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Non-Tech : Bill Wexler's Trading Cabana -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (4601)	12/3/2008 8:35:36 AM
From: Dale Baker	Read Replies (2) \| Respond to of 6370

Mining earnings likely to be very iffy for a while: Freeport-McMoRan suspends dividend, cuts output Wednesday December 3, 8:06 am ET By Euan Rocha NEW YORK (Reuters) - Freeport-McMoRan Copper & Gold Inc (NYSE:FCX - News) suspended dividend payments, slashed its 2009 capital expenditure budget and lowered copper output on Wednesday due to a slump in metal prices and its shares fell 13 percent. The collapse in the U.S. housing market triggered a freeze in global credit markets, leading to a recession in many developed economies and a sharp slowdown in developing regions. This has hurt metal demand and prices that were at record levels in mid-2008. "The suspension of our dividend reflects the sharp and rapid decline in copper and molybdenum prices, the dislocation of capital markets and the uncertain economic outlook," Chief Executive Richard Adkerson said in a statement. Freeport will reduce copper production by about 200 million pounds in 2009 and by about 500 million pounds in 2010 from October estimates. Copper prices on the London Metals Exchange averaged $3.61 per pound in the nine-month period ending September 30. The price of copper has since fallen and averaged $2.23 per pound in October 2008 and declined further to average $1.69 per pound in November 2008. Freeport is reviewing its copper mining operations to identify potential further reductions in costs. The company plans to more than halve its 2009 capital expenditure budget to $1.1 billion from a prior estimate of $2.3 billion. The move to suspend the annual dividend of $2 per share will save the company about $755 million on an annual basis, it said. The latest cost cutting measures come a just a few weeks after the company, the world's largest publicly traded copper producer, said it was delaying the restart of its Climax molybdenum mine and cutting production by 25 percent at the Henderson molybdenum mine. Both mines are in Colorado. Freeport also said it would delay expansions at the Sierrita and Bagdad copper mines in Arizona and push back the restart of its Miami mine in the state, cutting about $370 million in planned capital costs. Last month, the company also said it would cut more than 600 jobs at its U.S. mining operations to lower costs. Freeport expects 2008 operating cash flow of about $3.4 billion, which include about $900 million in working capital requirements. The company estimates its cash flow from operations, before working capital changes, will be about $2 billion in 2009. It currently expects working capital requirements of about $750 million in 2009. Phoenix, Arizona-based Freeport has a $1.5 billion revolving credit facility which matures in March 2012. As of September 30, no amounts were drawn and availability totaled about $1.4 billion after considering outstanding letters of credit, the company said. Freeport plans to use the revolving facility from time to time for working capital and short term funding requirements but does not intend to use the facility for long-term funding items. Shares of Freeport were down 13 percent to $19.04 in trade before the morning bell.