(Recasts to lead with net income reduction)
By Frank Tang
DENVER, Sept 10 Freeport-McMoRan Copper & Gold
Inc (FCX.N) said on Wednesday it expects recent lower copper
prices to reduce third-quarter net income by approximately $100
The Phoenix-based mining company also said it was lowering
its 2008 copper and gold production outlook, due to an incident
at its vast Grasberg mine in Indonesia.
It gave no further details of the incident at the complex,
where several workers were killed in a landslide in 2003.
Freeport is also confident that its giant Tenke Fungurume
copper/cobalt project will move forward following discussions
with the government of Democratic Republic of Congo over
renegotiating terms of Freeport's contract.
In late morning trading on the New York Stock Exchange,
Freeport's stock was up 3.4 percent at $67.37.
During a presentation at the Denver Gold Forum industry
meeting, Chief Executive Officer Richard Adkerson said the $100
million reduction in third-quarter net income was a result of
lower prices for copper, which had surged over the past four
years, but have slipped almost 25 percent since early July.
At the start of the third quarter, copper was selling for
above $4 per pound. But since July, the benchmark December
copper contract HGZ8 has been on a steady decline, losing
nearly 25 percent of its value and teetering near a 7-1/2-month
low at around $3.05.
Adkerson did not elaborate on the lower income figure
during his presentation but said the estimate was included in a
filing with the U.S. Securities and Exchange Commission.
Freeport's second-quarter net income was $947 million.
Earlier, the company said it was lowering its 2008 copper
and gold production outlook, due to the incident at Grasberg.
Although the incident is not expected to affect long-term
mine plans significantly, the company said access to a
high-grade section of the mine will be restricted until
remediation activities are completed and safe access to this
mining area can be assured.
Freeport said due to the delayed access to the high-grade
material, a portion of the metal expected to be mined in the
second half of 2008 will be deferred to future periods.
Initial estimates indicate about 150 million pounds of
copper and 200,000 ounces of gold previously expected to be
mined in 2008 will be deferred to future periods.
In July, Adkerson had said drilling programs adjacent to
existing ore bodies at Grasberg and in areas outside current
operations were showing opportunities to add reserves.
He said Grasberg operated at rates greater than 66,000
short tons per day during the second quarter. "That's a record.
We are expanding to have a sustained rate at 80,000 tons per
day targeted for 2010," he added.
On the Congo project, which is believed to be one of the
richest in the world, Adkerson said on Wednesday: "We have
confidence that we have a good basis for going forward."
There had been questions about the miner's contract as part
of the Congo's recent sweeping mine review.
The project is set for initial production during the second
half of 2009.
Adkerson also told the Denver Gold Forum that Freeport
estimates capital expenditures at $3 billion for 2008, $2.5
billion for 2009 and $1.3 billion for 2010.
He estimates $240 million in exploration spending for 2008,
with 20 percent of that in Indonesia.
(With additional reporting by Carole Vaporean and Chris Kelly
in New York, editing by Gerald E. McCormick)