Freeport reports lower Q2 copper, gold sales

US mining giant Freeport-McMoRan Copper & Gold Inc. (FCX) reported on Tuesday that its Indonesia copper and gold sales in the second quarter of 2008 were significantly lower than in the second quarter of 2007 as a result of the expected mining in a lower ore grade section of the Grasberg open pit.

?At the Grasberg mine, the sequencing in mining areas with varying ore grades causes fluctuations in the timing of ore production, resulting in varying quarterly and annual sales of copper and gold,? the company said.

PT.Freeport Indonesia (PT-FI), FCX?s Indonesian unit that runs the Papua giant mine expects to mine in a higher-grade section of the Grasberg open pit in the second half of 2008 compared to the first half of 2008, it said.

Approximately 63 percent of 2008 copper sales and 63 percent of 2008 gold sales are estimated in the second half, with the fourth quarter expected to be the highest of the year.

FCX expects Indonesia sales of 1.2 billion pounds of copper and 1.3 million ounces of gold for the year 2008, compared with 1.1 billion pounds of copper and 2.2 million ounces of gold for the year 2007.

PT-FI has several projects in progress throughout the Grasberg district, including developing its large-scale underground ore bodies located beneath and adjacent to the Grasberg open pit.

The expansion of the currently producing Deep Ore Zone (DOZ) mine to 50,000 metric tons of ore per day is complete with second-quarter rates averaging 66,000 metric tons per day.

A further expansion of the DOZ mine to 80,000 metric tons per day is under way with completion targeted by 2010. Other projects include the development of the high-grade Big Gossan mine, expected to ramp up to full production of 7,000 metric tons per day in 2011, and the continued development of the Common Infrastructure project, which will provide access to the Grasberg underground ore body, the Kucing Liar ore body and future development of the mineralized areas below the DOZ mine.

FCX said its 2008 exploration efforts in Indonesia include testing extensions of the Deep Grasberg and Kucing Liar mine complex, evaluating the resource below the old Ertsberg pit for potential resumption of open pit mining and evaluating targets in the area between the Ertsberg East and Grasberg mineral systems from the new Common Infrastructure tunnels.

FCX has also resumed exploration activities in certain prospective areas in Papua, outside Block A (the Grasberg contract area).(denny)

Consolidated Indonesian Mining Operations	Second Quarter		Six Months
	2008	2007	2008	2007
Copper (million of recoverable pounds):
Production	222	298	422	766
Sales	229	334	436	751
Average realized price per pound	$3.88	$3.43	$3.84	$3.40
Gold (thousands of recoverable ounces):
Production	221	795	467	1,869
Sales	235	880	486	1,827
Average realized price per ounce	$912	$658	$917	$659

Unit Net Cash Costs (Credits)	Second Quarter		Six Months
	2008	2007	2008	2007
Per pound of copper:
Site production and delivery, after adjustments	$ 1.90	$ 1.14	$ 1.88	$ 0.92
Gold and silver credits	(0.99 )	(1.79 )	(1.11 )	(1.65 )
Treatment charges	0.28	0.33	0.31	0.35
Royalties	0.13	0.14	0.13	0.13
Unit net cash costs (credits)	$ 1.32	$ (0.18)	$ 1.21	$ (0.25)