Summary
Freeport-McMoRan Inc. (FCX) reported a net loss of $19.4 million ($0.10 per diluted share) for the first quarter ended March 31, 2004, a significant decline from the $58.8 million net income ($0.33 per diluted share) reported in the same period of the prior year. This downturn was primarily driven by substantially lower copper and gold sales volumes from PT Freeport Indonesia, due to operational challenges at the Grasberg mine following slippage and debris flow events in late 2003. These events necessitated a focus on waste removal, deferring access to higher-grade ore until April 2004. Despite the lower volumes, realized prices for copper and gold increased year-over-year, which partially offset the revenue decline. The company also completed significant financing activities during the quarter, including the issuance of new senior notes and convertible preferred stock, and used proceeds to reduce debt and repurchase shares from Rio Tinto. The outlook for the second half of 2004 and 2005 anticipates improved production and sales volumes as operations at Grasberg normalize.
Key Highlights
- 1Reported a net loss of $19.4 million ($0.10/share) in Q1 2004, compared to a net income of $58.8 million ($0.33/share) in Q1 2003.
- 2Significant decrease in copper and gold sales volumes from PT Freeport Indonesia due to operational issues at Grasberg mine.
- 3Increased average realized prices for copper ($1.34/lb vs $0.73/lb) and gold ($411.42/oz vs $341.55/oz) year-over-year.
- 4Completed issuance of $350 million in 6.875% Senior Notes due 2014 and $1.1 billion in 5.5% Convertible Perpetual Preferred Stock.
- 5Used proceeds from new financing to repay $162.4 million in debt and repurchase 23.9 million shares from Rio Tinto for $881.9 million.
- 6Anticipates improved production and sales volumes in the second half of 2004 and into 2005 as Grasberg operations recover.
- 7Net cash used in operating activities was $225.5 million in Q1 2004, compared to net cash provided of $49.2 million in Q1 2003.