Freeport McMoRan beat analysts’ estimates for third-quarter profit, as the miner benefited from higher gold prices due to the covid-19 pandemic and cost cuts.
The average price Freeport received for its gold surged nearly 28% to 1,902 per ounce in the third quarter, with copper and gold sales nearly 7% higher than the company’s July estimates.
The company announced a major cost-cutting drive in April and has also lowered its capital expenditure.
Freeport reported a profit of 29 cents per share, beating analysts’ average estimate of 21 cents, according to IBES data from Refinitiv
Total costs and expenses fell about 7% to $2.97 billion in the third quarter ended September 30.
Freeport reported Q3 copper sales of 848 million pounds, 7% higher than the July 2020 estimate of 790 million pounds, primarily reflecting higher sales from North and South America mines.
The miner recently completed the Lone Star copper leach project in Arizona, with production ramping-up and remaining on track to produce approximately 200 million pounds of copper annually.
Freeport also expects to restart Chino mine in New Mexico at a reduced
rate of approximately 50% of capacity (approximately 100 million pounds of copper per year) beginning in 2021.
Cerro Verde continued to make progress toward restoring operations
during third-quarter 2020, with operating rates averaging 351,000 metric tonnes of ore per day (approximately 90% of the 2019 annual average), the company said.
Third-quarter gold sales of 234 thousand ounces were 6% higher than the July 2020 estimate, primarily reflecting higher ore grades in Indonesia.
“Metal production is expected to improve significantly in 2021 with estimated consolidated sales of 3.85 billion pounds of copper and 1.4 million ounces of gold for the year 2021,” the company said in a press release.
Freeport said plans to transition the giant Grasberg copper and gold project in Indonesia to underground operations from open pit mining were on schedule.
Combined average production from the Grasberg Block Cave and DMLZ mines approximated 60,000 metric tonnes of ore per day during Q3, 9% above the Q2 average but approximately 15% below the July forecast, primarily reflecting unplanned downtime and a brief labor-related work stoppage, according to Freeport.
The company reported net income attributable to shareholders of $329 million, or 22 cents per share, compared to a net loss of $207 million, or 15 cents per share, a year earlier.
Excluding items, Freeport reported a profit of 29 cents per share, beating analysts’ average estimate of 21 cents, according to IBES data from Refinitiv.
“Our strong cash flows in the third quarter, growing volumes, effective cost
management and positive market outlook for our products provide momentum to continue to strengthen our balance sheet, increase returns to shareholders and generate long-term values for all stakeholders,” said Freeport CEO Richard C. Adkerson.
Revenue jumped 22% compared to the same period of 2019, to $3.85 billion.
Midday Thursday, Freeport’s stock was up 2% on the NYSE. The company has a $26 billion market capitalization.
(With files from Reuters)
