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Freeport (FCX) Temporarily Halts Operations at Cerro Verde

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Freeport-McMoRan Inc. (FCX - Free Report) stated that the Government of Peru has issued a supreme decree and declaration of a national emergency in response to the outbreak of COVID-19.

In order to comply with government requirements, Cerro Verde has been transitioned provisionally to a care and maintenance status for a 15-day period starting Mar 16. During this period, onsite workers will be limited to critical activities, which are essential to maintain the facilities in order for them to return to normal operations.  

Freeport has 53.56% stake at Cerro Verde. The mine produced 1 billion pounds of copper and 29 million pounds of molybdenum in 2019. Cerro Verde is working closely with the government to enable the restart of operations as quickly as possible.

Freeport’s shares have lost 48.9% in the past year compared with the industry’s 35.9% decline.


 

The company has recently issued an operational update. It announced that it is making progress in boosting copper and gold volumes by 30-40%, while reducing unit net cash costs of copper by 25% to around 1.30 per pound. Moreover, it is aiming to more than double its cash flows by 2021.

Freeport is focused on growing volumes from its underground orebodies in Papua, Indonesia. From Jan 1 through Mar 5, production from the Grasberg Block Cave and Deep MLZ orebodies averaged nearly 35,000 metric tons of ore per day. This marks a sequential increase of 35% from average output in fourth-quarter 2019.

In January, Freeport stated that it anticipates consolidated sales volume to be nearly 3.5 billion pounds of copper, 800,000 ounces of gold and 88 million pounds of molybdenum for 2020. This projection also includes 725 million pounds of copper, 105,000 ounces of gold and 22 million pounds of molybdenum for first-quarter 2020.

 

Zacks Rank & Key Picks

Freeport currently carries a Zacks Rank #3 (Hold).

Few better-ranked stocks in the basic materials space are Newmont Corporation (NEM - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Newmont has an expected earnings growth rate of 72% for 2020. The company’s shares have gained 37.6% in the past year.

Franco-Nevada has an expected earnings growth rate of 24.2% for 2020. Its shares have returned 39.9% in the past year.    

Impala Platinum has an expected earnings growth rate of 424.1% for fiscal 2020. The company’s shares have inched up 1.3% in the past year.

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