Second quarter results reflected strong performance from the company's global operations and a continued focus on productivity, cost management and capital discipline.
What does the company say about the recent trade discussions? Tariffs?
Freeport said, "Despite the recent decline in copper prices associated with the uncertain impact on the global economy of recent international trade actions, we remain positive on the outlook for copper prices given limitations on supply and the important role of copper in the global economy. To date, we have not experienced a decline in demand for our products, but will be prepared to adjust our plans if necessary to respond to market conditions."
Going back to the quarter, consolidated sales totaled 989 mln pounds of copper, 676 thousand ounces of gold and 24 mln pounds of molybdenum in second-quarter 2018
Copper sales of 989 mln pounds were higher than the April 2018 estimate of 970 mln pounds and higher than second-quarter 2017 sales of 942 mln pounds, primarily reflecting higher mining and milling rates and higher ore grades in Indonesia.
Second-quarter 2018 gold sales of 676 thousand ounces were lower than the April 2018 estimate of 700 thousand ounces, primarily because of timing of shipments, and were higher than second-quarter 2017 sales of 432 thousand ounces, primarily reflecting higher ore grades and operating rates in Indonesia.
Lower second-quarter 2017 operating rates in Indonesia included the impact of labor disruptions at PT-FI in the first half of 2017. Second-quarter 2018 molybdenum sales of 24 mln pounds approximated the April 2018 estimate of 24 mln pounds and second-quarter 2017 sales of 25 mln pounds. Average realized prices in second-quarter 2018 were $3.08 per pound for copper, $1,274 per ounce for gold and $12.89 per pound for molybdenum.
Average unit net cash costs in second-quarter 2018 were $0.96 per pound of copper and are expected to average $1.04 per pound of copper for the year 2018. Looking ahead, the company the company reaffirmed consolidated sales for the year 2018 at approximately 3.8 bln pounds of copper, 2.4 mln ounces of gold and 95 mln pounds of molybdenum, including 970 mln pounds of copper, 700 thousand ounces of gold and 24 mln pounds of molybdenum in third-quarter 2018.
Assuming average prices of $1,250 per ounce of gold and $11.00 per pound of molybdenum for the second half of 2018 and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for copper mines are expected to average $1.04 per pound of copper for the year 2018.
Operating cash flows totaled $1.3 bln in second-quarter 2018 and $2.7 bln for the first six months of 2018. Based on current sales volume and cost estimates operating cash flows are expected to approximate $4.3 bln for the year 2018, down from prior guidance of $5.6 bln. Capital expenditures totaled $0.5 bln in second-quarter 2018 and $0.9 bln for the first six months of 2018.
The company reaffirmed capital expenditures for the year 2018 are expected to approximate $2.0 bln, including $1.1 bln for major mining projects primarily associated with underground development activities in the Grasberg minerals district in Indonesia and development of the Lone Star oxide project in Arizona.
In April 2018, FCX repaid $454 mln in debt, consisting of the redemption of $404 mln of senior notes due 2022 and $50 mln of senior notes due 2023. At June 30, 2018, consolidated debt totaled $11.1 bln (Compared to $11.6 bln at the end of Q1) and consolidated cash totaled $3.9 bln.
FCX had no borrowings and $3.5 bln available under its revolving credit facility at June 30, 2018.
Overall, following these results, shares of FCX are showing some volatility around the unchanged mark and are currently down slightly.