Freeport-McMoRan, Inc. · NYSE:FCX

Freeport-McMoRan — Q4 2018 Earnings Presentation

34 slides from Freeport-McMoRan's earnings presentation, Jan 24, 2019

1. Slide 1: 4th Quarter 2018 Earnings Conference Call

   4th Quarter 2018 Earnings Conference Call January 24, 2019 fcx.com

2. Slide 2: Cautionary Statement Regarding Forward-Looking Statements

   Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements in which FCX discusses its potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as projections or expectations relati

3. Slide 3: 2018 Highlights

   2018 Highlights ($ in bn)  Global Team Achieved Strong/Safe Cash Flows Net Debt (2) Operating Results $20.2  Successful in Establishing New Partnership with Indonesian Government $3.9 • Transaction Protects our Long-term Value at Grasberg  Continued to Strengthen Balance Sheet $2.0 (1) $6.9 Opera

4. Slide 4: Successfully Completed Transaction with the Government of Indonesia

   Successfully Completed Transaction with the Government of Indonesia  In December 2018, Resolved Long-standing Issues New Owner ship St r uct ur e Involving Long-term Mining Rights Grasberg District  Transaction Protects our Long-term Value at Grasberg 100%  FCX has Established a Positive Partners

5. Slide 5: 2019 Priorities to Build Shareholder Value

   2019 Priorities to Build 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 Portfolio of R

6. Slide 6: Compelling Copper Market – Fundamentals

   POWERED Compelling Copper Market – Fundamentals BY COPPER Remain Very Positive Despite Macro Headwinds Supply - Limited Demand - Growth • Project pipeline limited - lack of • Global Industrial Production expected investment with long lead time on new to grow at 2.3% pa 2018-2040* supply • Copper is

7. Slide 7: World Class Copper Discoveries Are Extremely Rare

   World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves Million metric tons 2018e Copper Production Thousand metric tons 0 10 20 30 40 0 200 400 600 800 1000 1200 1400 Escondida - 1981 1981 Escondida - 1981 1981 Collahuasi - 1880 1880 Grasberg Complex - 1988 1988 KGHM Polish Co

8. Slide 8: Preliminary Estimated Consolidated Copper Reserves & Mineralized Material as of 12/31/18

   Preliminary Estimated Consolidated Copper Reserves & Mineralized Material as of 12/31/18 billion lbs of copper Reserves (1) by Region 254 North America 42% South Mineralized Indonesia America Material (2) 30% 28% (contained copper) 120 YE 2017 Mineralized Material (2) by Region 87 bn lbs Reserves 44

9. Slide 9: Preliminary Estimated Reserves - Americas

   Preliminary Estimated Reserves - Americas Consolidated Proven & Probable Reserves (bn lbs) North 50 America Reserves @ 12/31/17 33.5 34 Additions/revisions 17.8 Production (1.4) Net Change 16.4 YE 2017 YE 2018 Reserves @ 12/31/18 49.9 49% Increase YoY Principally Bagdad, Morenci, Sierrita and Lone S

10. Slide 10: Cerro Verde Update

    Cerro Verde Update  Expanded Operations Benefit from Large-scale, Long-lived Reserves and Cost Efficiencies  Concentrator Facilities Continue to Perform Well Average Mill Rate (mt/d) 387,600 360,100 353,400 Cerro Verde Fleet recently added two new 4100AC shovels 2016 2017 2018 capable of moving 11

11. Slide 11: Lone Star – Potential for Another Morenci?

    Lone Star – Potential for Another Morenci? Leachable Development Provides Exposure to Major Asset 12/31/2018 Potential(2) Initial Initial Production: Reserves(1) (Leach & Mill) Leach Project YE 2020 5.6 bn lbs of Copper 50 - 70 bn lbs $850 mm Project ~200 mm lbs/year (Leach Only – 27% ~$290 mm Incur

12. Slide 12: Grasberg Underground Update

    POWERED BY COPPER Grasberg Underground Update Grasberg Block Cave Deep MLZ Ramp up to 130,000 t/d by 2023 Ramp up to 80,000 t/d by 2022 First Drawbell Blast Diamond Drill Rig Supporting December 15, 2018 Hydraulic Fracturing Program  Infrastructure in Place – Successful Testing of  Results from On

13. Slide 13: PT-FI Underground Ramp-up

    POWERED PT-FI Underground Ramp-up BY COPPER Contribution by Deposit Grasberg open pit DOZ Big Gossan DMLZ Grasberg BC Ore Milled 215 217 (000’s t/d) 163 80K t/d 80K t/d 116 107 60K t/d 130K t/d 104K t/d 27K t/d 64K t/d 30K t/d 2019e 2020e 2021e 2022e 2023e Cu (bn lbs) 0.62 0.76 1.4 1.7 1.7 Au (mm oz

14. Slide 14: FCX's Diversified Global Footprint

    FCX’s Diversified Global Footprint Copper Copper Reserves Plus Competitive Strengths Reserves (1) Mineralized Material (1)  Global Leadership Position North America North America  Operate All Assets – Operational 42% 43% Synergies, Shared Resources, Portfolio- Other 2% Based Capital Allocation Sou

15. Slide 15: 2019e Outlook

    2019e Outlook  Copper: 3.3 Billion lbs. Sales  Gold: 0.8 Million ozs. Outlook  Molybdenum: 94 Million lbs. Unit Cost  Site Production & Delivery 2019e: $2.03/lb (1Q19e: $2.11/lb) of Copper  After By-product Credits 2019e: $1.73/lb(1) (1Q19e: $1.76/lb)  ~$1.8 Billion (@ $2.75/lb Copper for 2019

16. Slide 16: Sales Profile

    Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 5 3 2.4 4.2 2 1.6 4 3.8 3.5 0.85 3.3 1 0.8 3 0 2018 2019e 2020e 2021e Note: Consolidated gold sales include 223k ozs in 2018, 147k ozs in 2019e, 160k ozs in 2020e and 290k ozs in 2021e for noncontrolling interest. 2 Molybdenum Sales (

17. Slide 17: 2018 and 2019e Volumes and Costs by Region

    2018 and 2019e Volumes and Costs POWERED BY COPPER by Region 2018 Sales by Region 2019e Sales by Region 1,428 1,400 1,253 1,130 2.4 1,270 615 0.8 Cu Au Cu Au mm lbs mm ozs mm lbs mm ozs N. America S. America Indonesia N. America S. America Indonesia 2018 Unit Net Cash Cost (Credit) by Region 2019e U

18. Slide 18: EBITDA and Cash Flow at Various Copper Prices

    EBITDA and Cash Flow at Various Copper Prices (US$ billions) Average EBITDA ($1,300/oz Gold, $12/lb Molybdenum) $10 $8 $6 $4 Transition Yrs $2 Average Average ’19e/’20e ’21e/’22e $0 Cu $3.00/lb Cu $3.25/lb Cu $3.50/lb Average Operating Cash Flow Excludes Working Capital Changes ($1,300/oz Gold, $12/

19. Slide 19: Consolidated Capital Expenditures

    Consolidated Capital Expenditures (US$ billions) Net of Scheduled Contributions $2.4 $2.5 (2) $2.4(2) $2.3 $2.0 $1.2(1) $1.5(1) $1.5(1) Major Mining Projects $0.8 $0.9 $1.0 Other Mining 2018 2019e 2020e (1) Major mining projects include CAPEX associated with Grasberg underground development ($0.9 bn

20. Slide 20: Financial Policy

    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 Significant Deleveraging Since 2015 ($ in bn) B

21. Slide 21: FCX: Primed for Success

    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% from Americas  Ex

22. Slide 22: Reference Slides

    Reference Slides

23. Slide 23: Financial Highlights

    As Revised February 7, 2019 Financial Highlights Sales Data 2018 2017 Copper Consolidated Volumes (mm lbs) 3,811 3,700 Average Realization (per lb) $2.91 $2.93 Site Production & Delivery Costs (per lb) $1.76 $1.60 Unit Net Cash Costs (per lb) $1.07 $1.19 Gold Consolidated Volumes (000’s ozs) 2,389 1

24. Slide 24: 4Q18 Mining Operating Summary

    4Q18 Mining Operating Summary North South 4Q18 Unit Production Costs (per lb of Cu) America 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 0.19 0.29 0.18 Ro

25. Slide 25: 2018 and 2019e Unit Production Costs (Credits) by Region

    2018 and 2019e Unit Production Costs (Credits) by Region North South 2018 Unit Production Costs (per lb of Cu) America 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 0.1

26. Slide 26: 2018 and 2019e Sales by Region

    2018 and 2019e Sales by Region 2018 Sales by Region 1,428 (1) 1,253 1,130 2.4 (2) 94 Cu Mo Au mm lbs mm lbs mm ozs North America South America Indonesia 2019e Sales by Region 1,400 1,270 (1) 94 615 0.8 (2) Cu Mo Au mm lbs mm lbs mm ozs North America South America Indonesia (1) Includes molybdenum pr

27. Slide 27: 2019e Quarterly Sales

    2019e Quarterly Sales Copper Sales (million lbs) Gold Sales (thousand ozs) 900 300 275 825 850 255 810 800 200 125 130 100 600 0 1Q19e 2Q19e 3Q19e 4Q19e Note: Consolidated gold sales include approximately 48k ozs in 1Q19e, 51k ozs in 2Q19e, 24k ozs in 3Q19e and 24k ozs in 4Q19e for noncontrolling in

28. Slide 28: PT-FI Mine Plan

    PT-FI Mine Plan Metal Sales, 2019e-2023e 2019e – 2023e Total: 6.2 billion lbs copper 2019e – 2023e Total: 6.9 million ozs gold Annual Average: 1.24 billion lbs Annual Average: 1.37 million ozs Copper, billion lbs Gold, million ozs 1.8 1.8 1.7 1.7 1.6 1.4 0.85 0.8 0.76 0.62 2019e 2020e 2021e 2022e 20

29. Slide 29: Grasberg Mining District

    Grasberg Mining District PT-FI History & of Block Caving 1980’s r GBT b Grasberg GBT (depleted) Deplete open pit 1990’s IOZ IOZ bl Deplete DMLZ (depleted) 2000’s DOZ DOZ b (operating) Operat DOZ • DM DMLZ Start Grasberg Future • Gra In de Block Cave Kucing Ertsberg East • Kuc Futu 1980’s Liar Amole

30. Slide 30: Grasberg Block Cave – Key Milestones

    POWERED BY COPPER Grasberg Block Cave – Key Milestones Reserves GBC Service Shaft YE 2018 355 meters  963mm t @ 0.96% Cu & 0.72 g/t Au Hoisting Level Completed to Date  +248 km of Development Batch Level  Mine Access  Service Shaft Extraction Level  Initial Fans & Vent Infrastructure  Initial

31. Slide 31: Sensitivities

    Sensitivities (US$ millions) Operating 2019e - 2020e Change EBITDA Cash Flow Copper: +/- $0.10/lb $350 $275 Molybdenum: +/- $1.00/lb $80 $70 Gold: +/- $50/ounce $40 $20 Currencies: (1) +/- 10% $165 $115 2021e - 2022e Change Copper: +/- $0.10/lb $425 $335 Molybdenum: +/- $1.00/lb $85 $80 Gold: +/- $5

32. Slide 32: FCX Debt Maturities as of 12/31/18

    FCX Debt Maturities as of 12/31/18 (US$ billions) $8 Total Debt & Cash at 12/31/18 Actual FCX Revolver $ - Senior Notes 9.9 $6 Cerro Verde Credit Facility 1.0 Other Debt 0.2 Total Debt $11.1 Consolidated Cash $ 4.2 $4 $3.1 $2.7 $2.4 CV Non- $2 recourse 5.40% & $1.0 $1.1 5.45% CV Non- $0.8 Sr. Notes

33. Slide 33: Adjusted EBITDA Reconciliation

    As Revised February 7, 2019 Adjusted EBITDA Reconciliation (in millions) 4Q18 2018 Net Income Attributable to Common Stock – Continuing Operations* $ 481 $2,617 Interest expense, net (1) 509 945 Income tax (benefit) provision * (552) 991 Depreciation, depletion and amortization 403 1,754 Net gain on

34. Slide 34: 4Q18 Copper Realization & 1Q19 Guidance

    POWERED BY COPPER 4Q18 Copper Realization & 1Q19 Guidance 4Q18 LME Average $2.80/lb Copper Price 3-Mo. Fwd Price for Copper $2.71/lb at the End of December $2.75/lb* FCX 4Q18 Consolidated Copper Price Realization (Generally, 50/50 Weight of Qtrly Avg and 3-mo Forward Price at End of Period) FCX 4Q18

Freeport-McMoRan — Q4 2018 Earnings Presentation on 6ix