management’s discussion and analysiss1.q4cdn.com/857957299/files/doc_news/2008-11-12_nr.pdf ·...

NEWS RELEASE

08-21November 12, 2008

www.first-quantum.com

FIRST QUANTUM MINERALS REPORTS OPERATIONAL AND FINANCIAL RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008

(All figures expressed in US dollars)

First Quantum Minerals Ltd. (“First Quantum” or the “Company”, TSX Symbol “FM”, LSE Symbol “FQM”) is pleased to announce its results for the three and nine months ended September 30, 2008. The complete financial statements and management discussion and analysis are available for review at www.first-quantum.com and should be read in conjunction with this news release.

Key features Q3 2008 Q3 2007 YTD 2008

YTD 2007

Production t Cu 82,187 57,565 238,780 153,947Sales t Cu 90,698 60,904 237,507 150,585Net sales USDM 563.9 483.8 1,728.0 1,095.9Operating profit USDM 277.5 308.1 1,039.6 664.7Net profit USDM 147.5 183.6 537.5 385.0Earnings per share USD 2.16 2.71 7.89 5.70Unless otherwise indicated, all comparisons of performance throughout this report are to the comparative period for the prior year (Q3 2007).

• Quarterly copper production rises 43% to record levels on the back of Frontier’s operations and Kansanshi’s expansions

• Earnings per share up 38% YTD but quarter negatively affected by: • Lower average copper price • Negative provisional pricing adjustments of $16.4 million • Higher costs for oil-based consumables and other process inputs • Write-down of Lonshi copper stockpile of $7.9 million • Lack of production at Bwana Mkubwa and subsequent suspension of operations

• Cash inflows after working capital movements rise 128% YTD and 30% for the quarter

• Two Kansanshi upgrade projects completed on time and under budget

• Constructive discussions continued in relation to the new Zambian tax regime and the Kolwezi revisitation process

Near term outlook

• Expected production for 2008 increased to 320,000 tonnes

• Revenues, earnings and cash flow will be materially lower than Q3 2008 if current copper price levels continue

• Management has responded to slowdown by suspending production at Bwana Mkubwa, enhancing operational practices to reduce costs, renegotiating supply contracts and deferring other non essential exploration and capital expenditure programs

• Significant cost reductions now flowing from a strengthening USD and slowing worldwide economic activity, the benefits of which are expected to be more fully realized in Q1 2009

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First Quantum Minerals Ltd. 08-21 Longer term outlook

• Kolwezi project construction continues towards commercial start-up in the first quarter of 2010

• Decision on Kevitsa development in Finland deferred pending detailed engineering review and capital costing, and further delineation drilling

Q3 2008 operating results

Q3 2008 Q3 2007 Q3 2006

NET SALES (after TC/RC charges) USD M USD M USD M

Kansanshi - copper 358.8 323.2 223.9 - gold 12.2 6.3 5.2Frontier - copper 137.1 - -Guelb Moghrein - copper 32.4 74.1 - - gold 12.6 14.1 -Bwana/Lonshi - copper 10.0 66.1 99.2 - acid 0.8 - 0.1Net sales 563.9 483.8 328.4Copper provisional pricing adjustment included above (16.4) 3.2 11.7

OPERATING PROFIT USD M USD M USD M

Kansanshi 199.3 222.3 168.2Frontier 80.1 - -Guelb Moghrein 20.3 63.5 -Bwana/Lonshi (22.2) 22.3 64.8Total operating profit 277.5 308.1 233.0

COPPER SELLING PRICE USD/lb USD/lb USD/lb

Current period sales 3.11 3.58 3.37Prior period provisional pricing adjustment (0.08) 0.02 0.11TC/RC and freight parity charges (0.33) (0.15) (0.31)Realized copper price 2.70 3.45 3.17

UNIT COSTS USD/lb USD/lb USD/lb

Cash costs (C1) 1.28 0.98 1.00Total costs (C3) 1.90 1.22 1.23

Group operating profit driven by sales volume increases; negatively impacted by copper price and costs

Copper sales volumes increased 50%, but the lower average copper selling price and higher production costs resulted in a 10% decrease in the group operating profit. The lower copper price was driven by the current global economic slowdown; however, production costs have not yet benefited from this slowdown due to the delay in cost benefits flowing through. Sales volumes increased due to a 43% increase in production and a reduction in the copper inventory stockpiles. The increase in production was driven by Frontier, which accounted for 76% of this increase, while Kansanshi contributed the balance of the increase due to facility upgrades and expansions. Frontier was not operational in Q3 2007. Operating profits were negatively impacted by higher stripping and cost inflation which resulted in a 31% increase in the average unit cost of production (C1). The accounting

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First Quantum Minerals Ltd. 08-21 for the new Zambian taxes has resulted in a large increase in C3 costs with an offsetting tax recovery recognized in operating profit.

New Zambian tax regime

Background

As previously reported and set out in the attached financial statements the Government of the Republic of Zambia (“GRZ”) announced in January 2008 a number of proposed changes to the tax regime in the country in relation to mining companies. These changes were passed by parliament in late March and the majority of changes took effect from April 1, 2008.

The various taxes have been accounted for as follows:

• Windfall tax – treated as a non-deductible royalty expense (C3 cost); • Variable tax – none recognized in these accounts as this tax does not apply when windfall tax applies, but it will be

recorded as an income tax expense if payable in the future; • Concentrate export levy – treated as a deductible operating expense (C3 cost); • Increased royalty – treated as a deductible royalty expense (C3 cost); and • Change in timing of deduction of capital allowances and quarantine of hedging activities from operating results –

accounted for in the calculation of income tax expense.

The Company, through its Zambian subsidiaries, is party to Development Agreements with the GRZ for its existing operations which provide an express right to full and fair compensation for any loss, damages or costs (including interest) incurred by the Company by reason of the GRZ's failure to comply with the tax stability guarantees set out in the Development Agreements, and rights of international arbitration in the event of any dispute.

The Company obtained legal advice on its rights under the Development Agreements confirming that the Company has rights of recovery for any taxes which are levied in excess of those permitted under the Development Agreements. In light of the detailed advice received, the Company assessed there to be a high probability of recovery from the GRZ of certain payments made in respect of these taxes. Accordingly, the Company has recognized a receivable from the GRZ for an amount in respect of the expected ultimate repayment of taxes in excess of the taxes permitted under the Development Agreements. As required by the financial instruments standards, this receivable has initially been recorded at fair value based on management’s best estimate of the timing of receipts and amounts due. At September 30, 2008 this receivable amounted to $119.3 million and the recovery has been included in other operating income and not deducted in calculating C costs.

The Company received letters from the Zambian Revenue Authority (“ZRA”) during July confirming that the Company “will with immediate effect be required to pay windfall tax on a provisional basis at a flat rate of 25% at any price above the first trigger price for both copper and cobalt”. This advice is inconsistent with the legislation referred to above which provides for windfall tax rates of 50% above $3.00/lb and 75% above $3.50/lb. The letters go on further to state that this “is an interim arrangement and, we expect at the end of the tax year, necessary adjustments will be effected accordingly”. Because of this inconsistency with duly passed legislation, the purported capping of the windfall tax rate has not been taken into account in the liability calculations for the financial statements. The Company’s accounts reflect tax liabilities consistent with the legislation passed by parliament, although the amount of windfall tax paid to date was calculated in accordance with the instructions received from the ZRA using a capped 25% windfall tax rate.

Update

The Company continues to record the full liability for these taxes in its Q3 accounts in accordance with the new legislation, and has also recognized as a receivable an amount in respect of the excess taxes recoverable in accordance with the Development Agreements.

During the quarter the Attorney General of the GRZ invited the Company to meet with the GRZ to resolve the dispute. In response, the Company established a designated holding account during Q3 whereby all payments of new taxes in excess of those payable under the Development Agreements have been paid. This includes all excess taxes previously paid to the GRZ. The GRZ and ZRA have been advised in writing of this account. The balance of the account at quarter end was $47.5 million and is included as cash and cash equivalents in the balance sheet of the Company.

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First Quantum Minerals Ltd. 08-21 Currently, the Company, along with other mining companies operating in Zambia with similar agreements, is engaged in discussions with the GRZ to find an alternative solution to arbitration or litigation. The timing and outcome of these discussions is uncertain.

Kansanshi production increases due to commissioning of sulphide circuit expansion; results negatively impacted by declining copper price and global cost pressures

Kansanshi copper production increased 30% and the copper in concentrate inventory stockpile was reduced by over 2,000 tonnes resulting in a 31% increase in tonnes of contained copper sold. However, operating profit was negatively impacted by a lower realized copper price and increased production costs resulting in a lower gross margin per pound of copper sold.

The sulphide circuit expansion began commissioning during Q2 and continued to ramp up to design throughput in Q3. This expansion allows for an annual throughput in excess of 12 million tonnes of ore and resulted in a 61% increase in sulphide ore throughput over Q3 2007 and a 70% increase in copper in concentrate production. Ore grades processed in both the oxide and sulphide circuits remained relatively consistent between the comparative quarters, while the increase in mining equipment during the early part of 2008 allowed for increased waste stripping and a continued increase in the ore stockpiles.

Operations at the Mufulira smelter remained consistent with Q2 as tolled cathode output was relatively similar, but down slightly from the Q3 2007. Kansanshi’s high pressure leach system (“HPL”) also remained consistent with Q2 contributing approximately 2,600 tonnes of copper in concentrate to cathode production. This was a 103% increase over the Q3 2007 as the HPL was commissioned during that quarter. With the significant increase in copper in concentrate production and a lack of available smelter capacity, approximately 15,800 tonnes were sold without further processing.

Kansanshi’s average cash unit cost of production (C1) increased 34% as ore and processing costs were higher for oil-based consumables, sulphur and an approximate 15% appreciation of the Zambian Kwacha against the US dollar. The significantly higher global price of oil, which reached a historic high during the early part of Q3, contributed to cost increases in all areas of production. These cost increases are reversing as lower oil prices, lower demand for sulphur and declining exchange rates against the US dollar begin to apply. Ore costs were also impacted by an increase in waste stripping during Q3 as mining focused on exposing new areas of the ore body.

Kansanshi’s total cost of production (C3) was significantly impacted by the introduction of the new Zambian tax regime, specifically for the windfall tax, export levy and royalties. These new taxes contributed approximately $0.55/lb to the average C3 cost. The receivable recognized for the recovery of these taxes is not included in C costs.

Frontier operating profit continued to be driven by strong production and a reduction of inventory stockpiles

Frontier’s operating profit continued to benefit from strong production and a drawdown of the copper in concentrate stockpile since achieving commercial production during the Q4 2007. However, operating profit was lower than Q2 due to lower production, higher costs and a lower realized copper price.

Copper production was 19% lower than Q2 as Frontier processed slightly less ore at a lower ore grade. Ore throughput was down 8% due to downtime resulting from a mill motor failure during Q3. Mining activities remained consistent with Q2 with an increase in the volume of ore mined and less waste stripping resulting in an increased ore stockpile in anticipation of the upcoming wet season.

With the finalization of new off-take agreements during Q2, the copper in concentrate stockpile was reduced by approximately 7,000 tonnes during Q3 resulting in there being less than one month’s stockpiled production at quarter end. The decrease in concentrate production, increased inflationary costs associated with the global oil price and increased wages resulted in cash costs (C1) being 9% higher than Q2. However, these negative impacts were partially offset by a decrease in the freight charges due to a variation in the off-take arrangements.

Guelb Moghrein negatively impacted by copper price and increased costs

Guelb Moghrein’s sales revenues were 49% lower due to the copper price and provisional pricing adjustments. Included in Q3’s revenue was an $11.9 million negative provisional pricing adjustment compared to a $0.8 million positive adjustment in

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First Quantum Minerals Ltd. 08-21 Q3 2007. In addition, sales volumes in Q3 2007 were 21% higher due to the reduction of the copper in concentrate stockpile during that period.

Copper production remained relatively steady with a 5% increase. Not taking into account the gold credit, the average unit cost of production (C1) increased 38% due to increased fuel, oil-based consumables and labour costs. The gold credit also decreased due to lower gold sales volumes, which was directly related to the lower copper in concentrate sales volumes.

Bwana/Lonshi operation suspended as Lonshi pit exhausted

Mining operations at the Lonshi open pit mine were completed in August, however the ore stockpiles remain in the Democratic Republic of Congo (“DRC”) as a result of the continuing closure of the DRC border since November 2007. Following a re-evaluation of the stockpiles and increased costs of operating on a smaller scale, at the end of Q3 the stockpile was written down by $7.9 million to a net realisable value of $25.0 million.

The SX/EW facility at Bwana continued to process low grade ore that was purchased from external vendors for a short period. In October operations were suspended at Bwana and the plant placed on care and maintenance until the Lonshi ore is available or alternative feed sources are obtained.

Provisional pricing adjustment negative following decrease in copper price during final settlement periods

The provisional pricing adjustment included in net sales in Q3 reflects the final settlement price of copper that was sold during previous periods, but subject to final pricing in the current quarter. At the end of Q2, there were 20,192 tonnes sold that were subject to final settlement in the current quarter. These tonnes sold were recognized in Q2 revenue at a forward average LME copper price of $3.94/lb. The final settlement price of these copper sales averaged $3.57/lb resulting in the recognition of a $16.4 million negative provisional adjustment.

Of the contained copper tonnes sold during Q3, 46,734 tonnes will be subject to final settlement prices in Q4 and beyond. These sales were recognized during this quarter at an average copper price of $2.90/lb. Refer below to the “Outlook” section for further discussion.

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First Quantum Minerals Ltd. 08-21 Q3 2008 net profit

Q3 2008 Q3 2007 Q3 2006

USD M USD M USD M

Operating profit 277.5 308.1 233.0

Corporate costs and other expenses/income (5.0) (10.5) (6.1)

Derivative losses (net) (2.4) (3.7) (6.6)

Exploration (9.4) (5.2) (5.2)

Interest (net) (2.7) (3.2) (4.3)

Tax expense (75.5) (59.3) (56.6)

Minority interests (35.0) (42.6) (21.0)

Net profit 147.5 183.6 133.2

Earnings per share

- basic $2.16 $2.71 $2.00

- diluted $2.13 $2.66 $1.96

Weighted average shares outstanding

- basic 68.4 67.7 66.6

- diluted 69.1 69.0 68.0

Net profit down on operational results and increased taxes

Net profit and earnings per share were down 20% and 21%, respectively, due to the lower group operating results and higher taxes.

Other expenses positively impacted by foreign exchange gain

During Q3 an unrealised foreign exchange gain of $4.4 million was recognized due to the movement in the USD against the Euro on the EIB subordinated debt facility for Kansanshi.

Exploration costs up for Lonshi underground

The Lonshi underground mining evaluation work is underway to assess the conditions and viability of extracting sulphide ores to be processed at Frontier. This resulted in an increase in exploration costs.

Income tax expense up on Zambian income tax rate increases and Frontier’s operating profit

Income tax expense increased as a result of accounting for the increase in the corporate tax rate in Zambia from 25% to 30% and the inclusion of Frontier’s operating profit in this, and not the comparative quarter, which is taxed at 30%.

Minority interests directly impacted by decreased operating profits at Kansanshi and Guelb Moghrein

The decrease in minority interest was the direct result of lower operating profits at Kansanshi and Guelb Moghrein, which are both subject to 20% minority interest. This decrease was partially offset by an increase at Frontier, which is subject to a 5% minority interest share of profits.

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First Quantum Minerals Ltd. 08-21 Q3 2008 cash flows

Q3 2008 Q3 2007 Q3 2006

USD M USD M USD M

Cash inflows from operating activities - before working capital 209.5 256.9 176.3 - after working capital 262.4 201.6 118.3Cash outflows from financing activities (259.5) (42.8) (58.6)Cash outflows from investing activities (109.7) (96.2) (60.1)Net cash (outflows) inflows (106.8) 62.6 (0.4)Cash inflows per share - before working capital $3.06 $3.80 $2.65 - after working capital $3.84 $2.98 $1.77

Cash inflows from operating activities before working capital down on lower net profit

Operating cash inflows before working capital movements decreased due to the Company’s lower operating results. Operating cash inflows after working capital movements for Q3 were impacted by a build up in inventory of $28.1 million and an increase in the recorded tax recovery provision of $52.0 million, which were offset by a decrease in accounts receivable of $88.3 million and an increase in current taxes payable of $7.1 million.

The decrease in working capital cash outflows over Q3 2007 was due primarily to a significant decrease in accounts receivable during the current quarter as improved collection procedures were implemented.

Cash outflows from financing activities due, mainly, to debt facility payments

Financing activities included repayments on debt facilities of $243.3 million, comprising an early repayment of $200.0 million on the corporate revolving loan and short-term facility, $40.5 million on the corporate revolving credit and term loan facility and $2.8 million on the Kansanshi project completion facility. Debt repayment was a primary reason for the increase in cash outflow over Q3 2007. Financing cash outflows also included the payment of $16.9 million in dividends.

Cash outflows from investing activities driven by continued capital investment

Capital expenditure and upgrades at a number of operations accounted for $69.8 million, and $69.0 million was spent on the Kolwezi development project. Capital expenditures continued at Kansanshi to complete the sulphide expansion and electrowinning tankhouse, while Guelb Moghrein continued investment in the gold plant and the copper plant expansion project. In addition, $34.8 million was spent on investments in marketable securities and $63.9 million was declassified from restricted cash as the related debt payments were made during Q3.

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First Quantum Minerals Ltd. 08-21 YTD 2008 operating results

YTD 2008 YTD 2007 YTD 2006

NET SALES (after TC/RC charges) USD M USD M USD M

Kansanshi - copper 1,099.2 797.5 596.2 - gold 34.0 15.8 15.7Frontier - copper 361.7 - -Guelb Moghrein - copper 150.7 128.1 - - gold 42.3 24.8 -Bwana/Lonshi - copper 38.5 129.4 265.7 - acid 1.6 0.3 0.5Net sales 1,728.0 1,095.9 878.1Copper provisional pricing adjustment included above 44.5 (9.7) 30.9

OPERATING PROFIT USD M USD M USD M

Kansanshi 731.1 546.0 460.5Frontier 224.0 - -Guelb Moghrein 119.8 104.7 -Bwana/Lonshi (35.3) 14.0 177.5Total operating profit 1,039.6 664.7 638.0

COPPER SELLING PRICE USD/lb USD/lb USD/lb

Current period sales 3.38 3.36 3.19Prior period provisional pricing adjustment 0.09 (0.03) 0.11TC/RC and freight parity charges (0.31) (0.15) (0.32)Realized copper price 3.16 3.18 2.98

UNIT COSTS USD/lb USD/lb USD/lb

Cash costs (C1) 1.16 1.05 0.89Total costs (C3) 1.68 1.30 1.11

Group operating profit increase driven by production increases

Group operating profit increased 56% as a result of higher sales volume. Sales volume increased 58% due to a 55% increase in production. Two thirds of this increased production was contributed by Frontier achieving commercial production in late 2007, with Kansanshi and Guelb Moghrein also contributing. The realized copper price was slightly lower with an increase in TC/RC and freight parity charges due to an increase in the relative proportion of copper in concentrate production and the negative impacts of the higher oil price. Cash costs were 10% higher due to the impact of inflationary costs including fuel, oil-based consumables and salaries and wages.

Kansanshi benefits from capital investment in expansion upgrades

Kansanshi copper production increased 36% as a result of the capital investments in expanding Kansanshi’s facilities during 2007 and 2008. This led to a 32% increase in sales volumes.

Investment in additional mining equipment throughout 2007 allowed for increased mining and access to higher grade ores for processing during the current period. The processing facility upgrades and expansions allowed for a 27% increase in ore throughput over the comparative period. The combination of these items resulted in the increased production output.

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First Quantum Minerals Ltd. 08-21 Tolled cathode production from the Mufulira smelter increased by 8% as the upgraded Mufulira smelter began to ramp up production. With the significantly increased concentrate production and the smelter capacity issues at the Mufulira smelter, Kansanshi sold approximately 29,000 tonnes of copper in concentrate without further processing and stockpiled an additional 6,000 tonnes of copper in concentrate since December 31, 2007.

The impact of cost pressures related to fuel and oil-based consumables, sulphur, and wages increased the average unit cash costs (C1) by 14%. Global crude oil prices were upwards of 60% higher compared with the same period of the prior year and sulphur prices have skyrocketed on heavy global demand. The introduction of the new Zambian tax regime that became effective during the second quarter resulted in a 43% increase in the average unit total costs (C3).

Frontier production achieves design levels; becomes second biggest contributor to the group operating results

Frontier’s operations ramped up to design levels since achieving commercial production in the December quarter of 2007. This resulted in a significant increase in production and operating profit.

Mining and copper production were impacted by Frontier’s first wet season during the early part of the period as the heavy rains hampered mining activities leading to low quality ore being available for processing. As the wet season ended, mining was able to expose higher grade ore leading to increased concentrate production during the latter part of the period. Frontier copper production represented 23% of the Company’s total output.

Frontier entered into a number of new off take agreements during the period resulting in an increase in sales during the latter part of the period and reducing the copper in concentrate stockpile to less than a month’s production. Cash costs (C1) increased during the latter part of the period with the increased global oil prices negatively affecting Frontier’s fuel and oil-based consumable costs.

Guelb Moghrein boosted by increased production and reduction of copper in concentrate stockpile

Guelb Moghrein’s sales volumes were 36% higher as copper in concentrate production was 15% higher and the copper in concentrate stockpile was reduced by 1,100 tonnes. However, Guelb Moghrein received lower margins on copper sales due to a lower realized copper price and higher mining and processing costs.

The average unit cost of production (C1) for the period was 14% lower due to the higher gold credit.

Bwana/Lonshi operation suspended

The open pit mining operations at the Lonshi mine were completed in August with the ore stockpiles remaining in the DRC. In October the SX/EW operation at Bwana Mkubwa was suspended due to a lack of economically viable ore available for processing.

Bwana/Lonshi’s operating results for the period were only from the processing of low grade ore purchased from third parties.

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First Quantum Minerals Ltd. 08-21

YTD 2008 net profit

YTD 2008 YTD 2007 YTD 2006

USD M USD M USD M

Operating profit 1,039.6 664.7 638.0

Corporate costs and other expenses/income (25.5) (21.2) (17.5)

Derivative losses (net) (6.0) (3.7) (59.2)

Exploration (19.4) (10.2) (12.2)

Interest (net) (16.2) (12.7) (13.2)

Tax expense (308.4) (136.0) (145.7)

Minority interests (126.6) (95.9) (51.7)

Net profit 537.5 385.0 338.5

Earnings per share

- basic $7.89 $5.70 $5.26

- diluted $7.80 $5.60 $5.16

Weighted average shares outstanding

- basic 68.1 67.5 64.3

- diluted 68.9 68.8 65.7

Net profit rises with production increases from continued capital investment

Net profit and basic earnings per share were 40% and 38% higher than the comparative period as the capital investments in Kansanshi, Frontier and Guelb Moghrein all contributed to the increase in net profit of the Company.

Corporate costs increase on wages and stock-based compensation

With the growth of the Company, the corporate administration function increased. In addition, the long-term incentive plan was in its third year resulting in an increase in the stock-based compensation expense.

Exploration costs increase with Lonshi underground evaluation and exploration in Mauritania

The Company’s increase in exploration costs was substantially due to the evaluation of mining underground at Lonshi and exploring new opportunities in Mauritania.

Interest expense up on higher outstanding debt balance

The outstanding long-term debt throughout the current period was higher than the comparative period resulting in an increase in interest charges.

Income tax expense higher on increased earnings and tax rate changes

Due to the increased earnings, the increase in the Zambian tax rate referred to previously and an increase in the proportion of income subject to the higher statutory tax rates in DRC, tax expense was higher than the comparative period.

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YTD 2008 cash flows

YTD 2008 YTD 2007 YTD 2006

USD M USD M USD M

Cash inflows from operating activities - before working capital 785.1 551.0 493.6 - after working capital 722.0 316.7 344.7Cash outflows from financing activities (22.5) (30.6) (39.7)Cash outflows from investing activities (612.9) (313.0) (198.0)Net cash inflows 86.6 (26.9) 107.0Cash inflows per share - before working capital $11.53 $8.16 $7.67 - after working capital $10.61 $4.70 $5.36

Improved cash inflows from operating activities direct result of higher net profit

The operating cash flows before working capital movements benefited from the Company’s improved operating results.

Net working capital increases were lower in the current period due to better utilization of credit terms from suppliers and timing of the payment of increased taxes. This was partially offset by increases in accounts receivable and inventories.

Cash outflows from financing activities net minimal movement for the year to date

The cash outflow from financing activities included dividend payments of $53.0 million for the period, which were partially offset by net debt facility draw downs of $25.5 million.

Cash outflows from investing activities increase on acquisition of Scandinavian Minerals Ltd. (“SML”)

The acquisition of SML during the June quarter at a net cash cost of $214.3 million and a 47% increase in capital expenditure to $351.6 million resulted in the significant increase in investing cash outflows over the comparative period.

Q3 2008 balance sheet

Q3 2008 YE 2007 YE 2006

USD M USD M USD M

Cash 286.6 200.0 249.5Property, plant and equipment 1,891.3 1,320.5 1,078.0Total assets 3,372.8 2,682.7 1,719.7Long term debt 393.5 361.2 294.9Total liabilities 1,586.6 1,096.7 799.9Shareholders’ equity 1,786.2 1,586.0 919.8Net working capital (including non-current inventory but excluding cash and debt) 368.2 308.5 106.0

Net debt to net debt plus equity 6% 9% 5%

Group assets rise on positive cash flows, acquisition of SML and continued capital investment

The Company’s positive operating cash flow was used to acquire SML, which holds the Kevitsa nickel-copper-PGE project in Finland, and to continue with other capital projects, expansions and investment.

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First Quantum Minerals Ltd. 08-21 Net working capital increased due, primarily, to an increase in inventories, and an increase in accounts receivable related to the higher sales since December 31, 2007. Net working capital fell from the end of Q2 by $58.8 million as a result of improved debtor collections which was partially offset by an increase in ore stockpiles and consumable stores.

Overall, inventory increased by $108.5 million from December 31, 2007. The Company stockpiled approximately 19,900 tonnes of contained copper in concentrate at the end of Q3, which was an increase of 1,650 tonnes since December 31, but a decrease of 8,800 tonnes since the end of Q2. With the completion of new off take agreements in the previous quarter, stockpiled concentrates at Frontier were reduced by 7,000 tonnes of copper in concentrate, while Kansanshi’s inventory balance also decreased by approximately 2,000 tonnes . Of the closing stockpiled copper in concentrate total, approximately 8,900 tonnes of Kansanshi production remain stockpiled at the Mufulira smelter awaiting further treatment.

The total investment in marketable securities at cost amounted to $401.2 million. With the current economic conditions and the negative impact to the equities market, the Company recognized a fair value loss of $224.2 million in the current quarter and a total of $343.5 million for the year to date through comprehensive income (before taxes). The Company believes that this loss in value is temporary and that the underlying fundamental value of the investments has not suffered a permanent decline in value.

Property, plant and equipment balances increased by $570.8 million, net of depreciation, with $104.7 million of this increase in Q3. In addition to the acquisition of SML in Q2, the increase was due to continued capital expansions at Kansanshi, the Kolwezi development project and expansions at Guelb Moghrein.

Group liabilities increase on accounts payables, current taxes, future tax adjustments, and minority interests

Accounts payable increased by $137.8 million in relation to the increase in purchases, windfall taxes and capital expenditure, and the timing of payments. Current tax payable increased by $109.7 million due to the positive operating results and the increased Zambian tax rates. The future tax liability also increased due to new Zambian taxes and the acquisition of SML. Minority interests are up on positive operating results. Since the end of Q2, total liabilities were reduced by $180.4 million following the repayment of debt.

Shareholders’ equity increases on net earnings

Shareholders’ equity increased on the positive net earnings but was negatively impacted by a decline in fair value of the Company’s investments in marketable securities resulting in an “other comprehensive loss” for the year and Q3. In addition, dividends of $53.0 million were paid with $16.9 million paid during Q3.

As at the date of this report the Company has 68,750,282 shares outstanding.

Growth activities

Kolwezi development in DRC

The Board of Kingamyambo Musonoi Tailings SARL (“KMT”) (owned by First Quantum: 65%; La Generale Des Carrieres et Des Mines (“Gecamines”): 12.5%; Industrial Development Corporation of South Africa (“IDC”): 10%; the International Finance Corporation (“IFC”): 7.5%; and the Government of the DRC: 5%) committed in November 2007 to proceed with the development of the Kolwezi tailings project (“Kolwezi”). First Quantum with support from the contributing equity partners of KMT (“IDC and IFC”) will finance or procure third party debt project financing totalling up to $593 million. This satisfied the obligations of First Quantum, the IDC and the IFC under the Contract of Association to complete feasibility studies, carry out an environmental impact assessment, prepare an environmental management plan and to obtain commitments with respect to the financing of the project.

Approximately $296 million of the project budget has been committed and approximately $112 million has been spent.

Progress continued on the detailed design for the copper /cobalt plant with Lycopodium Engineering in Perth, Australia. At the end of Q3 the engineering design was approximately 92% complete and detailed drafting was approximately 84% complete. The acid plant design by Monsanto in India is approximately 76% complete. Substantial design completion for the project is estimated for the end of 2008.

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First Quantum Minerals Ltd. 08-21 As of the close of Q3, the status of completion of various project components was approximately as follows:

• overall construction – 18%; • manufacture of materials and equipment – 52%; • process plant earthworks – 85%; • process plant concrete – 37%; • erection of tankage – 32%; • structural steel erection – 5%; and • HDPE pipe extrusion – 10%.

Project construction completion and commencement of pre-commissioning is estimated for Q4 of 2009.

Commercial start-up continues to be expected in Q1 of 2010. The plant will commence operations at 35,000 tonnes of copper cathode per year and 7,000 tonnes of cobalt hydroxide per year at an estimated capital cost of $553 million. The plant is designed and constructed such that its capacity can be doubled for an incremental capital cost of $40 million. The mine life is expected to be 22 years at an annual production rate of 70,000 tonnes of copper cathode per year. The future development of a cobalt metal facility and the expansion of copper and cobalt capacity will be considered in light of practical experience on site and on commodity market conditions.

Kolwezi revisitation

The Government of the DRC announced during 2007 a review of over 60 mining agreements entered into over the last decade with foreign companies. The Kolwezi mining convention was included in this review. The Company, and its contributing partners IFC and IDC, have obtained legal advice that the convention is valid and binding and that KMT has complied with all its terms. The convention provides a dispute resolution mechanism through international arbitration.

In September 2008 the Company (as well as all other mining companies under review) received a letter from the Mines Ministry, instructing Gecamines to re-negotiate the mining contracts based on a set terms of reference. KMT was asked to attend a revisitation meeting with Gecamines and Government representatives in early October 2008. Following this meeting, a proposed amendment document was received in late October from Gecamines and further meetings are scheduled during November to finalize agreed changes. The formal revisitation process is expected to continue through this year.

Upon completion of the revisitation process, the Company intends to finalize long-term project financing for KMT in accordance with the provisions of the amended Contrat D’Association. The project debt, when drawn, will be used to repay the funding provided by the contributing equity partners to date. The balance of funding will be provided by way of subordinated shareholder loans. Financial institutions have indicated their willingness to provide this project financing once the revisitation process has been satisfactorily completed.

Kansanshi sulphide expansion project operational and producing

The Kansanshi sulphide circuit expansion project (to an annual throughput in excess of 12 million tonnes) commenced commissioning in Q2 and was ramped up to operational status in Q3. The circuit has performed very well to date, with a smooth commissioning and relatively trouble free ramp up. Expected tonnage throughput rates have been achieved and equipment efficiencies are in line with design criteria. The upgrade of the flotation cleaner circuit is still underway. Its completion by the end of the year will enable the sulphide circuit to exploit periods of high grade feed, as hourly output will be nearly doubled. The overall project construction, commissioning, start-up, and production operation has been exceptionally smooth and timely.

Kansanshi fourth 35,000 tonne per year electrowinning tankhouse completed

The construction of the fourth 35,000 tonne per year electrowinning tankhouse at Kansanshi was completed during Q3. This brings electrowinning capacity to 140,000 tonnes of copper cathode per year. The plant is not expected to produce at this rate, but the extra capacity enables the plant to exploit periods of high grade feed. It also provides protection against periods of reduced power supply.

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First Quantum Minerals Ltd. 08-21 Guelb Moghrein plant expansion project underway

Construction of the gold recovery circuit is on schedule for commissioning to start at the beginning of November 2008. The new carbon-in-leach tailings storage facility earthworks and drainage are complete and the liner installation on the first cell was completed at the end of October 2008.

Corresponding power generation requirements are being addressed accordingly with an additional generator set commissioning part complete, awaiting electrical circuit components. The pipe extrusion has commenced for the new saline pipeline from Bennichab bore field which is due to be completed in Q1 2009. Foundations civil works have commenced for the additional mill and flotation cells for the expansion project and work has commenced on the new flotation tailings storage facility.

As part of the additional mining fleet requirements a new drill rig is being commissioned, a new excavator and four new 100 tonne trucks are being assembled on site, with another excavator due to arrive by the end of March 2009 and two more trucks scheduled to arrive on site by January 2009.

Lonshi underground evaluation work underway

Preparatory work for the exploratory decline progressed well and the development of the decline is expected to commence in November of 2008. This decline will examine the mining conditions for extracting the significant underground resource at Lonshi. If underground mining is viable, the Company will study the option of transporting the high grade sulphide ore to Frontier for processing or, alternatively, for processing it in a small plant on site.

Decision on Kevitsa development deferred for further studies

The mining and environmental permitting process continued and should be complete by Q1 2009. The construction of the access road and bridges to the mine site continued. A program of delineation drilling is planned for the balance of this year and early 2009 to follow up targets identified from electromagnetic imaging. A more detailed conceptual design and capital cost estimate is planned to be complete by Q1 2009 to refine the development schedule and construction requirements. A decision to proceed will not be made until the completion of the additional work mentioned and evaluation of financing alternatives.

Outlook

Group copper production estimate for 2008 increased to approximately 320,000 tonnes

The Company expects total production of approximately 320,000 tonnes of copper in 2008. This expected production includes approximately 208,000 tonnes from Kansanshi (previously 185,000 tonnes), approximately 75,000 tonnes from Frontier (previously 84,000 tonnes), approximately 32,000 tonnes from Guelb Moghrein (previously 33,000 tonnes) and approximately 5,000 tonnes from Bwana/Lonshi (previously 8,000 tonnes).

During October 2008, total copper production was about 30,700 tonnes sourced as follows:

• Kansanshi – 20,100 tonnes; • Frontier – 8,000 tonnes; • Guelb Moghrein – 2,600 tonnes;

The Company sold approximately 30,900 tonnes of copper in October 2008.

For the 2008 year, the Company anticipates group average cash unit cost of production (C1) to be approximately $1.15 per pound of copper, implying a C1 cost for Q4 at the same level. The Company is now seeing a reduction in costs as a result of the worldwide slowdown in economic activity. Steps are being taken to accelerate the flow-through of cost reductions to existing contractual arrangements reflecting the more competitive buying environment for supply negotiations. Lower world oil prices, lower cost of sulphur and more favourable exchange rates against the USD will have a positive influence in the last quarter. The full benefit of these cost reductions is expected to be realized in Q1 2009. There will also be a reduced stripping ratio at Kansanshi, and an expected reduction in freight for exported concentrate from lower oil prices and demand for concentrate feed.

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First Quantum Minerals Ltd. 08-21 Kansanshi production forecast revised to 208,000 tonnes of contained copper

Kansanshi’s production forecast has been revised upwards following actual production for the year to date being ahead of expectations with the facility expansions allowing for increased ore throughput. Production for the last two months of the year is expected to be as strong despite the onset of the wet season and a re-evaluation of the short-term mining schedule in light of the recent reduction in copper price.

Frontier production forecast revised to 75,000 tonnes of copper in concentrate

Frontier revises production forecasts down to 75,000 tonnes of copper in concentrate due to an unplanned mill shutdown in Q3 and the anticipated effects of the onset of the wet season. Sales are expected to exceed 80,000 tonnes due to reductions in the concentrate inventory stockpiles from the previous year.

Mining performance continued to improve with preparations underway for the wet season. The rock footprint has increased in size sufficiently allowing for the larger shovels and rigid trucks, and ore stockpiles are currently being built up. The initial works commenced in September 2008 for the sinking of the dewatering shaft, which is expected to be operational by late 2010.

Bwana/Lonshi operation suspended; alternatives currently being investigated

In October 2008, Bwana Mkubwa announced the suspension of copper cathode production due to the lack of suitable economically viable ore as the DRC border closure prevented the processing of ore available from Lonshi. The acid plant will continue production dependant upon the supply of sulphur at economic prices.

Q3 copper sales subject to final settlement prices in subsequent periods; will result in negative revenue adjustment in Q4

As at the end of Q3, there were 46,734 tonnes of contained copper sold that were provisionally priced at an average LME copper price of $2.90/lb. This revenue will be subject to future adjustments as a result of movements in the copper price. Of this amount, 6,853 tonnes had the final price determined in October 2008 at $2.23/lb resulting in a negative provisional pricing adjustment of approximately $10.3 million, 13,959 tonnes will be determined in November 2008, 16,731 tonnes will be determined in December 2008 and 9,191 tonnes will be determined in January 2009. Should the copper price remain at the current level of approximately $1.75/lb, the provisional pricing adjustment for Q4 will be approximately $111 million before tax and minority interest expense.

Financing

In addition to the Kolwezi and Kevitsa project financings mentioned above, the Company is currently in negotiations with the lender to renew the $250 million corporate revolving loan facility due for repayment in January 2009. The facility is currently only drawn as to $50 million.

Reaction to changing economic environment

The start of Q4 saw a sharp reduction in all commodity prices, copper in particular. Uncertainty and volatility is continuing to be a feature of the market. Q4 2008 revenues, earnings and cash flow will all be materially lower than Q3 2008 if current copper price levels continue for the quarter. This will be as a result of lower current quarter sales revenues, provisional pricing adjustments relating to Q3 sales and any changes in asset carrying values should they be required.

In response to the changed economic circumstances management immediately initiated a range of actions which will offset some of the impact of these changes. These include suspending production at Bwana Mkubwa, enhancing operational practices to reduce operating and overhead costs, renegotiating supply contracts, improving supplier credit terms and other working capital management initiatives, and deferring non-essential exploration and capital expenditure programs. In addition world prices for key consumables and other costs have been falling as a result of the slowdown in global activity and a strengthening US dollar. These changes will feed through progressively into lower operating costs. As markets remain very volatile it is not possible at this stage to forecast the net impact of these changes on the Q4 results.

The Company is currently in discussions with banks in relation to the negotiation of new facilities for the Kolwezi development and for general corporate purposes. All existing banking facilities are in good standing.

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First Quantum Minerals Ltd. 08-21 On Behalf of the Board of Directors 12g3-2b-82-4461 of First Quantum Minerals Ltd. Listed in Standard and Poor’s G. Clive Newall President

For further information visit our web site at www.first-quantum.com

North American contact: Sharon Loung 8th Floor, 543 Granville Street, Vancouver, British Columbia, Canada V6C 1X8

Tel: (604) 688-6577 Fax: (604) 688-3818 Toll Free: 1 (888) 688-6577 E-Mail: [email protected]

United Kingdom contact: Clive Newall, President 1st Floor, Mill House Mill Bay Lane Horsham West Sussex RH12 1TQ United Kingdom

Tel: +44 140 327 3484 Fax: +44 140 327 3494 E-Mail: [email protected]. Or

Simon Hockridge Hogarth Partnership Ltd. Tel: +44 (0) 20 7357 9477

Certain information contained in this news release constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information under applicable Canadian securities legislation. Such forward-looking statements or information, including but not limited to those with respect to the prices of gold, copper, cobalt and sulphuric acid, estimated future production, estimated costs of future production, the Company’s hedging policy and permitting time lines, involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Such factors include, among others, the actual prices of copper, gold, cobalt and sulphuric acid, the factual results of current exploration, development and mining activities, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the Company’s documents filed from time to time with the Alberta, British Columbia, and Ontario Securities Commissions, the Autorité des marchés financiers in Quebec, the United States Securities and Exchange Commission and the London Stock Exchange.

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http://www.first-quantum.com/

First Quantum Minerals Ltd. 08-21 Summary of quarterly and current year to date results The following unaudited table sets out a summary of the quarterly results for the Company for the last eight quarters and the current year to date:

2006 2007 2007 2007 2007 2008 2008 2008 2008Statement of Operations and Retained Earnings Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 YTD

(millions, except where indicated) Revenues Current period copper sales (1) $243.7 $270.9 $315.7 $460.2 $448.4 $441.8 $624.3 554.7 $1,605.6 Prior period provisional copper adjustments (2) (31.7) (17.6) 22.6 3.2 (34.7) 44.5 1.2 (16.4) 44.5 Other revenues 4.4 8.0 12.5 20.4 29.6 25.2 27.1 25.6 77.9Total revenues 216.4 261.3 350.8 483.8 443.3 511.5 652.6 563.9 1,728.0Cost of sales 88.5 101.9 121.3 152.6 168.4 137.1 219.0 256.5 612.6Net earnings 60.9 78.3 123.1 183.6 135.3 182.0 208.0 147.5 537.5Basic earnings per share $0.93 $1.16 $1.83 $2.71 $2.00 $2.68 $3.06 $2.16 $7.89Diluted earnings per share $0.91 $1.14 $1.79 $2.66 $1.97 $2.65 $3.02 $2.13 $7.80Copper selling price Current period copper sales (per lb) $2.89 $2.96 $3.28 $3.58 $2.97 $3.43 $3.72 $3.11 $3.38 Prior period provisional adjustments (per lb) (0.35) (0.18) 0.23 0.02 (0.21) 0.32 0.01 (0.08) 0.09Gross copper selling price (per lb) 2.54 2.78 3.51 3.60 2.76 3.75 3.73 3.03 3.47 Tolling and refining charges (per lb) (0.08) (0.06) (0.03) (0.05) (0.06) (0.05) (0.06) (0.06) (0.06) Freight parity charges (per lb) (0.14) (0.13) (0.10) (0.10) (0.14) (0.19) (0.29) (0.27) (0.25)Realized copper price (per lb) 2.32 2.59 3.38 3.45 2.56 3.51 3.38 2.70 3.16Average LME cash copper price (per lb) 3.21 2.69 3.46 3.50 3.28 3.52 3.83 3.49 3.61Realized gold price (per oz) $628 $661 $629 $700 $736 $868 $982 $759 $862Average gold price (per oz) $614 $650 $667 $681 $788 $927 $895 $871 $897Total copper sold (tonnes)(3) 41,454 44,315 45,366 60,904 73,322 62,802 84,007 90,698 237,507Total copper produced (tonnes) (3) 46,531 46,403 49,979 57,565 72,746 75,616 80,977 82,187 238,780Total gold sold (ounces) (3) 6,944 12,004 19,422 29,182 40,081 29,071 26,797 32,663 88,531Cash Costs (C1) (per lb) (4) (5) $1.14 $1.06 $1.12 $0.98 $0.98 $0.99 $1.18 $1.28 $1.16Total Costs (C3) (per lb) (4) (5) $1.38 $1.30 $1.38 $1.22 $1.19 $1.25 $1.87 $1.90 $1.68

Financial Position Working capital including non-current

inventories (restated) $312.8 $246.7 $390.8 $464.8 $457.3 $575.0 $472.2 $440.2 $515.5Copper in concentrate inventory (tonnes) Kansanshi 9,046 7,102 10,578 9,733 8,325 14,243 16,342 14,306 14,306 Guelb Moghrein 6,068 10,182 10,897 8,483 2,867 1,057 1,546 1,765 1,765 Frontier - - - - 7,104 16,328 10,850 3,876 3,876 Total copper in concentrate inventory (tonnes) 15,114 17,284 21,475 18,216 18,296 31,628 28,738 19,947 19,947Total assets $1,719.7 $1,797.1 $2,035.4 $2,300.4 $2,682.7 $2,917.9 $3,629.2 $3,372.8 $3,372.8

Weighted average # shares (000’s) 67,287 67,318 67,531 67,681 67,689 67,837 68,046 68,370 68,085Cash Flows from

Operating activities Before working capital movements $70.6 $118.9 $175.2 $256.9 $220.8 $272.6 $303.0 $209.5 $785.1After working capital movements 129.3 74.6 40.5 201.6 224.1 143.5 316.1 262.4 722.0

Financing activities 53.1 (25.8) 38.0 (42.8) 50.6 26.0 211.0 (259.5) (22.5)Investing activities (122.8) (102.0) (114.8) (96.2) (297.3) (99.9) (403.3) (109.7) (612.9)

Cash Flows from Operating activities per share Before working capital movements $1.05 $1.77 $2.59 $3.80 $3.26 $4.02 $4.45 $3.06 $11.53After working capital movements $1.92 $1.11 $0.60 $2.98 $3.29 $2.12 $4.64 $3.84 $10.61

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2006 2007 2007 2007 2007 2008 2008 2008 2008 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 YTD

Kansanshi Production Statistics Mining

Waste mined (000’s tonnes) 7,123 5,316 6,681 6,482 6,482 3,671 10,167 10,066 23,904Ore mined (000’s tonnes) 2,380 2,600 3,371 4,650 4,867 5,433 3,306 5,027 13,766Ore grade (%) 1.4 1.5 1.6 1.6 1.8 1.6 1.8 1.5 1.6

Processing (3) Sulphide Ore processed (000’s tonnes) 1,212 1,171 1,372 1,759 1,830 1,891 1,548 2,824 6,263Oxide Ore processed (000’s tonnes) 1,080 1,263 1,499 1,465 1,538 1,455 1,541 1,562 4,558Contained copper (tonnes) 31,545 38,231 36,766 41,605 51,572 55,995 47,945 55,358 159,298Sulphide ore grade processed (%) 0.9 0.8 1.1 1.0 1.3 1.3 1.4 1.1 1.2Oxide ore grade processed (%) 1.6 1.8 1.4 1.7 1.6 1.8 1.6 1.6 1.6Recovery (%) 92 93 99 99 99 93 93 96 96Copper cathode produced (tonnes) 17,201 22,823 20,322 23,705 26,399 27,522 25,430 23,685 76,637Copper cathode tolled produced (tonnes) 1,805 5,521 12,204 14,314 16,142 8,219 13,039 13,266 34,524Copper in concentrate produced (tonnes) 10,015 7,056 3,727 3,140 8,471 16,562 9,154 16,423 42,139Total copper production 29,021 35,400 36,253 41,159 51,012 52,303 47,623 53,374 153,300Concentrate grade (%) 26.9 25.2 26.6 27.8 28.3 27.6 28.7 28.1 28.1Combined Costs (per lb) (4) (5)

Mining $0.21 $0.20 $0.24 $0.24 $0.20 $0.20 $0.36 $0.41 $0.32Processing 0.62 0.54 0.59 0.59 0.53 0.50 0.69 0.79 0.66Site Administration 0.04 0.03 0.02 0.03 0.03 0.02 0.03 0.03 0.03TC/RCs and freight parity charges 0.27 0.14 0.16 0.15 0.18 0.15 0.12 0.14 0.13Gold / Acid credit (0.05) (0.06) (0.06) (0.07) (0.09) (0.08) (0.13) (0.11) (0.10)

Combined Total Cash Costs (C1) $1.09 $0.85 $0.95 $0.94 $0.85 $0.79 $1.07 $1.26 $1.04Combined Total Costs (C3) $1.28 $1.05 $1.17 $1.13 $0.86 $0.92 $1.92 $1.97 $1.59Oxide Circuit Costs (per lb) (4) (5)

Mining $0.15 $0.16 $0.22 $0.19 $0.18 $0.16 $0.32 $0.31 $0.26Processing 0.70 0.56 0.68 0.64 0.64 0.59 0.86 1.09 0.83Site Administration 0.04 0.03 0.02 0.03 0.03 0.03 0.02 0.03 0.03

Oxide Circuit Total Cash Costs (C1) $0.89 $0.75 $0.92 $0.86 $0.85 $0.78 $1.20 $1.43 $1.12Oxide Circuit Total Costs (C3) $1.05 $0.92 $1.12 $1.02 $0.86 $0.88 $1.99 $1.96 $1.58Sulphide Circuit Costs (per lb) (4) (5)


Sulphide Circuit Total Cash Costs (C1) $1.25 $1.00 $1.01 $1.05 $0.84 $0.81 $0.91 $1.11 $0.95Sulphide Circuit Total Costs (C3) $1.49 $1.25 $1.24 $1.29 $0.86 $0.95 $1.84 $1.98 $1.60

Revenues ($ millions) (3) Copper cathodes $110.9 $175.8 $249.0 $307.1 $268.0 $305.5 $338.1 $286.2 $929.8Copper in concentrates 20.1 42.6 6.9 16.0 37.2 67.9 28.9 72.6 169.4Gold 2.8 4.8 4.7 6.3 10.2 8.8 13.0 12.2 34.0Total revenues $133.8 $223.2 $260.6 $329.4 $315.4 $382.2 $380.0 $371.0 $1,133.2Copper cathode sold (tonnes) 17,360 22,798 20,207 24,909 27,897 29,811 28,063 25,943 83,817Copper tolled cathode sold (tonnes) 1,805 5,521 12,204 14,314 16,142 8,219 13,039 13,266 34,524Copper in concentrate sold (tonnes) 8,215 9,000 250 2,696 7,927 8,981 4,393 15,830 29,204Gold sold (ounces) 4,428 7,764 7,118 9,862 16,053 11,995 11,995 18,416 42,406

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2006 2007 2007 2007 2007 2008 2008 2008 2008 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 YTD

Guelb Moghrein Production Statistics Mining

Waste mined (000’s tonnes) 1,719 1,610 1,400 1,487 1,358 1,388 1,018 776 3,182Ore mined (000’s tonnes) 400 462 539 674 650 662 626 858 2,146Ore grade (%) 1.5 1.4 1.4 1.3 1.4 1.3 1.6 1.5 1.5

Processing (3) Sulphide Ore processed (000’s tonnes) 334 410 464 509 470 517 491 511 1,519Contained copper (tonnes) 6,552 7,791 8,894 10,006 8,410 9,241 9,423 10,161 28,825Sulphide ore grade processed (%) 2.0 1.9 1.9 2.0 1.8 1.8 1.9 2.0 1.9Recovery (%) 78 83 79 81 85 83 86 84 86Copper in concentrate produced (tonnes) 5,031 6,446 7,050 8,101 7,158 7,668 8,722 8,506 24,896Gold in concentrate produced (ounces) 10,355 13,588 12,814 14,699 13,060 14,191 16,300 15,423 45,914Sulphide Circuit Costs (per lb) (4) (5)


Sulphide Circuit Total Cash Costs (C1) $1.96 $1.29 $0.71 $0.26 $0.37 $0.37 $0.71 $0.74 $0.61Sulphide Circuit Total Costs (C3) $2.45 $1.66 $1.09 $0.76 $1.05 $0.89 $1.14 $1.09 $1.04

Revenues ($ millions) (3) Copper in concentrates $5.6 $12.8 $41.2 $74.1 $55.3 $67.2 $51.1 $32.4 $150.7Gold 1.6 3.1 7.6 14.1 19.3 16.4 13.3 12.6 42.3Total revenues $7.2 $15.9 $48.8 $88.2 $74.6 $83.6 $64.4 $45.0 $193.0Copper in concentrate sold (tonnes) 1,308 2,332 6,336 10,514 12,774 9,757 7,953 8,287 25,997Gold sold (ounces) 2,516 4,240 12,304 19,320 24,028 17,076 14,802 14,247 46,125

Frontier Production Statistics Mining

Waste mined (000’s tonnes) - 888 2,857 3,619 2,810 2,195 3,740 3,433 9,368Ore mined (000’s tonnes) - 81 160 1,442 2,042 638 1,860 1,986 4,484Ore grade (%) - 1.1 0.9 1.0 1.2 1.3 1.4 1.2 1.3

Processing (3) Sulphide Ore processed (000’s tonnes) - - - - 835 1,499 1,794 1,651 4,944Contained copper (tonnes) - - - - 11,872 18,238 25,308 19,479 63,025Sulphide ore grade processed (%) - - - - 1.4 1.2 1.4 1.2 1.3Recovery (%) - - - - 73 74 91 96 88Copper in concentrate produced (tonnes) - - - - 8,712 13,437 23,136 18,687 55,260Sulphide Circuit Costs (per lb) (4)

Mining - - - - $0.41 $0.61 $0.33 $0.43 $0.43Processing - - - - 0.32 0.29 0.26 0.35 0.30Site Administration - - - - 0.17 0.15 0.12 0.19 0.15TC/RCs and freight parity charges - - - - 0.39 0.65 0.69 0.55 0.63

Sulphide Circuit Total Cash Costs (C1) - - - - $1.29 $1.70 $1.40 $1.52 $1.51Sulphide Circuit Total Costs (C3) - - - - $1.59 $2.18 $1.70 $1.90 $1.88

Revenues ($ millions) (3) Copper in concentrates - - - - $16.1 $32.6 $192.0 $137.1 $361.7

Copper in concentrate sold (tonnes) - - - - 2,684 4,214 28,615 25,660 58,489

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2006 2007 2007 2007 2007 2008 2008 2008 2008 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 YTD

Bwana/Lonshi Production Statistics Mining

Waste mined (000’s tonnes) 4,081 2,105 3,425 2,992 1,732 898 1,079 117 2,094Ore mined (000’s tonnes) 80 16 94 160 82 37 89 14 140Ore grade (%) 10.4 7.5 6.1 6.8 6.1 4.4 5.3 4.3 5.0

Processing Oxide Ore processed (000’s tonnes) 294 242 327 353 355 242 234 228 704Contained copper (tonnes) 13,037 5,007 7,653 9,819 6,787 2,279 1,778 1,935 5,992Oxide ore grade processed (%) 4.3 2.1 2.3 2.8 1.9 0.9 0.8 0.8 0.9Recovery (%) 96 91 87 85 86 97 84 84 89Copper cathode produced (tonnes) 12,479 4,557 6,676 8,305 5,864 2,208 1,496 1,620 5,324Acid produced (tonnes) 73,901 67,227 69,108 67,537 72,477 66,414 74,699 90,987 232,100Surplus acid (tonnes) 8 586 1,483 11 - 10 2,174 2,071 4,255Oxide Circuit Costs (per lb) (4) (5)

Mining $0.60 $1.49 $1.57 $1.04 $1.37 $1.65 $1.61 $1.53 $1.60Processing 0.43 1.05 0.81 0.65 0.90 2.15 3.20 1.77 2.33Site Administration 0.07 0.20 0.15 0.21 0.35 0.58 0.39 0.35 0.46Gold / Acid credit (0.09) (0.24) (0.14) (0.09) (0.17) (0.78) (1.26) (0.39) (0.80)

Oxide Circuit Total Cash Costs (C1) $1.01 $2.50 $2.39 $1.81 $2.45 $3.60 $3.94 $3.26 $3.59Oxide Circuit Total Costs (C3) $1.26 $2.92 $2.77 $2.25 $2.81 $4.13 $5.47 $3.69 $4.50

Revenues ($ millions) Copper cathodes $75.4 $22.1 $41.2 $66.1 $37.1 $13.1 $15.4 $10.0 $38.5Copper cathodes sold (tonnes) 12,766 4,664 6,369 8,471 5,898 1,820 1,944 1,712 5,476

(1) Recognized at the settlement price or the LME copper price at the end of the respective period

(2) The provisional adjustment reflects the settlement or provisional price adjustment of prior period copper sales, therefore the sum of the periods will not equal the year to date

(3) Copper sold or produced does not include tonnes sold or produced prior to achieving commercial production (4) For the definition of cash and total costs, reference should be made to the regulatory disclosures section. (5) Mining costs included in cash and total costs have been restated to reflect the removal of the deferred stripping accounting policy and the retroactive restatement of prior period balances.

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Consolidated Balance Sheets

(unaudited) (expressed in millions of US dollars, except where indicated)

September 30,

2008 December 31,

2007 Assets Current assets Cash and cash equivalents (note 3) 286.6 200.0 Restricted cash - 22.5 Accounts receivable (note 2) 340.5 272.0 Inventory (note 5) 312.6 228.4 Current portion of other assets (note 8) 141.8 12.7

1,081.5 735.6 Available-for-sale investments (note 6) 316.6 567.0 Property, plant and equipment (note 7) 1,891.3 1,320.5 Other assets (note 8) 83.4 59.6

3,372.8 2,682.7

Liabilities

Current liabilities Accounts payable and accrued liabilities (note 2) 242.7 104.9 Current taxes payable 236.9 127.2 Current portion of long-term debt (note 9) 139.3 73.7 Current portion of other liabilities (note 10) 22.4 23.5

641.3 329.3 Long-term debt (note 9) 254.2 287.5 Other liabilities (note 10) 43.7 40.1 Future income tax liabilities 302.3 224.4

1,241.5 881.3 Minority interests 345.1 215.4

1,586.6 1,096.7 Shareholders’ equity Capital stock 418.4 396.0 Retained earnings 1,471.9 987.4 Accumulated other comprehensive income (104.1) 202.6

1,786.2 1,586.0

3,372.8 2,682.7 Commitments and contingencies (notes 14 and 15) Approved by the Board of Directors Peter St George Andrew Adams Director Director

The accompanying notes are an integral part of these consolidated financial statements. For a copy of the notes visit the Company’s website at www.first-quantum.com.

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First Quantum Minerals Ltd. 08-21 Consolidated Statements of Earnings and Comprehensive Income (unaudited) (expressed in millions of US dollars, except where indicated)

Three months ended

September 30 Nine months ended

September 30 2008 2007 2008 2007

Sales revenues

Copper 538.3 463.4 1,650.1 1,055.0

Gold 24.8 20.4 76.3 40.6

Acid 0.8 - 1.6 0.3

563.9 483.8 1,728.0 1,095.9

Cost of sales (233.8) (146.5) (559.3) (365.0)

Depletion and amortization (29.9) (23.0) (75.8) (55.3)

Royalties, windfall taxes and export levies (note 3) (74.7) (6.2) (172.6) (10.9)

Zambian taxes recovery (note 3) 52.0 - 119.3 -

277.5 308.1 1,039.6 664.7

Other expenses/income

Exploration (9.4) (5.2) (19.4) (10.2)

General and administrative (9.4) (8.2) (24.3) (20.4)

Interest (5.7) (5.6) (22.2) (20.7)

Other expenses/income (note 12) 5.0 (3.6) (1.2) 3.5

(19.5) (22.6) (67.1) (47.8)

Earnings before income taxes and minority interests 258.0 285.5 972.5 616.9

Income taxes (75.5) (59.3) (308.4) (136.0)

Minority interests (35.0) (42.6) (126.6) (95.9)

Net earnings for the period 147.5 183.6 537.5 385.0

Other comprehensive income

Unrealized (loss) gain on available-for-sale investments, net of tax (205.4) 40.0 (306.7) 108.1

Realized gain on available-for-sale investments, net of tax - - - (0.5)

(205.4) 40.0 (306.7) 107.6

Comprehensive (loss) income (57.9) 223.6 230.8 492.6

Earnings per common share

Basic $2.16 $2.71 $7.89 $5.70

Diluted $2.13 $2.66 $7.80 $5.60

Weighted average shares outstanding (000’s)

Basic 68,370 67,681 68,085 67,512

Diluted 69,142 69,036 68,907 68,804

Total shares issued and outstanding (000’s) 68,751 67,683 68,751 67,683


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First Quantum Minerals Ltd. 08-21 Consolidated Statements of Changes in Shareholders’ Equity (unaudited) (expressed in millions of US dollars, except where indicated)

Three months ended


September 30 2008 2007 2008 2007

Capital stock Common shares Balance – beginning of period 440.9 404.6 415.2 399.6 Stock options exercised 0.9 0.5 6.8 5.5 Acquisition of Scandinavian Minerals Limited (note 4) - - 19.8 -

Balance – end of period 441.8 405.1 441.8 405.1 Treasury shares Balance – beginning of period (39.5) (32.9) (34.3) (15.6) Shares purchased (4.0) - (9.3) (17.3) Restricted stock units vested 7.3 2.2 7.4 2.2

Balance – end of period (36.2) (30.7) (36.2) (30.7) Contributed surplus Balance – beginning of period 18.2 15.2 15.1 12.0 Compensation expense for the period 2.1 2.5 6.9 7.0 Transfers upon exercise of stock options (0.2) (0.1) (1.8) (1.4) Restricted stock units vested (7.3) (2.2) (7.4) (2.2)

Balance – end of period 12.8 15.4 12.8 15.4 Total capital stock 418.4 389.8 418.4 389.8

Retained earnings Balance – beginning of period 1,341.3 683.8 987.4 518.8

Net earnings for the period 147.5 183.6 537.5 385.0 Dividends (16.9) (15.3) (53.0) (51.7)

Balance – end of period 1,471.9 852.1 1,471.9 852.1

Accumulated other comprehensive income Balance – beginning of period 101.3 65.1 202.6 (2.5) Change in fair value of available-for-sale investments (205.4) 40.0 (306.7) 107.6

Balance – end of period (104.1) 105.1 (104.1) 105.1

Retained earnings and accumulated other comprehensive income 1,367.8 957.2

1,367.8 957.2


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First Quantum Minerals Ltd. 08-21 Consolidated Statements of Cash Flows (unaudited) (expressed in millions of US dollars, except where indicated)

Three months ended


September 30 2008 2007 2008 2007

Cash flows from operating activities Net earnings for the period 147.5 183.6 537.5 385.0

Items not affecting cash Depletion and amortization 29.9 23.0 75.8 55.3 Minority interests 35.0 42.6 126.6 95.9 Unrealized foreign exchange (gain) loss (5.1) 2.9 (1.3) 3.7 Future income tax expense 1.0 (0.3) 40.4 3.3 Stock-based compensation expense 2.1 2.5 6.9 7.0 Unrealized derivative instruments (gain) loss (0.6) 1.2 (3.4) (3.8) Other (0.3) 1.4 2.6 4.6

209.5 256.9 785.1 551.0 Change in non-cash operating working capital

Decrease (increase) in accounts receivable and other 25.2 (59.5) (196.8) (158.1) Increase in inventory (28.1) (17.5) (108.5) (63.8) Increase (decrease) in accounts payable and accrued liabilities 53.2 2.0 142.0 (11.4) Increase in current taxes payable 7.1 20.0 109.8 16.7

Long term incentive plan contributions (4.0) - (9.3) (17.3)

262.9 201.9 722.3 317.1

Cash flows from financing activities Proceeds from long-term debt - - 294.4 75.0 Repayments of long-term debt (243.3) (25.5) (268.9) (51.1) Proceeds on issuance of common shares 0.7 0.4 5.0 4.1 Dividends paid (16.9) (15.3) (53.0) (51.7) Other - (2.4) - (6.9)

(259.5) (42.8) (22.5) (30.6)

Cash flows from investing activities Restricted cash 63.9 22.5 46.0 15.0 Payments for property, plant and equipment (138.8) (95.1) (351.6) (239.1) Acquisition of Scandinavian Minerals Limited (note 4) - - (214.3) - Acquisition of available-for-sale investments (34.8) (23.6) (93.0) (88.9)

(109.7) (96.2) (612.9) (313.0)

Effect of exchange rate changes on cash (0.5) (0.3) (0.3) (0.4) (Decrease) increase in cash and cash equivalents (106.8) 62.6 86.6 (26.9) Cash and cash equivalents - beginning of period 393.4 160.0 200.0 249.5

Cash and cash equivalents - end of period 286.6 222.6 286.6 222.6


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First Quantum Minerals Ltd. 08-21 Segmented Information (unaudited) (expressed in millions of US dollars, except where indicated)

For the three month period ended September 30, 2008, segmented information is presented as follows:

Kansanshi Guelb

Moghrein Frontier Bwana/ Lonshi Kolwezi

Kevitsa Corporate Total

Segmented revenues 371.0 45.0 137.1 44.9 - - 7.3 605.3Less inter-segment revenues - - - (34.1) - - (7.3) (41.4)

Revenues 371.0 45.0 137.1 10.8 - - - 563.9Cost of sales (202.0) (20.7) (52.7) (33.1) - - - (308.5)Depletion and amortization (20.3) (4.0) (4.3) (1.3) - - - (29.9)Zambian taxes recovery 50.6 - - 1.4 - - - 52.0

Operating profit (loss) 199.3 20.3 80.1 (22.2) - - - 277.5Interest on long-term debt (1.0) 0.1 (3.4) (0.1) - - (1.3) (5.7)Other 1.5 (0.9) (0.2) (5.2) - - (9.0) (13.8)Segmented profit (loss) before

undernoted items 199.8 19.5 76.5 (27.5) - - (10.3) 258.0Income taxes (61.3) - (19.5) 2.8 - - 2.5 (75.5)Minority interests (28.4) (3.7) (2.9) - - - - (35.0)

Segmented profit (loss) 110.1 15.8 54.1 (24.7) - - (7.8) 147.5

Property, plant and equipment 591.6 135.3 256.5 48.8 540.7 314.2 4.2 1,891.3Total assets 1,274.8 214.4 381.5 126.4 545.4 337.7 492.6 3,372.8Capital expenditures 25.5 13.6 11.6 1.4 68.6 8.1 0.2 129.0

For the three month period ended September 30, 2007, segmented information is presented as follows:

Kansanshi Guelb



Segmented revenues 329.5 88.2 - 74.4 - - 5.3 497.4Less inter-segment revenues - - - (8.3) - - (5.3) (13.6)

Revenues 329.5 88.2 - 66.1 - - - 483.8Cost of sales (93.8) (19.5) - (39.4) - - - (152.7)Depletion and amortization (13.4) (5.2) - (4.4) - - - (23.0)

Operating profit (loss) 222.3 63.5 - 22.3 - - - 308.1Interest on long-term debt (0.9) (2.2) - - - - (2.5) (5.6)Other (8.4) (0.2) - (2.0) - - (6.4) (17.0)Segmented profit (loss) before

undernoted items 213.0 61.1 - 20.3 - - (8.9) 285.5Income taxes (56.3) - - (5.3) - - 2.3 (59.3)Minority interests (30.8) (11.8) - - - - - (42.6)

Segmented profit (loss) 125.9 49.3 - 15.0 - - (6.6) 183.6

Property, plant and equipment 488.4 100.8 226.8 42.2 398.0 - 3.7 1,259.9Total assets 820.9 209.7 238.4 178.4 398.8 - 454.2 2,300.4Capital expenditures 45.7 2.9 36.0 2.2 4.9 - 3.1 94.8

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For the nine month period ended September 30, 2008, segmented information is presented as follows:

Kansanshi Guelb



Segmented revenues 1,133.2 193.0 361.7 115.9 - - 19.9 1,823.7Less inter-segment revenues - - - (75.8) - - (19.9) (95.7)

Revenues 1,133.2 193.0 361.7 40.1 - - - 1,728.0Cost of sales (468.8) (62.0) (126.6) (74.5) - - - (731.9)Depletion and amortization (48.7) (11.2) (11.1) (4.8) - - - (75.8)Zambian taxes recovery 115.4 - - 3.9 - - - 119.3

Operating profit (loss) 731.1 119.8 224.0 (35.3) - - - 1,039.6Interest on long-term debt (4.8) (0.6) (12.1) (0.1) - - (4.6) (22.2)Other (8.1) (5.7) (0.2) (8.4) - - (22.5) (44.9)Segmented profit (loss) before

undernoted items 718.2 113.5 211.7 (43.8) - - (27.1) 972.5Income taxes (234.3) - (69.8) (10.2) - - 5.9 (308.4)Minority interests (98.0) (21.9) (6.7) - - - - (126.6)

Segmented profit (loss) 385.9 91.6 135.2 (54.0) - - (21.2) 537.5

Property, plant and equipment 591.6 135.3 256.5 48.8 540.7 314.2 4.2 1,891.3Total assets 1,274.8 214.4 381.5 126.4 545.4 337.7 492.6 3,372.8Capital expenditures 103.1 42.0 34.0 12.0 136.2 314.2 0.4 641.9

For the nine month period ended September 30, 2007, segmented information is presented as follows:

Kansanshi Guelb



Segmented revenues 813.3 152.9 - 157.1 - - 13.1 1,136.4Less inter-segment revenues - - - (27.4) - - (13.1) (40.5)

Revenues 813.3 152.9 - 129.7 - - - 1,095.9Cost of sales (234.0) (37.9) - (104.0) - - - (375.9)Depletion and amortization (33.3) (10.3) - (11.7) - - - (55.3)

Operating profit (loss) 546.0 104.7 - 14.0 - - - 664.7Interest on long-term debt (9.7) (5.1) - (0.1) - - (5.8) (20.7)Other (9.7) (0.3) - (3.0) - - (14.1) (27.1)Segmented profit (loss) before

undernoted items 526.6 99.3 - 10.9 - - (19.9) 616.9Income taxes (138.4) - - (2.8) - - 5.2 (136.0)Minority interests (76.6) (19.3) - - - - - (95.9)

Segmented profit (loss) 311.6 80.0 - 8.1 - - (14.7) 385.0

Property, plant and equipment 488.4 100.8 226.8 42.2 398.0 - 3.7 1,259.9Total assets 820.9 209.7 238.4 178.4 398.8 - 454.2 2,300.4Capital expenditures 108.6 5.8 110.4 5.0 7.7 - 9.7 247.2

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