Operator: Good morning. My name is Kenzie, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quantum Minerals Third Quarter Earnings Results Conference Call. [Operator Instructions]. Thank you.

Mr. Clive Newall, President and Director of First Quantum Minerals, you may begin your conference.

Geoffrey Newall: Thanks, Operator, and thank you, everyone, for joining us today. Joining me on the call today are Hannes Meyer, CFO; Tristan Pascal, General Manager at Cobre Panama; Juliet Wall, General Manager, Finance; and Simon MacLean, Group Reporting Controller. As usual, before we proceed, I will draw your attention to the fact that over the course of this conference call, we will be making several forward-looking statements, and as such, I encourage you to read the cautionary note that accompanies our third quarter MD&A and the related results release, the 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 first-quantum.com and on SEDAR.

A reminder that the presentation which accompanies this conference call is available on our website and can be accessed either in the Events section under the Investors tab or through the Q3 2019 results conference call button under the News section of the homepage. So I'll get started with some opening remarks before Hannes' review of the financial results, then we'll open the lines to take your questions. As you would have seen with our results release yesterday and in a separate one a week ago, Cobre Panama is now in commercial production. Needless to say, this is a very proud time for all of first quantum for so many reasons. Many of you would have been with us when we start -- we've begun this journey leading to the acquisition of the project in 2013.

It was a bold move on our part, but we have done extensive due diligence. We knew our capabilities and realize the value we could bring to this project. When we were able to get on site, our team applied their skills in the redesign of the majority of the project and changed just about everything that was being done before we got there. Those decisions together with our learnings from our sentinel project laid the groundwork for Cobre Panama to get to this stage in such a short time from first off through the mills. Of course, the best part is only as good as its execution.

And I have to say that our people and particularly our project team once again proved why they are leaders in our industry. During the challenging times our industry and company of face over the past few years, they somehow found a way to keep moving the project forward. So here we are today, expecting to be operating an annual throughput lease of 72 million tonnes by year-end and probably more and set to increase to the 85 million tonnes early next year. This will be achievable once the eighth mill is fully operational, which is expected during the fourth quarter. As the ramp-up continues, it is reasonable to expect Copra Panama's unit cost of production to settle in at a significantly lower rate than the current levels.

So as you can see, Cobre Panama is a truly impressive operation that is very quickly establishing itself as a cornerstone asset for First Quantum. And with that comes the added benefit of greater geographic diversity and a significant cash flow potential. Turning now to operations during the quarter, the Cobre Panama effect was clearly evident even just one month of commercial production on sales revenues and earnings. In our other main operations, Sentinel turned in another solid quarter with lower grades, offset by higher throughput, higher equipment availability and improved mill performance. Thus cruise has begun its recovery from the land slippage earlier in the year but had worked -- have to work through a failure of ball mill caused by the stickiness of the all of the oil feed, which resulted in several off days of production.

For the remainder of this year, our priorities at Las Cruces are finalizing the remediation of the mine and optimizing cost and cash flow. The research on the technical and economic feasibility of the polymetallic refinery project is also expected to continue. At Kansanshi, copper production was affected by the expected decline in grades in the oxide circuit and lower recoveries across all three circuits. Gold production, however, benefited from some operational enhancement projects recently completed and was over 25% higher compared to last year's quarter. Throughput at the smelter was lower due to upon two week shutdown, but maintained its consistently high overall copper recovery rate of 7%.

Moving on to other items. In Zambia, their proposed replacement of VAT with the sales tax announced just over a year ago was scrapped in the country's latest budget. Instead, the intention is now to make adjustments to the current VAT system. We continue to seek clarification on these changes to determine the impact on our cost structure in Zambia, which is yet unknown. You would have also seen a short news release we put out late in September confirming discussions regarding a potential sale of a minority interest in our Zambian copper assets.

As I'm sure you can appreciate, companies have these types of discussions from time to time, but I do want to reiterate, there's no guarantee that a transaction will result from them, and we won't be making any further comments on this during this call. So to wrap up my comments, it's fair to say that it's a special moment in the evolution of First Quantum as our largest and likely our most complex project to date has entered commercial production. I will also reiterate the commitment we made to take a pause from major project investment to delever the balance sheet and, in time, to reward our shareholders for their patient support of our vision and strategy. And with that, I'll hand over to Hannes to take you through his review.

Hannes Meyer: Thanks, Clive, and good day to everyone.

I'll turn to the quarterly production slide and as slide mentioned, Cobre Panama was deployed in commercial production on 1st of September. It produced 56,000 tonnes of copper and 21,000 ounces of gold in its second full quarter of production, of which 19,000 tonnes of copper and 8,000 ounces of gold were deemed commercial. This led to First Quantum's highest ever quarterly copper production exceeding the same period last year by 27%. Gold production of 70,000 ounces was 56% higher than the same period in 2018, reflecting Cobre Panama's contribution of 21,000 ounces and higher production at Kansanshi following operational enhancements. These included installation of additional gravity concentrators.

Turning to the next slide financial overview. Comparative EBITDA of $354 million reflects an 8% reduction in realized copper prices and lower volumes at Las Cruces and Kansanshi, but benefits from $67 million contribution from Cobre Panama. And an $18 million gain realized by copper sales hedge program. Comparative earnings were $0.14 per share lower than the comparable quarter of 2018 and were impacted by an interest charge of $64 million, of which $49 million relates to cash payments that would previously have been eligible for capitalization that is now expensed following declaration of commercial production at Cobre Panama. The increase in net debt reflects the Cobre Panama Capital expenditure program, which is now nearing completion.

Turned to the next slide on quarterly unit cash costs, Cobre Panama in its first month of commercial production delivered a C1 of $1.34 per pound and all-in sustaining cost of $1.56 per pound, an amazing result in early stages of commercial production. And over time, we expect the cost structure at Core Panama to improve as throughput and production levels increase. Overall, year-to-date, copper C1 and all-in sustaining costs were within full year guidance. Copper C1 cost of $1.36 per pound was $0.05 higher than Q3 2018 and $0.04 higher than Q2 of this year. Lower production at Las Cruces and Kansanshi impacted group C1 by $0.04 and $0.02, respectively.

All-in sustaining costs was impacted further by timing of sustaining capital expenditure at Kansanshi as well as the increased Zambia royalty rate. Turning to the copper hedging program slide. The company continues with its hedge program to ensure stability of cash flows, while maintaining compliance with financial covenants. As of today, the company had 50,000 tonnes of zero cost collar -- collars with maturities to February 2020, at a weighted average price of $2.65 per pound to $2.81 per pound and 37,500 tonnes of unmargined copper forward sales contract at an average price of $2.66 per pound. With maturities up to December 2019.

Approximately 1/3 of remaining expected copper sales in 2019 are hedged to end margin forward and 0 collars sales contracts at an average floor price of $2.65 per pound. The company also has an end margined nickel forward sales contract of just over 12,000 tonnes at an average price of $6.77 per pound outstanding with maturities through to February 2021. Turning to the next slide on debt and liquidity profile. The company ended the quarter with $406 million of net unrestricted cash and cash equivalents, in addition to $470 million of committed undrawn facilities and is compliant with all financial covenants. Taking into account forecast operating cash inflows, capital expenditure outflows and available committed facilities.

The company expects to have sufficient liquidity through the next 12 months to carry out its operating and capital expenditure plans and remain in full compliance of its financial covenants. Company continues to take action to manage operational and price risk and further strengthen the balance sheet. The total VAT receivable accrued by the company's Zambian operations at the date of claim was $823 million. The carrying value at the end of the quarter was $412 million, reflecting the devaluation of the Zambian kwacha, which resulted in $226 million decrease and an application of discount for the time value of the total receivable to expected repayment of $185 million. All Zambia VAT balances are now categorized as noncurrent.

A finance charge of $25 million had previously been recognized to reflect the impact of discounting the balance of the expected time frame to repayment and a further $160 million finance charge was recognized in the quarter, representing the discounting of all Zambia VAT balances over the expected time frame to repayment using a, Zambian kwacha local risk-free rate. The company is in regular discussions with the relevant government authorities and continues to consider that the outstanding claims are fully recoverable. Turning to the next slide, is Zambia budget. In its 2020 national budget presented on the 27th of September, the government of the Republic of Zambia announced that the sales tax, which was intended to be introduced in January 2020, will no longer be implemented. And the current VAT regime will be maintained.

The budget included certain changes to the rules on VAT non deductions, which are listed out in the slide and in the MD&A. Detailed guidance on these changes has not yet been issued by the Zambia revenue authority. And total further clarification is given on definitions and rules, it's not possible for us to communicate the exact impact of these proposed changes. However, we anticipate that the impact on C1 will be less than the previously proposed sales tax. Turning to the next slide on capital expenditure.

Guidance on total Cobre Panama project capital expenditure remains unchanged at $6.7 billion and expenditures in the quarter for the project was $183 million. It's also important to note that capitalized pre-commercial operating results at Cobre Panama excluded from these tables and excluded from guidance, and it resulted in a cash inflow and a reduction of the capital program of $137 million for the quarter and $91 million year-to-date. Guidance for the company's sustaining and other projects includes expenditure relating to Cobre Panama, which includes expenditure to enable commencement of the expansion to 100 million tonnes per annum capacity, including the initial development and engineering work, allowing for mining to proceed to the Colina pit. Other projects in 2019 include the trolley assist expansion at Sentinel, remediation work at Las Cruces following the January land slippage and cost associated to allow the restart of Ravensthorpe. Cobre Panama depreciation commenced in September following the declaration of commercial production.

And it is expected to range between $145 million to $165 million in the four months ending 31st December, 2019. And just a last comment on guidance. In terms of guidance, we've reaffirmed our 2019 guidance. We only typically update guidance once a year for the outer years, and that's normally in February of each year, following completion of the review and the approval of the longer-term plan. So to avoid a misunderstanding, we only published updates to the outer years in February going forward.

Thank you. And with that, I'll hand back over to Clive.

Geoffrey Newall: Thank you, Hannes. So operator, if you could open the lines for questions, please.

Operator: [Operator Instructions].

Our first question comes from the line of Orest Wowkodaw with Scotiabank.

Orest Wowkodaw: A couple of questions on Cobre Panama. First of all, pretty impressive cash costs in that September month of $1.34. Do you think those are sustainable over the next 12 months? Or could we actually see those maybe trend higher because of lower grades in the short-term before they move lower towards that $120 million number longer term?

Geoffrey Newall: I think Tristan would be happy to answer that one.

Tristan Pascall: Thank you for the question.

Obviously, we were very happy with the performance in the year-to-date. And I think it is sustainable is the short answer. Yes, for the rest of the year, the project does continue in ramp-up. Our guidance remains firm. And I do think that next year, you will see the numbers reduce from this level, exactly where it ends up by the end of the year in the first quarter or the fourth quarter.

We haven't got a firm indication that we're providing at the moment, but I think it will be at these levels or near about. And next year, trending lower as volume. And the rest of the ramp-up continues, as Hannes said.

Orest Wowkodaw: Excellent. Interesting, can you give us some color on what the gold grade and recoveries were in the third quarter?

Tristan Pascall: Yes.

We can -- certainly, they're in line with what we expected. So the first of all is the point of the disseminated grade that reports to the concentrate stream. The disseminated gold is in line with what's in the 43-101. We've seen a slight positive recon, both in terms of tonnes and grade of gold that's available, but for the purposes of what we're speaking about here we just referred to the 43-101 number. The recovery is in line with what we expected, which was in the order of 50% to 55% of that disseminated goal, which is it's absolutely in line with what we expected in the 43-101.

In terms of the nondisseminated gold, that is the gravity gold, we had our first pour from the gold gravity plant in September, so that is gold that we're not able to statistically estimate in terms of our requirements for the 43-101. We're not really giving an indication as to what we expect the recovery to be available from that gravity circuit, but it was -- we're certainly achieving gold production from the gravity circuit. And as we get some historicals under our belt, I think we'll be able to produce more guidance on what that gravity gold production will be longer term.

Orest Wowkodaw: That's excellent. Thank you, Tristan.

Can you provide the same color on silver?

Tristan Pascall: The silver was, I think, slightly below what we'd said in the 43-101 in terms of recovery, but in global picture, it wasn't materially different from what we said in the 43-101.

Orest Wowkodaw: Okay. And then finally for me, just a question for Hannes. Now that you've reached commercial production at Cobre. Can we -- are there plans to now go and term out the debt, so your maturity schedule matches or is more aligned with the life of mine at Cobre Panama?

Hannes Meyer: Orest, as we tend to look and manage the debt profile so with Cobre Panama coming along, I mean, there was a big achievement for us.

Now we'll continue to look and manage the debt where appropriate market conditions allow. We'll look at addressing some of the nearer term maturities.

Orest Wowkodaw: Okay. But is that the ultimate goal, I suppose, to term out these maturities to better match the production life of Cobre?

Hannes Meyer: Well, look, I think the production life of Cobre is quite a long time. So we'll -- what we'll do is you -- I mean, the objective stated is that we'll reduce overall indebtedness.

So that is still a key objective for this company. But then we'll look at addressing the maturities as well and term out some of those debt and roll it into longer-term maturities.

Operator: Your next question comes from the line of Matthew Murphy with Barclays.

Matthew Murphy: Just had a couple of follow-ups on those questions. So good to hear that, that cash costs sound sustainable.

But I was wondering on the Q3 results, it looked like there was a 63 million finished goods credit against cash costs. Can you just explain how we should think about that?

Geoffrey Newall: We're just quickly looking that up. Do you have another one, Matthew, whilst we're just looking at those numbers?

Matthew Murphy: Yes, it's on Page 46 of your MD&A. My other question on Cobre Panama, would just be on that grade profile that the technical report has the grade dropping towards $0.41. So you're in better grade rate now, how applicable should we think about that $0.4 versus the $0.5 or thereabouts that you were running in Q3?

Tristan Pascall: Yes.

Thanks, Matthew. Yes, so certainly, we do see the grade and partake ahead towards more of the $0.41, which is in the technical report. And that's the line that we're seeing in the ore body in terms of the grade control too. Does that answer the question?

Matthew Murphy: Yes. Yes, that's great.

I mean, in terms of inventory, I mean, there was quite a big movement in the quarter on finished goods for Paper Panama. So it's correct that you'll see that it was higher and it came down to a relatively low level at the end of Q3?

Geoffrey Newall: Yes, I can give some color to that, Matthew. When we started, we weren't. The -- certainly, the run-up of the first shipments out of the port was an interesting exercise. I think we will and truly have that behind us.

We've shipped 11 shipments, but we did see high stock levels in the shares when we first started up the port. And what we've been able to do is deplete that shed now down to virtually 0. And we just run that as empty as we can at the moment, depending on each -- the volume of each ship coming.

Matthew Murphy: Right. Okay.

Sorry. Go ahead.

Tristan Pascall: Within the C1, we typically exclude any movements in finished goods, just from that production metrics. So that's what you're seeing there is the movement in the finished goods inventory that's just coming through on that reconciliation between our cost of sales and the C1 cost.

Matthew Murphy: Right.

Okay. Okay. So I mean, part of the reason I'm asking is trying to figure out if there's any funnies in that number because you're running at only 63% of the 85 million tonne per year nameplate. And so I would have thought there would be more sort of fixed cost allocation driving that number higher for September. So I guess what I'm trying to ask is, could the $1.20 by 2020 to be conservative.

Tristan Pascall: So is there a downside possibility on our cost profile? Yes, I'm pretty optimistic about our costs. I think we can do better. I'll just point out that commercial production, you'll recall, is around just the seven mills that we have in place. So that's the 72 million tonnes per annum, we only expect to be at 85 by the end of the year, that doesn't add dramatically to my fixed cost profile. Our fixed costs really on labor and repairs and maintenance.

We don't yet have the eight mills. So we don't have the repairs and maintenance there. And in terms of labor, I'm at about 83% of my permanent workforce. I'm carrying a little bit more coming over from the project in camps and in the TMF at the moment, but those will be sorted out in the next month to two months by the end of the year, I expect, and then we should be much closer to our steady-state number by mid-2020. So there's not a dramatic difference in fixed cost profile.

I don't expect from here to the 85 million case.

Operator: Your next question comes from the line of Ralph Profiti with Eight Capital.

Ralph Profiti: It's certainly been impressive to watch things come together so well at Cobre Panama. Tristan, my question is, where is the daily throughput now? Or maybe you can give us sort of an exit rate at Q3. The reason I'm asking that is in the context of sort of 70 to the 85 scenario and the 100 million tonne expansion scenario, would it be too far of a stretch to get close to that 100 million tonnes without incremental capital.

We see the enablement of that capital in the $6.7 billion, but I would like to know your current thinking there on the expansion.

Tristan Pascall: Thanks, Ralph. So the question in terms of where we're at now and what we need to do to deliver the 100 million tonne case in terms of capital. There's a number of decisions that we will follow over the course of 2020 and 2021 towards that decision. The first is that we will look at the ninth mill and whether we need to add that on, which is a ball mill and whether we need that in the comminution circuit.

There are some questions around mine fleet and whether we will need additional shovel and trucking capacity. But the main decision is really whether we do need to go to Colina and when we need to go to Colina in terms of delivering the 100 million. We can possibly do that from Vertica, but there is a possibility of congestion. In the meantime, we -- the TMF is a major element that we'd like to get underway. It started now, and it started in earnest in terms of delivery of the cyclone, the downstream cyclone in Sandoval, but we want to see that progress well before we are spending the capital towards the 100 million case.

So it's limited in the flotation area limited in most of the plants, except around the possibilities in milling. And then what we do on the conveyors and the crushing circuit to Colina.

Ralph Profiti: Okay. Okay, great. And if maybe I could switch over to Clive with a question on Kansanshi and Zambia.

Clive, can you update us on the smelter situation in the copper belt? And when we could start to see some asset availability freed up? And when we can start to see those oxide grades come up again? Or are these relatively low grades or at least lower against my expectations, going to be the way forward at Kansanshi?

Geoffrey Newall: I think the smelter capacity, it's still a sort of moving targets in that it's -- a lot of it is about what happens to the other operators, Mopani and KCM. And thus, some extent, Lumwana. So from our point of view, we have sufficient capacity right now, and that is likely to continue. But when we are considering the S3 if and when we make a decision to do anything about that, then there is the consideration of another smelter. We are working on a concept whereby we would not need another smelter to do the S3, but that's still a work in progress.

But for the time being, we're in reasonable shape.

Tristan Pascall: Look, I think, Ralph, in terms of the oxide grade, I mean, Kansanshi will decrease in the next few years. I mean, as we deplete those oxides. So I mean, you will probably see that coming at these levels. So sort of for a while.

I mean, you get pockets in the pit, we really do get high grades, but in the longer run, you'll see a depletion of the oxide grades. I think asset -- I mean, we do utilize the asset from our smelter in terms of the circuit. So we do make use of the asset as well. It's just when we've got more higher gain asset consuming material that we do stockpile that a bit and wait a bit for that. Of course, before we treat that.

Operator: Your next question comes from the line of Greg Barnes with TD Securities.

Greg Barnes: Tristan, this cash cost question at Cobre. Perhaps another way to go at it would be unit cost per tonne? Where are they now? And what were they versus what are they versus your expectations?

Tristan Pascall: Thanks, Greg. I don't think we've published numbers on that. But certainly, in terms of mining costs, they're right on our expectations.

In fact, we had through the course of the project advance, the mining at Cobre Panama so that we exposed a lot of the ore body and have it available for the remainder of 2019 and 2020 production. Because we've advanced that so much, we actually slowed up mining in the last few months just to preserve cash, rather than mine ore to the stockpile. We were somewhat all bound really and waiting for the process plant. But the cash costs per tonne of that mining exercise are right on track. And certainly, we see it heading towards a number that will compete globally.

It's all-electric mine fleet, we control our power cost and we have very large trucks that operate efficiently, and we'll go on to trolley assist certainly by the end of this year. And all of those are helping our cash cost in the mine. In the process plant, we are on track with what we had envisaged in the 43-101. We have early on, seeing a few differences in, for example, growing media, labor costs and so on, but they're not really material in the scheme of things, it's really around a first field of that grinding media and getting the ball mills up and running and established. I think that now we're starting to see a much steadier profile and track record of those consumption rates, and I'm confident in the numbers.

What we do see is the port coming into its own in terms of delivery to our site and the freight costs that contribute to our costs are very effective, very efficient compared to, for example, as they are in Zambia. That is a major differentiator for this project. And the power costs around the current coal price are very competitive, and we're very happy here around that side of things that's certainly below where we had expected things to be in the budget. Coal price, as you will be aware, are very low at the moment. Yes.

That covers the main ground, the main categories of it overall, remain confident in the levels that we've done so far. As I said, I'm not giving exact numbers to the end of the year. But I think by next year, we see a lot of opportunity to reduce the cost further.

Greg Barnes: And what about the labor situation on citrus, is -- I know there were some challenges during the construction phase. But now, how do you feel about things?

Tristan Pascall: Yes.

Thanks, Greg. It's been a major exercise in terms of training with Panamanians. We're seeing that training and the acceptance of a mining culture and so on has been very good in Panama, but we are unwinding a major construction project from a peak of 16,500 people. And so those redundancies do have an impact on the people around us and the communities and so on. We're working closely with the government authorities.

We're working closely with the communities around us. The 22 villages that are in that project affected area. We have all of those people on at least for access and for training and for progression into opportunities that we do have available in the permanent operating staff, and we look to make sure that the villages around us are supported. It will be an ongoing challenge, Greg, because we are unwinding. But I think that in Panama, there is an understanding of construction, the country itself is built itself really on major construction projects that Canal, a lot of cement and industry residential, commercial building construction, there is under a sort of brute understanding of how construction project works.

But it will be a challenge until we get to the sort of steady state operations numbers around redundancies and getting to that steady state like the number.

Greg Barnes: Okay. Thanks, Tristan. Just one final follow-up, maybe for you and for Clive Law 9, what are the next steps that you see happening?

Tristan Pascall: Sure. So look, Greg, the dialogue is ongoing.

So there's been some very constructive meetings with the ministries involved. Obviously, there was a handover to the new government, they're now through 100 days in office, and we've seen a very positive impact of that new government in the economy. And what they're doing in Panama. They've made the direction clear. They're interested to have mining.

That message has been reiterated to us numerous times, supportive of mining. We do need to clear up this Law 9 topic. The government is aware of that, and they have voiced that many times. The dialogue that we're having with them is around to educate the new government on where we stand in the current position. But in terms of timing of when that will be resolved.

I don't have a picture of that at the moment. But there is a clear willingness and understanding that it does -- it does need to be resolved.

Operator: Your next question comes from the line of Lawson Winder with Bank of America.

Lawson Winder: Just a couple of questions from me. Just first off, to follow-up on your commentary around the S3, Clive, you mentioned that you're working on a solution that would not require a smelter, which obviously would be quite capitally beneficial in the sense that the capital would probably be much less.

Just curious if at this point, you can update us maybe on the capital that would be needed for a -- for an S3 expansion without a smelter versus perhaps with?

Geoffrey Newall: Lawson, I mean, this, as I say, this project is it's just a project at the moment, we're thinking about. And of course, there are other political issues, we need some fiscal stability before we invest anything, whether it's a new smelter or a smaller project. But the -- a new smelter is the differentiator between the two is essentially it's $1 billion. Or thereabouts because what a new smelter would cost. So it's a major item.

If you don't have to build that. The project is certainly a much better project. So -- but it's a work in progress.

Lawson Winder: Okay. That's very helpful, that the $1 billion figure.

And then just moving to one of the other projects. Haquira, you mentioned in the text that the access agreement had been successfully renegotiated. I'm just curious, does this mean that you can now start drilling? Or what has to be done before you get to a point where you can drill?

Geoffrey Newall: There are still quite a few permitting issues to hoops to go through before we can actually go on the ground there, Lawson. But we are doing -- we're still working there. We're still working with the communities.

And at some point, hopefully, we'll be able to go in and really understand the nature of the ore body that we've got. So it's -- it makes it still an early stage project is really the point.

Lawson Winder: Yes. Okay, that's fair. That's helpful.

And then just finally, on Ravensthorpe, I mean, it sounds like your just steps away from starting up the plant, do you have a good idea of when the plant will start-up and what the ramp-up might look at look like next year? And then ultimately, what's throughput, do you see the Ravensthorpe getting to by the end of next year?

Geoffrey Newall: I think, I mean, we are looking to starting up in Q1 next year, I think, is still the case, isn't it? And I think we're budgeting for around 20,000 tonnes next year of nickel or thereabout and 25,000 going forward. Is that right?

Juliet Wall: 25,000.

Geoffrey Newall: 25,000 plus.

Juliet Wall: So probably up on a monthly production level of about 7 million a quarter.

Geoffrey Newall: Yes.

Just as the grade is slightly lower than we'd mined historically. So the production just fluctuates with grade.

Lawson Winder: So I'm hearing that the ramp-up would be fairly quick?

Geoffrey Newall: Well, our experience to date is, yes, once you fire up the core of that project. The leach, the high-pressure leach, the sulfuric acid plant and the power station. It went -- it ramped up to production very rapidly.

Juliet Wall: Yes, I think they're saying between five and six months to get to approval and then just finally on that.

Lawson Winder: And then just finally on that, I mean, it struck me that the CapEx that you've been spending at Ravensthorpe teams relatively very, very low, like $1 million in the quarter, how much is left to spend before it ultimately starts up?

Geoffrey Newall: Well, the main -- we can start-up in the existing pit, but there's only a couple of years left of resources in that pit. It's the move to the next pit that is where there is capital expenditure. And the largest component of that is an overland conveyor, including a bridge across a highway to the next ore body. So we haven't put in the public domain, the estimated [indiscernible].

Juliet Wall: I think on previous calls that it was given an indicator, what do we issue is about 60 million.

Geoffrey Newall: 60 million?

Juliet Wall: So that's not this year.

Geoffrey Newall: No. These numbers are still soft. So we'll inform the market when we have the firm numbers.

Lawson Winder: Yes. I know, that's great. And then would you imagine the cash flow from Ravensthorpe, then ultimately paying for the pre-strip in Shoemaker Levy and the overland conveyor, and then the other incidental CapEx?

Geoffrey Newall: The nickel price stays at the current levels, hopefully.

Operator: Your next question comes from the line of Matthew Fields with Bank of America Merrill Lynch.

Matthew Fields: Congratulations on commercial production on Cobre Panama.

I appreciate that you can't comment on any potential transactions, given that they might not happen and whatnot. But if there were a sale of a minority stake in your Zambian assets, what would you use those proceeds for?

Geoffrey Newall: Well, it's all about deleveraging. That's the priority.

Matthew Fields: Okay, great. And then understanding your sort of 21 bonds are callable at par now, your 22s are not until callable at par until May of 2020, would you focus with cash flow generation and any kind of proceeds on bank debt, more so than the front end of your bond maturity curve?

Tristan Pascall: Matt, the 21s are callable at par, and I think it's 15th of February next year.

So currently, it's at 101 still. I mean, so that's just an exercise that you have to do. If you do get a chunk of cash in now just going through the economics? And is it better to pay up a 101 or just use it to use the proceeds current or use the process currently just to repay revolver, and you can always draw on that in the future. But yes, I mean, it's -- we could either avenue available, either calling the bonds or just repaying some of the revolver, which remains available to draw in future then.

Matthew Fields: So maybe a combination of paying down bank debt and terming out bonds, is that probably the better way to think about it?

Tristan Pascall: Yes, yes, that's one of the ways to think about it, yes.

Matthew Fields: Okay. And then just -- you sort of said that the gross debt you want to reduce by has been about $2 billion. I know it's kind of your gross debt levels have fluctuated. Can you give us an update on how much you want gross debt to go down by before you start in major projects again?

Tristan Pascall: Well, I think it's probably still the number that we do want to reduce that by the sort of $2 billion number. Yes.

So we do want to absolutely reduce the debt level.

Operator: Your next question comes from the line of Liam Fitzpatrick with Deutsche Bank.

Liam Fitzpatrick: Most of my questions have been answered, but two more detailed ones on tax and working capital. Just on tax, I appreciate the uncertainties in Zambia. But if you're guiding at 45% for 29 [ph] for the group.

Should we be expecting a similar or potentially materially higher rates for 2020 based on your current understanding of the new rules? And then linked to that, I think before you said the sales tax would increase costs by $150 million to up to $200 million. Is it your expectation that the overall impact of the new VAT rules, whether it's through C1 or tax will be a similar type of magnitude? And then secondly, just on working capital build. Have we seen most of that now with the ramp-up? Or could more come through in Q4?

Tristan Pascall: I think whilst Juliet and I were just looking at the corporate tax rate. I think on the sales tax and the VAT changes, I mean, we don't expect the same outflow as we had before, the sort of $152 million to $200 million number. So it should be less than that number.

Yes. So I mean, I had to quantify the number now, but it should be quite a bit less than that previously assumed number. In terms of working capital, we do you expect some increase in Cobre Panama consumables over the next 2, 3 quarters. It's not going to be $50 million, probably $20 million, $30 million or something like that, $20 million. And then in terms of finished goods and receivables, you might see just depending on weather conditions.

I mean, we try and do our shipments early in the quarter for the long receivables before quarter end, just to get the inventory off hand, but when you get a weather delay, there might be an impact on that. So you might get some fluctuations. And the way to think about it, if shipments probably, on average, about 10,000 tonnes of contained copper. So if there's a light shipment, you're looking at maybe $20 million, $30 million of working capital. Swing of that quarter or if there's a shipment, but you don't have the receivable in as maybe a $50 million, $60 million on the receivables.

So we try and manage that, that we don't run into that over quarter end, but that might happen in the future, but that's some. It's not a permanent sort of outflow there. And then, I don't know, Juliet, that you would like to have the corporate tax number?

Juliet Wall: Well, I mean, yes, I mean, its' obviously quite difficult in terms of looking at the tax because of the impact of the nondeductibility of that in royalties is pushing it up at the moment and also. But as a contribution of Panama increases, yes, the effective tax rate should be reduced gainfully.

Liam Fitzpatrick: Okay.

Actually, I have one -- just one brief follow-up on Cobre. I may have misheard, but the comments earlier, are you now suggesting that gold production into next year and 2021 could be higher than what we read in the technical report?

Tristan Pascall: Liam, no, not significantly higher. I think we just saw a positive recon in terms of the ore body model both on grade and tonnes. But in terms of production, I don't think it's materially different from the 43-101.

Operator: Your next question comes from the line of Brian Lalli with Barclays.

Brian Lalli: Maybe first as a follow-up to Matt's question. A couple of questions ago. I appreciate you talked about the $2 billion target, but I think to his point, debt balances are up over $1 billion of the period, obviously, that ties to the cash flow burn as Cobre wraps up here, but is it possible to get maybe what that ultimate goal is on the debt balance? And maybe is there a net leverage metrics to keep an eye on? And then I'll have a follow-up.

Hannes Meyer: Brian, I mean, we've stated in the long term, we want to get below 2x net debt-to-EBITDA ratio, so I think that's a target that you should look at reduced the debt by $2 billion, and I'm going to stick with that number. So I mean, you could try and sickout no more numbers, but that's the number I will give you.

And then twice net debt to EBITDA. So those are the numbers I'll give you.

Brian Lalli: Okay. I appreciate that. And then yes, Hannes, maybe as you approach this inflection point on cash flows.

Is it possible to walk through for the group, maybe some of the key cash outflows in 2021? And we know CapEx as you have in their slides, it's still budgeted at $850 million, but I think it would be helpful to get some high-level guidance around cash interest expense, taxes, working capital, debt amort, just to frame up all the fixed charges against this improving EBITDA profile, just so we can keep our eye on how that cash flow trends over these next couple of years in relation to those debt reduction targets that you talked about?

Hannes Meyer: I think that more -- there's a slide in that with the detail in terms of debt amount in there. Cash taxes, we're probably looking at about -- it's probably a little bit less than $60 million, $55 million or so, probably $50 million and is a little bit less than $600 million per annum. Sort of the interest -- the cash interest, and that should be reducing. Working capital shouldn't change dramatically over the next while. So you're going to see major shifts in that.

There's a little bit more in Panama, but that shouldn't change much. CapEx will provide guidance end of Q4 in terms of the new capital. So we're just sticking with the numbers we provided earlier this year for year two and three of the sort of $850 million. I think there's not much else. What else don't I cover then.

Brian Lalli: Yes. There's $95 million a year that goes still to LS-Nikko as well, right, just again in terms of our cash flow build up?

Hannes Meyer: Sure. Yes, that is correct. So November every year. So this -- in this month, we'll have another, give or take, $100 million going out.

Operator: Your next question comes from the line of Raphael de Souza with CIBC World Markets.

Unidentified Analyst: Most of them have already been answered, but one last one. So you mentioned that the construction of the moly plant has been rescheduled for the first half of 2020, I was just wondering if you could remind us of what was the original plan? And if there are any impacts to operating costs and/or capital costs due to this change?

Tristan Pascall: Sure, Raphael. I'm just struggling to recall the original schedule, but I think it was originally way back in 2013. It was just part of the current project.

In terms of capital, there's no real change. It's part of the existing commitment. It's included in that $6.7 million. In terms of timing for that, all of the equipment is on site, all of -- it's really delivered, it's lying on the site. In fact, we've cast the concrete for that facility already.

So it's really just the labor around erection and commissioning of that facility. In terms of operating cost, it doesn't really have much impact on our business. We expect at current moly prices to have a marginal cash inflow from it around $1 million a month as an order of magnitude. So it's not a significant contributor, but it will pay for itself. It's really around that we can tune the level of moly and concentrate for our customers.

We do expect at times to go through zones of higher moly in the pit. We haven't seen that as yet. We do -- we have encountered two higher zones, but they haven't been of any significance in terms of the impact on our concentrate quality. But the moly plant will be able to give us that flexibility if we do see zones with much higher moly grade. Does that answer the question?

Operator: Your next question comes from the line of Paul Cleary with AIG.

Unidentified Analyst: Just to come back to the question on Law 9. So you guys obviously have no timing on it yet, but you're kind of in active discussions with the new government there. Is there any color or any idea of how this settles in terms of the structure? Is it going to be -- end up being some sort of tax or royalty change? Or will it be a one-off payment? Or will there be some sort of settlement to kind of resolve the issue around the origination of the mining concession and everything that's happening there. Just any color on how we should think about how that resolves itself?

Tristan Pascall: Thanks, Paul. No, we don't really have -- we haven't given a firm opinion on that yet.

I'll just make the comment. Law 9 is a stability agreement. What it said was in 1997, when the -- when the investment structure for Cobre Panama was developed by the two parties, that being the government of Panama and the investment mining company. Law 9 was the basis by which the mining regime, the mining concession that was in place at that time relating to royalties and taxes and so on, all Law 9 says is those are held constant. So in terms of the discussions at the moment, that is around the discussions.

But no, we haven't given any guidance on what the settlement or otherwise might be.

Operator: This concludes our Q&A session for today's call. I will now turn the call back over to Clive Newall.

Geoffrey Newall: Thank you, everybody, for attending today, and we look forward to speaking to you at the end of the next quarter. Thanks, and goodbye.

Operator: This concludes today's conference call. You may now disconnect.