HispanicBusiness

Copper production increased by 29% in Q1 2013 compared to Q1 2012 due to higher copper grades and recovery, and slightly higher throughput.

Zinc production was 34% higher than Q1 2012 due to significantly higher zinc grades and higher recovery.

The copper and zinc grades achieved in Q1 2013 were higher than plan for the year due to areas mined outside of the mine plan. Copper and zinc grades are expected to return to plan levels for the remainder of 2013.

Cash costs in Q1 2013 decreased compared to Q1 2012 due to higher copper production and higher by-product credits. The decrease in cash costs in Q1 2013 was slightly offset by an increase in operating costs mainly related to contractor fees.

Sales revenues increased by 8% and gross profit increased by 17% in Q1 2013 compared to Q1 2012. The increase in sales revenues and gross profit reflect an increase in zinc sales volumes partially offset by a slight decrease in copper sales volumes and lower realized copper and zinc prices. Gross loss in the 10-day post-acquisition period is affected by the partial recognition in net earnings of fair value adjustments made to inventory on the date of acquisition. These adjustments impact the results as a portion of the inventory held on the balance sheet at acquisition date has been sold. It is expected that the fair value adjustment to finished goods inventory will be fully unwound during Q2 2013.

Outlook

Production is expected to be between 12,000 tonnes and 13,000 tonnes of copper and 20,000 tonnes and 23,000 tonnes of zinc. Zinc production should be lower than it was in 2012 due to an expected decrease in zinc grades in 2013. Pyrite production is expected to be approximately 820,000 tonnes.

Improved procedures for mucking and backfilling stopes will be developed in deteriorated ore access drifts in support of Pyhasalmi's ground control rehabilitation program and underground voids are expected to be reduced.

DEVELOPMENT ACTIVITIES

Kansanshi expansions, Zambia

The multi-stage Kansanshi plant upgrade to an annual production capacity of 400,000 tonnes of copper continues into 2013. The stage one oxide circuit expansion to 7.2 Mtpa was completed in Q2 2012 and optimized during Q3 2012 with the benefits being seen in the oxide throughput rates. Progress on the stage two oxide capacity expansion to 14.5 Mtpa continued with a phased commissioning planned to begin in mid-2013. The expansion encompasses additional crushing, flotation, leach tanks, CCD thickeners, solvent extraction, electro-winning and associated ancillary systems and equipment. Acid supply and economics will dictate the rate of oxide treatment until the smelter is commissioned in mid-2014.

The second phase of the 400,000 tonne annual production capacity expansion project is an expansion of the sulphide treatment facilities by construction of a new section of plant capable of treating up to 25 Mtpa of sulphide ore. Board approval has been granted and design work is continuing while environmental approvals are being pursued. No significant barriers to environmental approval are envisaged.

Copper smelter project, Zambia

Kansanshi's concentrate is currently treated at smelters in Zambia, however, existing domestic smelting capacity will be insufficient to process the substantial increase in production resulting from the Kansanshi expansion and the Sentinel project. The new copper smelter is designed to process 1.2 million tonnes of concentrate to produce over 300,000 tonnes of copper metal annually. The smelter is also expected to produce 1.0 million tonnes of sulphuric acid as a by-product at a low cost which will benefit Kansanshi by allowing the treatment of high acid-consuming oxide ores and the leaching of some mixed ores. The additional acid is also expected to optimize the expansion of the oxide leach facilities and allow improved recoveries of leachable minerals in material now classified and treated as mixed ore.