Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Freeport-McMoRan Copper & Gold — Prudential Equity Group, LLC Metals & Mining Conference (April 2007)
34 slides from Freeport-mcmoran's conference presentation, Apr 4, 2007
Slide 1: Prudential Equity Group, LLC Metals & Mining Conference
FCX FCX Cu Freeport- Freeport- McMoRan McMoRan Copper Au Gold Prudential Equity Group, LLC Metals & Mining Conference Richard C. Adkerson Chief Executive Officer April 4, 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. When When usedused in in this this document, document, the the words words “anticipates”, “may”, “can”,
Slide 3: Transaction Overview
Transaction Overview 3
Slide 4: Phelps Dodge Acquisition -- Transaction Highlights
Phelps Dodge Acquisition -- Transaction Highlights ¾ Created 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 Addi
Slide 5: Phelps Dodge Acquisition
Phelps Dodge Acquisition ¾ Completed March 19, 2007 ¾ Largest Acquisition in Metals and Mining History ¾ Highly Successful Debt and Equity Transactions ¾ Large & Liquid Securities: $30 Billion Equity Market Capitalization $12 Billion in Debt, $9 Billion Net of Cash 5
Slide 6: Business Overview
Business Overview 6
Slide 7: World's Leading Public Copper Company
World’s Leading Public Copper Company Top 10 Copper Producers (2007E) (000 t) 2,000 Pro forma FCX is poised to take advantage of favorable industry fundamentals 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Codelco Pro Forma FCX BHP Billiton Xstrata Rio Tinto Anglo Grupo Mexico KGHM Polska Kazakhm
Slide 8: Premier North American Mining Company
Premier North American Mining Company Enterprise Value (US$ billions) $40 $38.8 $37.2 $35 $30 $26.1 $25.0 $25 $20.9 $20 $18.2 $16.3 $15 $11.9 $10 $5 $0 Pro Forma Alcoa Barrick Alcan Newmont Goldcorp Cameco Teck Cominco FCX ____________________ Source: Public filings, prices as of March 30, 2007 Pro
Slide 9: Combination of FCX and Phelps Dodge
Combination of FCX and Phelps Dodge 2006 Revenue (US$ billions) 2006 Adjusted 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) 5 4 3.6 3 2.4 2 1.2
Slide 10: 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 11: 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 Global Leader in Mining and Processing Technologies ¾ Established Exploration and Development Expertise ¾ Proven Project Management Expertise 11
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: Positive Long-Term Fundamentals
Positive Long-Term Fundamentals ¾ The Combination of Strong Fundamentals Has Created Extremely Attractive Market Conditions for the Copper Industry ¾ Supply is Unlikely to Increase Meaningfully Absence of Mega-development Projects in the Pipeline Potential for Further Supply Disruptions ¾ China
Slide 15: World Class Discoveries Are Extremely Rare
World Class Discoveries Are Extremely Rare Recoverable Copper Reserves 2007E Copper Production Million metric tons 0 5 10 15 20 25 30 Thousands metric tons 0 200 400 600 800 1,0 0 0 1,2 0 0 1,4 0 0 1,6 0 0 Grasberg Complex - 1988 Escondida - 1979 Escondida - 1979 Chuquicamata - 1910 El Teniente - 19
Slide 16: The Right Assets
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 16 16
Slide 17: Geographically Diverse, Long-Lived Asset Base
Geographically Diverse, Long-Lived Asset Base 2006 Copper Production by Geography Pro forma Indonesia 35% North America Net 42% Reserves 12/31/06 Consolidated interest Copper (billion lbs) 93.6 77.2 Molybdenum (billion lbs) 2.0 1.8 Gold (million ozs) 42.4 38.3 Average Production Volumes (2007-2009)
Slide 18: North America
North America 10 Mines in North America Major Projects North America(1) Morenci (85%) Reserves ¾Mill Restart and Concentrate Leach Project ¾$210 Million Aggregate Capital Cost Cu 24.8 billion lbs ¾In Operation Mid-2007 Mo 1.7 billion lbs ¾Adds 115MM lbs Cu/year Aggregate and Enhances Cost Profile Pr
Slide 19: South America
South America Peru Peru Cerro Verde (53.6%) (1) Major Projects Reserves ¾Major Project With Conventional Concentrator Cu 8.3 billion lbs Mo 0.1 billion lbs ¾Aggregate $850MM Project Completed in 4Q06 Cu Production 380 million lbs ¾Ramp-up to Full Production in 1H07 Mine Life 37 years ¾Adds 430MM lbs
Slide 20: Indonesia – Grasberg
Indonesia – Grasberg Grasberg (90.64%) (1) Development Projects Reserves ¾DOZ Expansions (50K t/d & 80K t/d) Cu 35.2 billion lbs Au 37.2 million ozs ¾Big Gossan Development Ag 116 million ozs ¾Common Infrastructure Project Production ¾Development of Grasberg Underground & Cu 1.1 billion lbs Balance
Slide 21: Africa – Democratic Republic of Congo
Africa – Democratic Republic of Congo Development Projects Tenke Fungurume (1) (57.75%) ¾Feasibility Study Approved 4Q06 Reserves ¾Oxide Leach Operation Cu 2.6 billion lbs Co 0.3 billion lbs ¾$650MM Capital Cost ¾Aggregate Production of 250MM lbs Cu/year; 18 MM lbs Co/Year in First 10 Years ¾ Potent
Slide 22: Significant Exploration Potential
Significant Exploration Potential Papua, Indonesia Papua, Indonesia ¾ Rights to 2.2 Million Acres Pacific Ocean ¾ Highly Prospective Exploration Areas Provide Opportunities to Continue to Add to our Long- Grasberg lived Reserves Banda Papua, Sea Indonesia Papua Tenke Fungurume, Arafura New Guinea De
Slide 23: 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 24: The Right Company
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Slide 25: Pro Forma FCX — Growing Sales Profile
Pro Forma FCX — Growing Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 5 3 4.7 2.2 4.4 1.9 1.9 2 1.6 4.0 4 3.6 1 0 3 2006 2007E 2008E 2009E Pro Forma 2 Molybdenum Sales (million lbs) 100 77 80 75 80 68 1 60 40 20 0 0 2006 2007E 2008E 2009E 2006 2007E 2008E 2009E Pro Pro Forma Form
Slide 26: Adjusted EBITDA and Cash Flow at Various Copper Prices
Adjusted EBITDA and Cash Flow at Various Copper Prices Average Annual Adjusted 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) $6 (US$ billion
Slide 27: Sensitivity to Commodity Prices
Sensitivity to Commodity Prices Annual Annual Financial Financial Impact Impact Change Change Adjusted Adjusted Operating Operating EBITDA EBITDA Cash Cash Flow Flow (US$ millions) Copper: -/+ $0.20/lb $800 $500 Molybdenum: -/+ $2.00/lb $100 $80 Gold: -/+ $50/ounce $90 $50 ____________________ Note:
Slide 28: Pro Forma Capital Expenditures
Pro Forma Capital Expenditures (US$ billions) $2.5 Major Projects All Other $2.0 $1.9 $1.5 $0.9 $1.2 $1.0 $0.9 $0.6 $0.6 $0.5 $1.0 $0.6 $0.3 $0.0 2007E 2008E 2009E 28
Slide 29: Recent Financings & Pro Forma Debt
Recent Financings & Pro Forma Debt ($ in billions, except share amounts) Before Equity Offerings Pro Forma Avg. Rate Term Debt $10.0 $ 4.4 (1) 7.1 % Unsecured Notes 6.0 6.0 8.4 % Existing Debt 1.6 1.6 7.8 % $17.6 $12.0 7.8 % Less Cash 3.0 3.0 $14.6 $ 9.0 Basic Shares O/S (mms) 335 382 Fully Diluted
Slide 30: Capitalization Table
Capitalization Table (US$ billions) December December 31, 31, 2006 2006 Pro Pro Forma Forma Capitalization Capitalization Amount % Cash, Cash Equivalents and Restricted Investments $3.4 -- New Revolver (1) $0.0 0.0% New Sr. Secured Term Loan B (2) 4.4 10.4% New Sr. Unsecured Notes 6.0 14.2% Existing
Slide 31: FCX Pro Forma Debt Maturities
FCX Pro Forma Debt Maturities (US$ millions) $8,000 $7,000 $6,462 $6,000 $5,000 $4,748 $4,000 $3,000 $2,000 $1,000 $141 $308 $39 $62 $144 $25 $25 $0 2007 2008 2009 2010 2011 2012 2013 2014 Thereafter Credit Facilities Public Debt All Other Debt 31
Slide 32: Significant Debt Reduction
Significant Debt Reduction Year-End Net Debt at Varying Copper Prices (US$ billions) $16 $14.9 $14 $12 $10 $9.3 $8 $7.3 $6 $4 $3.6 $2 $0 -$0.1 -$2 Pro Forma Pro Forma ’07-’09 Avg. Copper Price $2.00 $2.50 $3.00 YE 2006 YE 2006 Net Debt/’07-’09 Avg. EBITDA 1.3x 0.5x 0.0x Before After $5.76B Equity $5
Slide 33: Financial Policy
Financial Policy ¾ FCX is Committed to Maintaining a Strong Financial Position Debt Reduction Top Priority ¾ Continuation of Positive Copper Markets is Expected to Provide Substantial Cash Flows ¾ Consideration of Asset Sales ¾ FCX Anticipates Continuing Regular Annual Common Dividend of $1.25 per
Slide 34: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (US$ millions) Pro Forma, Year Ended December 31, 2006 Income from continuing operations applicable to common stock $2,991.2 Interest expense, net 1,179.8 Provision for income taxes 1,934.9 Depreciation, depletion and amortization 1,268.2 (1) EBITDA $7,374.1 Preferred