* Q3 EPS of $1.31, revenue $4.6 billion
* Results miss Wall Street estimates
* Stock falls 5 percent in premarket trade (Adds quotes, stock drop, byline)

By Steve James

NEW YORK, Oct 21 (Reuters) - Freeport-McMoRan Copper & Gold Inc said on Tuesday that third-quarter profit fell sharply as metals prices dropped and it said it might curtail high-cost operations because of current economic conditions.

The results, which fell below Wall Street expectations, sent the company’s stock down 5 percent in premarket trading to $34.89.

“Our third-quarter results reflect strong operating performance during a period of weakening commodity prices and economic uncertainty,” Chairman James Moffett and President and Chief Executive Officer Richard Adkerson said in a statement.

“We will be responsive to current market conditions by reducing costs and capital spending and curtailing high-cost operations if required. We are positive about the underlying fundamentals of the copper market and the long-term prospects for our business.”

Global economic uncertainty has resulted in a drop in commodity prices recently. At the start of the third quarter, copper was selling for $4.08 per pound, but since July, the benchmark December copper contract plummeted, losing 32 percent to end the quarter at $2.76.

During the quarter, the spot price for gold went from $987 per ounce on July 15 to $736 on Sept. 11 — a drop of 25 percent.

Freeport actually sold more copper — 1.016 billion pounds during the third quarter, but the average realized price fell from $3.53 in the 2007 quarter to $3.14 this year. Gold sales
jumped to 307,000 ounces from 269,000 a year earlier, and the average realized price jumped to $869 from $695.

The Phoenix, Arizona-based mining company forecast full year 2008 sales of 4.0 billion pounds of copper and 1.2 million ounces of gold — in line with its lowered estimate last month. Sales of molybdenum, are expected to be slightly lower, at 74 million pounds, than the previous estimate of 75 million.

Net earnings were $523 million, or $1.31 per share, compared with $775 million, or $1.87 per share, a year earlier, the company said. Revenue fell to $4.62 billion from $5.07 billion.

Analysts on average were expecting earnings of $1.44 a share and revenue of $4.762 billion, according to Reuters Estimates.

Last month, Freeport said it expected recent lower copper prices to reduce third-quarter net income by approximately $100 million, with a $230 million cut in revenue.

In September, Freeport lowered its 2008 copper and gold production outlook, due to an incident at its Grasberg mine in Indonesia and also scaled back its forecast for full-year copper sales by 100 million pounds because of problems at its Safford and Morenci mines in Arizona.

Surging demand for copper and gold in the past few years has boosted earnings of miners and helped Freeport pay off $10 billion in debt from its purchase of rival Phelps Dodge last year.

But Freeport’s shares have plummeted more than 75 percent from a 52-week high of $127.23 on May 21 to a low of $30.03 last week. The stock closed on Monday at $36.72. (Reporting by Steve James, editing by Dave Zimmerman)