Freeport-mcmoran, Inc. · NYSE:FCX

Freeport-mcmoran — Freeport-McMoRan Copper & Gold — BMO Capital Markets Global Metals & Mining Conference 2012

26 slides from Freeport-mcmoran's conference presentation, Feb 27, 2012

  1. Slide 1: Connecting the World

    Connecting the World Kathleen L. Quirk Executive Vice President & CFO www.fcx.com February 27, 2012

  2. Slide 2: Cautionary Statement

    Cautionary Statement This presentation contains forward-looking statements in which we discuss factors we believe may affect our potential performance in the future. Forward- looking statements are all statements other than statements of historical facts, such as statements regarding projected ore g

  3. Slide 3: Investment Highlights

    Investment Highlights  Global Leader in Production of Copper, Gold and Molybdenum  Well Situated to Meet Growing Demand for Metals  Geographically Diverse  Long-Lived Reserves  Growing Production Profile  Strong Financial Position  Experienced Team 3

  4. Slide 4: FCX's Global Footprint

    FCX’s Global Footprint Major Mine Operations & Development Projects All major assets majority-controlled and operated North America1 Copper Reserves Copper/Gold/Silver Cu 40.6 billion lbs Mo 2.71 billion lbs Molybdenum Sales Cobalt Grasberg (90.64%) Cu 1.3 billion lbs Reserves Mo 80 million lbs2 Cu

  5. Slide 5: World's Leading Copper Producers

    World’s Leading Copper Producers Top 10 Copper Producers (2011e) (000 t) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Codelco FCX BHP Billiton Xstrata Anglo Southern Rio Tinto KGHM Antofagasta RAO Norilsk American Copper ____________________ Source: Brook Hunt 4Q11 Report. Rankings based on

  6. Slide 6: World Class Copper Discoveries Are Extremely Rare

    World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves 2011e Copper Production Million metric tons Thousand metric tons 0 5 10 15 20 25 30 0 200 400 600 800 1000 Grasberg Complex - 1988 Escondida - 1979 KGHM Polish Copper - 1957 Chuquicamata - 1910 Escondida - 1979 Collahuasi

  7. Slide 7: Markets

    Markets 2,500 500 2,000 400 000’s Metric Tons Cents Per Pound 1,500 300 LME Copper Price 1,000 200 500 100 LME & COMEX Exchange Stocks* 0 0 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 *LME and Comex, excluding S

  8. Slide 8: Value Creation Focus

    Value Creation Focus INVESTMENT CASH MINERAL RESERVE IN ATTRACTIVE PRODUCTION FLOWS/ RESOURCES ADDITIONS DEVELOPMENT GROWTH RETURNS PROJECTS FCX Copper Resources at 12/31/2011 Recoverable Reserves (a) 120 bn lbs Mineralized Material (contained) (b) 115 bn lbs Total Reserves (a) & Mineralized Materia

  9. Slide 9: Preliminary Reserves at 12/31/11

    Preliminary Reserves at 12/31/11 Consolidated Proven & Probable Reserves Copper Molybdenum Gold billion lbs billion lbs million ozs 12/31/11 Reserves @ 12/31/10 (1) 120.5 3.39 35.5 Copper Reserves Additions/revisions* (2) 2.9 0.11 (0.2) by Geographical Region Production (3.7) (0.08) (1.4) Net change

  10. Slide 10: Copper Reserves & Mineralized Material

    Copper Reserves & Mineralized Material as of 12/31/11 billion lbs of copper 12/31/11 235 Mineralized Material (b) by Geographical Region Mineralized 115 Material (b) billion (contained copper) lbs North 120 at $2.20 Cu price America 54% South Indonesia America Reserves 17% 17% 12% at $2.00 Cu price

  11. Slide 11: Development Projects Update

    Development Projects Update N. N. American American Copper Restarts (1) Copper Restarts (1) Climax Climax Molybdenum Mine (2) Molybdenum Mine (2) El El Abra Sulfolix (3) Abra Sulfolix (3) Grasberg Underground (4) Grasberg Underground (4) 1) Completed Morenci Restart in 2011 (125 MM lbs/yr); Miami Re

  12. Slide 12: Advanced Stage Copper Projects

    Advanced Stage Copper Projects Incremental Preliminary Copper Capital* Achieve Mill Expansions (mm lbs/year) ($ billions) Full Rates Status EIS filed Cerro Verde (360K) 600 $4.0 2016 4Q11 Completing Morenci (115K) 225 1.2 2014 Feasibility Study Under Tenke (14K) 150 0.9 2013 Construction TOTAL 975 $

  13. Slide 13: Potential Additional Projects

    Potential Additional Projects North America South America • Sulfides/Mill Projects • El Abra Mill  Large Scale Morenci  Sierrita Africa  Bagdad  Ajo • Future Expansion  Twin Buttes of Tenke Oxides • Safford/Lone Star • Tenke Sulfides 13

  14. Slide 14: 2011 Highlights

    2011 Highlights  Excellent Financial Performance - Exceeded 2010 Records  Solid Operating Performance Impacted by Labor Disruptions  New Labor Agreements at Grasberg, Cerro Verde & El Abra  Advanced Growth Projects to Increase Copper Production by ~25% Over Next 4 Years  Significant Exploration

  15. Slide 15: 2012e Outlook

    2012e Outlook  Sales Outlook: • Copper: 3.8 Billion lbs. • Gold: 1.2 Million ozs. • Molybdenum: 80 Million lbs.  Unit Net Cash Cost(1): • $1.38/lb in 2012e • Reflects Impact of Lower Volumes at Grasberg • Future Costs Expected to Decline with Higher Volumes  Operating Cash Flows(2): • ~$4.7 Billi

  16. Slide 16: Near-Term Sales Profile

    Near-Term Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 5.0+ 2 1.6 1.7 5 1.4 1.2 4.3 4.3 1 4 3.7 3.8 0 2011 2012e 2013e 2014e 3 ____________________ Note: Consolidated gold sales include approximately 139k ozs in 2011, 125k ozs in 2012e, 160k ozs in 2013e, and 170k ozs in 2014e f

  17. Slide 17: Grasberg Labor Situation

    Grasberg Labor Situation  Reached Financial Terms on New Collective Labor Agreement in December 2011  CLA Signed in January 2012  PTFI Implemented Terms of New CLA  Employees Returned to Work in January  Recent Work Interruptions Associated with Workforce Tensions  Temporarily Suspended Operat

  18. Slide 18: 2012e Operating Estimates

    2012e Operating Estimates 2012e Unit Production Costs North South (per pound of copper) America America Indonesia Africa Consolidated Cash Unit Costs (1) Site Production & Delivery (2) $1.89 $1.55 $2.59 $1.51 $1.92 By-product Credits (0.32) (0.30) (1.94) (0.46) (0.72) Treatment Charges 0.10 0.16 0.2

  19. Slide 19: Reconciliation of Unit Cash Costs

    Reconciliation of Unit Cash Costs Consolidated ¢ per lb of copper 2011 101¢ Grasberg (a) 20 North America (b) 10 South America (c) 7 Total 37 2012e 138¢ Impact of Higher 2013e/2014e Grasberg Volumes (20¢) With Higher Grasberg Volumes 118¢ (a) lower gold volumes (down 11%) and higher input costs part

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

    Adjusted EBITDA and Cash Flow at Various Copper Prices Average Adjusted EBITDA* ($1,200 Gold & $12 Molybdenum) $12 (US$ billions) $9 $6 $3 $0 Cu $3.00/lb Cu $3.50/lb Cu $4.00/lb Average Operating Cash Flow (excluding Working Capital changes)* ($1,200 Gold & $12 Molybdenum) $10 (US$ billions) $8 $6 $

  21. Slide 21: Sensitivities

    Sensitivities Adjusted Operating Change EBITDA Cash Flow (US$ millions) Copper: -/+ $0.10/lb $400 $275 Molybdenum: -/+ $1.00/lb $80 $65 Gold: -/+ $50/ounce $80 $50 Diesel(1): -/+ 10% $100 $70 Purchased Power(2): -/+ 10% $50 $40 Currencies(3): +/- 10% $130 $100 ____________________ (1) $3.60/gallon b

  22. Slide 22: Capital Expenditures

    Capital Expenditures (1) Major Projects All Other (US$ billions) $5 $4.0 $4 $3.5 $3 1.6 $2.5 1.3 $2 1.1 (3) $1 2.4 2.2 (4) (2) 1.4 $0 2011 2012e 2013e (1) Capital expenditure estimates will continue to be reviewed and revised subject to market conditions. (2) Primarily includes Grasberg underground

  23. Slide 23: Balance Sheet

    Balance Sheet (US$ billions)  Repaid $3.8 bn in Debt Since $20 YE 2008 (~50% Reduction) $17.6 (1)  Significant Liquidity  Strong Credit Metrics $15  No Near-term Maturities  Investment Grade Rated by Total Debt S&P, Moody’s, Fitch $10 $7.4 $5 $3.5 $0 At Time of PD Acquisition in 12/31/08 12/31/

  24. Slide 24: Debt Refinancing

    Debt Refinancing  Refinancing $3.0 Billion Existing 8.375% Notes Callable in April  Issued $3 Billion of New Notes with Weighted Average Interest Cost of 3% on February 13, 2012 • $0.5 Billion of 1.4% Senior Notes Due February 2015 • $0.5 Billion of 2.15% Senior Notes Due March 2017 • $2.0 Billion

  25. Slide 25: Financial Policy

    Financial Policy  Maintain Strong Balance Sheet & Liquidity Position  Invest in Attractive Growth Projects  Opportunistic Debt Repayment  Board Action to Increase Common Stock Dividend Rate: $1.25/Share per Annum  Board to Review Financial Policy on an Ongoing Basis 25

  26. Slide 26: FCX Investment Summary

    FCX Investment Summary  World’s Premier Publicly Traded Copper Company  World’s Largest Molybdenum Producer & Significant Gold Producer  Long-lived Reserves, Geographically Diverse Operations  Flexible Operating Structure Can Respond to Varying Market Conditions  Significant Reserve Growth 26

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