Mining group First Quantum Minerals (FQM) is a well-run outfit, but operates in volatile parts of the world. Such geopolitical risks have hurt both its performance and share price lately, so we've downgraded our view.
The shares fell ahead of these figures after reports of a miners’ strike in Zambia and a fall in the copper price. And FQM’s fourth-quarter performance would have done little to improve sentiment, either; copper sales volumes fell 14 per cent to 65,638 tonnes on 2010's fourth quarter figure - compounded by an 11 per cent fall in the average realised price over that period to $3.33 a pound. Total fourth quarter copper production increased 15 per cent compared to the previous quarter, though, as output at the Kansanshi mine picked up following remedial work.
Despite problems with ore grades, annual production from FQM's continuing operations was broadly flat at 265,576 tonnes. Mining cash costs bubbled-up 19 per cent during the year to $1.41 a pound, but the average copper price over the year rose by the same amount.
Meanwhile, management's median production guidance for 2012 stands at 280,000 tonnes of copper, 38,000 tonnes of nickel and 180,000 ounces of gold, with costs broadly in line with the fourth quarter.
Salman Partners expect 2012 EPS of $1.13 (2011: $1.16).
| FIRST QUANTUM MINERALS (FQM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,288p | MARKET VALUE: | £6.1bn | |
| TOUCH: | 1,270-1,321p | 12-MONTH HIGH: | 1,890p | LOW: 778p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 772¢ | NET CASH: | $389m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢)† | Dividend per share (CA ¢)† |
|---|---|---|---|---|
| 2007 | 1.54 | 0.84 | 154 | 15.6 |
| 2008 | 1.74 | 0.39 | 13.4 | 5.20 |
| 2009 | 1.86 | 0.75 | 123 | 11.8 |
| 2010 | 2.39 | 0.99 | 76.0 | 16.0 |
| 2011 | 2.58 | 1.12 | 118 | 18.1 |
| % change | +8 | +13 | +55 | +13 |
Ex-div:13 Apr Payment:08 May †Adjusted for August 2011's five-for-one share split £1=$1.57 £1=CA$1.57 | ||||
