Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Denver Gold Forum 2008
32 slides from Freeport-mcmoran's conference presentation, Sep 10, 2008
Slide 1: Denver Gold Forum 2008
Denver Gold Forum 2008 Richard C. Adkerson President & CEO September 10, 2008 www.fcx.com
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: A World of Assets, A World of Opportunities
A World of Assets A World of Opportunities 2007 Annual Report Highlights Strong Portfolio of Global Producing Operations Opportunities to Expand Current Production Capacity Add Reserves to Extend Lives of Our Mines Develop Significant New Ore Bodies 3
Slide 4: Geographically Diverse...
Geographically Diverse... Major Mine Operations & Development Projects All major assets majority-controlled and operated North North America America11 Reserves Copper Cu 25.8 billion lbs Copper/Gold/Silver Mo 1.8 billion lbs Molybdenum Production Grasberg (90.64%) Cu 1.7 billion lbs Reserves Mo 85 m
Slide 5: ...Long-Lived Asset Base
...Long-Lived Asset Base Consolidated Consolidated Reserves 12/31/07 (1) Copper (billion lbs) 93.2 Molybdenum (billion lbs) 2.0 Gold (million ozs) 41.0 Average Sales Volumes (2008-2010) Copper (billion lbs) 4.5 Molybdenum (million lbs) 85 Gold (million ozs) 1.9 Implied Reserve Life (years) Copper 21
Slide 6: 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% 6
Slide 7: Markets
Markets 2,000 400 1,750 350 1,500 300 000’s Metric Tons Cents Per Pound 1,250 LME Copper Price 250 1,000 200 750 150 500 100 250 50 LME & COMEX Exchange Stocks* 0 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 Jan-08 Ju
Slide 8: State of Copper Market
State of Copper Market Prices Have Been Volatile – Reached Record $4.04/lb in July ’08 3Q08 Range: $3.14 - $4.04/lb Factors Impacting Recent Copper Price Performance - Market Sentiment about Potential Global Slowdown - Impact on Chinese Economy - US$ Strengthening - Seasonal Factors Global Excha
Slide 9: 3Q 2008 Copper Price Considerations
3Q 2008 Copper Price Considerations Open Pound Impact on Net Income - 369 mm lbs Provisionally Priced at $3.88/lb on 6/30/08 - Each 5¢ Change Would Impact Net Income by $11 Million - Current Estimated 3Q Net Income Impact: ~ $100 Million Reduction* - Each 5¢ Change From Sept. 5 Would Impact Estima
Slide 10: Copper Supply Side Challenges – Production Has Not Met Expectations
Copper Supply Side Challenges – Production Has Not Met Expectations Production Shortfalls Have Averaged Almost 800 kt Per Year 0 -250 Annual Shortfalls (kt) -500 -3.0% -750 -5.0% -4.9% 3-Year Average -1,000 2005 2006 2007 Note: Based on Brook Hunt estimates per January report for given year, which i
Slide 11: Historical Refined Copper Consumption
Historical Refined Copper Consumption (kt) China United States 30% 25% % of Global Consumption 20% 15% 10% 5% 0% 80 982 984 986 988 990 992 994 996 998 000 002 004 006 8 (e) 19 1 1 1 1 1 1 1 1 1 2 2 2 2 0 20 Source: Brook Hunt 11
Slide 12: Demand Projections: World Will Need as Much Copper in Next 2yrs as Last 22yrs
Demand Projections: World Will Need as Much Copper in Next 12yrs as Last 22yrs 35,000 30,000 28,200kt 25,000 000 tonnes 20,000 18,000kt 15,000 2008 – 2020 300,000kt 10,000 5,000 1985 – 2007 300,000kt Of which China 32% 0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Slide 13: Challenges of New Copper Project Development
Challenges of New Copper Project Development Relatively Few Major Projects Lower Quality than Past Delays Being Encountered - Technical Factors – Complex Underground Development - Environmental - Geopolitical – Resource Nationalism Escalating Construction Costs Evolving Industry Structure
Slide 14: 1H08 Highlights
1H08 Highlights Sales Data 2Q08 1H08 Copper Consolidated Volumes (mm lbs) (1) 942 1,853 Average Realization (per lb) $3.85 $3.77 Gold Consolidated Volumes (000’s ozs) 265 545 Average Realization (per oz) $912 $917 Molybdenum Consolidated Volumes (mm lbs) (1) 20 40 Average Realization (per lb) $31.59
Slide 15: Development Project Update: North America - Copper
Development Project Update North America - Copper Safford Mine Development Miami Mine Restart • Major new mine in Arizona • Restart of the Miami mine completed • 100MM lbs Cu/year by 2010 • SX/EW facility continues to ramp-up to full rates; produced • ~$100MM project, primarily mining 24MM lbs in 2Q
Slide 16: Development Project Update: North America - Molybdenum
Development Project Update North America - Molybdenum Climax Mine Restart • ~$500MM “brownfield” project Primary crusher Open-pit operation Construction of new mill with Covered Pebble crusher restart by 2010 ore stockpile Major permits received SAG & Ball mills Construction activities comme
Slide 17: Development Project Update: South America
Development Project Update South America El Abra Sulfide • Large sulfide mineral deposit underlying current oxide pit • New leach pad & modifications to existing crushing plant; construction to begin in the second half of 2008 • Extends mine life 10+ years • Provides 325MM lbs copper/year aggregate
Slide 18: Development Project Update: Indonesia
Development Project Update Indonesia Grasberg Mill Complex Underground Mine Development • DOZ Expansion - Operated above 50K capacity at record 66K mt/d in 2Q08 - Further expansion to 80K under way with targeted completion by 2010 • Initiating mine development activities at Grasberg Block Cave • Big
Slide 19: Development Project Update: Democratic Republic of Congo
Development Project Update Democratic Republic of Congo Tenke Fungurume Mine Development • Initial production target – 2H09; • Engineering, procurement & construction Aggregate annual production of activities continue; concrete work, steel 250MM lbs Cu & 18MM lbs Co tank erection, structural steel &
Slide 20: Development Project Update: Democratic Republic of Congo
Development Project Update Democratic Republic of Congo Stockpile & Heavy Dump Pocket Duty Shop Leach Reagent SAG Mill Solution & CCD Storage SAG Pedestals Extraction Acid Solution Extraction Cobalt Plant Precipitation Electrowinning Tenke Fungurume Electrowinning Building Construction Site, 2Q08 20
Slide 21: A World of Opportunities
A World of Opportunities Exploration Targets in Major Mineral Districts 80 drill rigs operating around the world Safford/Lone Star/Morenci Cerro Verde Tenke Fungurume/Africa Grasberg/Indonesia District 18 rigs 9 rigs 19 rigs 13 rigs SW US 33 rigs Indonesia Africa 13 rigs South 19 rigs America 15 rig
Slide 22: Exploration Drives the Mine Plan
Exploration Drives the Mine Plan Aggregate 2008e Exploration: ~$240 million North America Lone Star, South America Morenci & Others 50% 11% Africa Indonesia Tenke 20% Deep Grasberg, Fungurume Kucing Liar, & 16% & Kisanfu other targets 3% outside of Block A Australasia & Other Areas 22 e = estimate.
Slide 23: Exploring Our World of Opportunities
Exploring Our World of Opportunities North America, South America and Africa* Drill Rigs Drill Meters Reserves (number) (000’s meters) (billion lbs CuEq) (a) (a) 661 144(b) 80 Potential Additions 57 in Medium Term 35 64 +80 billion lbs CuEq 180 April May December 2006 2008e PD Reserves PD Reserves 2
Slide 24: Greenfield Opportunities in our Brownfield Locations
Greenfield Opportunities in our Brownfield Locations North America, South America and Africa • Drilling adjacent to existing ore bodies • Focused on adds to reserves & mineralized material Drilling Mine planning Expansion projects • Major Opportunities Morenci Bagdad Sierrita Cerro Ver
Slide 25: Sales Profile 2007 - 2010e
Sales Profile 2007 - 2010e Gold Sales (million ozs) Copper Sales (billion lbs) 3 2.3 2.1 2.1 1.9 5 4.8 2 1.4 4.5 1 4.1 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, 145 k oz
Slide 26: 2008e Quarterly Payable Metal Sales
2008e Quarterly Payable Metal Sales Gold Sales (thousand ozs) Copper Sales (million lbs) Grasberg Grasberg mining mining in in higher higher 1,225 grade grade section. section. 1,250 750 575 500 1,020 280 315 1,000 942 265 911 250 0 750 1Q08 2Q08 3Q08e 4Q08e ____________________ Note: Consolidated g
Slide 27: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices Average Annual EBITDA ($900 Gold & $30 Molybdenum) $15 (US$ billions) $13 $11 $9 $7 $5 Cu $3.00/lb Cu $3.50/lb Cu $4.00/lb Average Annual Operating Cash Flow ($900 Gold & $30 Molybdenum) $10 (US$ billions) $8 $6 $4 $2 $0 Cu $3.00/lb Cu $3.50/lb Cu $4.00/
Slide 28: Sensitivity to Commodity Prices
Sensitivity to Commodity Prices Annual Annual Financial Financial Impact Impact Net Net Operating Operating Change Change EBITDA EBITDA Income Income Cash Cash Flow Flow (US$ millions) Copper: -/+ $0.20/lb $850 $490 $575 Molybdenum: -/+ $2.00/lb $140 $100 $100 Gold: -/+ $50/ounce $90 $45 $50 _______
Slide 29: Capital Expenditures
Capital Expenditures Major Projects All Other (US$ billions) $3.0 $3.0 $2.5 $2.5 1.2 $2.0 $1.8 1.2 $1.5 $1.3 1.0 $1.0 1.8 0.8 1.3 $0.5 0.8 0.5 $0.0 2007 * 2008e 2009e 2010e * Includes PD expenditures beginning March 20, 2007 Note: Includes capitalized interest. e = estimate. Please see cautionary st
Slide 30: July 2008 Board Action
July 2008 Board Action Increased Common Stock Dividend From $1.75 to $2.00/Share per Annum Increased Open Market Share Purchase Program to 30 Million Shares ̵ Purchased 4.8 MM Shares in Open Market at an Average Price of $82.18 During 3Q08* FCX is Committed to Maintaining a Strong Financial Po
Slide 31: Op. Cash Flow After CAPEX & MI Distributions
Average Annual Excess Cash Flow (1) ($ in billions, except copper, gold and molybdenum prices) $5 Copper Sensitivities with $900 Gold/$30 Molybdenum Op. Cash Flow After CAPEX & MI Distributions $4 Available for investments/ debt reduction/ $3 shareholder returns $2 $1 Annual Annual Dividend Dividend
Slide 32: FCX Investment Summary
FCX Investment Summary World’s Premier Publicly Traded Copper Company World’s Largest Molybdenum Producer & Significant Gold Producer World Class, Long-lived, Geographically Diverse Operations Attractive Project Pipeline Supports Growing Production Profile Significant Exploration Potential