The Mo in Freeport-McMoran

Adanac, Roca, Thompson Creek, and General Moly may be the pure mol plays, but numbers-wise, the heavy hitter is Freeport-McMoran. The 2010 results from the Phoenix-based mining giant came out on January 21, and the numbers are staggering.

Bottom line, FCX sold 6.7e+7 lbs of mol in 2010, at an average price of USD 16.47 per pound. The average cost per pound was USD 5.90. All that mol earned them USD 708 million.

The earnings report bears careful reading. They report that construction activities geared toward the reopening of the Climax mine (see last week’s post) are underway. The timing of start-up seems to be at least a year away, and will depend on “market conditions”. Estimated remaining costs to get Climax back into action are USD 450 million, a significant increase from the ~350 million estimate that was being quoted in mid-2009. The Climax Mine, on restart, is capable of pumping 30 million pounds per year — if mol prices hold up at the current USD 17.50 level, FCX’ll recoup their start-up costs in a year.

Furthermore, there’s no indication that the mol’s gonna run out any time soon. New reserves outpaced production in 2010 by 1200%. FCX is now sitting on 3.39 billion pounds of mol — a cool 60 billion at current prices. Not bad for a company with 100 billion market capitalization that’s primarily a copper play.

I’m not yet expert enough to issue stock picks, but one thing is for sure. This stock was a “buy” in Dec. 2008.