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TheStreet Open House

Freeport-McMoRan Copper & Gold Inc. Reports Third-Quarter And Nine-Month 2012 Results

Stocks in this article: FCX

James R. Moffett, Chairman of the Board, and Richard C. Adkerson, President and Chief Executive Officer, said, "Our global team continues to focus on execution of our plans to achieve efficient and safe production, effective cost management, investment in financially attractive projects and identification of additional reserves and resources. Our third quarter results reflect production growth in North America and Africa, offset by anticipated lower ore grades in Indonesia. As we look forward, we are on track to achieve meaningful increases in our production of copper as we return to higher grade ores at Grasberg and through the execution of brownfield expansions in the Americas and Africa, expected to add one billion pounds of copper annually over the next three years. We are positive about the long-term fundamentals of the metals we produce, our geographically diverse portfolio of large-scale operations with long-lived reserves and mineral resources and the strong track record of our team to execute our plans."

SUMMARY FINANCIAL AND OPERATING DATA

  Three Months Ended     Nine Months Ended  
September 30, September 30,
  2012     2011 2012     2011
Financial Data (in millions, except per share amounts)
Revenues a $ 4,417 $ 5,195 $ 13,497 $ 16,718
Operating income $ 1,411 c $ 2,150 c $ 4,456 c $ 7,843 c
Net income attributable to common stock b $ 824 c,d $ 1,053 c,d $ 2,298 c,d,e $ 3,920 c,d,e
Diluted net income per share of common stock $ 0.86 c,d $ 1.10 c,d $ 2.41 c,d,e $ 4.10 c,d,e
Diluted weighted-average common shares outstanding

953

955

953

955
Operating cash flows $ 526 f $ 1,835 f $ 2,509 f $ 5,874 f
Capital expenditures $ 971 $ 717 $ 2,518 $ 1,749
 
Mining Operating Data
Copper (millions of recoverable pounds)
Production

938

951

2,658

2,868
Sales, excluding purchases

922

947

2,676

2,875
Average realized price per pound $ 3.64 $ 3.60 $ 3.63 $ 3.94
Site production and delivery costs per pound g $ 2.03 $ 1.71 $ 2.00 $ 1.65
Unit net cash costs per pound g $ 1.62 $ 0.80 $ 1.46 $ 0.84
Gold (thousands of recoverable ounces)
Production

204

385

707 1,202
Sales, excluding purchases

202

409

756 1,245
Average realized price per ounce $ 1,728 $ 1,693 $ 1,666 $ 1,565
Molybdenum (millions of recoverable pounds)
Production

20

23

61 65
Sales, excluding purchases

21

19

62 60
Average realized price per pound $ 13.62 $ 16.34 $ 14.79 $ 17.57
 

a. Includes the impact of adjustments to provisionally priced sales recognized in prior periods (refer to the "Consolidated Statements of Income" on page IV for further discussion).

b. FCX defers recognizing profits on intercompany sales until final sales to third parties occur (refer to the "Consolidated Statements of Income" on page IV for a summary of net impacts from changes in these deferrals).

c. Includes net (credits) charges for adjustments to environmental obligations and related litigation reserves totaling $(85) million ($(68) million to net income attributable to common stockholders or $(0.07) per share) for third quarter 2012, $29 million ($23 million to net income attributable to common stockholders or $0.02 per share) for third-quarter 2011, $(19) million ($(16) million to net income attributable to common stockholders or $(0.02) per share) for the first nine months of 2012 and $78 million ($63 million to net income attributable to common stockholders or $0.07 per share) for the first nine months of 2011.

d. The 2012 periods include a net credit of $100 million, net of noncontrolling interests ($0.11 per share) associated with adjustments to Cerro Verde's deferred income taxes. The 2011 periods include a charge of $50 million, net of noncontrolling interests ($0.05 per share) for additional taxes associated with Cerro Verde's election to pay a special mining burden during the remaining term of its current stability agreement. For further discussion refer to the supplemental schedule, "Provision for Income Taxes," on page XXVI, which is available on FCX's website, " www.fcx.com ."

e. Includes losses on early extinguishment of debt totaling $149 million ($0.16 per share) for the first nine months of 2012 and $60 million ($0.06 per share) for the first nine months of 2011.

f. Includes working capital (uses) sources and other tax payments of $(765) million for third-quarter 2012, $256 million for third-quarter 2011, $(1.5) billion for the first nine months of 2012 and $(126) million for the first nine months of 2011.

g. Reflects per pound weighted-average site production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, excluding net noncash and other costs. For reconciliations of per pound unit costs by operating division to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedule, "Product Revenues and Production Costs," beginning on page VII, which is available on FCX's website, " www.fcx.com ."

OPERATIONS

Consolidated. Third-quarter 2012 consolidated copper sales of 922 million pounds were higher than the July 2012 estimate of 885 million pounds primarily reflecting higher production from North America and Africa and the timing of sales in South America. Third-quarter 2012 consolidated gold sales of 202 thousand ounces were lower than the July 2012 estimate of 225 thousand ounces primarily because of changes to mine plans at the Grasberg mine in Indonesia, which delayed access to higher grade material, and a slower than expected ramp-up at the Deep Ore Zone (DOZ) underground mine. Third-quarter 2012 consolidated copper and gold sales were lower than third-quarter 2011 sales of 947 million pounds of copper and 409 thousand ounces of gold primarily reflecting lower ore grades in Indonesia, partly offset by increased sales in North America and Africa.

Third-quarter 2012 consolidated molybdenum sales of 21 million pounds were higher than the July 2012 estimate of 20 million pounds and third-quarter 2011 sales of 19 million pounds.

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