Last Q, FCX sold 950M lbs of copper at $3.17/lb. This Q estimates FCX is selling 1.1 billion lbs. at I'm estimating an average selling price of around $3.25/lb., based on the spot charts. In Q2 FCX sold 173K ounces of Gold at 1,322/oz. This Q they are expected to sell 330K oz, almost double the amount of gold. Net cash cost of copper production in Q2 was $1.85/lb. This Q, with the higher copper production and higher gold production, I am expecting a major drop in net cash cost of production (increased amount of production for same overhead, huge increase in gold byproduct credits due to increased gold production and higher gold price) down to below 1.50/lb. So add 35 cents to every one of those 1.1 billion pounds FCX is expected to sell this Q for the expected drop in net cash costs, and add another 7 cents to each of the 1.1 billion pounds for the increased sales price. And just about all of that drops to the bottom line net income.
Re: O&Gas, lLast Q FCX new O&G assets contributed 5.0 million barrels of oil equivalent at a net cash cost of 16.58/barrel, sold at 74.37/barrel. This Q because we have the O&G assets for the full Q, estimates are for 15.0 million BOE, triple last Q. And I expect sale price to be substantially above the $74.37 last Q price. Do the math. Also, Re: provisional pricing applicable to part of last Qs copper production, take into account there were 306 million lbs. of copper provisionally priced at 3.06/lb at the end of Q2 the final price of which can go up or down depending on the average sale price over the current Q. With an average Cu spot of over 3.25 this Q, mark ups on the sale price of those 306 million lbs should add another 60 million to Q3 revenues, 30+ million to net income. All this info is from the last 10-K and from Kitco. I am therefore predicting net income for Q3 to be in the area of at least 85 cents/share, way above current estimates.
Can I ask you a question?What do you see as the potential advantage of the Davey Jones well?The minning and materials business is not my specialty.I can tell you this,Ford Motor Company will begin to increase its use of aluminum in truck bodies as a way to improve gas mileage starting in 2014.My experience is that once a manufacturing idea/process takes hold at Ford it is duplicated across the vehicle line.In other words finished aluminum products and rolled aluminum should see increased sales.
Brain, you seem to be very knowledgeable, so I'd like your opinion. I'm thinking of adding 200 shares to my small position (300 shares) before FCX reports. Do you think that's a good idea?
Maxine, I like FCX but i would feel guilty if I told you to buy and the share price took a big dip. You have 300 shares so you're on for the ride. You're going to collect almost $94 dividend in two weeks. Predicting short term move of FCX or any stock is so unpredictable. FCX has moved from 27 and change to almost 35, the company could put out a great report and it could go down on the news. I also don't know things like are you near retirement age, what percent of your portfolio your 300 shares are (would never suggest anyone have more than 5% of their money in more than one stock, definitely not more than 10%). So I'll say don't buy going into earnings, unless you're using gambling money. Collect your dividend, watch the price of copper and gold, watch the FCX news, and if things are stable, try to snag another 100 shares perhaps at a time after the share price has dipped a couple days in a row. Good Luck! PS, I'm not a short term trader like others on here.
I'm digging up this post so it is on the board ging into earnings next Tuesday. since the post the only news of note re: earnings was the company saying that the Congo had electricity problems that were affecting output there. So I'll take my estimate down from 85 cents per share to 82 cents. Would still be a good beat. Re: the warehouses, since these posts a month ago, the COMEX has dropped 2,816 tons, the LME has dropped 66,000 tons and the Shanghai has increased 20,000 tons. There has been production deficit of around 45,000 tons this past month (more the previous month), the market seems well supplied but tightening slightly,. Spot copper prices seem firm at $3.25/lb. Two year peace accord with Indo unions. Have no idea about the O & G side of things, Conference Call will shed light on that.
In that last post , I inadvertently left out that the estimated net cash cost of the O&G production is expected to $19/barrel, somewhat higher than the Q2 net cash cost ($16.58/bl), but this doesn't take much away from my story.