The Indonesian government has given the go-ahead for Freeport-McMoRan Copper & Gold’s (FCX-N) to resume open-pit mining at its Grasberg complex after suspending operations there following the death of 28 workers in May.
Mining activities were shut down May 15 after the roof of an underground training facility collapsed, about 500 metres from the entrance to Freeport’s Big Gossan underground mine.
The resumption of underground mining must await approval from Indonesia’s Department of Energy and Mineral Resources pending inspections.
Freeport estimates that for the 38-day-period that both the open pit and underground operations were suspended (May 15-June 21), the impact on production amounted to about 115 million pounds of copper and 115,000 ounces of gold.
The ongoing suspension of underground operations will come at a cost of about 1 million pounds of copper and 1,000 ounces of gold per day, Freeport estimates.
Analysts at Cowen Securities in New York calculate that the loss in daily revenue “is now slightly more than $5 million a day, compared to the previous daily revenue loss of approximately $16 million a day.”
The Grasberg minerals district has three mines in operation: the Grasberg open pit, the Deep Ore Zone underground mine and the Big Gossan underground mine.
Cowen Securities has a one-year target price on the stock of US$45 per share. At presstime in New York Freeport was trading at US$26.83 per share within a 52-week range of $26.37-43.65.
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