FCX Freeport McMoRan Inc

Freeport-McMoRan Copper & Gold Inc. (FCX) reported a profit of $640 million or 67 cents per share in the fourth quarter of 2011 versus $1.5 billion or $1.63 per share in the same quarter of 2010. The profit surpassed the Zacks Consensus Estimate by 3 cents per share.

Revenues in the quarter were $4.2 billion versus $5.6 billion in the prior-year quarter, surpassing the Zacks Consensus Estimate of $3.8 billion. Consolidated sales from mines totaled 823 million pounds of copper, 133,000 ounces of gold and 19 million pounds of molybdenum compared with 941 million pounds of copper, 590,000 ounces of gold and 17 million pounds of molybdenum in the fourth quarter of 2010.

Consolidated unit net cash costs (net of by-product credits) averaged $1.57 per pound of copper compared with 53 cents per pound in the fourth quarter of 2010. Operating income slumped to $1.3 billion from $3.1 billion in the year-ago quarter.

However, overall sequential results were lower primarily due to labor disruptions and temporary suspension of milling operations at PT Freeport Indonesia resulting from the damage of the concentrate and fuel pipelines.

Freeport-McMoRan had cash and cash equivalents of $4.8 billion as of December 31, 2011 compared with $3.7 billion as of December 31, 2010.

Freeport-McMoRan’s operating cash flows totaled $746 millionin the fourth quarter of 2011 compared with $2.1 billion in fourth-quarter 2010. Capital expenditures totaled $785 million for fourth-quarter 2011 compared with $535 million in fourth-quarter 2010. In fiscal 2011, operating cash flow was $6.6 billion and capital expenditure came in at $2.5 billion.

As of December 31, 2011, total debt approximated $3.5 billion and consolidated cash approximated $4.8 billion. During the fiscal year 2011, FCX repaid $1.2 billion in debt and paid common stock dividends totaling $1.4 billion.

Exploration Activities

Freeport is conducting exploration activities near its existing mines with a focus on opportunities to expand reserves that will support the development of additional future production capacity in the large minerals districts, where it currently operates.

Favorable exploration results indicate opportunities for significant future potential reserve additions in North and South America and in the Tenke Fungurume minerals district. The drilling data in North America continue to indicate the potential for expanded sulfide production.

Exploration spending for the year 2012 is expected to approximate $275 million, compared with $221 million in 2011. Exploration activities will continue to focus primarily on the potential for future reserve additions in FCX's existing minerals districts

Guidance

Freeport-McMoRan’s consolidated sales from mines for the year 2012 are expected to approximate 3.8 billion pounds of copper, 1.2 million ounces of gold and 80 million pounds of molybdenum, including 875 million pounds of copper, 425 thousand ounces of gold and 20 million pounds of molybdenum for first-quarter 2012.

Based on current 2011 sales volume and cost estimates and assuming average prices of $1,600 per ounce for gold and $13 per pound for molybdenum for first-quarter 2012, consolidated unit net cash costs (net of by-product credits) are estimated to average $1.38 per pound of copper for the year 2012.

Based on current 2011 sales volume and cost estimates and assuming average prices of $3.50 per pound for copper, $1,600 per ounce for gold and $13 per pound for molybdenum for first-quarter 2012, operating cash flows are estimated to approximate $4.7 billion for the year 2012. Capital expenditures are expected to approximate $4.0 billion for the year 2012, including $2.4 billion for major projects and $1.6 billion for sustaining capital.

Headquartered in Phoenix, Arizona, Freeport-McMoRan Copper & Gold Inc. is engaged in mineral exploration and development; mining and milling of copper, gold, molybdenum and silver; as well as smelting and refining of copper concentrates.

The company conducts its operations primarily through its principal operating subsidiaries, PT Freeport Indonesia, Freeport-McMoRan Corporation (formerly Phelps Dodge) and Atlantic Copper. Its major competitors include Newmont Mining Corp. (NEM) and Southern Copper Corp. (SCCO). It currently retains Zacks #3 Rank on its stock, which translates into a short-term Hold rating.

 
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