(Recasts with stock rise, adds comments from conference call on
Grasberg development plans, permit talks, analyst comment)
By Susan Taylor
TORONTO, April 25 Freeport-McMoRan Inc
missed earnings expectations, cut its outlook and warned on
Tuesday it would be difficult to secure a long-term Indonesian
mining permit, but investors sent its stock soaring on relief
over a temporary export resumption.
Phoenix, Arizona-based Freeport said a months-long export
ban by the Indonesian government at its massive Grasberg mine in
the country had been costly, clipping production and sales, with
more challenges ahead.
Still, shares of the world's biggest publicly listed copper
miner gained as much as 9 percent, before edging back to $12.98,
a 6 percent gain.
Freeport is ramping up output and copper concentrate
shipments from Grasberg, the world's second biggest copper mine,
after gaining a six-month export permit Friday that coincided
with U.S. Vice President Mike Pence's state visit.
"The market is used to bad news on the Indonesian front, so
anything that can be construed as optimistic is what the market
is focusing on," said Clarksons Platou analyst Jeremy Sussman of
the temporary permit.
New rules in Indonesia require miners to divest a 51 percent
stake, relinquish arbitration rights and pay new taxes and
royalties. Freeport says it will only
agree to a new permit with the fiscal and legal protection in
its current contract.
Chief Executive Richard Adkerson said the cost of failure
would be high for Freeport and its Grasberg joint venture
partner Rio Tinto. Speaking on a conference call with
analysts, he said Indonesia would also be hurt, noting the
government lost almost $500 million in taxes and royalties from
the export ban starting Jan. 12.
Separately in an SEC filing on Tuesday, Freeport said
Adkerson's total compensation for 2016 was about $16 million
versus $8.6 million in 2015.
Freeport has cut about 10 percent of its 32,000 Grasberg
workforce and spending on underground expansion by one-third.
It will "significantly" cut Indonesian spending, planned at
about $1 billion annually for the next five years, if it does
not gain a permit. Some $700 million of its $1.6 billion 2017
capital budget is earmarked for Grasberg's underground
In the first quarter, consolidated sales of 809 million
pounds of copper and 182,000 ounces of gold lagged Freeport's
January forecast of 1 billion pounds of copper and 460,000
ounces of gold.
Freeport said it deferred sales of 190 million pounds of
copper and 280,000 ounces of gold under the ban.
It also cut its 2017 sales forecast to 3.9 billion pounds of
copper and 1.9 million ounces of gold, from 4.1 billion pounds
of copper and 2.2 million ounces of gold.
Freeport's adjusted profit of 15 cents a share and revenue
of $3.34 billion trailed analyst estimates of 16 cents and $3.46
(Reporting by Susan Taylor; Editing by Meredith Mazzilli and