Monday, October 25, 2010

Freeport (NYSE:FCX) Ready to Build Rail Lines to Transport Copper from Tenke Project

Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) may be ready to build rail lines to transport ore from its Tenke project in Democratic Republic of Congo.

The possibility is being brought about after an agreement between the giant miner and the government of the African nation came after a 3-year battle over contract terms was resolved.

Freeport’s Chief Executive Officer Richard Adkerson said production will ultimately double at Tenke as they expand the operations there.

Tenke should produce up to 290 million pounds of copper and 18 million pounds of cobalt annually, according to Adkerson.

Revisions in the contract include the conversion of $50 million in debt into equity and pay up to $30 million in installments based on certain metrics being attained.

Concerning copper reserves, royalties of $1.2 million will be paid for each 100,000 metric tons of copper reserves above 2.5 million tons, and another $5 million for surface area fees.

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