FREEPORT-McMoRan COPPER & GOLD ANNOUNCES AGGRESSIVE
NEW OPERATING PLAN FOR 1998
Business Wire - March 12, 1998 09:22
%FREEPORT-COPPER-GOLD FCX %LOUISIANA %INDUSTRY %KEYWORDA: %MINING %METALS V%BW P%BW
NEW ORLEANS, La.--(BUSINESS WIRE)--March 12,1998-- Freeport-McMoRan Copper & Gold Inc. (FCX) announced
today an aggressive new operating plan for 1998 for P.T. Freeport Indonesia Company (PT-FI), its Indonesian mining
affiliate, in response to current market conditions.
PT-FI's focus for 1998 will be to "Hunker Down & Go" by reducing costs and increasing production and sales, which will
ensure continued high volume - low cost operations. PT-FI's recently expanded mine and mill facilities are now expected to
generate aggregate sales in 1998 of approximately 1.7 billion pounds of copper and 2.7 million ounces of gold resulting from
expanded throughput and higher than mine-life ore grades. Sales by PT-FI in 1998, net of Rio Tinto's share of joint venture
sales, should approximate 1.4 billion pounds of copper and 2.2 million ounces of gold, representing increases of 18 percent
and 13 percent for copper and gold sales, respectively, over 1997 amounts. While future operating plans continue to be
reviewed, PT-FI's share of copper and gold sales volumes for 1999 may be slightly lower for copper and as much as 10
percent lower for gold because of probable lower ore grades.
Unit site production and delivery costs for copper are expected to be below 40 cents per pound in 1998, down more than 22
percent from the approximately 51 cents per pound in 1997, as PT-FI reaps the benefits of its "Hunker Down & Go" program
and the economies of scale associated with the Fourth Concentrator Mill expansion. At a gold price of $300 per ounce, cash
costs of producing copper would be below 20 cents per pound. Because of the ramp-up of the expanding operations and
varying ore grades during the year, quarterly results will vary and be stronger during the second half of 1998.
In 1998, PT-FI expects its capital expenditures, excluding capitalized interest costs, to be approximately $100 million to
complete the Fourth Concentrator expansion within its original budget, plus $175 to $200 million for other long-term projects
and to sustain operations. FCX's new operating plan provides for general and administrative expenses of approximately $75
million in 1998, down approximately 38 percent from $122 million, excluding noncash credits, in 1997.
Although it will take several months to determine the optimum throughput rate of the newly expanded mill complex, PT-FI
believes that the facility will have the capacity to process throughput significantly higher than the previously anticipated rate
of 190,000 to 200,000 metric tons of ore per day (MTPD). Current plans project a throughput rate of at least 230,000 MTPD
by the second half of 1998.
As previously announced in December 1997, the Government of Indonesia approved PT-FI's Regional AMDAL study for a
daily throughput rate of 300,000 MTPD. PT-FI is considering a future expansion involving an ore hoisting or incline
conveyor system to raise high grade underground ore to the newly expanded mill complex at the 2,900 meter elevation, rather
than constructing a previously considered fifth concentrator mill at the 2,500 meter elevation. The potential development of
new ore handling systems along with upgrades of the existing mill facilities would require substantially less capital than
previously anticipated. This more attractive future optimization alternative has been made possible by the potential
performance of PT- FI's new Fourth Concentrator expansion.
James R. Moffett, Chairman and Chief Executive Officer of FCX said, "Since the discovery of the Grasberg ore body in
1988, PT-FI has been able to develop large-scale, low-cost operations. Maximization of Grasberg's operating performance
has yet to be achieved as the company has been in a continual expansion mode. As our Fourth Concentrator Mill commences
production, we will direct our energies to optimizing performance to achieve higher sales levels at the lowest possible cost.
While we cannot control commodity prices, we can effectively manage our assets to ensure financial viability and future
success."
Mr. Moffett continued, "While aggressively managing our mine and mill operations to increase throughput, we will also
establish constraints on capital, production costs and general and administrative expenditures. The Grasberg ore body
provides us the opportunity to achieve these goals. This strategy will be implemented in a manner that will enable us to
pursue the future opportunities provided by our continuing aggressive exploration program in Irian Jaya."
FCX is engaged in mineral exploration and development, mining and milling of copper, gold and silver in Irian Jaya,
Indonesia and the smelting and refining of copper concentrates in Spain. FCX is also involved in a joint venture to construct
and operate a smelter/refinery in Indonesia.
Cautionary Statement. This press release contains forward- looking statements regarding sales and production volumes, cash
production costs, general and administrative expenses, capital expenditures, development projects and other matters.
Important factors that might cause future results to differ from these projections are described in FCX's 1996 Form 10-K
filed with the Securities and Exchange Commission.
CONTACT: Freeport Copper & Gold Inc., New Orleans
Financial: Chris E. Saporito, 504/582-4476
Chris D. Sammons, 504/582-4474
or
Media: Garland Robinette, 504/582-1627
fcx.com
I think that is an error about bxmnf trading, I'll check. |
