Freeport (FCX) Wraps Up Senior Notes Offering Worth $1.3B

Freeport-McMoRan Inc. (NYSE:FCX) has closed the sale of $600 million of total principal amount of its 4.25% senior notes due 2030 and $700 million of total principal amount of its 4.125% senior notes due 2028.

The company plans to employ the net proceeds from the $1.3-billion senior notes offering along with cash in hand to fund its purchase or redeem certain outstanding senior notes. The series of notes include $40.4 million of total principal amount of its 4% senior notes due 2021, $154.8 million of total principal amount of its 4% senior notes due 2021 and $1,074.5 million of total principal amount of its 3.55% senior notes due 2022.

The company has further amended its earlier announced tender offers to increase the total purchase price from $1.1 billion to $1,141,899,000. Freeport said that it may use the proceeds to purchase a portion of its outstanding 2021 notes, 2022 notes, 3.875% senior notes due 2023 and 4.55% senior notes due 2024.

Notably, Freeport’s long-term debt declined around 12% year over year to $9.8 billion at the end of 2019. As of Dec 31, 2019, cash and cash equivalents were $2 billion, down 52% year over year.

Freeport’s shares have lost 18.9% in the past year compared with the industry’s 2.7% decline.

For 2020, Freeport anticipates consolidated sales volume to be nearly 3.5 billion pounds of copper, 800,000 ounces of gold and 88 million pounds of molybdenum. This projection also includes 725 million pounds of copper, 105,000 ounces of gold and 22 million pounds of molybdenum for first-quarter 2020.

For 2020, the company expects operating cash flows of roughly $2.4 billion. Capital expenditures are expected to be around $2.8 billion, which includes $1.8 billion for major mining projects that are mainly related to underground development activities in Grasberg and completion of the Lone Star copper leach project in Arizona.

Zacks Rank & Key Picks

Freeport currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space are Daqo New Energy Corp (NYSE:DQ) , Sibanye Gold Limited (NYSE:SBSW) and Impala Platinum Holdings Limited (OTC:IMPUY) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has an expected long-term earnings growth rate of 29%. The company’s shares have surged 80.3% in the past year.

Sibanye has an expected long-term earnings growth rate of 20.4%. Its shares have returned 123.6% in the past year.

Impala Platinum has an expected long-term earnings growth rate of 32.9%. The company’s shares have surged 113.7% in the past year.

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