FCX Results/DiscussionFCX reported yesterday and it wasn't pretty. Thankfully, the worst of their problems are on the oil and gas side and that is reflected in the 2015 capex/exploration budget cuts -- over a billion on oil & gas side and about $200 million on the remainder. In addition, their debt reduction plans are in flux and may not be realized on the schedule they previously announced (to $12 billion by 2016)
While FCX is currently dealing with some significant issues, it also has to remain focused on its businesses, which by their nature are long term. Something has to be done with Timok/RMC one way or another under Serbian law. Several drill rigs are turining now and the likelihood of extending the size of the porphry deposit are probably pretty good (I am not saying it will extend out 400M, but some of the rigs will likely extend and help define its size). We know we have the makings of a nice copper mine for someone, and it could turn out to be a world class opportunity if the porphry is extended outward by a couple hundered meters. My question for the board are opinions on who ultimately makes it a mine? Put another way, who has the set of rocks to make what many may call a "counter-cyclical" investment?
What little I know of FCX does make them a strong candidate despite their current issues. They went into oil and gas and many panned the idea (and with the benefit of hindsight, they may or may not be right- stay tuned). Nevertheless, FCX's board is independent and thinks longer term so I would not rule them out by any stretch of the imagination.
This does, however, bring me back to a post I made about a week and a half ago regarding our Chinese investors. Other than through the RMC announcements and a bit of my own research, I do not know much about them. I do know, however, that tthe Chinese are very patient, long term thinkers and, at least in the commodity space, opportunistic investors.
Which brings me back to the question I posed in my prior post - does anyone have any insight into these investors? This is a very thoughtful board so please post any responses. For some reason I cannot shake the thought that something quite unexpected and positive will happen this year. No knowledge, just a gut feel.