FCX Freeport McMoRan Inc

Freeport-McMoRan Copper & Gold Inc.'s (FCX) first-quarter profit jumped a stronger-than-expected 59% as production rose and prices surged.

The Phoenix-based company's earnings handily beat analysts expectations as it sold more metal than it had previously guided.

Freeport was able to access higher-grade ore at its Grasberg mine in Indonesia more quickly than it had expected. That enabled it to sell 926 million pounds of copper after it had said last quarter it would sell just 840 million pounds in the first three months of 2011. Gold sales were at 480,000 ounces compared with previous estimates of 325,000. Freeport sold 20 million pounds of molybdenum, beating estimates of 17 million pounds.

"We made really good progress" at the Indonesian operations, Chief Executive Richard Adkerson said in a conference call on the results.

The company raised its estimates for 2011 gold sales to 1.6 million ounces from the 1.4 million ounces it had projected last quarter. It tweaked its forecast sales of copper this year to 3.9 billion pounds from 3.85 billion pounds it previously expected. It said it also expects to sell 73 million pounds of molybdenum in 2011, up from previous guidance of 70 million pounds.

In addition to the higher grades in Indonesia, improved production in North America and South America also contributed to the higher sales at a time when gold and copper prices are surging.

Freeport posted a profit of $1.5 billion, or $1.57 a share, up from $945 million, or $1 a share, a year earlier, adjusted for a two-for-one stock split. Revenue rose 31% to $5.71 billion. Analysts polled by Thomson Reuters had forecast a $1.26 profit on $5.3 billion in revenue.

Copper output grew 2.3% while gold production rose 3.8% from the first quarter of 2010. Molybdenum output increased about 18%.

Shares were up 3.3% at $53.42 in recent trading, and are up 32% over the past year.

Freeport's earnings have risen of late as appetite for gold, the company's main source of revenue, remains at record levels, held up by investors stockpiling the precious metal as a hedge against other assets.

Freeport has also benefited from the recent rally in copper prices, which remain historically high despite worries about Japan's nuclear crisis, concerns about Chinese monetary tightening and fears that high oil prices will damp the global economic recovery.

Realized prices for gold and copper both rose 26%, while molybdenum prices increased 20%.

"Elevated copper and gold prices made for a pretty stellar quarter," said Morningstar analyst Dan Rohr.

The high prices and increased sales have cushioned Freeport against rising costs for inputs like energy and steel.

"Like everyone in the industry we're facing higher input costs," Adkerson said.

Surging earnings prompted the company to declare a 50-cent per-share special dividend on top of its normal quarterly payments. The one-time dividend will cost the company about $470 million. That comes on top of a $1-a-share special dividend last year and the stock split. Shares have more than quintupled since December 2008.

-By Matt Whittaker, Dow Jones Newswires; 212-416-2139; matt.whittaker@dowjones.com

--Drew FitzGerald contributed to this article.

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