Freeport-McMoRan Inc (FCX.N) wants to avoid arbitration and work with the Indonesian government to resolve a protracted mining permit dispute, Richard Adkerson, chief executive of the copper miner, said on Wednesday.

Freeport said it was encouraged by progress in talks on a new permit for its massive Grasberg copper and gold mine. But it offered no new developments on negotiations, which have been snarled by issues around the valuation, timing and structure of an agreed-upon divestment.

The company, the world's No. 2 publicly traded copper miner, and government are "highly motivated" to reach an agreement and actively working on documentation needed for a framework deal reached in August, Adkerson said on a conference call with analysts to discuss third-quarter results.

Under mining rules that Indonesia revised this year, miners are required to divest a 51 per cent stake, relinquish arbitration rights and pay new taxes and royalties.

"Negotiations in Indonesia matter more than anything else for now," said Jefferies and Co analyst Christopher LaFemina in a note to clients. "While we are encouraged by Freeport's operational performance, progress (or lack thereof) in the company's ongoing negotiations with the government of Indonesia is clearly critical to the FCX investment case."

Freeport shares, after initial gains, dropped 4.2 per cent to US$14.58 in trading on Wednesday

Freeport had earlier reported an adjusted third-quarter profit of 34 cents a share, bettering analyst expectations of 31 cents, according to Thomson Reuters I/B/E/S.

Revenue of US$4.3 billion topped analysts' estimate of US$4.08 billion.

Copper prices charged through a three-year high last week, underpinned by improving manufacturing profits in China that point to robust growth in the country, the world's top user of metals.

Freeport reported consolidated sales of 932 million pounds of copper and 355,000 ounces of gold, lagging its July forecast of 940 million pounds of copper and 375,000 ounces of gold.

Average realized prices rose to US$2.94 per pound of copper, from US$2.19 in the same period last year, while the price of gold slipped to US$1,290 an ounce from US$1,327.

Freeport maintained its 2017 sales forecast of 3.7 billion pounds of copper and 1.6 million ounces of gold, after twice lowering it earlier this year.

Gold production increased to 418,000 ounces in the quarter, from 308,000 ounces in the same period last year