CORRECTED - Freeport continues mine expansions as copper gains
(Corrects headline and first paragraph to show company gave positive outlook on metals, not on metals prices In 12th paragraph, corrects location of Cerro Verde to Peru instead of Chile)
NEW YORK, April 20 (Reuters) - Freeport McMoRan Copper & Gold (FCX.N) gave a positive outlook on Wednesday for all of the metals it mines -- gold, copper, molybdenum.
The company also increased its 2011 exploration budget as it continues projects to expand or restart mining projects across the regions where it operates.
Chief Executive Officer Richard Adkerson spoke to analysts on a conference call after the world's second largest copper miner reported first quarter earnings of $1.5 billion, beating Wall estimates. [ID:nN20133002]
Phoenix-based Freeport increased its 2011 exploration budget to $225 million from the $200 million announced in January, but left capital expenditures (capex) for 2011 at $2.5 billion and for 2012 at $2.1 billion, he said, adding that the company was looking at increasing capex as well.
"We expect our capital spending beyond 2011 will increase above our previous guidance as we get board approval for the Cerro Verde expansion and other projects," Adkerson said.
About $1.3 billion of the capex budget will go primarily to underground development of the Indonesian Grasberg copper mine, construction activities at the Climax molybdenum mine in Colorado and development of the El Abra sulfide deposit in South America.
In North America, its Morenci, Arizona copper mine reached a target rate of 635,000 tonnes of output per day in March, and the miner is studying further output rate increases.
Whereas it was evaluating investment in a new mill facility at Morenci in January, it has now begun a feasibility study to expand the mill to 115,000 tonnes per day, and is targeting an increase of 150 to 200 million lbs of incremental copper production in two to three years.
Also in Arizona, its Safford copper mine, completed in April a $150 million sulphur burner project. It will cut mining costs.
Adkerson said the mining giant is on schedule with restarts at its Miami mine in Arizona where it is ramping up to 100 million lbs of copper a year, and milling and mining activities at its Chino copper mine in New Mexico. Chino's output targets remain 100 million lbs per year in 2012 and 2013, increasing to 200 millions lbs in 2014.
Its Chilean El Abra project began ore crushing, conveying, stacking and leaching of a large sulfide mineral deposit in the first quarter. A development project extends the life of the mine for 10 years with 300 million lbs of copper a year anticipated.
At Cerro Verde, in Peru, it is now targeting a new concentrator facility that would add 240,000 tonnes per day of mill throughput to the current 120,000 tonnes a day output.
Adkerson said the giant Grasberg mine in Indonesia continues to expand according to plans, but he added that Freeport is studying the possibility of extending mining of its open pit to beyond 2016, before going completely underground.
The CEO also addressed questions about the death of two workers from a flood that shut part of the underground mine at Grasberg. The incident is being investigated, he said. [ID:nN20156781]
In the Democratic Republic of Congo, 2011 sales estimates at Tenke Fungurume, the world's largest copper project, were cut to 285 million lbs from 290 million projected in January, as it gears up for the second phase of the mine's expansion to add 150 million lbs of copper per year in two years.
Adkerson added that the DRC's review of its mining assets was officially completed this week with a presidential decree.
Construction of the Climax molybdenum mine in Colorado is expected to be complete in 2012, when it will set a start date.
Freeport is also studying several other projects in North and South America, as well as Africa, the chief executive said. (Additional reporting by Steve James; Editing by David Gregorio)
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