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Thursday July 26, 1:07 AM Freeport-McMoRan quarterly profit triples NEW YORK, July 25 (Reuters) - Freeport McMoRan Copper & Gold said on Wednesday second-quarter profit tripled, boosted by added production from the mines it acquired when it bought rival copper miner Phelps Dodge. Net earnings rose to $1.1 billion, or $2.62 per share, from $367 million, or $1.74 per share, a year earlier, said the Phoenix-based company that operates mines in the United States, Peru, Chile and Indonesia. Revenue quadrupled to $5.81 billion from $1.42 billion. This was the first full quarter that included earnings and production from Phelps Dodge, which Freeport acquired in March for $25.9 billion. Freeport's earnings number did not include a net total of 85 cents in various charges for such things as debt extinguishment and mark-to-market accounting adjustments on Phelps Dodge's copper price hedging programs. The hedges expire at the end of this year. Analysts said that if those charges are included, Freeport earned $3.47 -- far exceeding the consensus of $2.74 from analysts polled by Reuters Estimates. The Reuters number only included 8 cents for debt extinguishment. Wall Street first reacted positively, sending Freeport's stock up over 3 percent when the New York Stock Exchange opened. But later it was down 2.2 percent at $92.94. "I would characterize the results as confusing, but quite better than expected," said Victor Flores, a mining analyst at HSBC Securities. "It was well above the range, let alone the consensus." He noted that most analysts, like him, do not include hedging charges in their estimates. But Flores said there was some concern that production at Freeport's vast Grasberg gold mine in Indonesia might taper off in the second half of this year. "It looks like what they expected in the third and fourth quarters came in in the second, and production might fall off the cliff later in the year," he said. "It is very front-end weighted, but that's why they have better results (in the second quarter)" Flores said. LOWER GRADE ORES Freeport said consolidated sales from its mines totaled 1 billion pounds of copper, 913,000 ounces of gold and 15 million pounds of molybdenum in the second quarter. Average realized copper prices were down 13 cents from a year earlier, but average gold prices rose to $658.36 per ounce from $613.77. The company expects third-quarter sales of 900 million pounds of copper, 125,000 ounces of gold and 16 million pounds of molybdenum. Full-year 2007 consolidated sales are estimated at about 3.9 billion pounds of copper, 2.1 million ounces of gold and 68 million pounds of molybdenum. On a conference call with analysts, Chief Executive Officer Richard Adkerson explained that miners at Grasberg were currently working in an area of lower grade ores. This was a necessary part of mine sequencing, he said. "Variations in grades are an inherent part of the business," he said. "In the last half of '08 we will be back to high grades, but this is necessary for the symmetry of the pit. "The fall-off at Grasberg is offset by the ramp-up at Cerro Verde (in Peru)," Adkerson said. "Do not assume that two low quarters in '07 are an indication of something that's going to continue," said Chairman James Moffett, who also took part in the call. Asked about possible acquisitions, Adkerson said the company's strong cash-flow situation allowed it to pay down much of its debt more quickly and it might consider growth. "Our balance sheet is really where we like it to be and we can look at opportunities as long as they are accretive to shareholder value. "(But) We won't go far from what we know, and what we know is mining and processing materials," Adkerson said. Freeport's total debt was approximately $9.8 billion, with $2.1 billion cash on June 30, compared with total debt of $12.0 billion and $3.1 billion cash on March 31, the company said.