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Freeport-McMoRan narrows Q2 loss on fewer impairments

Freeport-McMoRan Inc. significantly narrowed itssecond-quarter net loss thanks to much lower impairments on its oil and gasproperties than the year-ago period, the company said July 26.

Net loss attributable to shareholders fell to US$479 millionfrom US$1.85 billiona year ago as impairments on oil and gas properties fell to US$291 million fromUS$1.98 billion. Results were also boosted by a US$744 million on in the period under review,compared to zero a year earlier.

Revenues in the quarter fell to US$3.33 billion from US$3.94billion in the second quarter of 2015 despite increased copper production andsales during the period.

Freeport produced a total of 1.13 billion pounds of copperin the quarter, including output from the Tenke Fungurume copper-cobalt mine in theDemocratic Republic of Congo, up from 977 million pounds recorded a year ago,with sales increasing to 1.11 billion pounds from 964 million pounds in thesame quarter of the preceding year.

While unit net cash costs per pound of copper fell toUS$1.33 in the three-month period, the average realized price for the metalalso dropped to US$2.18 per pound from US$2.71 per pound last year.

Meanwhile, gold output sank to 166,000 ounces from 367,000ounces last year, with sales also falling to 156,000 ounces from 352,000ounces, though the average realized gold price rose to US$1,292 per ounce fromUS$1,174 per ounce. Molybdenum production and sales also fell in the period,with both metrics coming in at 19 million pounds.

Furthermore, CapEx was significantly slashed to US$833million in the quarter from US$1.66 billion a year ago.

However, the company's first-half attributable net lossincreased to US$4.66 billion from US$4.33 billion a year ago.

As for Freeport's asset sales, the company has alreadyannounced more than US$4 billion in transactions this year but has receivedonly US$1.4 billion from the sales so far, with the US$2.65 billion TenkeFungurume saleexpected to be concluded in the fourth quarter.

The asset sales form part of the company's previouslyannounced debt-reductionprogram. Freeport also plans to launch a registered at-the-marketoffering of up to US$1.5 billion of common shares to further reduce its debts,subject to market conditions.

As of June 30, Freeport had total debt of US$19.32 billion,with varying interest rates.

The New York-listed company's shares were down over 4.5% inmorning trade.