Slide 1: Morgan Stanley Basic Materials Conference
F REEPORT-M FREEPORT -MCCM MOOR AN C RAN COPPER &G OPPER & GOLD OLD Morgan Stanley Basic Materials Conference Richard C. Adkerson President & CEO February 19, 2008 www.fcx.com
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements in which we discuss factors we believe may affect our performance in the future. Forward-looking statements are all statements other than historical facts, such as statements regarding pro
Slide 3: FCX Investment Summary
FCX Investment Summary ¾ World’s Premier Publicly Traded Copper Company ¾ World Class, Long-lived, Geographically Diverse Operations ¾ Attractive Project Pipeline Supports Growing Production Profile ¾ Significant Exploration Potential ¾ Strong Cash Flows and Financial Strength 3
Slide 4: 2007 Highlights
2007 Highlights Extraordinary Year; Record Performance Transformed FCX Into World’s Largest Publicly Traded Copper Company Successful Integration Achievement of Debt Reduction Targets Well Ahead of Schedule Higher Production Profile and Further Expansion Opportunities Increased Common Di
Slide 5: Transformation of FCX
Transformation of FCX FCX Revenue Comparison FCX Net Income Comparison* ($ in billions) ($ in billions) $16.9 $2.7 $1.4 $5.8 2006 2007 2006 2007 * From continuing operations FCX Cash Flow Comparison Enterprise Value ($ in billions) ($ in billions) $6.2 $51.2 $1.9 $12.1 (1) (2) 2006 2007 Y-E 2006 Y-E
Slide 6: Achievement of Significant Debt Reduction
Achievement of Significant Debt Reduction Total Debt at 12/31/07 Senior Notes Issued in 2007 $6.0 (US$ billions) Heritage PD Debt 0.8 $20 Other Debt 0.4 (1) $17.6 Total $7.2 $15 $14.2 Total Debt Net of Cash $10 $7.2 $5 $5.6 Net of Cash $0 At Time of Acquisition 12/31/07 (1) Pro Forma year-end 2006 t
Slide 7: Geographically Diverse, Long-Lived Asset Base
Geographically Diverse, Long-Lived Asset Base Major Mine Operations & Development Projects All major assets majority-controlled and operated North North America America11 Copper Reserves Cu 25.8 billion lbs Copper/Gold/Silver Mo 1.8 billion lbs Molybdenum Production Grasberg (90.64%) Cu 1.75 billion
Slide 8: Preliminary Reserves at 12/31/07
Preliminary Reserves at 12/31/07 Consolidated Proven & Probable Reserves 12/31/07 Copper Molybdenum Gold Copper Reserves billion lbs billion lbs million ozs by Geographical Region Reserves @ 12/31/06 93.6 1.95 42.5 Additions/revisions* 3.5 0.16 0.8 Production (3.9) (0.07) (2.3) Net change (0.4) 0.09
Slide 9: Revenue / Production Mix
Revenue / Production Mix Mining Revenue by Commodity Copper Production by Method 2007 Pro Forma 2007 Pro Forma Gold 10% SX/EW SX/EW Concentrate Concentrate Molybdenum 35% 35% 65% 65% 12% Copper 78% 9
Slide 10: Favorable Copper Markets
Favorable Copper Markets 2,000 400 1,750 350 Cents Per Pound 1,500 300 000’s Metric Tons 1,250 250 1,000 LME Copper Price 200 750 150 500 100 250 50 LME & COMEX Exchange Stocks* 0 0 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07
Slide 11: Gold/Molybdenum Markets Overview
Gold/Molybdenum Markets Overview $1,000 London Gold Price ($/oz) $800 $600 $400 $200 $0 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Molybdenum Price* ($/lb) $40 $35 $30 $25 $20 $15 $10 $5 $0 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07
Slide 12: 2008 Outlook
2008 Outlook ¾ Sales Outlook: • Copper: 4.3 Billion lbs. • Gold: 1.3 Million ozs. • Molybdenum: 75 Million lbs. ¾ Modeled Operating Cash Flows (1): ~ $5 Billion for 2008 Significant Working Capital Requirements in First Half Funded Settlement of 2007 Copper Collars of $0.6 Billion in 1Q08 Expe
Slide 13: Development Project Update - North America
Development Project Update North America Safford Mine Development Miami Mine Restart • Major new mine in Arizona • Restart of the Miami mine substantially completed • 100MM lbs Cu/year by 2010 • SX/EW facility start-up in 4Q07 with • ~$100MM project, primarily mining first copper production in Decem
Slide 14: Development Project Update - Climax
Development Project Update North America Climax Mine Restart • ~$500MM “brownfield” project Primary Open-pit operation crusher Construction of new mill with Covered ore stockpile Pebble crusher restart by 2010 SAG & • Initial annual production ~30mm lbs Flotation circuit Ball mills moly at ~$3.5
Slide 15: Development Project Update - South America
Development Project Update South America Cerro Verde Cerro Verde Sulfide Mill Expansion Mill Expansion • ~$900MM project completed in 4Q06 • Operated at capacity during the second half 2007 • Adds 430MM lbs/year aggregate • Ramping up moly production in 2008 El Abra Sulfide • Large sulfide mineral d
Slide 16: Development Project Update - Indonesia
Development Project Update Indonesia Underground Mine Development • DOZ Expansions - Completed 50K expansion in mid-2007; record production of 59K t*/d in 4Q - Further expansion to 80K • Completed 96% of tunneling (Common Infrastructure) required to reach Grasberg Block Cave Big Gossan Shaft Develop
Slide 17: Development Project Update - Democratic Republic of Congo
Development Project Update Democratic Republic of Congo Tenke Fungurume Mine Development • Engineering & procurement activities continue; steel & concrete work proceeding in the leaching/processing area • Capital cost estimate of ~$900MM (aggregate)* • Initial production target – 2009 Leach Tank Con
Slide 18: Growth Project Update
Growth Project Update Incremental Expansions • Incremental expansions at Morenci, Sierrita, Bagdad and Cerro Verde Total capital costs of ~$400MM*; engineering in-progress Incremental annual metal** of 210MM lbs copper & 7MM lbs moly Financially attractive Capital Incr. Cu $MM MM lbs/yr Start-
Slide 19: Copper Reserves & Mineralized Material
Copper Reserves & Mineralized Material Preliminary Estimates as of 12/31/07 93 100 Incremental at $1.20 at $1.50 copper price copper price Reserves (a) Mineralized (billion lbs of Material (b) recoverable copper) (billion lbs of contained copper) (a) Consolidated copper reserves using a long-term co
Slide 20: Significant Exploration Potential
Significant Exploration Potential Tenke Fungurume, Tenke Fungurume Democratic Republic of Congo ¾ Believed to be largest undeveloped, high grade copper/cobalt project in the world today ¾ Less than half of 600-square-mile concession explored; cumulative strike length greater than 80 kilometers Papua
Slide 21: Sales Profile 2007 - 2010e
Sales Profile 2007 - 2010e Gold Sales (million ozs) Copper Sales (billion lbs) 3 2.3 2.2 2.1 1.9 5 4.8 2 1.3 4.5 4.3 1 4 3.9 3.6 0 2006 2007 2008e 2009e 2010e Pro Pro Forma Forma* ____________________ 3 Note: Consolidated gold sales include approximately 185 k oz in 2006, 228 k oz in 2007, 135 k oz
Slide 22: 2008e Sales and Unit Production Costs by Region
2008e Sales and Unit Production Costs by Region 2008e Sales by Region North America South America Indonesia 1,575 1,475 1,200 75 (1) 1.2 0.1 Cu Mo Cu Au Cu Au mm lbs mm lbs mm lbs mm ozs mm lbs mm ozs 2 0 0 7e 1Q0 7 2008e 2007e 2007e 2007e North South (per pound of copper) America America Indonesia
Slide 23: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices Average Annual EBITDA 2008e-2009e ($800 Gold & $25 Molybdenum) $12 (US$ billions) $10 $8 $6 $4 $2 $0 Cu $2.50/lb Cu $3.00/lb Cu $3.50/lb Average Annual Operating Cash Flow 2008e-2009e ($800 Gold & $25 Molybdenum) $8 (US$ billions) $6 $4 $2 $0 Cu $2.50/lb
Slide 24: Sensitivity to Commodity Prices
Sensitivity to Commodity Prices Annual Annual Financial Financial Impact Impact Net Net Operating Operating Change Change EBITDA EBITDA Income Income Cash Cash Flow Flow (US$ millions) Copper: -/+ $0.20/lb $850 $490 $575 Molybdenum: -/+ $2.00/lb $140 $100 $100 Gold: -/+ $50/ounce $90 $45 $50 _______
Slide 25: Capital Expenditures
Capital Expenditures Major Projects All Other (US$ billions) $2.5 $2.4 $2.0 $1.8 $1.8 1.1 $1.5 1.0 0.9 $1.2 $1.0 0.8 1.3 $0.5 0.9 0.8 0.4 $0.0 2007 * 2008e 2009e 2010e * Includes PD expenditures beginning March 20, 2007 Note: Includes capitalized interest. e = estimate. Please see cautionary stateme
Slide 26: Op. Cash Flow After CAPEX & MI Distributions
Average Annual Excess Cash Flow (1) (1) 2008e – 2009e ($ in billions, except copper, gold and molybdenum prices) $5 Copper Sensitivities with $800 Gold/$25 Molybdenum Op. Cash Flow After CAPEX & MI Distributions $4 Available for investments/ $3 debt reduction/ shareholder returns $2 $1 Annual Annual
Slide 27: Financial Policy
Financial Policy ¾ FCX is Committed to Maintaining a Strong Financial Position ¾ Continuation of Positive Copper Markets is Expected to Provide Substantial Cash Flows Investments in Projects With Attractive Returns Opportunistic Debt Reduction Shareholder Returns ¾ Committed to Long-Standing T