Appreciate the advice, but what significance, if any , do you give to what has occurred/is occurring re: the COMEX, LME and SHFE warehouse levels? Are you taking those trends into account? The Indonesian proposed ban on export of metals concentrate is something I'm watching, but i doubt Indonesian Government wants that kind of unemployment , or the foregoing of that kind of revenue. and i expect FCX will agree to build a smelter there at some point, if gov't really wants that. Re: Production levels are expected to decline, my point is that there is already a production deficit in copper as of the past five months. the buildup of warehouse levels that took place over the first 6 months of the year is masking the news right now, IMO.
Copper creeping up 7 of last 8 sessions. Spot under 3.50 allows arbitrage. Buy out of LME, ship to China, sell for more than LME price +shipping/handling. LME will continue to drain with spot at these levels, should affect spot price and thereby FCX share price soon (w/in months) this week, LME down over 15,300 tons, COMEX down over 1,000 tons, SHFE only up 1600 tons, remaining at circa 143K tons, significantly below the 220K ton level we saw before the LME started dropping 5 months ago (from 680K tons to 395K tons today).
A lot of good points grandvn. FCX has definitely lagged. but that's another reason I'm picking it to outperform in 2014. IMO you'll be back above water very soon. Brain
grandvn's blame of the merger for the current stock price is all wet. Yes the share price did drop about 6$ immediately after the 12/5/12 announcement from it's close of 38.28 the day before the mergers were announced but that has all corrected. Plus you've received over $2.20/sh in dividends if you held over the past year. Back when the share price was 38.28 on 12/4/12 spot copper was at over 3.60/lb. Today it is at 3.25/lb. Gold on 12/4 was around 1,700/oz. Today its under 1,300/oz. Might the price of goods sold affect the share price ?! Duh. The price of FCX today is only helped by the merger as the O & G assets contributed significant net income to the company last Q and provide security of diversification. Also, look at the warehouse levels over the past 5 months, copper has been coming out of the LME warehouses at a rate of over 50,000 tons a month for the past 5 months. The relatively low copper prices allow for folks to play the arbitrage by buying out of the LME and selling into China at the higher prices there. And the copper in china is getting used up faster than it is being imported, as shown by the SHFE warehouse levels dropping from over 220K tons to under 150K tons during that same time. IMO the share price of FCX is about to double in 2014, due to the production deficit on copper worldwide that is about to send spot back over $4, as evidenced by the warehouse changes the past 5 months. There is still enough copper in the LME to allow some sense of security to copper users for another couple months, but I'm long and
stronger every day that the LME drops another 4K tons.
Reality and Neil, I'm still holding this strong. I'm seeing a lot going on under the radar that is so supportive of the near term future of FCX. I think 2014 will be the year and won't be surprised if the share price starts climbing again in December, like it did last month from 28 to 37 before its consolidation at 35. Big time for me are the warehouse levels as you know from my prior posts over the years. IMO, the best indicator of copper usage and trends that is available to us small retail investors are the warehouse levels, when there are clear trends, and there are clear trends right now. Of course spot copper prices are important too. LME levels have dropped from 680K tons as of about five months ago to 431K tons today. There are still reasonable amounts of copper in the LME, but being drained at a rate of about 40-50K tons per month. COMEX levels have dropped from 31K tons to 19K tons in the past 60 days. Chinese copper levels have dropped by a third over the past four months as well. There was a big buildup of copper levels in the first half of the year that IMO disguises the production deficit of the past five months The fact that the SHFE (Chinese) levels are also dropping means that the copper is getting truly used up. IMO the fact that spot copper has remained so reasonable is the reason why the LME warehouses continue to drain steadily. Copper is going to China where it is being used.
Google Oyu Tolgoi, the only "supermine" to come online(barely) since our Tengke Congo project and read the recent articles. Oyu Tolgoi is bogged down, production predictions are being cut back, 1,700 miners laid off. At some point the warehouse drops are going to bottom out when the long term ETF holdings are all thats left. It may take another 2-4 months of continued production deficit, but at some point spot copper prices will start to climb big time, and FCX will have some banner quarters, perhaps as soon as 2014 Q1. I can barely wait.
Nawlins', how you doin'? Hope all is well. Almost added 200 shares today, but wife talked me out of it. I have too high a % of my molehill in this stock. Brain.
How does he know this?
Spot price of copper has been between $3.20 and 3.30 for the past 90 days. Check the kitcometals website for the charts on this. At $3.25/lb., today's spot is in the middle of that range. The previous 60 days before that , spot was lower. While you're on kitcometals, check both the COMEX and London Metals Exchange warehouse charts for what the warehouse levels have been doing over those same time periods. You'll see why this stock is going up. go to the FCX website and listen to the conference call with the slide presentation there.
to make the stock more accessible to the smaller investor. With only around 120 million shares outstanding, a three for one or four for one split would be appropriate.
Based on the information from the CC, I believe the company's Oil and Gas production estimates going forward are conservative. Estimates are for 37.5 Million Barrels of Oil Equivalent for 2013, 57M BOE for 2014 and 61M BOE for 2015. At Eagle Ford they will apparently be reducing their rig count, thereby reducing cap ex, in 2014. Also, during the current Quarter the company did xylene and acid washouts of their lines at Eagle Ford and production went from 1200 BOE/day to 7000 BOE/day with a 50% increase in line pressures. And that was without any additional drilling. At Holstein, the company also increased production from 9K BOE/day to 18K BOE/day, again, without additional drilling. The call also stated that Davey Joes II, Blackbeard West and Linehan would all begin to produce sometime in the first half of 2014, and that the Lucius Deepwater Gulf of Mexico project was expected to begin production in the 2nd half of 2014. I believe that the company is doing their "under promise and overdeliver" routine when it comes to the O&G side of the business and that large beats in the O & G side that would be a further catalyst for the share price over the next several Quarters, are possible.
Re: the future earnings, click on profile, click on the FCX website, click on slide presentation and check out slides 30 thru 33. They show you what parts of the pit the company will be mining at Grasberg. In a nutshell, they will be working in progressively better parts of the pit over the next three years, with higher concentrates of copper and gold in the ore. That is why the company is predicting the mining of 1.7 million ounces of gold in both 2014 and 2015. That's over 400 K ounces per quarter, a third higher than this past Q. Think of what that will do to net cash costs, and therefore, net income.
And there's a lot more to glean from the CC.
The great Q3 earnings were a catalyst, but the CC showed there are more catalysts to come, as soon as next Q., more in 2014, 15 and 16. But let's focus for a bit on the company info for the next Quarter.
Current estimates are for 76 cents in Q4, 74 cents in Q1 of 2014. These estimates are both going to have to go up huge, to over 1.00 per share, based on my calculations on the info FCX gave us on the conference call. When analysts raise their estimates, and believe me we're going to have a lot of that in the next 3 months, the share price will react positively
In Q3, FCX made 79c/share net income on sale of 1.04billion lb. of copper and 305,000 oz of gold. They had 1.6 billion of capital Expenditures, generated 1.9 billion of free cash flow and had a 9 cent/share charge for marking to market their fuel hedging contracts. For Q4, the company estimates they will sell1.1 billion lbs. of copper (50 million more pounds than last Q) and 390,000 oz. of gold, (a full 85,000 more gold ounces than they sold in Q3!) Even with the company predicting CapEx charges increasing next Q from 1.6 billion in Q3 to 1.9 billion this Q, with the above increased amount of copper and gold production, FCX management predicts Free Cash Flow next Q to go up to 2.3 billion. 300 million more CapEx expense, yet free cash flow still going up 400 million on top of that! Now, how much of that free cash flow increase will be net income increase? Be conservative and say just half, or 200 million. With about 1 billion company shares outstanding, 200 million more net income equals 20 cents per share. Added to this past Q's 79 cents/share, gets you to a dollar per share pretty easily. Stable labor relations, stable copper prices at circa 3.25/pound, I see nothing but upgrades and increases in the current 76 cents/share estimates from now to the end of the 4th Quarter. it's happening already.
The one area where my estimates are significantly different is in the estimate of net cash cost of producing the copper. The Credit Suisse guy's estimate is for a net cash cost of $1.61/lb whereas my estimate is for around $1.45/lb. net cash cost. I'm basing my estimate on the huge anticipated increase in gold production, which is considered a byproduct of the copper mining in the FCX accounting method. The large increase in gold production therefore means a significant drop in the net cash cost of the copper production. My estimate is also more in line with the company estimates, which gave a net cash cost of copper production of $1.58 for the year. The net cash cost for the first six months of the year was $1.71. In order to get to the company net cash cost estimate of $1.58 for fiscal year 2013 (see last Q earnings press release), the net cash costs for the second half of the year need to be in the $1.45 range, perhaps a tad higher because more copper will be produced in the second half of the year. If you accept the Credit Suisse guys estimate of 1.05 billion pounds of copper this Q, but take my estimate of net cash cost of 1.45/lb instead of the Credit Suisse guys 1.61/lb net cash cost, you can add 16 cents times 1.05 billion pounds of copper, or roughly 160+ million dollars to net income. Divide that increase by the roughly billion shares outstanding and you can add 15 cents/share to the earnings estimate, bringing you closer to my 82 cents'/share estimate. So we'll see tomorrow.
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.
Its kind of like making a prepayment on your mortgage. Like almost all companies, FCX borrowed money for expansions over the years. The redemption means the company is making sufficient money/free cash flow, that enables them to redeem the subject notes in addition to running their business, paying our dividend, etc.. When a company redeems notes early they will usually redeem notes that are coming due the soonest, or they will redeem the ones with the highest interest rates, which will give them the most savings. So they are redeeming 300 million in notes early. Keep in mind the company has over 20 billion in debt after their big purchase of the oil and gas assets last June. As long as copper prices stay north of $3/pound, you can expect FCX to redeem more of their debt early every quarter or so. They have indicated that debt reduction is a priority. They may even be selling some of the non-essential oil and gas assets to knock down the debt. It's all good.
So let's do this. . .What effect do you think the shutdown/debt ceiling issues, will have on copper spot/FCX share price short term/longer term?
Did you previously pay for your own health insurance? Obamacare will cost a non-smoking family of 4 in Madison Wisconsin $7,940. That will get you having to pay 30% out of pocket for all medical charges, 30% of any hospital bill, up to $12,700 out of pocket per person per year. Check your current coverages hospitalization deductible. Assuming you can find a doctor that accepts Obamacare with time to treat you. What is your current plan deductible/co-pay/max out of pocket/physician list? Will your doctors take Obamacare? If not, you'll pay more. If you limit yourself to doctors who accept Obamacare, good luck getting in to see them. Hopefully you are also not one of the hundreds of thousands/millions across the country who lost their jobs/ suffered reduced hours to under thirty hours/week so their employer gets out of Obamacare. Obviously you are not a member of one of the over 1200 organizations who are Obama cronies and got exempted from Obamacare. As many young people will opt out and therefore be uninsured as will be getting coverage by virtue of Obamacare for the first time. After all that, lets see how many hundreds of billions/trillions Obamacare will be in the red after one year. They are collecting taxes for 10 years to fund 6 years so you'll have to wait 6 years to find out. We are watching the socialist collapse our country under obligations, just as Saul Alinsky taught. Blow up our country before our very eyes. Sad.
Last Q earnings estimates were 44 cents per share and came in at 22 cents. This quarter earnings estimates are 61 cents per share. Aussie is full of dingo dung.