Freeport reports strong quarter

Freeport McMoRan Copper & Gold (FCX-N) reported stronger fourth quarter and year-end results on the strength of higher throughput at the Grasberg copper-gold mine in Irian Jaya, Indonesia.

Through its operating subsidiary, Freeport Indonesia, the company averaged 127,100 tonnes per day through the mill at Grasberg during the fourth quarter of 1997. Production for the quarter was 573,400 oz. gold, 308 million lbs. copper and 745,000 oz. silver.

Freeport has nearly completed the fourth expansion of the mine and mill operation which is expected to push throughput beyond 200,000 tonnes per day. The company’s recently completed third expansion enabled it to reach current levels of 127,000 tonnes per day.

For the year, Freeport cranked out 1.17 billion lbs. of copper, 1.8 million oz. gold and 2.57 million oz. silver. Cash production costs (after gold and silver credits) were US22cents per lb. copper, 5cents higher than 1996. Cash costs for the quarter were US9cents per lb. Freeport earned US$39.6 million (21cents per share) on revenue of US$420 million during the fourth quarter of 1997, compared with a net income of US$77 million (40cents per share) on revenues of US$618 million for the same period last year.

For the full year, Freeport reported a net income of US$208.5 million ($1.06 per share) on revenues of US$2 billion, compared with earnings of US$174.7 million (90cents per share) on revenues of US$1.9 billion in 1996.

The company also reported year-end reserves of 2.17 billion tonnes with an average grade of 1.2% copper, 1.2 grams gold and 3.95 grams silver per tonne (equivalent to 47.1 billion lbs. copper, 62.8 million oz. gold and 138.5 million oz. silver).

Freeport added some 205 million tonnes of material to the reserves during the year, mainly from the main Grasberg deposit but also from the Block A orebodies.

During December, Freeport acquired the rights to a 90% interest in 486,000 ha in central Irian Jaya. Under a previous joint-venture agreement with Rio Tinto (RTP-N), that company has a right to participate in the exploration by funding its 40% share. Rio Tinto also holds a 40% share of the reserves at Grasberg.

Freeport is in the midst of a 20-million-share repurchase program. During the fourth quarter, the company purchased 9.2 million of its shares at about US$20 each. Since the beginning of the year, the company has purchased another 3.2 million shares at about US$15 per share.