Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Q4 2018 Earnings Presentation
34 slides from Freeport-mcmoran's earnings presentation, Jan 24, 2019
Slide 1: 4th Quarter 2018 Earnings Conference Call
4th Quarter 2018 Earnings Conference Call January 24, 2019
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
POWERED: Cautionary Statement BY.COPPER Regarding Forward-Looking Statements This presentation contains forward-looking statements in which FCX discusses its potential future performance. Forward-looking statemerts are all statements other than statements of historical facts, such as projections or
Slide 3: 2018 Highlights
2018 Highlights = Global Team Achieved Strong/Safe Operating Results = Successful in Establishing New Partnership with Indonesian Government + Transaction Protects our Long-term Value at Grasberg = Continued to Strengthen Balance Sheet = Commenced Development of New Lone Star Copper Project in Easte
Slide 4: Successfully Completed Transaction with the Government of Indonesia
POWERED: Successfully Completed Transaction with BY COPPER the Government of Indonesia i = In December 2018, ResolvedLong-standinglssues NEW OWNERSHIP STRUCTURE Involving Long-term Mining Rights 9 e ong Grasberg District = Transaction Protects our Long-term Value at Grasberg = FCXhas Establisheda Po
Slide 5: 2019 Priorities to Build Shareholder Value
2019 Priorities to Build POWERED: Shareholder Value = = Ramp-up Production from our Large-Scale Underground Assets at Grasberg = Continued Focus on Productivity and Cost Management = Advance Lone Star Development and Long-term Expansion Opportunities = Define Future Growth Options from our Large Por
Slide 6: Copper Supply Limited, Demand Growth
S| - Limited | Demand - Growth Global Industrial Production expected to grow at 2.3% pa 2018-2040" Copper is an essential element in .j global industrial economy Copper consumption supported by growing emerging markets Intensity of use increasing Renewables 3to 4 Electric Vehicles Copper Intensity G
Slide 7: World Class Copper Discoveries Are Extremely Rare
POWERED: World Class Copper Discoveries BY COPPER Are Extremely Rare = Recoverable Copper Reserves [tummmarmm 2018e Copper Production [YW Senmams ° 10 20 20 40 © 200 400 600 800 1000 1200 1400 Escondida- 1981 Escondida- 1981 Ootchuasi- 1880) Grasberg Complex. 1968) KGHM Polish Copper - 1957 Oblizhua
Slide 8: Preliminary Estimated Consolidated Copper Reserves & Mineralized Material
Preliminary Estimated Consolidated Copper BY COPPER Reserves & Mineralized Material as of 12/31/18 billion Ibs of copper Reserves “ by Region North America 42% Mineralized — Aone Materfal ) indonesia America 30% 28% (contained copper) 120 YE 2017 87 bnibs Mineralized Material ® by Region Reserves (1
Slide 9: Preliminary Estimated Reserves - Americas Biggest Increases
POWERED: Preliminary Estimated Reserves - Americas Bigg Consolidated Proven & Probable Reserves wn Reserves @ 12/31/18 (bn ibs) North 50 America Reserves @ 12/31/17 3s 34 Additionsirevisions 178 Production (1.4) Net Change 64 YE 2017 YE 2018 49% Increase YoY Principally Bagdad, Morenci, Sierrita and
Slide 10: Cerro Verde Update
POWERED BY COPPER Cerro Verde Update = Expanded Operations Benefit from Large-scale, Long-lived Reserves and Cost Efficiencies = Concentrator Facilities Continue to Perform Well Average MillRate BiGi)) 387,600 360,100 353,400 I] 2016 2017 2018 Cerro Verde Fleet recently added two new 4100AC shovels
Slide 11: Leachable Development Provides Exposure to Major Asset
Leachable Development Provides Exposure to Major Asset 12/31/2018 Potential” Initial Initial Product Reserves Leach & Mill) Leach Project YE 2020 5.6 bn lbs of Copper 50-70 bn Ibs $850 mm Project ~200 mm Ibs/year (Leach Only -27% ~$290mmiIncurred —_ With Expansion Options Increase from 12/31/17) Fav
Slide 12: Grasberg Block Cave and Deep MLZ
| GrasbergBlockCave | Block Cave Deep MLZ Ramp up to 130,000 t/d by 2023 Ramp up to 80,000 t/d by 2022 Diamond Drill Rig) Hydraulic! * Infrastructure in Place - Successful Testing of * Results from Ongoing Hydraulic Fracturing in 4Q18 Underground Rail and Ore Flow in 2018 to Manage Seismicity and Pr
Slide 13: PT-FI Underground Ramp-up
POWERED. PT-Fl Underground Ramp-up BY. COPPER Contribution by Deposit Grasbergopenpit =DOZ smmBig Gossan DMLZ smmGrasbergBC Ore Milled (000’s tid) 116 107 =a 2019e 2020e 2021e 2022e 2023e Cu(bnibs) 0.62 0.76 14 17 17 Au(mmozs) 08 0.85 16 18 18 Note: Timing of annual sales will depend upon mine seque
Slide 14: Competitive Strengths
Competitive Strengths = Global Leadership Position « Operate All Assets — Operational Synergies, Shared Resources, Portfolio- Based Capital Allocation * Significant Current Production Capacity with Long-Term Expansion Options » 70% of Reservesin the Americas « Experienced Team: Operations, Developme
Slide 15: 2019e Outlook
POWERED: BY COPPER 2019e Outlook = Copper: 3.3 Billion Ibs. Sales = Gold: 0.8 Million ozs. Outlook = Molybdenum: 94 Million Ibs. Unit Cost = Site Production & Delivery 2019e: $2.03/lb (1Q19e: $2.11/Ib) of Copper = After By-product Credits 2019e: $1.73/Ib (1Q19e: $1.76/Ib) _ = ~$1.8 Billion (@ $2.75/
Slide 16: Sales Profile
POWERED: BY COPPER Sales Profile CopperSales KU) | GoldSales_ (million ozs) 5 3 24 4.2 38 1.6 3.5 33 08 0.85 : ; | 2018 2019e 2020e 2021e | 100 75 0 94 94 91 92 2018 2019e 2020e 2021e 50 Transition Years ‘Note: Consolidated copper salesinclude 694 mm ibs in 2018, 715 mmibs in 25 2019e, 715 mm Ibs in
Slide 17: 2018 and 2019e Volumes and Costs by Region
2018 and 2019e Volumes and Costs BY. COPPER by Region 2018 Sales by Region 2019e Sales by Region 1,428 1,400 1,253 4,130 24 1,270 615 08 N. America S. America «—— Indonesia ——> NAmerica, $ America 4 Indonesia —__>* $1.79 $1.75 $1.86 $1.73 Sine i666 N. America $. America Indonesia Consolidated Consol
Slide 18: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow BY COPPER at Various Copper Prices (USS billions) PE Alaa ($1,300/0z Gold, $12/b Molybdenum) $10 $8 $6 $4 $2 $0 Cu $3.00/Ib Cu $3.25/Ib Cu $3.50/Ib PNior tel te)Sacliivebet bata Excludes Working Capital Changes ($1,300/oz Gold, $12/lb Molybdenum) $8 $6 $4 $2 e $0 19e/'20e Cu $3.
Slide 19: Consolidated Capital Expenditures
POWERED BY COPPER Consolidated Capital Expenditures (USS billions) Net of Scheduled Contributions $2.4 $2.5 $2.3?) sata $2.0 2018 2019e 2020e (1). Major mining projects include CAPEX associated with Grasberg underground development ($0.9 bn per year in 2019e and 202068) and Lone Star ($0.4nin 20196
Slide 20: Financial Policy
POWERED BY COPPER Financial Policy = * Disciplined Approach to Investing in Attractive Growth Projects * Quarterly Cash Dividend Policy on Common Stock: 5¢/Share * Positive Market to Enable Enhanced Returns to Shareholders = Board Reviews Financial Policy on Ongoing Basis Since 2015 ($ inbn) Balance
Slide 21: FCX: Primed for Success
POWERED BY COPPER FCX: Primed for Success =— = Premier Portfolio of Copper Assets = Copper Arguably Most Attractive Fundamental Market Outlook = Strong Margins and Cash Flows = Long-lived Reserves = Attractive Long-term Development Pipeline Within Existing Portfolio = Geographically Diversified -~70
Slide 22: Reference Slides
POWERED BY COPPER Reference Slides
Slide 23: Financial Highlights
POWERED: BY COPPER Financial Highlights 2018 2017 Copper Consolidated Volumes (mm ibs) 3,811 3,700 Average Realization (per /b) $2.91 $2.93 Site Production & Delivery Costs (per /b) $1.76 $1.60 Unit Net Cash Costs (per /b) $1.07 $1.19 Gold Consolidated Volumes (000’s ozs) 2,389 1,562 Average Realiza
Slide 24: 4Q18 Mining Operating Summary
4Q18 Mining Operating Summary POWERED: BY COPPER < . North South 4Q18 Unit Production Costs [GGUS ssO MRIS) America Indonesia _Consolidated Cash Unit Costs Site Production & Delivery, excluding adjustments $2.01 $1.77 $2.44 $1.98 By-Product Credits (0.34) (0.26) (2.70) (0.69) Treatment Charges 0.12
Slide 25: 2018 and 2019e Unit Production Costs by Region
2018 and 2019e BY COPPER Unit Production Costs (Credits) by Region ; North South 2018 Unit Production Costs [GZ#ERseO Mei America Indonesia Consolidated Cash Unit Costs (Credits) Site Production & Delivery $1.94 $1.79 $1.48 $1.76 By-product Credits (0.26) (0.24) (2.69) (0.97) Treatment Charges 0.11
Slide 26: 2018 and 2019e Sales by Region
POWERED: BY COPPER 2018 and 2019e Sales by Region 1,428 E @ sar 1,253 4,130 24 Cu Mo mm ibs mim ibs North America South America Indonesia 2019e Sales by Region 1,400 4,270 94) 0.8 (2) Cu Mo North America South America Indonesia (1) Includes molybdenum produced in South America. (2) Includes gold pro
Slide 27: 2019e Quarterly Sales
POWERED: BY COPPER 2019e Quarterly Sales ae (million Ibs) Gold Sales _ (thousand ozs) 300 275 900 255 200 125 130 100 600 ol | 1019 —«-2019e «= 3Q19e ©=—419e ‘Note: Consolidated gold sales ndude approximately 45k ozs in 1219, Sikozs in 2019, 2% 08 in 3Q19e and 2% 02s in 4219 for nencontroling intere
Slide 28: PT-FI Mine Plan
PT-FI Mine Plan BY COPPER Metal Sales, 2019e-2023e = PiU EeyYKi ae Total: 62 billion lbs copper Pi EeyYkiae Total: 6.9 million ozs gold Annual Average: 1.24 billion Ibs Annual Average: 1.37 million ozs B Copper, billion Ibs B Gold, million ozs 2019e 2020e 2021e 2023e +—— Transition Years ————> ‘Note
Slide 29: Grasberg Mining District: PT-FI History of Block Caving
POWERED: BY COPPER Grasberg Mining District PT-FI History of Block Caving Grasberg open pit Grasberg Block Cave GBTblock cave mine Depleted § 10Zblockcave mine & Depew + GrasbergBC In development + Kucing Liar Future development |Frecpont-McMoRAN
Slide 30: GBC Service Shaft
GBC Service Shaft Reserves Bar 355 meters = 963mm t @ 0.96% Cu & 0.72 g/t Au Completed to Date v +248 km of Development v Mine Access v Service Shaft Initial Fans & Vent Infrastructure Initial Rail Haulage System Over 5 km of Rail ~— Crusher #1 & Conveyors to Surface Stockpiles Underground Batch Pla
Slide 31: Sensitivities
POWERED: BY COPPER Sensitivities (USS millions) Operating 2019e - 2020e Change EBITDA Cash Flow Copper: +/- $0.10/Ib $350 $275 Molybdenum: +/- $1.00/Ib $80 $70 Gold: +/- $50/ounce $40 $20 Currencies: +/- 10% $165 $115 2021e - 2022e Change Copper: +/- $0.10/Ib $425 $335 Molybdenum: +/- $1.00/Ib $85 $
Slide 32: FCX Debt Maturities as of 12/31/18
POWERED: FCX Debt Maturities as of 12/31/18 === (USS billions) Sam Total Debt & Cash MEME Actual 1 FCX Revolver $< Senior Notes 99 $6 | | Cerro Verde Credit Faciity 10 WM Other Debt 02 Total Debt Sin] Consolidated Cash 342 $4 CVNon- $2 recourse 540% 6 SAB Notes ‘and $0.0 FMC % Sr. Notes 2019 Thereaf
Slide 33: Adjusted EBITDA Reconciliation
POWERED: BY COPPER Adjusted EBITDA Reconciliation : (in millions) 4018 2018 Net income Attributable to Common Stock — Continuing Operations $ 136 $2,272 Interest expense, net 509 945 Income tax (benefit) provision (169) 1,374 Depreciation, depletion and amortization 403 1,754 Net gain on sales of as
Slide 34: Copper Price Realization and Open Pound Guidance
Copper Price $2.80/Ib 3-Mo. Fwd Price for Copper $2.74/lb at the End of December . $2.75/Ib* (Generally, 50/50 Weight of Qtrly Avg and 3-mo Forward Price at End of Period) FCX 4Q18 Consolidated Copper Price Realization FCX 4Q18 Prior Period Revenue/EBITDA: $(32) mm Open Lb Adj. Net Income: $(15) mm