1Q13 FD Adjusted EPS $0.32. "Results were largely in-line with
our estimate of $0.29 (consensus of $0.28). Adjusted EPS excludes
charges largely associated with the acquisition of Inmet Mining (
) (GAAP EPS $0.23/sh)."
View: "Positive quarter driven by strong operations and
inventory drawdown at Kansanshi. FM reported sales of $901Mln vs.
our $781Mln on stronger copper/gold sales of 89.1Kt/58.8Koz (vs.
our 78.8Kt/47.5Koz), which included consolidation of IMN results
beginning on March 22nd (~10 days). Copper production (ex-IMN) and
cash costs (ex-IMN) were a slight miss at 76Kt and $1.55/lb
relative to our 81.7Kt and $1.52/lb, offset by stronger sales
(inventory drawdown) and higher nickel/gold sales."
Catalysts: "Detailed review of Cobre Panama in the works. FM
made various minor changes to FY13 guidance, and included ~9
months' of IMN guidance. A slight reduction was made to the
high-end of copper production, while the gold production range was
narrowed. Revised copper/gold production is now
384-416Kt/193-213Koz (including IMN mines) from
384-419Kt/190-215Koz. Nickel and zinc production guidance remain
unchanged. FY13 copper cash cost (incl-IMN) has been revised to
$1.40-1.50/lb, with cash cost from FM mines at $1.50-1.60/lb and
from IMN at $1.05-1.11/lb. FY13 Capital expenditures for
pre-acquisition FM remain at ~$2Bln, while expenditures for
IMN-acquired operations are expected to be $70-85Mln (excl Cobre
Panama). Mgmt is currently undertaking an extensive review of Cobre
Panama, which is expected to take 2-4 months. We estimate every 10%
in cost savings (vs. our $7Bln) adds 2.4% (or $0.60/share) to our
Valuation: "Maintain Outperform. Our TP of C$23.50 is based on a
50/50 weighting of 1x our NAVPS of C$24.57 and 6x FY13/14
EV/EBITDA. At end-1Q13, FM had cash of $1.8Bln (net debt: $874Mln;
D/E ratio 51%)."
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