Freeport reports lower 2014 sales, seeks higher sales in 2015
Friday, January 30 2015 - 03:13 AM WIB
US-based Freeport McMoRan Copper & Gold Inc reported Tuesday lower fourth quarter gold and copper sales from its Indonesian mining operation in Papua Province. The company expects higher sales in 2015.
The company said in a statement that its Indonesian subsidiary PT Freeport Indonesia (PT-FI), which operates the giant Grasberg gold and copper mine in Papua, saw copper sales volume in the fourth quarter of last year reached 180 million pounds, lower than 292 million pounds in the corresponding period of the previous year.
Gold sales were also lower at 366,000 ounces, compared to 476,000 ounces in the fourth quarter of 2013.
Freeport said PT-FI suffered lower production due to lower ore grades and unplanned work stoppages.
?During fourth-quarter 2014, reduced workforce attendance levels in certain operating areas (primarily in the Grasberg open-pit) unfavorably impacted productivity. Following discussions with union leadership and other stakeholders, attendance levels improved significantly by year-end 2014 and in January 2015,? the company said in a statement.
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 1.0 billion 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,? Freeport said.
PT-FI has updated its mine plans to incorporate lower than planned mining rates associated with work stoppages in late 2014, resulting in a deferral of completion of mining in the open pit from mid-2017 to late 2017 and resulting timing impacts of metal production.
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 $0.58 per pound of copper in fourth-quarter 2014 were higher than unit net cash costs of $0.21 per pound in fourth-quarter 2013, primarily reflecting lower volumes, 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 $1.19 per pound of copper for the year 2015, based on current sales volume and cost estimates, and assuming an average gold price of $1,300 per ounce. 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. 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.
| Indonesian Mining Operations | Three Months Ended December 31 | |
| 2014 | 2013 | |
| Copper (million of recoverable pounds): | ||
| Production | 171 | 304 |
| Sales | 180 | 292 |
| Average realized price per pound | $ 2.86 | $ 3.33 |
| Gold (thousands of recoverable ounces): | ||
| Production | 354 | 502 |
| Sales | 366 | 476 |
| Average realized price per ounce | $ 1,192 | $ 1,219 |
| Unit net cash (credits) costs per pound of copper: | ||
| Site production and delivery, excluding adjustments | $ 2.37 | $ 1.89 |
| Gold and silver credits | (2.46 ) | (2.04 ) |
| Treatment charges | 0.27 | 0.24 |
| Export duties | 0.20 | ? |
| Royalties | 0.20c | 0.12 |
| Unit net cash (credits) costs (*) | $ 0.58 | $ 0.21 |
| * 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 VI, which is available on FCX's website, "www.fcx.com." | ||
Editing by Reiner Simanjuntak