Freeport reports Q1 Indonesian production
Friday, April 19 2013 - 04:02 AM WIB
Through its 90.64 percent owned and wholly consolidated subsidiary PT Freeport Indonesia, Freeport-McMoRan Copper & Gold Inc (FCX) assets include one of the world's largest copper and gold deposits at the Grasberg minerals district in Papua, Indonesia. PT Freeport Indonesia produces copper concentrates, which contain significant quantities of gold and silver.
Operating and Development Activities. FCX has several projects in progress in the Grasberg minerals district, primarily related to the development of large-scale, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to ramp up over several years to produce approximately 240,000 metric tons of ore per day following the currently anticipated transition from the Grasberg open pit in 2017. Development of the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) is advancing according to schedule, which would enable the DMLZ to commence production in 2015 and the Grasberg Block Cave mine to commence production in 2017. Over the next five years, estimated aggregate capital spending on these projects is currently expected to average $735 million per year ($585 million per year net to PT Freeport Indonesia).
Operating Data. Following is summary consolidated operating data for the Indonesia mining operations for the first quarters of 2013 and 2012:
| Indonesian Mining Operations | Three Months Ended March 31 |
|
| 2013 | 2012 | |
| Copper (million of recoverable pounds): | ||
| Production | 219 | 123 |
| Sales | 198 | 134 |
| Average realized price per pound | $ 3.43 | $ 3.81 |
| Gold (thousands of recoverable ounces): | ||
| Production | 212 | 229 |
| Sales | 191 | 266 |
| Average realized price per ounce | $ 1,604 | $ 1,695 |
| Unit net cash (credits) costs per pound of copper: | ||
| Site production and delivery, excluding adjustments | $ 2.61 | $ 3.51 |
| Gold and silver credits | (1.63) | (3.51) |
| Treatment charges | 0.23 | 0.19 |
| Royalties | 0.13 | 0.14 |
| Unit net cash (credits) costs (*) | $ 1.34 | $ 0.33 |
| * 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." | ||
Indonesia's first-quarter 2013 copper sales of 198 million pounds were higher than first-quarter 2012 copper sales of 134 million pounds when labor-related disruptions affected operations. Productivity measures have continued to improve resulting in first-quarter 2013 daily mill throughput averaging 199,400 metric tons per day, including 59,000 metric tons per day from the Deep Ore Zone (DOZ) underground mine.
As expected, Indonesia's first-quarter 2013 gold sales of 191 thousand ounces were lower than first-quarter 2012 gold sales of 266 thousand ounces primarily as a result of lower ore grades from mine sequencing.
At the Grasberg mine, the sequencing of 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. FCX expects sales from Indonesia to approximate 1.1 billion pounds of copper and 1.25 million ounces of gold for the year 2013, compared with 716 million pounds of copper and 915 thousand ounces of gold for the year 2012. FCX expects sales from Indonesia to increase in the second half of 2013 as PT Freeport Indonesia gains access to higher ore grades and achieves the targeted ramp up in production from the DOZ underground mine to approximately 80,000 metric tons per day (57 percent of Indonesia's projected copper sales and 63 percent of Indonesia's projected gold sales are expected in the second half of 2013).
Indonesia's unit net cash costs (including gold and silver credits) of $1.34 per pound of copper in first-quarter 2013 were higher than unit net cash costs of $0.33 per pound in first-quarter 2012 primarily reflecting lower gold credits, partly offset by higher copper sales volumes.
FCX estimates Indonesia's average unit net cash costs (net of gold and silver credits) would approximate $1.00 per pound of copper for the year 2013, based on current sales volume and cost estimates and assuming an average gold price of $1,400 per ounce for the remainder of 2013. Projected unit net cash costs for 2013 are higher than previous estimates primarily because of lower gold credits. Indonesia's projected unit net cash costs would change by approximately $0.05 per pound for each $50 per ounce change in the average price of gold for the remainder of 2013. 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 sales volumes, as well as average realized gold prices for the quarterly period. Indonesia's unit net cash costs are expected to decline during the second half of the year as it gains access to higher grade ore. (end of excerpt)