FCX - Embedded Expectations Analysis - 2019 05 20
Freeport-McMoRan Inc. (FCX:USA) currently trades at historical lows, well belowUAFRS-based (Uniform) Asset levels, with a 0.5x Uniform P/B, implying bearish expectations for the firm. Moreover, management has concerns about their balance sheet, the progress of mine expansion projects, and the production capabilities of their mines.
Specifically, management may be exaggerating the strength of their balance sheet, their focus on strategic growth priorities, and the discipline of their investment approach. Moreover, they may be concerned about the progress of their Deep MLZ mine ramp-up, the potential of their Congo and Stafford mines, and the production capabilities of the Grasberg Block Cave. Also, they may be downplaying concerns about facility accidents, legacy liability issues, and the political climate in Indonesia. Finally, management may be concerned about the potential of a joint venture, their relationships with banks, and their ability to meet production targets for the Chino and Rio Tinto mines.
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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