Freeport Increases Copper-Sales Forecast, Pays Special Dividend

Freeport-McMoRan Copper & Gold Inc. (FCX), the largest publicly traded copper producer, said it will pay a one-time 50-cent-a-share dividend and raised its 2011 sales forecast as the industrial metal traded close to a record.

First-quarter net income climbed 67 percent to $1.5 billion, or $1.57 a share, from $897 million, or $1, a year earlier, the Phoenix-based company said today in a statement. That beat the $1.35 average estimate of two analysts in a Bloomberg survey. Sales gained 31 percent to $5.71 billion from $4.36 billion. Freeport rose as much as 6.2 percent in New York trading, the most in five months.

Freeport, which operates mines in the U.S., Africa and Indonesia, forecast full-year copper sales of 3.9 billion pounds and gold sales of 1.6 million ounces, up from its prediction in January of 3.85 billion pounds and 1.4 million ounces respectively.

Chief Executive Officer Richard Adkerson is moving to counter falling output by resuming operations suspended during the financial crisis of 2008 and 2009. Freeport said today it’s restarting its Chino copper mine in New Mexico and has begun mining at the Miami project in Arizona.

“These results highlight Freeport’s very strong asset base,” David Radclyffe, a London-based mining and metals analyst at BMO Capital Markets who has an “outperform” recommendation on the shares, said in an interview. “Strong and robust cash flows are dramatically changing this company, allowing it to reward shareholders.”

Gold Ore

Increased gold production from higher-grade ore in the open-pit section of Freeport’s Grasberg mine in Indonesia also buoyed profit, the company said. Freeport is continuing with plans to begin underground mining at Grasberg to extend the economic life of the mine.

The supplemental dividend of 50 cents, which was declared in addition to Freeport’s regular 25-cent quarterly payout, will be paid June 1, the company said.

Adkerson reiterated that Freeport is focused on expanding its metals output through its own exploration and development projects, while not ruling out acquisitions.

“If an attractive acquisition came to us, we are financially and technically available,” Adkerson said today on a conference call with analysts and investors. “We don’t expect it. It’s not part of our strategy.”

Copper for delivery in three months on the London Metal Exchange averaged $9,629 a metric ton in the first quarter, 32 percent more than a year earlier. It was 2.3 percent higher at $9,555 a ton as of 4:38 p.m. in London. Copper traded at a record $10,190 on Feb. 15.

Freeport rose $1.58, or 3.1 percent, to $53.30 at 4 p.m. in New York Stock Exchange composite trading. The shares have climbed 32 percent in the past 12 months.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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