FCX
Freeport-McMoRan Inc
Industrial/Transportation, Event Driven/Special Sit
04/03/2017
Presented
| Date | 03/28/2017 |
| Price | $12.57 |
| Market Cap | $17.72B |
| Ent Value | $33.59B |
| P/E Ratio | N/A |
| Book Value | $4.19 |
| Div Yield | 0% |
| Shares O/S | 1,410.00M |
| Ave Daily Vol | 28,119,563 |
| Short Int | 5.55% |
Current
| Price | $47.28 |
| Market Cap | $67.93B |
| Freeport-McMoRan, Inc. engages as copper, gold and molybdenum mining company. It operates through the following segments: North America Copper Mines, South America Copper Mines, Africa Mining, Indonesia Mining, and Molybdenum Mining. The North America Copper Mines segment operates seven open-pit copper mines in North America- Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. The South America Copper Mines segment has two copper mines-Cerro Verde in Peru and El Abra in Chile. The Africa Mining segment operates in the Tenke Fungurume minerals district in the Katanga province of the Democratic Republic of Congo which produces copper and cobalt hydroxide. The Indonesia Mining segment includes copper and gold deposits at the Grasberg minerals district in Papua. The Molybdenum Mining segment operates at the Henderson and Climax primary molybdenum mines in Colorado. The company was founded on November 10, 1987 and is headquartered in Phoenix, AZ. |
Publicly traded companies mentioned herein: BHP Billiton Limited (BHP), First Quantum Minerals Ltd. (FM CN), Freeport McMoRan Inc (FCX), Southern Copper Corporation (SCCO)
Highlights
The presenter thinks shares of Freeport-McMoRan (FCX) represent an attractive value play at under $13 per share (~$12.50 at the time of the presentation). PT Freeport Indonesia (PT-FI) operates under a Contract of Work (COW) with the Indonesian government; however, in early January (2017) the government issued new regulations that call for a COW to be converted to a special license (an IUPK). Under the new framework, a foreign owner such as FCX would have to divest 51% of its stake in the Indonesian asset(s), and FCX is not willing to do this unless an investment stability agreement can be obtained to protect its rights. The political risk and uncertainty around FCX’s Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits, is high and it is a complicated situation. However, with spot copper trading at ~$2.60-2.65 per pound and Gold at $1,250 per ounce he sees the base-case fair value of FCX at $13/ share. This assumes 50% of PT-FI is sold. On the upside, using a $3/lb copper price, FCX should be worth at least $15/ share; and depending on what value FCX ultimately realizes for Grasberg, the stock could be worth meaningfully more.
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