Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Freeport-McMoRan Copper & Gold — Morgan Stanley Basic Materials Conference 2007
32 slides from Freeport-mcmoran's conference presentation, Feb 22, 2007
Slide 1: Morgan Stanley Basic Materials Conference
FCX Cu Freeport- McMoRan Copper Au Gold MORGAN STANLEY Basic Materials Conference Crowne Plaza Times Square Square New New York York City Richard C. Adkerson President & Chief Executive Officer February 22, 2007 FREEPORT-MCMORAN COPPER & GOLD INC. www.fcx.com
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements This This document document contains contains certain certain forward-looking forward-looking statements statements about about FCX FCX and and Phelps Phelps Dodge. Dodge. When When used used in in this this document, document, the the words
Slide 3: Important Information for Investors and Stockholders
Important Information for Investors and Stockholders FCX FCX and and Phelps Phelps Dodge Dodge filed filed aa joint joint proxy proxy statement/prospectus statement/prospectus with with thethe Securities Securities and and Exchange Exchange Commission Commission (SEC) (SEC) in in connection with the
Slide 4: FCX's Grasberg
FCX’s Grasberg World Class Copper and Gold Mine Long Lived Payable Reserves - Copper – 39 Billion lbs - Gold – 41 Million ozs High Volume/ Low Cost Production Future Growth Potential from Exploration Continuous Operations Since 1972 – 50-Year COW Responsible Environmental Management 4
Slide 5: Grasberg
Grasberg 5 5
Slide 6: 2006 Financial Highlights
2006 Financial Highlights Operating Operating Data Data 4Q06 4Q06 2006 2006 Copper Volumes (mm lbs) 433 1,201 Realization (per lb) $2.88 $3.13 Gold Volumes (000’s ozs) 508 1,736 (1) Realization (per oz) $628 $606 Financial Financial Results Results (in (in millions, millions, except except per per s
Slide 7: FCX Operating Cash Flows and Capital Expenditures
FCX Operating Cash Flows and Capital Expenditures ($ in millions, except realized prices) $2,000 Operating Cash Flows Capital Expenditures $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 $1.02/ 94¢/ 73¢/ 75¢/ 82¢/ 69¢/ 71¢/ 82¢/ $1.37/ $1.85/ $3.1
Slide 8: Significant Debt Reduction
Significant Debt Reduction ($ in billions) FCX Ending Net Debt (Cash) (1) $3.0 $2.9 $2.5 $2.0 $1.5 $1.0 $0.5 ($0.2) $0.0 2000 2006 ($0.5) (1) Debt and commodity preferreds net of cash and restricted investments. Includes $253 million of debt guaranteed in 2000 which was subsequently assumed and repa
Slide 9: Transforming FCX: Acquisition of Phelps Dodge
FCX FCX Cu Freeport- Freeport- McMoRan McMoRan Copper Au Transforming FCX Gold Acquisition of Phelps Dodge Creating the World’s Largest Publicly Traded Copper Company FREEPORT-MCMORAN COPPER & GOLD INC. www.fcx.com
Slide 10: Transaction Highlights
Transaction Highlights ¾ Creates World’s Premier Publicly Traded Copper Company ¾ Leading North American-based Metals and Mining Investment ¾ World Class, Long-lived, Geographically Diverse Operations ¾ Significant Exploration Potential and Management Track Record of Adding Value Through Exploration
Slide 11: Status Report on Pending Acquisition of Phelps Dodge
Status Report on Pending Acquisition of Phelps Dodge Announced Transaction on November 19, 2006 Positive Market Response - Size, Scale, Diversity Transaction Subject to Regulatory and FCX/PD Shareholder Approval - U.S. Authorities Granted Early Termination of the Waiting Period Under the Hart
Slide 12: The Right Time
FCX’s Grasberg The Right Time 12 12
Slide 13: Strong Copper Fundamentals
Strong Copper Fundamentals 2,000 400 1,750 350 Cents Per Pound 000’s Metric Tons 1,500 300 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-
Slide 14: Recent Copper Market Drivers
Recent Copper Market Drivers Reasons For Recent Price Decline Positive Outlook Destocking Led to a Decrease Apparent Demand Remains Strong; in Chinese Imports of Refined Restocking Expected to Support Prices Copper in 2H06 Increase in Global Inventories Stocks Remain Near Historical Lows (~5
Slide 15: The Right Assets
FCX’s Grasberg The Right Assets Grasberg, Grasberg, Indonesia Indonesia Morenci, Morenci, North North America America Cerro Cerro Verde, Verde, Peru Peru Sierrita, Sierrita, North North America America 15 15
Slide 16: Geographically Diverse, Long-Lived Asset Base
Geographically Diverse, Long-Lived Asset Base Major Mine Operations & Development Projects All major assets majority-controlled and operated North North America America11 Grasberg (90.64%) Copper Reserves Reserves Cu 25.2 billion lbs Copper/Gold/Silver Cu 36.5 billion lbs Mo 1.7 billion lbs Molybden
Slide 17: Pro Forma Reserves and Production
Pro Forma Reserves and Production 2006E Production by Geography Pro forma Indonesia 35% North America Net 42% Reserves 12/31/05 Consolidated interest Copper (billion lbs) 87.6 75.0 Molybdenum (billion lbs) 2.0 1.9 Gold (million ozs) 45.4 41.0 Average Production Volumes (2006-2010) Peru Copper (billi
Slide 18: Enhanced Diversification
Enhanced Diversification 2006 Mining Revenue by Commodity FCX Phelps Dodge Pro Forma FCX Gold Gold Molybdenum 10% 23% 22% Copper 77% + Copper 78% = Molybdenum 12% Copper 78% 2006 Mining Revenue by Geography FCX Phelps Dodge Pro Forma FCX Peru 8% Indonesia Indonesia North America 38% 35% 100% + Chile
Slide 19: Proven Technical Expertise
Proven Technical Expertise 2006 Copper Production by Method FCX Phelps Dodge Pro Forma FCX Concentrate Concentrate Concentrate 100% 33% 56% + = SX/EW SX/EW 67% 44% Smelting/Refining (1) Pro forma FCX will be a world leader (000 metric tons) FCX Phelps Dodge ¾ Open pit mining Atlantic Copper, Spain (
Slide 20: Additional Development Upside
Additional Development Upside Henderson/Climax (100%) • Henderson production capacity increased Morenci (85%) to 40 MM lbs Mo/year from 32MM lbs Mo Grasberg (90.64%) • Mill restart and • DOZ expansions (50K t/d & 80K t/d) • Possible 2009 restart of Climax at 20- concentrate leach project 30MM lbs Mo
Slide 21: Significant Exploration Potential
Significant Exploration Potential Papua, Indonesia Papua, Indonesia Pacific ¾ Rights to 2.2 Million Acres Ocean ¾ Highly Prospective Exploration Areas Provide Opportunities to Continue to Add to Our Long- Grasberg lived Reserves Banda Papua, Sea Indonesia Papua Arafura New Guinea Tenke Fungurume, 0
Slide 22: Strong Management Track Record
Strong Management Track Record ¾ Leader in Safety and Environmental Excellence ¾ World Class Open Pit and Underground Mining Expertise ¾ Established Exploration and Development Expertise ¾ Proven Project Management Expertise ¾ Global Leader in Mining and Processing Technologies ¾ Strong Tradition of
Slide 23: The Right Company
FCX’s Grasberg The Right Company 23 23
Slide 24: Premier North American Mining Company
Premier North American Mining Company Enterprise Value (US$ billions) $40 $37.0 $35.9 $35 $30 $28.6 $25.0 $25 $21.9 $20.2 $20 $15 $13.8 $13.6 $10 $5 $0 Alcoa Pro Forma Barrick Alcan Newmont Goldcorp Cameco Teck Cominco FCX ____________________ Source: Public filings, prices as of February 7, 2007 Pr
Slide 25: World's Leading Public Copper Company
World’s Leading Public Copper Company Top 10 Copper Producers (2006E) (1) (000 t) 2,000 Pro forma FCX is poised to take advantage of favorable industry fundamentals 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Codelco Pro Forma FCX BHP Billiton Xstrata Rio Tinto Anglo Southern KGHM Polska RAO Nor
Slide 26: Combination of FCX and Phelps Dodge
Combination of FCX and Phelps Dodge 2006 Revenue (US$ billions) 2006 EBITDA (US$ billions) $20.0 $10.0 $17.7 $7.8 $15.0 $11.9 $4.7 $10.0 $5.0 $5.8 $3.1 $5.0 $0.0 $0.0 FCX Phelps Dodge Combined FCX FCX Phelps Dodge Combined FCX 2006 Consolidated Copper Sales (billion lbs) Enterprise Value (US$ billio
Slide 27: Pro Forma FCX — Growing Sales Profile
Pro Forma FCX — Growing Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 5 3 4.6 4.6 4.5 2.2 4.1 2.0 1.9 1.9 1.9 2 4 3.6 1 3 2006 2007E 2008E 2009E 2010E Pro Forma 2 Molybdenum Sales (million lbs) 100 85 80 80 80 75 68 1 60 40 20 0 0 2006 2007E 2008E 2009E 2010E 2006 2007E 2008E 200
Slide 28: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices Average Annual EBITDA 2007-2009 ($500 Gold & $15 Molybdenum) $12 (US$ billions) $10 $8 $6 $4 $2 $0 Cu $1.50/lb Cu $2.00/lb Cu $2.50/lb Cu $3.00/lb Average Annual Operating Cash Flow 2007-2009 ($500 Gold & $15 Molybdenum) $6 (US$ billions) $5 $4 $3 $2 $1
Slide 29: Sensitivity to Commodity Prices
Sensitivity to Commodity Prices Annual Annual Financial Financial Impact Impact Change Change Net Net Income Income EPS EPS (in millions) Copper: -/+ $0.20/lb $500 $1.50 Molybdenum: -/+ $2.00/lb $80 $0.24 Gold: -/+ $50/ounce $50 $0.15 ____________________ Note: Annual financial impact based on estim
Slide 30: Significant Debt Reduction
Significant Debt Reduction Year-End Net Debt at Varying Copper Prices (US$ billions) $16 $14.9 $14 $12.7 $12 $10 $9.2 $8 $5.8 $6 $4 $2 $0 2007-2009 Average Copper Price $2.00 $2.50 $3.00 Net Debt/2007-2009 Average EBITDA 2.2x 1.2x 0.6x Pro Forma Pro Forma YE 2006 YE 2009 ____________________ Note: S
Slide 31: Financial Policy
Financial Policy ¾ FCX is Committed to Maintaining a Strong Financial Position Investment in Future Growth Opportunities With High Rates of Return Aggressive Debt Reduction Using the Substantial Cash Flows Generated From the Combined Business ¾ Continuation of Positive Copper Markets is Expected
Slide 32: Transaction Highlights
Transaction Highlights ¾ Creates World’s Premier Publicly Traded Copper Company ¾ Leading North American-based Metals and Mining Investment ¾ World Class, Long-lived, Geographically Diverse Operations ¾ Significant Exploration Potential and Management Track Record of Adding Value Through Exploration
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