Freeport Copper & Gold turns in record quarter

Higher sales of copper and gold have enabled New York-listed Freeport Copper & Gold to post record earnings for its 1995 third quarter.

During the period, Freeport sold a record 258.2 million lb. copper and 338,700 oz. gold, enabling it to post income of US$60.5 million (or 30 cents per share) compared with 1994 third-quarter income of US$13.5 (or 7 cents per share). Revenues were US$469.8 million, compared with US$313.4 million for the same period last year.

The encouraging financial numbers are the result of record throughput from the company’s principal mining unit in Irian Jaya. For the quarter, P.T. Freeport Indonesia averaged 122,200 tonnes of ore per day.

The expansion of operations led to a significant decrease in total cash production costs to US20.5 cents per lb. copper, which is 33% lower than the second quarter of 1995 and 46% less than a year ago.

Feasibility studies continue for the further expansion of milling capacity to 175,000- 200,000 tonnes per day, with another possible expansion under consideration.

Looking at financial results for the nine months of 1995, Freeport reported net income of US$145.2 million (or 71 cents per share) compared with net income of US$36.7 million (or 18 cents per share) for the same period last year.

Exploration activities on the company’s Block A contract-of-work area are continuing to return promising results, as are activities within Block B and the Eastern Mining blocks.

While Freeport’s smelter in Spain reported a loss for the quarter, its expansion is on schedule for completion by year-end. Construction will begin later this year on the copper smelter-refinery complex in Gresik, Indonesia.

Freeport was notified that the Overseas Private Investment Corporation (OPIC) is seeking to terminate US$100 million worth of political risk insurance on the company’s Indonesian operations. OPIC points out that mining operations have expanded beyond the original scope, and says it has concerns about environmental issues associated with the expansion.

Freeport believes that OPIC lacks the legal basis for cancelling the coverage, and is determined to enforce its contractual rights even though it considers the coverage financially insignificant. The parties have submitted the dispute to arbitration for resolution.