Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Q4 2019 Earnings Presentation
38 slides from Freeport-mcmoran's earnings presentation, Jan 23, 2020
Slide 1: 4th Quarter 2019 Earnings Conference Call
/-onj FREEPORT-McMoRaAN 4 Quarter 2019 Earnings Conference Call January 23, 2020 + eal = ies PROVEN ASSETS. FUNDAMENTAL VALUE.
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement rn Regarding Forward-Looking Statements id og 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 ex
Slide 3: 2019 Highlights
—_ va) 2019 H ighlights PROVEN ASSETS. FUNDAMENTAL VALUE. Building Momentum on 3 Major Initiatives to Support Growing Sales Profile, Decrease Unit Costs and Drive Expanded Margins & Cash Flow Generation Grasberg Block Cave Crusher in Operation 1) Grasberg Underground * Commenced Operating Phase + Ra
Slide 4: Committed to Responsible Production for All Stakeholders
Committed to Responsible Production en for All Stakeholders FUNDAVENTAL VALUE SAFETY © RESPECT e INTEGRITY e EXCELLENCE e COMMITMENT CONTINUOUS IMPROVEMENT ENVIRONMENTAL STEWARDSHIP COPPER. METAL OF THE FUTURE = Copper Key in Global Decarbonization Trends + High Efficiency in Conductive Applications
Slide 5: Copper Market Commentary
Copper Market Commentary FUNDAMEN WUE tonnes $/lb = Strong Fundamental Outlook 1,400,000 3.30 CopperPrice = Exchange Inventories Near : 1,200,000 Multi-year Low 3.10 = Medium Term Supply Growth 1,000,000 2.90 is Limited 800,000 2.70 = Modest Demand Growth Expected to Drive Prices Higher 600,000 2.50
Slide 6: Executing The Plan
Executing The Plan FUNBAMENGAL OE Growing 2019 v. 2021e Sales ~30% ~40% Profile” Increase Increase in Copper in Gold Declining 0 Unit Net ~25% ) Reduction Cash Costs in Unit Costs Strong Financial 0 R ee BITDA” 100% occ esults & E Increase ment Generation inEBITDA = “onatons Value Creation for Share
Slide 7: Grasberg — One of the World's Largest Copper & Gold Deposits
Grasberg — One of the World’s Largest Copper & Gold Deposits rc nagoend Impressive Past / Robust Future FUNDAMENTAL VALUE. Historical Open Pit Era (1990 — 2019) Underground Era (2020e — 2041e) Grasberg Block Cave “amole™ S00 m ee) Historical Results Total Material Mined (bn 1) 5.2 1.8 Strip Ratio —-
Slide 8: Underground Ramp-up Building Momentum
Underground Ramp-up Building Momentum ava) . . PROVEN ASSETS. Continued Progress in 4Q 2019 FUNDAMENTAL VALUE. Deep MLZ (DMLZ) & Grasberg Block Cave (GBC) Averaged 26,000 t/d in 4Q19: 15% Ahead of Forecast Drawbelling Ore Extraction (000 va DMLZ GBC 35 DMLZ 20 = > “ 2 eas 20 7 20 18 10 (11 15 10 * o
Slide 9: Lone Star Leach Project in Arizona Nearing Completion
Lone Star Leach Project in Arizona Nearing Completion Lag Building Value in New U.S. Cornerstone Asset FUNDAMENTAL VALUE. = Low-Risk Developmentin Established Mining January 2020 District; Wholly Owned = Located8 miles North of Safford; 18 miles Southwest of Morenci = FirstCu Production Expected Dur
Slide 10: Innovation Driving Results
Innovation Driving Results Combining Data Analytics with Agile Way of Working PROVEN ASSETS. FUNDAMENTAL VALUE. Processing/Concentrating MJ Mine Data systems landscape Throughput & Recovery Optimization Intelligence (TRO!) = Digital Twin for Processing Plant = Machine Learning Algorithm = Analyze Hi
Slide 11: Freeport: Foremost in Copper
. j PROVEN ASSETS. Freeport: Foremost in Copper ra Ove ASSETS Portfolio of High Industry Leader Quality Copper Assets with Sizé, Stale Difficult to Replicate | and Durability Strong TrackRetord & Commitment to Growing Production Communities and and Cash Flow Profile Environmental Responsibility | Co
Slide 12: PROVEN ASSETS.
PROVEN ASSETS. FUNDAMENTAL VALUE.
Slide 13: Sales Profile
i PROVEN ASSETS. ) a | es P rofi | e FUNDAMENTAL VALUE. | CopperSales | fo) *) J e=F- | (billion Ibs) | Gold Sales | =F)[ (million ozs) 5 4.6 2 17 4.3 1 4 45 1.0 3.5 1 0.8 3.3 . 2 0 2019 2020e 2021e 2022e Transition Years 2 a reer era | Molybdenum Sales | =—\/) (million Ibs) 14 100 90 88 90 90 75 0
Slide 14: 2020e Quarterly Sales
2020e Quarterly Sales e fRNEN ASSETS. ce = (million Ibs) a4 =*-|(53) (thousand ozs) 200 0 Ei 2Q20e 3Q20e 4Q20e 500 ne an MolybdenumSales Wiieams) 250 4 25 20 15 0 10 3Q20e ‘Note: Consolidated copper sales indude approximately 140 mm lbs in 10202, 165 mm ibs in 2Q20e, 175mm Ibs in 3Q20e and 205 mm lb
Slide 15: Growing Sales & Declining Unit Costs
Growing Sales & Declining Unit Costs PROVEN ASSETS. FUNDAMENTAL VALUE. (S per pound of. cu) Sales Volume Roll Forward Copper Gold (bns of Ibs) (mms of ozs) 2020e Indonesia Americas 2021e $1.74 $1.75 Lower Lower Unit Site Unit Costsin Production Indonesia = Costs Following Ramp-up Offset by Productiv
Slide 16: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow en ‘ . PROVEN ASSETS. at Various Copper Prices FUNDAMENTAL VALUE. ($ inbn) EBITDA ($1,500/0z Gold, $10/Ib Molybdenum) $10 $8 $6 $4 aot | as $0 2020e ‘21el'22e Cu $2.75/Ib Cu $3.00/Ib Cu $3.25/Ib Operating Cash Flow Excludes Working Capital Changes ($1,500/oz Gold, $10/Ib Molybde
Slide 17: Consolidated Capital Expenditures
Fon Consolidated Capital Expenditures __,, owas. (S in billions) =~ Net of Scheduled Contributions $2.65 aa $2.5? $2.79 $2.4 $2.22) $1.60 Major Projects. $1.05 Other Mining 2019 2020e 2021e (1) 2019 actuals include $0.1 bn for new Indonesia smelter project. (2) Net of scheduled contributionstrom PT
Slide 18: New Copper Smelter Project in Indonesia
New Copper Smelter Project in Indonesia _,,/ROVEN ASS. = Capacity of 2 mm tonnes per annum of Concentrate, Bringing Domestic Capacity to ~3 mm tonnes per annum = Estimated Capital Cost ~$3 Billion + Completing Front-end Engineering and Design + ~$0.5 Billion in Estimated Spending During 2020e + Expe
Slide 19: Strong Financial Position & Liquidity
Strong Financial Position & Liquidity __, nosis. ($ in billions) Net Debt* $20.2 Liquidity Position | as of 1231/19 Consolidated Cash $2.0 Undrawn Credit Facility $3.5 Total Liquidity $5.5 12/31/15 12/31/19 * Net debt equals consolidated debt less consolidated cash. See Cautionary Statement. [ill Fr
Slide 20: Executing Clearly Defined Strategy to Build Value for Shareholders
Executing Clearly Defined Strategy to mn m PROVEN ASSETS. Build Value for Shareholders FUNDAMENTAL VALUE. Substantial Growth in Cash Flow = Growing Sales Continued Profile Execution of Grasberg = Declining Unit Underground Costs Innovation-Driven| Ramp-up = More Than Productivity Doubling EBITDA Imp
Slide 21: Reference Slides
Reference Slides PROVEN ASSETS. FUNDAMENTAL VALUE. Freepont-McMoRan
Slide 22: Financial Highlights
i i i i PROVEN ASSETS. Financial Highlights FUNDAMENTAL VALUE 12 mos. ended | Sales Data Data 4Q19 12/31/19 Copper Consolidated Volumes (mm Ibs) 906 3,292 Average Realization (per /b) $2.74 $2.73 Site Production & Delivery Costs (per /b) $2.12 $2.15 Unit Net Cash Costs (per /b) $1.67 $1.74 Gold Cons
Slide 23: Preliminary Estimated Consolidated Copper Reserves & Mineralized Material
Preliminary Estimated Consolidated Copper ava) Reserves & Mineralized Material FURDAMENIAL VLE. As of 12/31/2019 Mineralized Material 2 bn Ibs of copper By Reg ion 249 North America 40% South Indonesia America 31% 29% (1) Preliminary estimate of recoverable proven and probable consolidated copper re
Slide 24: 4Q19 Mining Operating Summary
ini i PROVEN ASSETS. 4Q19 Mining Operating Summary Rico 5 5 North South 4Q19 Unit Production Costs [(2a tigen ae Uru) America Indonesia —_ Consolidated Cash Unit Costs Site Production & Delivery, excluding adjustments $2.07 $1.85 $2.69 $2.12 By-product Credits (0.22) (0.18) (2.38) (0.69) Treatment C
Slide 25: 2020e Outlook
mer 2020e Outlook PROVEN ASSETS. FUNDAMENTAL VALUE. = Copper: 3.5 Billion Ibs. = Gold: 0.8 Million ozs. = Molybdenum: 88 Million Ibs. Unit Cost = Site Production & Delivery 2020e: $2.04/Ib (1Q20e: $2.24/Ib) of Copper. = After By-product Credits 2020e: $1.75/Ib™ (1Q20e: $2.02/Ib) Operating = ~$2.4 Bi
Slide 26: 2019 and 2020e Sales by Region
; =a) 2019 and 2020e Sales by Region ROD ASSETS 2019 Sales by Region 1,442 1,183 1.0? 90 (1) 667 Cu mm Ibs North America South America Indonesia 2020e Sales by Region 1,580 1,150 88? 750 c 0.8? u North America South America Indonesia (1) Includes molybdenum produced in South America. (2) Includes go
Slide 27: 2019 and 2020e Unit Production Costs by Region
2019 and 2020e ava) Unit Production Costs by Region FUNDAMENTAL VALUE = 5 North South | 2019 Unit Production Costs | Unit Production Costs [(7iEEio Me ury America Indonesia Consolidated Cash Unit Costs Site Production & Delivery $2.05 $1.85 $2.91 $2.15 By-product Credits (0.24) (0.27) (2.13) (0.63)
Slide 28: World Class Block Cave Design
World Class Block Cave Design PROVEN SETS FUNDAMENTAL VALUE. Substantial Infrastructure in Place to Support Large-Scale Production Ramp-up Schedule (000's tid of Ore) Ramp-up Schedule (000's Ud of Ore) 80 80 103 59 2 Cave Fronts 2019 2020e 202te 2022e 2023e 2019 2020e 2021e 2022e 2023e 3 Production
Slide 29: Grasberg Block Cave Extraction Level - Plan View
Grasberg Block Cave Lay ; ‘ PROVEN ASSETS. Extraction Level - Plan View FUNDAMENTAL VALUE. 150 meters @ Open drawbells @ Drawbells to be openedin 2020 PB Production Block > Direction of Caving 29
Slide 30: Deep MLZ Block Cave Extraction Level - Plan View
Deep MLZ Block Cave 0 % ; PROVEN ASSETS. Extraction Level - Plan View FUNDAMENTAL VALUE. @ Open drawbells @ Drawbells to be openedin 2020 PB Production Block 4} Direction of Caving BE Freepont-McMoRan 30
Slide 31: PT-FI Mine Plan Metal Sales, 2019-2024e
PT-FI Mine Plan ava PROVEN ASSETS. Metal Sales, 2019-2024e FUNDAMENTAL VALUE. | Copper | 2020e-2024e | Gold 2020e-2024e Total: 7.2 billion Ibs copper Total: 7.4 million ozs gold Annual Average: 1.4 billion Ibs Annual Average: 1.5 million ozs 1.8 1.7 1.7 17 1.7 1.6 T il | | | | 2022e 2023e 2024e Note
Slide 32: Sensitivities
Sensitivities PROVEN ASSETS. FUNDAMENTAL VALUE. (USS millions) Operating 2020e Change EBITDA Cash Flow Copper: +/- $0.10/Ib $375 $305 Molybdenum: +/- $1.00/Ib $75 $65 Gold: +/- $50/ounce $40 $30 Currencies: ” +/- 10% $195 $135 Copper: +/- $0.10/Ib $440 $345 Molybdenum: +/- $1.00/Ib $90 $85 Gold: +/-
Slide 33: FCX Debt Maturities as of 12/31/19
= va) FCX Debt Maturities as of 12/31/19 PROVEN ASSETS. FUNDAMENTAL VALUE. (USS billions) fw fotal Debt & Cash at 12/31/19 ™ FCX Revolver $ - Il Senior Notes 9.0 Il Cerro Verde Credit Facility 08 $6 Total Debt $ 98 Consolidated Cash $ 20 $4.1 $4 $2.4 $2 VNon-recourse $1.9 05 $0.9 sr. Notes and VA ba
Slide 34: 4Q19 Copper Realization & 1Q20e Guidance
4Q19 Copper Realization & 1Q20e Guidance , from ists. 4Q19 LME Average Copper Price $2.67/Ib 3-Mo. Fwd Price for Copper $2.80/Ib at the End of December : $2.74 /Ib (Generally, 50/50 Weight of Qtrly Avg and 3-mo Forward Priceat End of Period) FCX 4Q19 Consolidated Copper Price Realization FCX 4Q19 Pr
Slide 35: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation PROVEN ASETS FUNDAMENTAL VALUE. (in millions) 12 mos. ended 4Q19 12/31/19 Net Income (Loss) Attributable to Common Stock — Continuing Operations $ 8 $(242) Interest expense, net 219 620 Income tax provision 329 510 Depreciation, depletion and amortization 391 1,412 Met
Slide 36: Grasberg Block Cave Development Diagram
Underground Block Cave Mine Development Ps Grasberg Block Cave Development Diagram FUNDAMENTAL THLE t. = x d Grizzly / & Rock Breaker J { Orepass | Service Level = 2810m Bevotion i Loading Chute i- fa Chute Rail. Haulage Level 2760m Sevatlon 36
Slide 37: Deep MLZ Block Cave Development Diagram
: a Underground Block Cave Mine Development PS ate MLZ Bioen eave Deven Rime Diagram FUNDAMENTAL VALUE Sydrorractur diGround) Undercut Ring baa _, — — Grizzly Extraction Level" & Rock Breaker | 2585m Elevation Haulage Truck ‘ Truck Haulage Level 2525m Elevation fH Freeont-McMoRAan 37
Slide 38: Glossary of Key Terms
Underground Block Cave Mine Development Fon PROVEN ASSETS. Glossary of Key Terms FUNDAMENTAL VALUE. AirGap Block Caving Cave Cave Front Cave Muck Pile Haulage Level Ore pass Production Block (PB) Undercut Level space between the cave muck pile and the uncaved ore above it ‘a mass mining method that