FCX - Embedded Expectations Analysis - 2018 02 15
ï€ Freeport-McMoRan Inc. (FCX:USA) currently trades near historical lows relative toUAFRS-based (Uniform) Assets, with a 0.9x Uniform P/B, implying bearish expectations for the firm. Moreover, management has concerns about copper supply, Indonesia, and cash flows
ï€ Specifically, management may lack confidence in expectations for 2018 to be the first year of lower copper production since 2011, and may be exaggerating the cooperation they are getting from Indonesian authorities related to security issues. Additionally, they may be concerned about their ability to maintain free cash flow growth, and may lack confidence in the sustainability of higher moly prices. Furthermore, they may be exaggerating their claim that new copper projects in the market are of less quality than older projects, and may lack confidence in their early deployment of the Ore Flow system, in terms of expectations for efficiency improvements
Freeport-McMoRan is a holding company. Through its subsidiaries, the company is a mining company. The company operates assets with proven and probable reserves of copper, gold and molybdenum, and the company is a publicly traded copper producer. The company's portfolio of assets includes the Grasberg minerals district in Indonesia, copper and gold deposits; and mining operations in North America and South America, including the Morenci minerals district in Arizona and the Cerro Verde operation in Peru. The company has organized its mining operations into four primary divisions: North America copper mines, South America mining, Indonesia mining and Molybdenum mines.
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