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First Quantum Minerals Reports Operational and Financial Results for the Three Months and Year Ended December 31, 2012

Tuesday, March 05, 2013

First Quantum Minerals Reports Operational and Financial Results for the Three Months and Year Ended December 31, 201217:00 EST Tuesday, March 05, 2013VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 5, 2013) - (In United States dollars, tabular amounts in millions, except where noted) - First Quantum Minerals Ltd. ("First Quantum" or the "Company") (TSX:FM)(LSE:FQM) today announced its results for the three months and year ended December 31, 2012. The complete audited financial statements and management's discussion and analysis are available for review at www.first-quantum.com and should be read in conjunction with this news release.First Quantum's President, Clive Newall, will host a conference call and live webcast to discuss the results on Wednesday, March 6, 2013 at 6:00 am (PST); 9:00 am (EST); 2:00 pm (GMT). The call and webcast will be available on www.first-quantum.com and by dialing 416-340-8530 or toll free in North America on 877-240-9772.First Quantum's results have been prepared in accordance with International Financial Reporting Standards ("IFRS"). SUMMARIZED OPERATING AND FINANCIAL RESULTS (USD millions unless otherwise noted)Q4 2012Q3 2012Q4 201120122011Copper production (tonnes)84,91884,14467,316307,115265,576Copper sales (tonnes)77,57077,39665,638295,466273,257Cash cost of copper production (C1)1 (per lb)$1.42$1.44$1.53$1.49$1.41Realized copper price (per lb)$3.46$3.45$3.33$3.51$3.87Nickel production (contained tonnes)10,0969,9165,66636,7595,666Nickel sales (contained tonnes)8,0817,1201,38830,3791,388Cash cost of nickel production (C1)1 (per lb)$6.12$6.24-$5.92-Realized nickel price (per payable lb)$7.74$7.69-$7.96-Gold production (ounces)64,38350,78443,524201,942175,225Gold sales (ounces)61,35048,88949,209202,303180,442Sales revenues774.6724.8567.32,950.42,583.5Gross profit295.0261.0182.71,101.01,308.0EBITDA1309.7276.2180.62,361.21,232.1Net earnings attributable to shareholders of the Company186.7107.376.01,772.9528.9Earnings per share$0.39$0.23$0.16$3.74$1.18Diluted earnings per share$0.39$0.23$0.16$3.72$1.18Comparative earnings2186.7107.378.9555.0580.5Comparative earnings per share2$0.39$0.23$0.17$1.17$1.301 Cash costs (C1) and earnings before interest, tax, depreciation and amortization ("EBITDA") are not recognized under IFRS. See "Regulatory Disclosures" for further information.2 Earnings attributable to shareholders of the Company have been adjusted to remove the effect of unusual items to arrive at comparative earnings. Comparative earnings and comparative earnings per share are not measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. The Company has disclosed these measures to assist with the understanding of results and to provide further financial information about the results to investors. See "Regulatory Disclosures" for a reconciliation of comparative earnings.Results for full year 2012ProductionCopper production 16% higher than 2011; new annual production record set at KansanshiCopper production of 307,115 tonnes included record production at Kansanshi, primarily due to an increase in sulphide grades and throughput, and the contribution from Kevitsa which achieved commercial production in August 2012 following a successful commissioning and rapid ramp-up phase at the nickel and copper operation. This is the second project successfully commissioned by the Company during the past year. Nickel production of 36,759 tonnes after first full year of production from Ravensthorpe Results from the new nickel business included Ravensthorpe's first full year of production and the commencement of production from Kevitsa. Gold production 15% higher than 2011Gold production of 201,942 ounces resulting from gold circuit enhancements at Kansanshi which yielded higher recoveries and the first contribution from Kevitsa. Copper production cash costs increased 6% Average copper production cash cost of $1.49 per pound reflects a downward trend throughout the year as increased sulphuric acid cost was partially offset by higher by-product credits. Sales revenues 14% higher than 2011Sales revenues rose to $2,950.4 million from increased copper and gold sales volumes and commercial production at Ravensthorpe and Kevitsa. Positive volume contributions were partially offset by lower average realized copper prices. Gross profit 16% lower than 2011Gross profit of $1,101.0 million was negatively impacted by the 9% lower average realized copper price and inflationary increases in operating costs which outweighed higher sales volumes and the contribution from Ravensthorpe and Kevitsa. Net earnings attributable to shareholders of the Company increased to $1,772.9 millionEarnings included a $1,217.9 million gain on disposal of République démocratique du Congo ("RDC") residual claims and assets. 2012 comparative earnings were lower than 2011 predominately due to the lower year-over-year average realized copper price and inflationary cost pressures which were partially offset by the contribution from Ravensthorpe and Kevitsa. Results for Q4 2012ProductionTotal copper production improved 26% over Q4 2011 with higher sulphide grades and higher throughput as a result of the continued expansion of the oxide circuit at Kansanshi, higher throughput rates at Guelb Moghrein and the contribution from Kevitsa. Total nickel production improved 78% over Q4 2011 with a full quarter of commercial production at both the Ravensthorpe and Kevitsa operations. Total gold production improved 48% over Q4 2011 with higher grades and recovery rates at Kansanshi together with the contribution from Kevitsa.Copper production cash costsCopper production cash costs decreased from Q4 2011 due to lower mining and freight costs and higher by-product credits. Sales revenuesSales revenues increased by 37% from Q4 2011 with increased copper and gold sales volumes, higher average realized copper and gold prices and the contribution from Ravensthorpe and Kevitsa. Gross profitQ4 2012 gross profit of $295.0 million was 61% higher than Q4 2011 with higher sales volumes, higher average realized copper and gold prices, lower copper production cash costs and the contribution from Ravensthorpe and Kevitsa. Net earningsQ4 2012 net earnings attributable to shareholders of the Company were higher than Q4 2011 due to higher copper and gold average realized prices, higher sales volumes, lower copper production cash costs and the contribution of Ravensthorpe and Kevitsa. Reduction of the effective income tax rate for the quarter as a result of a number of non-recurring factors that include the recognition of previously unrecognized tax losses. Significant advancement of development projects and exploration activitiesBenefit from expansion of the oxide processing circuit at Kansanshi to 7.2 million tonnes per annum ("Mtpa") was seen in the oxide throughput during Q4 2012. The stage two expansion to 14.5 Mtpa is scheduled for completion and commencement of commissioning from mid-2013. Detailed design work and construction on the Kansanshi smelter is progressing well and all major equipment has been ordered. The project remains on schedule for construction completion in mid-2014 followed by commissioning and ramp up. Construction of the Sentinel project is on schedule. Board approval was received to increase the plant throughput from 40 Mtpa to 55 Mtpa. Board approval was granted for the expansion of the sulphide treatment facilities at Kansanshi by construction of a new section of plant capable of treating up to 25 Mtpa of sulphide ore. Construction of this new plant is to commence in the first half of 2013. A significant resource and reserve upgrade was announced at Kansanshi with initial comparative estimates showing the mineral resource tonnage has increased by approximately 121% and total contained copper increased by 74%. Maiden resource estimates for the Enterprise project confirmed the potential for an operation capable of producing on average 38,000 tonnes nickel per annum with scope to increase to 60,000 tonnes when nickel market conditions allow. On the strength of this resource estimate, Board approval was granted for the development of this project.Balance sheet positioned to support growth initiativesOn October 10, 2012, the Company completed the offering of $350.0 million of Senior Notes due 2019. Interest will accrue at the rate of 7.25% per annum, payable semi-annually. On January 30, 2012, a five-year $1.0 billion senior term and revolving facility was signed for Kansanshi Mining PLC to enable the execution of planned capital projects at Kansanshi. On January 5, 2012, the Company reached an agreement with Eurasian Natural Resources Corporation PLC ("ENRC") to dispose of its residual RDC claims and assets for $1.25 billion. The agreement closed on March 2, 2012 with the Company receiving payment of $750.0 million and a three-year promissory note for $500.0 million. Other corporate developmentsOn January 9, 2013, the Company announced that it has formally commenced an offer to acquire all of the outstanding shares of Inmet Mining Corporation ("Inmet") for total consideration of approximately C$5.1 billion. Inmet shareholders have the opportunity to elect shares in the Company, cash, or a combination thereof, subject to an overall consideration mix of approximately 50% in shares and 50% in cash. The offer is open until March 11, 2013. The Company has declared a final dividend of C$0.1147 per share in respect of the financial year ended December 31, 2012. The final dividend of C$0.1147, together with the interim dividend of C$0.0603, is a total of C$0.1750 for the 2012 financial year. This total dividend paid for the 2012 financial year is 15% of net earnings attributable to shareholders of the Company (adjusted for unusual items) which is in line with the 15% of net earnings attributable to shareholders of the Company used as guidance in 2011.Operational outlook for 2013ProductionGroupKansanshiGuelb MoghreinRavensthorpeKevitsaCopper (000's tonnes)302 - 330250 - 27037 - 41-15 - 19Nickel (000's contained tonnes)40 - 45--31 - 359 -10Gold (000's ounces)190 - 215126 - 14052 - 61-12 - 14Expected average cash cost of approximately; $1.50 to $1.60 per pound of copper. Expected average cash cost of approximately; $5.50 to $6.00 per pound of nickel. Expected total capital expenditure of approximately $2.0 billion in 2013. OPERATIONSKansanshi Copper and Gold OperationQ4 2012Q3 2012Q4 201120122011Sulphide ore tonnes milled (000's)2,6792,7631,6289,2548,855Sulphide ore grade processed (%)1.00.90.61.00.7Sulphide copper recovery (%)9292929391Mixed ore tonnes milled (000's)1,9511,9552,9868,5618,377Mixed ore grade processed (%)1.11.01.01.11.0Mixed copper recovery (%)7477646963Oxide ore tonnes milled (000's)1,7381,5001,4926,2106,072Oxide ore grade processed (%)2.02.62.32.22.3Oxide copper recovery (%)9084888686Copper production (tonnes)70,43171,48459,163261,351230,295Copper sales (tonnes)61,75865,83054,036249,884235,832Gold production (ounces)45,41035,24529,580136,056112,286Gold sales (ounces)38,17933,51027,742131,159114,488Cash costs (C1) (per lb)1$1.45$1.46$1.52$1.49$1.41Total costs (C3) (per lb)1$1.90$1.86$1.90$1.88$1.70Sales revenues494.3507.1405.71,979.92,048.3Gross profit238.0223.8186.2929.41,187.1EBITDA1251.1240.4202.3995.91,263.01 C1 and C3 costs and EBITDA are not recognized under IFRS. See "Regulatory Disclosures" for further information. Full year operating results Full year copper production increased by 13% from 2011 to a record of 261,351 tonnes in 2012. This was achieved mainly through an increase in grade, specifically in sulphide ore, as well as increases in throughput and recovery. Throughput increased as a result of plant expansions completed as part of Kansanshi's multi-stage plant upgrade to an annual production capacity of 400,000 tonnes of copper metal. Annual production from the sulphide circuit was significantly higher than in 2011 due to higher ore grades processed during the year. Ongoing mine pit development work has established significantly wider pits and improved access to various ore types at target grades to coincide with the plant expansions underway. Specifically, this work led to an increase in the availability of sulphide ore at target grades in addition to the circuits being reconfigured during Q2 2012 to the current capacity of 12 Mtpa for sulphide and 6.5 Mtpa for mixed ore treatment. The mixed ore circuit achieved increased recoveries and grade, while throughput remained consistent with the prior year. Following the circuit interchange in Q2 2012, the reduced throughput on the mixed circuit allowed longer residence time in flotation resulting in improved recoveries. In the second half of the year, throughput significantly exceeded capacity of 6.5 Mtpa due to optimization of the front end, improving plant availability and utilization.Year-on-year the oxide circuit achieved slightly higher throughput, which has been offset by lower grades. The effect of completion of the oxide expansion works to 7.2 Mtpa allowed increased throughput in Q4 2012. The limited availability of locally-sourced sulphuric acid meant that most of the high grade, higher acid consuming oxide ore was stockpiled in 2012. Gold production was 21% higher than in 2011 as a result of gold circuit enhancements and improvements resulting in higher recoveries. Year-on-year cash costs have increased by 6% from 2011, however there has been a downward trend throughout the year with cash costs decreasing each quarter to $1.45 per lb in Q4 2012. An increase in the gold credit in 2012 was largely offset by an increase in treatment and refining charges. The increase in costs compared to 2011 is mainly due to an increase in processing costs including higher acid costs. Full year sales revenues decreased by 3% compared to the prior year despite an increase in copper sales volumes of 6% and an increase in gold sales volumes of 15%. These increases in sales volumes were offset by a decrease in net realized copper prices of 9%. The effect of these lower realized copper prices is also seen at the gross profit level which fell 22% to $929.4 million from $1,187.1 million in 2011. Q4 operating results Copper production increased by 19% from Q4 2011 due to increased throughput, grades and recoveries. Throughput in Q4 2012 increased as a result of the oxide circuit expansion works and benefited from a later than usual start to the Zambian rainy season. The exposure of sulphide ore faces at target grades, as a result of the mine pit development work, led to the increased sulphide grades in Q4 2012 compared to the prior year. Mixed ore throughput in Q4 2012 continued to exceed the 6.5 Mtpa design capacity. Increased recoveries compared to Q4 2011 resulted from the longer residence time in flotation. Oxide throughput has increased 16% from Q4 2011 as a result of the completion of the oxide expansion to 7.2 Mtpa capacity in Q3 2012. This increase in throughput has been offset by a decrease in grade as high-grade, high-acid consuming ore was stockpiled in the quarter. Gold production was 54% higher than Q4 2011 as a result of gold circuit enhancements resulting in higher recoveries.Q4 2012 C1 costs decreased by $0.07 per lb from Q4 2011. C1 costs benefited from lower mining costs and an increased gold credit as a result of higher gold sales volumes and a higher net realized gold price. This benefit outweighed higher acid costs. Sales revenues and gross profit increased by 22% and 28% respectively in Q4 2012 compared to Q4 2011. The increase in sales revenues reflects both an increase in sales volumes and higher realized prices. Gross profit was higher than Q4 2011 due primarily to higher realized copper prices offset partially by higher royalty rates. The Zambian copper royalty rate was increased from 3% to 6%, effective April 2012, being the principal reason for the increase of $18.6 million in the royalty expense in Q4 2012 compared to Q4 2011. Smelters in Zambia are at or near capacity, and as a result of increased copper in concentrate production at Kansanshi, this has meant that inventory has increased at the end of Q4 2012. Compared to Q3 2012, Kansanshi has achieved a steady state with the exception of the oxide circuit, where oxide expansions have increased throughput in Q4 2012 offset by a decrease in ore grade as high grade, high acid consuming ore was stockpiled. Mixed ore recoveries have decreased due to a less favourable blend of sulphide and oxide ore processed. Cash costs were consistent with Q3 2012. Outlook Production in 2013 is expected to be between 250,000 and 270,000 tonnes of copper, and 126,000 and 140,000 ounces of gold. The reduction in mining rates during the wet season will impact on progress in opening up mining areas and hence oxide ore availability. This, in turn, is expected to result in on-going variation in feed quality with respect to copper grade and gangue acid consumption (GAC). Two mobile screening plants, received and commissioned in Q4 2012 will continue to assist in reducing the GAC of ore ahead of processing.The construction of the fifth acid plant was completed and commissioning occurred during Q4 2012 with minor process changes planned for Q1 2013. In the medium term, some of Kansanshi's mining areas for oxide ore are characterized as high grade, high acid-consuming ore. Currently the supply of sulphuric acid from acid plants requires the import of sulphur at high costs. Consideration will be given to withholding the high grade, high acid-consuming ore from production until acid is available at minimal cost from the Kansanshi smelter. If this decision is made, the capacity of the oxide expansions and fifth acid plant may not be fully exploited.Copper in concentrate inventory levels may remain at year-end levels in the short term unless there is a change in smelter capacity levels or a temporary export permit can be obtained.Sulphide ore processing is expected to remain strong. Refinements to the process control systems across mill and float are expected to maintain and further enhance metallurgical performance in the sulphide circuit through increased circuit stability and rapid automated response to mineralogical and process variations.Guelb Moghrein Copper and Gold OperationQ4 2012Q3 2012Q4 201120122011Sulphide ore tonnes milled (000's)8256876343,0622,691Sulphide ore grade processed (%)1.41.31.41.31.4Sulphide copper recovery (%)9394919191Copper production (tonnes)11,0388,6568,15537,67035,281Copper sales (tonnes)13,0078,96211,60140,17435,774Gold production (ounces)16,80212,82713,94360,51962,938Gold sales (ounces)20,86413,63121,46767,08965,954Cash costs (C1) (per lb)1$1.13$1.43$1.63$1.48$1.46Total costs (C3) (per lb)1$1.69$1.93$2.45$2.04$2.20Sales revenues127.385.697.2394.4346.2Gross profit47.524.33.5117.7127.8EBITDA154.229.620.9142.4157.71 C1 and C3 costs and EBITDA are not recognized under IFRS. See "Regulatory Disclosures" for further information. Full year operating results 2012 copper production was 7% higher than in the prior year. Efforts are ongoing to maintain steady state operations and throughput has increased by 14% year-on-year. The better throughput performance in 2012 is a result of the mill optimization works and improved blast fragmentation. There was a slight decrease in copper grades, year-on-year, however there was an increase in the last quarter of 2012 reflecting the current ore profile in the pit. Cash costs increased by $0.02 per lb to $1.48 per lb compared to the prior year. A larger gold credit has been offset by an increase in mining costs specifically for explosives, contractors and equipment hire. 2012 sales revenues increased by 14% compared to 2011 reflecting an increase in copper sales volumes of 12% offset by a lower net realized price. 2012 sales revenues also benefited from higher gold sales volumes. Gross profit fell by 8% due to increased costs for personnel, maintenance and consumables partially offset by the increase in sales revenues. Q4 operating results Q4 2012 copper production increased by 35% from Q4 2011, mainly as a result of increased throughput rates. A record quarterly throughput rate of 825,000 tonnes was achieved in Q4 2012 due to ball mill optimization work and better fragmentation of ore. Copper recovery in Q4 2012 increased following a circuit reconfiguration in Q3 2012 allowing longer flotation residence time which has increased recoveries. Gold production increased by 21% from Q4 2011 with higher throughput partially offset by slightly lower grade and recovery. Cash costs in Q4 2012 are 31% lower than Q4 2011 as a result of lower processing costs, site administration costs and treatment and refining charges. Cash costs also benefited from the unit cost effect of producing 35% more copper. Sales revenues and gross profit have both increased in comparison to Q4 with a 40% increase in copper sales revenues and a 12% increase in gold sales revenues. The increase in sales revenues reflects both an increase in copper sales volumes and higher realized prices. This increase in revenues and lower cash operating costs drove the increase in gross profit. Increases in throughput and grade drove the 28% increase in copper production in Q4 2012 compared to Q3 2012. Gold production increased by 31% from Q3 2012. Outlook Production in 2013 is expected to be between 37,000 and 41,000 tonnes of copper and between 52,000 and 61,000 ounces of gold. Production is expected to benefit from higher volumes of material mined exposing ore in two additional cutbacks. Process plant enhancements continue with a focus on better availability in the grinding circuit to achieve more consistent operation at steady state to maintain throughput rates as ore grades are expected to be slightly lower than those in 2012. The project to install an additional mill from the mothballed Bwana Mkubwa copper plant that was planned for Q4 2012 has been replaced by a new SAG mill project which is now under design and planning. Commissioning is expected in mid-2014. Ravensthorpe Nickel OperationQ4 2012Q3 2012Q4 201120122011Beneficiated ore tonnes processed (000's)6877336452,811645Beneficiated ore grade processed (%)1.51.41.31.51.3Nickel recovery (%)7877687768Nickel production (contained tonnes)8,2278,0325,66632,8845,666Nickel sales (contained tonnes)7,2886,2721,38828,7381,388Nickel production (payable tonnes)6,3386,1884,18925,3474,189Nickel sales (payable tonnes)5,4254,7901,11021,8571,110Cash costs (C1) (per lb)1$6.05$6.43-$5.97-Total costs (C3) (per lb)1$7.33$7.84-$7.25-Sales revenues94.381.3-387.7-Gross profit (loss)2.8(1.6)-42.5-EBITDA14.66.4-82.3-1 C1 and C3 costs and EBITDA are not recognized under IFRS. See "Regulatory Disclosures" for further information. Full year operating results 2012 was Ravensthorpe's first full year of production after reaching commercial production on December 28, 2011. The year has seen Ravensthorpe ramp up to design capacity in the earlier months of the year and commencing in-pit mining in Q2 2012. By Q3 2012, the majority of the ore feed was being sourced from the pit and nickel production for the full year was in-line with plan as a result of steady state operation of the complete circuit. Nickel grades and recoveries have remained consistent through the year.C1 costs for the year consistently beat guidance and ended the year at $5.97 per lb against original full year guidance in Q1 2012 of $6.60 per lb to $6.80 per lb. At the beginning of the year, low cost sulphur inventory contributed to a lower cost of production. Throughout the year, the consistent operation of the sulphuric acid plant which generates power as a by-product, provided for sufficient and stable power generation for the operation and reduced diesel costs. Ore costs increased as the mining operations moved to the main pit in the second half of 2012. Q4 operating results Limonite ore availability was limited early in Q4 2012 which resulted in new mining areas being opened up to provide a future source of ore. Mining activity continued to feed ore to the crushers with a limited amount of material stockpiled to accommodate crusher availability. C1 costs have decreased in Q4 2012 compared to Q3 2012. Lower processing costs in the quarter were driven by lower sulphur costs as well as processing circuit improvements which have resulted in savings in flocculant consumption. A lower C1 cost was achieved despite a $0.07 per lb increase in mining costs resulting from additional waste being mined. Outlook Production in 2013 is expected to be between 31,000 and 35,000 tonnes of nickel.Crushing plants and beneficiation are expected to continue to operate well in 2013. A number of circuit improvements in beneficiation during Q1 2013 are expected to result in improvements in plant utilization. Processing circuit enhancements in Q4 2012 have already resulted in savings and the same focus will now be extended to the operation of the CCD's.The sulphuric acid plant is expected to continue to have stable operations with efficient use of power distribution, significantly reduced diesel fuel consumption and associated savings. Taking advantage of lower cost sulphur opportunities with associated logistical improvements will remain a focus for Ravensthorpe.Post- commercial productionPre- commercial productionKevitsa Nickel-Copper-PGE1OperationQ4 2012Q3 2012Q3 201220122011Ore tonnes milled (000's)1,4136877203,138--Nickel ore grade processed (%)0.20.20.20.2-Nickel recovery (%)59605456-Nickel production (tonnes)1,8701,0418433,875-Nickel sales (tonnes)792848-1,640---Copper ore grade processed (%)0.30.30.30.3-Copper recovery (%)84848783-Copper production (tonnes)3,4481,8742,1308,094-Copper sales (tonnes)2,8052,6041,0406,448---Gold production (ounces)2,1721,4311,2825,367-Platinum production (ounces)6,1233,9263,17413,808-Palladium production (ounces)5,4193,3732,82712,183---Nickel cash costs (C1) (per lb)2$6.37$3.79-$5.47-Nickel total costs (C3) (per lb)2$7.19$5.35-$6.54-Copper cash costs (C1) (per lb)2$1.75$0.11-$1.28-Copper total costs (C3) (per lb)2$3.06$1.49-$2.61-Sales revenues36.535.6-72.1-Gross profit6.417.5-23.9-EBITDA11.223.6-34.8-1 Platinum-group elements ("PGE")2 C1 and C3 costs and EBITDA are not recognized under IFRS. See "Regulatory Disclosures" for further information.Q4 2012 marked the first full quarter of commercial production for Kevitsa. Throughput rates exceeded expectations whilst recoveries were below life of mine targets due to the weathered nature of the initial ore processed. Slightly lower feed grades in line with life of mine plans have resulted in lower output of copper and nickel compared to Q3 2012. There has been steady improvement in both mining capacity and the efficiency of machinery operations, the latter of which has been affected during the first period of commercial production in the Arctic winter. Nickel and copper cash costs increased over Q3 2012 with a ramp up in contractor usage and maintenance costs in line with plan and higher electricity costs due to an increase in electricity tariffs which is normal for the time of year. Copper by-product credits decreased from Q3 2012 as Q3 2012 benefited from the sale of production from the commissioning phase. Nickel by-product credits were unfavorably impacted by some stockpiling of nickel concentrate in the quarter. Outlook Production in 2013 is expected to be between 15,000 and 19,000 tonnes of copper, between 9,000 and 10,000 tonnes of nickel and 12,000 to 14,000 ounces of gold.In Q1 2013 mining is planned to ramp up to a full seven days per week shift roster as opposed to the five days per week system implemented for the majority of 2012. Mining volumes have been set at 12.9 Mt of waste and 7.3 Mt of ore equating to a strip ratio of 1.8. The amount of weathered ore going into the plant is expected to reduce in the first half of 2013. Pre-stripping the Stage 2 cutback will commence in the first half of 2013. A focus on improving nickel recoveries and achieving pilot study levels has been ongoing for several months. Different scenarios of flotation kinetics are being trialed and sampled during Q1 2013 for further optimization work.The Company has submitted an environmental assessment and application to increase the plant throughput rate from the current approved 5.5 Mtpa up to a maximum of 10 Mtpa. Liaison with the relevant authorities is in progress with respect to granting of the upgraded permit. DEVELOPMENT ACTIVITIESKansanshi expansions, ZambiaThe 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 of Q4 2012. Progress on the stage two oxide capacity expansion to 14.5 Mtpa continued with a phased commissioning commencing from 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 however the output of the five acid plants as well as the current volume of acid that can be externally sourced will allow for interim treatment rates of approximately 10 Mtpa.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 for the project and construction of this new plant is planned to commence in the first half of 2013. 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. Detailed design works on the smelter are well progressed and all of the major equipment packages have been ordered. On site, earthworks construction is approximately 85% complete and concrete pouring is 20% complete. Mechanical installation commenced in January 2013. The project is scheduled for construction completion in mid-2014 followed by commissioning and ramp up.Sentinel project, ZambiaA mineral resource and reserve estimate for the Sentinel copper project was released in March 2012. An estimated measured and indicated resource of 1,027 Mt at 0.51% copper grade, containing 5.2 Mt of copper has been delineated, inclusive of an estimated recoverable proven and probable mineral reserve of 774 Mt at 0.50% copper grade, containing 3.9 Mt of copper. The life of mine strip ratio is anticipated to be 2.2 and the estimated mine life is in excess of 15 years. An infill drilling programme has commenced to identify further detail of the geological resources that will be encountered during the initial years of operation.The project is expected to produce between 270,000 and 300,000 tonnes of copper in concentrate annually. Sentinel construction activities continued to ramp up in Q4 2012 following the approval from the Company's Board of Directors. Project milestones to the end of December 2012 include detailed design engineering 70% complete; construction completion of process plant earthworks for the major equipment areas; over 30,000 cubic metres of concrete poured on site; and approximately 3,000 tonnes of structural steel fabricated with approximately 1,500 tonnes of steel already received on site and being erected. The development of project infrastructure continues: the major tenders for the Zambia Electricity Supply Corporation Limited 330kV transmission line and substation works have been released; the first senior houses are complete and ready for occupation; the visitor guesthouse is complete; and a further 20 houses are on schedule for completion in Q1 2013. The Company will continue project development with an on-going commitment to social responsibility within the complete license area. Project capital costs were estimated at approximately $1.72 billion with project completion unchanged and expected during 2014. However a throughput increase from 40 Mtpa to 55 Mtpa, plus the addition of a nickel processing plant (Enterprise development) has been added to the project development which increased the total capital cost estimate to $2.0 billion.Enterprise project, ZambiaThe maiden mineral resource estimate for the Enterprise nickel deposit has been identified at 40.1 Mt at 1.07% nickel. This supports proved and probable mineral reserves of 32.7 Mt at 1.10% nickel and based on a 4 Mtpa operation, the mine life would be approximately eight years producing 38,000 to 40,000 tonnes of nickel per annum. There is further potential to increase both the mineral resource and reserve as drilling continues in the adjacent Enterprise South West Zone. The Enterprise deposit is located approximately 12 kilometres north west of the Sentinel development.The longest lead equipment items, being the SAG mill and the ball mill, have been ordered and engineering design has commenced. ExplorationExploration programs continued with ongoing drilling campaigns active at Trident and Kansanshi. A maiden resource and reserve estimate was released for the Enterprise nickel project and a significant resource and reserve upgrade was announced for Kansanshi. Trident Exploration At Trident up to 10 drill rigs were active mostly on regional targets, but also included some infill drilling on Sentinel and additional resource drilling around Enterprise. In total, approximately 110,000 metres of drilling was completed at Trident in 2012.Enterprise nickel project (Main and SW) Grade-Tonnage Estimate as at November 28, 2012 Ore tonnesGradeContained nickel(million tonnes)(Nickel %)('000 tonnes)Measured resource2.71.5141Indicated resource37.41.04390Total measured and indicated40.11.07431Inferred resource7.10.7050Note: The Mineral Resource is reported at a 0.15% nickel cut off and was estimated as a block model within constraining mineralized wireframe. Differences may occur due to rounding.Several regional targets were drill tested during the Q4 2012. The target at Bream, 20 kilometres north east of Enterprise, continues to return encouraging low grade disseminated chalcopyrite intercepts in reconnaissance drilling over several hundred metres of strike within highly altered sequence. Kansanshi At Kansanshi, 14 core rigs continued operating on the project divided between incremental resource and reserve additions immediately around the existing pits and the district exploration program. These programs are designed to provide enhanced definition of longer term oxide and sulphide resource potential as well as to test the ultimate extents of the mineral system.More than 120,000 metres of resource development drilling has now been completed at Kansanshi. Modeling and resource estimation of the Kansanshi and South East Dome resources were finalized during the period and released as part of the Kansanshi resource and reserve upgrade statement in December.The mineral resource estimate for the combined Main and North West regions includes a total of 690.0 Mt at 0.86% total copper ("TCu") defined by a cut-off grade of 0.3% TCu in the measured and indicated classification plus an additional 344.5 Mt at 0.7% TCu in the inferred classification. The mineral resource for the South East Dome includes 54.0 Mt at 0.9% TCu defined at a cut-off grade of 0.3% TCu in the indicated classification plus an additional 20.8 Mt at 0.91% TCu in the inferred classification. Initial comparative estimates show that the mineral resource tonnage has increased by approximately 121% and total contained copper metal by 74%. The inferred mineral resources has increased by greater amounts and these largely adjacent regions will now be the focus of the targeted in-fill drilling program for 2013.Exploration drilling during the quarter continued to the northern side of South East Dome where additional intercepts suggest that the resource and potential pit may be extended into the Rocky Hill area.Regional transect drilling has included several deep holes (700 - 1,000 metres) along the core of the Kansanshi Antiform, some of which have intercepted notable mineralization to depths of over 800 metres below surface. The context and extent of this mineralization is not yet fully understood however it further enhances the scale of the Kansanshi system. Finland Deep drilling targeting geophysical targets immediately to the south west of Kevitsa has demonstrated a much larger body of the Dunite/pyroxenite intrusion (host to the Kevitsa mineralization) than was previously known. Scattered chalcopyrite/pentlandite at depth in this hole suggests potential for Kevitsa style mineralization well beyond the area previously tested by drilling.Reconnaissance drilling and ground geophysics is in progress or planned during the northern winter season on a number of Mafic nickel-copper, sediment hosted copper and IOCG copper-gold targets through Finland. Peru Detailed soil sampling over targets identified in the 2012 helicopter magnetic survey has confirmed porphyry style geochemistry over six main target areas within the Haquira tenure. The multi-element sampling has demonstrated a very extensive footprint halo around known mineralization that should prove useful for defining new porphyry mineralization in Southern Peru. Exploration drilling at Haquira is likely to be postponed during 2013 while the Company concentrates on the community and environmental aspects of the project development.In May 2012, the Company acquired a 19.99% ownership stake in Zincore Metals Inc ("Zincore"). Since then, Zincore has released results for three of the seven holes drilled to date on their early stage Dolores copper porphyry prospect, in which the Company has an option to earn 80%. The current holes are widely spaced and have encountered extensive intercepts of low grade mineralization in holes nearly 3 kilometres apart (for more details see Zincore press releases - TSX-V:ZNC). Turkey The Company has entered into a placement and option joint venture agreement with Empire Mining Corporation (now Columbus Copper Corporation (TSX-V:CCU)) which hold rights to a porphyry/skarn copper project at Bursa in Western Turkey. Drilling and a high resolution airborne magnetic survey commenced on the project during Q4 2012. Mauritania & West Africa The diamond drill program on the Oriental Hill mineralization adjacent to the current Guelb Moghrein open pit continued during Q4 2012. As part of the program five metallurgical holes have been completed for detailed metallurgical testing. Consistent thicknesses of oxide and typical Guelb Moghrein style 'FMC' mineralization have been intercepted and are somewhat wider than anticipated in the south. Drilling on the Bou Seroual gold target east of Guelb Moghrein has intercepted quartz-ankarite-sulphide veins in an extensively altered shear zone. Assay results for gold are pending.The first of three exploration permits in western Cote D'Ivoire has been granted to the Company's alliance partner Newgenco. These permits cover prospective nickel-copper-PGE targets in the Man region. Reconnaissance geochemistry and geophysics are now able to commence.SALES REVENUESQ4 2012Q3 2012Q4 201120122011Kansanshi- copper437.9462.3368.41,797.31,909.3- gold56.444.837.3182.6139.0Guelb Moghrein- copper92.564.166.2286.7244.4- gold34.821.531.0107.7101.8Ravensthorpe- nickel93.079.6-380.8-- cobalt1.31.7-6.9-Kevitsa- nickel6.98.8-15.7-- copper20.618.7-39.3-- gold, PGE and cobalt9.08.1-17.1-Corporate and other22.215.264.4116.3189.0774.6724.8567.32,950.42,583.5Full year 2012 sales revenues were 14% higher than 2011. Revenue in 2012 has benefited from a full year of commercial production at Ravensthorpe, contributing $387.7 million and the first full quarter of production at Kevitsa, contributing $72.1 million. Excluding the two new operations, sales revenues decreased by 4% year-on-year due to the lower net realized copper price which fell by 9%. Gold revenues increased to $296.4 million in 2012 due to higher sales volumes and higher realized prices. Q4 2012 total sales revenues were 37% higher than the prior year quarter due to the contribution of Ravensthorpe and Kevitsa of $94.3 million and $36.5 million respectively. Excluding the two new operations, sales revenues increased by 13% from Q4 2011 from a combination of higher realized copper and gold prices and higher sales volumes of both metals. This was offset by a decrease in revenue from the Corporate segment which in 2011 benefited from a one-off sale of excess sulphur.The Company's revenues are recognized at provisional prices when title passes to the customer. Subsequent adjustments for final pricing are materially offset by derivative adjustments and shown on a net basis in cost of sales (see "Hedging Program" for further discussion). Copper selling price (per lb)Q4 2012Q3 2012Q4 201120122011Average LME cash price3.593.503.403.614.00Realized copper price3.463.453.333.513.87Treatment/refining charges ("TC/RC") and freight charges(0.23)(0.26)(0.32)(0.25)(0.27)Net realized copper price3.233.193.013.263.60The LME copper price averaged $3.59 per lb for the quarter, an increase of $0.19 per lb from the average for Q4 2011. Copper prices traded lower from the end of September (closing $3.75 per lb) to a quarter low of $3.42 per lb on November 9, 2012 when the Dow Jones Industrial Average registered its biggest one day loss in 2012. Nickel selling price (per lb)Q4 2012Q3 2012Q4 201120122011Average LME cash price7.707.418.307.9510.35Realized nickel price per payable pound7.747.69-7.96-TC/RC charges(0.35)(0.44)-(0.25)-Net realized nickel price per payable pound7.397.25-7.71-The LME nickel price averaged $7.70 per lb for the quarter, a decrease of $0.60 per lb from the average for Q4 2011. The rally in nickel prices that began in the final week of August and continued through September reached its peak of $8.54 per lb on October 2, 2012 and then started to fall back reaching a quarter low of $7.19 per lb on November 5, 2012. The last week of November saw a rebound to around $7.94 per lb in early December, and then to a month high of $8.05 per lb at the close on December 12, 2012.SUMMARY FINANCIAL RESULTSQ4 2012Q3 2012Q4 201120122011Gross profitKansanshi238.0223.8186.2929.41,187.1Guelb Moghrein47.524.33.5117.7127.8Ravensthorpe2.8(1.6)-42.5-Kevitsa6.417.5-23.9-Other0.3(3.0)(7.0)(12.5)(6.9)Total gross profit295.0261.0182.71,101.01,308.0Exploration(13.4)(6.3)(19.7)(49.7)(73.0)General and administrative(20.4)(22.5)(15.8)(76.0)(73.8)Other income (expense)(5.0)(1.0)(3.8)(4.3)7.3Net finance income (costs)1.01.2(0.1)8.3(4.6)Settlement of RDC claims and sale of assets---1,217.9-Bond inducement costs----(48.4)Income taxes(50.5)(99.7)(49.5)(327.8)(460.7)Net earnings for the period206.7132.793.81,869.4654.8Net earnings for the period attributable to:Non-controlling interests20.025.417.896.5125.9Shareholders of the Company186.7107.376.01,772.9528.9Comparative earnings186.7107.378.9555.0580.5Earnings per shareBasic$0.39$0.23$0.16$3.74$1.18Diluted$0.39$0.23$0.16$3.72$1.18Comparative earnings per share$0.39$0.23$0.17$1.17$1.30Full year exploration costs decreased from 2011. The prior year includes exploration expenses at Enterprise, which were capitalized in 2012 following a development decision by the Board. Full year exploration expenses comprise primarily; $13.7 million in Peru $8.4 million at Kansanshi $9.6 million in Finland and Sweden $8.7 million at Guelb Moghrein General and administrative costs were consistent with costs in 2011. A reduction in legal expenses related to RDC matters were partially offset by an increase in personnel costs in 2012 driven by an increased complement of employees to develop and manage the Company's expanded asset base. On January 5, 2012, the Company reached an agreement with ENRC to dispose of its residual claims and assets in respect of the Kolwezi Tailings project and the Frontier and Lonshi mines and related exploration interests, all located in the Katanga Province of the RDC and to settle all current legal matters relating to these interests for a total consideration of $1.25 billion. The transaction was completed on March 2, 2012. The total consideration was comprised of $750.0 million, paid on March 2, 2012, together with a deferred consideration of $500.0 million in the form of a three-year Promissory Note with an interest coupon of 3% payable annually in arrears. Under the terms of the acquisition, ENRC acquired, with certain limited exceptions, all of First Quantum's assets and property either physically located within the RDC or relating to the operations formerly carried out by First Quantum and its subsidiaries in the RDC. In connection with the transaction, First Quantum, ENRC, the RDC Government, International Finance Corporation and Industrial Development Corporation have also settled all disputes relating to the companies being sold and their assets and operations in the RDC and each of First Quantum, ENRC, the RDC Government, International Finance Corporation and Industrial Development Corporation have released one another in respect of all claims and judgments relating to the foregoing or to any other matter arising in the RDC on or before the date of closing.The $1,217.9 million gain recognized on the disposal includes the fair value of proceeds received, net of transaction costs and the underlying net liabilities of subsidiaries disposed of. Income taxes for the full year amount to an effective income tax rate of approximately 33% of earnings (excluding the $1,217.9 received in settlement of RDC claims and sale of assets) compared to 40% (based on comparative earnings) in the prior year. The decrease is due to a number of non-recurring factors that include the recognition of previously unrecognized tax losses. In future, it is expected that the effective tax rate will reduce slightly below 43% as a result of increased earnings in lower tax jurisdictions.LIQUIDITY AND CAPITAL RESOURCESQ4 2012Q4 2011120122011120101Cash flows from operating activities- before changes in working capital319.1285.51,165.21,299.31,340.4- after changes in working capital70.2(5.2)342.5412.3802.9Cash flows from investing activitiesPayments for property, plant and equipment(420.0)(294.4)(1,373.3)(1,108.7)(357.6)Proceeds from settlement of RDC claims and sale of assets--736.5--Acquisitions----(514.9)Other investing activities(27.3)-(41.0)14.0646.9Cash flows from financing activities311.2(2.8)192.2(210.4)(151.6)Net cash flows(65.9)(302.4)(143.1)(892.8)(425.7)Cash balance309.0452.1309.0452.11,344.9Total assets7,536.45,298.07,536.45,298.04,957.9Total long-term liabilities1,211.4507.61,211.4507.6853.1Cash flows from operating activities per share2before working capital (per share)$0.67$0.60$2.46$2.91$3.34after working capital (per share)$0.15$(0.01)$0.72$0.92$0.921 Cash flows before changes in working capital has been adjusted from that previously disclosed due to changes in presentation of taxes paid and interest received in the cash flow.2 Cash flows per share is not recognized under IFRS. See "Regulatory Disclosures" for further information.2012 operating cash flows before changes in working capital decreased from 2011 due to higher non-cash expenses in 2011. Changes in working capital during 2012 resulted in a reduction of cash of $822.7 million which includes $458.8 million in Zambian taxes that the Company paid during the year. Increases in accounts receivable and inventory totalled $444.3 million during 2012, resulting in part, from the commencement of operations at Kevitsa. Capital expenditure on the Company's key development projects totalled $1,373.3 million for the year. Capital expenditure comprised primarily; $755.2 million at Kansanshi for the oxide circuit expansions, smelter project and mine pit development costs $328.2 million at Sentinel, including deposits, for site development and long-lead plant and mine equipment $171.4 million at Kevitsa for project development, completion and costs incurred during the commissioning phase Proceeds from settlement of RDC claims and sale of assets represents the net cash proceeds received during Q1 2012. The $500.0 million promissory note is payable by ENRC on March 2, 2015.Cash flows from financing activities for the year include dividend payments made to shareholders of the Company of $91.0 million as well as dividends paid to non-controlling interest of $39.0 million. Cash flows from financing activities in 2011 include dividend payments of $79.3 million and $10.8 million made to shareholders of the Company and non-controlling interest respectively. Prior year cash flows from financing activities also include bond inducement costs of $48.4 million and the final $80.7 million repayment of the $400.0 million term loan facility which was previously in place.Cash flows from financing activities in Q4 2012 comprise primarily of the net proceeds from the $350.0 million senior notes issue which was completed on October 10, 2012. Q4 2012 also includes dividends of $23.2 million paid to non-controlling interests. As at December 31, 2012, the Company had the following contractual obligations outstanding: Carrying ValueContractual Cashflows< 1 year1 - 3 years3 - 5 yearsThereafterDebt396.8584.973.360.050.8400.8Trade and other payables355.5355.5355.5---Current taxes payable32.532.532.5---Deferred payments4.24.24.2---Finance leases27.238.93.87.67.619.9Commitments897.2897.2897.2---Restoration provisions270.5519.00.65.61.0511.8Total1,983.92,432.21,367.173.259.4932.5Total commitments of $897.2 million comprise primarily of capital expenditure for property, plant and equipment related to the development of Sentinel, upgrades at Kansanshi, the smelter construction and other projects. The significant capital expansion and development program is expected to be funded using available cash, future cash flows from operations and debt facilities. At December 31, 2012, both the $250.0 million Kevitsa debt facility and $1.0 billion Kansanshi senior term and revolving facility were undrawn and available for drawdown. Hedging program As at December 31, 2012, the following derivative positions were outstanding:Average priceOpen Positions (tonnes/ ounces)ContractMarketMaturities ThroughEmbedded derivatives in provisional sales contracts:Copper50,191$3.61/lb$3.59/lbMarch 2013Nickel3,9967.81/lb7.70/lbFebruary 2013Gold19,4621,705/oz1,676/ozMarch 2013Commodity contracts:Copper53,453$3.61/lb$3.59/lbMarch 2013Nickel3,3157.81/lb7.70/lbFebruary 2013Gold21,2531,705/oz1,676/ozMarch 2013A summary of the fair values of unsettled derivative financial instruments for commodity contracts recorded on the consolidated balance sheet:December 31, 2012December 31, 2011Commodity contracts:Asset position$5.0$5.1Liability position(2.4)(6.0)a) Provisional pricing and derivative contractsA portion of the Company's metal sales is sold on a provisional pricing basis whereby sales are recognized at prevailing metal prices when title transfers to the customer and final pricing is not determined until a subsequent date, typically two months later. The difference between final price and provisional invoice price is recognized in net earnings. In order to mitigate the impact of these adjustments on net earnings, the Company enters into derivative contracts to directly offset the pricing exposure on the provisionally priced contracts. The provisional pricing gains or losses and offsetting derivative gains or losses are both recognized as a component of cost of sales. Derivative assets are presented in other assets and derivative liabilities are presented in other liabilities with the exception of copper, gold and nickel embedded derivatives which are included within accounts receivable. As at December 31, 2012, substantially all of the Company's metal sales contracts subject to pricing adjustments were hedged by offsetting derivative contracts.EQUITYAt the date of this report, the Company has 476,310,282 shares outstanding. There were no changes in common shares outstanding during 2012.OTHER ITEMSZambian taxation The Government of the Republic of Zambia ("GRZ") announced in January 2008 a number of proposed changes to the tax regime in the country in relation to mining companies. The Company, through some of its Zambian subsidiaries, is party to Development Agreements with the GRZ for its existing operations which provide an express right to full and fair compensation for any loss, damages or costs (including interest) incurred by the Company by reason of the government's failure to comply with the tax stability guarantees set out in the Development Agreements and rights of international arbitration in the event of any dispute. The Company's Zambian subsidiaries have complied with the GRZ's new tax regime without prejudice to its rights under the Development Agreement. Following the change of government in 2011, the first Budget of the new government introduced a further increase in the copper mineral royalty tax from 3% to 6%, effective April 2012, in breach of the Development Agreements. In the 2013 Budget, delivered in October 2012, the GRZ has decreased the rate of Capital Allowances from 100% per annum to 25% per annum. This will impact the timing of the tax benefit from the Company's significant capital programs at Kansanshi and Sentinel.Until resolved differently with the GRZ, the Company is recognizing and paying taxes in excess of the Development Agreement, resulting in an effective tax rate of approximately 43% at Kansanshi.On Behalf of the Board of Directors of First Quantum Minerals Ltd. G. Clive Newall, President12g3-2b-82-4461Listed in Standard and Poor's Forward-Looking StatementsCertain statements and information herein, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. These forward-looking statements are principally included in the Development activities section and are also disclosed in other sections of the document. The forward looking statements include estimates, forecasts and statements as to the Company's expectations of production and sales volumes, expected timing of completion of project development at Kansanshi, Sentinel and Enterprise, the impact of ore grades on future production, the potential of production disruptions, capital expenditure and mine production costs, the outcome of mine permitting, the outcome of legal proceedings which involve the Company, information with respect to the future price of copper, gold, cobalt, nickel, PGE, and sulphuric acid, estimated mineral reserves and mineral resources, our exploration and development program, estimated future expenses, exploration and development capital requirements, the Company's hedging policy, and our goals and strategies. Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. With respect to forward-looking statements and information contained herein, we have made numerous assumptions including among other things, assumptions about the price of copper, gold, nickel, PGE, cobalt and sulphuric acid, anticipated costs and expenditures and our ability to achieve our goals. Although our management believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that a forward-looking statement or information herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. These factors include, but are not limited to, future production volumes and costs, costs for inputs such as oil, power and sulphur, political stability in Zambia, Peru, Mauritania, Finland and Australia, adverse weather conditions in Zambia, Finland and Mauritania, labour disruptions, mechanical failures, water supply, procurement and delivery of parts and supplies to the operations, the production of off-spec material. See our Annual Information Form for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information. Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actual results, performances, achievements or events not to be anticipated, estimated or intended. Also, many of these factors are beyond our control. Accordingly, readers should not place undue reliance on forward-looking statements or information. We undertake no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information made herein are qualified by this cautionary statement.First Quantum Minerals Ltd.Consolidated Statements of EarningsFor the years ended December 31, 2012 and 2011(expressed in millions of U.S. dollars, except where indicated and share and per share amounts)Note20122011Sales revenues182,950.42,583.5Cost of sales19,20(1,849.4)(1,275.5)Gross profit1,101.01,308.0Exploration(49.7)(73.0)General and administrative20(76.0)(73.8)Settlement of RDC claims and sale of assets211,217.9-Bond inducement costs10-(48.4)Other income (expense)22(4.3)7.3Operating profit2,188.91,120.1Finance income23.65.3Finance costs23(15.3)(9.9)Earnings before income taxes2,197.21,115.5Income taxes14(327.8)(460.7)Net earnings for the year1,869.4654.8Net earnings for the year attributable to:Non-controlling interests96.5125.9Shareholders of the Company1,772.9528.9Earnings per common shareBasic163.741.18Diluted163.721.18Weighted average shares outstanding (000's)Basic16473,893447,224Diluted16476,310449,457Total shares issued and outstanding (000's)15476,310476,310The accompanying notes are an integral part of these consolidated financial statements.For a copy of the notes visit the Company's website at www.first-quantum.com.First Quantum Minerals Ltd.Consolidated Statements of Comprehensive IncomeFor the years ended December 31, 2012 and 2011(expressed in millions of U.S. dollars)Note20122011Net earnings for the year1,869.4654.8Other comprehensive income (loss)Unrealized gain (loss) on available-for-sale investments6(7.3)0.2Tax on unrealized gain (loss) on available-for-sale investments1.8-Comprehensive income for the year1,863.9655.0Total comprehensive income for the year attributable to:Non-controlling interests96.5125.9Shareholders of the Company1,767.4529.11,863.9655.0The accompanying notes are an integral part of these consolidated financial statements.For a copy of the notes visit the Company's website at www.first-quantum.com.First Quantum Minerals Ltd.Consolidated Statements of Cash FlowsFor the years ended December 31, 2012 and 2011(expressed in millions of U.S. dollars)Note20122011Cash flows from operating activitiesNet earnings for the year1,869.4654.8Items not affecting cashDepreciation7172.3112.0Unrealized foreign exchange (gain) loss1.9(2.1)Deferred income tax expense (recovery)290.4(13.1)Income tax expense37.4473.8Share-based compensation expense1715.98.8Bond inducement costs10-48.4Net finance (income) costs(8.3)9.9Settlement of RDC claims and sale of assets21(1,217.9)-Other4.16.81,165.21,299.3Taxes paid(458.8)(598.4)Change in non-cash operating working capital(Increase) decrease in trade, other receivables and derivatives(183.0)92.3Increase in inventories(224.4)(241.1)(Increase) decrease in trade and other payables80.4(118.9)Long term incentive plan contributions(36.9)(20.9)342.5412.3Cash flows from investing activitiesPurchase of property, plant and equipment(1,316.7)(1,049.5)Deposits on property, plant and equipment(56.6)(59.2)Proceeds from sale of property, plant and equipment1.6-Acquisitions of investments(46.1)-Interest received3.54.1Proceeds from settlement of RDC claims and sale of assets736.59.9(677.8)(1,094.7)Cash flows from financing activitiesNet movement in trading facility0.7(14.6)Repayments of debt(5.1)(83.6)Proceeds from issuance of senior notes9338.8-Proceeds on issuance of common shares-16.1Cash paid on bond inducement10-(48.4)Restricted cash-40.4Dividends paid(91.0)(79.3)Dividends paid to non-controlling interests(39.0)(10.8)Finance lease payments(3.8)(3.7)Interest paid(8.4)(26.5)192.2(210.4)Decrease in cash and cash equivalents(143.1)(892.8)Cash and cash equivalents - beginning of year452.11,344.9Cash and cash equivalents - end of year26309.0452.1The accompanying notes are an integral part of these consolidated financial statements.For a copy of the notes visit the Company's website at www.first-quantum.com.First Quantum Minerals Ltd.Consolidated Balance SheetsAs at December 31, 2012 and 2011 (expressed in millions of U.S. dollars)NoteDecember 31, 2012December 31, 2011AssetsCurrent assetsCash and cash equivalents26309.0452.1Trade and other receivables4390.2238.1Inventories5903.7649.9Current portion of other assets8230.134.01,833.01,374.1Investments655.618.0Property, plant and equipment74,953.63,824.4Promissory note receivable21481.8-Other assets8212.481.5Total assets7,536.45,298.0LiabilitiesCurrent liabilitiesTrade and other payables355.5273.4Current taxes payable32.5289.4Current portion of debt949.148.1Current portion of provisions and other liabilities116.511.0443.6621.9Debt9347.714.8Provisions and other liabilities11299.2286.4Deferred income tax liabilities14564.5206.4Total liabilities1,655.01,129.5EquityShare capital1,929.61,950.6Retained earnings3,405.71,723.8Accumulated other comprehensive income (loss)(4.3)1.2Total equity attributable to shareholders of the Company5,331.03,675.6Non-controlling interests550.4492.9Total equity5,881.44,168.5Total liabilities and equity7,536.45,298.0Commitments27Approved by the Board of Directors and authorized for issue on March 5, 2013.Signed bySigned byAndrew Adams, DirectorPeter St. George, DirectorThe accompanying notes are an integral part of these consolidated financial statements.For a copy of the notes visit the Company's website at www.first-quantum.com.First Quantum Minerals Ltd.Consolidated Statements of Changes in EquityFor the years ended December 31, 2012 and 2011(expressed in millions of U.S. dollars)Note20122011Share capitalCommon sharesBalance - beginning of year2,003.81,479.3Shares issued and share options exercised-16.1Conversion of convertible bonds10-508.4Balance - end of year2,003.82,003.8Equity portion of convertible bondsBalance - beginning of year-48.3Conversion of convertible bonds10-(48.3)Balance - end of year--Treasury sharesBalance - beginning of year(68.0)(57.0)Restricted and performance stock units vested6.09.9Shares purchased15b(36.9)(20.9)Balance - end of year(98.9)(68.0)Contributed surplusBalance - beginning of year14.815.9Share-based compensation expense for the year17a15.98.8Restricted and performance stock units vested17a(6.0)(9.9)Balance - end of year24.714.8Total share capital1,929.61,950.6Retained earningsBalance - beginning of year1,723.81,274.2Earnings for the year attributable to shareholders of the Company1,772.9528.9Dividends(91.0)(79.3)Balance - end of year3,405.71,723.8Accumulated other comprehensive incomeBalance - beginning of year1.21.0Other comprehensive income (loss) for the year(5.5)0.2Balance - end of year(4.3)1.2Non-controlling interestsBalance - beginning of year492.9377.8Earnings attributable to non-controlling interests96.5125.9Dividends(39.0)(10.8)Balance - end of year550.4492.9The accompanying notes are an integral part of these consolidated financial statements.For a copy of the notes visit the Company's website at www.first-quantum.com.FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: North American contact:Sharon LoungDirector, Investor Relations(647) 346-3934 or Toll Free: 1 (888) 688-6577(604) 688-3818 (FAX)sharon.loung@fqml.comUnited Kingdom contact:Clive NewallPresident+44 140 327 3484+44 140 327 3494 (FAX)clive.newall@fqml.comwww.first-quantum.com