Freeport-McMoRan Inc. FCX said that it has filed a prospectus supplement with the Securities and Exchange Commission. Under the prospectus supplement, the company may offer and sell shares of common stock having total gross proceeds of up to $1 billion from time to time, with J.P. Morgan Securities LLC acting as its sales agent.
The company intends sell the common stock through ordinary broker transactions or block trades on the NYSE at market prices or as otherwise agreed with its agent. Freeport plans to utilize the net proceeds from this offering for repaying the outstanding amount under its revolving credit facility and other bank borrowings, and for funding working capital and capital expenditures.
Freeport’s shares jumped roughly 10.6% on the news to close at $11.65 yesterday.
Freeport released its second-quarter 2015 results last month. The company reported a loss of $1.78 per share for the second quarter as against earnings of 46 cents per share in second-quarter 2014.
The results include net charges of $2 billion or $1.92 per share related to the reduction of the carrying value of oil and gas properties. Barring that impact, earnings were 14 cents a share in the second quarter, surpassing the Zacks Consensus Estimate of 11 cents. Revenues declined 23.1% year over year to around $4,248 million in the second quarter and missed the Zacks Consensus Estimate of $4,523 million.
Freeport’s copper business remains affected by a sluggish Chinese economy and supply related issues. The slowdown in China (a major market for copper) and difficult market conditions in Europe are affecting copper markets. The depressed gold and copper pricing environment also remains a major concern for Freeport.
Adding to the problem is the slump in oil prices which is hurting Freeport’s oil and gas business. The company may also see further impairment charges related to this business, thereby affecting its profitability in the future reporting periods.
Freeport is taking aggressive actions to sell assets, defer capital spending and cut dividends on its common stock. The company will continue to assess its portfolio for potential future actions and aims to maintain a strong financial position, with focus on reducing debt. Simultaneously, it will carry on investing in attractive growth projects and providing cash returns to shareholders.
Freeport currently carries a Zacks Rank #3 (Hold).
Some better-ranked mining companies are Capstone Mining Corp. CSFFF, Denison Mines Corp. DNN and Energy Fuels Inc. UUUU. While Capstone Mining sports a Zacks Rank #1 (Strong Buy), Denison Mines and Energy Fuels carry a Zacks Rank #2 (Buy).
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Click to get this free report FREEPT MC COP-B (FCX): Free Stock Analysis Report DENISON MINES (DNN): Free Stock Analysis Report CAPSTONE MINING (CSFFF): Free Stock Analysis Report ENERGY FUELS (UUUU): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research