Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Q4 2017 Earnings Presentation
37 slides from Freeport-mcmoran's earnings presentation, Jan 25, 2018
Slide 1: 4th Quarter 2017 Earnings Conference Call
DRIVEN BY VALUE FREEPoRT-MicMoRAN 4* Quarter 2017 Earnings Conference Call January 25, 2018 FCX NYSE
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements Tis presentation contains forwardiooiéng statements in whlch FGXalecisses ts potential future performance. Forwardioong statements ere a deferred ntorcompany profits on earnings, reserve estimates, future dividend poments nd share purciunes o
Slide 3: 2017 Highlights
2017 Highlights Strong Execution - “Driven by Value” Solid Operating Performance Through Global Op Ongoing Cost Management & Capital Discipline Strong Cash Flow Generation Restored Balance Sheet Strength Developed Attractive Organic Options for Future Growth Important Progress for Long-term Stabilit
Slide 4: Unit Net Cash Costs and Net Debt
UntNetCas Cots 2017 Copper $1.26 pestle Restored Balance shectvens Net Debt (Sin tn) $20.1 DRIVEN BY VALUE FREEPORT: McMoRAN
Slide 5: Copper Market Commentary
~ Copper Market Commentary Global IP Growthin 2017 = Positive Demand Globally was Strongest Since 2010 ‘ Sect ai é 2017e Change From . it is i Prior Year » European Growth Continues 00's Mt China 11,046 32% * U.S.Demand is Solid = Supply Side Issues Remain Rest of Asia 3,936 2.7% » Extended Period o
Slide 6: World's Leading Copper Producers
World’s Leading Copper Producers Top 10 Copper Producers (2017e) (000% 2,000 = GLENCORE snpotld Oxkcum ANTOFAGASTA Wore piton 414, 2017. Rank e= estimate 6 DRIVEN BY VALUE FReepont-McMoRAN
Slide 7: World Class Copper Discoveries Are Extremely Rare
World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves Minion metric tons 0 5 © 1% 2 2% 3 KGHM Polish Capper -1957 Toquepcta 18008 (aro Verd2-18605 BTeniente-1910 Oyu Toigpi-2001. Source: Wood Mackenzie e=estimate 2017e Copper Production Thousand metrictons 0 200 400 600 800 1
Slide 8: Potential Billion Lbs
Potential * 87 Billion Lbs 92 Billion Lbs 156 Billion Lbs (2) Pratminry etna of recoeaie proven and rotate cope esenes wig copper ce of $2.00/8; 72 lon pounds nett FE sree (2) Preliminary d copper @ sale. ‘and indicated) ou i <niling is required that the potential ‘Statement. 8 DRIVEN BY VALUE FREEP
Slide 9: FCX Values Beyond Proven & Probable Reserves
FCX Values Beyond Proven & Probable Reserves Preserving Optionality for the Future - Driven by Value U.S. Large footprint ap Te Sees . 5 ign lin. sett ete BSE ciaeBecions Serbia ~ Distt extensions include: = Beet ~“glimok lower zone = large, = Chino/Cobr Brade, early stage opportu = Lone Star/Saffor
Slide 10: Americas Update
Americas Update Strong Operating Performance 666 mm lbs of Copper Sold in 4Q17 Cerro Verde Concentrator Averaged 374 kt/d in 4Q17 Continued Focus on Cost and CAPEX Management Future Growth to ) Maintain Optionality Americas Cash Flow ($inmm) +$561* +$2,597* $3,057 ting cash flow less CAPEX. NOTE: Ae
Slide 11: Large Development Project Inventory
Large Development Project Inventory Copper Sulfide Opportunities in Americas (bnsof Ibs) Bagdad Chino/Cobre El Abra Lone Star/Safford Morenci Sierrita 2P Reserves Including @$2.00Cu Mineralized Material* @$2.20 Contained Cu Including Potential* Future Development Subject to Market Conditions * Miner
Slide 12: Lone Star Oxide Project - Moving Forward
Lone Star Oxide Project - Moving Forward = 12/31/2017 Reserve: 4.4 bn Ibs of Copper $850 mm Project; Utilizes Existing Infrastructure at Safford (60+ bn Ibs Cu Contained) = Low Execution Risk First Copper Expected by YE 2020 Key Statistics Estimated production: ~200 mm Ibs/year Mine life: ~20 Years
Slide 13: Lone Star Sulfide Potential
Lone Star Sulfide Potential Leach Pit +0.6% Cu DH 259 1048 m } DH 267 1478m 0.44% Cu 0.45% Cu Potential Extension of Sulfide Orebody DRIVEN BY VALUE FReepont-McMoRAN
Slide 14: El Abra Sulfide Mill Project
EI Abra Sulfide Mill Project = Large Sulfide Resource = Resource Estimate: 2 Billion Tonnes at >0.45% Copper = Advancing Technical Studies * 240 kt/d Concentrator - Similar to Recent Cerro Verde Expansion ° Estimated Production: ~750 mm Ibs/year * 6-8 Year Expected Lead Time — 3-4 Years of Feasibili
Slide 15: El Abra Sulfide Potential
EI Abra Sulfide Potential West Cross-Section looking North East a Significant Intercepts DRIVEN BY VALUE iv Fneeromt-McMoRan
Slide 16: Indonesia Update
Indonesia Update Negotiations are Advancing to Achieve a FI Cash Flow Mutually Positive Resolution (Sinmm) PT-FI Requires Fiscal and Legal Certainty +$792* +$1,656* for Long-term Mining Operations $2,422 51% Divestment: Ongoing Discussions with Inalum (Indonesian SOE) and PT-FI Joint Venture Partner
Slide 17: Grasberg Mining District
Grasberg Mining District PT-Fl History of Block Caving Grasberg open pit Grasberg Block Cave GBT block cave mine Depleted % lOZbleckcavemine Doped DOZblock cave mine Operating: + DMILZ Saartep + GrasbergBC In development + Kucing Liar Future development a7 DRIVEN BY VALUE FReepont-McMoRAN
Slide 18: Grasberg Underground Progress
n Progress Will Enable Initial Undercutting in Late 2018 Expected to Ramp Up to >4 Bn Ibs of Cu & >4 mm ozs of Au Within 5-6 Yrs* TS, Conveyor & Service Declines ' Amounts in aggregate 18 DRIVEN BY VALUE FReepont-McMoRAN
Slide 19: Completed to Date and Near-term Objectives
Completed to Date: Rail Construction Crew at Work v¥ +220 km of Development / Mine Access Y Service Shaft ¥ Initial Fans & Vent Infrastructure / Rail Connection v Crusher #1 ( Batch Plant Near-term Objectives 28 km of Development in 2018 = Complete Rail & Ore Flow Systems in 2H18 Complete Key Fixed
Slide 20: Financial Benefits to Indonesia
Financial Benefits to Indonesia = Positive Long-term Historical Relationship Financial Benefits Breakdown = 50-Year History of Operationsin Indonesia ~$21 Billion me il +$60 Bnt ik Since 1992 Gol 59% = Largest Pri in Papua & Signi FOX, ie in Region hs = One of the Largest Taxpayers in Indonesia (200
Slide 21: 2018e Outlook
2018e Outlook = Copper: 3.9 Billion Ibs. Gold: 2.4 Million ozs. = Molybdenum: 91 Million Ibs. Sales Outlook Unit Cost = Site Production & Delivery: $1.60/Ib of Copper = After By-product Credits”: $0.97/Ib, Including $0.95/Ib for 1918e = Exceed $5.8 Billion (@ $3.15/Ib Copper for 2018e) (e-em steicmo
Slide 22: 2018e Operating Estimates
2018e Operating Estimates 2018e Unit Production Costs (per pound of copper) North South America America Indonesia Consolidated Cash Unit Costs Site Production & Delivery 2) $1.76 $1.62 $137 $1.60 By-product Credits (0.20) (0.19) (2.56) (0.92) Treatment Charges 0.14 0.19 0.25 0.18 Royalties & Export
Slide 23: Copper, Gold and Molybdenum Sales Outlook
Copper Sales (billion Ibs) Gold Sales (million ozs) 4 P - 7 3 1 3.9 39 3.7 3.45 3 2017 2018 2019e 2020e- 2021 AVG s Note: Consolidated gold sales include 144k ozs in 2017, 230k ozs in 2018¢, ‘90k 028 n 2019e, 130k ozs for 20202-202de avg for roncontroling interest. a Molybdenum Sales (million ibs) 1
Slide 24: 2018e Quarterly Sales
Copper Sales (million Ibs) Gold Sales (thousand ozs) 1,200 1018e 2Q18e «= -3018e += 4Q18e 750 675 650 500 625 490 1,000 Bi D bec 900 960 950 250 1018 2018e 3Q18e 4Q18e Note: Consolidated goldsafesincude appraximately 65K028 in 292, 60k 028 600 in 2gase, Molybdenum Sales (million ibs) 300 - 20 15 ET
Slide 25: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices Cu $3.25/b Cu $3.50/b ($1,300/0z Gold, $10.00/lb Molybdenum) (US$ biliors) 2018e/2019e Cu $3.00/Ib Cu $3.25/b Cu Net: 20188 EBTDA end Operating Csh Flow expected t0 be above the to3eer aerege. Assomes concined ers frm ifenesie ar 2/16/2028. depletion and
Slide 26: Cash Flow Sensitivities
(OTE TN eins eid io tinued exports from Sensitivities (US$ millions) 2018e/2019e Operating Cash Flow Copper: +/-$0.10/Ib $380 $290 Molybdenum: +/- $1.00/Ib $80 $70 Gold: +/- $50/ounce $85 $50 Currencies: ” +/- 10% $145 $100 (a) ps xen om: tne pai 25 50 een els 9-75 Aietatin ii, $128 Fim 3.23 Pani ro
Slide 27: Capital Expenditures
Capital Expenditures * Major (US$ billions) Includes Lone Star Oxide Project $2.2 2017 2018e 2019e development ($0.75.n in 2018e and 2019e)and Lone Star ($0.251n in 2018e and $0.35in 2019) e= estimate. See Cautionary Statement. DRIVEN BY VALUE FReepont-McMoRAN
Slide 28: Strong Execution of Deleveraging Plan
Strong Execution of Deleveraging Plan Net Debt at Varying Copper Prices Ss billions) $20.0 $15.0 $10.0 $5.0 $0.0 Net Debt/ YE2015 YE2016 YE 2017 $3.00 $3.25 $3.50 Adjusted EBITDA 4.6x 24x 1.5K 0.7x 0.5x 0.4x YE 2018e er aot ae ps Wa toe ON ca éeitteaed Sos Career So DRIVEN BY VALUE FReepont-McMoRAN
Slide 29: Executing Clearly Defined Strategy
F-vi FREEPORT-McMoRan Executing Clearly Defined Strategy Industry-Leading ExperiencedTeam i Financially Copper Position of Operators & Strong Developers Optimistic About Market Outlook for Copper - Attractive Long-Term Fundamentals 29 DRIVEN BY VALUE FReepont-McMoRAN
Slide 30: Reference Slides
Reference Slides DRIVEN BY VALUE (row FReeront-McMoRan
Slide 31: Financial Highlights
Financial Highlights Sales Data 4Q17 2017 Copper Consolidated Volumes (mm Ibs) 1,017 3,700 ‘Average Realization (per II $3.21 $2.93 it ion & Delivery Costs (per Ib) $162 $1.61 Unit Net Cash Costs (per Ib) $1.04 $1.20 Gold Consolidated Volumes (000’s ozs) 593 1,562 Average Realization (per 02) $1,285
Slide 32: 4Q17 Unit Production Costs
4Q17 Unit Production Costs Cash Unit Costs (Credits) North South of copper) America America Indonesia Site Production & Delivery $1.79 $174 $1.36 $1.62 By-Product Credits (0.24) (0.20) (2.48) (0.89) Treatment Charges 0.10 0.24 0.26 0.19 Royalties & Export Duties : 0.04 0.34 0.12 Unit Net Cash Costs
Slide 33: 2017 Operating Summary
2017 Operating Summary 2017 Unit Production Costs (per pound of copper) North South Cash Unit Costs Site Production & Delivery ® $1.64 $1.59 $1.58 $1.61 By-product Credits (0.47) (0.18) (2.05) (0.67) Treatment Charges 0.10 0.22 0.27 0.19 Royalties & Export Duties : 0.04 0.29 0.07 Unit Net Cash Costs
Slide 34: Preliminary Reserves
Preliminary Reserves Consolidated Proven & Probable Reserves Copper Molybdenum Gold 12/31/17 billion Ibs billion Ibs million 02s Copper Reserves Reserves @ 12/31/16 868 2.95 261 by Geographical Region Additions/revisions 36 (0.02) (1.0) ——_—$ Production (37) (0.09) (16) Net Change “@) ©) 26) Reseves
Slide 35: PT-FI Mine Plan
PT-Fl Mine Plan PT-Fl’s Share of Metal Sales, 2017-2022e 2018e - 2022e PT-FI Share Total: 5.3 billion Ibs Copper, billion Ibs Annual Average: 1.07 billion Ibs - — (0) Gord, minion ozs 2018e - 2022e PT-FI Share Total: 7.6 million ozs gold Annual Average: 1.5 million ozs 24 154 14 a2 2017 2021e 2022e
Slide 36: FCX Debt Maturities as of 12/31/17
FCX Debt Maturities as of 12/31/17 (USS billions) Total Debt & Cash at 12/31/17 2018 2019 2020 2021 2022 2023 2024 Thereafter In 4Q17, $617 mm &Rep $74mm in Sr. Notes Interest Savii i i i $40 mm perannum 36 DRIVEN BY VALUE FReepont-McMoRAN
Slide 37: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (inmillions) 492017 2017 Net Income Stock = $1,025 $1,755 Interest expense, net 168 804 Income tax provision 136 883 Depreciation, depletion and amortization 457 4,714 Gain on early extinguishment and exchanges of debt (43) (24) Net gain on sales of assets (45) (81) Ac