Freeport's Results Weaker Than Expected

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported third-quarter results before markets opened this morning. The mining firm posted adjusted diluted earnings per share (EPS) of $0.86 on revenues of $4.42 billion. In the same period a year ago, the company reported EPS of $1.10 on revenues of $5.2 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.73 and $4.36 billion in revenues.

The company noted that third-quarter net income included one-time net credits totaling $0.18 per share.

The company's CEO said:

Our third quarter results reflect production growth in North America and Africa, offset by anticipated lower ore grades in Indonesia. As we look forward, we are on track to achieve meaningful increases in our production of copper as we return to higher grade ores at Grasberg and through the execution of brownfield expansions in the Americas and Africa, expected to add one billion pounds of copper annually over the next three years.

The company's third-quarter realized price for gold was $1,728 per ounce, up from $1,693 in the same period a year ago. Gold production fell from 385,000 ounces in 2011 to 204,000 ounces this year.

Copper production fell from 951 million pounds to 938 million pounds, but the realized price rose slightly, from $3.60 in the third-quarter of 2011 to $3.64 this year.

The company expects fourth-quarter sales to include 930 million pounds of copper and 255,000 ounces of gold. Gold sales have been reduced by 50,000 ounces due to lower grade ores from the company's Grasberg mine.

The company expects cash costs to fall in 2013 due to improved copper and gold volumes at its Grasberg mine in Indonesia as a result of higher grade ores.

Excluding the one-time items, Freeport's quarterly results did not meet consensus estimates. That will weigh on shares somewhat today.

Freeport's shares are down 0.3% in premarket trading this morning at $41.05, in a 52-week range is $31.08 to $48.96. Thomson Reuters had a consensus analyst price target of around $49.60 before today's report.

Paul Ausick