Freeport-McMoRan, Inc. · NYSE:FCX
Freeport-McMoRan — Freeport-McMoRan Copper & Gold — Q4 2007 Earnings Presentation
42 slides from Freeport-McMoRan's earnings presentation, Jan 23, 2008
Slide 1: 4th Quarter 2007 Earnings Conference Call
F REEPORT-M FREEPORT -MCCM MOOR AN C RAN COPPER &G OPPER & GOLD OLD 4th Quarter 2007 Earnings Conference Call James R. Moffett Richard C. Adkerson Timothy R. Snider Kathleen L. Quirk www.fcx.com January 23, 2008
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: 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 4: 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 5: 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% 5
Slide 6: Quarterly Operating Highlights
Quarterly Operating Highlights Operating Data 4Q06 Pro Forma 4Q07 Copper Consolidated Volumes (mm lbs) (1) 1,031 878 Average Realization (per lb) (2) $2.99 $3.12 Net Unit Cash Cost (per lb) $0.71 $1.08 Gold Consolidated Volumes (000’s ozs) 538 161 Average Realization (per oz) $628 $803 Molybdenum Co
Slide 7: 4Q07 Copper Impact
4Q07 Copper Impact ¾ Spot Price Declined From $3.70/lb at Start of Quarter to $3.01/lb at Year-end ¾ Approximately Half of Sales in Any Quarter are Provisionally Priced and Subject to Final Pricing Quarter-end Price is a Major Determinant in Recorded Price ¾ Two Impacts in 4Q07 1) Adjustments to 3
Slide 8: Pro Forma 2007 Sales and Unit Production Costs by Region
Pro Forma 2007 Sales and Unit Production Costs by Region 2007 Pro Forma Sales by Region North America South America Indonesia 1,399 2.2 1,332 1,131 69(1) 0.1 Cu Mo Cu Au Cu Au mm lbs mm lbs mm lbs mm ozs mm lbs mm ozs 1Q07 2007e 2007e 2007e 2007e 2007e North South (per pound of copper) America Ameri
Slide 9: 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 10: Markets Overview
Markets Overview 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 0 LME & COMEX Exchange Stocks* 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 Jul-07
Slide 11: 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 12: 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 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 Mine Restart
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: Exploration Drives the Mine Plan
Exploration Drives the Mine Plan Aggregate 2008e Exploration: ~$175 million North America Lone Star South America & Morenci 37% 14% Africa Indonesia Tenke 22% Deep Grasberg, 21% Fungurume Kucing Liar, & & Kisanfu other targets 6% outside of Block A Australasia & Other Areas 20 e = estimate. Please s
Slide 21: 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 22: Tenke Fungurume
Tenke Fungurume 2008 Exploration Program • +70 kilometers of diamond drilling with 10 drill rigs • Drill & advance mine development, brownfields & greenfields targets • $20 million N Existing drill holes License boundaries Drilling in Dec 2007 Priority 1: Excellent potential for outcropping and cove
Slide 23: 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 24: 2008e Quarterly Payable Metal Sales
2008e Quarterly Payable Metal Sales Gold Sales (thousand ozs) Copper Sales (million lbs) 1,240 1,250 750 Grasberg currently Grasberg currently mining mining in in lower grade lower grade section. section. 600 1,145 500 350 980 1,000 885 250 170 200 0 750 1Q08e 2Q08e 3Q08e 4Q08e ____________________
Slide 25: 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 1Q07 2 0 0 7e 2008e 2007e 2007e 2007e North South (per pound of copper) America America Indonesia C
Slide 26: 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 $2.50/lb
Slide 27: Sensitivity to Commodity Prices
Sensitivity to Commodity Prices Annual Annual Financial Financial Impact Impact Net Net Operating Operating Change Change EBITDA EBITDA Income Income Cash Cash Flow Flow (US$ millions) Copper: -/+ $0.20/lb $850 $490 $575 Molybdenum: -/+ $2.00/lb $140 $100 $100 Gold: -/+ $50/ounce $90 $45 $50 _______
Slide 28: Capital Expenditures
Capital Expenditures Major Projects All Other (US$ 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 $0.0 2007 * 2008e 2009e 2010e * Includes PD expenditures beginning March 20, 2007 Note: Includes capitalized interest. e = estimate. Please see cautionary stateme
Slide 29: Op. Cash Flow After CAPEX & MI Distributions
Average Annual Excess Cash Flow (1) (1) 2008e – 2009e ($ 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 30: 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
Slide 31: Reference Slides
Reference Slides 31
Slide 32: Grasberg District Ore Bodies
Grasberg District Ore Bodies • At year-end, we arrived at the start of the Grasberg BC terminal Grasberg • In 2008, we will begin development of Grasberg UG Grasberg BC infrastructure Pit Grasberg Block Cave “Spur” Elev Kucing Liar ation Kucing Liar Amole MLZ : “Spur” Deep 2,90 MLZ ESZ 0 m DOZ N e t
Slide 33: Grasberg Open Pit
Grasberg Open Pit 9N 8N 8E 6N 7S 8S N 33
Slide 34: PT-FI Mine Plan
PT-FI Mine Plan PT-FI’s Share of Metal Sales, 2008e-2012e Copper, billion lbs Gold, million ozs 2008e – 2012e PT-FI Share 2008e – 2012e PT-FI Share Total: 6.0 billion lbs Total: 7.8 million ozs Annual Average: 1.2 billion lbs Annual Average: 1.6 million ozs 2.1 2.0 1.4 1.3 1.2 1.2 1.2 1.2 1.2 1.0 20
Slide 35: Mining Sequence in 2008
Mining Sequence in 2008 Copper Equivalent Cross Section A B 7S is the Primary Ore Pushback in 2008 8E 7S Grasberg Plan View B End 2007 1Q08 A Legend: 0.25 –- 0.99 0.50 0.99% CuEq % Eq Cu 1.00 –- 1.99 1.00 1.99% CuEq % Eq Cu 2.00 –- 2.99 2.00 2.99% CuEq % Eq Cu 35 >3.00% > 3.00 % CuEq Eq Cu
Slide 36: Mining Sequence in 2008
Mining Sequence in 2008 Copper Equivalent Cross Section A B 7S is the Primary Ore Pushback in 2008 8E 7S Grasberg Plan View B End 2007 2Q08 A Legend: 0.25 –- 0.99 0.50 0.99% CuEq % Eq Cu 1.00 –- 1.99 1.00 1.99% CuEq % Eq Cu 2.00 –- 2.99 2.00 2.99% CuEq % Eq Cu 36 >3.00% > 3.00 % CuEq Eq Cu
Slide 37: Mining Sequence in 2008
Mining Sequence in 2008 Copper Equivalent Cross Section A B 7S is the Primary Ore Pushback in 2008 8E 7S Grasberg Plan View B End 2007 3Q08 A Legend: 0.25 –- 0.99 0.50 0.99% CuEq % Eq Cu 1.00 –- 1.99 1.00 1.99% CuEq % Eq Cu 2.00 –- 2.99 2.00 2.99% CuEq % Eq Cu 37 >3.00% > 3.00 % CuEq Eq Cu
Slide 38: Mining Sequence in 2008
Mining Sequence in 2008 Copper Equivalent Cross Section A B 7S is the Primary Ore Pushback in 2008 8E Grasberg Plan View 7S B End 2007 A 4Q08 Legend: 0.25 –- 0.99 0.50 0.99% CuEq % Eq Cu 1.00 –- 1.99 1.00 1.99% CuEq % Eq Cu 2.00 –- 2.99 2.00 2.99% CuEq % Eq Cu 38 >3.00% > 3.00 % CuEq Eq Cu
Slide 39: Mining Sequence in 2009
Mining Sequence in 2009 Copper Equivalent Cross Section A B 7S and 8E/8S are the Primary Ore Pushbacks in 2009 8E Grasberg Plan View B End 7S 2008 A 2009 Legend: 0.25 –- 0.99 0.50 0.99% CuEq % Eq Cu 1.00 –- 1.99 1.00 1.99% CuEq % Eq Cu 2.00 –- 2.99 2.00 2.99% CuEq % Eq Cu 39 >3.00% > 3.00 % CuEq Eq
Slide 40: Mining Sequence in 2010
Mining Sequence in 2010 Copper Equivalent Cross Section A B 8E/8S is the Primary Ore Pushback in 2010 9N Grasberg Plan View B 8E End 8E/8S 2009 A Legend: 2010 0.25 –- 0.99 0.50 0.99% CuEq % Eq Cu 1.00 –- 1.99 1.00 1.99% CuEq % Eq Cu 2.00 –- 2.99 2.00 2.99% CuEq % Eq Cu 40 >3.00% > 3.00 % CuEq Eq Cu
Slide 41: Mining Sequence in 2011
Mining Sequence in 2011 Copper Equivalent Cross Section A B 8E/8S and 9N are the Primary Ore Pushbacks in 2011 9N* Grasberg Plan View End B 2010 8E/8S A Legend: 0.25 –- 0.99 0.99% CuEq 2011 0.50 % Eq Cu 1.00 –- 1.99 1.00 1.99% CuEq % Eq Cu 2.00 –- 2.99 2.00 2.99% CuEq % Eq Cu 41 >3.00% > 3.00 % CuEq
Slide 42: Mining Sequence in 2012
Mining Sequence in 2012 Copper Equivalent Cross Section A B 9N is the Primary Ore Pushbacks in 2012 9N* Grasberg Plan View B End 2011 2012 A Legend: 0.25 –- 0.99 0.50 0.99% CuEq % Eq Cu 1.00 –- 1.99 1.00 1.99% CuEq % Eq Cu 2.00 –- 2.99 2.00 2.99% CuEq % Eq Cu 42 >3.00% > 3.00 % CuEq Eq Cu * 9N is in
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