Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Freeport Mcmoran Copper & Gold — Q4 2010 Earnings Presentation
49 slides from Freeport-mcmoran's earnings presentation, Jan 20, 2011
Slide 1: 4th Quarter 2010 Earnings Conference Call
FREEPORT-McMoRAN Coprer & GoLp 4 Quarter 2010 Earnings Conference Call PROVEN PERFORMANCE January 20, 2011 FCX LISTED www .fex.com NYSE.
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
|FREEPORT-McMoRAN COPPER & GOLD Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements in which we discuss factors we believe may affect our potential performance in the future. Forward-boking statements are all statements other than statement
Slide 3: 2010 Highlights
|FREEPORT-McMoRAN COPPER & GOLD 2010 Highlights = Strong Operating and Financial Performance = Initiated Restart/Optimization Projects to Add ~500 Million Pounds of Annual Copper Production = Advanced Growth Projects/Focus on Value Creation = Substantial Reserve Additions = Enhanced Financial and Li
Slide 4: 4Q10 & 2010 Highlights
= FREEPORT-WICMORAN, 4Q10 & 2010 Highlights Sales Data 4Q10 2010 2009 Consolidated Volumes (mm tbs) 941 3,896 4,111 Average Realization (per ib) $4.18 $3.59 $2.60 Site Production & Delivery Unit Costs (per /b) $1.46 $1.40 $1.12 Unit Net Cash Costs (per /b) $0.53 $0.79 $0.55 Consolidated Volumes (200
Slide 5: Quarterly Operating Highlights
= FAEEPORT-MICMORAN COPPER & GOLD Quarterly Operating Highlights 4Q10 Unit Production Costs (per pound of copper} North South America America| Indonesia Africa Consolidated Cash Unit Costs Site Production & Delivery ( $1.65 $1.26 $1.55 $1.48 $1.46 By-Product Credits (0.44) (0.27) (2.81) (0.68) (4.14
Slide 6: LME Copper, Gold and Molybdenum Prices
FREEPORT-McMoRAN COPPER & GOLD @ 2 ‘0 LME Copper Price - ® 2 2 a3 g a o 3 g 3 ms 2 a § ro) 3 ; m 2 a rr Jane Jolene Jule Jan Jule ane Jame Jak San Jule Jan ue Jane Jule Jane Il Sn Je Jame Jue Jane Jul an. soe nm mnnnee sok eee Geo ee Ho w WH “LME and Comex, excluding Shanghai stocks, producer, consu
Slide 7: Value Creation Focus
FREEPORT-McMORAN COPPER & GOLD MINERAL RESOURCES Value Creation Focus INVESTMENT RESERVE IN ATTRACTIVE PRODUCTION ADDITIONS DEVELOPMENT GROWTH PROJECTS CASH FLOWS/ RETURNS
Slide 8: Preliminary Reserves at 12/31/10
Feanl EREEROREMeMORAN COPPER & GOLD Preliminary Reserves at 12/31/10 Consolidated Proven & Probable Reserves Reserves @ 12/31/09” Additions/revisions* Production Net change Reserves @ 12/31/10” * as % of 2010 production Reserves @ 12/31/99 Additions/revisions* Production Net change Reserves @ 12/31/
Slide 9: Copper Reserves & Mineralized Material
= FREEPORT-WICMORAN, COPPER & Goo Copper Reserves & Mineralized Material as of 12/31/10 billion Ibs of copper 12/31/10 230 Mineralized Material ©) by Geographical Region Mineralized 110 Material ©) billion (contained copper) Ibs North 120 at $2.20 Gu price America 54% Indonesia, 17% Reserves at $2.0
Slide 10: Significant Reserve Additions
Fenn) BEFORE Memon COPPER & GOLD Significant Reserve Additions Since 12/31/06 2010 Additions +43 billion Ibs Cu* Post-Merger Candelaria/ Ojos +20 billion Ibs Cu* Candelaria/Ojos Balance, net * Preliminary proven and probable reserves as of 12/21/10 totaled 120 bn ibs, and were based on a long-term a
Slide 11: Defining the Sulfide Potential
FREEPORT-McMoRAN, cents" EM Americas aS Defining the Sulfide Potential + Porphyritic +, Intrusions ,. a u
Slide 12: Development Project Update: Morenci
FREEPORT-McMoRAN, Development Project Update COPPER & GOLD North America Morenci Mill Restart & Ramp-up e Mill averaged 42K t/d during 4Q10 & 26K t/d in 2010 Increase Mine Rate e Averaged 566K t/d in 4Q10 & 484K t/d in 2010; continue ramp-up to 635K t/d e Further rate increases being evaluated Poten
Slide 13: Development Project Update: Miami and Safford
——— oe McMoRan COPPER ® GoLD 5 eye aaa rae Update S North America Miami Mine Restart ¢ Began stripping activities in 1Q10; 4Q10 mining rate of ~150K t/d ¢ Ramp up to 100MM lbs Cu/year ¢ $40MM project, primarily mining equipment e 12/31/10 reserves of ~550MM Ibs Cu* ¢ Additional drilling on-going in
Slide 14: Development Project Update: Chino Restart
———— FREEPORT-McMoRAN ov Development Project Update SS WS North America 4910 Milestones * Ahead of schedule on hiring workforce Chino Restart “1 Wine restart of mining & Initiated certain mining in milling activities advance of ramp-up of pit = «$150mm in restart costs Operations « Incremental Cu: 1
Slide 15: Development Project Update: El Abra Sulfolix
|FREEPORT-McMoRAN Development Project Update COPPER & GOLD South America El Abra Sulfolix Sulfolix First Stacking ¢ Large sulfide mineral deposit Jenuary 2011 underlying current oxide pit ¢ Project extends life 10+ years — ~300MM Ibs Cu/yr aggregate ¢ New leach pad & modifications to existing crushi
Slide 16: Cerro Verde Expansion
= FREEPORT NICMORAN — Development Project Update COPPER & GOLD South America Cerro Verde Expansion Gerro Verde Mill Facilities e Debottleneck Project = Completed $50MM project = Increased mill rate from 108K t/d to 120K t/d = 30MM lbs Cu/year of incremental metal at low cash cost e Evaluating large-
Slide 17: Grasberg Underground Development
Work continues on the development of our underground reserves. In 2010, we completed a'tecord 44 km of underground development. Significant undeveloped UG reserves = Aggregate reserves of 37 billion lbs Cu & 33 million ozs Au DOZ expanded to 80K t/d ¢ Initiated mining at Big Gossan — full rates of 7
Slide 18: Tenke Fungurume
ee a COPPER & GOLD Tenke Fungurume ° Milloperated at 11K t/d in 4Q10& 10K t/d in 2010, above 8K t/d design capacity ° Sold 68MM lbs Cu & 7MM lbs Co in 4Q10 and 262MM lbs Cu & 20MM lbs Co in 2010 ° Cu production expected to increase to 290MM lbs/year in 2011 * Potential to add additional 100-200 mm I
Slide 19: Climax Molybdenum Project Construction
FREEPORT: McMoRal COPPER & GOLD ¢ Advancing construction to provide flexibility for start-up = Completed pebble crusher & stockpile dome ring foundations = Mill foundations ready for shells & assembly commenced OS Zy # = Flotation cell foundations nearing SAG & Ball Mill completion ¢ Mine developmen
Slide 20: FCX Announced Copper Additions To Date
= FAEEPORT-MICMORAN FCX Announced Copper Additions To Date SS Additional Annual Copper +~500mm Ibs | = 400 Tenke Mill & Mine Rate Increase (2011) 0 Cerro Verde Debottleneck (2011) Chino Mine & Mill Restart ==) (ramp-up in 2012*) 100 Miami Mine Restart (2012) 125 Morenci Mill Restart & Mine Rate Incr
Slide 21: FCX Copper Projects
|FREEPORT-McMoRAN COPPER & GOLD FCX Copper Projects billion Ibs copperannually Replacement Potential New Projects Copper Sources Sulfolix SA Projects 1.4 billion Ibs Cu 1.7 billion Ibs Cu Other Opportunities ¢ Tenke Sulfides ¢ NA Mill Projects (Sierrita, Bagdad, Ajo, Safford) e Lone Star Potential t
Slide 22: Exploration Targets in Major Mineral Districts
[rani REEPORT- Memoria COPPER & GOLD Exploration Targets in Major Mineral Districts E I ti North South xploration America America in 201le 35% 33% $200 million 17% Africa Indonesia 450, Australasia & Other Areas Note: FOX's consolidated share; & = estimate, See Cautionary Statement, 22
Slide 23: 2011 Outlook
|FREEPORT-McMoRAN COPPER & GOLD 2011 Outlook >» Sales Outlook: ° Copper: 3.85 Billion Ibs. ¢ Gold: 1.4 Million ozs. « Molybdenum: 70 Million Ibs. >» Unit Net Cash Cost (1): © $1.10/Ib ~$8 Billion (@$4.25 copper) « Each 10¢/lb Change in Copper = $300 MM in 2011 >» Operating Cash Flows ©): >» Capital
Slide 24: Near-Term Sales Profile
FREEPORT MICMORAN COPPER & GOLD Near-Term Sales Profile Excludes current projects under evaluation Copper Sales (billion Ibs) 2010 2011e 2012e 2013e ‘Foier Coasoliaed copper sles include spprovimately 756s fs in 2010, 740 opm bs ip 20t2, 760 mm fe in bie, and 775 mm fin 2013e Fr noncontoling interes
Slide 25: Projects Under Evaluation
|FREEPORT-McMoRAN COPPER & GOLD Projects Under Evaluation North America e Further increases to Morenci/Safford mining rates e Plans for Twin Buttes/Sierrita district ¢ Climax Start-up timing ¢ Major mill projects for sulfide development South America e Major expansion at Cerro Verde e El Abra mill p
Slide 26: Quarterly Sales Profile 2011e
FREEPORT MICMORAN COPPER & GOLD 800 1,250 600 425 385 1,035 1,015 400 325 295 1,000 300 0 1gile 2Qlie aQuie aQuie 750 ‘Rater Consolidated got sales iol approsimately 35k ors in 4Qtse, 30k ozs n ZOE, 2k ozs in 2G4e and 38k oz in St fer noncontling interest. 500 Molybdenum Sales (million ibs) 25 250 2
Slide 27: 2010 and 2011e Sales by Region
= FREEPORT NICMORAN COPPER & GOLD 2010 and 2011e Sales by Region 2010 Sales by Region North America South America Indonesia Africa a 4214 18 262 20 O14 Cu Co Au F momlbs mmlbs 201 1e Sales by Region North America South America Indonesia Africa 1,230 320 1,020 = 285 20 O41 Cu Co Au A, momlbs momlbs (
Slide 28: 2010 and 2011e Unit Production Costs by Region
|FREEPORT-McMoRAN COPPER & GOLD 2010 and 2Z01le Unit Production Costs by Region 2010 per pound of copper) america Ament Indonesia _ Africa Consolidated Cash Unit Costs Site Production & Delivery $1.50 $1.21 $1.53 $1.40 $1.40 By-product Credits (0.35) (0.21) (1.92) (0.58) (0.81) Treatment Charges 0.0
Slide 29: Reconciliation of Unit Cash Costs
|FREEPORT-McMoRAN COPPER & GOLD Reconciliation of Unit Cash Costs Consolidated ¢ per Ib of copper 2010 79¢ Grasberg, primarily lower volumes (a) 21 North America (b) 6 South America (c) 4 Africa 0 Total 31 2011e 110¢ (@) lower sales volumes and higher commoalty-based input costs; copper and gold vol
Slide 30: EBITDA and Cash Flow at Various Copper Prices
Feanl EREEROREMeMORAN : COPPER & GOLD EBITDA and Gash Fi 1OW at Various Gopper- Prices Average EBITDA* ($1,200 Gold & $12 Molybdenum) $15 (USsbillions) $12 $9 $6 $3 $0 - Cu $3.50/Ib Cu $4.00/Ib Cu $4.50/Ib Average Operating Cash Flow (excluding Working Capital changes)* ($1,200 Gold & $12 Molybdenum
Slide 31: Sensitivities
= FAEEPORT-MICMORAN COPPER & GOLD Sensitivities Operating Change EBITDA Cash Flow (058 millions} Copper: -/+ $0.10/Ib $375 $260 Molybdenum: -/+ $1.00/Ib $60 $50 Gold: -/+ $50/ounce $70 $40 Diesel: -/+ 10% $70 $40 Purchased Power™: -/+ 10% $45 $25 Currencies™: +/- 10% $120 $70 (a) $2.B/galion base ca
Slide 32: Capital Expenditures
Fenn) BEFORE Memon . COPPER & GOLD Capital Expenditures © Excludes current projects under evaluation (US$ billions) $3.0 mMajorProjects mAllOther $2.5 $2.5 $2.1 $2.0 $1.55 $1.0 $0.5 $0.04 2010 2011e 2012e (1) Capital ewenditure estimates willcontiwe to be reviewed andrevisad subject to market condit
Slide 33: Debt Repayment and Liquidity
Fenn) BEFORE Memon . COPPER & GOLD Repaid $2.6 bn in Debt Since a ‘ent ee YE 2008 (35% Reduction) Significant Liquidity Strong Credit Metrics No Near-term Maturities Investment Grade Rated by S&P, Moody's, Fitch $15 Total Debt At Time of PD Acquisition 12/31/08 12/31/10 in March 2007 (1) Pro Forma y
Slide 34: Investment in McMoRan Exploration Co. (MMR)
|FREEPORT-McMoRAN COPPER & GOLD Investment in McMoRan Exploration Go; (MMR) = Completed Purchase of $500 MM in MMR 524% Perpetual Preferred Stock on 12/30/10 « Preferred Stock Convertible Into 31.25 MM Shares of MMR Common Stock at $16 per share = Several High Potential Wells in Progress = Opportuni
Slide 35: Financial Policy
|FREEPORT-McMoRAN COPPER & GOLD Financial Policy = Maintain Strong Balance Sheet & Liquidity Position =» Invest in Attractive Growth Projects = Opportunistic Debt Repayment = December 2010 Board Actions » $1.00/Share Supplemental Common Stock Dividend (Paid December 2010) * 2-for-1 Stock Split (Effe
Slide 36: FCX Investment Summary
|FREEPORT-McMoRAN COPPER & GOLD 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 Significa
Slide 37: Slides
Slides
Slide 38: PT-FI Mine Plan
|FREEPORT-McMoRAN COPPER & GOLD PT-FI Mine Plan PI-Fil's Share of Metal Sales, 2011e-2015e 2011¢e—2015e PT-FI Share Total: 5.9 billion Ibs copper BE copper, billion Ibs Annual Average: 1.2 billion Ibs |) Gold, million ozs 2011e — 2015e PT-FI Share Total: 8.3 million ozs gold Annual Average: 1.7 mill
Slide 39: Grasberg Open Pit
Grasberg Open Pit
Slide 40: Mining Sequence in 2011
— —————— ORT-MicMORAN ore! Mining Sequence in 2011 Copper Equivalent Cross Section A 8E and 9N are the Primary Ore Pushbacks in 2011 5 Grasberg Plan View Legend: mm 0.25- 0.99% CuEq mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq >3.00% CuEq “ON is in ore north of this cross-section 40
Slide 41: Mining Sequence in 2011
—— —————— EEPORT-MICMORAN ore! Mining Sequence in 2011 Copper Equivalent Cross Section A 8E and 9N are the Primary Ore Pushbacks in 2011 5 Grasberg Plan View Legend: mm 0.25- 0.99% CuEq mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq >3.00% CuEq “ON is in ore north of this cross-section 41
Slide 42: Mining Sequence in 2011
EEPORT-MICMORAN _ ore! Mining Sequence in 2011 Copper Equivalent Cross Section A 8E and 9N are the Primary Ore Pushbacks in 2011 5 Grasberg Plan View 0.25 - 0.99% CuEq 1.99% CuEq 2.99% CuEq uEq “ON is in ore north of this cross-section 42
Slide 43: Mining Sequence in 2011
— —————— EEPORT-MICMORAN ore! Mining Sequence in 2011 Copper Equivalent Cross Section A 8E and 9N are the Primary Ore Pushbacks in 2011 5 Grasberg Plan View 0.25 - 0.99% CuEq 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq “ON is in ore north of this cross-section 43
Slide 44: Mining Sequence in 2012
————— EEPORT-MICMORAN _ ore! Mining Sequence in 2012 Copper Equivalent Cross Section Grasberg Plan View 0.25 - 0.99% CuEq 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq
Slide 45: Mining Sequence in 2013
—————— EEPORT-MICMORAN COPPER & GOLD Mining Sequence a 2013 Copper Equivalent Cross Section Grasberg Plan View 0.25 - 0.99% CuEq 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq
Slide 46: Mining Sequence in 2014
— —————— EEPORT-MICMORAN COPPER & GOLD Mining Sequence a 2014 Copper Equivalent Cross Section 9N and 9S are the Primary Ore Pushbacks in 2014 Grasberg Plan View Leaend: 0.25 - 0.99% CuEq mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq
Slide 47: Mining Sequence in 2015
— —————— EEPORT-MICMORAN COPPER 2 GOLD Mining Sequence a 2015 Copper Equivalent Cross Section 9S is the Primary Ore Pushback in 2015 Grasberg Plan View Leaend: 0.25 - 0.99% CuEq mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq
Slide 48: Mining Sequence in 2016
FAEEPORT-McMORAN = z =“ Mining Sequence in 2016 Copper Equivalent Cross Section 9S is the Primary Ore Pushback in 2016 Grasberg Plan View Leaend: 0.25 - 0.99% CuEq mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq
Slide 49: Site Operating Costs by Category
EEPORT-McMoRAN: COPPER & GOLD Site Operating Costs by Category Consolidated Materials 34% Manpower 30% 2010 Note:e =estinate.See Cautionary Statement. i 49m
Freeport Mcmoran Copper & Gold — Q4 2010 Earnings Presentation on 6ix