Freeport profit rises on higher production

Tue Jan 22, 2013 8:42am EST

(Reuters) - Freeport-McMoRan Copper & Gold Inc (FCX.N) reported a 16 percent rise in quarterly profit on higher copper and gold production, sending its shares up nearly 2 percent before the bell.

Freeport, the world's largest listed copper producer, said early last month it would buy Plains Exploration & Production Co PXP.N and McMoRan Exploration Co MMR.N to enter the energy business. The $9 billion bid to buy the two U.S. oil and gas companies has been criticized by investors as an expensive and unnecessary distraction.

The Phoenix, Arizona-based company's shares dropped 16 percent on December5 following the announcement of the deal but have since recovered. They have gained nearly 5 percent to Friday's close of $33.64.

Freeport was positive about the opportunities that the pending oil and gas acquisitions will provide, Chairman James Moffett and Chief Executive Richard Adkerson said on Tuesday.

The move into energy comes at a time when prospects for growth in the flagship copper business are waning as mines age, grades decline and costs rise. There are very few premier accessible copper mines left to be acquired.

Net income rose to $743 million, or 78 cents per share, in the fourth quarter, from $640 million, or 67 cents per share, a year earlier.

Revenue rose 8 percent to $4.51 billion.

Higher volumes helped Freeport beat a fall in prices in the fourth quarter. Copper output rose 22 percent to about 1 billion pounds while gold production soared 39 percent to 251,000 ounces.

Spot gold fell nearly 6 percent to $1,674.34 per ounce during the December quarter. Three-month copper on the London Metal Exchange fell 4 percent to $7,931 per tonne during the period.

Freeport said projected 2013 gold sales are expected to be 37 percent higher than 2012, primarily reflecting higher ore grades at its Grasberg mine in Indonesia.

Gold output from Grasberg was hurt for most of last year as the company worked through a layer of lower-grade ores.

(Reporting by Swetha Gopinath; Editing by Sriraj Kalluvila)