Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Q2 2018 Earnings Presentation
31 slides from Freeport-mcmoran's earnings presentation, Jul 25, 2018
Slide 1: Second Quarter 2018 Earnings Conference Call
: POWERED BY COPPER 24 Quarter 2018 Earnings Conference Call July 25, 2018
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
POWERED. Cautionary Statement BY.COPPER Regarding Forward-Looking Statements Thi : which FOX king statements are all than statements of historical facts, such and hllpg rates producton and sales volumes unt net seth co byte non-binding Heads of Agreement bebvoen CX, PI freepor indonesia eal BT indon
Slide 3: 2Q18 Highlights
POWERED. BY COPPER 2Q18 Highlights = Maintained Focus on Productivity, Cost Management and Capital Discipli iscipline $27 = Unit Net Cash Costs: $0.96/Ib, 19% Below 2Q17 = Cash Flows Exceeded CAPEX by ~$0.8 bn in 2Q & ~$1.8 bn YTD $0.9* » Repaid $2.0 bn in debt YTD, $0.5* Including $0.45 bn in April
Slide 4: Copper Market Commentary
POWERED. BY COPPER Copper Market Commentary = Global Trade Issues Impacting Commodities Market Sentiment and Causing Macro Uncertainty » Copper Down 14% Since June 15th = Current Copper Physical Market Broadly Balanced Globally » Exchange Stocks (LME, COMEX and Shanghai) Down ~90 kt (13%) Since June
Slide 5: Heads of Agreement — 7/12/18: Transaction Benefits
Heads of Agreement — 7/12/18 BY COPPER Transaction Benefits = Establishes New Long-term Partnership between FCX and Government of Indonesia = Long-Term Stability for Grasberg Operations = FCX Retains Current Existing Economics » Preserves FCX Share of Future Cash Flows and Net Asset Values » Non-Dil
Slide 6: PT-FI Operations Review
POWERED BY_GOPPER. PT-Fl Operations Review | Actual Results | Results Mine Plan Adjustments = 2Q18 Mill Rate: 188 t/d = Extension of Open Pit Through 1H19 + CopperGrade: 1.06% + GoldGrade: 1.77 git = Deferred Start-up of Deep MLZ (DMLZ) » Hydraulic Fracturing Operations to Pre- = 2Q18 Production Con
Slide 7: PT-FI Underground Ramp-up
PT-FIl Underground Ramp-up Contribution by Deposit Ore Milled POWERED BY_GOPPER. Aggregate Metal (000’s t/d) Grasbergopenpit m—DOZ mam Big Gossan 215 173 161 ‘80K td 104 106 | = at 25K tid 2018e 2019e 2020e 2021e 2022e (bn Ibs Cu & mm ozs Au) DMLZ 1.4 oa Cu Au 2022e 2023e- 2027e 2018e ‘year-end 2047
Slide 8: Lone Star (Oxides Only)
Lone (Oxides Only) = $850 mm Project ($113 mm incurred thru 6/30/18) Utilizes Existing Infrastructure at Safford = Commenced Pre-stripping Activities in 1Q18 = Provides Exposure to Large Sulfide Deposit (60+ bn Ibs Contained Copper) = Low Execution Risk = First Copper Expected by YE 2020 Key Statist
Slide 9: Recent Lone Star Sulfide Intercepts
POWERED BY. GOPPER Recent Lone Star Sulfide Intercepts Plan View | ly 2Q18 Lone Star Intercepts Intercept i Intervals Drill Hole meters = %Cu meters %Cu meters = %Cu__ LS18-270 792 0.46 64 0.68 219 0.64 Eitentofe™ eee LS18-274 369 0.39 NA NA NA NA LS18-280 780 047 192 0.81 67 0.99 cs ww LS18-283A 1,
Slide 10: Large footprint with substantial undeveloped sulfide resources
U.S. ~ Large footprint with substantial undeveloped sulfide:resources _ Significant existing infrastructure provides for Brownfield expansions « Distri¢t extensions include: » Bagdad: » China’Gobre + Lone SfapSafford * Morenci » Sierrita South America = El Abra mill project to develop large sulfide
Slide 11: 2018e Outlook
Sales Outlook Copper: 3.8 Billion Ibs. Gold: 2.4 Million ozs. = Molybdenum: 95 Million Ibs. Unit Cost of Copper Site Production & Delivery: $1.73/Ib After By-product Credits™: $1.04/Ib (3Q18e: 95¢/Ib; 4Q18e: $1.29/Ib) Operating Cash Flows ) ~$4.3 Billion (@ $2.75/lb Copper for 2H18e) Each 10¢/Ib Cha
Slide 12: Sales Profile
Sales Profile POWERED. BY COPPER CopperSales (iii) 4.0 4 3.7 3.8 = o > iS 2 = D = o S S 2017 2018e 2019e 2020e - 2022e AVG ‘Note: Consolidated copper sales include 670 mm lbs in 2017, 685 mm Ibs {in2018e, 670 mm Ibs in 2019e and ~690 mm Ibs per year in 2020e - e = estimate. See Cautionary Statement
Slide 13: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow BY CORBER at Various Copper Prices (USS billions) UNS Tel31-]8 12). ($1,250/0z Gold, $11/Ib Molybdenum) $10 $8 $6 $4 Transition Yrs $2 Average $0 ’19eP'20e Cu $3.00/Ib Cu $3.25/Ib Cu $3.50/Ib NoctelTel cele Cun Excludes Working Capital Changes ($1,250/oz Gold, $11/lb Molybdenum)
Slide 14: Capital Expenditures
POWERED. BY COPPER Capital Expenditures (USS billions) 2017 2018e 2019e ba per: ‘and 2019) and Lone Star ($0.22 bn in 2016e and $0.37 bnin 2019e): F's after 7/31/18. Note: e estimate. See Cautionary Statement.
Slide 15: Financial Policy
POWERED. BY COPPER Financial Policy = = Net Debt at 6/30/18: $7.3 Bn* » LTMLeverage Ratio: 0.9x Balanced Approach Significant Deleveraging Over Last Two Years Positive Market to Enable Further Additional Debt Reduction & Enhanced Returns a to Shareholders Cannan Shareholders Disciplined Approach to
Slide 16: Slide 16
Slide 17: Financial Highlights
POWERED. BY COPPER Financial Highlights 2018 1H18 Copper Consolidated Volumes (mm Ibs) 989 1,982 Average Realization (per Ib) $3.08 $3.10 Site Production & Delivery Costs (per Ib) $1.69 $1.68 Unit Net Cash Costs (per Ib) $0.96 $0.97 Gold Consolidated Volumes (000’s ozs) 676 1,286 Average Realization
Slide 18: 2Q 2018 Mining Operating Summary
POWERED. BY COPPER 2Q 2018 Mining Operating Summary (per Ib of Cu) america America Indonesia Cash Unit Costs (Credits) Site Production & Delivery, excluding adjustments $1.94 $1.77 $1.33 $1.69 By-Product Credits (0.25) (0.22) (2.76) (1.04) Treatment Charges 0.10 0.18 0.26 0.18 Royalties & Export Dut
Slide 19: 2018e Operating Estimates
POWERED. BY COPPER 2018e Operating Estimates 3 2 North South 2018e Unit Production Costs [G3aDRsen marry America c Cash Unit Costs Site Production & Delivery (2) $1.91 $1.70 $1.53 $1.73 By-product Credits (0.24) (0.23) (2.72) (0.98) Treatment Charges 0.11 0.19 0.26 0.18 Royalties & Export Duties - 0
Slide 20: 2018e Quarterly Sales
POWERED. BY COPPER 2018e Quarterly Sales | CopperSales | (million Ibs) ae (thousand ozs) 1,200 5 750 500 970 900 - 865 250 0 Koz 1018 2018 3Q18e 1918, PIG ext oasis 20 Se and eons ise fr nancon trong rere 300 — 25 24 24 24 23 20 15- 10 1018 2018 = 3Q18e «= Ate 5 Cade mt nanny sen teh 0m, Zwae te 9ag
Slide 21: Heads of Agreement — 7/12/18
POWERED BY_GOPPER. Heads of Agreement — 7/12/18 = = Inalum (an Ind ian SOE) and Provincial/Local Government to Acquire: + Rio Tinto JV Interests for $3.5 Billion Cash * PTIndocopperinvestama (PT-Il) Shares Owned by FCX for $350 Million Cash = Inalum to Contribute JV Interests to PT-FI in Exchange fo
Slide 22: PT-FI Mine Plan
PT-FI Mine Plan Br Copeee PG FI’s Sha Share of Metal Sales, 2017-2022e oon PAE SeydtY.-am Total: 5.3 billion lbs copper PAE CEL Total: 7.6 million ozs gold PT-FI Share Annual Average: 1.06 billion Ibs PT-FIShare Annual Average: 1.5 million ozs Oo Copper, billion Ibs DB Gold, million ozs 1.9 1.4 | ii
Slide 23: Grasberg Mining District
POWERED. BY COPPER Grasberg Mining District = PT-FI History of Block Caving Grasberg open pit - Grasberg Block Cave Kucing + GrasbergBC In development + Kucing Liar ‘Future development
Slide 24: Grasberg pit life extended by mining north ramp
= Grasberg pit life extended 6 months by mining north ramp starting from bench 3325L & will start after pit bottom is mined (year-end 2018) v Accelerated ore: 5.3mm t @ 1.24% Cu & 1.88 g/t Au v Aggregate metal impact: 130mm Ibs Cu & 250K ozs Au A View Northwest 3325 4 3295 5 3265 4 3235 4 3205 4 317
Slide 25: GBC Service Shaft and Development Status
| Reserves | YE 2017 GBC Service Shaft = 963mmt @ 1.01% Cu & 0.72 gitAu 355 meters Sm Hoisting Level Completed to Date +233 km of Development Mine Access Service Shaft Extraction Level Initial Fans & Vent Infrastructure Rail Connection Over 5 km of Rail Crusher #1 Batch Plant Train, Rail & Unloading
Slide 26: Hydraulic Fracturing
Hydraulic Fracturing 437mm t@ 0.91% Cu & 0.76 git Au (from DOZ ae arm : PT-FI continues to address mining-induced seismic activity in DMLZ that began in 2017 and continued during 2018. During 2Q18, PT-FI initiated plans to conduct hydraulic fracturing activities to manage rock stresses & pre-conditi
Slide 27: Sensitivities
POWERED. BY COPPER Sensitivities (USS millions) Operating EBITDA Cash Flow Copper: +/- $0.10/Ib $325 $250 Molybdenum: +/- $1.00/Ib $80 $75 Gold: +/- $50/ounce $40 $20 Currencies: +/- 10% $175 $125 Copper: +/- $0.10/Ib $400 $315 Molybdenum: +/- $1.00/Ib $80 $75 Gold: +/- $50/ounce $80 $45 Currencies:
Slide 28: FCX Debt Maturities as of 6/30/18
POWERED. FCX Debt Maturities as of 6/30/18 E==™ (USS billions) Suam Total Debt & Cash MEMsWAE) Actual MNFCX Revolver $- I Senior Notes 99 $6 Cerro Verde Credit Facility 12 Total Debt su. Consolidated Cash $39 $4 6. Sr. Notes Sr, Notes Sr, Notes 2018 2019 2020 2021 2022 2023 2024 Thereafter
Slide 29: Adjusted EBITDA Reconciliation
POWERED. BY COPPER Adjusted EBITDA Reconciliation : {in millions) 12-mos Ended 2Q 2018 6/30/18 Net Income Attributable to Common Stock — Continuing Operations $ 873 $2,878 Interest expense, net 142 765 Income tax provision 515 1,544 Depreciation, depletion and amortization 442 1,768 Gain on early ex
Slide 30: 3-Mo. Forward Price for Copper and Price Realization
3-Mo. Fwd Price for Copper at the End of June FCX 2Q@18 Consolidated Copper Price Realization FCX 2Q18 Prior Period Open Lb Adj. (aka Provisional Price Adj.) 3Q18 Open Pound Guidance 2Q18 LME Average Copper Price $3.12/Ib $3.01 /Ib $3.08/Ib* (Generally, 50/50 Weight of Qtrly Avg and 3-mo Forward Pri
Slide 31: 2018e Consolidated Effective Tax Rate
POWERED BY. GOPPER 2018e Consolidated Effective Tax Rate = Projected Quarterly Rate Annual Rate* 38% 38% 33% 36% ~46% ~38% ~38% ~38% ash taxes. th operates. Accordingly, variations volume and cost estimates and average prices of $2.75 per pound for copper, $1,250 per ounce for gold and $1 1.00 per p