Freeport-McMoRan posts Q3 profit, sees Q4 production decline

US based Mining company Freeport-McMoRan Copper & Gold on Tuesday reported net income of US $4.2 million, or 3 cents per share, compared with a loss of $9.2 million, or 6 cents a share, for third quarter 2000.

Freeport said the increase in profit was due to higher gold production.

Freeport earlier this month had cut its third-quarter estimate to that level as low copper prices outweighed production and sales that were above expectations.

However, the company said it expects a decline in production during the fourth quarter because of a decline in ore grade at its giant Grasberg mine in Irian Jaya operated by its subsidiary PT Freeport Indonesia (PTFI).

James Moffett, Freeport McMoRan?s chairman and chief executive officer, said that although there have been some demonstrations at the American Embassy in Indonesia, there is no sense of these feelings in remote Irian Jaya where they have their operations.

During the quarter, Freeport said, its sales of gold rose 62 percent to 673,800 ounces, while the average realized price rose slightly to $277.08 per ounce on an improvement in gold grade, record gold recoveries and record mill throughput. Copper sales fell 10 percent to 350.6 million pounds, while the average price realized fell 25 percent to 65 cents per pound, primarily due to lower copper ore grades and recoveries.

Freeport said it expects its fourth-quarter production to be down slightly, with gold sales around 440,000 ounces and copper sales of about 330 million pounds, because of lower than expected ore grades.

Meanwhile, Freeport said the reserve extension drilling program has been completed at the Ertsberg Stockwork Zone (ESZ), adjacent to the Deep Ore Zone (DOZ) mine with the results indicated an expansion of the footprint of the lower ESZ mining block and additional filling in of ore between the DOZ mine reserve and the ESZ reserve.

According to the company's statement, PT-FI is currently evaluating the potential for exploiting the two deposits as one, by an outward extension of the DOZ mine infrastructure.

Exploration drilling also continues at the Grasberg Underground and The exploration drilling program at GBT-A (also previously referred to as Guru Ridge) has been completed, said the company.

With current copper and gold metals prices, PT Freeport Indonesia would not pursue current development of this surface deposit, but will continue to study and evaluate the prospect and mining opportunities for other smaller near-surface ore bodies, said the company .(*)