A bright future for high-grade moly$2.3B NET INCOME FOR 9-MONTH 2007
Freeport-McMoRan sees a bright future for high-grade moly
While Freeport enjoys its global leadership in copper, the company’s future as the top producer of high-grade molybdenum may be equally promising.
Author: Dorothy Kosich
Posted: Thursday , 25 Oct 2007
RENO, NV -
Freeport-McMoRan Copper& Gold is increasingly bullish on the moly side of its business as the market for the metal continues to improve.
During a conference call Wednesday to discuss quarterly results, Freeport officials said they are not worried about the potential impacts of tough Mining Law reform legislation to be voted on by the U.S. House.
Freeport-McMoRan President and CEO Richard Adkerson told analysts that the market for molybdenum has improved, meaning the fortunes of the world's top moly producer are looking very promising. Freeport's inherited assets, which include the Climax moly mine in Colorado, are comprised of both standalone and by-product moly operations, which, Adkerson said, "allow us to continue in that leadership position.
In fact, moly markets are looking so promising, Adkerson said Freeport is seriously contemplating building a larger mill as it resurrects and ramps up Climax, the largest undeveloped high-grade moly resource--and possibly building a second mill in the future. He estimated that 420 million pounds of molybdenum are produced annually on international markets of which 68 million pounds will be mined by Freeport this year. When $500 million restart of Climax comes on line, possibly by 2010, Adkerson estimated it will yield an additional 30 million pounds of high-grade moly.
However, he warned that the numerous lower-grade moly deposits now being touted by a number of companies "will be challenged in terms of this marketplace." Even Freeport is working to increase the value of its molybdenum projects.
Meanwhile, Adkerson said he is not yet worried about the potential impacts of a tough Mining Law reform bill approved this week by the House Natural Resources Committee. He stressed that "significantly different views" will affect the direction of the legislation. Freeport is hopeful "that we can work with the Congress in having a resolution of this so there gets to be some clarity as we go forward."
The Climax re-start will not be impacted by potential Mining Law reform. Freeport President Tim Snider explained to analysts that since "all of our U.S. operations are operating on patented mining claims," the impacts of the legislation on existing operations "are minimal."
In the meantime, Freeport may face some logistical challenges in meeting its 2009 production start-up timetable for the Tenke Fungurume mine development project in the DRC. Adkerson told analysts that he is "confident" that DRC government officials will carry forward their commitments concerning permitting and contracts.
FINANCIAL RESULTS
Freeport reported third-quarter net income of $775 million, or $1.87 per share, up from $351 million or $1.67/sh during the same period of 2006. For the first nine months of this year, Freeport reported a net income of $2.335 billion or $6.46/share, up from $970 million or $4.64/sh for the first nine months of 2006.
Total debt was estimated at $8.7 billion with consolidated cash of $2.4 billion for the first nine months of this year. Operating cash flows totaled $2.2 billion for the third-quarter of 2007 and $4.9 billion for the first nine months of this year.