The Kanshansi concentrator produces oxide concentrates for SX/EW processing on site and sulphide concentrates for shipment to smelters. Phase 1 of the expansion is currently under way and is expected to increase production capacity to about 285,000 mt/y of copper, with completion scheduled for the fourth quarter of 2011. Work is focused on expanding the treatment capacity of the concentrator’s oxide circuit by about 20% to 8.5 million mt/y and building in flexibility to allow its mixed ore and sulphide circuits to be switched as needed to suit mining activity. The expansion will include the use of relocated equipment from the recently closed Bwana Mkubwa copper SX/EW plant as well as new installations. Phase I of the Kansanshi expansion has a capital budget of $40 million.

Phase 2 construction is expected to start in the second half of 2012, with commissioning targeted for the first half of 2014. This phase will focus on construction of a new concentrator, with planned throughput capacity of 25 million mt/y of ore. Capital spending for Phase 2 is expected to total about $350 million.

In addition to its production expansion project at Kansanshi, First Quantum has stepped up exploration drilling program on the property, with a primary focus on the Southeast Dome prospect. An updated reserve and resource estimate incorporating results from the program is expected to be released by the end of 2011. The capital budget for Kansanshi exploration drilling in 2011 has been increased to $16 million from about $3.5 million per year in recent years.

Elsewhere in Zambia, First Quantum has completed an internal study of its Sentinel development prospect that assumes a resource of at least 700 million mt, head grade in the range of 0.65% to 0.80% copper, and an annual throughput rate of 40 million mt, yielding about 250,000 mt/y of copper. Mining and processing conditions at Sentinel appear to be relatively straight-forward, supporting First Quantum’s assumption that unit cash cost of production will likely be in the range of Kansanshi’s costs. Results from the ongoing Sentinel drill program, which has 14 rigs on site, may lead to an expansion of the resource base and allow for further production expansion.

First Quantum pointed out that potential quantities and grades and other technical aspects of the Sentinel deposit are as yet only conceptual. Exploration has not defined an NI 43-101 compliant resource, and additional work will be needed to determine if the deposit will be developed as a mine.

Subject to results of the ongoing resource and mine studies, securing all relevant permits, and approval by First Quantum’s board of directors, the company anticipates the initial design and construction phases for Sentinel development could begin during 2011, with commercial production in early 2014. Capital cost to develop the project, including the necessary infrastructure, is expected to be in the range of $1 billion.

First Quantum is also evaluating possible construction and operation of a new copper smelter near the Kansanshi mine. Currently, most Kansanshi sulphide concentrates are treated at smelters in Zambia, but from time to time, due to limited smelter capacity, some concentrates are sold to third parties for export sale. The Zambian smelters are located at least 250 km from the Kansanshi mine.

Due to the substantial increase in production expected from Kansanshi and possible new production from the Sentinel deposit, First Quantum is evaluating the potential economics and options for a smelter close to Kansanshi. The evaluation is expected to be completed in the second half of 2011.