequent preservation and safe management of the mine.

Speaker Change: As I noted earlier the disruption at the port prevented us from shipping copper concentrate.

Ryan McWilliam: The sale of this concentrate will provide important funding of approximately $225 million at current market prices. This is required for the implementation of essential environmental stability measures under the Preservation and Safe Management Plan of the Mines. With Cobra Panama not in operation, our focus is on ensuring that we have a balance sheet that confidently supports the completion of the Kansanshi S3 expansion project, independent of the timing of resolution in Panama. As a result, we already have initiatives underway to strengthen our financial position. These include the suspension of the dividend, for Reduction in Capital Spending and Operating Cost and Working Capital Optimization.

Speaker Change: The sale of this concentrate.

Speaker Change: We will provide important funding of approximately $225 million at current market prices.

Speaker Change: This is required for the implementation of essential environmental stability measures under the preservation and safe management plant at the mine.

Speaker Change: With Cobre, Panama knocked in operation our focus is on ensuring that we have a balance sheet that confidently support with the completion of the consents U S oriented expansion project independent of the timing of resolution in Panama.

Speaker Change: As a result, we already have initiatives underway to strengthen our financial position.

Speaker Change: These include the suspension of the dividend.

Speaker Change: <unk> capital spending.

Speaker Change: And operating cost and working capital optimization.

Ryan McWilliam: Liquidity has been further bolstered by yesterday's announcement of a $500 million copper prepayment with our long-standing customer, Jiangxi Copper, at a competitive cost of funds, in line with that of our bank debt. The three-year prepayment agreement for 50,000 tons of copper per year includes a one-year grace period before periodic repayment commences. The price at which copper is sold under the agreement will reflect the LME copper price, subject to typical market terms.

Speaker Change: Liquidity has been further bolstered by yesterday's announcement of a $500 million copper prepayments with a long standing customer junk see copper at a competitive cost of funds in line with that of our bank debt.

Speaker Change: The three year prepayment agreement for 50000 tons of copper per year includes a one year Grace period before periodic repayment commences.

Speaker Change: The price at which copies sold under the agreement will reflect the <unk> copper price subject to typical market terms.

Ryan McWilliam: This pre-payment agreement is a reminder of the strategic nature of copper in today's market and the value of stable supply given the potential disruptions to copper production across the sector. In addition, the process to sell our Las Cruces mine in Spain is well advanced and has attracted interest from a range of parties from various parts of the world, reflecting the strategic location and processing capabilities of this project within the Iberian Pyrite Belt. As we alluded to in our January guidance release, we've also received expressions of interest regarding our Zambian assets, and as a result, we have commenced the process to evaluate the possibility of a minority investment by a strategic investor into this business. This interest is a reflection of the positive business and fiscal reforms that the Zambian government has delivered on in recent years. However, any such proposals received will be considered relative to other options available to the company and will only be pursued if we believe that they will deliver enhanced value and are in the best interests of our shareholders. The options that I have outlined are only a subset of those available to the company.

Speaker Change: This prepayment agreement is a reminder of the strategic nature of copper in today's market and the value of stable supply given the potential disruption to copper production across the sector.

Speaker Change: In addition to the prepay the process to sell our Las Cruces mine in Spain is well advanced and has attracted interest from a range of parties from various parts of the world.

Speaker Change: Collecting the strategic location and processing capabilities of this project within the librarian pyrite belt.

Speaker Change: Yeah.

Speaker Change: As we alluded to in our January guidance release, we have also received expressions of interest regarding our Zambian assets and as a result have commenced a process to evaluate the possibility of a minority investment by a strategic investor into this business.

Speaker Change: This interest is a reflection of the positive business in fiscal reforms that the Zambian government has delivered on in recent years.

Speaker Change: However, any such proposals received will be considered relative to other options available to the company and will only be pursued if we believe that they will be that they will deliver enhanced value and are in the best interest of our shareholders.

Speaker Change: The options that I have outlined are a subset of those available to the company.

Ryan McWilliam: As we've mentioned, for a couple of months now, we've been considering and pursuing a variety of balance sheet management initiatives across a wide range of finance providers, from short-term trade to capital markets. The prepay is an attractive first step in this respect, and we will continue to deliver initiatives which position our balance sheet to support our business' potential to create significant value over the coming period. Lastly, I'd like to address the going concern references in our MD&A and financial statement. Current forecasts for 2024, before taking into account future balance sheet initiatives, indicate that the company may exceed our net debt to EBITDA covenant ratio threshold in the coming 12 months, resulting in material uncertainty ongoing concern. This is similar to language that has been in our MD&A previously when we have worked through other challenging moments in our history. However, the nature of this analysis means that it does not factor in potential changes in the company's covenants, despite the fact that we are in advanced discussions with our banks in this respect.

Speaker Change: As we've mentioned for a couple of months now we've been considering pursuing a variety of balance sheet management initiatives across a wide range of finance providers from short term cap from short term trade to capital markets.

Speaker Change: The prepay has an attractive first step in this respect and.

Speaker Change: And we will continue to deliver initiatives, which position our balance sheet to support our business has potential to create significant value over the coming period.

Speaker Change: Yeah.

Speaker Change: Lastly, I'd like to address the going concern references in our MD&A and financial statements.

Speaker Change: Current forecast in 2024 before taking into account future balance sheet initiatives indicate that the company may exceed net debt to EBITDA, our net debt to EBITDA covenant ratio threshold in the coming 12 months.

Speaker Change: <unk> and the material uncertainty ongoing concern.

Speaker Change: This is similar to language that has been in our MD&A previously when we have worked through other challenging moments in our history.

Speaker Change: The nature of this analysis means that it does not factor in potential changes in the company's covenants. Despite the fact that we are in advanced discussions with our banks in this respect.

Ryan McWilliam: There is alignment with our banking group regarding amendments to the facilities to extend our debt amortization and provide more headroom in respect of our covenant. We expect to conclude these changes in the very near term. This should remove the technical risk around bank covenants when reviewed at the end of Q1. And that brings the finance section to an end. I now hand the call back to Tristan. Thank you, Ryan.

Speaker Change: There is alignment with our banking group regarding amendments to the facilities to extend our debt amortization and provide more headroom in respect of our covenants.

Speaker Change: We expect to conclude these changes in the very near term.

Speaker Change: This should remove the technical risk around our bank covenants when reviewed at the end of Q1.

And that brings the finance section to an end.

Speaker Change: I'll now hand, the call back to trust them.

Trust: Thank you Ron.

Tristan Pascall: The Consanche S3 expansion project remains on budget and on schedule to ramp up in the second half of 2025 and will return the company to a position of strong free cash flow generation. The $1.25 billion project is a key part of our ongoing commitment to Zambia, which is supported by the continuing stable investment climate in the country under the current Zambian government administration. Engineering work at the end of the fourth quarter was 80% complete, with minor mechanical design left and the balance on instrumentation and control engineering.

Trust: The consensus is three expansion project remains on budget and on schedule to ramp up in the second half of 2025, and we will return the company to a position of strong free cash flow generation.

Trust: The 1.25 billion project is a key part of our ongoing commitment to Zambia, which is supported by the continuing stable investment climate in the country under the current Zambian government administration.

Engineering work at the end of the fourth quarter was 80% complete with minor mechanical design lift and the balance on instrumentation and control engineering Dilip.

Tristan Pascall: Deliveries of major long-lead items such as the mills, the primary crusher, and process thickeners remain on schedule. Construction on the site continues across all disciplines, and excavation of the primary crusher position commenced during the fourth quarter. Similarly, the advancement of the smelter expansion to 1.6 million tonnes per annum feed capacity and ramp up of the enterprise nickel mine also remain on track. 2023 close, with the company facing one of its biggest challenges in its recent history. However, I remain confident in the resilience of First Quantum and the determination of the team to work through the current challenges. As Ryan discussed in his section, we are taking a proactive approach to manage our balance sheet and address our liquidity in a fulsome and disciplined manner.

Trust: Deliveries of major long lead items, such as the mills the <unk>.

Trust: <unk> crusher and prices thickness remain on schedule.

Trust: Construction on the site continues across all disciplines and excavation of the primary crusher position commenced during the fourth quarter.

Trust: Similarly, the advancement of the smelter expansion to $1 6 million tonnes per annum feed capacity and ramp up of the enterprise nickel mine also remain on track.

Trust: Yeah.

2023 closed.

Trust: With the company facing one of its biggest challenges in its recent history. However, I remain confident in the resilience of first quantum and the determination of the team to work through the current challenges.

Trust: As Ron discussed in his section we are taking a proactive approach to manage our balance sheet and address our liquidity in a fulsome and disciplined manner.

Tristan Pascall: An important component of this comprehensive solution is an amendment and extension of our loan facilities. We have a long relationship with our lending banks, and there is a high degree of alignment between parties, and we expect to provide an update to the market in short order. Whilst we address our liquidity, we remain focused on running our operations, executing our Consange S3 expansion, and the safe and responsible stewardship of Cobra Panama. Thank you. Operator, I would like to open the line for questions now, please. Thank you.

Trust: An important component to this fulsome solution is an amendment and extension of our loan facilities.

Trust: We have a long relationship with our lending banks and there's a high degree of alignment among parties and we expect to provide an update to the market in short order.

Trust: Whilst we address our liquidity we remain focused on running our operations executing at Constancia is three expansion in a safe and responsible stewardship of cobre Panama.

Speaker Change: Thank you.

Operator, I would like to open the line for questions now please.

Speaker Change: We will now begin the analyst question and answer session.

Operator: We will now begin the analyst question and answer session. Analysts are permitted to ask one question and one follow-up and are welcome to rejoin the queue if they have more. To join the question queue, you may press star, then 1 on your telephone keypad.

Speaker Change: Alice who are permitted just are permitted to ask one question and one follow up and you're welcome to rejoin the queue. If they have more.

Speaker Change: To join the question queue. You May Press Star then one on your telephone keypad, you'll hear atone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw. Your question. Please press Star then two we will pause for a moment as callers join the queue.

Greg Barnes: You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue. Our first question comes from Greg Barnes of TD Securities. Please go ahead.

Speaker Change: Our first question comes from Greg Barnes of TD Securities. Please go ahead.

Greg Barnes: Yes, thank you, operator. Tristan, can you talk a little bit about the damages or value you're seeking under the arbitration process? I know you have the $10 billion number in the slide deck, but I'm wondering if that's the number you're seeking, or is it something more than that?

Greg Barnes: Yes. Thank you I'll put it Tristan can you talk a little bit about the damages of value you're seeking under the arbitration process. I know you have a $10 billion number in the slide deck, but I'm wondering if that's the number you're thinking or is it something more than that.

Tristan: Yes, Thanks, Greg.

Tristan Pascall: I mean, first off, we should highlight that although arbitration isn't our preferred outcome, we do have a strong case in arbitration, but we would really rather come to a resolution with the state of Panama that results in the best outcome for the people and for the company. That being said, as part of the free trade arbitration, that is between Canada and Panama under the free trade agreement, and as required under the process, we have provided a minimum value sought in those proceedings of $20 billion, reflecting an estimated fair market value of the initial investment. But in reality, with damages and interest, the award could be much higher.

Tristan: First off we.

Tristan: We should highlight that although the arbitration is now preferred outcome. We do have a strong case in arbitration, but we would really rather come through resolution with a state of Panama that results in the best outcome for the people.

Greg Barnes: And for the company.

Greg Barnes: That being said as part of the free trade arbitration that is between Canada, and Panama and the free trade agreements and as required under the process. We have provided a minimum value.

Greg Barnes: So in those proceedings of $20 billion, reflecting.

Greg Barnes: An estimated fair market value of the initial investment.

Greg Barnes: But in reality with damages and interest the world could be very much harder on this.

Ryan McWilliam: There have been some figures quoted in the Panamanian media which are several times higher. Alongside that, we do have the ICC arbitration process as well. That's under the auspices of the concession contract from 2023, and it is the same value under the ICC process. That's under a fair market value consideration; that is the termination clause in the ICC contract. And just as a follow-up, I just want to direct this to Ryan, on the copper prepay, how does the mechanics of the repayment of the $500 million actually work? So Greg, the Pre-Pay is like a Sale Agreement for 50,000 tons of copper over three years. And we sell copper to Junxi just as we've sold it to them in the past, you know, as a regular customer at market-related terms.

Greg Barnes: It's been some figures quoted in the Panamanian maybe it was just several times higher alongside that we do have the ICC arbitration process as well that's under the auspices of the the <unk>.

Greg Barnes: Session contract from 2023.

Greg Barnes: And is it the same value under the ICC premises.

Greg Barnes: That's under a fair market value a consideration that is the termination clause in the OCC contract.

Speaker Change: And just as a follow up.

Matt Murphy: Alright, Mr. Ryan on the copper prepay, how does the mechanics of the repayments of the.

Ryan McWilliams: So it's $500 million actually work.

Ryan: So Greg the prepaid prepaid the sale agreement for 50000 tons of copper over three years.

Greg Barnes: And we sell copper to chunk see just as we've sold it to them in the past as a regular customer at market related terms, but also as part of the agreement we received an advanced payment of $500 million.

Ryan McWilliam: But also, as part of the agreement, we receive an advance payment of $500 million, with the interest rate on that payment, a floating interest rate broadly in line with our bank debt costs. We then sell them the copper as per normal, with no discount on the LME price on market terms. There's a one-year grace period, and then in years two and three, we pay them back on that loan plus interest, and that payment is offset against what they would have paid us for the copper in years two and three.

Greg Barnes: With the interest rates on that payment a floating interest rate, but was in line with our bank debt costs. We then sell it in the copper as per normal no discount on that let me price.

Greg Barnes: On market terms is a one year Grace period, and then in years, two and three we pay them back on that loan plus interest and that payment is offset against what they would have paid us for the copper in years, two and three.

Greg Barnes: Yeah.

Greg Barnes: Okay.

Orest Wowkodaw: Our next question comes from Orest Wowkodaw of Scotiabank. Please go ahead. Hi, good morning.

Greg Barnes: Our next question comes from our erstwhile cause Dallas Scotiabank. Please go ahead.

Dallas Scotiabank: Hi, good morning.

Ryan McWilliam: Brian, do you have a target of debt reduction corporately in terms of what you're trying to get to with respect to the various transactions you're looking at? Thanks, Orest. The focus is really on having the balance sheet that confidently delivers S3, because it's S3 that brings Zambia back to being a strong cash flow producer, and then we'll naturally de-leverage from there. So we have a clear plan in place. It's a holistic plan. It's well advanced.

Dallas Scotiabank: Brian do you have a target of debt reduction corporately in terms of what you're trying to get to with respect to the various transactions you're looking at.

Dallas Scotiabank: Thanks highest the focused Israeli on having the balance sheet that confidently deliver that street.

Speaker Change: Because it's S three that deliver Zambia back to being a strong cash.

Cash flow producer and then we will naturally deleverage from there. So we have a clear plan in place. It's a holistic plan, it's well advanced we announced two important step forwards in that plan today, which is the copper prepay in alignment on the bank covenants and we'll keep the market updated it in short order on the progress.

Ryan McWilliam: We announced two important steps forwards in that plan today, which is the copper prepay and alignment on the bank covenants, and we'll keep the market updated and in short order on further progress. Does the prepay qualify, or is it considered debt under the covenants? Or is that, is that considered not debt?

Speaker Change: Just the prepay.

Speaker Change: Qualifiers are considered debt under our covenants or is that or is that considered knocked out.

Ryan McWilliam: Yes, so from an accounting perspective, it will be deferred revenue, but from a debt perspective, it'll, from a covenant perspective, will likely be included in the debt, the covenant calculation. I say so because it still helps you with liquidity, but not with your deck. Correct. The focus on the debt covenants has really been that discussion with the banks. And I'd just like to note our appreciation for the supportive and constructive approach that our banks have taken in the discussions with us to reach alignment on new covenants. Okay, and can you give us an idea how much of a minority interest you are considering in Zambia in terms of a potential sale to a strategic partner? Doris, I wouldn't get too much into the specifics at this stage, other than to say we've received interest from a number of parties in respect of Zambia and stakes within our business.

Speaker Change: Yes, so from an accounting perspective, it'll be deferred revenue, but from a debt perspective from a covenant perspective will likely be included in the deck.

The covenant calculation.

Speaker Change: I see so it's still it helps me with liquidity, but not with your debt covenants.

Correct the depth.

Speaker Change: Focus on the debt covenants, there's really been that discussion with the banks and I just like to note.

Speaker Change: Depreciation for the supportive and constructive approach that all banks have taken in the discussions with us to reach alignment on new covenants.

Speaker Change: Okay and can you give us an idea of how much of a minority interest are you considering and Zambia in terms of a potential sale to a strategic.

Speaker Change: Alright, so I wouldn't get too much into the specifics at this stage other than to say we've received interest from a number of parties in respect of Zambia and stakes within our business I think that's a function of it being a high quality copper business in Zambia and also the rail improvement we've seen in Zambia, which has attracted a variety of pot and he is also to make other investments in Zambia.

Tristan Pascall: I think that's a function of it being a high-quality copper business in Zambia and also the real improvement we've seen in Zambia, which has attracted a variety of parties also to make other investments in Zambia. And we'll explore those discussions in a disciplined manner. And if there's a transaction that makes sense for shareholders, we'll progress with that transaction. If not, we're comfortable with the existing ownership structure in Zambia. Our next question comes from Jackie Przybylowski of BMO Capital Markets. Please go ahead.

Speaker Change: And we will explore those discussions in it in a disciplined manner and if there's a transaction that makes sense for shareholders well progressed with that transaction, if not we're comfortable with existing ownership structure in Zambia.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Jackie <unk> of BMO capital markets. Please go ahead.

Jackie Przybylowski: Thanks very much for taking my question. I just wanted to ask you about the unsold copper concentrate that you have in Panama, 121,000 tons. If you could tell us, I know it hasn't been sold yet, if you could tell us maybe if you expect it to be sold in the first quarter or if we should assume that it's a second quarter transaction. And as a follow-up, I guess it'd be helpful, just given that Law 406 has been overturned, if you could talk a little bit about what taxes and royalty rates and things that you're Thank you. Sure, Jackie.

Jackie: Thanks, very much for taking my question I just wanted to ask you about the unsold copper concentrate that you have in Panama 121000 times. If if you could tell us I mean, I know it hasn't been sold yet if you could tell us maybe if you expect it will be sold in a in the first quarter or if we should assume that.

Speaker Change: The second quarter transaction and as a follow up I guess it'd be helpful. Just given the love for all six has been overturned if you could talk a little bit about.

Speaker Change: What like taxes, and royalty rates and things that Youre expecting you would on a on that sale if and when that happens. Thank you.

Speaker Change: Sure Jackie yet so there's 121000 tons sitting in the shade and it's clear from our perspective that was mined and processed prior to the Supreme Court decision and that provides the pathway to ship it out we'd like to press for that so certainly.

Tristan Pascall: Yeah, so there's 121,000 tonnes sitting in the shed, and it's clear from our perspective that it was mined and processed prior to the Supreme Court decision, and that provides the pathway to ship it out. We'd like to press for that, so certainly we submitted the Preservation and Safe Management Plan on the 16th of January, and in conversations with the Ministry, a key component of that plan and how to address the environmental stewardship of the site, which is needed, is how those costs are met. So the concentrate is an important part of that. In addition, we don't want to see any gassing or anything coming off that concentrate, so there's a strong argument to move it.

Speaker Change: We submitted the preservation and safe management plan on the 16th of January.

Speaker Change: And in conversations with the Ministry.

Speaker Change: A key component of that plan and how to address the environmental stewardship of the salt which is needed.

Speaker Change: As to how those costs are met so the concentrate is an important part of that in addition, we don't want to see any guessing or anything coming off that concentrate so there's a strong argument to move it we would like to present to that as soon as possible.

Tristan Pascall: We would like to press for that as soon as possible. And in regard to the royalties and so on due, that's yet to be resolved with the government, but looking at the way the current mining code works, we would expect that the mining code royalties would apply to that. We don't see that minimum tax, the previous arrangements under Law 406, we do, and we'd be looking at royalties under the current mining code. Okay, great. Thanks. Thanks very much, Tristan.

Speaker Change: And in regard to the royalties and so on to.

Speaker Change: Yeah.

Speaker Change: That's yet to be resolved with the government.

Speaker Change: Looking at the way the current mining code works, we would expect that in the mining code royalties would apply to that we don't see the minimum tax the.

Speaker Change: Previous arrangement on the move for six weeks.

Speaker Change: We'd be looking at royalties under the current mining code.

Speaker Change: Okay, great. Thanks, Thanks, very much Jason.

Dalton Baretto: Our next question comes from Dalton Baretto of Canaccord Genuity. Please go ahead. Thanks, operator. Good morning, Tristan and team. Tristan, I'm wondering if I could ask you about the situation around the election in Panama right now. I understand Martinelli has been disqualified from running.

Speaker Change: Our next question comes from Dalton Barreto with Canaccord Genuity. Please go ahead.

Dalton Baretto: Thanks, operator, and good morning attrition that team just and I'm wondering if I can ask you about the situation around the election in Panama right now I understand martinelli has been disqualified from running so I'm wondering what the board looks like to you right now and how you were thinking about.

Tristan Pascall: So I'm wondering what the board looks like to you right now and, you know, how you're thinking about, you know, both the election as well as your actions post-election. Thank you. Yeah, sure. So I think there are two parts.

Dalton Baretto: Both the election as well as your action supposedly election. Thank you.

Speaker Change: Yes, sure. So I think there's two parts. The first is that as I was saying there.

Tristan Pascall: The first is that, as I was saying there, it's important that some activities commence on the site, and that's really to address the environmental stewardship requirements right now. And we've seen positive signs in terms of the framework around the Preservation and Safe Management Plan that is in discussion with the current administration. The election is in May.

Speaker Change: Important that some activities commenced on the <unk> and that's really to address the environmental stewardship requirements right now and we're seeing positive signs in terms of framework around the preservation and safe management plan.

Speaker Change: That is in discussion with the current administration. The election is in my view some eight candidates running for that I think delta in what we'd say is whoever comes in.

Tristan Pascall: There are some eight candidates running for that. I think, Dalton, what we'd say is whoever comes in, the solutions that are provided by the mine in terms of contribution to the economy, contribution to employment, social security, and social infrastructure are extremely important and can't be ignored in the context of the challenges that Panama is experiencing in terms of lower growth rates and also the situation with low water and so on. So we're seeing very high power prices in the country. You know, getting the power plant running would provide an active contribution to support high power prices for people in their homes in Panama. These are the issues that the incoming administration will need to deal with, whatever the successful outcome of the democratic elections is.

Speaker Change: The solutions that are provided by the mine in terms of contribution to the economy contributions to employment social security social infrastructure are extremely important and can't be ignored in the context of the challenges that Panama is experiencing in terms of lower growth rates.

Speaker Change: And also the situation with low water and so on so we're seeing very high power prices in the country getting the plant running.

Speaker Change: Ill provide an active contribution to support a high power prices for people in their homes in Panama.

Speaker Change: These are the issues that the incoming administration will need to deal with whichever the cat whichever the successful outcome.

Speaker Change: Outcome of the Democratic election season.

Tristan Pascall: Okay, thank you for that. And then, I think you said earlier in your comments that you're seeing new space for responsible debate on the role of mining. What does that look like in Panama right now? And what's the plan to, you know, post the election to address sort of the social license? Sure, Dalton, so I think the decision by the Supreme Court last year was understandable in terms of a release valve and a lot of emotion in the country.

Speaker Change: Okay. Thank you for that and then I think you said earlier in your comments that Youre seeing new space for responsible debate on the role of mining what does that look like in Panama right now and what's the plan to you know.

Speaker Change: Post the election to address sort of the social license.

Speaker Change: Sure.

Speaker Change: I think you know.

Speaker Change: The decision by the Supreme Court last year was understandable in terms of a release valve and a lot of emotion in the country. What was the surprise was that they stopped operations.

Tristan Pascall: What was a surprise was that they stopped operations, and that needs to be dealt with because stopping things at such a hard stop can be very detrimental to the environment, and so that's the reason why the Preservation and Safe Management Framework is important so that those activities can get underway. I think there's an understanding that mines can't stop dead and there needs to be a fullsome working out of that solution, so we've seen MECI talk about developing a plan over two years, and it may perhaps take up to ten years to resolve that. In terms of opening further space, you know, we acknowledge there was a lot of emotion. We need to do more in terms of broad-based communication and speaking to people.

Speaker Change: And that needs to be dealt with because stopping things.

Speaker Change: In such a hard stop at can be very detrimental to the environment and so that's the reason why the preservation and safe management framework is important it's always activities can get underway. I think there is an understanding that you know mines can't stop dead, and then needs to be a fulsome workout of that solution. So we've seen may see talk about developing a plan over two years and it might.

Speaker Change: Perhaps take up to 10 years to resolve that in terms of openings for the space.

Speaker Change: We acknowledge that there was a lot of emotion, we need to do more in terms of broad based communication in speaking to people I think Panama interested to learn about and the mine. If you ask them what should happen from this point that's challenging for people to answer and I think that's that is a space.

Tristan Pascall: I think Panamanians are interested in learning about the mine. If you ask them what should happen from this point, it's challenging for people to answer. And I think that is a space, but a lot needs to be done in terms of this time in front of the election and then into the run-up to the new administration coming in.

Speaker Change: But a lot needs to be done in terms of this time in front of the election, and then into the run up to the new administration coming in.

Speaker Change: Okay.

Tristan Pascall: Our next question comes from Ralph Profiti of 8 Capital. Please go ahead. Good morning, Tristan. Thanks for taking my question. I just have one.

Speaker Change: Our next question comes from Ralph <unk> of eight capital. Please go ahead.

Ralph: Good morning, and thanks for taking my question I just have one.

Ralph M. Profiti: Did the MISI delivery of this preliminary draft on January 16th include proposals for cost sharing of the $15 to $20 million a month? After successful monetization of those inventories. Just wondering how we should think about sort of who foots the bill, you know, in that medium.

Ralph: Did the Missy delivery of this preliminary draft on January 16th include proposals for cost sharing of the $15 million to $20 million a month.

Ralph: After successful monitor monetization of those inventories just wondering how we should think about sort of who fits the bill.

Ralph: In that medium term.

Tristan Pascall: Sure Ralph, so what happened there, MECI had asked for us to submit a plan, that is, they said this needs to be addressed, how will you address the safe environmental management of the site? So they called for a plan, and so it was our submission, a preservation and safe management plan, that dealt with the topics of the environmental stewardship that is required, it dealt with the topics of the welfare of employees and how they would be looked after, you know, given the circumstances, security of the asset, you know, safe maintenance, that is keeping the assets in good standing, and then also the costs, and you know, certainly there's an understanding in terms of that framework, that the costs of that environmental stewardship do need to be met, so with the concentrators available for that, it also eliminates, you know, potential environmental degradation on the concentrate itself, and that would address that $15-$20 million per month, you know, that's the necessary level in order to, you know, ensure environmental stewardship, that's at a level of about 1,400 people per site, which is about the right level, you know, beyond that, you know, the ability to operate some of the machinery there would give us greater ability to.., to ensure that pH in the tailings dam is held within compliance, and that is there is no degradation in terms of downstream environmental impacts. And we've seen that all the way through Panama. It really has been operating as a gold standard environmentally, particularly in regard to discharge of water from the tailings dam. All our independent audits return those very high standard results.

Speaker Change: Sure Ralph.

Speaker Change: What happened at Macy's had asked for us to submit a plan.

Speaker Change: That is they they see this needs to be addressed how will you address the safe environmental management of the site. So they called for a plan and so without submission preservation and safe management plan that dealt with the topics of <unk>.

Speaker Change: Governmental stewardship that is required it dealt with the topics of the.

Speaker Change: The welfare of employees and how they would be looked after.

Speaker Change: The circumstances are security asset safe maintenance that is keeping the assets in good standing.

Speaker Change: And then also the costs and.

Speaker Change: Certainly there's an understanding in terms of that framework that the cost of that environmental stewardship do you need to be met so.

The concentrate is available for that it also eliminates potential.

Speaker Change: Potential environmental degradation on the concentrate itself.

Speaker Change: And that would address that $15 million to $20 million per month.

Speaker Change: That's the necessary level in order to ensure.

Speaker Change: Ensure environmental stewardship that sort of level of about 1400 people per site, which is about the right level.

Speaker Change: Beyond that.

Speaker Change: To operate some of the machinery, they would give us greater ability to too.

Speaker Change: Sure that ph in the tailings dam is held within compliance and that is there is no degradation in terms of downstream environmental impacts and we've seen that all the way through Panama. It really has been operating as a gold standard environmentally particularly in regard to discharge of water from the timing Stan rollout independent.

Ordered to return those very high standard results.

Tristan Pascall: And for that to continue, those costs do need to be addressed. So that was part of the plan that we put forward. Thanks.

And for that to continue those costs do you need to be addressed and that was part of the plan that we put forth.

Speaker Change: Oh.

Speaker Change: Understood. Thanks Tristan.

Brett Levy: Our next question comes from Bryce Adams of CIBC Capital Markets. Please go ahead. Thank you, Operator. Hi, all. Firstly, just noting the Ravensthorpe impairment. It might be difficult with so many unknowns, but what are the triggers for an impairment test on Cobre Panama?

Our next question comes from Bryce Adams of CIBC capital markets. Please go ahead.

Brett Levy: Thank you operator, Ohio.

Brett Levy: Firstly, just noting the ravensthorpe impairment.

Brett Levy: It might be difficult with so many unknowns, but what are the triggers for an impairment test on cobre Panama.

Ryan McWilliam: That test, is that something that's being considered, or with arbitration initiated, is it not required? Just wondering what the trigger might be for the testing there. Yeah, sure, Bryce. So we do look at impairment triggers across our assets, which include Ravenswarp, and Cobra Panama, and you then consider a variety of scenarios going forward at Cobra Panama as you work through that impairment analysis. And I think it's important to note that you also consider potential arbitration outcomes when you conduct that analysis. And on the basis of that, we were comfortable with the book value we had for Cobra Panama.

Brett Levy: Test is that something that's being considered.

Brett Levy: Arbitration initiated its not required just wondering what the trigger might be for the testing.

Speaker Change: Yes, sure Bryce so we do look at impairment triggers across our assets that include the Ravensthorpe included Cobre, Panama and you then consider a variety of scenarios going forward. It at Cobre, Panama as you work through that impairment analysis and I think it's important to note that you also consider potential arbitration outcomes. When you conduct that analysis and then on the <unk>.

Speaker Change: So that we were comfortable with the book value, we have for Cobre Panama.

Ryan McWilliam: Okay, thanks. And for a follow-up, I'm going to go back to the copper concentrate at Cobre Panama. If you're successful in shipping out that concentrate, do you expect that all of the net revenue is available for care and maintenance costs? And in that scenario, is there a potential for a write-down to the amount of the cost of the inventory?

Bryce: Okay. Thanks.

Speaker Change: Sort of follow up and then get back to the copper concentrate at Cobre Panama.

Speaker Change: We were successful in shipping at that Con.

Speaker Change: Do you expect that all of the net revenue is available for care and maintenance costs and in that scenario is there a potential for a write down.

Speaker Change: Ah right down to the amount of the cost of the inventory.

Ryan McWilliam: Yes, Bryce, the way it would work is we would sell that copper concentrate, and that would generate around $220 million of cash, around $160 million of EBITDA. So, normally, that would have been EBITDA that would have flowed into Q4, that would then flow into Q1, and that cash amount would, we expect, broadly fund the preservation and environmental work at sites for most of this year. Our next question comes from Yanos Masvoulas of Morgan Stanley. Please go ahead.

Speaker Change: Yes, the price the way it would work is we would sell that copper concentrates that would generate around $220 million of cash around $160 million of EBITDA. So that normally would have been EBITDA that would have flowed into Q4 that would then flow in Q1 and that cash amount would we expect broadly fund the preservation and.

Speaker Change: Mental work at sites for the type of the most of this yet.

Ioannis Masvoulas: Our next question comes from Giannis muscles of Morgan Stanley. Please go ahead.

Ioannis Masvoulas: Okay.

Ioannis Masvoulas: Hello Tristan and Tim, thank you very much for the presentation. First question from me, going back to the prepayment agreement, could this deal in any way restrict the pool of possible bidders for a minority state? Given that you will have to sell 50,000 tons per annum to Jiangxi for the next three years, and then within that, do you have capacity to do more of these deals, for example, at Sentinel? Sure, Ioannis

Ioannis Masvoulas: Especially for someone team. Thank you very much for the presentation.

Ioannis Masvoulas: First question for me going back to the prepayment agreement.

Giannis: This deal in any way restrict if all the possible teasers for a minority stake keeping up that you would have to be 60000 tonnes per annum to the drinks before the next two to three.

Giannis: Three years, and then we see that.

Giannis: You have capacity to do more of these deals for example that sentiment. Thank you.

Giannis: Joanna to your first question no the contracting entity as a as a marketing subsidiary.

Ryan McWilliam: So to your first question, no, the contracting entity is our marketing subsidiary, and it's a small percentage of the overall copper production from our Zambian business. In terms of your second question, yes, there is the potential for future agreements like this one. We'll assess them on a case-by-case basis, just as we do all our financing options, and where we feel they are at competitive terms that make sense for us, we'll enter into them. Our next question comes from Lawson Winder of Bank of America Securities. Please go ahead. Great, thank you, operator. Good morning, everyone. Thank you for the presentation today. I just wanted to get a little bit of clarity on the prepay.

Giannis: And it's a small percentage of the overall copper production from from Zambian business.

In terms of your second question, Yes, there is potential for future agreements like this one.

Speaker Change: We'll assess them on a case by case basis, just as we do all our financing options and where we feel they are at competitive terms that make sense for us we'll enter into them.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Lawson Winder of Bank of America Securities. Please go ahead.

Speaker Change: Okay.

Lawson Winder: Great. Thank you operator.

Good morning, everyone. Thank you for the presentation today.

Lawson Winder: I just wanted to get a little bit of clarity on the on the prepay I wasn't 100% clear that there are no caps or floors.

Lawson Winder: I wasn't 100% clear that there are no caps or floors. Correct, Lawson. It's at LME prices, so there's no implicit hedging agreement locked into the prepay. It's just about purely selling physical copper at market-related prices, and as part of that, there's also a loan agreement to First Quantum. Okay, perfect. Also wanted to ask about potential asset monetization or minority sales. Consistent communication with the market and with us, Taka Taka has never been mentioned as a possible asset that could be monetized to help with liquidity and strengthen the balance sheet. Is that something you guys talk about internally?

Lawson Winder: Correct clause in it that <unk> prices. So there's no implicit hedging agreements locked into the prepay, it's just about purely selling physical copper at market related prices and as part of that is also a loan agreement to first quantum.

Speaker Change: Okay perfect.

Speaker Change:

Speaker Change: Also wanted to ask you about.

Speaker Change: Potential asset monetization minority sale, so I mean through through your.

Speaker Change: No.

Consistent communication with with the market and with US talk attack has never been mentioned as a possible asset that could be monetized to help with liquidity and striking the balance sheet is that something you guys talk about internally.

Tristan Pascall: Sure, Lawson, we've certainly looked at that. Taka Taka is a great project. We think it hangs together really well.

Speaker Change: Sure.

Speaker Change: And we certainly looked at that Tech attack a is it is a great project, we think it hangs together really well the question.

Tristan Pascall: The question, you know, at the current stage of the asset, we need to address two questions. One, the environmental and social impact assessment approval, and secondly, the investment climate in Argentina. And at this stage, you know, we think both of those, particularly the investment climate, although we're seeing, you know, with the new administration there, certainly intent, but it's really yet... We're yet to see implementation that would, we think, impact the way in which a process would go forward. Certainly, as we look at that asset, you know, the potential for partnership or and so on in the future, we've been open to I think it really needs to get to a shovel-ready position, Lawson, before we can look further into that. Our next question comes from Ian Rossouw of Barclays. Please go ahead.

Speaker Change: At the current stage of the cities, we need to address two questions one the environmental social impact assessment approval and secondly, the investment climate in Argentina and at this stage.

Speaker Change: Both of those particularly the investment kilometer, though we're seeing.

Speaker Change: With the new administration, they suddenly intent.

Speaker Change: But it's really yet we get to see implementation.

Speaker Change: Wood.

Speaker Change: We think impacted the way in which a process would go forward certainly as we look at that asset the potential for partnerships and so on in the future we'd be open to say, we would look at that.

Speaker Change: I think it really needs to get to a shovel ready position Lawson before we can look further into that.

Yeah.

Speaker Change: Our next question comes from Ian Russo.

Ian Rossouw: Barclays. Please go ahead.

Ian Rossouw: Hi, thank you. Just one question on this preservation and safe management program. Do any of your proposals include producing new copper to help fund the ongoing program going forward? And maybe just as part of that, you mentioned that now that the blockade is cleared, have you been able to restart the power plant and sell it into the grid? Sure, Ian. But at this time, no; the power plant is still idle. We'd like to see that happen.

Ian Rossouw: Alright, thank you.

Ian Rossouw: Just one question on this.

Ian Rossouw: Preservation and safe management price.

Ian Rossouw: Graham does does any of your proposals include.

Graham: Producing new copper.

Graham: Help fund the ongoing program going forward and maybe just as part of that you mentioned that now that the blockade just cleared have you been able to restart the power plants and selling into the grid.

Speaker Change: So in this time no the pipeline is still idle.

Speaker Change: We'd like to see that happen.

Tristan Pascall: Producing that power would certainly have a very positive impact for Panamanians in terms of reducing power prices in the grid. It's currently at a historical high because of low water in the hydro dams in the country, and this time of year is always low because of the rainfall, normally, and because of low wind and solar. So currently, Panama's running a lot of diesel power, which is very expensive, and certainly the power station can contribute to the national grid. In terms of running operations and generating new copper, that alternative is available in turning the mill and producing on one train, as we were during the care and maintenance stage during the COVID period. We're certainly able to hold environmental stewardship, particularly around the tailings dam, in a very strong position.

Speaker Change: Yeah.

Producing that power would certainly have a very positive impact for Penn in mining in terms of reducing power price in the grid. It's currently at a historical high because of low water in the hydro dams in the country and this time of year is always a low because of rainfall normally and because of that.

Speaker Change: Wind and solar.

Speaker Change: So.

Speaker Change: Currently Panama is running a little diesel power, which is very expensive and certainly the past I shouldn't can.

Speaker Change: Contribute to the national grid in terms of.

Speaker Change: The in terms of running operations in January generating your copper that alternative is available in that tuning the mill and producing on one train as we would during the care and.

Speaker Change: Maintenance states during the Covid period, we certainly able to hold the environmental stewardship, particularly around the tailings dam and a very strong position and ultimately.

Tristan Pascall: And ultimately, it's the buffering from the lime addition, the buffering from the processing in the milling trains, and certainly you could achieve that by some level of operation. It really holds things steady and holds things constant. It would also provide the sand that's necessary for the ongoing cyclone sand construction on the tailings dam. Without that, you're challenged around erosion, you're challenged around long-term issues with those issues on the tailings dam because all of the long-term planning was there, but in the interim, there is ongoing construction that is required on the dam and to manage pH in the facility itself.

Speaker Change: It's the buffering from.

Speaker Change: From the long edition the buffering from the processing in the in the milling trains and Sidney you could see that in.

Speaker Change: By some level of operation.

Speaker Change: <unk> really hold things steady in wholesale constant it would also provide the sand that's necessary for the ongoing stockpiling sand construction on the timings, Dan without that Youre challenged around erosion, you're challenged around long term on those issues on the tailings dam because all of the the long term planning was there but in the interim.

Speaker Change: These ongoing construction that is required on the dam and to manage ph and metallics in the facility itself.

Tristan Pascall: Thank you for watching! This concludes the question and answer session. I would like to turn the conference back over to Tristan Pascall for any closing remarks. Thank you very much, operator, and thank you everyone for joining our call today. We certainly appreciate the support, and we look forward to talking to you again soon. This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Speaker Change: Okay.

Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Tristan Pascoe for any closing remarks.

Tristan Pascall: Thank you very much operator, and thank you everyone for joining our call today, we certainly appreciate the support and we look forward to talking to you again soon.

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

Speaker Change: Yeah.