Freeport reports higher copper, gold sales
Tuesday, April 28 2015 - 01:05 AM WIB
US gold and copper giant Freeport McMoRan Copper & Gold Inc said that sales of its Indonesian subsidiary PT Freeport Indonesia (PT-FI) in the first quarter of this year increased to155 million pounds of copper and 260 thousand ounces of gold compared to the first-quarter 2014 sales of 109 million pounds of copper and 162 thousand ounces of gold.
The company said in a statement last week that this reflects higher operating rates, partly offset by lower ore grades. Indonesia's first-quarter 2015 copper production was approximately 20 percent below January 2015 estimates primarily because of lower mining rates, which improved throughout the quarter. Indonesia's gold production was above January 2015 estimates because of higher ore grades.
PT-FI, which operates the giant Grasberg mine in Papua, was forced to suspend export during the first six months of last year after the government of Indonesia introduced the mineral ore export ban policy. The company resumed export in July.
Freeport said that at the Grasberg mine, the sequencing of mining areas with varying ore grades causes fluctuations in quarterly and annual production of copper and gold. Sales from Indonesia mining are expected to approximate 885 million pounds of copper and 1.3 million ounces of gold for the year 2015, compared with 664 million pounds of copper and 1.2 million ounces of gold for the year 2014.
A significant portion of PT-FI's costs are fixed and unit costs vary depending on production volumes. Indonesia's unit net cash costs (including gold and silver credits) of US$1.34 per pound of copper in first-quarter 2015 were lower than unit net cash costs of $1.53 per pound in first-quarter 2014, primarily reflecting higher volumes, partly offset by the impact of export duties and increased royalty rates.
Unit net cash costs (net of gold and silver credits) for Indonesia mining are expected to approximate $1.09 per pound of copper for the year 2015, based on current sales volume and cost estimates, and assuming an average gold price of $1,200 per ounce for the remainder of 2015. Indonesia mining's projected unit net cash costs would change by approximately $0.06 per pound for each $50 per ounce change in the average price of gold for the remainder of 2015. Because of the fixed nature of a large portion of Indonesia's costs, unit costs vary from quarter to quarter depending on copper and gold volumes.
Following is summary consolidated operating data for the Indonesia mining operations for the first quarters of 2015 and 2014:
| Indonesian Mining Operations | Three Months Ended March 31 | |
| 2015 | 2014 | |
| Copper (million of recoverable pounds): | ||
| Production | 154 | 140 |
| Sales | 155 | 109 |
| Average realized price per pound | $ 2.74 | $ 3.04 |
| Gold (thousands of recoverable ounces): | ||
| Production | 255 | 208 |
| Sales | 260 | 162 |
| Average realized price per ounce | $ 1,186 | $ 1,299 |
| Unit net cash (credits) costs per pound of copper: | ||
| Site production and delivery, excluding adjustments | $ 2.84 | $ 3.33 |
| Gold and silver credits | (2.09 ) | (2.15 ) |
| Treatment charges | 0.29 | 0.24 |
| Export duties | 0.14 | ? |
| Royalties | 0.16 | 0.11 |
| Unit net cash (credits) costs (*) | $ 1.34 | $ 1.53 |
| * For a reconciliation of unit net cash costs (credits) per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedule, "Product Revenues and Production Costs," beginning on page X, which is available on FCX's website, "www.fcx.com." | ||