Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Freeport-McMoRan Copper & Gold — JPMorgan 2007 High Yield Conference
34 slides from Freeport-mcmoran's conference presentation, Jan 22, 2007
Slide 1: 2007 High Yield Conference
FCX Cu Freeport- McMoRan Copper Au Gold 2007 High Yield Conference Miami, Florida Kathleen L. Quirk Senior Vice President & Chief Financial Officer January 22, 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 and and Phelps Phelps Dodge. Dodge. When When used used in in this this document, document, the the words
Slide 3: Important Information for Investors and Stockholders
Important Information for Investors and Stockholders FCX FCX andand Phelps Phelps Dodge Dodge filedfiled aa joint joint proxy proxy statement/prospectus statement/prospectus with with the the SEC SEC inin connection connection withwith the the proposed proposed merger merger on on December 11, 2006.
Slide 4: FCX's Grasberg
FCX’s Grasberg World Class Copper and Gold Mine Long Lived Payable Reserves - Copper – 38.7 Billion lbs - Gold – 41.1 Million ozs High Volume/ Low Cost Production Future Growth Potential from Exploration Continuous Operations Since 1972 – 50-Year COW Responsible Environmental Management
Slide 5: Grasberg
Grasberg 5 5
Slide 6: FCX Operating Cash Flows and Capital Expenditures
FCX Operating Cash Flows and Capital Expenditures ($ in millions, except realized prices) $2,000 Operating Cash Flows Capital Expenditures $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 $1.02/ 94¢/ 73¢/ 75¢/ 82¢/ 69¢/ 71¢/ 82¢/ $1.37/ $1.85/ $3.1
Slide 7: Significant Debt Reduction
Significant Debt Reduction ($ in billions) FCX Ending Net Debt (Cash) (1) $3.0 $2.9 $2.5 $2.0 $1.5 $1.0 $0.5 ($0.2) $0.0 2000 2006 ($0.5) (1) Debt and commodity preferreds net of cash and restricted investments. Includes $253 million of debt guaranteed in 2000 which was subsequently assumed and repa
Slide 8: Summary Financial Data
Summary Financial Data ($ in millions, except avg. realized prices and percentages) 2004 2005 2006 Pricing (Cu/Au) $1.37/$412 $1.85/$456 $3.13/$606 (Avg. Realized Prices) Revenues $2,372 $4,179 $5,791 EBITDA $910* $2,429 $3,096 EBITDA Margin 38% 58% 53% Operating Cash Flow $341 $1,553 $1,866 Interes
Slide 9: FCX Capitalization and Credit Statistics
FCX Capitalization and Credit Statistics ($ in millions) 12/31/06 Cash and Cash Equivalents $ 907 Debt: Infrastructure, Equipment & Other $ 60 Senior Notes 613 Convertible Notes ___ 7 Total Debt $ 680 Total Net Debt/(Cash) $ (227) Market Value of Equity @ $54/share $10,638 5.5% Convertible Perpetual
Slide 10: FCX Debt Maturities
FCX Debt Maturities ($ in millions) $1,000 December 31, 2006 Cash $ 907 Less Debt ($680) $800 Net Cash $ 227 $600 $400 $340 $282 6⅞% 10⅛% Senior $200 Senior Notes Notes Due Callable 2014 $19 $14 $14 1Q07 $11 $0 2007 2008 2009 2010 2011 Thereafter Equipment Loans Atlantic Copper Senior Notes Converti
Slide 11: 2007 Outlook
2007 Outlook Sales of 1.1 Billion lbs. Copper, 1.8 Million ozs. of Gold Continuation of Strong Cash Flows At Prices of $2.50/lb. Copper and $600/oz. Gold, Full Year Operating Cash Flows Would Exceed $1.3 Billion(1) (1) Each 10¢ change in copper would impact this estimate by approximately $55 M
Slide 12: PT-FI Mine Plan
PT-FI Mine Plan PT-FI’s Share of Metal Sales, 2007e-2011e Copper, billion lbs Gold, million ozs 2007e – 2011e PT-FI Share 2007e – 2011e PT-FI Share Total: 6.2 billion lbs Total: 8.9 million ozs Annual Average: 1.24 billion lbs Annual Average: 1.8 million ozs 2.1 2.0 1.8 1.5 1.5 1.4 1.3 1.3 1.1 1.1 2
Slide 13: FCX Operating Cash Flows at Varying Copper & Gold Prices
FCX Operating Cash Flows (Annual Avg. 2007e-2011e) at Varying Copper & Gold Prices ($ in millions, except copper and gold prices) $2,000 $1,500 2007e-2011e Avg. Operating Cash Flows $1,000 $500 $0 $1.50 $2.00 $2.50 $3.00 $400 $500 $600 $700 $500 $2.00 Copper Sensitivities Gold Sensitivities * 5-year
Slide 14: FCX Capital Expenditures
FCX Capital Expenditures ($ in millions) Long-term 2007e – 2011e Annual Average ~ $275 Million Projects* $400 $340 $251 $240 $200 $200 $200 $180 $122 $125 $60 $70 2006 2007e 2008e 2009e 2010e 2011e e = estimate. Amounts are projections; see cautionary statement. * Includes PT-FI’s share of capital e
Slide 15: Transforming FCX Acquisition of Phelps Dodge
FCX FCX Cu Freeport- Freeport- McMoRan McMoRan Copper Au Transforming FCX Gold Acquisition of Phelps Dodge Creating the World’s Largest Publicly Traded Copper Company FREEPORT-MCMORAN COPPER & GOLD INC. www.fcx.com
Slide 16: Transaction Highlights
Transaction Highlights ¾ Creates 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 Adding Value Through Exploration
Slide 17: Transaction Summary
Transaction Summary Price: ¾ Freeport-McMoRan Copper & Gold (“FCX”) to acquire Phelps Dodge for $126.46 per share, based on FCX’s closing price of $57.40 on November 17, 2006 ¾ Total transaction value of $26 billion Premium: ¾ Premium of 33% to Phelps Dodge’s closing price on November 17, 2006 Struc
Slide 18: The Right Time
The Right Time 18
Slide 19: 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 20: The Right Assets
The Right Assets 20
Slide 21: Geographically Diverse, Long-Lived Asset Base
Geographically Diverse, Long-Lived Asset Base Major Mine Operations & Development Projects All major assets majority-controlled and operated North North America America11 Grasberg (90.6%) Copper Reserves Reserves Cu 25.2 billion lbs Copper/Gold/Silver Cu 36.5 billion lbs Mo 1.7 billion lbs Molybdenu
Slide 22: Pro Forma Reserves and Production
Pro Forma Reserves and Production 2006E Production by Geography Pro forma Indonesia 35% North America Net 42% Reserves Consolidated interest Copper (billion lbs) 87.6 75.0 Molybdenum (billion lbs) 2.0 1.9 Gold (million ozs) 45.4 41.0 Average Production Volumes (2006-2010) Peru Copper (billion lbs) 4
Slide 23: Enhanced Diversification
Enhanced Diversification 2005 Mining Revenue by Commodity FCX Phelps Dodge Pro Forma FCX Gold Molybdenum 10% 23% Gold Copper Molybdenum 32% 68% 16% + = Copper Copper 77% 74% 2005 Mining Revenue by Geography FCX Phelps Dodge Pro Forma FCX Peru 5% Indonesia 35% Chile + = Indonesia 21% 100% North Ameri
Slide 24: Additional Development Upside
Additional Development Upside Henderson/Climax (100%) • Henderson production capacity increased Morenci (85%) to 40 MM lbs Mo/year from 32MM lbs Mo Grasberg (90.6%) • Mill restart and • DOZ expansions (50K t/d & 80K t/d) • Possible 2009 restart of Climax at 20- concentrate leach project 30MM lbs Mo/
Slide 25: Significant Exploration Potential
Significant Exploration Potential Papua, Indonesia Papua, Indonesia Pacific ¾ Rights to 2.2 million acres Ocean ¾ Highly prospective exploration areas provide opportunities to continue to add to our long- Grasberg lived reserves Banda Papua, Sea Indonesia Papua Arafura New Guinea Tenke Fungurume, Se
Slide 26: The Right Company
The Right Company 26
Slide 27: World's Leading Public Copper Company
World’s Leading Public Copper Company Top 10 Copper Producers (2006E) (1) (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 BHP Billiton Xstrata Rio Anglo Southern KGHM RAO Kazakhmys FCX Tinto
Slide 28: Pro Forma FCX — Growing Sales Profile
Pro Forma FCX — Growing Sales Profile Copper Sales (billion lbs) Gold Sales (million oz) 5 3 4.6 4.6 4.5 2.2 1.9 2.0 1.9 2 1.8 4.1 4 3.7 1 0 3 2006E 2007E 2008E 2009E 2010E 2 Molybdenum Sales (million lbs) 100 85 75 80 80 1 80 69 60 40 20 0 0 2006E 2007E 2008E 2009E 2010E 2006E 2007E 2008E 2009E 201
Slide 29: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices Average Annual 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) $6 (US$ billions) $5 $4 $3 $2 $1
Slide 30: Sensitivity to Commodity Prices
Sensitivity to Commodity Prices Annual Financial Impact Change in metal price Net income EPS Copper: -/+ $0.20/lb $500 $1.50 Molybdenum: -/+ $2.00/lb $80 $0.24 Gold: -/+ $50/ounce $50 $0.15 ____________________ Note: Annual financial impact based on estimated average annual production for 2007-2010
Slide 31: Pro Forma Capital Expenditures
Pro Forma Capital Expenditures (US$ millions) $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2006E 2007E 2008E 2009E Sustaining Long-term projects 31
Slide 32: Significant Debt Reduction
Significant Debt Reduction Year-End Net Debt at Varying Copper Prices (US$ billions) $16 $14.9 $14 $12.7 $12 $10 $9.2 $8 $5.8 $6 $4 $2 $0 2007-2009 Average Copper Price $2.00 $2.50 $3.00 Net Debt/2007-2009 Average EBITDA 2.2x 1.2x 0.6x Pro Forma Pro Forma YE 2006 YE 2009 ____________________ Note: S
Slide 33: Financial Policy
Financial Policy ¾ FCX is Committed to Maintaining a Strong Financial Position ¾ Combined Company Will Invest in Future Growth Opportunities with High Rates of Return Aggressively Seek to Reduce Debt Incurred in the Acquisition Using the Substantial Cash Flows Generated From the Combined Busines
Slide 34: Transaction Highlights
Transaction Highlights ¾ Creates 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 Adding Value Through Exploration
Freeport-McMoRan Copper & Gold — JPMorgan 2007 High Yield Conference on 6ix