Freeport-mcmoran, Inc. · NYSE:FCX

Freeport-mcmoran — Bank of America Merrill Lynch 19th Annual Canada Mining Conference 2013

29 slides from Freeport-mcmoran's conference presentation, Sep 13, 2013

  1. Slide 1: Expanding Resources

    EXPANDING RESOURCES Kathleen L. Quirk Executive Vice President & CFO September 13, 2013 www.fcx.com

  2. Slide 2: Cautionary Statement Regarding Forward-Looking Statements

    EXPANDING RESOURCES 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 projections or

  3. Slide 3: FCX – A Premier U.S. Based Natural Resource Company

    EXPANDING RESOURCES FCX – A Premier U.S. Based Natural Resource Company  World’s Largest Publicly Traded Copper Producer  High-Quality U.S. Based Oil & Gas Assets  Strong Margins & Cash Flows  Visible and Predictable Organic Growth  Strong Technical Capabilities  Track Record of Capital Discip

  4. Slide 4: FCX's Global Footprint

    EXPANDING RESOURCES FCX’s Global Footprint Major Operations & Development Projects North America1 All major mining assets majority-controlled and operated Reserves Cu 38.8 bn lbs Mo 2.7 bn lbs Copper Oil & Gas 688 MMBOE2 Sales Copper/Gold/Silver Cu 1.45 bn lbs Molybdenum Mo 92 mm lbs3 Grasberg (90.6

  5. Slide 5: Geographic & Commodity Mix

    EXPANDING RESOURCES Geographic & Commodity Mix (1) 2014e EBITDA North Mining America 75% 50% South America 17% Africa Oil & Gas Indonesia 7% 25% 26% (1) Based on 2014e EBITDA of ~$11 bn assuming annual pricing of $3.25/lb Cu, $1,400/oz Au, $10/lb Mo, $100/Bbl Oil (Brent) and $4.50/MMbtu natural gas.

  6. Slide 6: World's Leading Copper Producers

    EXPANDING RESOURCES World’s Leading Copper Producers Top 10 Copper Producers (2013e) (000 t) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Codelco FCX Glencore BHP Billiton Southern KGHM Rio Tinto Anglo Antofagasta RAO Norilsk Xstrata Copper American ____________________ Source: Wood Mackenz

  7. Slide 7: Copper Market Commentary

    EXPANDING RESOURCES Copper Market Commentary  China Remains Important Demand Driver - Slower Growth – but on Larger Base  Continued Improvement in U.S. Demand - Automotive Continues to Show Strength - Housing Sector Recovery Continues  European Demand Remains Weak  Lack of Scrap Availability Sup

  8. Slide 8: World Class Copper Discoveries Are Extremely Rare

    EXPANDING RESOURCES World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves 2013e Copper Production Million metric tons Thousand metric tons 0 5 10 15 20 25 30 0 200 400 600 800 1000 1200 1979 Escondida - 1979 1979 Escondida - 1979 Grasberg Complex - 1988 1910 Chuquicamata - 19

  9. Slide 9: Visible Organic Growth

    EXPANDING RESOURCES Visible Organic Growth Mining Oil & Gas  Targeting 5+ Billion Pounds  Production Targeted to Double Annual Cu Production by 2015 Over Next 5 Years (37% Increase from 2012)  Substantial Production Capacity  Advanced Stage Brownfield from Existing Deepwater Development Infrastr

  10. Slide 10: Copper Reserves & Mineralized Material

    EXPANDING RESOURCES Copper Reserves & Mineralized Material as of 12/31/12 billion lbs of copper 12/31/12 230 Mineralized Material (b) by Geographical Region Mineralized 113 Material (b) billion (contained copper) lbs North 117 at $2.20 Cu price America 52% South Indonesia America Reserves 17% 19% 12

  11. Slide 11: Copper Brownfield Development Projects

    EXPANDING RESOURCES Copper Brownfield Development Projects Tenke Fungurume Cerro Verde Morenci Phase II Expansion Mill Expansion Mill Expansion $0.9 billion* ~$4.4 billion $1.6 billion • Completed on time & within budget • Commenced construction in 1Q13 • Construction in Progress • Incremental 150 m

  12. Slide 12: Update on Grasberg

    EXPANDING RESOURCES Update on Grasberg • Unusually low metal production in 2012 & 2013 compared with historical levels  Low ore grades  Suspension of operations in 2Q13  Sequencing/timing of access of higher grade ore in Open Pit  Ramp-up of DOZ • Outlook for improving metal production & resulti

  13. Slide 13: History of Underground Operations at PT-FI

    EXPANDING RESOURCES History of Underground Operations at PT-FI  Freeport is a Recognized Global Leader in Underground Mining and Development  Initial Block Caving Operations Commenced in 1980  Decades of Successful and Safe Underground Mining Operations  Designed to Highest International Standar

  14. Slide 14: Significant Risked Resource Potential

    EXPANDING RESOURCES Significant Risked Resource Potential (MMBOE) ~3,250 Resource Potential by Region Exploration International 25% Success Model 9% Eagle Ford California 5% 11% Development 75% Success 1,565 Model Haynesville Deepwater 27% GOM 26% Ultra-Deep 22% Operating Operating, Resource (1) Dev

  15. Slide 15: Oil & Gas Operating Assets

    EXPANDING RESOURCES Oil & Gas Operating Assets California Eagle Ford Deepwater Haynesville • Long Established Oil • Large Oil/Liquids • Significant Current • Significant Gas Production History Rich Resource Production with Resource (5+ Tcfe) Upside • Strong Margins and • Flexible Structure • Preserv

  16. Slide 16: 2013 Outlook

    EXPANDING RESOURCES 2013 Outlook  Sales Outlook: • Copper: 4.1 Billion lbs. • Gold: 1.1 Million ozs. • Molybdenum: 92 Million lbs. • Oil Equivalents(1): 35 MMBOE (~65% Oil)  Unit Cost (2): • $1.58/lb of Copper in 2013e • $19/BOE  Operating Cash Flows (3): • ~$5.8 Billion (@$3.15/lb Copper in 2H13

  17. Slide 17: Production Profile

    EXPANDING RESOURCES Production Profile Gold Sales (million ozs) Copper Sales (billion lbs) 2 1.8 1.7 5.0+ 1.1 5 4.5 1 4.1 4 0 2013e ____________________ 2014e 2015e Note: Consolidated gold sales include approximately 115k ozs in 2013e, 180k ozs in 2014e and 160k ozs in 2015e for noncontrolling inter

  18. Slide 18: Strong Margins and Cash Flow

    EXPANDING RESOURCES Strong Margins and Cash Flow Average EBITDA ($1,300 Gold, $10 Molybdenum & $100 Oil) $24 (US$ billions) $18 ~40% 2016e Increase $12 $6 2014e/2015e Average $0 Cu $3.00/lb Cu $3.50/lb Cu $4.00/lb Average Operating Cash Flow (excluding Working Capital changes) ($1,300 Gold, $10 Moly

  19. Slide 19: Sensitivities (US$ millions)

    EXPANDING RESOURCES Sensitivities (US$ millions) 2014e/2015e Operating Change EBITDA Cash Flow Copper: -/+ $0.10/lb $470 $330 Molybdenum: -/+ $1.00/lb $80 $65 Gold: -/+ $50/ounce $75 $45 Oil Sales:(1) + $10/Bbl $405 $340 - $10/Bbl (2) ($380) ($325) Oil Sales Net of Diesel Costs:(1,3) + $10/Bbl $320

  20. Slide 20: Capital Expenditures

    EXPANDING RESOURCES Capital Expenditures (1) (US$ billions) $8 $6.5 $6.7 $6 $5.5 Oil & Gas 2.7 2.9 1.5 (2) $4 Major Projects 2.3 (3) TOTAL 2.7 2.7 $2 MINING 3.8 3.8 Other 4.0 (2) Mining 1.7 1.1 1.1 $0 2013e 2014e 2015e (1) Capital expenditure estimates include projects in progress. Project spending

  21. Slide 21: Committed to Balance Sheet Management

    EXPANDING RESOURCES Committed to Balance Sheet Management Strong Track Record  Reduce Debt to $12 Billion 6/30/2013 Balances Within 3 year Period ($ in bns)  Anticipate Continuing Current $20.5 Common Stock Dividend Rate: $1.25/Share per Annum $17.2  Large Resource Base with Strong Cash Flows and

  22. Slide 22: Summary

    EXPANDING RESOURCES Summary A Strong & Focused Organization Maximize Total Shareholder Returns Strong Management of the Base  Operational Excellence  Achieve Production Targets  Effective Cost and Capital Management  Manage HS&E and Other Inherent Risks Return Driven Growth  Prioritize Highest

  23. Slide 23: Reference Slides

    EXPANDING RESOURCES EXPANDING RESOURCES Reference Slides

  24. Slide 24: 2013e Quarterly Sales

    EXPANDING RESOURCES 2013e Quarterly Sales Gold Sales (thousand ozs) 400 400 330 Copper Sales (million lbs) 300 214 173 1,250 200 1,130 100 1,060 0 1,000 954 951 1Q13 ____________________ 2Q13 3Q13e 4Q13e Note: Consolidated gold sales include approximately 22k ozs in 1Q13, 18k ozs in 2Q13, 35k ozs in

  25. Slide 25: 2013e Operating Estimates

    EXPANDING RESOURCES 2013e Operating Estimates 2013e Unit Production Costs (per pound of copper) North South America America Indonesia Africa Consolidated (3) Cash Unit Costs (1) Site Production & Delivery (2) $2.00 $1.53 $2.76 $1.43 $1.94 By-product Credits (0.23) (0.27) (1.59) (0.26) (0.53) Treatme

  26. Slide 26: Cost Reductions/Deferrals

    EXPANDING RESOURCES Cost Reductions/Deferrals 2013e-2014e - $1.9 billion Capital Cost Reductions/Deferrals $1.4 billion Key Reductions/Deferrals • El Abra Sulfolix leach pad to 2019 South America • Miami smelter expansion (timing) $0.3 Africa $0.2 • Transmission line upgrades in Indonesia to 2016 No

  27. Slide 27: 2nd Half 2013e Oil & Gas Operating Estimates

    EXPANDING RESOURCES 2nd Half 2013e Oil & Gas Operating Estimates Madden & Operating Cost: $1.35/Mcfe California Haynesville Pricing: NYMEX Operating Cost: $30/Bbl Pricing: Brent Based Gulf of Mexico Shelf/ Deepwater Operating Cost: $14/Bbl Eagle Ford Pricing: LLS Operating Cost: $19/Bbl Pricing: LLS

  28. Slide 28: Oil & Natural Gas Hedging Positions

    EXPANDING RESOURCES Oil & Natural Gas Hedging Positions Oil Indexed to Brent 2H13 2014 2015 Puts Collars Unhedged Swaps 25k Bbls/d 5k Bbls/d 75k Bbls/d 30k Bbls/d $100 floor $90 floor $90 floor $95 floor 28% 40k Bbls/d $70 limit $70 limit $75 limit @ $109.23 $80 limit $124 Ceiling $126 Ceiling $5.74

  29. Slide 29: PT Freeport Indonesia

    EXPANDING RESOURCES PT Freeport Indonesia Life-of-Mine Production Sequencing 258mm mt Grasberg Open Pit 0.90% Cu & 0.98 g/t Au 176mm mt DOZ 0.57% Cu & 0.71 g/t Au 54mm mt Big Gossan 2.26% Cu & 0.97 g/t Au 517mm mt Deep MLZ 0.84% Cu & 0.70 g/t Au 999mm mt Grasberg UG 1.01% Cu & 0.78 g/t Au 420mm mt K

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