Freeport increases earnings

Record quarterly sales for copper and gold produced at its Grasberg operation in Indonesia enabled Freeport-McMoRan Copper & Gold (FCX-N) to boost earnings during the last three months of 1998.

Freeport earned US$42.1 million (or 26 cents per share) on $485 million in revenue in the fourth quarter, compared with US$39.7 million (21 cents per share) on $420 million in the corresponding period of 1997.

Freeport’s 82%-owned subsidiary, P.T. Freeport Indonesia (PT-FI), sold a record 511.2 million lbs. copper and 1.02 million oz. gold during the period. Throughput reached 210,600 tonnes per day, well above the 127,100 tonnes recorded in the year-ago period.

The company’s average realized gold price fell to US$289 from $304 per oz. between the past two years.

For the year 1998, Freeport earned US$118.3 million (67 cents per share) on revenue of $1.76 billion, compared with US$208.5 million ($1.06 per share) on just over $2 billion in 1997.

The mine, situated in Irian Jaya, cranked out 1.4 billion lbs. copper, 2.2 million oz. gold and 3.4 million oz. silver during 1998, compared with the previous year’s 1.1 billion lbs. copper, 1.8 million oz. gold and 2.6 million oz. silver.

Freeport expanded Grasberg’s proven and probable reserves by 381 million tonnes in 1998. The figure now stands at 2.5 billion tonnes grading 1.13% copper, 1.05 grams gold, and 3.77 grams silver per tonne, equivalent to 51.3 billion lbs. copper, 63.8 million oz. gold and 150.9 million oz. silver.

Through a previous agreement, Rio Tinto (RTP-N) receives a 40% interest on production from mineralization added to reserves after 1994.

Delineation drilling is under way on the Kucing Liar, Grasberg underground, and DOZ resources. At Kucing Liar, three rigs are stepping out to the west where mineralization appears to be thinning.