Shares in US copper giant Freeport McMoRan (NYSE:FCX) declined by as much as 2.3% in New York trading on Thursday after the company released results that disappointed markets despite a swing to profit.
The company announced net income attributable to common stock of $53 million, or 3 cents per share, in the second quarter, compared with a loss of $72 million, or 5 cents per share, in the same period last year.
The Phoenix, Arizona-based company is now worth $19.4 billion on the NYSE, flat for the year to date despite a resurgent copper price.
The miner’s quarterly copper production fell 1.2% to 767 million pounds (350,000 tonnes), molybdenum declined to 19 million pounds, while its gold output rose 19% to 191,000 ounces.
Consolidated sales for 2020 are expected to be approximately 3.15 billion pounds of copper (1.43 million tonnes), 0.8 million ounces of gold and 77 million pounds of molybdenum, rising sharply next year as its 49%-owned Grasberg mine in Indonesia expands underground.
Capital expenditures this year are expected to come in around $2 billion, including $1.3 billion for Grasberg and the completion of the Lone Star copper leach project in Arizona, but do not include outlays for its smelter project in Indonesia.
Freeport said the Lone Star project, near its Safford mine in the eastern part of the state, is substantially complete and on track to produce some 200 million pounds (90,000 tonnes) of copper annually beginning in the second half of 2020.
In April, Freeport unveiled a $1.3 billion cost-cutting plan, including delays to expansion projects, suspension of operations at its China mine in New Mexico, and deep cuts to exploration expenditure.
Only a handful of employees had gotten seriously sick from covid-19, CEO Richard Adkerson told investors on a Thursday conference call.
Exploration spending for 2020 is estimated at $30 million, roughly 60% below the 2019 total.
Copper was last trading at $2.93 a pound, not far off two-year highs and up by more than 50% from the covid-19 lows struck in March.
“We’re not making any major adjustments to those plans until we have clarity in this market situation,” Adkerson said in a response to the rising copper price.
If prices do continue to improve, Freeport may consider reinstating its dividend or share buybacks in 2021, he said in a conference call, Reuters reports.
Freeport operates seven open-pit copper mines in North America – Morenci (72%-owned), Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico – responsible for around half its output.
Freeport also operates the Cerro Verde mine in Peru, where it has a 53.6% interest, and the 51%-owned El Abra complex in Chile.
Freeport operates the Grasberg copper-gold mine and has an 81% economic interest in the venture through 2022. The government of the Asian nation owns 51% of the iconic mine.