FCX Q1-2013, Ceo Adkerson confident in long term d
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FCX’s Adkerson urges mining analysts to reflect on copper market history
Freeport-McMoRan reported copper and moly sales exceeded expectations in the first quarter, while gold sales dipped by 16,000 ounces.
Dorothy Kosich (MINEWEB)
Posted: Friday , 19 Apr 2013
RENO - Like most everyone in the mining sector, Freeport-McMoRan Copper & Gold top management has been concerned about the buildup in copper investors, the mood at the annual CESCO meeting in Chile, and a 20-cent drop in copper prices over the past 10 days.
During a conference call to discuss financial results Thursday, however, Freeport CEO Richard Adkerson told analysts, “I think it’s important to look back at history and remember that these short-term movements can get accelerated by things like consumer buying patterns, material moving into and out of warehouses for inventories, and flows of investor funds. When times are good, they accelerate things on the upside and they can accelerate things on the downside.”
However, Adkerson noted, Freeport has “a lot of confidence in the long-term copper markets based on the fundamentals of the world’s requirements for copper longer term and continuing challenges of maintaining supplies from existing mines and also of developing new sources of supply.”
“The market will work,” he declared. “Over time, the lower price will encourage consumption, the inventories will work off. And so we look at the underlying economics in China and the world, think about the industry’s challenges in producing supplies and feel confident about our long term strategy.”
Adkerson observed that “we do have the ability of managing our capital expenditures, lowering our production of high-cost copper elements and being responsive to market conditions. He advised that “our copper development projects are very attractive at even lower prices than we have now.”
FCX announced that first quarter 2013 consolidated copper sales of 954 million pounds were higher than the previous guidance of 940 million pounds, reflecting higher production and sales from Africa. First-quarter 2012 molybdenum sales of 25 million pounds were also higher than the original guidance of 23 million pounds, primarily reflecting stronger sales volumes in the metallurgical and chemical sectors.
However, Freeport’s first-quarter 2012 gold sales of 214,000 ounces were lower than the original estimate of 230,000 gold ounces, due to the timing of shipments at quarter end and lower grades in Indonesia.
The company also reported six million pounds of cobalt production at its Tenke Fungurume joint venture during the first quarter, the same as the first quarter of last year.
FINANCIALS
Freeport-McMoRan reported net income of $648 million or 68-cents per share for the first quarter of the year, down from the net income of $764 million or 80-cents per share for the first-quarter 2012.
As of March 31, 2013, the company reported a total debt of $10.1 billion which includes the controversial pending Plains and McMoRan oil and gas transaction. FCX is paying $9 billion in cash and stock for Plains Exploration and Production (PXP) and McMoRan Exploration (MMR). McMoRan was spun off from Freeport McMorRan in 1994.
FCX has completed $10.5 billion in debt financing associated with the acquisitions. In a statement, Freeport Chairman Jim Bob Moffett, who is also McMoRan’s CEO, and Adkerson said, “We look forward to completing the transactions in the second quarter and to executing our strategy of developing long-term resources to generate long-term value for shareholders through expanded investment opportunities.”