Good morning. My name is Heidi and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quantum Minerals’ fourth quarter of 2018 earnings 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. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Mr. Clive Newall, President and Director of First Quantum Minerals, you may begin your conference.

Thank you very much, Operator, and thanks everyone for joining us today. Here on the First Quantum side in London, we have our finance department, Hannes Meyer, CFO; Juliet Wall, Senior Manager, Finance, and Simon MacLean, Group Reporting Controller, and joining from Panama Philip Pascall, Chairman and CEO, and Zenon Wozniak, Director of Projects. As usual, before we proceed, I will draw your attention to the fact that over the course of this call, we will be making several forward-looking statements and as such, I encourage you to read the cautionary note for the company’s fourth quarter and full year 2018 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, firstquantum.com and on SEDAR. Following my opening remarks, Hannes will take us through the financial results, then we will open the lines to take your questions. 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 Q4 2018 results conference call button under the News section of the home page. I’d like to start off with our very good news - I’m sure you all saw the news release out yesterday. We announced that Cobre Panama ore was introduced through the primary crushing into the stockpile, and on February 11 ore was introduced through the first milling circuit. This is a very significant milestone for Cobre Panama and represents many years of effort that is now culminating in the commencement of operation of this megaproject. Everyone at First Quantum is very proud of this achievement and thanks to all of those involved in getting us here. On our website, you can view a short video and see updated project photos on the projects at Cobre Panama which clearly show the progress made at the site and the commencement of operations with ore. The first milling of ore was only one of several milestones achieved at Cobre Panama. During Q4, we also successfully brought into operation the second 150 megawatt generating set at the power station. Engineering procurements project pre-strip was also completed. All in all, we are excited by the prospect of entering the ramp-up phase of the Cobre Panama project and are looking forward to getting it to a steady state operation as soon as possible. We’re also very much looking forward to hosting the official mine opening ceremony next week. Turning back to our results for Q4 and the year, both operationally and financially it was a very solid year for the company. For the full year 2018, our copper production exceeded guidance and the year represents the seventh straight year the company has delivered year-over-year production growth, and with the introduction of production from Cobre Panama this year, we’re expecting 2019 to continue that trend. We’re expecting approximately 15% growth in copper production for 2019 given the midpoint range we provided for our production guidance from Cobre Panama. Kansanshi and Sentinel continue to be the biggest contributors to our 2018 production, contributing more than 75% of total copper. Sentinel achieved record throughput, recoveries and production in 2018 with copper production 17% higher than 2017. Kansanshi mining operations were in line with expectations while a new record was achieved at the Kansanshi smelter for the year. At our smaller operations, the 20% production increase over 2017 at Cayeli was slightly offset by lower production at Las Cruces and Pyhasalmi. The land slippage at Las Cruces, which I’m sure you’ve all read about, that we announced in late January will result in lower production at the operation in 2019, and we expect about 25,000 fewer tons in 2020. The investigation into the cause and the impact assessment is ongoing. Currently, we’re processing lower grade stockpiles while we obtain the regulatory approval to return to the pit to mine phase six. These expectations are reflected in our current production guidance. Our low unit cost of production and all-in sustaining costs continued through the year despite continuous pressures from increased royalties, increasing sustaining capital spending, and increased energy costs, somewhat offset by production volumes and lower contractor costs. We do expect to maintain our low cost structure in the next few years; however, the pressures will remain. During the year, several issues arose in the jurisdictions where we operate. In Q1, we were served with a tax assessment relating to capitalizing imported at Sentinel. This issue is still ongoing and we remain engaged with the Zambian Revenue Authority and the committee to bring the matter to a just and prompt resolution. Later in the year, the Zambian government announced a new tax and royalty regime that in part became effective on January 1, 2019. These changes to royalties and taxes have been included in our current cost guidance. Also announced as part of the new tax and royalty structure, the Zambian government will introduce a new sales tax intended to replace VAT from April 1, 2019. Although details on the new sales tax have not been made available, we do expect further increase in our cost structure as a result. We also continue to deal with a Panamanian Supreme Court ruling on the constitutionality of Law 9 and are working with the government to resolve the issue. The process does not impact our ability to continue to advance our Cobre Panama project to production, and the project continues to be widely supported in country. Most recently, we announced a new $2.7 billion term loan revolving credit facility to replace the existing RCF. This extends the debt maturity profile of the business, demonstrates the strong support we have from our banking group, and improves the financial flexibility of the company. Hannes will comment further on this shortly. In short, 2018 was a strong year for the company both operationally and financially, providing a foundation to deliver significant production growth in 2019 and the years to come. Our priorities remain bringing Cobre Panama into commercial production in a manner which Panama and the company can be proud of, to begin de-leveraging of the balance sheet through cash flow growth expected, and to provide returns to shareholders who have patiently supported our vision and strategy for many years. With that, I’ll ask Hannes to take us through the financial review.

Thanks Clive, and good day to everyone. Turning to the slide headed Quarterly and Full Year Production, the group achieved record annual production of 606,000 tons, which was 6% higher than 2017 and 11,000 tons ahead of our guidance. Copper production in Q4 of 158,000 tons is a new quarterly record and 3% higher than the same period in the prior year. This is due to improved performances at Sentinel, Guelb Moghrein, and Cayeli, and the continued strong performance at Kansanshi. Moving to the next side, Continued and Consistent Optimization, Sentinel’s copper production of 224,000 tons was 17% higher than 2017. This growth in production was driven by higher throughput in 2018 due to improved ore supply and optimization of the milling circuits, as well as higher recoveries. The Kansanshi smelter achieved record annual production of 347,000 tons of copper anode and treated a record 1.4 million dry metric tons of concentrate in the year. The smelter throughput was 14% higher than 2017 and has exceeded design capacity of 1.2 million dry metric tons by 15% through operational efficiencies. Heading to the next slide, Financial Overview, comparative EBITDA of $481 million was $163 million above quarter four in 2017. The full year EBITDA of $1.7 billion is nearly $600 million above the full year of 2017. This was driven by higher sales volumes and higher realized metal prices. Comparative earnings were $0.26 per share and $0.716 per share for the quarter and the full year respectively. The copper sales hedge program resulted in a hedge gain of $25 million in the quarter, an increase to realized prices by 7/10ths per pound. Net debt of $6.5 billion was higher than the previous year-end due to the Panama planned capital expenditure program. Turning to the next slide on quarterly unit cash costs, copper C1 cost was $0.07 per pound below the same quarter in the prior year due to the impact of higher copper production volumes, increased byproduct [indiscernible] from sales of sulfuric acid at Kansanshi, as well as higher zinc sales at Pyhasalmi and Cayeli. All-in sustaining cost of $1.68 per pound for the quarter decreased $0.08 against the same period in the previous year. The decrease in underlying all-in sustaining costs reflects lower Zambian royalties due to the lower average LME copper price and a change in C1, partially offset by higher sustaining capital expenditures. Copper C1 and all-in sustaining costs were within guidance in each quarter of 2018 and the full year. Our C1 and all-in sustaining guidance for 2019 and 2020 excludes any impact in respect of Las Cruces land slippage. Turning to the next slide, Debt and Liquidity Profile at Year End, at year end the company was in compliance with all facility covenants and ended the quarter in a strong position with $700 million of committed undrawn facilities and $788 million of unrestricted cash. On the sixth of this month, the company signed a new $2.7 billion term loan and revolving credit facility underwritten by BNP Paribas, ING and Societe Generale. The new facility replaces the existing $1.5 billion revolving credit facility. The new $2.7 billion facility with an accordion feature to increase it up to $3 billion before the end of this year comprises a $1.5 billion term loan facility and a $1.2 billion revolving credit facility, which can be upsized to $1.5 billion if the accordion feature is activated. This financing includes revised financial covenants, extends the debt maturity profile of the business, demonstrates the company’s access to a diverse range of capital markets, and improves the financial flexibility of the company through the added liquidity. The covenants give us increased headroom through 2019 and 2020. Net debt to EBITDA covenant ratio is 5.75 until December 2019. The ratio will then reduce to 5.25 until June next year, and then 4.75 until end of December next year, stepping down to a ratio of 4 until mid-2021 and then 3.5 until final maturity. The facility will be used for the redemption of the 2021 senior notes due in February 2021 in full or in part, and for general corporate purposes. The company will issue a call note to redeem $820.5 million of the February 2021 notes at a price of $101.75 plus accrued interest by the end of this month. Any additional money raised under the accordion of the new facility will be used to redeem the remainder of the 2021 notes. The next slide shows the company’s improved debt maturity profile with the new facility and after partial redemption of the 2021 senior notes. The debt maturities now better match the cash profile of the business with plenty of time to address the next major notes issue, the $850 million 2022 notes maturing in May 2022. Turning to the next slide on our hedge program, earlier this month we executed 30,000 tons of new copper hedges covering period February to July 2019. As of today, the company has 7,500 tons of un-margined copper forward sales contracts at an average price of $2.81 per pound, outstanding the period’s maturity to June 2019, and zero cost collars for 52,500 tons at prices ranging from a low side of $2.70 per pound to a high of $3.50 per pound with maturities to July 2019. Approximately 19% of expected copper sales in the first half of this year are hedged to un-margined forward and zero cost sales contracts at an average floor price of $2.91 per pound. We will continue to increase our hedge cover as price targets are met and will use zero cost collars alongside forward contacts and purchased options, as appropriate. Moving to the next slide on capital expenditures, expenditures on Cobre Panama for the full year was $1.3 billion or $907 million on a net basis. Guidance for total Cobre Panama project capital remains unchanged at $6.3 billion. Guidance for the company’s sustaining capital and other projects include expenditure relating to Cobre Panama future operations. In addition, guidance includes expenditure related to other development projects, as well as some planned expenditure at Ravensthorpe, and I’ll give more detail a bit later. Underlying sustaining capita is expected to average approximately $250 million per annum from 2020. Outside of this, [indiscernible] some allocation for the expenditure as follows: $220 million towards our development project pipeline, which is discretionary and dependent on various factors; Ravensthorpe, some of which will be dependent on nickel market conditions; some site operational projects included in Panama, and at Panama this includes amounts brought forward to allow future ramp-up to $100 million tons as well as amounts on capital spares operational initiatives and additional mining fleet. At Sentinel, this includes amounts for a fourth crusher and primary crusher number two. Thank you, and I will now hand back over to Clive.

Thank you, Hannes. Operator, could you hand over for questions now, please?

[Operator instructions] Your first question comes from the line of Orest Wowkodaw with Scotiabank. Please go ahead.

Hi, good morning. I was wondering if we could get some color on the Cobre Panama production guidance, specifically for 2021. I’m curious if you’re expecting to ramp to 85 million tons throughput by the end of 2020, how come you’re not expecting any increase in production in 2021? I’m just curious if that’s grade related.

Philip or Zenon, do you want to take that one?

Perhaps he could repeat it? I don’t quite follow that.

Well, you’re guiding to 270,000 to 300,000 tons of copper in 2020 at Cobre Panama, and your 2021 guidance is only 300,000. I would have expected that increasing more in 2021 over 2020 as you’re ramping up the throughput through 2020, so I’m just wondering if there’s an offset that we’re missing in 2021 to keep the production at only 300,000 before you move up to 350,000 in 2022.

There has been a change in our grade profile certainly since last year with the new revised mine plan, so you’re absolutely right - that would be part of it, and then as you see us moving to 350,000 in 2022.

Would we be able to get that grade for 2021?

What was that, sorry?

Yes, we’ll be publishing a technical report in due course. I can’t--

Yes, there’s some grade [indiscernible] and then we’re seeing there’s a bit of a step-up.

So it will be put in the public domain soon, Orest.

Okay, and then just secondarily, any idea on what we could expect for cash costs for Cobre Panama in 2020 and 2021?

Well we’ve guided, as you all see, for 2022 at $1.20. I think it would be wise to assume slightly higher in 2021 than 2020, of between $0.10 and $0.20.

Great, thank you very much.

Orest, just a comment on the projections further out. As Juliet mentioned, you’ll see variations that are made in the estimates of grade and the like. For a mine plan that moves according to what the actual throughput is and how we prioritize the exploitation of various parts of the pit, and this year - this is going into 2019, a lot of the focus is obviously on understanding more clearly how the plant runs and how the mine operates and the like, so some of those further out projections based on mine plans, to a large extent are waiting to understand the results and performance of the plant over the next three to 12 months, and we will definitely upgrade those guidances as that picture becomes much clearer. I think that’s possibly part of what you were seeing in the step from 300 to 350 - it’s grade related on some mine plans and will also be some measure of recoveries according to what’s actually known at the moment.

Thank you, Philip.

Your next question comes from the line of Matthew Murphy with Barclays. Please go ahead.

Hi, morning. Hannes, maybe just another one on the capex there. I might have missed what you said, but the sustaining capital in other projects of around $600 million in 2020 and 2021, if I net out the $250 million in underlying sustaining, that leaves $350 million, and I think you said development projects will be $220 million.

That’s correct.

So what’s the other $130 million?

That’s split between Ravensthorpe, Panama and Sentinel. Juliet, I don’t know if we want to give more detail?

Yes - sorry, were you asking specifically 2020, 2021? Is that right?

Yes.

Yes, so there will be some--as Hannes mentioned, some allocated towards Ravensthorpe over those two years, which is price dependent up to about $17 million. There is the project pipeline as well mentioned, and some amounts of Kansanshi and Sentinel projects as well.

So that’s in the $130 million, and then the $220 million in development projects is spending other than those?

Correct.

Yes.

That will be greenfield projects, depending on conditions on those sites.

Okay, that’s great. Can you just give any color as that relates to your Zambia production profile? Does the spend on Kansanshi allow a 235,000 ton type of production level to be sustained, or should we be expecting at some point higher spending there and Sentinel, when that capex brings the production up from 250, or do you still expect it to be up from 250?

Well, if I could just elaborate on the positions in Zambia, we will of course, and have said we’ll be very cautious about capital expenditure there, so that will mean that on Kansanshi we will maintain our output the best we can for at least the next three to four years. We have said that if we don’t increase the capacity of the plant to process sulfide ore, then that production thereafter at Kansanshi will decline and the timing for that is a subject of ongoing review. At Sentinel, this year there is a commitment for the fourth crusher, which will give us some increased capacity and that would probably be the limit of what’s possible out of Sentinel going forward. If Sentinel produces more while Kansanshi produces slightly less, it measures more easily with the capacity of smelters, both ours and others in the copper belt, because of course an expansion of what we used to call S3 will require some additional smelting capacity to take advantage of it, and that kind of capital expenditure at the moment is something which we would be very cautionary about simply because of the nature of the change to the royalties and taxes.

Okay, thank you.

Your next question comes from the line of Greg Barnes with TD Securities. Please go ahead.

Thank you. This may be a little unfair given you’re just starting the ramp-up at Cobre, but I want to talk about the 100 million ton throughput rate. I’m just trying to get a better sense of the timing on when you want to move forward with that and when it will happen.

To which rate are you referring?

One hundred million tons a year at Cobre.

That’s a good question, for which we’d love to know the answer. What I mean by that is that our test work that’s been done, we conducted--I don’t know exactly, but about 250,000 meters of grade control drilling with--and at the same time done metallurgical work, shows that for what we’re looking at at the moment, the grind size can be slightly coarser and the energy for grinding is less than anticipated, and that means that our milling circuit would likely have more capacity than we estimated, but exactly how much will really not manifest itself until we run it. That’s just the nature of it. So you’re dead right - it’s a bit unfair right now, but in the next few months we’ll get a much better feel for what we can handle there. What is important to understand is that almost everything else in the plant that we have been able to apply ourselves to is rated for 100 million tons a year or more, so where at Sentinel we have some limitation that comes out of mining and crushing but not in the rest of the plant, at Cobre Panama the primary crushing and conveying and the mining rates have a lot of flexibility, particularly because there’s a lower strip ratio and a lot of pre-strip already done. So it will boil down to limitations in the milling circuit and we have yet to see what that might look like, and therefore how quickly one can get to 100 million tons and exactly what we need to do that.

So those production forecasts you’ve given for 2021 and 2022 really are in flux and, I guess, sort of the low end?

That’s reasonable, yes. I mean, yes, they’re conservative.

Okay. Philip, just on the tailings dam at Cobre, can you talk a little bit about how that’s constructed and--? Obviously there’s huge water or precipitation levels in Panama and there might be some concerns around tailings dams.

Sure. It’s a subject to talk about, is tailings generally, I think, and I’ll take the opportunity to do that. With the possible exception of Pyhasalmi, which has been there for about 50 years, I have as a CEO been involved in and personally been taken part of what designs we have and how we proceed with tailings, and our operating guys know that at times I would intervene to make sure that they give it priority, and that’s applied elsewhere. In the case of Cobre Panama, that design has been the subject of considerable scrutiny before we were involved and then subsequently with a completely different consultant. It’s an unusual tailings dam design. There are, as far as we know, three others in the world built in that fashion and designed to be water retaining structures where necessary, and those are Highland Copper and the one from Bingham Canyon, and another in British Columbia. We could ask the question, is it downstream or upstream? It’s basically the wall progresses downstream. It’s actually called center stream, which is an unusual arrangement, but the wall will drain and therefore the vulnerability to the kind of conditions where the wall gets saturated and has inherent weaknesses when it stores water, are no longer a consideration because basically it’s designed to drain properly anyway. We have no doubt that the material here, being a sulfide, will leech well. One of the interventions that I had was in its original design, excess water was pumped off the dam using pontoon arrangements. Here, uniquely, we have a tunnel that’s a very substantial tunnel, and those that might have been to the site would have seen it, so it’s capacity is sufficient to take an extraordinary flood, all of which would have occurred in an hour and ignores the storage capacity of the dam itself, so it’s huge. It’s over-designed by a factor of something like 10 of the record floods that have ever happened, and that was to--so that in a quite passive fashion it will drain whatever excess water would arise, and there’s some other emergency provisions anyway. So we’re quite confident that that wall will operate well as a water retaining structure where needed, but that the beaching and the nature of excess water being taken off the pond has been considered in some detail. There is another factor to cover what you think is important. Quite often in most operations, the tailings dam falls under management of the plant. At times, I suspect it gets forgotten about or perhaps doesn’t get the attention it needs. This has a completely different management structure. It operates independently of the plant and very significantly it has people who are intense, know it well, have been involved in its construction, and going to see other operations of this sort, so I have confidence that they quite independently of the plant management can make their point and ensure that things run properly. If we ever get opportunity to show people, that they would be able to go through very carefully how that wall operates and its design, which I think is a not unimportant consideration.

Great, thanks Philip.

Your next question comes from the line of Jackie Przybylowski from BMO. Please go ahead.

Thanks very much. My first question is going back to the Cobre Panama ramp-up. Can you maybe just give us a quick--some color and maybe compare how the ramp-up is looking so far compared with the experience you had at Sentinel, and maybe what the differences are between the two projects so far?

Perhaps we’d just ask Zenon, because we’d put a lot of pressure on him.

The difference is very significant. Sentinel for us was quite a learning curve. It was a large throughput mine and it was probably slower to ramp up than what we wanted, but we learned a lot from that. We also learned a lot from the smelter, which ramped up very quickly, so a lot of what we learned from both of those projects has been applied to Cobre Panama, and if anything, Cobre Panama has probably been over-designed to some extent. We’re optimistic that that will help to bring a smooth and efficient and fast ramp-up to Cobre Panama. It’s still very early days, but the initial indications are already good, and the first week or so, or first two weeks of operation as been smooth with very few problems that often are associated with commissioning. So they’re very different, comparing Cobre Panama to Sentinel, and I think Cobre Panama at the moment is looking good.

That’s great.

If I elaborate on that, the distinction of the smelter from virtually every other mineral processing plant is that the QA and the checking of its automation system in advance of operation was absolutely paramount, so that the smelter would operate on automatic from the day it started. We learned from that and one of the elements that we insisted on here was that the power station would be simulated and operate on automatic, and that the plant itself would be simulated, that all of the input-output units for the control system would be tested and the QA very thorough, so it could operate from the beginning under automatic. That is not a common practice in mineral processing plants in which the automation tends to follow over some years. The results that we’ve been seeing in this, now the early phases of commissioning, is that that is really paying handsome dividends. The combination of the quality assurance on all of the automation and the details and being able to train people with a simulation which reflects actually how the plant will run in its ultimate form, have great advantages for smoothing out in advance some of the difficulties that otherwise we encountered at Sentinel.

That’s great, thank you. If I can ask one other question, can you comment on the updated status of your discussions with the Zambian government, and do you see any opportunities for any concessions in terms of the taxes and royalties that were effective on January--sorry, the royalties that were effective on January 1 or the taxes on April 1?

It’s probably not politic for me to talk about those details as it stands at the moment. You’d have seen various statements made in the press and certainly our relationship has been a very amicable one, and we’re working our way through that and we’ll just have to see where we get to with the nature of those laws. They are put in place starting from the first of January, and by and large once that happens it takes a while to undo them, and we understand that so it’s a process that we are working at. But I wouldn’t want to speculate as to where that will get to.

Got it, thanks very much. Maybe if I could just ask one final question on Las Cruces, I know you mentioned in the release that there’s some higher grade ore that you’re no longer able to access. Is any of this fallout of the slide going to affect your ability to move underground in the future, or will you have to move this material before you go underground in the future?

The portal was actually covered. I’ve spent some time talking to Wyatt and that doesn’t concern them much in terms of getting back to it, to go underground. Lots of material in the first instance, the best guess they have is that there was a low grade stockpile which would in total have been able to yield in due course, not early days, but something like 6,500 tons of copper which will probably be lost, but the rest will be recovered.

Okay, that’s great. Thanks very much, Philip. That’s it for me, thank you.

Your next question comes from the line of Karl Blunden with Goldman Sachs. Please go ahead.

Hi, good morning. Thanks for taking the question. On the Law 9 uncertainty that you mentioned in the press release, are there next steps or milestones that we should keep in mind as you move forward with that?

Philip, do you want to take that?

What was it that you were asking about we should keep in mind going forward?

Karl, can you repeat your question?

Yes, sorry about that. It’s regarding Panama and the uncertainty that you cited in your press release about Law 9. You mentioned you have confidence in resolving it in the near medium term. What are the next steps there that we should keep an eye on and milestones that you’re working through?

Our steps on that, with a lot of advice and obviously discussion at a high level, is an application to the Supreme Court. The Supreme Court, if you wanted a parallel, like in the U.S., at times it’s short of judges and they have a workload, so it’s not possible to give a very definitive answer to the timing for when they would be able to deliberate on it. But it’s a fairly clear request for what they call clarification, and we will just wait for that and that would give us the best understanding of where we go from there. Obviously I can only say that we have some confidence that that will be deliberated on very rationally and we’ll have an outcome from it, but its timing is one which we’d like sooner but we’ll wait for the processes to occur.

Got you, that makes sense. It certainly looks like the banks are comfortable with any uncertainty or risk associated with that. This one, I’m not sure how much you can comment on, but there have been press reports indicating an interest on First Quantum’s part in increasing ownership at Kansanshi or adding a stake in VCCM. Is there anything you can share with us about those press reports?

I think the Minister of Finance statement was probably the most useful out of that. They had certainly been asking and entertaining discussion to do with some elements of the ownership of VCCM, which is held in different places if you referred to the 17% component, and we’ve had those--we are party to it, of course, because we own the other 80%. I think that’s probably the most I can say is that those discussions have been held, and the rather more speculative article that was put out wasn’t one which we would make any comment about.

Okay, got you. Thanks very much, and congrats on the operating progress on all fronts.

Thank you.

Your next question comes from the line of Matthew Fields with Bank of America Merrill Lynch. Please go ahead.

Hey everyone, congratulations on getting first ore at Cobre Panama. Just want to ask why you’re only redeeming $820 million of the 2021 notes. Why not the whole $1.1 billion at this time?

Matt, we do have a provision in that facility, an accordion to allow us to upsize from $2.7 billion to $3 billion. If we upsize to the $3 billion, we’ll take up the remaining $300 million. We felt it was opportune at the time when we’re doing this refinancing, resetting certain covenants to deal with the--to address Zambia taxes that are coming through, and to add some additional liquidity to the balance sheet, so therefore we’ve added some liquidity to the balance sheet and if we upsize that facility in this year, we’ll take up the remaining notes.

Okay, great. Then is it your intention to pay down that term loan, I guess in the Slide 17 that you outlined - $450 million in 2020 and 2021, and the remainder in 2022 as you generate cash?

That’s certainly my intention. We do honor our banking agreements, so if we have to repay it, we’ll repay that.

And is it still--you’ve said in the past that you sort of want to reduce nominal amount of debt by about $2 billion before you embark on your next major project. Is that still your thinking?

Yes, I mean, we absolutely do need to reduce absolute amount of debt, and we have mentioned two in the past, so that is part of the thinking.

Okay, great. Thanks very much.

Your next question comes from the line of Lawson Winder with Bank of America Merrill Lynch. Please go ahead.

Hi, thank you for taking the question. First off, I’d like to commend you all and the team onsite at Cobre Panama for the herculean effort in getting it to where it is today. Then maybe also, could you just comment a bit more on how the pit is ramping up, and in particular how many rope shovels are now operating there? I believe the plan was to have a fourth there at some point in the first half. Thanks.

Yes, a third rope shovel was commissioned in January and there’s a fourth one, I’m not sure exactly the date, April or May. I’ll just talk about the mining because I think that, as I mentioned earlier, was a distinction from Sentinel, we had it in mind to do a lot of pre-strip and ensure that in that case, there was a lot of flexibility in terms of what we could feed to the plant. That has happened. There was a desire that we did not do all of that with the pioneering fleets of equipment so that we had material that could be moved with the large trucks and large shovels as a means for development of the operators of the mining fleet, and that has happened and we reached the 68 million BCM of stripping during January that we’d had as a target, and of course that mining organization has then carried on running and one of the questions about capital is that of course we continue to capitalize the work that they do. It’s work--I mean, it’s stripping work that we’d have to do in time in any event, and we need to keep that mining fleet and its operating crews productive. They have the equipment to be productive at a rate that’s somewhat higher than we’re currently feeding the plant because we’re early days, but it does mean that it will have a lot of flexibility to ramp up quickly as the demands are made, and they're very conscious of that, that they may well have to meet the capacity of a plant that is substantially more demanding than maybe any estimates that they’re given.

Okay, thank you Philip, that’s very helpful. If I might just ask on your budget for this year, particularly with the capex spending budget and then the Zambian tax situation, are you assuming a 45% effective tax rate in your budget for 2019 or are you assuming 31%, and if it is the case that you’re assuming the lower tax rate, if it does end up in a situation with the higher effective tax rate, does that impact your spending plans at all? Thanks.

You could answer that, Juliet or Hannes.

Okay. Yes, we are assuming a higher effective tax rate, and one of the big drivers or reasons for that is the non-deductibility on royalties, so that really almost has something like a 10% impact. That’s the big bridge, so that is embedded in our plan.

I’m not sure if you’re able to comment at all on the nature of the proposed sales tax. I guess since the government hasn’t said much, you might not be able to say much; but do you have any understanding of what it might look like, particularly in terms of how it might impact imports as opposed to items that are sourced within the country? If you can’t say anything, I completely understand, and that would be it for me.

Lawson, I think it’d be wrong for us to speculate on what it would look like.

That’s fair. Thanks for taking the questions, guys.

Your next question comes from the line of Sean Wondrack with Deutsche Bank. Please go ahead.

Hi there. Most of my questions have been answered. Just a couple more. While this constitutional issue surrounding Cobre Panama is still in question, are you able to actually sell the copper at Cobre Panama once you’ve reached commercial production?

Sean, at the moment in every element, we’re proceeding with--obviously with involvement of the government, as Law 9 dictates, so the answer is yes. There’s some other detailed areas which continue to operate that way.

Right, okay. Thank you. Just one more. In terms of Cobre Panama, you’re now selling power into the grid. Is this captured in the cost guidance, and how impactful is it?

Yes, [indiscernible] the revenue in our pre-commercial production [indiscernible] of about $9 million in actuals this year, and I think round about--there is some assumed revenue, I think of about $15 million next year--or this year, rather, sorry, 2019.

I got you. Okay, great. Thank you very much.

Your next question comes from the line of Oscar Cabrera with CIBC. Please go ahead.

Thank you, Operator. Good morning everyone. I want to echo my congratulations on Cobre Panama. I was wondering if we can spend a little bit more time on the capex. At first, just a clarification please - I believe you mentioned you’re expecting to spend $220 million in 2020 and 2021 for greenfield projects. Can you just elaborate on that please?

Oscar, yes, that would be projects that we have in Argentina, Peru, and sort of--and then in Spain at Las Cruces as well, so we do still have the underground project at Las Cruces. Just depending on various conditions, it’s discretionary money, it’s money that we put in there, so it’s just part of the budgeting cycle that we do put these numbers in, but various elements and factors have got to develop before we proceed on any of those projects.

Okay. Then related to one of the questions that you had a couple minutes ago with respect to deleveraging by $2 billion before you embark on other projects, so that $2 billion or embarking on other projects means construction, right? It doesn’t mean investing in feasibility studies and exploration, etc.?

Yes Oscar, it’s a target to reduce by two, and you’ve got to see a path to getting to the two for the end reduction. Spending some money on the feasibility studies or early stage, we wouldn’t consider that as a major expenditure. You know, $220 million over a two or three-year period, that’s not a significant capital expenditure or program that we’re investing in. But I think the idea is to get bolt ready, and if you do have certain opportunities, you proceed with some of that, and that is captured within this plan

Okay.

If I’d just mention, on the various projects, we have--the one that’s getting at the moment most attention is Taca Taca, and it’s a combination of aspects that-there’s effort to define some of the infrastructure better, whether to do with power and particularly water, so they’ve been drilling to make sure they have enough water, and obviously the logistics for the roads and rail. There’s some drilling work that’s to provide slightly better definition of the start-up pits and metallurgy so they’re all the valuation or determination activities which are to provide a much more concrete estimate of what has to be done and what is involved in Taca Taca for the purposes of forward position. Exactly when we would start any work on that or spend any higher levels of capital will definitely be determined by a desire that we have to reduce our leverage, and that would be important. Also, we have some discussions with government and the like to ensure that there’s stability and some reassurance because obviously that kind of level of capital expenditure would need to have that clear before we started. So we see a period of some time while all of those are brought to a definitive form, and I think what you’re seeing in an allowance there is something that covers that plus a number of other areas that we operate in at modest levels, but certainly with no commitment to anything major.

Thank you, Philip. Capital allocation is something that everyone is very focused on, and I’m glad you brought it up. In the past, we have talked about considering returning to shareholders once Cobre Panama was in operation. Is that still part of the consideration along with advancing the other more interesting projects you have in your pipeline?

Absolutely. I think there are two different elements. One is what one returns to shareholders and the other is the extent to which we reduce debt. The decisions as to how we--which portion goes where in part is obviously influenced by our bankers and the like and what requirements they would like us to see before we obviously pay a lot out to shareholders, but there would be a recognition that we can return some to shareholders along the way, and maybe Hannes can comment in any details that constrain that.

Yes Philip, I think you’ve captured it. I mean, it is a balance, and increasing sort of modest returns after--you know, to shareholders, increasing the--the past few years we’ve had very modest dividends, as Clive mentioned, and the deleveraging is certainly a key focus area for the company as well.

Thank you both for your comments. If I may just lastly, what assumptions are you using for byproducts on your cost guidance, that is gold price, silver price, molybdenum price, please?

We are using for gold, around $2.50. I think for moly, it would be round about $7, and for silver, it would be about $17 an ounce.

Okay, thank you very much.

Your next question comes from the line of Brian Nunes with Gramercy. Please go ahead.

Hi, congratulations on a great quarter and a good result at Cobre Panama. I had a question on the new [indiscernible]. Is there any nexus to the Cobre Panama entity with this new facility, either being a guarantor or a borrower?

No, Cobre Panama is not a guarantor to the facility.

Okay, so it’s my understanding that there is zero encumbrances through debt instruments over Cobre Panama right now, because the bonds don’t have a nexus to that either, right?

There are certain restrictions imposed in terms of indebtedness at Cobre Panama, so that is really aligned to the bond holders needs as well.

Okay, but there’s no--Cobre Panama doesn’t have--is not an obligor to any specific instrument? Maybe the question I’m asking is part of the expectation in the markets was that when you guys issued those two new bonds, was that potentially you shelf that bank financing, and it seems at least to me that the reason for that bank financing being shelved over Cobre Panama was that maybe it was these issues around Law 9, which is preventing this thing from being underwritten. I just want to understand if that is indeed the case.

No, that is not the case. I mean, we issued those two bonds last year because the bond conditions were quite favorable, and project finance would have restricted the sort of operational flexibility and daily running of the operation, so it was a more opportune time for us to finance it through the bond market. What we are doing now is basically dealing with the maturity coming up in 2021 so we’ve got a long runway ahead of us of about three years before we’ve got to think about any major maturities due, resetting some of these covenants and adding some liquidity to the balance sheet.

No, that’s good. Then is it still your intention to try to get a mix of 50/50 between bank and bond debt?

Yes, I mean, in the past it’s been a good mix for us. That is probably a good--it’s important for us to be big in both markets, and as this facility has demonstrated, the bond market there has been pretty weak in the last three to six months but the bank market is still supportive. The bank market was ready to support us in terms of the project finance and we’ve had some pent-up demand there, and we felt this is probably a good way just to access that pool of capital again. But at the same time, it is important for us to be big in the bond market as well, because it does attract quite a big and efficient capital market for us.

No, I agree. Okay. Thanks for taking my questions.

Your next question comes from the line of Ian Russo [ph] from Barclays. Your line is open.

Hi guys, thanks. Just wanted to follow up on the tailings dam question. Philip, if it would b e possible to maybe just talk around some of the other operations - you mentioned Pyhasalmi and just around the risks, sort of potential impact risks and the design structures, and then also in Zambia.

Well Cayeli, [indiscernible] tailings are disposed of as [indiscernible], so they don’t have a tailings dam, and that’s always been very benign and it goes into an oxic area where it causes no damage. We took some time to develop that as an [indiscernible] and reasonable environmental way to handle things. Las Cruces has filtered dry tailings - when I say dry, they're 10% moisture and they’re stacked effectively, and that’s a very different kind of storage arrangement in a lined pond. When I say lined, it’s so that nothing can seep out of it into the groundwater as a requirement that persists in Spain, but because it’s coming through a pressure filter, it’s a very different form of tailing [indiscernible] and certainly doesn’t attract the same focus in terms of design a wall or the like that you would be talking about, say, in the case of Kansanshi and Sentinel. Kansanshi and Sentinel are both upstream tailing designs. IN the case of Kansanshi, there are two. It was in the early days of one of those a need for us to make sure that we buttressed the tailings, and we did with waste drop from the mine. It was very significant. We did it basically because we wanted to make sure that we were confident of it. That is what’s called [indiscernible] - it’s used rather less now and watched very carefully, but that buttressing means that it has a very strong wall in any event. Sentinel gets a lot of focus. The nature of those sulfide tailings is they’re quite coarse and heavy. They settle and beach well. The early part of the disposal was into obviously the deeper part of the tailings area, and it’s hard to get density in those, so we will move over time--I know you can move on top of it, you can walk on them at the moment with machines, but we will move over time to drain any residual moisture that might have been collected in its early years because that would ensure that it’s stability is unquestioned. We keep a pond--it’s a very large tailings dam, and it’s about, I think, four kilometres diameter, and we keep a pond over in the middle so it’s a long way from the wall, so that’s pretty important. The recovery of water off that proceeds all the time [indiscernible] any new water, so we keep the water level down. Each of them get managed very carefully to accommodate the demands of the operation. One of the attractions of Zambia is that it has a six-month dry period and there’s a net evaporation rate of some figure, like about 1.4 meters, so any kind of water that you’re putting on a tailings dam, there will be a net evaporation rate that ensures that it’s being dissipated, but we’re recovering it in any event. That brings us to Bwana Mkubwa. Bwana Mkubwa we’ve been managing since we closed the mine. That’s over quite a long time now, turn back to get vegetation on the embankments and to make sure that any drainage of moisture that sits on the top of neutralized because, if you recall, there was acid used to leech that material, and that’s gone on over time and what it means is, of course, that the drainage is--pretty sure it’s working all the time, and eventually once we’ve got it so there’s vegetation covering the whole thing, and that will take us some years, then that vegetation alone with ensure with the normal transpiration of plants and the like that one keeps this moisture down. So you know, they all get that kind of attention.

That’s useful, thank you very much. Maybe just a follow-up question on Ravensthorpe. If nickel prices are acceptable for you to restart, could you give an indication of how much capex will that require and thoughts around different processing and circuits and potential capex for that?

[Indiscernible] to restart, we estimate it’s something over $10 million, and that’s largely the time it takes, which we estimate is about six months to pull together a team of people and establish what you need to get started, and then of course the purchase of the inventory of sulfur, which we have to do in advance to ensure there’s sulfur there for the acid plant. It’s not huge capital to get started and it will be able to operate for two or three years on the [indiscernible] body. During that period, and we’ve been working on environmental applications alike and design for a conveyer across to [indiscernible], and we’ve been drilling that ore body so we’ve got a mine design to get approval from the Ministry of Mines, which we expect by the middle of this year, and then a design of a conveyer to bring the material back. We don’t have a definitive estimate for that at the moment, but it’s round about $60 million or $70 million, and that’s so that one can mine and convey the material to the existing plant. [Indiscernible] is slightly higher grade than [indiscernible], so in the longer term that has benefits but is also--it’s a huge part of the ore body there, and we wanted to time any restart not only on what the nickel price is, which of course at the moment is more attractive anyway, but also to ensure that we could move to [indiscernible] without any major disruption, I think. So that’s pretty much what we have in mind.

Thanks. Does that 60 to 70 include the pre-stripping of the new pit?

Yes, the ore comes right to surface.

Okay. Maybe just a last question on Cobre Panama ramp-up, you referred to the production, the majority of the production expected is about 80% in the second half. I know with Sentinel obviously you had some issues with payability and your payable production was quite a bit lower than your contained metal production. Have you taken into account some of the ramp-up or a slightly conservative ramp-up in these estimates?

Yes, what you’re probably talking about is the grade of material and certainly in this year we expect the grade of our concentrate to be lower and our marking guys have dealt with a marker on the basis that we would have a very low minimum grade so that they are aware of it coming. What is attractive about Cobre Panama is it has zero arsenic, and so many of the smelters are keen to have that choice of material anyway as a means to blend into concentrates that have high arsenic.

Okay, that’s all for me. Thank you very much.

That brings us to the end of the question and answer session. I’d now like to turn the call back over to Mr. Clive Newall. Please go ahead.

Thanks Operator. Thanks everybody for listening today. We look forward to talking to you again the end of the next quarter and hopefully we’ll be able to have some more positive news on Cobre Panama. Goodbye and thanks.

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