Reuters: Global Markets: Miner Freeport's quarterly profit down but beats Street

Reuters: Global Markets Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

Miner Freeport's quarterly profit down but beats Street Jul 19th 2012, 16:50 By Steve James Thu Jul 19, 2012 12:50pm EDT (Reuters) - Freeport-McMoRan Copper & Gold Inc's (FCX.N) second-quarter profit topped Wall Street estimates on Thursday and the company announced several mine expansions to boost its copper production by 25 percent in the next three years. It also said its vast Grasberg mine in Indonesia is returning to normal production after a crippling strike last year and chief executive Richard Adkerson expressed confidence that Freeport's contract to operate in that country would be extended after a review by the Jakarta government. Freeport's stock rose 5 percent to $34.70 in afternoon trading on the New York Stock Exchange. "Copper markets remain relatively tight," as inventories have dropped and there is weak economic demand in many parts of the world for the metal which is used in wiring and construction, Adkerson told analysts on a conference call. "With all of the negative comments about the world's economic situation, to have copper at $3.50 (per pound) I think is notable and the outlook for copper we believe is very positive," he said. The company also said it planned to increase copper production by 25 percent over the next three years through development of brownfields - projects near existing mines. In particular, Adkerson said he expected to boost copper production from the Americas from 2.4 billion pounds in 2010, to 3.5 billion pounds in 2016, through expansion of projects at Cerro Verde, Peru and Morenci, Arizona. Tenke Fungurume, Freeport's cobalt mine in Democratic Congo just started producing copper too, he said, and a planned expansion in the works. To fund the expansion projects, Freeport boosted its capital expenditure budget this year to $4 billion from $2.5 billion last year and it will rise to $4.5 billion next year, he said. Adkerson also said the company was in discussions with the Indonesian government which is currently reviewing all mining contracts in the country, including Freeport's for the vast Grasberg open-pit and underground mine. "Our existing contract provides for extension from 2021 to 2041," he said. "We're committed to working with the government...and I'm confident we'll find a way of coming forward with a completion of this review and extension of our contract in a way that will be well-received both by the government and the people of Indonesia and by our shareholders." Adkerson said Grasberg, which lost a significant amount of output last year during a strike, was almost back to normal operation. In its second-quarter earnings release, Freeport said net earnings were $710 million, or 74 cents per share, compared with $1.4 billion, or $1.43 per share in the same quarter of 2011. Excluding charges for environmental obligations and related litigation reserves totaling $53 million or 6 cents per share, the company earned 80 cents per share, on which basis it beat analyst estimates of 75 cents per share, according to Thomson Reuters I/B/E/S. Revenue fell to $4.48 billion from $5.81 billion, as the average copper price it received fell to $3.53 per pound from $4.22 a year earlier. Its realized price for gold rose to $1,588 per ounce from $1,509 in the year-ago quarter, but the molybdenum price dropped to $15.44 per pound from $18.16. "They were hurt by the copper price which they can't control," said analyst Charles Bradford, of Bradford Research in New York. "But it was a good quarter and they gave terrific outlook for projects ahead." Freeport said consolidated sales from its mines in Indonesia, South America, Democratic Congo and the southwestern United States totaled 927 million pounds of copper, 266,000 ounces of gold and 20 million pounds of molybdenum. That was down from 1.0 billion pounds of copper, 356,000 ounces of gold and 21 million pounds of molybdenum in the second quarter of 2011. The company said consolidated sales for 2012 are expected to be about 3.6 billion pounds of copper, 1.1 million ounces of gold and 81 million pounds of molybdenum. That is down slightly from its previous estimate by about 85 million pounds of copper and 60,000 ounces of gold. During the second quarter, Freeport's Climax molybdenum mine in Colorado began commercial production, which is expected to ramp up to a rate of 20 million pounds per year during 2013. (Reporting by Steve James; Editing by Gerald E. McCormick, James Dalgleish and David Gregorio) Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions