First Quantum Minerals (TSX:FM) has been on a remarkable trajectory over the past year. Its stock price nearly doubled in value, up 96% at writing. This dramatic surge reflects a combination of strong financial results, strategic initiatives, and improved investor sentiment. Despite some market challenges, the Canadian stock has positioned itself as a standout in the mining industry, thus making it a compelling option for investors looking for exposure to copper and other base metals.

What happened

The year's performance can largely be traced back to the mining and metals firm's strategic moves and operational resilience. In the third quarter of 2024, First Quantum reported net earnings attributable to shareholders of $108 million, or $0.13 per share, alongside adjusted earnings of $119 million, or $0.14 per share. This marked a significant turnaround from the second quarter, which had been marred by a net loss of $46 million. The rebound was driven by stronger copper and gold sales volumes and the company's ability to adapt to fluctuating market conditions. Revenue for the third quarter, although down year-over-year due to softer copper prices, was sufficient to support operational stability and drive profitability.

Yet earlier in the year, First Quantum faced challenges. The first quarter of 2024 was particularly difficult, with the Canadian stock posting a net loss of $159 million, or $0.21 per share, and adjusted losses of $154 million, or $0.20 per share. The losses were largely attributable to lower copper production and higher costs. However, the company's management acted decisively by implementing a comprehensive refinancing package, which significantly bolstered its balance sheet. This move provided much-needed liquidity for ongoing and future projects, particularly the ambitious Kansanshi S3 Expansion, a cornerstone of its growth strategy.

The market has recognized these efforts, with First Quantum's stock climbing steadily throughout 2024. The near doubling of its stock price over the year underscores growing confidence in the company's ability to deliver on its strategic goals despite a challenging global environment for base metals. But is more to come?

What to watch

A closer look at the Canadian stock's operations reveals a strong foundation for future growth. First Quantum continues to advance its S3 Expansion project. This is expected to significantly increase copper production at its Kansanshi mine in Zambia. The Canadian stock has also been proactive in addressing challenges, such as power supply restrictions in Zambia, thus ensuring that its operations remain resilient in the face of external pressures. Plus, the Canadian stock secured new derivative contracts to hedge against price volatility, along with a $425 million loan facility to support its capital expenditure requirements.

Looking at the company's financial health, First Quantum maintained a reasonable balance sheet despite the challenges of 2024. The Canadian stock holds $783 million in cash and a manageable debt-to-equity ratio of 67.4%. Therefore, the Canadian stock is well-equipped to fund its growth initiatives. Its operating cash flow of $883 million, while not at peak levels, provides a solid buffer for ongoing operations and debt servicing. The Canadian stock's ability to maintain a current ratio of 1.8 reflects its strong liquidity position. This is crucial for navigating a volatile market environment.

Despite its impressive run, there are still reasons to consider First Quantum as a buy. Its current valuation metrics, including a forward price/earnings (P/E) ratio of 14.6, suggest that the Canadian stock remains attractively priced relative to its growth potential. Moreover, with copper prices expected to rebound as global economic conditions stabilize, the Canadian stock stands to benefit significantly.

Bottom line

First Quantum Minerals demonstrated remarkable resilience and strategic acumen over the past year, thus driving its stock to nearly double in value. With strong projects in the pipeline, a robust financial position, and favourable long-term demand trends for copper, the Canadian stock remains well-positioned for future growth. For investors seeking exposure to a well-managed mining company with substantial upside potential, First Quantum appears to be a compelling choice.