US – Freeport-McMoRan, or FCX, the US-based natural resources company, are tightening the purse strings after declaring a low cash dividend of $0.05 per share from the previous rate of $0.3125 per share on Tuesday.
This is in response to the impact of lower commodity prices.
FCX, the developer of the Tenke Fungurame minerals district in West Africa’s Democratic Republic of Congo, says the reduction in the dividend, payable on May 1, 2015, is a prudent measure to strengthen its balance sheet during a period of volatile market conditions.
FCX’s board of directors do however anticipate increasing cash returns to shareholders as market and business conditions warrant.
Going forward, the copper miner’s plans include significant reductions in capital spending and other costs while it evaluates funding opportunities for capital expenditures in its oil and gas business.
The FCX board members jointly said in a statement that the company will continue to take steps to enhance its financial position and to preserve its high quality resources for improved market conditions in the future.
“We are optimistic about our business, long-term commodity markets and the significant values embedded in our large-scale, long-lived assets. We are committed to achieving our plans to increase production volumes and to prudently manage capital spending which will enable us to reduce debt over time and increase future returns to shareholders,” the statement said.
FCX has a broad set of natural resource assets that provides many alternatives for future actions to enhance its financial flexibility.
Additional capital cost reductions, potential additional divestitures or monetisations and other actions will be pursued as required to maintain a strong balance sheet while preserving a strong resource position and portfolio of assets with attractive long-term growth prospects.
The declaration and payment of dividends is at the discretion of the board and will depend on the company’s financial results, cash requirements, future prospects, and other factors deemed relevant by the board.
Besides Tenke Fungurame in the DRC, FCX’s portfolio of mineral assets also includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits; significant mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America; and significant oil and natural gas assets in North America, including reserves in the Deepwater Gulf of Mexico (GOM), onshore and offshore California and in the Haynesville natural gas shale, and an industry-leading position in the emerging shallow water Inboard Lower Tertiary/Cretaceous natural gas trend on the Shelf of the GOM and onshore in South Louisiana.