Freeport reports Q1 Indonesian copper output slightly lower
Thursday, April 21 2011 - 01:23 AM WIB
Through its 90.64 percent owned and wholly consolidated subsidiary PT Freeport Indonesia (PT-FI), FCX operates the world?s largest copper and gold mine in terms of reserves at its Grasberg operations in Papua, Indonesia.
| Indonesian Mining Operations | Three Months Ended March 31 |
|
| 2011 | 2010 | |
| Copper (million of recoverable pounds): | ||
| Production | 284 | 279 |
| Sales | 278 | 296 |
| Average realized price per pound | $ 4.26 | $ 3.51 |
| Gold (thousands of recoverable ounces): | ||
| Production | 441 | 429 |
| Sales | 454 | 458 |
| Average realized price per ounce | $ 1,400 | $ 1,110 |
| Unit net cash (credits) costs per pound of copper: | ? | ? |
| Site production and delivery, including adjustments | $ 1.84 | $ 1.54 |
| Gold and silver credits | (2.34) | (1.79) |
| Treatment charges | 0.18 | 0.23 |
| Royalties | 0.16 | 0.12 |
| Unit net cash credits (*) | $ (0.16) | $ (0.10) |
| *. For a reconciliation of unit net cash 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 web site, ?www.fcx.com.? | ||
FCX has several projects in process in the Grasberg minerals district, primarily related to the development of the large-scale, high-grade underground ore bodies located beneath and nearby the Grasberg open pit. In aggregate, these underground ore bodies are expected to ramp up to approximately 240,000 metric tons of ore per day following the currently anticipated transition from the Grasberg open pit in 2016.
The Deep Ore Zone (DOZ) mine, one of the world?s largest underground mines, has been
expanded to 80,000 metric tons of ore per day; and a feasibility study for the Deep Mill Level Zone (DMLZ), which is expected to start up as the DOZ depletes, has been completed. The high-grade Big Gossan mine, which began producing in the fourth quarter of 2010, is expected to reach full rates of 7,000 metric tons of ore per day by the end of 2012. Substantial progress has been made in developing infrastructure and underground workings that will enable access to the underground ore bodies.
Development of the terminal infrastructure and mine access for the Grasberg Block Cave and DMLZ ore bodies is in progress. Over the next five years, estimated aggregate capital spending is expected to average approximately $600 million ($470 million net to PT-FI) per year on underground development activities.
Indonesia reported slightly lower copper sales in the first quarter of 2011, compared to the first quarter of 2010, primarily because of timing of shipments. Gold sales in the first quarter of 2011 approximated first-quarter 2010 sales. First-quarter 2011 copper and gold sales were significantly above the January 2011 estimates because of improved pit slope conditions, which enabled access to ore previously expected to be mined in future periods. At the Grasberg mine, the sequencing of mining areas with varying ore grades causes fluctuations in the timing of ore production resulting in fluctuations in quarterly and annual sales of copper and gold.
Because of recent revisions to its Grasberg mine plans, FCX expects 2011 sales to approximate 1.1 billion pounds of copper and 1.5 million ounces of gold, which reflect increases of approximately 40 million pounds and approximately 130 thousand ounces compared to the January 2011 estimates.
Indonesia unit site production and delivery costs were higher in the first quarter of 2011, compared to the first quarter of 2010, primarily because of higher maintenance and other input costs.
Unit net cash costs averaged a net credit of $0.16 per pound in the first quarter of 2011, compared to a net cost of $0.10 per pound for the first quarter of 2010, primarily reflecting higher gold credits.
Assuming an average gold price of $1,400 per ounce for the remainder of 2011 and using current 2011 sales volume and cost estimates, FCX expects PT-FI?s average unit net cash costs, including gold and silver credits, to approximate $0.38 per pound of copper for the year 2011. Unit net cash costs for 2011 would change by approximately $0.06 per pound for each $50 per ounce change in the average price of gold for the remainder of 2011. Quarterly unit net cash costs will vary significantly with variations in quarterly metal sales volumes. (end of excerpt)