All data are collected in the Fiscal Year of 2008-2009.

Zambia / Energy, Mining, Resources

First Quantum Minerals Ltd. is a Vancouver, British Columbia based mining and metals company engaged in mineral exploration, development and mining. First Quantum's common shares are listed for trading on the Toronto Stock Exchange in Canada (symbol "FM"), the London Stock Exchange (symbol "FQM") in the United Kingdom. First Quantum is a member of the S&P/TSX 60 index.

Apart from properties in Zambia, in the Democratic Republic of Congo, First Quantum operates the 95% owned open pit Frontier copper mine and is currently developing the 65% owned the Kolwezi copper-cobalt tailings project. In Mauritania, First Quantum operates the 80% owned Guelb Moghrein copper-gold mine. In Finland, the Company owns the 100% Kevitsa nickel-copper-PGE project.

2008 marked an important step forward in First Quantum's progress towards building an international mining company. Total copper production rose over 47% from the previous year to total 334,415 tonnes as the Frontier mine completed its first full year of commercial operations, benefits of capacity expansions at the Kansanshi mine were realized and another strong operating year was recorded at the Guelb Moghrein mine. Additionally, the acquisition of the Kevitsa project in Scandinavia was a significant first step in its strategy to diversify both geographically and across commodity lines.

In 2001, the Company purchased an 80% interest in Kansanshi from Cyprus Amax, a subsidiary of Phelps Dodge Corporation, for total consideration of US $27.5 million. In 2002, it was proposed that Kansanshi be developed in two phases and a definitive feasibility study (DFS) was completed for the first phase of 16 years. A second phase of 14 years is supported by the existing resource for a total mine life of approximately 30 years.

P.O. Box 230022
Ndola, Zambia
Tel: +260 2 651 555
Fax: +260 2 651 553

The Company produces LME grade "A" copper cathode, copper in concentrate, gold and sulphuric acid.

Total employees as of end 2008: 6,500. Total employees in Zambia as of end 2008: 2,475

First Quantum produced 334,400 tonnes of copper, sold 121,800 ounces of gold and generated US$1.7 billion of revenues in 2008.

Zambia’s copper production was 569,000 tonnes in 2008. First Quantum’s total copper production in Zambia was 215,314 tonnes in 2008. First Quantum 2008 market share was 37.8%.

Building an international low cost mining company

First Quantum focuses on low-cost projects. Following the sharp fall in the copper price in the second half of 2008, the company initiated a review of all parts of the business to identify prudent measures to protect the Company's core activities and financial resources and improve its operating cost profile. As a result of the review, it adjusted each mine's operating plan, renegotiated supply contracts, improved supplier credit terms, tightened working capital management, and deferred some exploration and capital expenditure.

The company believes that as a low cost producer with brownfield expansion opportunities at Kansanshi, Frontier and Guelb Moghrein plus new projects under development at Kolwezi and Kevitsa, it is well positioned to bring additional organic growth projects on line quickly as market conditions improve. In addition, the Company is on track to become a more meaningful gold producer as the gold recovery circuits at Guelb Moghrein and Kansanshi are enhanced.

The changes implemented across all aspects of activities to optimize the cost structure are being supplemented by price reductions for several key process inputs. Most notably, the prices for diesel and sulphur have declined significantly from levels in mid-2008.

Much of the Company's success also comes from being opportunistic, focused and conservative in its acquisitions.

Subsequent to year end the Company initiated a short-term hedging program, currently consisting of 72,500 tonnes of copper hedges for the five-month period ending July 2009, to provide protection against the possibility of further deterioration in the copper price.

The Company's assets in Zambia include the 80% owned Kansanshi open pit copper-gold mine in which Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH) owns 20 per cent interest on behalf of the Zambian Government; and the 100% owned Fishtie copper project and the 100% owned Bwana Mkubwa SX/EW facility and sulphuric acid plants. First Quantum also holds strategic investments in Mopani Copper Mines (16.9%), operator of the Nkana underground copper mine and cobalt refinery and the Mufulira underground copper mine, smelter and copper refinery, as well as Equinox Minerals Ltd. (16.32%), a publicly-traded company that operates the Lumwana copper mine.

The Company, through its Zambian subsidiaries, is party to Development Agreements with the government 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 obtained legal advice on its rights under the Development Agreements confirming that the Company has rights of recovery for any taxes which are levied in excess of those permitted under those Development Agreements. The Company received letters from the Zambian Revenue Authority (“ZRA”) in July 2008 confirming that the Company “will with immediate effect be required to pay windfall tax on a provisional basis at a flat rate of 25% at any price above the first trigger price for both copper and cobalt”. This advice is inconsistent with the legislation which provides for windfall tax rates of 50% above $3.00 per pound and 75% above $3.50 per pound. The letters go on further to state that this “is an interim arrangement and, we expect at the end of the tax year, necessary adjustments will be effected accordingly”.

As previously reported, the government announced changes to the tax regime in the country in relation to mining companies. On 30 January 2009 the Minister of Finance of the Zambian Government published the 2009 budget. There were positive changes to the mining tax regime announced including: abolition of the windfall tax; increase in the capital allowance back to 100%; and set-off of hedging losses against mining profit was prohibited in FY 2008-09. This prohibition has been removed in 2009-10 and onward. The 2009 changes took effect on 1 April 2009.

There were, however, a number of changes implemented in 2008 that were retained, including the variable profit tax, concentrate export levy, income tax at 30% and higher royalties, which the Company maintains are in excess of those permitted under its Development Agreements and for which it has rights of recovery. The Company is seeking to hold discussions with the government to find an alternative solution to arbitration or litigation to fully resolve these matters. The timing and outcome of these discussions are uncertain.

Copper production increased 22% to 62,014 tonnes as the sulphide circuit expansion began commissioning during Q2 2008 and continued to ramp up to design throughput in Q4. This expansion allows for an annual throughput in excess of 12 million tonnes of ore and resulted in a 61% increase in sulphide ore throughput over Q4 2007 and a 47% increase in copper in concentrate production.

Kansanshi’s high pressure leach system (“HPL”) has made steady improvements since commencing operations in late 2007. Various pump materials, which were necessary to increase the HPL’s performance, were received and installed resulting in an increase in the availability of the HPL. The HPL contributed approximately 11,200 tonnes of copper in concentrate to cathode production, which was a 245% increase over 2007.

Investment in additional mining equipment throughout 2007 allowed increased mine production and processing facility upgrades and expansions resulted in a 28% increase in ore throughput over 2007 to over 15 million tonnes.

The volume of material mined is being reduced by approximately 40%by increasing the cut-off grades for both oxide and sulphide ores. This has significantly reduced both mining and processing unit costs. The recently installed 35,000 tonne per year electrowinning tankhouse, the four million tonne per year concentrator expansion and the HPL facility are all giving Kansanshi considerable processing flexibility.