Copper Futures up 8% Despite High Inventories; Freeport Rallies (FCX)
Posted on | November 4, 2008 Time: 5:10 pm |
Shares of the world’s largest publicly-traded copper miner Freeport-McMoRan (FCX) are up over 10% as copper futures have made it all the way back to just below $2 (currently $1.98); the December contracts were trading at $1.80 just yesterday on the back of the London Metal Exchange (LME) reporting that copper inventories were the highest since 2004
Gold and molybdenum (Freeport’s two other revenue sources) continue to price well, and FCX shares pay a 6% dividend.
Balance Sheet Better Than You Think
Most importantly to the company’s financial position, most of the debt from the Phelps Dodge acquisition isn’t due until 2011 or later; operating cash flow should remain high enough at $2+ on copper to cover the interest & debt while leaving a little behind for capex.
Disclosure: author does not hold a position in FCX
Tags: copper > Freeport-McMoRan > gold > molybdenum
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