First Quantum Minerals – BUY

First Quantum Minerals (TSE: FM), a Toronto-based mining and metals company, has released its fourth-quarter and full-year 2021 results.

Key Results

In Q4 2021, the company produced 201,823 tonnes of copper, down 3% from the prior quarter. Total annual production increased by 5% year-on-year to 816,435 tonnes, the highest annual production in the company’s history.

Cash flow was $760 million in Q4, and $2,885 million for the full year, with C1 copper cash costs averaging $1.39 per pound in Q4. The company’s net debt decreased by $249 million during the quarter, bringing the balance to $6,053 million as of December 31. Plans to meet its $2 billion debt reduction target in the first half of 2022 are progressing.

First Quantum expects future cash flows to remain strong, allowing it to continue its debt reduction program while advancing growth programs and supporting ESG initiatives.

CEO Commentary

First Quantum chairman and CEO Philip Pascall said, “First Quantum’s operations continue to demonstrate resilience in dealing with the challenges brought about by the COVID-19 pandemic and new variants as they emerge. We are in a period of solid cash flow generation for the Company and while debt reduction remains a priority, we are pleased to cautiously commence increased capital returns to our shareholders with our new dividend framework. We have released our inaugural Climate Change report which recognizes our obligation to mine responsibly and to report on our actions to address climate change.”

Wall Street’s Take

On February 16, Jefferies analyst Chris LaFemina kept a Buy rating on FM and set a price target of C$50. This implies 44.2% upside potential.

The rest of the Street is bullish about FM, with a Strong Buy consensus rating based on 13 Buys, one Hold, and one Sell. The average First Quantum Minerals price target of C$39.18 implies 13% upside potential to current levels.