Freeport-McMoRan, Inc. · NYSE:FCX
Freeport-McMoRan — Q1 2019 Earnings Presentation
29 slides from Freeport-McMoRan's earnings presentation, Apr 25, 2019
Slide 1: 1st Quarter 2019 Earnings Conference Call
1st Quarter 2019 Earnings Conference Call April 25, 2019 fcx.com
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
Slide 3: Proven Assets. Fundamental Value.
“Proven Assets. Fundamental Value.” Leading Global Copper Producer Safe and Environmentally Responsible Operator Geographically Diverse, Long-lived Asset Base Portfolio Difficult to Replicate Significant Productive Capacity Large Footprint of Organic Growth Options Proven Track Record
Slide 4: 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
Slide 5: 1Q 2019 Operations Update
1Q 2019 Operations Update North America South America Indonesia Maintaining Focus on Cerro Verde Mill Continues Completing Final Productivity and Cost to Perform Well Phases of Grasberg Management • Debottlenecking Continues Open Pit • Advanced Analytics El Abra Weather Events – Undergroun
Slide 6: "Capital Light" Debottlenecking Through Innovation
“Capital Light” Debottlenecking Through Innovation Objective: Increase Metal Production Using Advanced Analytics in Combination with Expert Systems • Initial Pilot at Bagdad – Cross-Functional Team Metallurgists Information Technology Operators Dispatchers Process Control Mine Planners
Slide 7: Lone Star
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) of Copper ~$385 mm as
Slide 8: Cerro Verde Operations Update
Cerro Verde Operations Update Mill Rate (K mt/d) • Expanded CV2 Mill Facility +40K mt/d Processing 15% More Ore Avg. 389 v. Original Design Avg. 349 384 396 387 352 355 339 • Reviewing Opportunities to Process Additional Ore CV1 277 282 267 243 232 225 CV2 1Q16 2Q16 3Q16 3Q18 4Q18 1Q19 8
Slide 9: PT-FI Underground Transition
PT-FI Underground Transition Advancing According to Plan DMLZ Update Grasberg Block Cave Ramp-up to 80,000 t/d by 2022 Ramp-up to 130,000 t/d by 2023 YE 2018 Reserves: 432mm t @ 0.92% Cu & 0.76 g/t Au YE 2018 Reserves: 963mm t @ 0.96% Cu & 0.72 g/t Au Results from Ongoing Hydraulic Fracturing
Slide 10: PT-FI Underground Ramp-up
PT-FI Underground Ramp-up Contribution by Deposit Grasberg open pit DOZ Big Gossan DMLZ Grasberg BC Ore Milled 215 217 (000’s t/d) 162 80K t/d 80K t/d 114 100 59K t/d 130K t/d 103K t/d 27K t/d 64K t/d 30K t/d 2019e 2020e 2021e 2022e 2023e Cu (bn lbs) 0.63 0.75 1.4 1.7 1.7 Au (mm ozs) 0.83 0.82 1.5 1
Slide 11: Copper Market – Compelling Fundamentals
Copper Market – Compelling Fundamentals Demand Expected to Grow Project Pipeline Thin Estimated Supply Gap (million metric tonnes) (million metric tonnes/annum) (million metric tonnes/annum) 33 4.4% 5.0 ~4.75 24 CAGR Emerging Only 6 Markets projects > 100 mt/a China 0.7% 1.9 Mature 60 Probable 34 Pr
Slide 12: 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: $2.09/lb (2Q19e: $2.07/lb) of Copper After By-product Credits 2019e: $1.75/lb(1) (2Q19e: $1.67/lb) Operating ~$2.3 Billion @ $3.00/lb Copper
Slide 13: Sales Profile
Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 5 3 2.4 4.2 2 4 3.8 1.5 3.5 0.85 3.3 1 0.8 3 0 2018 2019e 2020e 2021e Note: Consolidated gold sales include 223k ozs in 2018, 154k ozs in 2019e, 155k ozs in 2020e and 285k ozs in 2021e for noncontrolling interest. 2 Molybdenum Sales (
Slide 14: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices (US$ billions) EBITDA ($1,300/oz Gold, $13/lb Molybdenum) $10 $8 $6 $4 Transition $2 Year Average 2020e ’21e/’22e $0 Cu $3.00/lb Cu $3.25/lb Cu $3.50/lb Operating Cash Flow Excludes Working Capital Changes ($1,300/oz Gold, $13/lb Molybdenum) $8 $6 $4 Tra
Slide 15: Consolidated Capital Expenditures
Consolidated Capital Expenditures (US$ billions) Net of Scheduled Contributions $2.5 $2.5 $2.4(2) $2.4(2) $2.0 $1.2(1) $1.5(1) $1.5(1) Major Mining Projects $0.8 $1.0 $1.0 Other Mining 2018 2019e 2020e (1) Major mining projects include CAPEX associated with Grasberg underground development ($0.9 bn
Slide 16: Financial Policy
Financial Policy Maintain Balance Sheet Strength 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 D
Slide 17: Summary
Summary FCX is Well Positioned High-Quality Assets Well Managed Focused on Execution WORLD’S PREMIER PUBLICLY TRADED COPPER PRODUCER 17
Slide 18: Reference Slides
Reference Slides PROVEN ASSETS. FUNDAMENTAL VALUE. [F=9 FREEPORT-McMoRAN
Slide 19: Financial Highlights
Financial Highlights Sales Data 1Q19 1Q18 Copper Consolidated Volumes (mm lbs) 784 993 Average Realization (per lb) $2.90 $3.11 Site Production & Delivery Costs (per lb) $2.17 $1.67 Unit Net Cash Costs (per lb) $1.78 $0.98 Gold Consolidated Volumes (000’s ozs) 242 610 Average Realization (per oz) $1
Slide 20: 1Q19 Mining Operating Summary
1Q19 Mining Operating Summary North South 1Q19 Unit Production Costs (per lb of Cu) America America Indonesia Consolidated Cash Unit Costs Site Production & Delivery, excluding adjustments $2.06 $1.73 $3.10 $2.17 By-product Credits (0.26) (0.34) (1.81) (0.63) Treatment Charges 0.11 0.19 0.29 0.18 Ro
Slide 21: 2019e Operating Estimates
2019e Operating Estimates North South 2019e Unit Production Costs (per lb of Cu) America America Indonesia Consolidated Cash Unit Costs (1) Site Production & Delivery (2) $2.07 $1.75 $2.81 $2.09 By-product Credits (0.27) (0.29) (1.75) (0.56) Treatment Charges 0.11 0.19 0.26 0.17 Royalties & Export D
Slide 22: 2021e Consolidated Unit Net Cash Cost
2021e Consolidated Unit Net Cash Cost Sales Volume Roll Forward Consolidated Unit Net Cash Copper Gold (bns of lbs) (mms of ozs) Cost Roll Forward ($/lb) 2019e 3.3 0.8 2019e $ 1.75 Americas 0.1 - Americas - Indonesia _0.8 _0.7 Indonesia (0.45) (1) 2021e 4.2 1.5 2021e $ 1.30 Pro Forma with Indonesia
Slide 23: 2019e Quarterly Sales
2019e Quarterly Sales Copper Sales (million lbs) Gold Sales (thousand ozs) 900 300 265 835 832 242 784 800 190 200 135 100 600 0 1Q19 2Q19e 3Q19e 4Q19e Note: Consolidated gold sales include approximately 44k ozs in 1Q19, 50k ozs in 2Q19e, 35k ozs in 3Q19e and 25k ozs in 4Q19e for noncontrolling inte
Slide 24: PT-FI Mine Plan
PT-FI Mine Plan Metal Sales, 2019e-2023e Copper 2019e – 2023e Gold 2019e – 2023e Total: 6.2 billion lbs copper Total: 6.8 million ozs gold Annual Average: 1.24 billion lbs Annual Average: 1.35 million ozs 1.8 1.8 1.7 1.7 1.5 1.4 0.83 0.82 0.75 0.63 Cu Au bn mm lbs ozs 2019e 2020e 2021e 2022e 2023e T
Slide 25: Grasberg Block Cave – Key Milestones
Grasberg Block Cave – Key Milestones GBC Service Shaft Reserves YE 2018 355 meters 963mm t @ 0.96% Cu & 0.72 g/t Au Hoisting Level Completed to Date +254 km of Development Batch Level Mine Access, Service Shaft, Initial Fans & Vent Infrastructure Extraction Level Initial Rail Haulage System;
Slide 26: Sensitivities
Sensitivities (US$ millions) Operating 2020e Change EBITDA Cash Flow Copper: +/- $0.10/lb $330 $265 Molybdenum: +/- $1.00/lb $80 $70 Gold: +/- $50/ounce $40 $20 Currencies: (1) +/- 10% $195 $135 2021e-2022e Avg. Change Copper: +/- $0.10/lb $425 $335 Molybdenum: +/- $1.00/lb $90 $85 Gold: +/- $50/oun
Slide 27: FCX Debt Maturities as of 3/31/19
FCX Debt Maturities as of 3/31/19 (US$ billions) Total Debt & Cash at 3/31/19 $8 Actual FCX Revolver $ - Senior Notes 9.0 Cerro Verde Credit Facility 0.8 $6 Other Debt 0.1 Total Debt 9.9 Consolidated Cash $ 2.8 $4 $3.1 $2.7 $2.4 CV Non-recourse $2 5.40% & 5.45% $0.9 $0.8 Sr. Notes CV Non-recourse 3.
Slide 28: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (in millions) 12 mos ended 1Q19 3/31/19 Net Income Attributable to Common Stock – Continuing Operations $ 30 $1,944 Interest expense, net 146 940 Income tax provision 105 590 Depreciation, depletion and amortization 347 1,650 Cobalt inventory adjustments 57 57 Net gain
Slide 29: 1Q19 Copper Realization & 2Q19 Guidance
1Q19 Copper Realization & 2Q19 Guidance 1Q19 LME Average $2.82/lb Copper Price 3-Mo. Fwd Price for Copper $2.94/lb at the End of March $2.90/lb* FCX 1Q19 Consolidated Copper Price Realization (Generally, 50/50 Weight of Qtrly Avg and 3-mo Forward Price at End of Period) FCX 1Q19 Prior Period Revenue