Freeport-McMoRan Inc. FCX stated that in order to contain the outbreak of coronavirus (COVID-19), the government of Peru has extended the declaration of National Emergency till Apr 26, 2020.
Freeport has 53.56% interest in Cerro Verde, which operates one of the largest concentrating facilities near Arequipa, Peru. Cerro Verde is conducting limited operations per government regulations. It is also completing actions for additional onsite facilities and enhancing health protocols that will boost production in compliance with the government order. Notably, Cerro Verde’s concentrator has operated at roughly one-third of planned rates from Apr 1 to Apr 11.
Cerro Verde is reviewing health guidelines with the government to return to normal operations as quickly as possible. In 2019, Cerro Verde produced 1 billion pounds of copper and 29 million pounds of molybdenum.
Freeport’s shares have lost 39.4% in the past year compared with the industry’s 33.2% decline.
In March, Freeport stated that it is reviewing plans at each of its global copper and molybdenum operations to reduce costs and capital expenditure for achieving the maximum cash flow in the current market conditions.
Per Freeport, the revised operating plans may lead to a temporary reduction in copper and molybdenum production in the Americas, which are witnessing low commodity prices. The company is expected to report its revised operating and financial plans along with first-quarter 2020 results.
Per management, given the sharp decline in copper prices, Freeport’s actions to address costs and capital spending as well as preserve a strong liquidity position are necessary to maintain flexibility in the current global economic uncertainties.
Zacks Rank & Key Picks
Freeport currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the basic materials space are Novagold Resources Inc. NG, Franco-Nevada Corporation FNV and Barrick Gold Corporation GOLD, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Novagold has an expected earnings growth rate of 11.1% for fiscal 2020. The company’s shares have surged 147.8% in the past year.
Franco-Nevada has an expected earnings growth rate of 15.9% for 2020. Its shares have returned 63.7% in the past year.
Barrick has an expected earnings growth rate of 41.2% for 2020. The company’s shares have rallied 78.8% in the past year.
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