Freeport expects higher sales in 2013
Friday, September 21 2012 - 06:12 AM WIB
Freeport-McMoran through its 90.64 percent owned PT Freeport Indonesia recently reported that it targets to produce up to 7,000 tons of ore per day from Big Gossan underground mine in 2013.
The company, stated on its second quarter report that substantial progress has been made in developing infrastructure and underground workings that will enable access to the underground ore bodies.
?Development of both the Grasberg Block Cave and Deep Mill Level Zone spurs is advancing, and the tunneling required to reach these underground ore bodies is complete,? the company said.
Freeport has several projects in progress in the Grasberg minerals district, primarily related to the development of the large-scale, high-grade underground ore bodies located beneath and nearby the Grasberg open pit.
In aggregate, these underground ore bodies are expected to ramp up production over several years to approximately 240,000 metric tons of ore per day following the currently anticipated transition from the Grasberg open pit in 2016.
?Over the next five years, estimated aggregate capital spending on these projects is expected to average $700 million per year, $550 million per year net to PT Freeport Indonesia,? the company said.
The company sold 183 million pounds of copper in the second-quarter of 2012, with up to 247 thousand ounces of gold, which is significantly lower than last year?s second-quarter 2011 copper sales of 265 million pounds and gold sales of 330 thousand ounces.
?Operations and productivity at PT Freeport Indonesia have continued to improve following the first-quarter 2012 work interruptions in connection with efforts to resume normal operations. PT Freeport Indonesia's milling rates averaged 179,500 metric tons of ore per day in second-quarter 2012, compared with the first-quarter 2012 average of 114,800 metric tons of ore per day. Mining operations in the Grasberg open pit are approaching normal levels and underground mining operations at the DOZ underground mine continue to be ramped up following the 2011 work stoppages. Mining rates at the DOZ underground mine averaged 45,400 metric tons per day in second quarter 2012 and are expected to reach 80,000 metric tons per day in fourth-quarter 2012,? the company said.
Freeport expects sales from Indonesia to approximate 750 million pounds of copper and 960 thousand ounces of gold for the year 2012, compared with 846 million pounds of copper and 1.3 million ounces of gold for the year 2011.
Lower sales
Despite PT Freeport Indonesia's lower revised sales estimates for 2012 than previous estimates reported in April (by approximately 50 million pounds of copper and 60 thousand ounces of gold), the company expects sales from Indonesia to increase in 2013 as PT Freeport Indonesia gains access to higher ore grades.
?Indonesia's unit net cash costs, including gold and silver credits of $1.37 per pound of copper in second quarter 2012 were higher than unit net cash costs of $0.22 per pound in second-quarter 2011 primarily reflecting lower sales volumes,? the company said, adding that Indonesia's average unit net cash costs (net of gold and silver credits) are estimated to reach approximately $1.24 per pound of copper for the year 2012, assuming an average gold price of $1,600 per ounce for the second half of 2012.
?Indonesia's unit net cash costs for 2012 would change by approximately $0.04 per pound for each $50 per ounce change in the average price of gold for the second half of 2012. FCX expects Indonesia's unit net cash costs to decline significantly in future years, compared to the year 2012, because of higher projected copper and gold volumes,? it said.
Editing by Er Audy Zandri