November 13, 2010 / 4:57 AM / 9 years ago

Freeport could return more cash to investors

YOKOHAMA, Japan (Reuters) - Freeport-McMoRan Copper & Gold Inc’s (FCX.N) board could consider more steps to return cash to shareholders as the firm will be generating significant cash flows in excess of capital spending, its chief executive said.

Freeport, which operates mines in North and South America, Africa and Indonesia, was also optimistic about the outlook for copper prices due to continued demand from China and emerging markets, and saw volatile currencies keeping gold prices firm.

“We have just increased our regular dividend to $2 a share. Our board will have the opportunity to consider other steps to return cash to shareholders,” CEO Richard Adkerson told Reuters in an interview on the sidelines of the Asia-Pacific Economic Cooperation (APEC) meeting in the port city of Yokohama.

The company would be generating an operating cash flow of $6 billion this year and planned to increase its spending on new projects to boost output, he said.

Last month the company said it would resume mining at its Chino mine in New Mexico where it had suspended operations in late 2008 in response to the economic downturn and was ramping up operations at several other idled mines.

Freeport said its capital expenditure was currently about $1.6 billion for 2010 including investments in major projects such as the sulfide ore project at El Abra in Chile and underground development activities at the Grasberg mine in Indonesia. For a presentation click here

“The outlook is we will be generating very substantial cash flows in excess of our capital spending,” Adkerson said, adding the project spending could take a few years.

Freeport last month beat Wall Street estimates with a 30 percent jump in third-quarter profit on soaring prices for gold and other metals.

Adkerson said he was bullish on gold prices because they were driven by uncertainty in the currency and financial markets, and global capital flows instead of fundamental factors such as supply and demand.

Gold prices hit record highs over $1,300 per ounce during the July-September period this year — compared to an average price of $987 in the third quarter of 2009.

“People’s lack of confidence in the U.S. dollar and other major currencies tend to indicate a real positive outlook for gold,” he said.

Reporting by Saeed Azhar and James Topham; Editing by Ed Davies

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