Freeport McMoRan’s (NYSE: FCX) first-quarter profit fell sharply from a year ago as Indonesian output of gold and copper slid as mining operations transition from an open pit to underground, the company announced Thursday.
Net income in the January-March period totaled $31 million, or 2 cents per share, down from $692 million, or 48 cents, in the same period a year ago.
After adjusting for charges of $36 million, first-quarter adjusted income totaled $67 million, or 5 cents, the company said. This was below consensus estimates that news reports put around 7 cents a share.
First-quarter copper sales of 784 million pounds were down from 993 million in the same period of 2018 and from the January estimate of 825 million. Gold sales of 242,000 ounces were down from 610,000 in the same period a year ago and the January estimate of 255,000.
At the giant Grasberg mine in Indonesia, copper sales fell to 174 million pounds from 319 million in the same period a year ago, while gold sales fell to 235,000 ounces from 603,000. The company had anticipated lower mill rates and ore grades as PT Freeport Indonesia (PT-FI) operations transition to underground. During this transition, production is expected to be significantly lower in 2019 and 2020 than it was 2018, Freeport said. Metal production then is expected to improve significantly by 2021 following a ramp-up period.
First-quarter 2019 molybdenum sales of 22 million pounds were lower than the January estimate of 24 million pounds.
“Our transition to underground mining at Grasberg is advancing according to plan, and we are encouraged by recent milestones,” said Richard C. Adkerson, president and chief executive officer. “In North America and South America, we are advancing the Lone Star copper leach project in eastern Arizona and continuing to focus on opportunities to enhance operating performance from existing mines. As we look forward, we are optimistic about the future that our asset base and copper market fundamentals are expected to provide shareholders.”
The company also received lower prices than a year ago for copper and gold. The average realized copper price in the first quarter was $2.90 a pound, down from $3.11. The average realized gold price fell to $1,291 from $1,312. However, the molybdenum price rose to $12.69 a pound from $11.95.
Sales volumes for full-year 2019 are expected to be around 3.3 billion pounds of copper, 0.8 million ounces of gold and 94 million pounds of molybdenum. For the second quarter, the company looks for 800 million pounds of copper, 265,000 ounces of gold and 25 million pounds of molybdenum.
As of March 31, consolidated debt totaled $9.9 billion and cash totaled $2.8 billion. The company said it had no borrowing and $3.5 billion available under its revolving credit facility at the end of the quarter.
Freeport is the world’s largest publicly traded copper-mining company and is also a significant producer of gold.
Source: Allen Sykora / Kitco News Mining News
25 April 2019