Freeport-McMoRan, Inc. · NYSE:FCX
Freeport-McMoRan — Q1 2018 Earnings Presentation
27 slides from Freeport-McMoRan's earnings presentation, Apr 24, 2018
Slide 1: 1st Quarter 2018 Earnings Conference Call
POW POW ERED ERED BY COPPER BY COPPER 1st Quarter 2018 Earnings Conference Call April 24, 2018 fcx.com
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
POW ERED POW ERED Cautionary Statement BY COPPER BY COPPER 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
Slide 3: Powered by Copper
POW ERED POW ERED BY COPPER BY COPPER “Powered by Copper” Well-Placed to Benefit from Industry-Leading Position in Copper Long-Lived, Geographically Diverse Reserves and Resources Strong Cash Flows Underpinned by Large-Scale Production Capacity and Ongoing Cost Management Attractive Inventor
Slide 4: Financial Policy
POW ERED POW ERED BY COPPER BY COPPER Financial Policy Significant Deleveraging Over Last Two Years Balanced Approach Positive Market to Enable Further Debt Reduction & Enhanced Returns to Shareholders A d d it io nal D elever ag ing Disciplined Approach to Investing in Attractive Growth Proje
Slide 5: 1Q18 Highlights
POW ERED POW ERED BY COPPER BY COPPER 1Q18 Highlights Maintained Focus on Consolidated Results ($ in bn) Productivity, Cost Management and Capital Discipline $1.4 Unit Net Cash Costs: $0.98/lb 29% Below 1Q17 Cash Flows Exceeded CAPEX by ~$1 bn $0.4 Repaid $2.0 bn in debt YTD, Including $0.45
Slide 6: Copper Market Commentary
POW ERED POW ERED BY COPPER BY COPPER Copper Market Commentary Real Demand Growing in Key Regions • Positive Momentum Continues in China • U.S. and Europe Healthy - Autos and Construction • Cathode Consumption Increasing with Tighter Scrap Availability Supply Constraints Continue • Absence of Ma
Slide 7: Indonesia Update
POW ERED POW ERED BY COPPER BY COPPER Indonesia Update Parties Have Agreed to a Framework for Long-Term Resolution 51% Divestment @ FMV; Development of New Smelter FCX / GoI JV Partner Extension of Long-Term Mining Rights with Fiscal and Legal Certainty 1st Quarter Milestones Open Items • Sign
Slide 8: Grasberg Block Cave – Key Milestones
POW ERED POW ERED BY COPPER BY COPPER Grasberg Block Cave – Key Milestones Reserves YE 2017 Dry Commissioned Rail Unloading Station 963mm t @ 1.01% Cu & 0.72 g/t Au Completed to Date +226 km of Development Mine Access Service Shaft Initial Fans & Vent Infrastructure Rail Connection Cru
Slide 9: Deep MLZ Commissioning
POW ERED POW ERED BY COPPER BY COPPER Deep MLZ Commissioning Reviewing DMLZ Mine Plan in Response to a Continuation of Mining-induced Seismic Activity Over Last Several Months Slowing Ramp-up Schedule to Assess Alternatives to Manage Rock Stress in Cave This is Not Expected to Affect Longer Te
Slide 10: Lone Star Oxide Development Project
POW ERED POW ERED BY COPPER BY COPPER Lone Star Oxide Development Project 12/31/2017 Reserve: 4.4 bn lbs of Copper Safford Leach Dos Pobres Pit Safford Facility Stockpile San Juan Pit $850 mm Project; Utilizes Existing Infrastructure at Safford Commenced Pre-stripping Activities in 1Q18 Lone
Slide 11: Recent Lone Star Intercepts
POW ERED POW ERED BY COPPER BY COPPER Recent Lone Star Intercepts Drill Hole Intercept (m) % Copper LS15-224 305 0.63 LS18-281 LS17-264 LS15-242 621 0.83 LS17-257 1213 0.47 LS18-279 LS17-259 1048 0.44 LS15-242 LS17-264 718 0.60 LS17-265 1202 0.63 LS17-266 603 0.56 LS17-265 LS17-267 1479 0.45 LS17-26
Slide 12: Americas Development Opportunities
POW ERED POW ERED BY COPPER BY COPPER Americas Development Opportunities Future Development Subject to Market Conditions U.S. • Large footprint with substantial (bns of lbs) Large footprint undeveloped sulfidewith substantial resources 257 undeveloped • Significant sulfide existing resources infra
Slide 13: 2018e Outlook
POW ERED POW ERED BY COPPER BY COPPER 2018e Outlook* Copper: 3.8 Billion lbs. Sales Gold: 2.4 Million ozs. Outlook Molybdenum: 95 Million lbs. Site Production & Delivery: $1.70/lb Unit Cost of Copper After By-product Credits(1): $1.01/lb, Including $0.97/lb for 2Q18e Operating ~$5.6 Bill
Slide 14: Transition Year Sales Profile
POW ERED POW ERED BY COPPER BY COPPER Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 4.0 4 3.8 3 3.7 2.4 3.3 2 1.6 1.45 3 1 0.65 0 2017 2018e 2019e 2020e - 2 2021e AVG Transition Year Note: Consolidated gold sales include 144k ozs in 2017, 230k ozs in 2018e, 60k ozs in 2019e, 135k
Slide 15: EBITDA and Cash Flow at Various Copper Prices
POW ERED POW ERED EBITDA and Cash Flow BY COPPER BY COPPER at Various Copper Prices (US$ billions) Average EBITDA ($1,300/oz Gold, $12/lb Molybdenum) $9 $6 $3 Average 2019e - 2021e $0 Cu $3.00/lb Cu $3.25/lb Cu $3.50/lb Average Operating Cash Flow Excludes Working Capital Changes ($1,300/oz Gold, $1
Slide 16: Capital Expenditures
POW ERED POW ERED BY COPPER BY COPPER Capital Expenditures (US$ billions) $2.3 $2.0 $1.4 Major 1.1* 1.3* Mining Projects 0.9 Other Mining 0.9 1.0 0.5 2017 2018e 2019e * Major mining projects include CAPEX associated with Grasberg Underground development ($0.75 bn per year in 2018e and 2019e) and Lon
Slide 17: Strong Execution of Deleveraging Plan
POW ERED POW ERED BY COPPER BY COPPER Strong Execution of Deleveraging Plan Net Debt* at Varying Copper Prices (US$ billions) $25.0 $20.1 $20.0 $15.0 $11.8 $10.0 $7.9 $6.1 $5.5 $4.9 $5.0 $0.0 Net Debt/ YE 2015 YE 2016 1Q18 $3.00 $3.25 $3.50 Adjusted EBITDA 4.6x 2.4x 1.1x 0.8x 0.7x 0.5x YE 2018e * Ne
Slide 18: Reference Slides
POW ERED POW ERED BY COPPER BY COPPER POW ERED POW ERED BY COPPER BY COPPER Reference Slides 18
Slide 19: Financial Highlights
POW ERED POW ERED BY COPPER BY COPPER Financial Highlights Sales Data 1Q18 1Q17 Copper Consolidated Volumes (mm lbs) 993 809 Average Realization (per lb) $3.11 $2.67 Site Production & Delivery Costs (per lb) $1.67 $1.60 Unit Net Cash Costs (per lb) $0.98 $1.39 Gold Consolidated Volumes (000’s ozs) 6
Slide 20: 1Q 2018 Mining Operating Summary
POW ERED POW ERED BY COPPER BY COPPER 1Q 2018 Mining Operating Summary North South 1Q18 Unit Production Costs (per lb of Cu) America America Indonesia Consolidated Cash Unit Costs (Credits) Site Production & Delivery, excluding adjustments $1.84 $1.78 $1.36 $1.67 By-Product Credits (0.20) (0.25) (2.
Slide 21: 2018e Operating Estimates
POW ERED POW ERED BY COPPER BY COPPER 2018e Operating Estimates North South 2018e Unit Production Costs (per lb of Cu) America America Indonesia Consolidated Cash Unit Costs (1) Site Production & Delivery (2) $1.85 $1.69 $1.52 $1.70 By-product Credits (0.25) (0.25) (2.73) (0.99) Treatment Charges 0.
Slide 22: 2018e Quarterly Sales
POW ERED POW ERED BY COPPER BY COPPER 2018e Quarterly Sales Copper Sales (million lbs) Gold Sales (thousand ozs) 1,200 750 700 690 610 993 990 500 430 970 900 875 250 0 1Q18 2Q18e 3Q18e 4Q18e Note: Consolidated gold sales include approximately 57k ozs in 1Q18, 68k ozs 600 in 2Q18e, 65k ozs in 3Q18e
Slide 23: PT-FI Mine Plan
POW ERED POW ERED PT-FI Mine Plan BY COPPER BY COPPER PT-FI’s Share of Metal Sales, 2017-2022e 2018e – 2022e Total: 5.4 billion lbs copper 2018e – 2022e Total: 7.6 million ozs gold PT-FI Share Annual Average: 1.1 billion lbs PT-FI Share Annual Average: 1.5 million ozs Copper, billion lbs Gold, milli
Slide 24: Grasberg Mining District
POW ERED POW ERED BY COPPER BY COPPER Grasberg Mining District PT-FI History & of Block Caving 1980’s r GBT b Grasberg GBT (depleted) Deplete open pit 1990’s IOZ IOZ bl Deplete DMLZ (depleted) 2000’s DOZ DOZ b (operating) Operat DOZ • DM DMLZ Start Grasberg Future • Gra In de Block Cave Kucing Ertsb
Slide 25: 2019e - 2021e Sensitivities
POW ERED POW ERED BY COPPER BY COPPER 2019e - 2021e Sensitivities (US$ millions) Operating Change EBITDA Cash Flow Copper: +/- $0.10/lb $360 $280 Molybdenum: +/- $1.00/lb $80 $75 Gold: +/- $50/ounce $55 $30 Currencies: (1) +/- 10% $175 $125 (1) U.S. Dollar Exchange Rates: 600 Chilean peso, 13,800 In
Slide 26: FCX Debt Maturities as of 3/31/18
POW ERED POW ERED BY COPPER BY COPPER FCX Debt Maturities as of 3/31/18 (US$ billions) Pro forma for Redemption of FCX 6.750% and FMOG 6.875% Senior Notes in April 2018 $8 Total Debt & Cash at 3/31/18 Actual PF Call FCX Revolver $ - $ - $6 Senior Notes 10.4 9.9 Cerro Verde Credit Facility 1.2 1.2 To
Slide 27: Adjusted EBITDA Reconciliation
POW ERED POW ERED BY COPPER BY COPPER Adjusted EBITDA Reconciliation (in millions) 12-mos Ended 1Q 2018 3/31/18 Net Income Attributable to Common Stock – Continuing Operations $ 703 $2,265 Interest expense, net 151 785 Income tax provision 506 1,215 Depreciation, depletion and amortization 451 1,776