TSX Commentary

FM’s Board has approved the development of the Kevitsa nickel-copper-PGE project in northern Finland. The project will include an open pit mine and concentrator with capacity of 5 million tonnes/yr. Detailed engineering is to start before year end with commercial production targeted for mid-2012. All material mining permits have been received. Kevitsa has a mineral reserve estimate of 107 million tonnes grading 0.272% nickel sulphide and 0.418% copper using a nickel sulphide cut-off grade of 0.147%. The mine has an estimated life of 20 years. A copper concentrate and a nickel concentrate will be produced. Gold values will report to the copper concentrate and PGE’s to the nickel concentrate. Off-take agreements have yet to be arranged. Capex is estimated at approximately $400 million. Financing is expected to be a combination of equity and debt. Over the longer term, RBC CM believes that First Quantum offers investors the potential for continued superior returns based on its low cost profile, growth potential and management’s project execution expertise. However, in the near term there may be downside risk to the share price given potential negative headline risk surrounding the Kolwezi mining contract revisitation. Upside share price potential may also be limited until issues around smelter availability in Zambia and gold production at Kansanshi, and their effects on costs, are resolved.