Freeport-McMoRan Copper & Gold (NYSE:FCX) is enjoying copper's rise to $1.01 a pound, the highest price since 1997. Because copper started 2003 at $0.71 a pound, and Freeport's income increases $8 million with every one-cent increase in copper prices, the company's earnings have exploded.

Freeport's good fortune also includes its copper mine's byproducts: silver and gold. For every $5 increase in the price of gold, the company's income swells $6 million. With gold going from $344 per ounce in January to $410 currently, the company's treasuring is bulging from gold's exploding price too.

Freeport mined 345 million pounds of copper last quarter. To compute copper's production cost, the company first subtracts the profits from the mines two byproducts. Last quarter's net copper production cost was a negative 16 cents. It cost $0.68 to produce, deliver, treat, and pay mine royalties for copper. The company received a $0.84 credit for silver and gold for every pound of copper produced. Voila, free copper -- actually, it is less than free!

But the news isn't all good for Freeport. It has just one mine -- the Grasberg mine -- and it is located in politically unstable Indonesia. Furthermore, three recent rockslides caused disruptions. The latest slide blocks access to the open pit mine's high-grade section. Although underground operations will continue, and waste and low-grade materials from the open pit will be mined, the company has lowered its sales forecast for the fourth quarter by 21% for copper and 4% for gold.

The stock has had a meteoric rise this year. From a January low of $16.45, it almost tripled to $46.74 this month. Trading at 29 times earnings, and with $1.7 billion in net debt, the stock is not cheap or risk-free. But with the company's expanding margins and free cash flow, low production costs, long-life mine, and expanding dividend, there is a lot to interest investors.

Investors looking for other companies that will benefit from copper's sharp price increases should start with the world's second-largest copper producer, Phelps Dodge (NYSE:PD). Other large mining companies with copper operations include BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RTP).

W.D. Crotty pines over Freeport. Early to recognize the potential, W.D. took profits when FCX soared on the wings of gold's sharp price increase. You can join W.D. and other investors on the Mining and Metals discussion board, or email W.D. at wdcrotty@fool.com.