It didn't exactly fit the old saw about the minnow swallowing the whale, but Freeport McMoRan's (NYSE:FCX) acquisition this year of its larger rival Phelps Dodge clearly allowed the former company to bulk up in a hurry. On Wednesday, Freeport reported the results of its first full quarter as a combined company, and my, how the numbers have grown!

Net income for the company rose to $1.1 billion, or $2.62 a share, vs. $367 million, or $1.74 a share, in the June 2006 quarter. That, for those of you who'd rather not do the math, is right at a 200% increase on the net income line. Revenues rose 306% to $5.81 billion, compared to $1.43 billion last year.

Before acquiring Phelps Dodge in March, Freeport's biggest asset was easily its large Grasberg copper facility in Indonesia. As a combined company, it now operates Phelps' former copper and molybdenum mines in the United States and Africa. In total, those facilities yielded 1 billion pounds of copper, 913,000 ounces of gold, and 15 million pounds of molybdenum in the quarter. While gold prices were 7% higher year over year, copper prices were about flat at $3.33 a pound.

The key to Freeport's success lies in global copper demand and, hence, the prices it realizes for the metal. While those prices have remained comfortably above $3 for the past several months, that level is about three times the norm of a decade ago. But despite softness in the U.S. housing and automobile markets -- the two biggest domestic users of the metal -- increasing demand in China and other developing nations has more than offset whatever demand falloff may have occurred in the U.S.

The mining and metals industry has been a hotbed of mergers and merger speculation of late. In addition to the Freeport-Phelps combination, aluminum producer Alcoa (NYSE:AA) recently made an unfriendly offer for its Canadian rival Alcan (NYSE:AL), only to be shunted aside by a far higher offer from Anglo-Australian mining giant Rio Tinto (NYSE:RTP). But there continues to be speculation that BHP Billiton (NYSE:BHP), an even larger Melbourne-based mining company, will enter the acquisition fray by itself acquiring Alcoa or, yes, Freeport.

So Freeport McMoRan clearly represents a solid new combination operating in a continuously active and interesting industry. And despite its shares having increased about 58% in value this year, I'm convinced that the company warrants ongoing Foolish attention.

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Fool contributor David Lee Smith does own shares in BHP Billiton, but not in the other companies mentioned. He welcomes your communiques. The Motley Fool has a disclosure policy.

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