Smooth sailing at Freeport’s Grasberg

By expanding one of its concentrators, Freeport-McMoRan Copper & Gold (FCX-N) has achieved record throughput levels at the Grasberg copper-gold mine in Irian Jaya, Indonesia.

The company, through 85%-owned subsidiary P.T. Freeport Indonesia, cranked out 378.7 million lbs. copper, 561,900 oz. gold and 802,300 oz. silver during

the second quarter, with throughput averaging 201,200 tonnes per day. (By the fourth quarter, daily throughput is projected to reach 230,000 tonnes.) Between the three months ended June 30 and the corresponding period last year, realized prices for copper and gold fell 34% and 23%, respectively. To help compensate, Freeport cut general and administrative expenses by 35%.

Despite the weak metals prices, the New Orleans-based major reported a profit of US$25.8 million (or 14 cents per share) for the quarter, compared with US$69.9 million (35 cents per share) a year ago. Revenue fell to US$433.9 million from US$566.9 million, though cash production costs were reduced by 43%.

For the first six months of 1998, earnings amounted to US$52.4 million (29 cents per share) on revenue of US$830 million, compared with US$132 million (66 cents per share) on US$1 billion in the first half of last year.

The company continues to expand underground resources of its Block A concession in the Kucing Liar and Grasberg underground deposits. At the former, drilling returned several long, high-grade intercepts, including: * hole 38-5, which cut 288 metres grading 1.3% copper and 1.15 grams gold; * hole 38-4, which hit 451 metres of 1.8% copper and 1.3 grams gold; and * hole 42-2, which intersected 213 metres of 2.7% copper and 1.9 grams gold.

Two rigs continue to probe mineralization below the so-called “block-cave” reserve. Highlights to date include:

* 328 metres grading 1.3% copper and 1.6 grams gold from hole 40-5; and * 228 metres of 1.3% copper and 1.2 grams gold in hole 43-5.

Freeport will spend US$21 million on exploration to earn up to a 54% interest in a 485,000-ha block of land on the property, which abuts the company’s Block B and Eastern Mining concessions. The company is earning the interest from Battle Mountain Gold (BMG-N).