FCX - Embedded Expectations Analysis - 2018 09 12
Freeport-McMoRan Inc. (FCX:USA) currently trades below historical lows, and well below UAFRS-based (Uniform) Asset levels, with a 0.6x Uniform P/B, implying bearish expectations for the firm. Moreover, management has concerns about increased costs, their ability to improve asset utilization, and ore grades at the Grasberg Block CaveSpecifically, management may lack confidence in their ability to improve productivity and cost management. Additionally, they may be concerned about the increased cost of energy and the development of the deep MLZ. Furthermore, they may be exaggerating their insight about the ore body of the Grasberg Block Cave, and may lack confidence in the grade of ore mined at Grasberg. Moreover, they may lack confidence in their ability to increase their asset utilization, and may be exaggerating improvements in their relationship with local communities in Indonesia
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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