NEWS RELEASE
First Financial report to include Copper and Acid Sales
July 31, 1998 Trading Symbol: FM
First Quantum is pleased to announce its 2nd quarter financial results to May 31st, 1998. These financials highlight the transition from start-up to full production at the Bwana Mkubwa Copper Mine in Zambia and total sales of US$2.8 million which includes copper cathode production of 1,706,540 pounds from only four weeks of sales.
3 months 6 months
May 31st May 31st
Total Sales US$ 2,787,788 3,553,581
Direct Costs 2,147,658 3,318,051
Operating Profit 640,130 235,480
G & A Expenses 1,982,466 3,544,194
Depreciation & Amortization 814,309 1,067,403
Other items (16,426) (215,399)
Loss 2,140,219 4,160,718
Loss Per share 0.10 0.20
The Company reports sales of US$3,553,531 for the six months ended May 31, 1998 compared with nil for the six months ended May 31, 1997. Copper and sulphuric acid sales of US$2,028,555 were generated in the month of May alone. After accounting for total direct operations expenses of US$3,318,051, the Company reported an operating profit of US$235,480 in the first six months of 1998 and US$640,130 for the second quarter.
As a result of intermittent copper production during the start up period, these operating figures for the 3 months ending May 31st represent only 30% capacity of copper production for the plant at the Bwana Mkubwa Copper Mine. Total direct costs for copper were US$0.28 per pound which includes sulphuric acid consumed on a zero cost basis. During the start up phase, throughput of copper oxide tailings has steadily increased and is now approaching the design capacity of 4,500 tonnes per day. Both head grade and recovered grade of copper continue to be within feasibility study estimates. By May 31, 1998, 775.7 tonnes of copper cathode were delivered to Gerald Metals pursuant to an off-take agreement. During the quarter, the Company realized net revenues of US$1,438,552 from these shipments.
The sulphuric acid plant at the Bwana Mkubwa Copper Mine has been operational since February 1998. Revenues from sulphuric acid totaled US$1,456,616 for the second quarter, however only US$590,003 is attributed to sales. As a onetime event, acid sales prior to May 1, 1998 totaling US$866,613 were capitalized as part of start-up costs. 75% of the second quarter sulphuric acid production was sold to third parties.
The Connemara Gold Mine, which was recently upgraded with a US$3 million expansion to bring the South Pit into operation to produce 27,500 oz gold per year, underwent an initially slow start up. Therefore, gold revenue was principally generated from the existing North Pit operation. Production at the Connemara Gold Mine for the six months of operations ending May 31, 1998 totaled 4,138 oz of gold, which includes 1,869 oz of gold produced during the three months ending May 31, 1998. Revenues from gold sales for the six months ending May 31, 1998 were US$1,490,888, which includes revenues of US$740,910 for the quarter.
These financials reflect that First Quantum has successfully completed its strategy of bringing the Bwana Mkubwa Copper Mine into production and completing the expansion of the Connemara Gold Mine and thus should be encouraging to shareholders. Financial results for the third quarter ending August 31, 1998 will be significantly greater than the second quarter as the results will reflect sales for a full three months of copper, sulphuric acid and gold production.
Joe
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