Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Q4 2022 Earnings Presentation
39 slides from Freeport-mcmoran's earnings presentation, Jan 25, 2023
Slide 1: FCX Conference Call 4th Quarter and Year Ended 2022 Results
FCX Conference Call 4th Quarter and Year Ended 2022 Results January 25, 2023
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements in which FCX discusses its potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as plans, projections, or expectation
Slide 3: 2022 Performance
Adjusted EBITDA Operating Cash Flow CAPEX Excluding Smelter CAPEX Including Smelter $9.5 $5.1 $2.7 $3.5 Copper (bn lbs) (1) (4) 2022 Performance (1) Consolidated copper sales include 741 mm lbs in 2021 and 840 mm lbs in 2022 for noncontrolling interests; excludes purchased copper. (2) Consolidated g
Slide 4: 2022 Accomplishments
2022 Accomplishments 4 • Copper and gold sales growth • Successful PT-FI underground transition – sustaining large- scale, low-cost production • Measurable progress on new leaching initiative • Solid capital & cost management in challenging environment • Advanced Indonesia smelter • Advancing option
Slide 5: Copper Structurally Supported by Favorable Long-term Fundamentals
Copper Structurally Supported by Favorable Long-term Fundamentals 5 Copper Market Commentary $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 0 300,000 600,000 900,000 1,200,000 1,500,000 Jan-22 Feb-22Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Copper Price Inventories (metric to
Slide 6: Long-Lived Reserve Base
Long-Lived Reserve Base 25+ year implied reserve life for copper, excluding mineral resources Copper (bn lbs) 111.0 234.7 Gold (mm ozs) 26.9 67.1 Molybdenum (bn lbs) 3.5 7.8 Mineral Reserves (1) (recoverable) Incremental Mineral Resources (2) (contained) (2) Includes measured, indicated and inferred
Slide 7: Overview of Freeport-McMoRan's Molybdenum Business
7 Overview of Freeport-McMoRan’s Molybdenum Business • 2022 production 85mm lbs: 61% by-product / 39% primary • By-product molybdenum produced at Bagdad, Sierrita, Morenci and Cerro Verde • Two primary molybdenum mines located in Colorado – Henderson underground mine (100% owned) – Climax open-pit m
Slide 8: 2022 Operational Data
2022 Operational Data 8 (1) (1) Includes molybdenum produced in South America. (2) Includes gold produced in North America. (3) Production costs include profit sharing in South America and severance taxes in North America. 1,162 75 1,469 1,582 1.8 (2) North America IndonesiaSouth America by Region20
Slide 9: PT-FI Successful Transition to Underground Mining
PT-FI Successful Transition to Underground Mining 9 • Sustaining large-scale, low-cost production • Produced 3.0 mm dmts of copper concentrate in 2022 – Annual Record • World’s largest underground operation • Positive long-term partnership with Indonesia government 2019 2020 2021 2022 0.6 0.8 1.3 1.
Slide 10: Indonesia Greenfield Smelter Project Update
10 Indonesia Greenfield Smelter Project Update Preliminary Estimate of Spending on Greenfield Smelter & PMR (shared 51% PT Inalum/49% FCX)(2) $0.2 $0.8 $1.8 $0.6 2021 2022 2023e 2024e ($ in bns) e = estimate. See Cautionary Statement. NOTE: See slide 33 for additional details. (1) Greenfield smelter
Slide 11: Future Growth Embedded in Existing Asset Base Provides Increased Leverage to Copper Prices
Future Growth Embedded in Existing Asset Base Provides Increased Leverage to Copper Prices • Advancing sulfide leaching technologies • Identified opportunities to achieve annual run rate of 200 mm lbs by year-end 2023 • Double concentrator capacity • Advancing feasibility study, stakeholder engageme
Slide 12: Annual Sales Profile
Annual Sales Profile January 2023 Estimate NOTE: Consolidated copper sales include 741 mm lbs in 2021, 840 mm lbs in 2022, 1,332 mm lbs in 2023e, 1,407 mm lbs in 2024e and 1,360 mm lbs in 2025e for noncontrolling interests; excludes purchased copper. 0 1 2 3 4 5 2021 2022 2023e* 2024e* 2025e 3.8 4.2
Slide 13: Reconciliation of 2023e Unit Net Cash Cost Guidance
2022 Actual (1) Impacts January 2023e Guidance (2) Site Production & Delivery $2.19 +10¢ (3) $2.29 By-product Credits (1.01) -3¢ (1.04) Treatment Charges 0.16 +6¢ (4) 0.22 Royalties & Export Duties 0.16 -3¢ 0.13 Unit Net Cash Costs $1.50 $1.60 Reconciliation of 2023e Unit Net Cash Cost Guidance e =
Slide 14: EBITDA and Cash Flow at Various Copper Prices
14 NOTE: EBITDA equals operating income plus depreciation, depletion and amortization. e = estimate. See Cautionary Statement. (1) U.S. Dollar Exchange Rates: 875 Chilean peso, 15,500 Indonesian rupiah, $0.68 Australian dollar, $1.05 Euro, 3.83 Peruvian Nuevo Sol base case assumption. Each +10% equa
Slide 15: Consolidated Capital Expenditures Excluding Indonesia Smelter Projects
2022 2023e 2024e Consolidated Capital Expenditures Excluding Indonesia Smelter Projects CAPEX (1) Major Projects (1) See slide 10; Indonesia smelter projects are being funded with net proceeds from PT-FI’s April 2022 senior notes offering and its available revolving credit facility. (2) Major projec
Slide 16: Financial Policy: Performance-Based Payout Framework
16 Financial Policy: Performance-Based Payout Framework ~50% free cash flow(1) for shareholder returns NOTE: Target net debt $3 - $4 bn, excluding project debt for additional smelting capacity in Indonesia. (1) Available cash flows generated after planned capital spending (excluding Indonesia smelte
Slide 17: Executing Clearly Defined Strategy Focused on Copper
Long-lived reserves Embedded growth options Strong balance sheet Cash returns for shareholders Responsible producer of scale Experienced management team 17 Executing Clearly Defined Strategy Focused on Copper
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Slide 19: Reference Slides
ELECTRIFYING THE FUTURE Reference Slides
Slide 20: Copper – Metal of the Future Critical to Global Decarbonization
20 Copper – Metal of the Future Critical to Global Decarbonization Source: International Copper Association See Cautionary Statement. Freeport is strategically positioned as a leading copper producer. Global Decarbonization is Expected to Drive Intensity of Copper Use More than 65% of the world’s co
Slide 21: S&P Global Copper Study Published in July 2022
S&P Global Copper Study Published in July 2022 21 Key takeaways from independent study led by Dan Yergin as project chairman • Copper — the “metal of electrification” — is essential to all energy transition plans • Copper demand is projected to grow from 25 million metric tons (MMt) today to about 5
Slide 22: 2022 ESG Highlights
2022 ESG Highlights • Achieved the Copper Mark at all 11 of our eligible copper producing sites in North America, South America and Europe; PT-FI completed the assurance process and submitted its validation package • Signed letters of commitment for the new Molybdenum Mark for Climax and Henderson m
Slide 23: The Copper Mark & Molybdenum Mark
The Copper Mark & Molybdenum Mark 23 Recognition for Responsible Production Assurance framework developed to demonstrate the copper industry’s responsible production practices Producers participating in the Copper Mark are committed to adhering to internationally recognized responsible operating pra
Slide 24: Financial Highlights
Financial Highlights Copper Consolidated Volumes, excluding purchases (mm lbs) 1,042 4,213 Average Realization (per lb) $ 3.77 $ 3.90 Site Production & Delivery Costs (per lb) $ 2.28 $ 2.19 Unit Net Cash Costs (per lb) $ 1.53 $ 1.50 Gold Consolidated Volumes (000’s ozs) 458 1,823 Average Realization
Slide 25: 4Q22 Mining Operating Summary
25 4Q22 Mining Operating Summary (1) Includes 5 mm lbs in 4Q22 and 7 mm lbs in 4Q21 from South America. (2) Silver sales totaled 1.2 mm ozs in 4Q22 and 1.0 mm ozs in 4Q21. (3) Silver sales totaled 1.5 mm ozs in 4Q22 and 1.6 mm ozs in 4Q21. NOTE: For a reconciliation of unit net cash costs per pound
Slide 26: Actions in 2022 to Strengthen Balance Sheet
26 Actions in 2022 to Strengthen Balance Sheet Raised $3 bn in Senior Notes to fund Indonesia Smelter Projects ▪ Average weighted cost of three tranches approximated 5.4% Restructured credit facility ▪ Added approximately $385 mm in capacity (net of term loan prepayment), matures in 2026 Refinanced
Slide 27: Solid Balance Sheet and Liquidity
$0 $2 $4 $6 $8 2023 2024 2025 2026 2027 2028 Thereafter 27 Solid Balance Sheet and Liquidity Attractive Debt Maturity Profile (US$ bns) $6.5 5.25%, 4.25%, 4.625%, 5.40% & 5.45% Sr. Notes and FMC Sr. Notes $1.0 3.875% Sr. Notes $0.7 4.55% Sr. Notes FCX Revolver $ - FCX/FMC Senior Notes 7.6 PT-FI Seni
Slide 28: 2023e Outlook
2023e Outlook Sales Outlook Unit Net Cash Cost of Copper Operating Cash Flows (1,2) Capital Expenditures (1) Assumes average prices of $1,900/oz gold and $20/lb molybdenum in 2023e. (2) Each $100/oz change in gold would have an approximate $170 mm impact and each $2/lb change in molybdenum would hav
Slide 29: 2022 and 2023e Sales by Region
1,200 2022 and 2023e Sales by Region (1) Includes molybdenum produced in South America. (2) Includes gold produced in North America. 80 (1) Mo mm lbs 1,460 Cu mm lbs e = estimate. See Cautionary Statement. 1,500 1.7 (2) Au mm ozs 75 (1) Mo mm lbs 1,469 Cu mm lbs 1,582 1.8 (2) Au mm ozs 1,162 North A
Slide 30: 2023e Quarterly Sales
NOTE: Consolidated copper sales include 269 mm lbs in 1Q23e, 356 mm lbs in 2Q23e, 346 mm lbs in 3Q23e and 361 mm lbs in 4Q23e for noncontrolling interests; excludes purchased copper. 0 200 400 600 800 1000 1200 1Q23e* 2Q23e 3Q23e 4Q23e 900 1,100 1,070 1,090 0 150 300 450 600 1Q23e* 2Q23e 3Q23e 4Q23e
Slide 31: 2022 and 2023e Unit Production Costs by Region
North South America America Indonesia Consolidated 2022 and 2023e Unit Production Costs by Region (1) Production costs include profit sharing in South America and severance taxes in North America. (2) Estimates assume average prices of $4.00/lb for copper, $1,900/oz for gold and $20/lb for molybdenu
Slide 32: PT-FI Mine Plan Metal Production, 2022 – 2027e
PT-FI Mine Plan Metal Production, 2022 – 2027e NOTE: Amounts are projections. Timing of annual production will depend on a number of factors, including operational performance and other factors. FCX's economic interest in PT-FI approximated 81.27% through 2022 and beginning January 1, 2023, FCX’s ec
Slide 33: Indonesia Smelter and Precious Metals Refinery
3D Concept Map of PMR (1) In accordance with Indonesia regulations, PT-FI submits a smelter progress report to the Indonesia government for review every six months. (2) Based on target price of $2.8 bn for construction contract (excludes capitalized interest, owner’s costs and commissioning) and $0.
Slide 34: Advancing New Leach Technologies
34 Advancing New Leach Technologies Taking Leach to the Next Level South America 16% Other North America 34% Morenci 50% Copper in Leach Stockpiles Unrecoverable by Traditional Leach Methods 38 bn lbs Contained* * Copper from historical placements beyond assumed recovery estimates and is not include
Slide 35: Lone Star Update
35 ● Success of oxide development advances opportunity for scale ● Design to incorporate combined leach and concentrate facilities – similar to Morenci ● Next steps o Ongoing exploration to support metallurgical testing o Scoping studies/mine planning scenarios Lone Star Update (1) Initially at 105k
Slide 36: Discretionary Capital Projects
36 Discretionary Capital Projects* ● Commenced long-term mine development activities ● Approximate 10-year development timeframe ● Sustain large-scale, low-cost Cu/Au production ● Capital investment: ~$400 mm/yr average (~$470mm in 2023e) ● 6.8 bn lbs copper & 6.5 mm ozs gold o ~ 550 mm lbs & 560K o
Slide 37: 4Q22 Copper Realization & 1Q23e Guidance
37 4Q22 Copper Realization & 1Q23e Guidance $3.63/lb 4Q22 LME Average Copper Price 3-Mo. Fwd Price for Copper at the End of December FCX 4Q22 Consolidated Copper Price Realization FCX 4Q22 Prior Period Open Lb Adj. (aka Provisional Price Adj.) $3.80/lb $3.77/lb (Generally, 50/50 weight of qtrly avg
Slide 38: Adjusted EBITDA Reconciliation
38 Adjusted EBITDA Reconciliation (1) Fourth-quarter 2022 primarily includes adjustments to reclamation liabilities at PT-FI ($116 mm) and charges for a proposed settlement related to legacy environmental litigation ($44 mm). The twelve months ended 12/31/2022 also includes net adjustments to enviro
Slide 39: Freeport
FREEPORT FOREMOSTYN COPPER