Freeport shares fall on NYSE after the accident in Indonesia
Thursday, October 9 2003 - 11:30 PM WIB
New Orleans-based Freeport said in a press release that two mine workers were killed and six others were missing in an accident caused by a landslide on Thursday morning at its key mining site in Papua, Indonesia.
Merrill Lynch analyst Daniel Rolling downgraded the stock to neutral from buy, saying the production stoppage from the accident puts the full-year earnings at risk though its sole mining operator Grasberg Open Pit Mine has an underground mining facility that continues operate.
Six employees of the Grasberg were also injured in the accident.
Rolling said in a research note that when Grasberg does restart its mining operations, there are concerns the company will be mining low-grade materials. There is an uncertainty surrounding how long it will take to restore the current level of its productivity.
Freeport will likely defer some production excepted in the fourth quarter to early 2004, but maintained its long-term mine plans. It also provided an update on its third quarter production.
Meanwhile, ahead of its Oct. 16 earnings release, Freeport forecast copper sales of 345 million pounds and gold sales of approximately 764,000 ounces in the third quarter. That is up from previous estimates of 320 million pounds of copper and 644,000 ounces of gold.
Freeport-McMoRan shares were down $1.75, or 4.7%, at $35.65 in midday trading Thursday.
Merrill Lynch has acted as a manager or co-manager in a public offering and has an investment ?banking relationship with the company.
Freeport recently traded at US$35.51, down $1.89, or 5.1%, on volume of 5.2 million shares compared with its average daily volume of 2.1 million. The stock on Wednesday had hit a 52-week high of $37.70.(*)