Lower output leaves Freeport-McMoran with loss

Freeport-McMoran Copper & Gold Inc., operator of a major copper and gold mine in Indonesia, on Tuesday reported a third quarter loss on an expected production decline.

Despite the company's September operations update analysts surveyed by First Call/Thomson Financial had expected a third quarter profit of 4 cents a share.

New Orleans-based Freeport-McMoRan said it lost $9.2 million, or 6 cents a share, in the latest quarter compared to a year earlier profit of $26.8 million, or 16 cents a share.

Analysts commenting on the consensus profit estimate said the expectation did not reflect the slippage in gold production the company talked about in September.

At that time the company said third quarter copper sales would ``approximate its previous estimate of 380 million pounds and gold sales (would) be slightly lower than its previous estimate of 460,000 ounces.''

Freeport-McMoRan reported sales of 388.3 million pounds of copper and 422,700 ounces of gold during the third quarter, and projected fourth-quarter sales to total 410 million pounds of copper and 675,000 ounces of gold.

The company said the third quarter loss included pretax charges of $20.5 million for currency losses and $5.7 million for a previously announced corporate restructuring. These reduced net income by $16.8 million, or 11 cents a share, and $2.8 million, or 2 cents per share, respectively.

Freeport-McMoRan said production costs are expected to drop. The average net cash production costs, after credit for gold and silver sales, of the company's Indonesian mining unit, PT Freeport Indonesia, are expected to average 11 cents per pound of copper produced during the current quarter compared to 33 cents during the third quarter.

During the third quarter, Freeport said, it purchased 4.4 million shares of its common stock for $38.2 million, or $8.67 per share. (*)