New Trade for June 27th, 2023

Several Wall Street analysts have recently become bullish on copper, predicting a potential surge in prices. Citi’s projections indicate that copper could experience a remarkable increase of almost 50% by 2025, reaching $12,000 per ton in their base case scenario. In a more optimistic bull case, prices could even double to $15,000 per ton. Similarly, Goldman Sachs forecasted a 25% upside in copper prices over the next 12 months, with a target of $11,000 per ton.

While current copper prices may seem subdued, analysts and financial institutions project a promising future for this versatile metal, prompting investors to consider seizing the potential buying opportunity it presents. Today’s featured stock is set to benefit amid copper’s recovery.

Freeport-McMoRan (FCX)

Freeport-McMoRan, one of the leading copper producers worldwide, has established itself as a prominent player in the industry. Apart from copper, the company also engages in the production of gold and molybdenum, a crucial element utilized in the creation of high-strength steel alloys.

The crown jewel of Freeport’s impressive portfolio is the Grasberg mine located in Indonesia, renowned as one of the largest sources of copper and gold globally. Additionally, the company operates substantial mines in Arizona and Peru. In 2022 alone, Freeport achieved a remarkable copper production of 4.2 billion pounds.

Looking ahead, Freeport possesses an extensive organic development pipeline that holds the potential to increase its copper production in the coming years significantly. By implementing initiatives to enhance leaching, a chemical process employed to extract copper from ore, and potentially adopting new leaching technology, the company aims to augment its annual production capacity by an estimated 800 million pounds in the near and medium terms. Furthermore, several expansion projects are in the pipeline, projecting substantial production capacity growth over the medium and long term.

The company’s commitment to expanding copper production is expected to yield positive shareholder results through increased cash returns. Freeport has devised a framework aiming to allocate up to 50% of its excess cash flow towards shareholder returns, encompassing dividends and share repurchases. As the mining company’s copper production continues to grow, shareholders can anticipate enhanced cash rewards due to its strategic approach.

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