Throughput rates continue to exceed expectations at Kevitsa with a 7% increase in throughput compared to Q4 2012, the first full quarter of commercial production, although production is still affected by the processing of weathered ore. It is expected that this ore will be fully depleted in Q2 2013. Modifications to nickel flotation were implemented which have improved recoveries in Q1 2013. The increased throughput and nickel recoveries have increased nickel production by 10% from Q4 2012.
A decrease in copper recoveries from processing oxidized ore was slightly offset by the increase in throughput, with copper production decreasing by 8% compared to Q4 2012.
Nickel cash costs decreased by 17% compared to Q4 2012 while copper cash costs increased 11%. The ramp up to a full seven days per week mining shift roster was implemented during Q1 2013 and training of an increased complement of employees continues. Cash costs for copper were higher resulting from lower than planned feed grades and lower recoveries resulting in less metal production.
Nickel sales volumes increased from Q4 2012 by 28%, with copper sales volumes falling slightly by 3%.
Outlook
Production in 2013 is expected to be between 15,000 and 16,000 tonnes of copper, between 9,000 and 10,000 tonnes of nickel and 11,000 to 12,000 ounces of gold.
The amount of weathered ore going into the plant is expected to reduce further in Q2 2013 and pre-stripping the Stage 2 cutback is also expected to commence. On-going studies continue towards improving recoveries, as well as other operational optimization of the plant, including expansion of the nickel filter. A secondary crusher is expected to be delivered in the second half of the year.
Liaison with the relevant environmental authorities to increase the plant throughput rate to a maximum of 10 Mtpa is still in progress.
The following operation discussions review the results of the Las Cruces mine (100%), the Cayeli mine (100%) and the Pyhasalmi mine (100%). The tables show both the post-acquisition results of the mines from March 22, 2013 to the end of the quarter, and historical results for the full period without adjustment and as reported by Inmet. The non-controlling interest portion of 14.5% of net earnings relating to shareholders of Inmet at March 31, 2013 are not disclosed here.
-------------- --------------------------------- Historical results--------------------------------------------------------------------------Las Cruces Copper March 22-31 Full Quarter Operation(1) 2013 Q1 2013 Q4 2012 Q1 2012--------------------------------------------------------------------------Ore tonnes milled (000's) 30 305 276 246Copper ore grade processed (%) 6.8 6.7 6.9 6.7Copper recovery (%) 90 88 90 85Copper cathode production (tonnes) 1,923 17,927 17,302 13,343Copper cathode sales (tonnes) 2,852 17,360 17,394 13,561Cash costs (C1) (per lb)(2) n/a $1.00 $1.14 $1.38Total costs (C3) (per lb)(2) n/a $1.53 $1.76 $2.03--------------------------------------------------------------------------Sales revenues 22.1 138.5 136.0 110.1Gross profit(3) 6.1 74.0 73.4 51.6EBITDA(2) 11.5 101.8 93.5 71.1--------------------------------------------------------------------------(1) Results from the Las Cruces mine are only included in First Quantum'sfinancial results for the period subsequent to the date of acquisition onMarch 22, 2013. Prior period results are shown for comparative purposes onlyand do not include any financial adjustments that would be required had theacquisition taken place on January 1, 2012.(2) C1 and C3 costs and EBITDA are not recognized under IFRS. See"Regulatory Disclosures" for further information. C1 and C3 costs have beenrecalculated using First Quantum's methodology and may be different to thatpreviously disclosed by Inmet.(3) Gross profit is defined as sales revenues less cost of sales; disclosureregarding the Las Cruces mine in Inmet's financial reporting defines salesrevenues less cost of sales as operating earnings.
