In a July 2 research note, CIBC analyst Oscar Cabrera reported that Freeport-McMoRan Inc. (FCX:NYSE) lowered its Q2/19 gold sales estimate but maintained its 2019 guidance for gold and copper. It also provided an operations update for PT Freeport Indonesia.
Freeport maintained its 2019 copper and gold sales guidance at 3.3 billion pounds and 800,000 ounces, respectively. However, the company lowered its Q2/19 gold sales due to the Grasberg pit resequencing.
Cabrera pointed out that Freeport importantly declared its intention to meet 2019 revised mine plans for the Grasberg open pit and noted the pit could potentially produce more copper and gold in 2019 than expected. The company also indicated that material not mined from the Grasberg open pit could be mined from the Grasberg block cave.
Freeport's primary near-term catalysts, Cabrera wrote, include the company meeting operational guidance and executing development of the Grasberg underground ramp-up and of Lone Star.
After factoring into its model on Freeport revised Q2/19 guidance and the 2019 operating update, CIBC reiterated its Outperformer rating and $15 per share price target on the company. Freeport's current stock price, in comparison, is around $11.29 per share, a discount to peers that is unwarranted, Cabrera pointed out, "given the completion of Grasberg's agreement, strong operating/development project execution and a strong balance sheet."
Freeport will report Q2/19 results before the market opens on July 24, 2019, and immediately follow them with a conference call.
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Disclosures from CIBC, Freeport McMoRan Inc., July 2, 2019
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Important Disclosure Footnotes for Freeport-McMoRan Inc. (FCX)
· CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Freeport-McMoRan Inc. in the next 3 months.
