Freeport-McMoRan, Inc. · NYSE:FCX
Freeport-McMoRan — Q1 2017 Earnings Presentation
28 slides from Freeport-McMoRan's earnings presentation, Apr 25, 2017
Slide 1: 1st Quarter 2017 Earnings Conference Call
1st Quarter 2017 Earnings Conference Call April 25, 2017 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: Driven by Value: 2016 Annual Report Highlights
“Driven by Value” 2016 Annual Report Highlights Global Team Came Together to “Prove Our Mettle” in 2016 Strengthened Balance Sheet & Liquidity Successfully Executed Operating Plans Refocused Business on Leading Position in Global Copper Industry Asset Sale Valuations Demonstrated Attractiv
Slide 4: 1Q17 Highlights
1Q17 Highlights Continued to Strengthen our Financial Free Cash Flow Trend Position ($ in mms) • Despite Production Interruptions Experienced at Grasberg -$242 +$448 Strong Cost and Capital Discipline $982* $792 Improved Market Conditions for Copper $740 Resumed Concentrate Exports in Indone
Slide 5: Copper Market Commentary
Copper Market Commentary Improved Market Fundamentals LME Copper Price • Chinese Demand Remains Strong per pound • Europe/North America Steady Improvement $3.00 $2.55 4/24/17 $2.75 Supply Side Issues in Focus • Higher than Average Disruptions YTD $2.50 • Absence of Major New Projects on the Hori
Slide 6: Showcasing Americas Portfolio
Showcasing Americas Portfolio Americas Copper Resources Key Strengths (bns of lbs) 266 Significant Current Production with Including Potential* Long-term Growth Options 137 Long-Lived Reserves Including 60 Mineralized Material* Flexible Operating Structure 2P Reserves @ $2.20 @ $2.00 Cu Contai
Slide 7: Large Development Project Inventory: Copper Sulfide Opportunities
Large Development Project Inventory Copper Sulfide Opportunities 1 km % Copper N Bagdad >=0.00% • >=0.10% >=0.20% >=0.30% Reserve Pit >=0.40% >=0.60% >=0.80% >=1.00% • Chino El Abra +0.3% Cu • • Lone Star/Safford 1 km N Reserve Pit • Morenci % Copper Sierrita >=0.00% >=0.20% • >=0.30% >=0.40% >=0.50
Slide 8: Indonesian Regulatory Matters in 2017
Indonesian Regulatory Matters in 2017 GoI Amended Regulations to enable PT-FI to Retain its COW Negotiations and Received Temporary IUPK Commencing Immediately through October 10, 2017 on Long-term Agreement GoI Issued New Mining Regulations Allowing Exports Subject to Conversion of COW to IUPK Expo
Slide 9: 1Q17 Actions – PT-FI
1Q17 Actions – PT-FI ~10% Reduction in Workforce PT-FI Free Cash Flow ($ in mm) Implemented Efficiency Programs (Cost, CAPEX) $349 Slowed Investments in Grasberg Underground Development • Current Spend of $40 MM per Month on Grasberg $218 Block Cave Being Reviewed Regularly • Prepared to Suspe
Slide 10: Grasberg Block Cave
Grasberg Block Cave World Class Design Conveyor Transfer Chamber Service Shaft Rail Car Unloading Station Train Car Test Track Hoist Room Production Levels Grasberg Block Cave Design Oblique View Looking Southwest Reserves: 964mm t @ 1.03% Cu & 0.78 g/t Au Fixed Facilities Ventilation Drifts Pump Tu
Slide 11: Financial Benefits to Indonesia
Financial Benefits to Indonesia Positive Long-term Historical Relationship Financial Benefits Breakdown 50 Year History of Operations in Indonesia ~$19 Billion Contributed +$60 Bn to National GDP in Since 1992 GOI 62% Largest Private Employer in Papua & Significant FCX Economic Engine for De
Slide 12: 2017e Outlook
2017e Outlook Copper: 3.9 Billion lbs. Sales Gold: 1.9 Million ozs. Outlook Molybdenum: 93 Million lbs. Unit Cost Site Production & Delivery: $1.55/lb of Copper After By-product Credits: $1.08/lb (1) Operating ~$4.0 Billion (@ $2.50/lb Copper for 2Q17e – 4Q17e) Cash Flows (2) Each 10¢/
Slide 13: Sales Profile
Sales Profile Copper Sales Copper(billion Sales lbs) (billion lbs) Gold Sales (million ozs) 5 4.65 3 3.9 4.0 4 4.17 2 2.3 1.9 Net of Volumes 1 3 Sold in 1.1 Tenke/Morenci Transactions 0 2016 2017e 2018e 2 Note: Consolidated gold sales include 99k ozs in 2016, 180k ozs in 2017e and 220k ozs in 2018e
Slide 14: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices Average EBITDA ($1,250/oz Gold, $9/lb Molybdenum)* $8 (US$ billions) $6 $4 $2 2017e/2018e Average $0 Cu $2.50/lb Cu $2.75/lb Cu $3.00/lb Average Operating Cash Flow (excluding Working Capital changes) ($1,250/oz Gold, $9/lb Molybdenum)* (US$ billions) $6
Slide 15: Sensitivities (US$ millions)
Sensitivities (US$ millions) 2017e/2018e Operating Change EBITDA Cash Flow Copper: (1) +/- $0.10/lb $350 $270 Molybdenum: (1) +/- $1.00/lb $50 $45 Gold: (1) +/- $50/ounce $100 $55 Currencies: (2) +/- 10% $140 $100 (1) Impacts as noted for changes in commodity prices for the period 2Q17e –4Q17e and 2
Slide 16: Capital Expenditures
Capital Expenditures (US$ billions) Future Spending Dependent on $2.8 Improvement in Market Conditions and Oil & Gas Continued Grasberg Underground Development 1.2 $1.8 $1.6 Major 0.9* Mining TOTAL 0.9* Projects MINING 1.2 1.6 Other Mining 0.7 0.9 0.4 2016 2017e 2018e * Major mining projects include
Slide 17: Restoring Balance Sheet Strength
Restoring Balance Sheet Strength Year-End 2017e Net Debt at Varying Copper Prices (US$ billions) $20.1 $20.0 $15.0 $11.8 $9.7 $10.0 $9.0 $8.4 $5.0 $0.0 12/31/2015 12/31/2016 $2.50 $2.75 $3.00 Net Debt/2017e EBITDA 1.8x 1.5x 1.2x YE 2017e Note: Sensitivity assumes $9/lb Molybdenum and $1,250/oz Gold
Slide 18: Committed to Balance Sheet Management – Strong Track Record
Committed to Balance Sheet Management – Strong Track Record (US$ billions) Manageable Near-Term Debt Maturity Schedule (1) $4 FCX Debt Structure 12/31/16 3/31/17 $3 $3.5 bn Revolver $ - $ - Sr. Notes 14.4 13.9 $2 Cerro Verde Non-Recourse $1.5 (2) Credit Facility 1.4 1.3 $1 $0.7 Bank Bilateral & Othe
Slide 19: Positive Long-term Outlook
Positive Long-term Outlook Industry Leading Experienced Team Long-lived, Financially Copper Position of Operators & Geographically Strong Developers Diverse Portfolio Executing Clearly Defined Strategy 19
Slide 20: Reference Slides
Reference Slides DRIVEN BY VALUE \eoe Freeront-McMoRan
Slide 21: Financial Highlights
Financial Highlights Sales Data 1Q17 1Q16 Copper (1) Consolidated Volumes (mm lbs) 809 1,000 Average Realization (per lb) $2.67 $2.18 Site Production & Delivery Costs (per lb) $1.60 $1.49 Unit Net Cash Costs (per lb) $1.39 $1.38 Gold Consolidated Volumes (000’s ozs) 182 201 Average Realization (per
Slide 22: 1Q 2017 Mining Operating Summary
1Q 2017 Mining Operating Summary 1Q17 Unit Production Costs Cash Unit Costs North South (per pound of copper) America America Indonesia Consolidated Site Production & Delivery $1.52 $1.48 $2.15 $1.60 By-Product Credits (0.15) (0.18) (1.88) (0.43) Treatment Charges 0.11 0.22 0.28 0.18 Royalties & Exp
Slide 23: 2017e Operating Estimates
2017e Operating Estimates 2017e Unit Production Costs (per pound of copper) North South America America Indonesia Consolidated Cash Unit Costs (1) Site Production & Delivery (2) $1.60 $1.58 $1.43 $1.55 By-product Credits (0.17) (0.17) (2.07) (0.73) Treatment Charges 0.10 0.21 0.26 0.18 Royalties & E
Slide 24: 2017e Quarterly Sales
2017e Quarterly Sales Copper Sales (million lbs) Gold Sales (thousand ozs) 1,200 750 765 500 530 1,060 440 1,020 900 975 250 182 809 0 1Q17 2Q17e 3Q17e 4Q17e Note: Consolidated gold sales include approximately 17k ozs in 1Q17, 40k ozs 600 in 2Q17e, 50k ozs in 3Q17e and 73k ozs in 4Q17e for noncontro
Slide 25: Grasberg Minerals District
Grasberg Minerals District Plan View Grasberg & Kucing Liar Grasberg Reserves* open pit DMLZ Grasberg (as of December 31, 2016) DMLZ Block Big Cave Tonnes (mm) 439 Gossan 964 DOZ Copper Grade (%) 0.9 1.03 Grasberg Block Cave Gold Grade (g/t) 0.75 0.78 Kucing Liar Amole Copper (bn lbs) 7.6 18.5 N 2,9
Slide 26: PT-FI Mine Plan
PT-FI Mine Plan PT-FI’s Share of Metal Sales, 2017e-2022e 2017e – 2022e PT-FI Share Total: 6.3 billion lbs copper Copper, billion lbs Annual Average: 1.05 billion lbs Gold, million ozs 2017e – 2022e PT-FI Share Total: 9.0 million ozs gold Annual Average: 1.5 million ozs 2.3 1.91 1.5 1.28 1.14 1.1 1.
Slide 27: FCX Debt Maturities as of 3/31/17
FCX Debt Maturities as of 3/31/17* (US$ billions) $8 Total Debt & Cash at 3/31/17 FCX Revolver $ - Senior Notes 13.9 $6 Cerro Verde ($1.3) & Other 1.5 Total Debt $15.4 Consolidated Cash $ 4.0 $4 $2.8 $2.9 $2.1 $2.4 $2 CV Non- $1.7 Recourse 5.40% & $1.1 5.45% $0.9 $0.8 $0.7 Uncommitted & Sr. Notes CV
Slide 28: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (in millions) 12 Months Ended 1Q 2017 3/31/2017 Net Income Attributable to Common Stock – Continuing Operations $193 $465 Interest expense, net 167 731 Income tax provision 174 468 Depreciation, depletion and amortization 389 2,257 Impairment of oil and gas properties