First Quantum Minerals|Profit Up 7x, Adjusted EPS Misses

The Beat That Isn't

First Quantum Minerals just posted Q2 net earnings of $136 million, up sharply from $18 million a year ago. But strip out the one-time items, and the company posted an adjusted loss of 13 cents per share, badly missing the roughly 5-cent profit analysts expected. Revenue actually beat forecasts at $1.52 billion. So which number tells the real story for a TSX name that trades on copper's next move?

The company's own filing explains the gap. EBITDA of $400 million already absorbed $164 million in losses from its copper sales hedging program, plus a $51 million negative contribution from Cobre Panamá as it prepared the mine for restart rather than earning from it. Those are structural costs, not one-off noise, and they landed in the same quarter that production actually improved.

Here is the detail that changes how a holder should read this quarter. First Quantum states there are no derivative contracts outstanding beyond June 30. The hedging program that dragged this quarter's results is now finished. From here, the company's earnings move directly with the copper price, for better or worse, with nothing smoothing the swings.

Panama's Second Life

Cobre Panamá, the mine that was ordered shut in 2023 after Panama's top court struck down its contract, is edging back toward relevance. A final government audit found the site broadly compliant, meeting 361 of 370 commitments, with an inter-ministerial committee now formed to review the findings. Site preparation has advanced enough that first concentrate production began earlier than the company had planned.

But production restarting is not the same as the mine's legal status being resolved. The company itself frames engagement with Panama's government as ongoing, seeking what it calls a fair and durable resolution. Stockpiled ore processing is generating output now, yet the underlying contract dispute that shut the mine in the first place remains an open political question, not a closed one.

This is why the adjusted EPS miss matters less than it looks. The company left full-year guidance unchanged, betting that Kansanshi's above-design throughput and Cobre Panamá's restart carry the second half, even as it flags further cost pressure of about 25 cents per pound from fuel prices and the Zambian kwacha if current conditions persist.

What The Holder Is Actually Betting On

Setting Cobre Panamá aside, the core Zambian operations are quietly improving. Total copper production rose 4% quarter over quarter to just over 100,000 tonnes, and cash costs at Kansanshi and Sentinel actually fell 3 cents to $2.48 per pound as throughput records were set. That is the operating base the market largely overlooked while focused on the headline EPS miss.

The risk case is just as concrete. Without hedges, a copper price pullback now flows straight into earnings with no buffer, and the company's own disclosure already flags a potential 25-cent-per-pound cost increase if fuel prices and the kwacha stay where they are. Two variables outside the company's control now sit directly on the earnings line.

The headline miss on adjusted EPS obscured the quarter's more important shift: First Quantum enters the second half of 2026 with improving Zambian output, a Panama mine edging back toward production, and, for the first time in years, full exposure to whatever copper does next. For a holder, that makes the stock a more direct copper bet than the quarter's numbers alone suggest, with the Panama compliance review as the checkpoint most likely to move the read from here.