Overall production was up and gold revenues from its Grasberg copper- gold mine in Indonesia completely offset production costs, but Freeport-McMoRan Copper & Gold (FCX-N) still posted a significant drop in revenue and profits in the first quarter of the year.
Revenues plunged to US$2.6 billion from US$5.67 billion in the year-earlier quarter, while net earnings dropped to US$43 million, or US11¢ per share, down from US$1.1 billion, or US$2.64 per share, in the same quarter of 2008.
Weaker metal prices and demand were to blame for the world’s largest publicly traded copper company’s poor results. And even though the first quarter brought a small uptick in the price of copper, which climbed to US$1.84 per lb. from US$1.42 per lb., the metal was still selling well below the US$3.83 per lb. it commanded a year ago.
Consolidated sales reached 1 billion lbs. copper (12% higher than the 911 million lbs. copper in the year-earlier quarter), 545,000 oz. gold (nearly twice the 280,000 oz. in the year-ago quarter) and 10 million lbs. molybdenum (half the amount of last year’s 20 million lbs.)
Unit site production and delivery costs averaged US$1.07 per lb. copper in the first quarter, 27% lower than the US$1.47 in the first quarter of 2008 and 29% lower than the 2008 average of US$1.51 per lb. First-quarter unit net cash costs, after byproduct credits, came in at US66¢ per lb.
Freeport estimates that at an average price for the rest of the year of US$2 per lb. copper, US$900 per oz. gold and US$8 per lb. molybdenum, unit net cash costs should average about US70¢ for all of 2009.
Total debt reached about US$7.2 billion, while consolidated cash totalled US$644 million as of March 31, 2009.
The company also reported it had made significant progress on the construction of its Tenke Fungurume copper and cobalt project in the Democratic Republic of the Congo. Freeport owns 57.75% of the project, which produced its first copper cathode in late March.
The DRC government is currently reviewing Freeport’s contract, but the company says it com- plies with Congolese law and the review is not affecting the development schedule or production plans for Tenke Fungurume.
The DRC is also reviewing the contracts of five other companies.
At presstime, Freeport was trading at US$40.96 per share in a 52-week range of US$15.70-127.24 per share.
The Phoenix, Ariz.-based company has 411.7 million shares outstanding.
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