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Gold/Mining/Energy : first quantum minerals FM on TSE -- Ignore unavailable to you. Want to Upgrade?

To: Stephen O who wrote (350)	8/28/2003 9:58:11 PM
From: Stephen O	Read Replies (1) \| Respond to of 385

FIRST QUANTUM(FM : TSX : C$6.67) – BUY - 12-MONTH TARGET PRICE: C$10.00 Greg Barnes Comment: First Quantum's Bwana Mkubwa hits its stride; Kansanshi project financing facility arranged First Quantum reported Q2/03 net earnings of US$0.1 million, or US$0.00/share, compared to net earnings of US$2.1 million, or US$0.05/share, in Q2/02. Second quarter results this year included an unrealized foreign exchange loss of US$1.2 million – excluding this loss, net earnings would have been US$0.9 million or US$0.02/share. Operating cash flow for the quarter was US$0.04/share. Adjusted results for the quarter were slightly below our estimated EPS of US$0.04 primarily due to lower surplus acid sales than we were expecting. The acid plant took a planned annual maintenance shutdown in May/June that resulted in surplus acid sales for the quarter of just 15,832 tonnes; we were expecting more in the range of 25,000 tonnes. Copper sales during the quarter were ahead of our estimate at 6,734 tonnes – we forecasted copper sales at 6,500 tonnes. First Quantum has the best production growth profile among the intermediate Canadaian copper producers with copper production expected to increase from roughly 30,000 tonnes in 2003/04 to more than 100,000 tonnes by 2005/06. Investors should be cognizant of the higher political risk associated with First Quantum given the location of its operations and projects in Southern Africa. We are increasing our target price on First Quantum to C$10.00/share and maintaining our BUY recommendation. Our previous target price of C$7.50/share was based upon our 15% discounted net asset value of C$7.43/share. Our new target price is based upon our 12% discounted net asset value of C$9.83/share.