Clive Newall - President Hannes Meyer - CFO Juliet Wall - General Manager, Finance Libby Senez - Group Reporting Controller Zenon Wozniak - Director, Projects

Alain Gabriel - Morgan Stanley David Charles - Dundee Capital Markets Michael Flitton - Citigroup Jean Devevey - Exane Greg Barnes - TD Securities Oscar Cabrera - Bank of America Merrill Lynch Alex Terentiew - Raymond James

Welcome to the First Quantum Fourth Quarter 2014 Results Conference Call. [Operator Instructions]. I would now like to turn the meeting over to Mr. Clive Newall, President. Please go ahead, Mr. Newall.

Thanks very much, operator and thank you everyone for joining us today. As usual, we have several First Quantum personnel on the call, including our finance team, including Hannes Meyer, CFO, Juliet Wall, General Manager Finance, Libby Senez, Group Reporting Controller, and from our projects group, Zenon Wozniak, Director, Projects Following a few housekeeping items and some opening comments, Hannes will go through the financial results which were purchased earlier today and after that we'll open the lines to take your questions. A reminder that the presentation which accompanies this conference call is available on our website, www.fist-quantum.com, and can be accessed either on the events section or on the 2014 results conference call button under the new section of the home page. Before we begin, I must note that over the course of this conference call, we will be making several forward-looking statements, and as such I encourage you to note the risk factors in forward-looking statements particular to our company, which are detailed in our annual information form and Q4 end year 2014 MD&A available on our website and on CDAR on www.sedar.com. To begin the review, 2014 was a good year for the company. On the production side we recorded on you highest copper output in our history. This was on account of a full year of production from the three acquired operations as well as improved results from our committee it’s a mine. While our largest operation, Kansanshi, posted decent results, its year was characterized by the flexibility it - constraints of limited local smelter availability in Zambia and fluctuating prices for sulfuric acid. In the first two quarters of 2015, these two issues are expected to continue to influence Kansanshi is that's performance and says before the basis points of own smelter start to kick in with processing capacity and low cost suggest Pacific acid availability. These combined with the regular impact to the seasonal rains in the first quarter are the factors behind the relatively flat production guidance for have been stood down in the interim. On the project development front, a tremendous amount of work was put into both the smelter and Sentinel during the year to the point where the smelter is complete and heater processes expected to start by this Monday, this coming Monday. The process is typically ten days to heat up, two to three days to coat the furnaces with slag and then first introduction of concentrate. So this should happen nominally within a couple of weeks of this weekend. At Sentinel, train one is operational, and early indications are that the - surface, the high throughput should be achieved using only one train. Longer periods of time of running time are being established as buses get ironed out so daily throughput is increasing. We expect to have the additional power at about mud year, which will allow us for the full running of both trains around Q3. Construction completion for Enterprise is likely around midyear, as personnel move off the Sentinel project and join the Enterprise construction team. At Cobre Panama, the work planned for 2015 remains largely unchanged. The focus is on four main areas. To progress the power station construction, to continue with the process plant at earthworks and concrete, commence the milling installing and continue construction of the tailings down. On the - construction all the equipment and materials were ordered some time ago by INMET so we have everything we need to move ahead with this. Earthworks for the power station are complete, concrete work is underway, and structural and mechanical installation will commence shortly. Earthworks for the process plant is about 55% complete, and concrete work is underway with the milling area, concrete being worked first - mills and mill drives early and the mills have been ready since last year so we want to do the concrete for the mills, erect the mill building steel, and building crane, and commence installation of the mills. Completing process - earthworks during the process concrete and undertaking the miller action is a lot of work for this year. The main difference in CapEx from the earlier estimate to the $600 million we're currently using is that we have enough equipment now to continue for 2015 and we don't need to order, pay for or deliver any more equipment to site during 2015. In addition to these major products, we have a number of smaller ones at the operation. First, magnet right concentrate was produced in December, additional flotation plants and regrind facility to increase the iron content of the - from 62% to around 69% is now being commissioned as well and - as well as running as of two days ago. The high intensity grinding Miller at Kevitsa to improve recovery will be commissioned arrested the end of this Monday the lost cruise he is new pressure filters were commissioned late last year and will provide recovery benefit. We're currently correcting some vendor issues with these three filters and we expect to see the full benefit of the new filter installation shortly. At Ken San she additional - to increase recovery. As noted in our year-end disclosure, we're taken several steps aimed at lower costs and conserve go cash in light of the prevailing low metal price environment. The biggest difference year-over-year is in the capital expenditures program which totaled $2.6 billion in 2014. The reduced budget for 2015 is between 1.2 and $1.4 billion, reflects the completion of Sentinel, the smelter, and the various smaller improvement projects as well as the revised work plan at Cobre Panama, as I noted before. We have elected to pay a common share dividend at the payout ratio of 10% of comparative earnings. This compares to a 15% payout previous year and balanced our cash conservation objective with the fact that the number much our longest and most supportive shareholders need some amount of dividend to satisfy their investment mandate. Additionally, we've stepped up initiatives in all areas of the company to identify opportunities for operating cost reduction and several of these are already being implemented. We have shared these actions with our lead bankers, who have responded favorably. They have agreed to change the net debt to EBITDA covenant under the financing agreements to reflect current circumstances. This covenant was at risk on account of the amended Zambia corporate tax and mining royalty regime and the falling metal prices. Our lead bankers have also provided confirmation that this will recommend such a change to the company's broader lending group, who remains supportive of the company. It's important to note that other covenants remain robust and as of December 31st, 2014, the company was in full compliance with all terms of the financing agreement and expects to remain so under current circumstances after the change to the financial could have are Facebook and Twitter is implemented. In Zambia, newly elected President - declared in his maiden address to his full cabinet that he wants a prompt resolution to the disagreement over the royalty regime as well as outstanding VAT rebates to ensure the smooth running of the mining industry. To this end, he had directed various officials to expedite talks with the industry. We are encouraged by these developments and with the dialogue the company has had with members of the cabinet. We are hopeful that these will lead to a satisfactory outcome for all parties concerned. I believe we're all in agreement that a healthy mining industry with a stable mining fiscal policy is crucial and the encouragement and support for further investment in our industry and particularly in Zambia. So with that I'll handled over to Hannes to discuss the financials.

Thanks, Clive, and good day, everyone. Turning to the first slide past all the pictures of the various construction projects and it's called 2014 highlight and it's Slide 16 of the presentation, production guidance was met in all core metals, including nickel which was within guidance despite the shutdown of [inaudible] annual copper production of 428,000 tons increased by 4% over 2013 and was a record level for the group, reflecting a full year contribution from the acquired operations. Copper C1 cost at [inaudible] nickel C1 cost of - in 2014 were also in line with guidance. And nickel was at the lower end of that range provided. Comparative earnings of $475 million for 2014 were $64 million below the prior year, while comparative earnings per share was $0.16 lower at $0.80 per share. Moving to the next slide on production, as shown by the graphs to the side, annual production was 4% higher, reflecting a full year contribution from the acquired operations. The full year growth was achieved despite lower Q4 production, following strong performances in the prior quarters - copper production was lower in the quarter mainly due to a reduction in - recoveries on the oxide circuit. Copper production was higher at - which increased 10% over Q4 2013, following commission of the new SAG mill in Q2 of this year. And at the - saw an increase of 18% due to improved grades. Production at all other operations was broadly in line with the corresponding quarter last year. Nickel production for Q4 2014, just under 10,000 tons, was 21% lower than the corresponding quarter, primarily due to the atmospheric leach tank failure as Ravensthorpe is mid-December which resulted in approximately 1.8000 tons of lost production. Full year nickel production - 3% lower than the prior year. Copper - was 9% down from the prior year - quarter due mainly to lower grades and recoveries at Kansanshi, partly offset by higher gold production at good Wellman grain. Overall copper C1 costs of 1.35 per pound per quarter was $0.12 or 10% higher than Q42013, due to an increase at Kansanshi's C1 cost. Kansanshi copper C1 cost increased 40 since this in the quarter, mainly due to higher strip ratio, reduced mining development, and higher output cost. All other operations, except - saw reductions in copper C1 costs with Las Cruces benefiting from the debottlenecking issues - credit on higher sales - higher gold sales. The full year copper C1 cost of $1.41 represents an increase of $0.11 per pound or 8% from the prior year. Now looking at the nickel C1 costs, group nickel C1 costs of $4.49 since this per pound was broadly in line with $4.51 pound achieved in the corresponding quarter in 2013. Ravensthorpe nickel C1 up gave dollars $0.04 per pound was$0.81 higher than the same quarter last year. Kevitsa - refining charges. Full year nickel C1 costs of [inaudible] decreased by $0.62 per pound or 12% on 2013. Move to the next slide, financial overview, Slide 19 - revenue of $821 million for the quarter was 8% lower than Q4 2013, due to lower realized copper prices, partly offset by higher nickel prices. Average LME praise for copper and nickel was 7% lower and 15% higher than Q4 2013 respectively. Gross profit of $183 million for the quarter was $136 million lower than the same quarter last year. This is mainly due to the lower copper price. Copper production costs increased at Kansanshi due to high mining processing costs related to the higher strip and reduced mining development. Comparative EBITDA of - was $57 million lower than Q4 2013, despite Q4 2014 full year comparative EBITDA of - of $1.4 billion, this was broadly in line with the prior year. To move to the next slide, Slide 20, full year gross profit - gross profit of 2014 compared to the prior year. Gross profit was particularly impacted by lower copper price. Average LME cash praise for copper, 6% lower in 2014 compared to the prior year. Sales volumes were lower than the prior year with lower volumes at Kansanshi due to local smelter constraints as well as lower sales at good we feel ma gay. This was partly offset by higher sales volumes$163 million at Trident, $177 million at Kansanshi, which includes $68 million on the smelter project, $2 million on power lines, and $52 million in capitalized stripping, to go with a further 43 capitalized stripping across the rest of the group. At the end of the quarter, the company had just over $1 billion committed - facilities and $436 million of cash and cash equivalents, including $79 million of restricted cash. Moving to the next slide on management actions, the financial and commodity markets have started 2015 with high volatility and concerns about the global economy, demand for natural resources and the company's liquidity positions. While we have confidence in the mid to long-term outlook for copper, we are mindful of the current conditioner. As always, we pay close attention to the company's financial position to make sure there's sufficient flexibility despite having an active project development - actions taken include the rephasing of this 2015 capital expenditure, reducing or taking debt to $1.4 billion for the year. At Cobre Panama we have substantially reduced the planned - to $600 million without compromising the project's progress. Finalizing opportunities for reduced operating costs and cash flow over and above the reductions expected from lower fuel and other input costs. The company has elected to her its dividend payout ratio from 15% of comparable earnings to 10%, and the slide, as mentioned earlier, the company has proactively engaged with its banking group. Turning to the next slide from Zambia development, on the 23rd of December, 2014, the Zambia government passed into law amendments to the income tax and mining and minerals Development Act. Effective from the first of January this year, corporation tax of 30% and - profit tax of 15% were both reduced to zero, while royalties was increased from 6% to 20% for open pit mines. The change in the law will result in higher audits and therefore higher cost of sales and lower gross profit. EBITDA and operating cash flow. However, the overall impact is directly linked to fluctuation in metal prices. No - with respect to Kansanshi, and therefore no refunds have been received since June 2013. Due to the uncertainty around the timing of receipts of the Kansanshi - receivable, balance totaling $246 million at year-end has been classified as - the company continues to engage in regular discussions with the Zambia government to resolve the countrywide dispute with respect to exports and - turning to the next slewed on market guidance, 2015 copper production guidance of 410 to 440,000 tons is consistent with prior year production. In addition, 150 to 200,000 tons of physical production is expected from Sentinel as the operation is commissioned during the year. 2015 nickel guidance of 32,000 to 40,000 tons is lower than 2014 production, and this is as a result of the Ravensthorpe production shutdown since mid-December. Following site remediation and receipt of the required regulatory approvals, production restarted under high pressure acid leach circuit on February to - is between 1.30 and $1.55 per pound, full year guidance for nickel C1 is between $4.80 and $5.30 per pound. CapEx pend for 2015 is forecast at between 1.2 and $1.4 billion. This excludes capitalized interest and any pre-commercial production costs at Sentinel and the Smith her. The CapEx includes approximately $600 million for Cobre Panama as the project include approximately $160 million on the smelter, $40 million on the power lines as well as $75 million on the Trident project. In addition, the forecast includes approximately $200 million capitalized stripping for the group. Thank you and I'll hand back over to Clive.

Thank you, Hannes. And operator could you open the lines for questions, please.

[Operator Instructions]. Our first question comes from the line of Alain Gabriel from Morgan Stanley. Please proceed with your question.

Just a quick question on the Cobre Panama project. So where do we stand with the negotiations with regards to their contributions given that we were expecting an announcement in the near term, and on the - as well, Cobre Panama, to my understanding, they are looking to dispose of their statistic stake? How are you thinking about that? And the second part of the question is relating to Sentinel. How should we think about the potential closure of - in terms of an impact on Sentinel's commercial production into 2015? Thank you.

I think in terms of the discussions with [inaudible] that is ongoing, we do expect that to reach conclusion shortly, and those contributions to start in this year, I think shortly is probably accurate. Talking about the minority shareholder, I think there was a process run, I'm not sure where that process is standing at the moment. I think you know they saw - actively participating in our project and they're still contributing so far. So there's no immediate new - there's no relevant new owner of those shares. If I can - issue around Sentinel and, reports about Lumwana - we don't have any information in terms of whether that's accurate or not. In terms of the 1610 commercial production. I think it's probably not linked to Lumwana at all. So we will look at Sentinel reaching its targeted throughput numbers and there's a second power line coming in in the middle of the year. And commercial production will be based on Sentinel achieving its designed throughput criteria rather than linked to another operation.

[Operator Instructions]. Our next question comes from the line of David Charles from Dundee Capital Markets. Please proceed with your question.

I'm just looking for a little of clarification, just wondering how we should treat the 497 million revaluation and deferred tax liability in Zambia is that a one off that impacted just in 2014 or will it impact cash [inaudible] like that in 2015?

David, this is one of those accounting entries we - as we - as you incur capital expenditure, you accrue this deferred tax - you accumulate your deferred tax line. With the Zambia tax - corporate tax rate going to zero, all of those future capital deductions are now not relevant anymore and therefore we had to reduce that and therefore you saw that big deferred tax gain in the income statement. So it's an once-off item that won't be repeated. However, if their corporate tax is reintroduced at any time in future, there will be a reversal of that entry but that's just in the event of something like that happens, so it's absolutely an once-off.

So it has no impact on cash or anything else, it's just an accounting treatment.

It's an accounting treatment.

Our next question comes from the line of Michael Flitton from Citigroup. Please proceed with your question.

I've just got a couple. Firstly, on the renegotiation of the covenants, it sounds like that's just under $3 billion facility. Can you just give a bit of color on the other two facilities, whether you're in negotiations on the equivalent facility and the cap facility and - or whether you're just going to potentially use the $3 billion facility to pay off those two facilities if negotiations don't work out there. And just further on that, the recommends by the lead lenders to the rest of the lending group, there's no further hurdles, is there, to reach to actually get this change of covenants through? That's the first one. And then secondly, on sulfur prices and just what's in your cost range, it's a kind of wide range. I was wondering if you could give us a bit of color on the inputs into that range, what might move you up or down. I mean, obviously excluding views around commodity prices and byproduct credits but what's your view on sulfur prices perhaps in that number because they have been moving higher, obviously.

Michael, on the facilities, the three facilities have got the same sort of covenants so we're addressing all three facilities at the time, and we have been engaging with all of the banks in those facilities. So we have had discussions and that amendment request will go through in next week. In terms of hurdles, the certain hurdles set [inaudible] facility in terms of agreement, it doesn't need 100% agreement, but we're confident that we will achieve, if we put the two lead banks already credit-approved and they will be supporting this process as well, engaged with most of the banks within our banking facility group. A lot of them have been - last year - end of August respectively at Kansanshi have seen the progress so we've got a very support I have banking group and we do not expect to encounter problems during this process. On the sulfur question, I'm just looking at Juliet, Juliet's numbers.

If you look at Ravensthorpe, I think the sort of average price in the fourth quarter was - $150 a ton, obviously much higher than the same quarter last year. I mean, when we have been doing factions, we've actually used probably a slightly higher price match, not drastically but probably around about 180. I think, you know, it's difficult obviously to forecast, but our - we've sort of forecast prices remaining broadly at current levels in our very latest view.

And just quickly back on the covenant side, so timing-wise we'll hear next week if presumably this goes through, is that right?

No, the timing on this, there will be an amendment request distributed to the various banks next week, and we do expect to get approval by sort of mid to third week of March or so from all the various banking groups. All of them have a process to go through, they have to represent the papers as well to the internal credit committees or various sign-off persons. So we do expect to close this off by mid to end March.

Our next question comes from the line of Jean Devevey from Exane. Please proceed with your question.

First maybe on the Zambian tax structure, is there any chance in your view that the royalty gets reversed or at least amended, given from what I read in the press, the government seemed somewhat more open to discussion with the mining companies post the election, so I'm just trying to get a sense whether things could evolve there. That's my first question. And then the second one is on the CapEx guidance for 2015. So I understand it's mostly a phasing issue in Cobre Panama, and there's no reduction in the absolute CapEx number whatsoever, so should we assume the sharp increase in 2016 again of the CapEx figure, coming back to closer to the 2014 event, or whether the savings that you've made over 2015 could be spread over 2016 and 2017. Thank you.

In terms of the Zambian tax reversal, we also see the relevant press articles. We've got discussions with the Zambian government. I think my assumption at this stage is that we assume the royalty is in place for this year so that's what we're planning, and our business models on. Obviously there are other players also impacted in the mining industry in Zambia, therefore, various discussions at - and other mining companies are happening. You know, we're not factoring in a change at this stage in terms of the royalty. In terms of CapEx for next year, we generally don't provide capital guidance for the next year going forward. I don't know if we've got any comments there, Juliet to make?

No, but it will - the expectation is that - that it would increase approximately double.

Approximately what, sorry?

Very approximately, double. So we've given guidance of 600, and all things being equal, current plan would be that that would double.

Could you just comment on that in terms of the impact on future capital, I mean, not in precise terms but how you would see that being spread?

Sure. And essentially the short answer to your question, Jean, is yes, it is just a phasing thing through 2015, so the CapEx that we've been able to reduce in the cash flow for this year does come back in in 2016 and 2017.

And just coming back on what was said by Juliet, so you would assume the CapEx to double on Cobre Panama in 2016 or that's the overall CapEx number that should double?

The guidance for 2015 is 600, so that's - and obviously to complete it, one would expect the CapEx the following year to approximately double from 600. But it's work in progress on this year.

And finally, just on the cash cost guidance - I'm slightly surprised by the guidance that you've released. I understand that there is some kind of one off effects into the operational issues there and start of the plant, but, I mean, have you assumed any positive impact from the weaker Australian dollar versus the USD and also savings into the oil and energy prices there?

Yes, in terms of Ravensthorpe, there is some FX saving assumed, so a $0.10 movement you can get a savings of about $20 million. In terms of the guidance actually, it's probably driven, we are expecting higher C1 cost Kevista. A higher C1 cost at Kevitsa so that slides the group average more so than Ravensthorpe.

Why is that? Higher C1 cost at Kevista?

In terms of its mining standards, there is quite some higher levels of mining activity but similar production level with the slightly reduced grade, so that's just one of the factors that pushes up the cost, the C1 cost. One would expect that then to come off and be improved in 2016.

Are continuing on, our next question comes from the line of Greg Barnes from TD Securities. Please proceed with your question.

I just wanted to follow up a little bit on the final CapEx numbers for the smelter at Sentinel because you obviously are capitalizing operating costs and still I assume some development costs at both operations. I wonder, there was no update in the press release, where we think those numbers could end up.

I think what we do in terms of CapEx numbers, we give you the Zenon's project-related capital cost. The preproduction operational cost, that's a function of when we hit those targets and numbers. And this could move as we ramp up quicker or slower. So we don't guide towards that, and that's just a function of when we hit the required targets.

Okay. Will you give us a final CapEx number including all of that when it's done then?

Yes, well report it as part of the actuals when it's done, but it's basically operating costs with - but it's offset by certain revenues that you'll generate as well during that period.

Okay. Just another accounting question then, I'm still struggling with Las Cruces and how EBITDA for the last couple of quarters has been higher than revenue. I'm not sure I understand what's going on there.

This is Libby Senez. So Las Cruces has some quite large tax liabilities that are denominated in euros and so those get reevaluated. So with the weakening euro over the last few months, we've seen quite a large foreign exchange gain coming through and obviously that comes through in EBITDA, but after the gross profits number.

Those are non-cash changes, though?

That's non-cash.

But you're including them in EBITDA.

That's correct.

Okay. And then just finally, Clive, I was wondering what the deal is with the [inaudible] coal project and then why you're investing in that?

So part of the whole view on energy and our dependency on energy whatever we’re and we are looking at the possibilities at some of project as Cobre Panama with whether we can there is an opportunity to generate our own.

So you look at building a power plant there and ship the power up to Zambia? Is that the concept?

That's the sort of long-term concept. At this point it's just a look at these resources.

Thank you for your question. Continuing on, our next question comes from the line of Oscar Cabrera Bank of America Merrill Lynch. Please proceed with your question.

Just wanted to go back to the question on C1 cost guidance for the copper side. $1.30 to $1.55 a pound, it's a big spread, so I was just wondering what assumptions are you making with regards to the ramp up or the start-up of the smelter, what's imbedded in the 1.30? Are you assuming you are getting acid from your smelter in Kansanshi in the second half and 1.55 is without? Could you help us with that, please?

Oscar, I mean, there's quite a few things imbedded within that guidance. And some of it is the ramp up of the smelter as you have indicated and the availability of that free acid. I mean that - so Kansanshi C1 costs would be higher in the first half of the year, but in the second half we would see a saving coming through from the asset, which is a waste product from the smelter. Another factor in that is Sentinel costs of - when we see product coming through, that would also have an impact on that and it's a matter of that sort of coming through during this next few months. So second half of the year we'll see the impact on that. That's quite a wide range, but I think what we try and capture is - we try and be conservative on the FA end of it to make sure that we accommodate ramp up schedules at both smelter and sentinel.

Yes, I mean, at the lower end there's obviously potential savings on energy costs and some potential for an foreign exchange benefit at the upper end obviously allowing for changes with Trident coming on stream as well as the smelter--

I'm sorry, but I - apologies but I thought that the C1 cost guidance for copper did not include Sentinel.

The C1 does include Sentinel. I think we've guided - obviously with commercial production, we have to look at it at the time and assess it at the time, you know, very broadly expectations for commercial production on Sentinel are midway through the year. So it allows for Sentinel six months.

We haven't included it on the production numbers, so the 14 to 448 [ph] doesn't include Sentinel on the production side.

We have a separate [inaudible] in the guidance, in the MD&A specifically around physical production on Sentinel.

Okay. But, I mean, just to be clear, your C1 cost guidance does not include Sentinel.

Our C1 cost guidance includes approximately six months of commercial production on Sentinel.

Then if I may, in terms of resources of capital from the [inaudible] and your precious metals - can you please give us an update on that. Are you close to getting these monies from these companies?

The ENRC money is due in December of this year, I think that's the status on that. So it's not due currently. And [inaudible] I think as I said before, we do expect that to come in in the next few months to reach conclusion on that agreement.

And then lastly with regards to Cobre Panama status, in your press release you state that the deferred CapEx in 2015, you don't think that the progress in the project will be hampered. Can you just explain how the logistics within the project are, when do you plan to start stripping and are we going to run into a situation where if you're trying to finish the project in a rush, so lead to you know budget overruns?

Sure. Oscar, the change in cash flow for this year is really one to do with equipment and purchasing of equipment. What happened in the past and what we inherited is a lot of equipment purchased, which leads obviously to a cash outflow, such as the complete power station and all of its equipment and materials and the six mills in the mill drives, etcetera and the mills have been available since last year. And engineering companies typically when they do a detailed design, will design the project and issue requisitions for equipment and materials as they design which for a short duration project you can go and buy that equipment and materials more or less as is specified but for a longer duration project like Cobre Panama, you can fall into the trap of purchasing equipment and materials that then ends up in storage or on site and waiting to be installed which is what has happened with the previously procured mills for example. So on Cobre Panama, what we've done is very consciously looked at the equipment procurement and we're not purchasing any more equipment right at the moment. What we do have on-site is what we had planned to do, which is we purchased all the earth moving fleet, so we’re doing a lot of earth moving, as you know, it's a large earthworks project. We're doing all the concrete. We're building the power station and we're going to be erecting those six mills which is also a lot of work. And purchasing more equipment during 2015 will mean that it essentially sits in storage or waits on the site and that's essentially what we've done in terms of cash flow for Cobre Panama. If we don't see it affect get the overall project schedule all it does is it remains - that equipment doesn't arrive on site prematurely.

And thank you, sir. Continuing on, our next question comes from the line of Alex Terentiew from Raymond James. Please proceed with your question.

Just a couple questions. First is on Zambia. I noticed that earlier this month the government approved some power [inaudible] for the miners. Given your involvement in constructing parts of the power lines to Sentinel, does this hike impact Sentinel's costs and also Kansanshi especially now that this smelter is ramping up, so I guess in another way what I'm really asking is if you can quantify the impact of that hike for me. And the second question, is more on Cobre Panama with so much of the earthworks already done and project progressing seemingly well. I'm just finding it hard to reconcile how the remaining costs could be in the $4.5 billion range using your $6.5 billion CapEx estimate. So is your CapEx number conservative or to put it another way, is there scope to bring that number down a little bit?

So to answer that basically the earthworks is going very well on Cobre pan man. There's still quite a bit of earthworks to do - earthworks as well. We are commencing a reestimate of the project because, again, we estimated it back in 2013 based on information we had at that point in time. We have now done a lot of work on the detailed design, we've got much better handle of our costs on site. And I wouldn't say that our estimate is conservative. There's certainly no alarm bells at the moment but there's nothing that's a red flag that indicates that we've got a problem. But now that we have turned up began duties and costs, et cetera, we will go back and reestimate and look at the different assets of the capital costs estimates and at this stage it's premature to say what that would lead to, but as I said, there's no red flags on the estimate, but there is still quite a lot of other work to do that you don't necessarily see just in the process spot, like the pre-strip and etcetera.

Alex on the first part on the power tariff - on the current power tariff hike, it's just not clear what the message is at this point with the elections and everything else it's we will discover what that’s all about over the next few weeks. But it's unclear at this point.

Just another quick question on the power tariff, the sorry power and this goes back to an earlier question on the call with regards to Lumwana, I guess another way to look at that is, should Lumwana shut down, is there an additional power available so perhaps you don't need to wait until July to get the - you know, the second train at Sentinel running or is the capacity on the line from Lumwana to Sentinel already maxed out?

Certainly if Lumwana were to shut down, it would help the power situation. Lumwana at the moment, I think, draws somewhere between 50 and 60 megawatts of power, so in theory there would be some power then available in the grid. I'm sure that would help us. Specifically it's very difficult to put a number on it because you've got to go - number of static and dynamic studies along the power line, but it would put us in a better position power-wise, yes.

Our next question comes from the line of [inaudible]. Please proceed with your question.

Two questions. First one is, are you seeing any cost deflation showing up in Zambia, either related to currency relief in the surrounding area or just general looseness? Second one is, for the smelter, can you give us a range of - I know it's tough, but can you give us a range of what the possible production to the smelter might be in 2015?

I think in terms of cost deflation, if you look at the local currency, the currency has weakened recently but we've got a limited amount of your cost is did he nominated in local currency. Might be local wages or something like that. So a lot of the other components are mainly a dollar-driven cost and so if you've got a reduction like in the oil and fuel price, there would be a flow through but that's just a general commodity flow through. In steel prices wife seen some reduction. So that will flow through. It's not a Zambia-specific or currency-specific benefit. In terms of the smell tear, we haven't given guidance in terms of that and I think it's probably - I don't know what we've said or what we're going to say in terms of the smelter. I mean, it is a slow ramp up and that's what we've always --

Yes, the smelters, are very difficult to predict how quickly they ramp up and we've taken a fairly conservative view on how long it will take us to get to somewhere near capacity. I think Zenon it's only 90% by the end of next year, as I recall.

Yes, we did take a fairly conservative view, as you say, Clive, and just a couple of comments on how the smelter might ramp up. Essentially what may happen or what could typically happen is that the smelter can run at quite good throughput rate but then would suffer an interruption if something goes wrong or something fails and you'd shut down or you'd stop for a period of time. And that's been typical of smelters in the past. It's not necessarily a smooth ramp up curve. It may be that you run well and then there's an interruption and stop, then you run well again and then you have another interruption. Having said that, we've put a lot of effort into the design and construction of this smelter to cover all of the issues that we have seen that have occurred on other smelters or that has caused trouble on other smell tears, all of those things in our smelter have been taken into account. But it's very difficult to predict what the interruption might be if there is one during the ramp up of our smelter. And that's why we've taken a conservative view.

You have your production estimates for 2015 from the different mines and I guess let's assume maybe Lumwana does shut down. Just what other options do you have? You can send some Sentinel [inaudible] what else could you possibly do to produce--

I mean, on the production side, the estimate is as it is. I think the opportunity would be on the revenue side that it frees up additional smelting capacity within the copper belt. So the copper smelter, there would be some additional capacity at 'Nam. So that concentrate is not in the market anymore. The smelters run better when it's at capacity and we do have concentrate available. So we've got a significant concentrate stockpile at the moment at Kansanshi, so that's about 300 tons of concentrate. And with the ramp up of Sentinel and the continued sulfur production at Kansanshi. We'll be producing a lot of concentrate. So it loss for opportunity on the revenue side in the year.

Our next question comes from the line of [inaudible]. Please proceed with your question.

I just want to ask real quick about the covenant. What's sort of the nature of the change that they're approving? Is it basically taking the measurement higher from three and a quarter or is it sort of delaying the measurement period? Can you just talk about the general movement?

I think what we can say is, the changes the lead bankers have approved through the committee and what we've requested will allow us to run this company and continue our projects within those covenant ratios, given current commodity prices.

Does it change the statistic now that there is no tax to add back essentially to an EBITDA?

We've considered that as well, so there were three things that we considered within that could have are Facebook and Twitter adjustment that we requested. Zambia changing the regime, the way taxes are excluded from EBITDA, as a royalty, that's now part of your EBITDA. So there's a reduction in EBITDA. So that was a factor. We loud for the smelter as well that's now coming online. And then we are on a lower commodity price environment. So we factored in all of that and then requested these changes or put through this request for changes to the rest of the banking group to allow us to stay within the relevant covenant testing measures.

On the Franco-Nevada amounts that you intend to receive, so 256 is sort of the catch-up payment and you expect that in the next few months or so, and then in if you're spending 600 on Cobre Panama, should we expect 200 million over the course of 2015?

Well, I think the - if it's 600 at Cobre Panama, the contribution - it's not exactly but you can assume roughly 20% of that because you've got 20% contribution from our Korean partners and then there is a 20% contribution from. It's slightly more complex than that but it's close enough if you're saying 20% of the 600.

Okay. So 250 plus 120 over the course of the year.

Yes.

And just looking at sort of additional potential sources of liquidity should you need them, have you considered anything like a project financing at Cobre Panama level once Franco security has moved to a different level and then, you know, potentially putting in some kind of a stream at Kansanshi?

We look at various liquidity sources. I mean, I think what - you know, after going through the year-end and looking at the commodity prices, what we're doing is, I think we're well placed in terms of liquidity, and all we needed was a technical covenant adjustment in this ratio, so there's no immediate plan for - to address - the liquidity is not a problem, so our plans work in terms of current environment. We just need that covenant change to allow for the ramp up of the smelter and Sentinel.

And now we'll return the presentation back to the presenters for their concluding remarks. Please go ahead, Mr. Newall.

Well, thanks, everybody, for attending today and if you have any follow-up questions, Sharon and I will be available or we'll try to make ourselves available. So thanks again for attending. We'll talk to you at the end of next quarter. Thanks, goodbye.

Thank you, sir. Ladies and gentlemen, that does conclude the conference call for today. We thank you all for your participation and ask that you please disconnect your lines. Thank you once again. Have a great weekend.