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Freeport: 4Q copper, gold output top forecasts

Kitco News

(Kitco News) - Freeport-McMoRan Inc. (NYSE: FCX) reported a smaller fourth-quarter profit Thursday but said that copper and gold output were higher than its autumn estimate and that copper production should rise in 2020 and 2021.

The company reported net income of $9 million, or less than a penny per share, in the fourth quarter, compared to $485 million, or 33 cents, in the same period a year ago. Excluding special items, adjusted net income was $31 million, or 2 cents per share, in the October-December period.

Freeport said fourth-quarter copper sales were 906 million pounds, which was 4% more than its October estimate of 870 million pounds and 15% higher than in the fourth quarter of 2018. This was due to higher sales in Indonesia as a result of an extension of mining from the Grasberg open pit, which was completed in the fourth quarter, and the timing of shipments, the company said.

Gold sales from October through December were 317,000 ounces, which was 117,000 more than the October guidance of 200,000 and around 20% higher than the same period a year earlier. This was also attributed to the Grasberg open pit.

Meanwhile, fourth-quarter molybdenum sales of 22 million pounds were lower than both the October estimate and fourth-quarter 2018 sales of 24 million pounds.

Average realized prices in the fourth quarter were $2.74 per pound for copper, $1,491 per ounce for gold and $11.65 per pound for molybdenum, Freeport said.

For full-year 2019, the company reported sales totaling 3.3 billion pounds of copper, 991,000 ounces of gold and 90 million pounds of molybdenum. For 2020, the company said it anticipates approximately 3.5 billion pounds of copper, 0.8 million ounces of gold and 88 million pounds of molybdenum. Sales are expected to increase to 4.3 billion pounds of copper and 1.4 million ounces of gold in 2021.

Richard C. Adkerson, president and chief executive officer, said the company progressed three three major initiatives during 2019.

“We are on schedule to establish large-scale production from our high-grade, low-cost and long-lived underground ore bodies at Grasberg; the Lone Star project in Arizona is nearing completion; and early results from our innovation initiatives to enhance productivity at our operations in the Americas are positive,” he said.

These should improve the company’s cost position and future cash flow, he continued.

“We are laser focused on execution of these plans designed to increase copper and gold sales by more than 30%, reduce unit net cash costs by approximately 25% and more than double operating cash flows in 2021 from 2019 levels," Adkerson said.

The company said that during the fourth quarter, it generated $452 million from asset sales, including its Freeport Cobalt business and its interest in the lower zone of the Timok exploration project.

For full-year 2019, the company listed a net loss of $239 million, or 17 cents per share.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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