Freeport McMoRan Q3 net income soars on higher production, prices
Tuesday, October 18 2005 - 01:01 PM WIB
FCX said its Indonesian unit PT. Freeport Indonesia (PT-FI) produced 344.5 million pounds of copper and 472,100 ounces of gold during the third quarter, higher than previous year?s production of 256.4 million pounds and 337,000 ounces. Average copper price during the quarter increased to$1.73 per pound from $1.34, while average gold price increased to $445.9 per ounce from $398.89.
PT-FI?s 9-month productions have reached 982.4 million pounds of copper and 1.67 million ounces of gold.
FCX said PT-FI achieved significantly higher production due to higher ore grades and milling rates. However, FCX said production was lower than expected because of lower than expected mining rates in the "6 South" high-grade section of the Grasberg open pit, lower ore grades and an extension of planned downtime for mill maintenance activities.
Mill throughput, which varies depending on ore types being processed, averaged 216,300 metric tons of ore per day in the third quarter of 2005 compared with 194,000 metric tons of ore in the third quarter of 2004. Mill rates in the third quarter of 2005 were negatively affected by an extension to a planned maintenance shutdown of one of PT-FI's semi-autogenous grinding mills. Mill rates are projected to average in excess of 220,000 metric tons of ore per day during the fourth quarter of 2005.
Production from PT-FI's Deep Ore Zone (DOZ) underground mine averaged 41,800 metric tons of ore per day in the third quarter of 2005, representing 19 percent of mill throughput. DOZ continued to perform above design capacity of 35,000 metric tons of ore per day. PT-FI is expanding the capacity of the DOZ underground operation to a sustained rate of 50,000 metric tons per day with the installation of a second crusher and additional ventilation, expected to be completed by 2007.
PT-FI's share of sales for 2005 is expected to approximate 1.47 billion pounds of copper and 2.8 million ounces of gold.
FCX said PT-FI expected its fourth quarter operations to benefit from access to higher grade material and more flexible mining set-ups than in the third quarter, allowing PT-FI to generate sales estimated to approximate 480 million pounds of copper and 1.1 million ounces of gold, 39 percent more than third-quarter copper sales and more than twice the third-quarter gold sales. Achieving this high level of production and sales is dependent, among other factors, on the successful operations of PT-FI production facilities and systems, and sales volumes could be reduced if year-end weather conditions delay concentrate loading operations. These factors could result in sales volumes being deferred until 2006.
Elsewhere, FCX said PT-FI's exploration efforts in 2005 are focused on potential extensions of the Mill Level Zone (MLZ) and Deep MLZ deposits to the northwest, expansion of the Deep Grasberg and Kucing Liar resources, and testing downward extensions of the Dom deposit. FCX continues to assess the timing of resumption of exploration activities in areas outside the existing producing area of the Grasberg mining district.
In 2004, PT-FI commenced its Common Infrastructure project, which will provide access to its large undeveloped underground ore bodies located in the Grasberg mining district through a tunnel system located approximately 400 meters deeper than its existing underground tunnel system. The Common Infrastructure project is progressing according to plan.
PT-FI is also proceeding with plans to develop Big Gossan, a high-grade deposit located near the existing milling complex. The engineering design for Big Gossan includes 44 million metric tons of ore, grading 2.5 percent copper and 1.2 g/t of gold, expected to yield aggregate payable copper of 2.3 billion pounds and aggregate payable gold of 1.1 million ounces. Aggregate capital expenditures for Big Gossan to be incurred over a four-year period beginning in 2006 total approximately $225 million.
FCX, through its subsidiary PT-FI operates one of the world?s largest copper, gold mining complex in Papua province. (alex)