Freeport-McMoRan Shares Boosted on Asset Sale
Freeport-McMoRan sold an interest in its stake in a Serbian copper project at Timok to Toronto's Lundin Mining. The deal could be worth up to $262.5 million to Freeport.
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To paraphrase the late U.S. Senator Everett Dirksen, a few hundred million here and a few hundred million there, and pretty soon it adds up to real money. Freeport-McMoRan Inc. (NYSE: FCX) certainly hopes so at least.
The company sold an interest in its stake in a Serbian copper project at Timok to Toronto’s Lundin Mining. The deal could be worth up to $262.5 million to Freeport, provided certain development milestones are met. Freeport is the majority owner of the Timok project and its operator. The company’s current minority partner is another Canada-based miner, Reservoir Minerals, which holds right of first offer on the proposed sale.
Reservoir has 60 days to exercise its first-offer right. If it chooses not to do so, Lundin said the deal is expected to close in the second quarter.
Freeport currently owns 54% of the Timok project, which has been divided into upper and lower zones, and Reservoir holds 45%. Details of the proposed deal are complicated, but the end result would be that Lundin would own 75% of the project’s upper zone and Reservoir would own the rest. Freeport would own 54% of the project’s lower zone, Reservoir would own 25% and Lundin would own 24%.
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Last month Freeport sold a 13% ownership stake in its Morenci project for $1 billion to its joint-venture partner in the Arizona mine, Japan-based Sumitomo. Freeport’s long-term debt at the end of December totaled $19.8 billion. Freeport aims to cut at least $5 billion from that total from asset sales.
Freeport’s shares traded up about 12% in the early afternoon Friday, at $10.22 in a 52-week range of $3.52 to $23.97. That low was posted less than two months ago. The consensus price target on the shares is $6.58.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
