Freeport-McMoRan Inc. FCX has issued an update on its second-quarter 2020 operational and financial performance.
Freeport provided revised operating plans in April amid the impact of the coronavirus pandemic on global economy. The company stated that it is executing the revised operating plans in an effective manner, while prioritizing the health and safety of its employees.
Freeport is advancing the ramp-up of underground production at Grasberg, which will help the company to establish large-scale, low-cost copper and gold production. The company is also advancing initiatives in the Americas to boost its cashflows in 2021 and beyond.
Freeport expects copper sales to exceed its April 2020 estimate of 690 million pounds by around 8% in second-quarter 2020 and gold sales are expected to surpass the previous estimate of 165,000 ounces by roughly 10%.
In North America, the company is implementing its revised operating plans. Further, production, costs and capital management are expected to be at par or better than forecast. The Lone Star project is mostly complete and is on track to produce roughly 200 million pounds of copper per year starting second-half 2020.
In South America, Freeport has achieved considerable progress at Cerro Verde during the second quarter to restore operations. Cerro Verde mill operations produced an average of 315,000 metric tons of ore per day during the second quarter.
In Indonesia, Freeport’s ramp-up of underground production at the Grasberg minerals district is continuing per schedule. In the second quarter, the Grasberg Block Cave and Deep MLZ underground mines together produced more than 54,000 metric tons of ore per day. Moreover, the mines’ average production was around 70,000 metric tons of ore per day at the end of June. For 2021, PT Freeport Indonesia expects 1.4 billion pounds of copper and 1.4 million ounces of gold, almost twice the projected 2020 levels.
Assuming average copper price realization of $2.54 per pound in the second quarter, Freeport projects adjusted EBITDA to be around $650 million. It also expects to incur net loss before nonrecurring items of around 3 cents per share.
As of Jun 30, 2020, the company’s total consolidated debt is estimated to be roughly $9.9 billion and consolidated cash of around $1.5 billion. Freeport plans to release second-quarter 2020 financial and operating results on Jul 23, 2020, before the opening bell.
Freeport’s shares have gained 13.6% in the past year against the industry’s 4% decline.
Zacks Rank & Other Key Picks
Freeport currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the basic materials space are Sandstorm Gold Ltd SAND, Harmony Gold Mining Company Limited HMY and AngloGold Ashanti Limited AU, all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Sandstorm Gold has an expected earnings growth rate of 55.6% for 2020. The company’s shares have surged 76.3% in the past year.
Harmony Gold has an expected earnings growth rate of 264.3% for fiscal 2020. Its shares have returned 99.1% in the past year.
AngloGold has an expected earnings growth rate of 109.9% for 2020. The company’s shares have surged 62.3% in the past year.
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