Freeport-mcmoran, Inc. · NYSE:FCX

Freeport-mcmoran — Freeport-McMoRan Copper & Gold — Morgan Stanley Global Basic Materials Conference 2009

31 slides from Freeport-mcmoran's conference presentation, Feb 17, 2009

  1. Slide 1: Morgan Stanley Global Basic Conference

    Morgan Stanley Global Basic Conference Richard C. Adkerson President & Chief Executive Officer www.fcx.com February 17, 2009

  2. 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

  3. Slide 3: FCX Investment Summary

    FCX Investment Summary  World’s Premier Publicly Traded Copper Company  World’s Largest Molybdenum Producer & Significant Gold Producer  Long-lived Reserves, Geographically Diverse Operations  Flexible Operating Structure to Respond to Varying Market Conditions 3

  4. Slide 4: Geographically Diverse

    Geographically Diverse Major Mine Operations & Development Projects All major assets majority-controlled and operated North North America America11 Copper Reserves Cu 28.3 billion lbs Copper/Gold/Silver Mo 2.1 billion lbs Molybdenum Sales Grasberg (90.64%) Cu 1.1 billion lbs Reserves Mo 60 million l

  5. Slide 5: Year in Review

    Year in Review  Strong Operating Performance  Reserve Additions: Replaced 3x 2008 Copper Production and 7x 2008 Molybdenum Production  Aggressive Response to Weak Market Conditions: - Revised Operating Plans to Reduce Costs and Capital Spending - Suspended Most Development Projects and Incrementa

  6. Slide 6: 2008 Summary

    2008 Summary Sales Data 2008 2007 Copper Consolidated Volumes (mm lbs) (1) 4,066 3,357 (2) Average Realization (per lb) $2.69 $3.29 Gold Consolidated Volumes (000’s ozs) 1,314 2,298 Average Realization (per oz) $861 $682 Molybdenum Consolidated Volumes (mm lbs) (1) 71 52 Average Realization (per lb)

  7. Slide 7: Impairment Assessment Results

    Impairment Assessment Results  Individual assets are assessed for impairment under applicable accounting requirements using year-end pricing and cost assumptions Writedown Writedown ($ ($ billions) billions) Pre-tax Pre-tax After-tax After-tax Leach Stockpiles & $ 0.8 $0.5 Other Metal Inventories L

  8. Slide 8: Phelps Dodge Transaction

    Phelps Dodge Transaction  Purchased Phelps Dodge in a Different Economic Environment  Significant Changes in Market Conditions in 4Q08 Resulted in Charges to Reduce the Carrying Value of Assets and Goodwill  Phelps Dodge Transaction has been Positive for FCX - Generated Substantial Cash Flow from

  9. Slide 9: Copper Markets

    Copper Markets 2,000 400 1,750 350 LME Copper Price 1,500 300 000’s Metric Tons Cents Per Pound 1,250 250 1,000 200 750 150 500 100 250 50 LME & COMEX Exchange Stocks* 0 0 Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- 99 99 00 00 01 01 02 02

  10. Slide 10: Copper Market – "What Happened"

    Copper Market – “What Happened” Change in Prices  Continued Financial Market Turbulence, Since Mid-September 2008 Credit Issues, and Outlook for Global 0% Economy are Major Force in Price Collapse  Anticipation of Surpluses and Slowing -10% Global Demand, Including China  LME Copper Stocks Up: -2

  11. Slide 11: Underlying Fundamentals of Copper Business Remain Positive

    Underlying Fundamentals of Copper Business Remain Positive  Supply Constraints/Shortfalls Reached Record 1.4 Million Metric Tons in 2008  Absence of New Projects  Current Market Will Further Delay Projects  60% of Today’s Mines Deplete or Go Underground by 2021  Urbanization in China and Other

  12. Slide 12: Molybdenum Market Update

    Molybdenum Market Update Molybdenum Price* ($/lb)  2008 Range: $8.75 - $34/lb $40 ̶ First 9 Months: $32 - $34/lb $35 $30 ̶ Since September 30: $8.75 - $30/lb $25 $20  Down $23.25/lb (72%) Since Sept. 30 $15 $10  Sharp Decline in Demand $5 $0  Destocking by Consumers & Traders Jan- Jul- Jan- Jul-

  13. Slide 13: Gold Market Update

    Gold Market Update  All-time High of $1,011/oz London Gold Price ($/oz) in March 2008 $1,200 $1,000  Price Weakened as US $800 Dollar Strengthened in 3Q $600 $400  Most Analysts Projected $200 Gold Would Have Performed $0 Better in This Environment Jan- 99 Jan- 00 Jan- 01 Jan- 02 Jan- 03 Jan- 04

  14. Slide 14: Preliminary Reserves at 12/31/08

    Preliminary Reserves at 12/31/08 Consolidated Proven & Probable Reserves Copper Molybdenum Gold 12/31/08 billion lbs billion lbs million ozs Copper Reserves Reserves @ 12/31/07 93.2 2.04 41.0 by Geographical Region Additions/revisions* 12.8 0.51 0.3 Production (4.0) (0.07) (1.3) Net change 8.8 0.44

  15. Slide 15: A World of Opportunities

    A World of Opportunities Consolidated Proven & Probable Copper Reserves 102 billion lbs of Copper Reserves at 12/31/08 +12.8 billion lbs of net additions North 28.3 America Reserves: 28.3 Additions: 3.9 85% of additions at Sierrita & Bagdad Africa 35.6 Reserves: 5.9 Additions: 1.6 32.2 >35% increase

  16. Slide 16: Copper Reserves & Mineralized Material

    Copper Reserves & Mineralized Material Preliminary Estimates as of 12/31/08 102 99 at $1.60 at $2.00 copper price copper price Reserves (a) Mineralized Material (b) (billion lbs of (billion lbs of contained copper) recoverable copper) (Incremental to Reserves) (a) Consolidated copper reserves using

  17. Slide 17: Near-Term Business Strategy Revisions

    Near-Term Business Strategy Revisions Prior Strategy (since PD acquisition) Revised Strategy  Reduce Debt   Aggressively reduce costs and capital  Define the potential spending of our resources   Protect liquidity  Develop growth and expansion projects   Preserve resources and growth  Ret

  18. Slide 18: Summary Impacts

    Summary Impacts  Reduce Volumes in 2009e/2010e Compared with October 2008 Estimates • Copper – 9% in 2009e and 17% in 2010e • Molybdenum – 25% in 2009e and 40% in 2010e  26% Reduction in Estimated 2009 Unit Site Production and Delivery Costs Compared with 2008  Reduced/Eliminated ~ 50% of 2009 CA

  19. Slide 19: Sales Profile 2007 - 2010e

    Sales Profile 2007 - 2010e Gold Sales (million ozs) Copper Sales (billion lbs) 3 2.3 2.2 2.2 5 2 1.3 4.1 1 3.9 3.9 4 3.8 0 2007 2008 2009e 2010e Pro Forma* 3 ____________________ Note: Consolidated gold sales include approximately 228 k oz in 2007, 134 k oz in 2008, 225 k oz in 2009e, and 220 k oz i

  20. Slide 20: 2008 and 2009e Sales by Region

    2008 and 2009e Sales by Region 2008 Sales by Region North America South America Indonesia 1,434 1,521 1,111 71 Au 1.2 mm ozs Cu Mo Cu 0.1 Cu Au mm lbs mm lbs mm lbs mm lbs mm ozs 2008 2008 2008 2008 2008 2008 2009e Sales by Region (1) North America South America Indonesia 1,370 1,300 1,130 2.1 60 Au

  21. Slide 21: 2008 and 2009e Unit Production Costs by Region

    2008 and 2009e Unit Production Costs by Region 2008 North South (per pound of copper) America America Indonesia Consolidated Unit Cash Costs Site Production & Delivery (1) $1.88 $1.13 $1.59 $1.51 Royalties (1) - - 0.10 0.03 Treatment Charges 0.09 0.14 0.24 0.15 By-product Credits (0.64) (0.13) (0.97

  22. Slide 22: Site Operating Costs by Category

    Site Operating Costs by Category 2009e 42% Materials Manpower 30% North 27% 28% Indonesia America 7% Acid Other 11% 19% Energy 19% 17% 33% 20% 36% 25% South Consolidated America 7% 16% 4% 18% 22% 19% Note: e = estimate. See Cautionary Statement. 22

  23. Slide 23: Exploration

    Exploration 2008 2009e $248 million $75 million 22% 17% North America 7% 44% 34% South 20% America 4% 10% Indonesia Africa 13% 29% Activities focused on incorporating significant data Australasia obtained in 2008 into our & Other Areas future plans Note: FCX’s consolidated share; e = estimate. See C

  24. Slide 24: EBITDA and Cash Flow at Various Copper Prices

    EBITDA and Cash Flow at Various Copper Prices 2009e & 2010e Average Annual EBITDA ($800 Gold & $9 Molybdenum) $5 (US$ billions) $4 $3 $2 $1 $0 Cu $1.25/lb Cu $1.50/lb Cu $1.75/lb 2009e & 2010e Average Annual Operating Cash Flow (excluding Working Capital)* ($800 Gold & $9 Molybdenum) $3 (US$ billion

  25. Slide 25: Sensitivities (2009e & 2010e Avg.)

    Sensitivities (2009e & 2010e Avg.) Operating Change EBITDA Cash Flow (US$ millions) Copper: -/+ $0.10/lb $375 $260 Molybdenum: -/+ $1.00/lb $55 $50 Gold: -/+ $50/ounce $100 $60 Diesel (1): -/+ 10% $25 $15 Purchased Power (2): -/+ 10% $35 $20 Currencies (3): +/- 10% $115 $70 ____________________ (1)

  26. Slide 26: Capital Expenditures

    Capital Expenditures (1) Major Projects All Other (US$ billions) $3.0 $2.7 $2.5 1.1 $2.0 $1.5 $1.3 $1.0 $1.0 0.6 1.6 0.5 $0.5 (2) 0.7 0.5 (3) $0.0 2008 2009e 2010e (1) Capital expenditure estimates will continue to be reviewed and revised subject to market conditions (2) Includes Tenke development a

  27. Slide 27: Tenke Fungurume

    Tenke Fungurume Development Project Update  Construction activities being advanced Kwatebala Mining  Initial production target -- 2H09; Aggregate annual production of 250MM lbs Cu & 18MM lbs Co  $1.75 billion in aggregate capital costs  Includes substantial amounts to support larger operation 

  28. Slide 28: Underground Mine Development in Indonesia

    Underground Mine Development in Indonesia Grasberg District Ore Bodies  In 2008, completed significant underground Grasberg development open pit  Big Gossan Mine  Initiated development of infrastructure for the Grasberg Block Cave Grasberg  In 2009, continue Block Cave Kucing development of the

  29. Slide 29: Achievement of Significant Debt Reduction

    Achievement of Significant Debt Reduction (US$ billions) $20 (1) $17.6 $15 Total Debt $10 $7.4 $5 $0 At Time of PD Acquisition 12/31/08 in March 2007 (1) Pro Forma year-end 2006 total debt of $1.6 billion plus $16 billion in acquisition debt 29

  30. Slide 30: FCX Debt Maturities 12/31/08

    FCX Debt Maturities 12/31/08 $6,000 (US$ millions) Total Debt & Cash at 12/31/08 $5,000 (US$ billions) Public Debt $6.9 Other Debt 0.5 $4,010 $4,000 Total Debt $7.4 8.375% Consolidated Cash $0.9 Senior Notes and $3,000 PD $2,514 Senior Notes Floating Rate & $2,000 8.25% Senior Notes $1,000 $355 $246

  31. Slide 31: Financial Policy

    Financial Policy  Maintain Strong Balance Sheet & Liquidity Position - Completed $750 mm Equity Offering  Aggressive Cost Management  Capital Investments Will be Limited in Current Market Environment  Near-Term Focus Will be on Protecting Liquidity While Preserving Large Mineral Resources and Gr

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