During a conference call with analysts Wednesday to discuss quarterly results, Freeport-McMoRan Copper & Gold CEO Richard Adkerson said the Tenke Fungurume copper-cobalt mine has shipped its first concentrate that day.
Adkerson estimated it could take from 20 to 30 days to reach its destination. Not surprisingly, the biggest challenge to logistic management at the operation is the road system in the Democratic Republic of the Congo.
Because of the difficulty of transportation in the DRC, Adkerson told analysts Wednesday that the development of adequate rail infrastructure will be critical to the future growth of the massive Tenke operation. He noted that rail infrastructure is already being developed in the region that will improve logistics for Tenke shipments once sufficient rail infrastructure is also developed in the vicinity of the project.
Freeport has already tested its transportation logistics for the past year as it transported construction materials to the Tenke project site.
Adkerson assured analysts Wednesday that, despite the fits and starts in contract negotiations between the operators of Tenke and the DRC government, Tenke is allowed to ship product and operate its mines while working through the government contract review process.
Phoenix-based Freeport reported $43 million or 11-cents per share in net income for the first quarter of this year, down from the $1.1 billion or $2.64 per share reported during the same quarter of 2008.
Total debt was reported at $7.2 billion and consolidated cash was $644 million as of March 31, 2009.
First-quarter 2009 consolidated copper sales increase 12% to 1 billion pounds, slightly higher than the original projection of 990 million pounds made on January 26th. First-quarter 2009 consolidated gold sales nearly doubled to 545,000 ounces, exceeding the original estimate of 500,000 ounces.
However, consolidated molybdenum sales dropped 50% to 10 million pounds for this first quarter of this year, and well below the original estimate of 13 million pounds.
Consolidated unit net cash costs (net of by-product credits) also dropped to an average of 66-cents per pound for the first-quarter 2009, compared to $1.06/lb in the first-quarter 2008.
Capital expenditures were reported at $519 million during the first quarter with nearly half related to development of Tenke Fungurume. Freeport estimated that capital expenditures will total $1.3 billion this year. The estimated exploration budget has dropped to $75 million this year, a substantial decline from the $248 million spent for exploration in 2008.
Adkerson told analysts that he anticipates that the company will have stronger earnings for the rest of the year as it sells more gold and copper prices increase.