Freeport McMoRan Copper and Gold Inc. ( FCX ) announced that PT Freeport Indonesia (PT-FI) has resumed open pit mining and concentrating activities at its Grasberg operations in Papua after it received approval from Indonesia's Department of Energy and Mineral Resources (DEMR).
Freeport has commenced operations in phases with open pit and milling operations starting initially. The underground operations will recommence after receiving approval from the government. PT-FI is actively working with the government authorities so that the mine can resume its full operations.
Freeport had announced a force majeure on shipments from PT-FI Grasberg mine after the collapse of a tunnel at the mine on May 14 that took 28 lives. While the accident occurred outside the area of mining operations, Freeport temporarily suspended mining and processing activities at the Grasberg complex as a part of the rescue and recovery operation.
The closure of operations at the world's second largest copper mine affected production. The Indonesian operation lost about 115 million pounds of copper and 115,000 ounces of gold in the period between May 15 and Jun 21, 2013. It is apprehended that on a daily basis the mine lost about 3 million pounds of copper and 3,000 ounces of gold. The impact of the ongoing suspension of underground operations approximates 1 million pounds of copper and 1,000 ounces of gold per day.
Freeport released its first-quarter 2013 results in Apr 2013. The company's Indonesian operation recorded copper sales of 198 million pounds in the quarter, higher than copper sales of 134 million pounds a year ago. Gold sales declined roughly 28% year over year to 191,000 ounces due to lower ore grades from mine sequencing.
Freeport's adjusted earnings (excluding one-time charges) of 73 cents per share for first-quarter 2013 beat the Zacks Consensus Estimate by a penny but missed the year-ago earnings of 96 cents.
Including debt extinguishment costs for the termination of the acquisition bridge loan facilities and acquisition costs, net income for the quarter was $648 million, or 68 cents per share. This represents roughly 15% fall from the prior-year quarter's net income of around $764 million or 80 cents per share. The results were affected by higher costs and lower copper prices.
Revenues fell roughly 0.5% year over year to $4.58 billion in the first quarter, missing the Zacks Consensus Estimate of $4.81 billion.
Freeport currently holds a short-term Zacks Rank #3 (Hold). Claude Resources, Inc. ( CGR ), Lake Shore Gold Corp. ( LSG ) and NovaGold Resources Inc. ( NVO ) are currently performing well in the mining industry, all retaining a Zacks Rank #2 (Buy).
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