Clive Newall - President and Director Hannes Meyer - CFO Juliet Wall - General Manager, Finance Simon MacLean - Group Reporting Controller Martin Walker - Treasurer

Ian Rossouw - Barclays (London) Matt Murphy - Macquarie Orest Wowkodaw - Scotiabank Karl Blunden - Goldman Sachs Matthew Fields - Bank of America Greg Barnes - TD Securities Lawson Winder - BofA Merrill Lynch Alex Terentiew - BMO Capital Markets Sean Wondrack - Deutsche Bank Patrick Jones - Deutsche Bank

Good morning. My name is Mariana and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quantum Q2 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. Clive Newall, President and Director of First Quantum, you may begin your conference.

Thanks, operator and thank you, everyone for joining us today. On the call with me today we have Hannes Meyer, CFO; Juliet Wall, General Manager, Finance; Simon MacLean, Group Reporting Controller; and Martin Walker, Treasurer. Before we proceed, as usual, I need to draw your attention over the course of this conference call, we will be making several forward-looking statements. And as such, I encourage you to read the cautionary note that accompanies our second quarter MD&A and the related results news release as well as the risk factors particular to our Company which are detailed in our most recent annual information form and available on our website and on www.sedar.com. Following my opening remarks, Juliet will take you through the financial results, which were published yesterday after the close of the TSX. And after that, we will open the lines to your questions. Just a reminder that the presentation which accompanies this conference call is available on our website and can be accessed either on the events section or on the Q2 2017 results conference call button under the News section of the homepage. Okay. To get started, we are very pleased with the Company’s overall performance in the quarter and the first six months of 2017. Operationally, the Kansanshi mine and smelter, and the Las Cruces mine, all performed well helped by the sustainable margin improvements which commenced last year, initially at Las Cruces and continuing at Kansanshi. Just as a reminder, the smelter at Kansanshi will be undertaking a four-week maintenance shutdown in mid-August. So, there will some impact to production and cost in the third quarter. Our young Sentinel is starting to find its legs. The onset of the dry weather and a number of optimization initiatives, performance has been improving despite the continuing transition to terrace mining. June and July have been good solid months for the operation and we expect this to continue with further development in the blasting techniques and the optimization of the flotation performance. Guelb Moghrein’s quarter was impacted by a planned maintenance shutdown and its associated cost. However, more generally, the operation continued to be innovative in finding sustainable margin improvement opportunities and as a result, it maintained a low cost position with good gold credit. The Pyhäsalmi mine, despite being in the late years of its life and with the inevitable challenges typical of that stage, continues to generate healthy earnings and cash flows at very low operating cost. Meanwhile Çayeli, which is also managing late stage mine life issues, has begun its recovery from the difficulties in the first quarter. With the installation of a rope coiling device in late May, we’re now able to access the lowest level of the mine where the high grade copper and zinc ore is located. And it’s notable, despite the issues of first half, Çayeli broke even for the period, a real testament to the team there. The challenges are different Ravensthorpe. With the nickel price averaging in the mid-$4, it’s very difficult for any nickel operation to turn a profit, and even more so for a less right [ph] operation which Ravensthorpe is. Nevertheless, the team there continues pursue every opportunity to operate this mine as safely and optimally as possible. Turning now to our projects and starting with the very advance Cobre Panama, which I’m pleased to say, continues to progress well. Our overall schedule target of phased commissioning in 2018 followed by continuing ramp-up in 2019 is unchanged and development is tracking in line with it. Currently, our site construction mining is around 8,200 people, which is very close to our peak planned levels for construction. Needless to say that a workforce this large, working efficiently, we’re making very solid progress month to month. And you can see some of the results and progress to-date in the accompanying photos to this presentation. We continue to maintain high focus on power station and its associated infrastructure and there is very good momentum there. Over the last quarter, we’ve undertaken some additional rectification work on specific components of the boilers for both sets which we’re confident will pay dividends and a smooth startup and longer life. Overall, at the end of Q2, the power station was just over 70% complete with set 1 and 2 at about 80% and 50% respectively. This is in line with our planned phase start-up. The extra effort in our vigilance related to the power station has moved out date slightly, but we believe it is well warranted in terms of the additional confidence it will provide the operation long term. First firing of the boiler is now scheduled for the fourth quarter of this year with power generation into the Panama grid following the first quarter of 2018 from the first 150 megawatt generating set. It is a movement of a few months. T he second set is expected to follow during Q2. This is still well in advance of our power requirement, so the commissioning of the process plant and therefore not a critical part of the stage of the project. And in the mean time, we also expect to be connected to the Panamanian electricity grid during Q3 of this year, which will reduce our reliance on site gen sets for construction and improve commissioning power. In terms of completeness of the project, the project overall is 58% complete and specific disciplines are well advanced. For example, a concrete progress site wide is approximately 78% complete, structural steel 61%, mechanical installation 45%, the tailings management facility 67% and the pre-strip 62%. In the process plant, the seventh and final mill has been installed and we progress towards completion of the last of the large gearless mill drives. All other areas of the process plant are now well underway in construction, covering the remaining disciplines of piping and electrical instrumentation. As I mentioned during the last call, Cobre Panama is really benefiting from the opportunity to incorporate a number of the improvements inclusive of learnings from both Sentinel and in the Kansanshi smelter, which we believe will result in a positive development outcome, very much like our experience at smelter. As I also mentioned during the last call, we’re looking at other areas where there may be good opportunities to bring forward some more work now during development as opposed to being undertaken during operation. This could help to provide a smooth as possible a startup and greater operating flexibility to this mega project. Currently in the consideration are undertaking some additional mine pre-strip to help open up larger work phased areas for the ultra class fleet that will used on the mining. A partial first raise of the tailings management facility warrant embankments, which would otherwise normally occur within two years of startup, this could help with operability of the facility in the early years. And we’re also evaluating the addition of an eighth mill, which could boost throughputs by between 8 million and 10 million tons per annum. This is a ball mill what we already own and therefore available to be deployed at Cobre Panama. We continue to progress our thinking on these and we’ll update you if any go ahead decisions are made. Meanwhile, at Las Cruces, the research on the technical and economic feasibility of the Polymetallic Refinery project, which could extend this mine’s life quite significantly, continues as of the expiration ramp to increase our knowledge of the current resources. With the healthy copper price increase which started in the fourth quarter of 2016, the losses incurred under our copper sales hedge program can be distracting. However, we do keep in mind that we manage the Company for the long-term and the program was put in place for a very specific reason, that is to protect cash flows in a low metal price environment, ahead of the completion of Cobre Panama; and to that end, it has been effective. And we do believe it is still a prudent strategy, especially given the continued copper price volatility. Even so, a sustained higher copper price bodes well for the entire industry. On the balance sheet, following on the successful initiatives to restructure our liability in the first quarter, we’re continuing to take action to manage operational and price risk and to further strengthen the balance sheet. We’ve started the process to refinance the existing facilities with the aim to extend tenure and maintain liquidity at the corporate level. Concurrently, the process to secure project financing of Cobre Panama is progressing well with strong appetite expressed during market sounding taken during the quarter. The current target for completion for the entire process is the end of this year. So, to summarize, we’re pleased with the performance and adaptability in all aspects of the Company from operations to balance sheet to projects. To repeat my earlier statement, First Quantum is being managed for the long-term. We believe this is in the best interest of all stakeholders and we will continue to balance opportunism with prudence. Now, I’ll ask Juliet to take us through the financial review.

Thanks, Clive, and good day to everyone. So, moving to the first slide on Q2 2017 highlights. So, copper production was 8% above Q2 2016 and 7% above Q1 2017, and that was driven by a higher Sentinel contribution and continued strong performance of Kansanshi. The Kansanshi smelter achieved another record quarter, processing 334,000 tons of concentrate. 82,000 tons of copper anode were produced which was 13,000 tons above Q2 2016. Copper sales, totaling 140,000 tons were made in the quarter, consistent with the record sales levels seen in Q1 2017. Comparative EBITDA was slightly higher than Q1 2017, as higher realized metal prices, including the impact of the sales hedge program were offset by foreign exchange movement. The comparative loss per share in the quarter results from no tax credit being recognized on the losses incurred in the quarter on the sales hedge program. As we will touch on later in the presentation, the copper hedge program pricing profile is expected to improve going forward. Low unit costs were achieved in the quarter with copper C1 cost reducing from 1.26 per pound in Q1 2017 to 1.12 per pound in Q2 2017. This reduction was driven by favorable performance and higher production at Kansanshi, together with lower cost including the impact of a review of recoverable costs and provisions at Kansanshi. Turning to the next slide, which looks at quarterly production. So, as mentioned, our copper production was 8% or 11,000 tons above Q2 2016, reflecting higher production at Sentinel and Kansanshi. Looking at Sentinel. Sentinel production of 44,000 tons of copper during the quarter was 12,000 tons above Q2 2016 following its ramp-up to commercial production across 2016. Sentinel production increased by 7,000 tons from the previous quarter due to improved recovery rates and higher throughput, despite the planned five-day maintenance shutdown of train 1. Kansanshi production of 64,000 tons was 3% above Q2 2016, primarily due to 5% higher tons milled driven by sulphide circuit performance along with improved mixed circuit recovery at oxide and mixed grade. As already mentioned, we’ve already mentioned, the Kansanshi smelter had another record quarter with concentrate processed up 2% against Q1 2017, anodes produced, 687 tons from Q1 2017; the smelter recovery rate at 95% remains strong. Nickel production was 19%, above Q2 2016, despite lower grades and recovery rates as plant throughput increased from improved equipment availability. Gold production of 50,000 ounces was marginally below Q2 2016 driven by reduced recovery rates and the impact of harder ore at Guelb Moghrein. Kansanshi however was 2% above the corresponding prior quarter. So, if we move on to the next slide, financial overview, Q2 financial overview. So, comparative EBITDA of $267 million was 4% above Q2 2016 as higher copper and nickel sales and higher realized prices including the impact of the sales hedge program, more than offset lower byproduct sales and increased royalties. During the quarter, LME copper prices were above the average price with the copper hedges the Company had in place. And so this resulted in a hedge loss reducing revenue by $97 million and realized prices by $0.31. Gross profit was $36 million below Q2 2016 and that was due to the higher depreciation and lower byproduct sales. The comparative loss incurred in the quarter was a result of no tax credit being recognized against the sales hedge program losses. And net debt, net debt of $4.8 billion was $110 million above Q1 2017, reflecting our planned capital expenditure program. So, if you go on to the next slide, which details the outlook of our hedging program. So, as mentioned in our Q1 2017 presentation, we introduced the hedging program in 2015 to protect cash flows and covenants as we develop the Cobre Panama project. FQM is not a strategic long-term hedger of the copper price as we believe really in the positive fundamentals of copper. However, this program protects cash flows and covenants as we develop the Cobre Panama project. And so, with this in mind, we continue to hedge on the rolling basis into 2018 within limits agreed with the Board. So, turning to hedge prices for the rest of the year. The copper hedge price increases across 2017 with the second half of the year expected average $2.37 per pound with the balance of copper sales now hedged. We have continued to hedge into 2018, but with increased use of zero cost collars, providing the protection we need while retaining some potential upside. So, as of today, approximately 30% of copper sales in the first half of 2018 hedge significantly higher prices. So on average, for the 30% hedged, we have full protection at $2.59 per pound with potential upside to $2.80 per pound. So, if we go on to the next slide on quarterly unit cash costs. So, copper C1 of $1.12 per pound was $0.14 below Q1 2017, reflecting higher production and impact of a review of recoverable costs and provisions at Kansanshi. Excluding Sentinel, copper C1 reduced by $0.35 against the previous quarter and $0.21 against Q2 2016. The previous quarter was impacted by the rainy season in Zambia, which increased mining costs and reduced production. All-in sustaining costs for quarter reduced by $0.09 against Q1 2017 with lower C1 cost offset partially by higher capitalized striping at Kansanshi. Copper C1 and all-in sustaining cost guidance are unchanged at $1.20 to $1.40 per pound and $1.65 to $1.80 per pound, respectively, across the three years guided. Looking at nickel, nickel C1 and all-in sustaining cost guidance is also unchanged across the three years guided. So, moving on to the next slide and the waterfall chart, you see there that details the Company’s gross profit for Q2 2017 compared to the previous quarter, Q1 2017. So, gross profit that was $3 million below Q1 2017. The prior realized prices including the impact of sales hedging program, were offset by higher depreciation, and depreciation that was higher due to the increased mining fleet and processing plant operating out of Sentinel with some offset from the impact of lower sales at Kansanshi. So, moving on to the next slide on long-term debt profile, which outlines our debt maturity profile and current liquidity. So, Q2 2017, the Company was in compliance with all existing facility covenants and ends the quarter in a strong position with $838 million of undrawn facilities and $450 million worth of unrestricted cash. So, in the previous quarter, the Company successfully completed the offering of $2.2 billion of senior notes and used the proceeds to settle the existing 2019 and 2020 and pay down the Company’s term loan and revolving facility. So, as a result, significantly reduced debt repayments are required between 2017 and 2020, which comprise mainly the term loan at Kansanshi facility. The first senior note repayment is now due in 2021, two years after Cobre Panama project spend completed. And also as noted in previous quarter, we’re in the process of putting in place project financing for the Cobre Panama project, and this is targeted completion during the second half of 2017. The next slide, financing update. That lays out our liquidity management initiatives with particular focus on the progress of our project financing initiatives. So, we continue to monitor our balance sheet closely and manage our liquidity proactively as evidenced by the successful $2.2 billion senior notes issue in the previous quarter. After the senior notes issue was completed, we began the process to refinance our existing corporate debt facilities to extend the tenure and show that appropriate covenants are in place and liquidity hedge headroom is maintained. We expect this process to be completed early in Q4 of this year. As you will also be aware of, we launched a project financing process for Cobre Panama in December 2016 where we expect to raise upto $2.5 billion of long-term debt. This process -- well, during Q2 with ECA is continuing their due diligence and site visit and just as Clive mentioned earlier, there is strong appetite demonstrated during a recent market sounding undertaken. The completion is targeted for the end of 2017. So, if we move on to next slide that’s on capital expenditure. Our net capital expenditure of $469 million in the first half of 2017 that’s included $309 million at Cobre Panama, $66 million capitalized stripping including $38 million at Kansanshi, and $94 million of sustaining capital and other projects spend, including $41 million at Sentinel and $28 million at Kansanshi. So, looking at 2017, capital expenditure guidance is unchanged at $1.07 billion. And just moving on to the slide, which looks at our market guidance for 2017. The total copper production guidance of 2017 remains unchanged of 570,00 tons, but if we look at the individual operations, guidance has been increased for both Kansanshi and Las Cruces by 8,000 and 2,000 tons respectively. So that reflects their strong year-to-date performance. And guidance for Sentinel, that’s been reduced by 10,000 tons to 185,000 tons. So, all other production guidance remains unchanged, both in total and by operation. Cash cost guidance also remains unchanged. And I think with that, I will now thank you and hand back over to Clive.

Okay. Thanks, Juliet. So, operator, could you hand over for questions, please?

[Operator Instructions] Your first question comes from the line of Ian Rossouw from Barclays (London). Your line is open.

Hi, guys. Just a couple of questions for me. And the first one on Kansanshi’s pretty impressive C1 cost in the period. I mean, I think the last time we had such a low number was in 2005 when you were mining two grade -- 2% copper. Can you provide some details on this review of recoverable cost provisions and maybe just mention, if there any of the items were non-cash and non-recurring? So, what should we expect going forward? And then, just second question on Sentinel. I think you mentioned in the release that transition to terrace mining will continue into next year. I’m just trying to understand what does that mean for throughput rates for the remainder of this year and next year. And maybe also just comment on the blasting issues you’ve had and also the fact that you will -- I think you mentioned that copper grades were sort of -- the actuals were below what you were modeling. Does this have any impact on sort of forward looking expectations for grade? Thanks.

Yes. So, I’ll take the first one on Kansanshi. So, the review of recoverable costs and operational provisions, that resulted in the reversal of some costs previously, expense including fuel [ph] costs in the first quarter which are now deemed recoverable. So that was the moved on the balance sheet of the recoverable item, whereas been expense in the first quarter. It also included adjustments to things like power costs and assumptions around that as well. So, that did impact Q1 in the quarter and really the reduction…

Can you quantify those numbers, just what it would have been without those adjustments?

Well, really, at Kansanshi, the impact on the quarter is about $0.18 and it’s less year-to-date, there is some cost picture [ph] provided for in the first quarter when go, and year-to-date it’s probably about $0.05. But in Q1…

For the group…

That’s for Kansanshi. The group impact is $0.08 in the quarter, year-to-date.

On Sentinel -- Ian, are you happy with that answer so far on Kansanshi?

Yes. Thanks.

Okay. So Sentinel, yes, look, since the end of the quarter, production’s really been picking up, throughputs are really picking up as the dry season and we’ve been making significant improvements to flotation, recoveries but also fragmentation. You’re blasting has been -- or getting the material through the crushers has been an issue. It’s not fully resolved yet, but we’re getting close. So, it’s really beginning to hit its stride now. Clearly the terrace mining is going to go, run through into Q2, I think next year. That will have an impact to the time and it does mean that we’re mining at somewhat diluted grade, just that with the terrace mining, you can’t mine that internal way separately basically. So, it’s all going through the mill.

So, when do we -- should we expect to be at the sort of full run rates, in terms of throughputs next year…

Well we’re -- it’s just a steady buildup over the next two years. As you know, there are also other limitations we have to always be cognizant of, smelting capacity and such things. So, it’s -- we may not be pushing it as hard as we could for that reason.

Your next question comes from the line of Matt Murphy from Macquarie. Your line is open.

Maybe I will just follow up on the Sentinel question. So, there was a comment you are running at the life of mine reserve grade. So, is that like 0.51% copper that you’re running right now?

Yes, that’s right.

And just in the MDA itself, production is expected to be impacted by ore grade, does that mean we’re steady at that or do you think you’re going to have some downside from that in the second half or can it increase a bit?

No, I think it will remain pretty consistent going forward.

Okay. And then, in terms of -- I’m just trying to figure out how that ties into guidance if you need to be producing over I guess 52,000 tons of copper per quarter at that grade, either throughput or recovery is going to have to have a pretty good jump. I guess it points to recovery maybe being the prime driver of that guidance.

It’s both. The tons milled will steadily increase and the recoveries also will be increasing as the improvements and optimization that we’ve been working on open situation. And we’re already seeing some benefits of that. So, it’s combination of the two things.

Your next question comes from Orest Wowkodaw with Deutsche Bank. Your line is open.

Hi. Good morning. It’s actually Orest from Scotiabank. I have couple of questions about your hedging. I’m surprised to see you ramped up the hedging activities again. Am I correct that your slide 19 that 305,000 tons hedges in the second half, that’s more than a 100% of your production expected in the second half that is on guidance. Just curious, why you’ve taken that up. And then also I’m trying to reconcile, it looks like when we add up the 305 and the 87,000-ton hedges, like it’s 392,000 tons of hedges and just trying to understand how that reconciles with the release with respect to the discloser of 359,000 tons as of July 27 plus all the collars. Any help there would be helpful. Thank you.

Hannes here. So, I think what I -- in terms of hedging, I mean, we’ve delivered into some of the hedges in this quarter, last quarter. What we’ve done is for August and September, basically locked those prices in. So, yes, you’re right, this year looks like sort of fully hedged. We will probably sell more than we will produce over the next six months. With the smelter shutdown, we have some inventory of anodes that will be released during that process that we’ll sell down. But, we’ll have a continuous supply of anodes to our customers on that side. And in the mean time we put concentrate that we will sell. So, you can see we’ll probably sell more in the second half than we will produce. And then bids that we’ll increase for next year and largely sort of collars and sort -- and Martin you’ve got those, maybe you can comment on that but it’s just above 250, 260 at the bottom. And Martin, can you give maybe a more detail on that?

Yes. Just thinking of I think the high level of hedge is related to 2017 as Hannes just said, we did place some short-term, some recent high prices, which is why that’s edged to 305. That does mean we’re about fully hedged for the balance of 2017. The hedging program, we’ve continued but on a rolling basis, so we don’t expect to those high levels of hedges going forward. At the end of July, we have 30% hedging in 2018, which we placed that when prices were good and near the high level. We’ve done most of that by collar and as Juliet said, that gives us protection that we require but also enables us to share in the upside. And the way we presented that is we’ve got an absolute protection for that 30% at 59, but we share an upside upto $2.80. We continue to hedge going forward, but on this rolling basis and lower percentages. And decisions to go into the market, we track that continuously in the company and regular discussions with the board to set targets on how to take that forward.

Is the expectation that the hedging will seize when you get the Cobre Panama financing package?

When Cobre Panama comes on stream, not when we get the Cobre Panama package. So, we’d expect it to continue through 2018.

I see. And you plan to bring it up to possibly 100% of production, just like you’ve done in 2017?

Not being more than 50%. So, we’ll target a maximum number of 50%.

Okay.

And it’s 100% of 60 million [ph] the next six months and that gives visibility of the next six months cash flows and earnings. Absolute target is probably at the high-end it would be 50%. So, you’ll see that decrease and there will be more use of a collar structure, we get the protection on the down side...

Okay. Thank you. And then just one follow-up on Sentinel just on some of the other questions. If you’ve now -- the terrace mining is going to be extended. How do we reconcile that with no change to the 2018 Sentinel guidance, if grades are going to be lower? Just trying to understand why that number hasn’t come down.

We’re getting access to more and more working phases, and it’s a volume thing. The volume will be increasing steadily.

But it seems like your languaging a change this quarter in terms of the mine plan at Sentinel or am I misreading that?

No, I don’t think there has been any significant change to the thinking. We will be mining at a, as you, steady grade; that’s not changing. Recoveries will be improving steadily, as they are but it’s manly volumes.

So, you are still quite comfortable with that 215,000 ton guidance for next year.

Yes. That’s unchanged. Yes.

Your next question comes from Karl Blunden with Goldman Sachs. Your line is open.

I just wanted to follow up here on the project financing. I wanted to clarify, is there a shift in timing at all which you put out in your release this quarter? Has it been shifted back in 2017 or is it still the same as previously contemplated, and on size is that still the same?

Yes. There has been no shift that’s been put out, compared to the end of last quarter, we were - this is something which looks more likely to happen in quarter four than perhaps at the end of the next quarter, the last one. It’s not really to do with the status of the process, it’s more dealing with the number of ECAs, they will have that process to go through, and it has taken us longer than expected to get to a final agreed position. In the meantime, we have progressed with sounding of commercial banks who will provide the liquidity support to that and that has been a very strong result coming in from that.

And it sounds like this is still the preferred route to do -- to raise additional liquidity, are there other options outside of project financing that you would consider at this point?

There are other options which are kept under consideration, but you’re right, the project finance is preferred option.

Your next question comes from Matthew Fields with Bank of America. Your line is open.

I just wanted to touch on a little bit of the Kansanshi smelter outage and I think what you said about a stockpile being worked up. Can you discuss the anode stockpile that you seem have worked up? I know you’ve been sort of producing more than you sell into the first half. Can you talk about the amount that you expect that to reverse over the next six months?

Our smelter has been performing ahead of budget and we’ve had terrific throughputs there and recovery. So, that’s -- when you enter into long-term contracts or of the contracts -- you enter into contracts with certain tonnage every month. So with more tonnage coming from the smelter, we have accumulated that and that’s some way in the net 50,000 ton that we got as inventory. With the smelter shutdown, we will now continue to ship and sell those anodes. So that will be – and by the time the smelter starts up, we’ll probably have a much reduced level and then as we produce, we’ll just continue delivering into those contracts.

Okay. And then, following up on project financing, now that you’ve got the sort of sounding from the commercial banks, is it -- can you talk a little bit maybe high level about sort of potential rates and terms for that financing? And is there the intention to still use some of the proceeds to send it up to the corporate level to pay down the term loan?

In terms of rate and terms, we’re not in a position to discuss that now. I mean the intention is still to draw down on that and return to the corporate.

To pay down term loan?

Yes, pay down term and what are they -- access on top of that.

Your next question comes from Greg Barnes with TD Securities. Your line is open.

Thank you. Clive, I just want to return to Sentinel and the impact of terrace mining. Does that increase the strip ratio?

It does in the early while we are developing it. Yes, we’re moving out more waste, while we’re putting it together. But in the strip ratio, the previous mining method with all the internal waste as well and that -- as I say, most of that will be mined and go through the mill going forward, just by the nature of the mining method. So, in the longer run, I guess the strip ratio will be less. The short run higher, longer run, less.

Okay. So, what in terms of operating cost of Sentinel now, and you are getting well into this, you must be getting a sense of where you think the operating cost is going to settle down at, you can do to settle at Sentinel, cost per pound, I don’t know what…

Yes, we’re still -- for this year, the costs in the first half are probably the good guide to the whole year, while we’re still developing the terrace mining. There may be some small improvements over the next year or two. But, we’re not guiding too far out on cost, until we really understand fully how far we can push recoveries and all of those things, which we’re working on at the moment.

Okay. The target was at one point to get it done [Indiscernible] I believe, is that hopefully where you would end up?

Well, yes, hope is the word. Whether it’s realistic, I hope. I think it will certainly go lower, but just how much lower we can get with, we’re not forecasting at the moment.

Your next question comes from Lawson Winder with BofA Merrill Lynch. Your line is open.

Hi. Thanks for taking the call. Just two quick things for me. So, one on the hedging. Will it be possible to breakdown the price of the forwards between Q3 and Q4?

The price of the forward… [multiple speakers]. Hannes, are you answering that?

No, I think Martin’s probably got the numbers, but…

And then, just secondly, while you are looking at that number, just on the Las Cruces, the Polymetallic Refinery project, you guys were, I believe targeting some sort of study for the end of Q4 2017. Is that still tracking for that?

We’ll have pretty well completed the -- I’ll answer the last part first while looking for the numbers. By the end of this year, we will have completed the pilot plant test work but we will be working on the exploration ramp sometime, yet to drill out the results, so that we know exactly how many tons we’re dealing with. We’ve certainly got a substantial resource there at the moment but it’s pretty open in lots of directions. So, there is a fair bit of work to do. We have time; we will get it right, before we go ahead with any sort of new project. So, it will happen when we’re ready, when we’ve got all the information.

On the hedging question, take it on quarter-by-quarter basis; there is not a big difference between quarter three and quarter four, quite similar around that 237 level.

Your next question comes from Alex Terentiew with BMO Capital Markets. Your line is open.

I just wanted to -- most of my questions have been answered here but I just wanted to do a follow-up on the hedges here again, with second half 2017. You mentioned something lock down of the inventory. Is this -- I believe you got around 313 or some million of finished product inventory that’s on your balance sheet and that’s been around that level for better part of a year or two. I think is that where that inventory product is going to be coming from? And I think based on your numbers here, it looks like, I think Hannes you mentioned is above 50,000 tons of anode. I am just trying to make sure, I understanding this that you’re effectively guiding that you will be selling down the vast majority of that inventory that you have on your balance sheet. And then, lastly, a related question. The 20% of Kansanshi that is owned by ZCCM, how does the hedging and the inventory, how does all that fit into their ownership? Because I understand the hedging is more of a corporate strategy, so how are they related?

In terms of inventory and finished product, it might be the value of that -- the anode that’s sort of 300, but it’s not the cost that we carry on the balance sheet. So that cost would settle [ph] inventory good, so you could possibly -- I don’t, roundabout I would guess half of that would be reduced because you got to look at the production cost of Sentinel and Kansanshi and say that’s the value of the inventory, of the anode inventory, what it’s carried at. So you will see some reduction of that finished product. But you’re correct; it is in the finished product column that will be sold. And then, to get to your hedges portion, in-country, it’s all treated at spot price. So, Kansanshi will sell all of the production at spot that focus through to bulk shareholders, ourselves, and ZCCM attributable on the relevant spot rate, whilst the hedges are done at a corporate level.

Your next question comes from Sean Wondrack with Deutsche Bank. Your line is open.

Apologies if I missed this. On slide 23, you have a remark that says “process to refinance existing corporate debt facilities well advanced; completion expected early Q4”. What facilities were you to specifically there?

Yes. So, that refers to at corporate debt facility, principally the revolver we have at the corporate. We are following the fund refinancing, completing early probably a year, we are able to extend the tenure of that and we are looking at some of the controls around that facility at the same time to allow greater flexibility for the Company. That’s something which is well advanced. So, we are planning to get done shortly and it should complete about early in the first quarter of -- the first part quarter four.

Okay. And then, when you think about the Cobre financing, I know you’ve guided to some point in the second half, but do you expect this to be closer to December or is this like a next month event or is it just still up in the air and really uncertain as to when it’s going to completely finalize?

Probably guide you to closer to December.

Okay. Thank you. And then, when you think about Cobre, right, it’s a great asset you built there. Now that you have the power plant up and basically functioning, have you guys considered -- are you going to start selling power into the grid in Panama there, is their incremental upside there?

We will be selling power into the grid from first part of next year.

First part of next year but that’s not in your guidance.

No.

Okay, great.

No, we’re not guiding as to how much power we are going to be selling. But once the first train is up and running, most of its production will be sold for a while.

Right. And when you think about the power plant down there, obviously you guys are miners or not, more in the utilities business. Have you thought about potentially doing a sale leaseback of that facility, where you can control a full life of the mine but you don’t effectively have to own it or how would you think about it?

It’s something that we have contemplated in the past. But, I think if you look back to a few of our conference -- a few conference calls ago, we were very much holding it in the form of an insurance policy, when the markets were much more difficult and our balance sheet was in the more pressure; it was an insurance policy. Right now, until -- we want to get it up and running and totally control that by owning it outright. What we do with it going forward is still something that we will consider from time-to-time. So, it’s not something fixed forever.

Your next question comes from [David Hohlfeldt with CQS]. Your line is open.

Good morning, guys. Just to follow up on Matt’s earlier question, where are your most restricted covenants?

The situation with that current corporate facility which we had to put in place in the middle of 2016 and that was around the time that clearly the outlook for copper was very low, and it’s difficult time to do that facility. Therefore, we had some restrictions on particularly constraining the Company and raising debt on disposals, which are not appropriate for the spaces of the Company that we are looking to go back more to the sort of facility we had in place in 2014 before that move and things are much stronger now so we are able to do that.

So, just to clarify, you’re trying to the $1.875 billion senior debt before right now. Right?

Correct, it was actually upside to 2.2 but yes that facility. Yes

And if you don’t mind, could you just remind us what the current rate on that facility is, split between the revolver portion and the term loan portion?

Revolver and the term loan are the same and you probably touched on of the reasons that refinancing -- when put in place that on the market as a ratchet on the prices. And at the debt to EBITDA we are the moment that’s 600 basis points available.

So, drop of 600, got it. Okay. And then, my last question relates to the hedging program. So, I’m just trying to understand a little bit better. So, I calculate that on the 74,000 tons that you guys hedged between June 30th, and I actually think that this is an incorrect because I delivered into some of them. But of the 74,000 incremental between July 27th and June 30th, I’m coming up with the price of two spot 78. Can you just -- I’m barley confident that’s wrong because you guys have absolutely delivered on some of the copper between June 30 and July 27. So, can you just help us understand what kind of pricing you guys had for this incremental tonnage between June 30 and July 27?

The numbers aren’t far out. Those hedges -- look like this week, the numbers aren’t far out.

Okay. So, you guys hedge this week you’re saying?

Yes.

And 61,000 tons that are good through, I guess I think it’s June of 2018, was that also this week on the collar?

No, there was a small -- basically as we go in 2018, we are hedging on a rolling basis. So, it’s not all of that [indiscernible].

We have almost 15,000 tons this week.

15,000 this week and just to clarify, when you talk about 50% hedge, you’re referring to the 50% of your 600,000 tons of copper or is there some other number that we should be thinking about inclusive of anode…

50% over the next 12 months production, looking forward 12 months.

So, you essentially always want to be hedged -- or I guess at least for the next 12 months hedged at around 300, maybe 350,000 tons something like that?

Probably 300 is a max, may be a little bit lower, but we will evaluate the situations and look at it on a continuous basis. But as we go, you could see more of it now drifting into the collar scenario where we price protection at the bottom end but still get some exposure on the upside.

Your next question comes from Patrick Jones with Deutsche Bank. Your line is open.

I had a quick one on, firstly on issue of power supply. And then, one of the reasons that was declaring state of emergency was that there’s number of power lines that have been destroyed by vandalism, one optically from west [ph] and [indiscernible] issues. Just wanted to hear any comment about what the impact you guys have faced and how you mitigated this? Secondly, if you could just comment a little bit about the state on -- CapEx budget, whether you’ve -- on the 5.5 even into any of the contingency and what level you’re sitting on that one? Thank you.

We’ve had no issues on with power lines, or any vandalism on power lines. So, it hasn’t affected us. I think most of it’s just the rising copper price, that as far as I can tell from selling people’s data and cable. So we haven’t been affected. In terms of Cobre capital, the guidance remains the same. We do highlight in the -- actually in the MD&A and in my introduction that we’re looking at a few things that we may or may not do, which are efficiency improvements and in one case, significant increase in throughput, which should take the total throughput up to close to 18 million tons a year. We haven’t made decisions on those things, the engineers are looking at them and we’ll see. So other than that, no, guidance remains the same.

There are no further questions at this time. I will now turn the call back over to Clive Newall.

Well, thanks everybody for attending. If you have any follow-up calls, best to actually call Sharon because I’m about to go on a plane to Zambia. But, I hope we answered your questions, but do try and follow them up if you have further questions to ask. We’ll talk to you at the end of the next quarter. Thank you.

This concludes today’s conference call. You may now disconnect.