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Freeport-McMoRan Copper & Gold Inc. Reports Fourth-Quarter and Year Ended December 31, 2009 Results
By Martin | February 8, 2010
The principal metals Freeport McMoran mine across four continents are copper, gold and molybdenum. The North American operations comprise five operating copper mines and one operating molybdenum mine located in Arizona, New Mexico, and Colorado. In South America, they operate four copper mines in Peru and Chile, which include open-pit and underground mining. In the Republic of Indonesia, through PT Freeport Indonesia, they mine, process and explore for ore containing copper, gold and silver. In Africa, they are developing the Tenke Fungurume deposit in the Democratic Republic of Congo, which is believed to be the largest undeveloped copper/cobalt deposit in the world.
Freeport-McMoRan Copper & Gold’s estimated consolidated reserves include 102.0 billion pounds of copper, 40.0 million ounces of gold, 2.48 billion pounds of molybdenum, 266.6 million ounces of silver and 0.7 billion pounds of cobalt.
The company’s portfolio of assets include the Grasberg mining complex, the world’s largest recoverable copper reserve and the largest gold reserve, significant mining operations in the Americas, including the large scale Morenci/Safford minerals district in North America and the Cerro Verde and El Abra operations in South America, and the potential world-class Tenke Fungurume development project in the Democratic Republic of Congo.
They expect to produce more than 4 billion pounds of copper per year for the next several years. For a look at global copper reserves and current copper production from our existing mines by region,
Company Asset based
- Net income attributable to common stock for fourth-quarter 2009 was $971 million, $2.15 per share, compared with a net loss of $13.9 billion, $36.78 per share, for fourth-quarter 2008.
- Net income attributable to common stock for the year 2009 was $2.5 billion, $5.86 per share, compared with a net loss of $11.3 billion, $29.72 per share, for the year 2008.
Consolidated sales from mines for fourth-quarter 2009 totaled 989 million pounds of copper, 551 thousand ounces of gold and 16 million pounds of molybdenum, compared with 1.2 billion pounds of copper, 462 thousand ounces of gold and 12 million pounds of molybdenum for fourth-quarter 2008. Consolidated sales for the year 2009 totaled 4.1 billion pounds of copper, 2.6 million ounces of gold and 58 million pounds of molybdenum. - Consolidated sales from mines for the year 2010 are expected to approximate 3.8 billion pounds of copper, 1.8 million ounces of gold and 60 million pounds of molybdenum, including 890 million pounds of copper, 490 thousand ounces of gold and 15 million pounds of molybdenum for first-quarter 2010.
- Consolidated unit net cash costs (net of by-product credits and excluding Tenke Fungurume) averaged $0.62 per pound for fourth-quarter 2009, compared with $1.04 per pound for fourth-quarter 2008, and $0.55 per pound for the year 2009, compared with $1.16 per pound for the year 2008. Assuming average prices of $1,100 per ounce for gold and $12 per pound for molybdenum, consolidated unit net cash costs (net of byproduct credits and excluding Tenke Fungurume) are estimated to average approximately $0.86 per pound for the year 2010.
- Operating cash flows totaled $1.5 billion for fourth-quarter 2009 and $4.4 billion, net of $770 million in working capital uses, for the year 2009. Using estimated sales volumes and assuming average prices of $3.25 per pound for copper, $1,100 per ounce for gold and $12 per pound for molybdenum, operating cash flows for the year 2010 are estimated to approximate $5.3 billion, net of $0.4 billion in working capital requirements.
- Capital expenditures totaled $449 million for fourth-quarter 2009, including a $200 million property acquisition adjacent to the Sierrita mine, and $1.6 billion for the year 2009. FCX currently expects capital expenditures to approximate $1.7 billion for the year 2010, including $0.9 billion for sustaining capital and $0.8 billion for major projects. A number of studies are under way, which may result in increased capital spending programs.
- At December 31, 2009, total debt approximated $6.3 billion and consolidated cash approximated $2.7 billion. During the year 2009, FCX repaid $1.0 billion in debt, including $277 million in the fourth quarter. Since December 31, 2009, FCX has made additional open-market debt purchases totaling $75 million.
- FCX’s preliminary estimate of consolidated recoverable proven and probable reserves as of December 31, 2009, totaled 104.2 billion pounds of copper, 37.2 million ounces of gold and 2.59 billion pounds of molybdenum. Net reserve additions of 6.3 billion pounds of copper and 0.16 billion pounds of molybdenum replaced approximately 150 percent of 2009 copper production and 300 percent of 2009 molybdenum production.
OUTLOOK
Projected sales volumes for 2010 approximate 3.8 billion pounds of copper, 1.8 million ounces of gold and 60 million pounds of molybdenum, including 890 million pounds of copper, 490 thousand ounces of gold and 15 million pounds of molybdenum in the first quarter of 2010. The sequencing in mining areas with varying ore grades, primarily at Grasberg, causes fluctuations in the timing of ore production, and is expected to result in fluctuations in quarterly sales of copper and gold in 2010. The achievement of FCX’s sales estimates will be dependent on the achievement of targeted mining rates, the successful operation of production facilities, the impact of weather conditions and other factors. Using estimated sales volumes for 2010 and assuming average prices of $3.25 per pound of copper, $1,100 per ounce of gold and $12 per pound of molybdenum for the year 2010, FCX’s consolidated operating cash flows, net of an estimated $0.4 billion of working capital requirements, are estimated to approximate $5.3 billion in 2010. The impact of price changes on FCX’s operating cash flows in 2010 would approximate $260 million for each $0.10 per pound change for copper, $50 million for each $50 per ounce change for gold and $45 million for each $1 per pound change for molybdenum.
FCX’s capital expenditures are currently estimated to approximate $1.7 billion for 2010. Capital expenditures for major projects in 2010 are expected to approximate $0.8 billion, which primarily includes underground development activities at Grasberg and the sulfide ore project at El Abra. Capital spending plans will continue to be reviewed and adjusted in response to changes in market conditions and other factors.
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