Among established miners focused on copper production, First Quantum can lay claim to being among the best relative stock price performers, along with Antofagasta, but it can only be stressed that in these markets, everything is relative.First Quantum ranks first and foremost as an African copper miner, but also has substantial gold ounces under its belt and increasingly flying through the mine gates. The group owns and operates 80% of the Kansanshi copper-gold mine in Zambia (a foundation asset), 95% of Frontier in the Democratic Republic of the Congo, the group's newest mine, 80% of the Guelb Moghrein gold-copper mine in Mauritania, 65% of the developing Kolwezi copper-cobalt project in the DRC, and, among other interests, exploration assets, including the Kevitsa copper-nickel-cobalt-gold-platinum-palladium project in Finland.

First Quantum ranks as the pioneer miner in reenergizing the Central African Copperbelt, which extends some 500km through Zambia and into the DRC's Katanga province, with a width of around 50km. First Quantum acquired Zambia's Bwana Mkubwa in 1996, a grand old man of the copperbelt that exhausted the last of its own ore reserves in mid-2002; those reserves in any event were poor quality tailings from previous operations.

The mine had been worked on and off since its discovery in 1902. So tattered and torn was Bwana Mkubwa that First Quantum's acquisition was a straight commercial deal. The mine's state of dereliction and apparently hopeless future left it outside the mandate of the copper industry privatisation initiated by the Zambian government. First Quantum started mining at Lonshi, just over the DRC border, in August 2001; a 36km laterite road was built to haul ore from Lonshi to Bwana Mkubwa, near Ndola. The Lonshi orebody was mined out during 2008, by which time, First Quantum had graduated into a serious miner.

When all the numbers for 2008 are in, First Quantum's group copper production, with much of it in cathode, is likely to be around 332,000 tons, compared to 29,500 tons in 2003, all of the latter produced by Bwana/Lonshi. Just as tellingly, group gold production, which started out at a modest 14,300 ounces in 2005, is set to total around 120,000 ounces for 2008. Projections for 2009 indicate 380,000 tons of group copper production, and a 100% increase in gold output to some 240,000 ounces. The latter number would easily rank First Quantum among global Tier III gold diggers.

Using the flexibility built into Kansanshi as a whole, average C1 cash cost at the mine is expected to decline to about USD 0.80/lb of copper in 2009; copper production is expected to rise to 244,000 tons in 2009 from 215,300 ton in 2008. Gold production for 2009 is expected to total 140,000 ounces from 54,000 ounces in 2008. Market copper prices fell from record levels of USD 4.06/lb in mid-2008 to USD 1.28 late in 2008; current prices are sharply off that bottom at about USD 1.65/lb.

Guelb Moghrein's copper production is expected to rise to 38,000 tons from 33,100 tons in 2008; gold recoveries are expected to increase to over 100,000 ounces in 2009 from 60,000 ounces in 2008. C1 costs are expected to decline significantly, depending on the prevailing gold price and the operating efficiencies of the new gold circuit and plant expansion.

 The Frontier copper mine in the DRC completed a full year of successful operations and produced 80,200 tons of copper in concentrate in 2008.  For 2009, production is targeted to rise to 98,000 tons. Overall, First Quantum sees a significant reduction in group operating costs to a target of USD 0.80/lb of copper for 2009.

In line with the dramatic reversal in commodity prices, First Quantum is cutting 2009's planned capital expenditure to around USD 190m, from around USD 430m during 2008. The 2009 program will be limited to committed capital projects - the development of the Kolwezi copper-cobalt mine, the expansion of Guelb Moghrein, and a few smaller projects at Kansanshi. Each of these projects is expected to result in low-cost production when complete. Other projects, including a decision to proceed to full development of the Kevitsa project, have been deferred pending improvement in market conditions.First Quantum's 2009 exploration budget has been reduced to USD 10m from about USD 28m in 2008.  Senior management and the board of directors are making a personal contribution to the efforts to lower costs with a 20% cut in salaries and fees. First Quantum has also initiated a short-term hedging program, largely limited to the next six months, to protect against possible further falls in commodity prices. First Quantum's net cash stood at around USD 236m on 31 January 2009; the revolving credit facility of USD 250m was renewed with Standard Chartered Bank for a further 12-month period. Copper - which is set to remain First Quantum's primary focus - could reach group output levels close to 500,000 tons in 2011, including production from Kolwezi and Kashime (for the first time in 2011), also in the DRC. The estimated capital investment at Kolwezi is around USD 553m; commissioning is anticipated during the third quarter of 2010, with initial annual capacity of 35,000 tons of copper and 7,000 tons of cobalt hydroxide.On the corporate front, First Quantum owns 16.9% of the Mopani mine in Zambia, which in 2007 produced some 104,000 tons of finished copper and 1,700 tons of cobalt. Mopani, effectively controlled by Switzerland's Glencore, has been busy with heavy capital upgrades at the mine, and also construction of a new smelter at Mufulira, which would increase handling capacity from 420,000 tons initially to 720,000 tons of copper concentrate a year, and eventually to 850,000 tons of copper concentrate a year. The smelter is known to have experienced commissioning issues, but was likely fully operational during the second half of 2008.First Quantum also owns close to 20% of Equinox, which in the past few months, following exceptionally heavy rains, has been stabilising the build up to commissioning of the gigantic mills at its 180,000 tons a year world-class Lumwana copper mine in Zambia. The Equinox stock price is set to exaggerate copper price moves this year, as Equinox focuses on repaying USD 183m of debt on 30 September 2009.Equinox, however, has a hedge book worth USD 235m and cash and bank underwritten equity of USD 85m; given the known metrics at Lumwana, Equinox should not need an equity top up so long as copper stays anywhere above USD 1.50/lb. For now, it can probably be argued that Equinox ranks as the world's No 1 leveraged copper equity proxy; Freeport-McMoRan, the world's biggest listed copper digger - and also a material miner of gold and molybdenum - may rank as a close rival in this respect. First Quantum will logically at some point make a scrip offer for the 80% of Equinox its does not yet own; perhaps, as a London sales-trader speculates, a more bullish copper price outlook could trigger that transaction.Selected copper stocks

Stock

From

From

Value

price

high*

low*

USD bn

Freeport-McMoRan

USD 34.17

-73.1%

117.6%

14.067

Southern Copper

USD 15.44

-63.2%

69.3%

13.183

Antofagasta

GBP 5.39

-35.5%

120.9%

7.289

KGHM Polska Miedź

PLN 45.22

-60.2%

125.2%

2.489

Jiangxi Copper

CNY 16.84

-65.7%

103.6%

4.026

First Quantum

CAD 33.50

-64.9%

162.7%

1.793

Equinox

CAD 1.66

-70.3%

118.4%

0.771

Philex

PHP 5.80

-25.6%

50.6%

0.465

Camec

GBP 0.029

-95.3%

53.7%

0.112

Katanga Mining

CAD 0.38

-97.6%

72.7%

0.061

Quadra

CAD 4.15

-84.6%

110.7%

0.213

Pan Australian

AUD 0.18

-86.0%

113.4%

0.199

Metorex

ZAR 1.39

-94.4%

20.9%

0.100

Palamin

ZAR 47.50

-70.7%

18.8%

0.223

Mercator

CAD 0.38

-97.1%

31.0%

0.032

Anvil

CAD 1.15

-92.2%

155.6%

0.064

Northern Dynasty

CAD 6.11

-46.4%

218.2%

0.440

Taseko

CAD 1.10

-82.6%

66.7%

0.131

Aditya Birla

AUD 0.12

-96.2%

19.8%

0.023

Corriente

CAD 4.40

-20.0%

76.0%

0.258

Fronteer

CAD 2.57

-67.2%

65.8%

0.167

CuDeco

AUD 1.84

-60.8%

96.8%

0.140

Chariot

CAD 0.13

-88.5%

108.3%

0.032

Teal

CAD 2.92

-34.4%

1522.2%

0.123

Straits Resources

AUD 0.90

-88.9%

45.2%

0.136

Centenario

CAD 1.16

-81.4%

157.8%

0.046

Globestar Mining

CAD 0.53

-75.1%

82.8%

0.043

Frontera

CAD 0.74

-87.1%

236.4%

0.048

Amerigo

CAD 0.36

-84.9%

56.5%

0.037

Stingray Copper

CAD 0.26

-68.3%

100.0%

0.010

Tiger Resources

AUD 0.08

-84.9%

18.6%

0.013

Candente

CAD 0.15

-92.4%

15.4%

0.009

African Copper

GBP 0.01

-98.5%

3.6%

0.001

Monterrico

GBP 0.65

-78.9%

168.8%

0.023

Inca Pacific

CAD 0.17

-92.5%

37.5%

0.007

Exco Resources

AUD 0.08

-81.2%

27.0%

0.013

Coro

CAD 0.15

-93.1%

107.1%

0.009

Discovery Metals

AUD 0.15

-76.9%

42.9%

0.016

Africo

CAD 0.64

-76.3%

60.0%

0.036

Prairie Downs

AUD 0.06

-94.2%

52.4%

0.003

Red Dragon

CAD 0.14

-66.7%

180.0%

0.007

Polymet Mining

CAD 0.82

-81.7%

36.7%

0.088

African Eagle

GBP 0.03

-71.0%

122.2%

0.007

El Nino Ventures

CAD 0.07

-89.1%

100.0%

0.002

Simberi

CAD 0.01

-83.3%

100.0%

0.001

Augusta Resources

USD 0.83

-88.1%

112.8%

0.074

Rambler Metals

GBP 0.12

-80.7%

84.0%

0.009

Norsemont Mining

CAD 1.64

-62.8%

53.3%

0.069

Nevada Copper

CAD 0.23

-93.1%

39.4%

0.007

Capstone Mining

CAD 1.35

-69.8%

107.7%

0.173

Imperial Metals

CAD 2.20

-79.7%

136.6%

0.055

Pacific Booker

CAD 6.90

-31.0%

169.5%

0.055

Nevada Copper

CAD 0.23

-93.1%

39.4%

0.007

Avanco Resources

AUD 0.05

-87.2%

2.3%

0.002

Palabora

ZAR 47.50

-70.7%

18.8%

0.223

Kagara

AUD 0.33

-94.4%

11.9%

0.055

Stingray Copper

CAD 0.26

-68.3%

100.0%

0.010

Benguet

PHP 7.00

-68.9%

44.3%

0.014

Con't Mines

CAD 0.40

-74.0%

31.7%

0.040

Redbank Mines

AUD 0.01

-87.2%

11.1%

0.004

IMA Exploration

USD 0.23

-51.1%

43.8%

0.012

Cornerstone Capital

CAD 0.05

-88.8%

50.0%

0.003

Thundermin

CAD 0.11

-78.6%

75.0%

0.006

Western Copper

CAD 0.26

-83.8%

26.8%

0.015

Averages/total

-73.8%

98.9%

47.790

Weighted averages

-68.1%

98.8%

 

Diversifieds with copper

Stock

From

From

Value

price

high*

low*

USD bn

BHP Billiton

GBP 12.97

-41.2%

77.3%

105.299

Vale

USD 13.65

-69.1%

55.1%

66.885

Rio Tinto

GBP 20.47

-71.4%

105.7%

40.586

Anglo American

GBP 11.12

-69.8%

22.7%

20.101

Xstrata

GBP 3.53

-85.9%

22.3%

8.371

Norilsk

USD 5.17

-83.7%

47.3%

9.855

Teck

USD 3.16

-94.1%

21.5%

1.509

Vedanta

GBP 5.86

-79.0%

63.2%

2.273

Sterlite

USD 5.04

-78.1%

61.5%

3.570

Lundin

CAD 1.15

-87.4%

66.7%

0.436

Kazakhmys

GBP 3.07

-84.4%

80.0%

2.258

Ivanhoe

CAD 5.74

-54.4%

178.6%

1.689

Inmet

CAD 31.07

-68.8%

155.7%

1.168

Northgate

CAD 1.27

-63.6%

89.6%

0.253

Oz Minerals

AUD 0.61

-83.7%

52.5%

1.227

Polymet

CAD 0.82

-81.7%

36.7%

0.088

Mwana Africa

GBP 0.04

-93.9%

42.0%

0.019

EMED Mining

GBP 0.04

-88.6%

7.4%

0.012

Boliden

CAD 4.50

-65.4%

125.0%

0.958

Averages/total

 

-76.0%

69.0%

266.557

Weighted averages

-67.2%

65.5%

* 12-month

 

Source: market data; table compiled by Barry Sergeant