Diversified mining giant Freeport-McMoRan Copper & Gold (FCX 0.68%) is out with its fourth-quarter and full-year report, and the results aren't pretty. Due to collapsing gold and copper prices last year, this was bound to be a rough batch of earnings for miners like Freeport, Southern Copper (SCCO 1.02%), and Rio Tinto (RIO -0.15%).

It's easy to doubt the financial positions of the major mining stocks in light of their ugly earnings reports over the past few quarters. However, there are still plenty of reasons for investors to be hopeful about Freeport's future. Freeport-McMoRan is solidly diversified, thanks to its huge investments in oil and gas. That's why management is optimistic about the upcoming year, and why Foolish investors should be optimistic as well.

Business results were largely as expected
Minerals prices declined across the board last year, so not surprisingly, Freeport's profits followed suit. For fiscal 2013, diluted earnings per share dropped 17%. Plainly stated, there was nowhere for Freeport-McMoRan to hide. There was an abundance of industry data as well as information from its peers to indicate that 2013 would amount to a tough year for Freeport. For example, Southern Copper's net sales over the first nine months of its fiscal year fell 12%.

On the bright side, minerals giants kept production going strong in recent quarters. This is perhaps a signal that management teams are expecting a recovery in the precious metals markets sooner rather than later. For example, Freeport grew production of copper, gold, and molybdenum year over year. In fact, Freeport's fourth-quarter gold sales nearly doubled from the fourth quarter of 2012.

Positive production trends are evident across the mining industry. Southern Copper increased copper production by 5% in the most recent quarter due to recoveries at two major mines in Peru. Meanwhile, Rio Tinto increased production over its first nine months of the fiscal year across its key minerals. Production of iron ore, copper, and aluminum each increased over that period. Copper led the way, with 19% production growth through the first three quarters. And, its most recent quarter was a record one for iron ore production and shipments.

Why gold may rise again
The price of gold is often seen as a 'fear trade.' In other words, it's commonly bought as a hedge against declining economic growth or geopolitical risks. Recently, concern over the condition of the global economy has reared its ugly head. In particular, the emerging markets are looking shaky on reports that China might be growing slower than economists had expected.

Over the past few weeks, gold has reacted as you'd expect. The precious metal is up recently, and if the trend continues, it would be a bullish signal for gold miners. Freeport-McMoRan realized an average gold price of $1,220 per ounce in the fourth quarter. Gold prices are now above that, meaning the pricing environment may finally serve as a tailwind heading into the first quarter.

An additional layer of protection
Going forward, Freeport-McMoRan will benefit from any increases in precious metals prices. However, even if gold and copper prices continue lower in 2014, Freeport is at least somewhat insulated from further damage thanks to its newly diversified business. Freeport made a series of acquisitions last year to break into the oil and gas industries. In fact, Freeport sold 16.6 million barrels of oil equivalents in the fourth quarter.

This is what gives management confidence to significantly increase the company's 2014 cash flow estimate. Freeport McMoRan generated $6.1 billion in operating cash flow in 2013, but expects cash flow to jump to $9 billion for the upcoming year.

As a result, while last year was a rough one for Freeport-McMoRan, there are many reasons to be hopeful for the future. Freeport is already a giant in the mining space, and is set to soon become a giant in oil and gas production as well.

There is far less uncertainty surrounding our "Top Stock for 2014"