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Essential Metals & Mining Insights - September 2021


Freeport-McMoRan swings to loss in Q3'19 as revenue falls YOY

Freeport-McMoRan Inc. reported a net loss of US$131 million, or 9 U.S. cents per share, for the third quarter, swinging year over year from a net profit of US$556 million, or 38 cents per share.

Quarterly revenue dropped year over year to US$3.31 billion from US$4.91 billion, and operating cash flows decreased to US$224 million from US$1.25 billion, according to an Oct. 23 news release.

Freeport-McMoRan's Indonesian operations sold 139 million pounds of copper and 239,000 ounces of gold during the quarter, decreasing year over year from 368 million pounds of copper and 831,000 ounces of gold.

In mid-September, Indonesia's Energy and Mineral Resources Ministry increased Freeport-McMoRan's copper concentrate export quota to 700,000 wet tonnes from 198,282 wet tonnes.

Capital expenditure for the quarter totaled US$666 million, increasing year over year from US$507 million. The company estimated capex for the year at US$2.6 billion, including US$1.6 billion for mining projects including underground development at the Grasberg operation in Indonesia and the Lone Star copper leach development at the Safford mine in Arizona.

Freeport-McMoRan booked total copper production of 864 million pounds for the third quarter, down from 1.01 billion pounds the year before. Sales dropped to 795 million pounds from 1.04 billion pounds. Average realized prices per pound decreased to US$2.62 from US$2.80, while unit net cash costs per pound increased to US$1.59 from 93 cents.

Total gold output for the quarter plunged year over year to 333,000 ounces from 760,000 ounces and sales dropped to 243,000 ounces from 837,000 ounces, while the average realized price per ounce increased to US$1,487 from US$1,191.

Molybdenum production dipped to 21 million pounds from 23 million pounds on an annual basis. Sales were stable at 22 million pounds, and the average realized price per pound increased to US$12.89 from US$12.40.

President and CEO Richard Adkerson said the company is working on increasing copper production by 30% and gold production by 70% while reducing unit net cash costs by 25% and more than doubling operating cash flows in 2021 from 2019 levels.

Freeport-McMoRan's consolidated debt totaled US$9.92 billion as of Sept. 30, decreasing year over year from US$11.29 billion, while cash and cash equivalents decreased to US$2.25 billion from US$4.58 billion.

The company expects 2019 consolidated sales to reach 3.3 billion pounds of copper, 874,000 ounces of gold and 92 million pounds of molybdenum, with gold increasing slightly and molybdenum decreasing slightly compared to guidance outlined in January. Fourth-quarter production was pegged at 870 million pounds of copper, 200,000 ounces of gold and 24 million pounds of molybdenum.