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Freeport-McMoRan Q1 earnings beats estimates despite Grasberg strike

Published: 14:47 19 Apr 2012 EDT

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Freeport-McMoRan Copper & Gold's (NYSE:FCX) first-quarter earnings fell by almost half due to labour problems at its Grasberg mine in Indonesia but beat estimates.

The company lowered its 2012 production outlook slightly because of reduced output at Grasberg. It said projected sales volumes were partly dependent on the vast mine returning to normal operations during the second quarter.

First-quarter net earnings were $764 million, or 80 cents per share, compared with $1.5 billion, or $1.57 per share, in the same
quarter of 2011. Excluding losses on debt repayment, profit was 96 cents per share.

Analysts were expecting 86 cents, according to Thomson Reuters.

Revenue dropped to $4.61 billion from $5.71 billion.

The Phoenix, Arizona-based company, which operates mines in Indonesia, Africa and North and South America, said consolidated first-quarter sales were 827 million pounds of copper and 288,000 ounces of gold.

It said the totals were lower than its January estimates of 875 million pounds of copper and 425,000 ounces of gold. It said labor-related work interruptions and the related temporary suspension of operations affected production at Grasberg during the quarter.

This was partly offset by higher sales from North America, it said.

Freeport said 2012 sales from mines are seen at 3.7 billion pounds of copper, 1.1 million ounces of gold and 81 million pounds of
molybdenum - down about 100 million pounds of copper and 100,000 ounces of gold from its previous forecast.

Freeport sees second-quarter consolidated sales of 895 million pounds of copper, 235,000 ounces of gold and 20 million pounds of molybdenum.

"The achievement of projected 2012 sales volumes is dependent on a number of factors, including returning to normal operations at Grasberg during second-quarter 2012," the company said in a statement.

During the first quarter, spot gold gained 8 percent - from $1,563.80 an ounce to $1,688.29 on March 30. Copper climbed 11 percent, with futures moving up from $3.44 per pound to $3.82.

Operations at the Grasberg mine and its associated mill have resumed.

In January, Freeport reported a 60 percent decline in fourth-quarter profit, largely due to the Grasberg strike.

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