Freeport-mcmoran, Inc. · NYSE:FCX

Freeport-mcmoran — 6th Annual Global Industrials and Basic Materials Conference 2015

31 slides from Freeport-mcmoran's conference presentation, Jun 3, 2015

  1. Slide 1: 6th Annual Global Industrials and Basic Materials Conference

    6th Annual Global Industrials and Basic Materials Conference Kathleen L. Quirk Executive Vice President & CFO June 3, 2015

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

    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 expectations relati

  3. Slide 3: Value at Our Core

    “Value at Our Core” 2014 Annual Report Highlights  Substantial Values in Long-Lived, Geographically Diverse Natural Resources - Premier Portfolio of Global Mining Assets - High-Quality, U.S.-Based Oil & Gas Assets with Attractive Growth Pipeline  Growing Production and Cash Flow Profile  Exposure

  4. Slide 4: FCX's Global Footprint

    FCX’s Global Footprint Major Operations & Development Projects North America1 Reserves Cu 35.6 bn lbs Mo 2.42 bn lbs Copper Oil & Gas 635 MMBOE2 Sales Copper/Gold/Silver Cu 1.9 bn lbs Molybdenum Mo 95 mm lbs3 Grasberg (90.64%) Oil & Gas 143 MBOE/d Cobalt Oil/Natural Gas Reserves Cu 29.0 bn lbs Au 28

  5. Slide 5: Key Priorities

    Key Priorities  Maintain Strong Balance Sheet & Liquidity  Manage Operations and CAPEX to Maximize Cash Flow in Weak Market Environment  Mitigate Funding Gap in Oil & Gas ̶ Evaluating IPO Alternative  Complete Near-term Mining Projects ̶ Expand Free Cash Flow Generation  Generate Values from La

  6. Slide 6: 1Q15 Highlights

    1Q15 Highlights Mining Oil & Gas  Successful Ramp-up of Morenci  Positive Drilling Results at Holstein Expansion Deep, Power Nap and King – Significant Expansion of  Record Quarterly Tenke Sales Resource Base Following Successful Phase 2 Expansion in 2013  Established New Production at Lucius, D

  7. Slide 7: Copper & Oil Markets Last 12 Months

    Copper & Oil Markets Last 12 Months Copper Price History (¢/lb) Brent Crude Price History* ($/bbl) 350 $120 300 $100 250 $80 200 $60 150 $40 Copper Brent Crude ($/lb) ($/bbl) 12-Month Price Range $2.42 - $3.27 $47 - $116 Current Spot $2.73 $66 Change from 12-mo. High -17% -43% Change from 12-mo. Low

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

    World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves 2014e Copper Production Million metric tons Thousand metric tons 0 5 10 15 20 25 30 35 0 200 400 600 800 1000 1200 1400 1981 Escondida - 1981 Escondida - 1981 1880 Collahuasi - 1880 Chuquicamata - 1910 1988 Grasberg Comple

  9. Slide 9: Copper Market Commentary

    Copper Market Commentary  Market Expectations for Surpluses Have Not Materialized  China – Slowing Growth Rate on Larger Base; Economic Stimulus  U.S. Growing at Moderate Rate  Economic Stimulus in Europe and Japan  Continuing Supply Side Challenges  Near-term Price Uncertainty with Bullish Lo

  10. Slide 10: Copper Markets – Long-term Fundamentals Support Positive Outlook

    Copper Markets – Long-term Fundamentals Support Positive Outlook Total Copper Consumption 40  Assuming 2.5% Global Growth +7.6 mm Over Next 10 Years, Copper 30 +5.2 mm 28% Cu in mm tonnes 23% Market Expected to Grow by +7.6 mm tonnes (28%) 20 Mature Markets 10 Emerging  Over Same Period, Productio

  11. Slide 11: Positioned for Margin & Free Cash Flow Growth

    Positioned for Margin & Free Cash Flow Growth Growing Copper Sales Profile Declining Unit Net Cash Cost Profile (millions of lbs) $2.00 ($ per lb) 1,500 $1.64 $1.62 $1.50 1,370 $1.45 1,250 ~$1.20 1,230 $1.00 1,000 1,060 960 960 $0.50 750 $0.00 1Q15 2Q15e 2H15e 2016e 500 Declining Mining CAPEX Profil

  12. Slide 12: Cerro Verde Mill Expansion

    Cerro Verde Mill Expansion  Detailed engineering & major procurement activities complete  To become world’s largest concentrating facility  Construction advancing on schedule & approximately 70% complete  Completion expected in late 2015  Expected to add 600 mm lbs of Cu per annum Primary Crush

  13. Slide 13: Indonesia

    Indonesia  Engaged in Active Discussions with Government to Amend COW − Positive Long-term Partnership − Economic Engine for Development of Papua − Operations Provide Significant Benefits to Indonesian Economy − All Rights Under COW to Continue Until Agreed Amendment − Negotiations to Take Into Con

  14. Slide 14: Grasberg BC & DMLZ Underground Mine Development

    Grasberg BC & DMLZ Underground Mine Development • Completed development of access to underground ore bodies • Expect DMLZ start-up in late 2015 & Grasberg BC in 2018 • Key development activities include work on ore flow systems & Grasberg BC shaft • Development capital* of $3.1 bn spent to date ($2.

  15. Slide 15: Strategic Position in Deepwater Gulf of Mexico

    Strategic Position in Deepwater Gulf of Mexico Major Exploration/ Operating/ Development Exploitation Producing Assets Projects Opportunities  Significant Current Oil  Financially Attractive  Strategic Acreage Production with Strong Development Activities Near Existing Facilities Cash Margins to

  16. Slide 16: Deepwater Gulf of Mexico Focus Areas

    Deepwater Gulf of Mexico Focus Areas Net Unrisked Louisiana Resource Potential 4.7 Billion BOE Dorado Marlin King Viosca Knoll Ram Powell Horn Mississippi Mountain Canyon Vito KOQV Green Canyon Power Nap Holstein Deep Deep Sleep East Breaks Garden Banks Holstein Atwater Valley Diana Heidelberg Hoove

  17. Slide 17: 2015e Outlook

    2015e Outlook Sales Outlook Unit Cost  Copper: 4.2 Billion lbs.  $1.53/lb(2) of Copper  Gold: 1.3 Million ozs.  $19/BOE  Molybdenum: 95 Million lbs.  Oil Equivalents(1): 52.3 MMBOE (~67% Oil) Operating Cash Flows (3) Capital Expenditures  ~$4.4 Billion (@$2.75/lb Copper for  $6.5 Billion Rem

  18. Slide 18: Sales Profile

    Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 3 6 2 2.4 1.9 5.4 1 1.25 1.3 5.0 0 2014 2015e 2016e 2017e 4 4.2 3.9 Note: Consolidated gold sales include 123k ozs in 2014, 120k ozs in 2015e, 175k ozs in 2016e and 220k ozs in 2017e for noncontrolling interest. Molybdenum Sales (mill

  19. Slide 19: 2015e Operating Estimates

    2015e Operating Estimates 2015e Unit Production Costs (per pound of copper) North South America America Indonesia Africa Consolidated Cash Unit Costs (1) Site Production & Delivery (2) $1.74 $1.58 $2.28 $1.67 $1.81 By-product Credits (0.15) (0.07) (1.78) (0.47) (0.51) Treatment Charges 0.12 0.20 0.2

  20. Slide 20: EBITDA and Cash Flow at Various Copper Prices

    EBITDA and Cash Flow at Various Copper Prices Average EBITDA ($1,200 Gold, $8 Molybdenum & $70 Oil) Significant Increase From 2015 $15 (US$ billions) $10 $5 2016e/2017e Average $0 Cu $2.50/lb Cu $3.00/lb Cu $3.50/lb Average Operating Cash Flow (excluding Working Capital changes) ($1,200 Gold, $8 Mol

  21. Slide 21: Capital Expenditures

    Capital Expenditures (1) (US$ billions) $8 $7.2 $6.5 $6 $5.6 Oil & Gas $5.1 3.2 2.8 $4 2.9 Major 2.9 Projects TOTAL 2.5 (2) $2 2.9 MINING 3.7 1.5 1.2 4.0 2.7 2.2 Other Mining 1.2 1.2 1.0 1.1 $0 2014 2015e 2016e 2017e (1) Capital expenditure estimates include projects in progress. Project spending wi

  22. Slide 22: Committed to Balance Sheet Management

    Committed to Balance Sheet Management Strong Track Record 3/31/2015 Balances  Large Resource Base with Strong Cash ($ in bns) Flows and Capital Discipline  Have Taken Steps to Reduce Cost & CAPEX, Complete Asset Sales and Reduce Common $20.3 $19.8 Stock Dividend  Increasing Volumes & Declining CA

  23. Slide 23: FCX – A Premier U.S. Based Natural Resource Company

    FCX – A Premier U.S. Based Natural Resource Company  World’s Largest Publicly Traded Copper Producer  Long-lived Reserves with Large Incremental Resources  High-Quality U.S. Based Oil & Gas Assets  Growing Cash Flow & Production Profile Through Brownfield Expansion  Experienced Technical Team 

  24. Slide 24: Reference Slides

    EEPORT-McMoRAN | Reference Slides

  25. Slide 25: Sensitivities (US$ millions)

    Sensitivities (US$ millions) 2016e/2017e Operating Change EBITDA Cash Flow Copper: +/- $0.10/lb $500 $350 Molybdenum: +/- $1.00/lb $100 $80 Gold: +/- $50/ounce $100 $60 Oil Sales: +/- $5/bbl(1) $215 $170 Oil Sales Net of Diesel Costs:(1,2) +/- $5/bbl $170 $140 Natural Gas: +/- $0.50/Mcf $32 $26 Curr

  26. Slide 26: PT-FI Mine Plan

    PT-FI Mine Plan PT-FI’s Share of Metal Sales, 2015e-2022e 2015e – 2019e PT-FI Share Total: 5.65 billion lbs copper Copper, billion lbs Annual Average: 1.13 billion lbs Gold, million ozs 2015e – 2019e PT-FI Share Total: 7.7 million ozs gold Annual Average: 1.54 million ozs 2.4 1.9 1.5 1.45 1.3 1.3 1.

  27. Slide 27: PT Freeport Indonesia

    PT Freeport Indonesia Grasberg Minerals District Life-of-Mine Production Sequencing* Plan View Grasberg Open Pit 179mm mt (includes stockpiled ore) 0.96% Cu & 1.06 g/t Au 146mm mt Grasberg & DOZ 0.54% Cu & 0.69 g/t Au Kucing Liar Grasberg Big Gossan 54mm mt open pit 2.26% Cu & 0.99 g/t Au DMLZ 472mm

  28. Slide 28: Brownfield Development Studies

    Brownfield Development Studies El Abra Bagdad • Large sulfide resource >0.4% Cu • Large sulfide resource ~0.3% Cu supports 260 mt/d mill • Resource supports potential to • Potential incremental production more than double mill capacity* ~750 mm lbs Cu year • Potential incremental production • Advanc

  29. Slide 29: Deepwater GOM Progress Report

    Deepwater GOM Progress Report Green Canyon Area  2nd Subsea Delineation Well Logged 482’ of Net Oil Pay  Established Sand Continuity Across Reservoir Holstein Deep  ~280 MMBOE Gross Resource Potential (was ~75 MMBOE Initial Discovery)  Drilling of 3rd Subsea Delineation Well In-Progress  Main T

  30. Slide 30: 2015e Oil & Gas Operating Estimates

    2015e Oil & Gas Operating Estimates Madden & Operating Cost: $2.10/Mcfe California Haynesville Pricing: NYMEX Operating Cost: $32/bbl Gulf of Mexico Operating Cost: $15/bbl Pricing: HLS/NYMEX 2015e Oil & Gas Sales by Region California Haynesville/ GOM Madden/Other 65 38 133 109 Oil Gas Oil Gas MBOE/

  31. Slide 31: 2Q – 4Q 2015 Oil Puts Indexed to Brent

    2Q – 4Q 2015 Oil Puts Indexed to Brent Unhedged 14% Hedged 86% 84 MBbls/d $90 Floor $70 Limit 31

Freeport-McMoRan — 6th Annual Global Industrials and Basic Materials Conference 2015 on 6ix