Mining Profits...Investing In Industrial Metals

Phelps Dodge Corp., which has agreed to a buyout by copper mining rival Freeport McMoran Copper & Gold Inc., said Monday its fourth-quarter earnings surged due to sharply higher copper prices, even as production slipped.

Net income grew to $1.32 billion, or $6.50 per share, in the three months ended Dec. 31 from $121.3 million, or 60 cents per share, in the prior-year period.

Revenue surged 43 percent to $3.24 billion from $2.26 billion a year ago. Costs rose a more modest 7 percent to $1.88 billion.

The latest quarter included a special gain of $364.1 million, or $1.79 per share, while the 2005 quarter included a one-time charge of $204.2 million, or $1.01 per share. Excluding the gain in the latest quarter, Phelps Dodge would have earned $$4.71 a share.

Analysts polled by Thomson Financial forecast earnings of $4.28 per share, excluding one-time items, on $3.49 billion in sales.

Copper production fell slightly to 320,000 tons from 321,800 tons in year-earlier quarter. But copper prices averaged $3.206 per pound on the London Metal Exchange, up sharply from $1.951 in the year-ago quarter and down slightly from the $3.479 averaged in the third quarter.

Molybdenum production grew to 16.8 million pounds from 14.5 million pounds.

For the full year, earnings increased to $3.02 billion, or $14.83 per share, from $1.55 billion, or $7.69 per share. Revenue rose to $11.91 billion from $8.29 billion.

Phelps Dodge agreed in November to a $25.9 billion cash-and-stock takeover by Freeport McMoran. The deal, expected to close in March, would create the world's largest publicly traded copper company.

Phelps Dodge shares fell 72 cents to $123.55 in morning trading on the New York Stock Exchange. They are still near their 52-week high of $124.77.