Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Q3 2015 Earnings Presentation
38 slides from Freeport-mcmoran's earnings presentation, Oct 23, 2015
Slide 1: 3rd Quarter 2015 Earnings Conference Call
HE Freepont-McMoRan 3rd Quarter 2015 Earnings Conference Call October 22, 2015 VALUE AT OUR CORE FCX [LISTED] NYSE fex.com
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
[| FREEPoRT-McMoRan Cautionary Statement Regarding Forward-Looking Statements VALUE AT OUR CORE ato cans rd eng, ates) CX oes pert a perpen, Formac haley alamen a Zatements athe ton statements of tora fects, such 2s projections or expecatons retin t ore grades and ming rete, production end sles Toki
Slide 3: 3Q15 Highlights
15 Highlights Prudently Managing Short-Term Risk/ Positioning for Long-Term Success = Aggressive Cost & Capital Expendi' M in Weak and Uncertain Market Environment = Enhanced Outlook for Free Cash Flow Generation Beginning in 2016 4 = Cerro Verde Start-up and A from Ii Reduce Risks Government = Posi
Slide 4: Copper Market Commentary
= FREEPORT-McMoRan Copper Market Commentary = Copper Averaged $2.39 per Pound in 3Q 2015 - Trading Range: $2.21* - $2.62 China’s Demand Remains Significant - Copper Consumption Still Increasing = The U.S. and Europe are Recovering Slowly - Autos Remain Positive -€ _ sa Price Volatility Creating Shor
Slide 5: $1.6 Billion (29%) Reduction in 2016e Consolidated CAPEX
$1.6 Billion (29%) Reduction in 2016e Consolidated CAPEX Mining = Mine by Mine Review to Optimize Cash = $1.8 Billion Reduction (31%) of Flow with Low Prices CAPEX in 2016 and 2017 = Reductions: = Deferring Investments in - 250 mm lbs of Copper per Annum (~5%) Several Prop - 20 mm lbs of Moly per An
Slide 6: Revised Mine Operating Plans
|==ve FREEPORT-McMoRan Revised Mine Operating Plans VALUE AT OUR CORE * 50% reduction in rates at Tyrone Suspension of mining at Miami Mine Reduced mining at other NA operations Plan * 50% reduction in stacking rates at El Abra : : 3 Pei Changes 35% reduction in Mo at Henderson o 50% reduction in ra
Slide 7: Positioned for Margin & Free Cash Flow Growth
Positioned for, Margin & _ Free Cash Flow Growth Declining Unit Net Consolidated Gash Cost Profile Operating Cash Flow aes Profi ile (billions of Ibs) (Sper lb) 27% Increase 24% Decrease 106% Increase 37% Decrease $6.8 5.2 4.1 $1.52 $115 2015e” 2016e” 2015e” 2016e” 2015e” 2016e” 2015e 2016e w 020mm
Slide 8: Strong Project Execution
[--0 FREEPoRT-McMoRan Strong Project Execution VALUE AT OUR CORE Tenke Fungurume Morenci Cerro Verde Phase II E ion V = Achieved Full Rates in 1913 = Incremental Copper: 150 mm lbs/yr = Second Sulphuric Acid Plant Nearing Completion = Achieved Full Rates in 2Q15 = Incremental Copper: 225 mm Ibs/yr v
Slide 9: Cerro Verde Mill Expansion
= FREEPORT-McMoRan Cerro Verde Mill Expansion World's Largest Concentrating Facility VALUE AT OUR CORE
Slide 10: Cerro Verde Mill Expansion: Status
Cerro Verde Mill Expansion: Stat us as oy October, 22 ane 240K t/d Concentrating Facility Primary Secondary Tertia Crushing Crushing Crushing Grinding Flotation Number 2 8 8 6 6 Rows ofUnits Crushers MP1250s HPGRs Ball Mills (per Ball Mill) Capacity per uni (00's t/d) Concentrate Handling E> Tails i
Slide 11: Grasberg BC & DMLZ Underground Mine Development
Grasberg BC & DMLZ. _ Underground Mine Development ¢ Completed development of access to underground ore bodies ¢ Production commenced from DMLZ in 3Q15 & expect start-up of Grasberg BC in 2018 DMLZ First Production e Key development activities include work on ore flow systems & Grasberg BC shaft ¢ D
Slide 12: Indonesian Matters
_ Indonesian Matters = Government Currently Developing E ic Stimul - Includes Revisions to Mining I Employment Growth to Promote jic and = Government Assured PT-FI that it Will Approve Extension of Operations Beyond 2021 with Legal & Fiscal Certainty “Regarding PTFI’s proposal of contract extension,
Slide 13: Portfolio of Large-Scale Mines
[--0 FREEPoRT-McMoRan > Rs A S, Portfolio of JLo eI! Scale Mines "VALUE AT OUR CORE * Grasberg & Morenci (100%) capable of producing over 1 bin Ibs/annum, Cerro Verde ramping up to 1 bin Ibs/annum and El Abra & Tenke have potential to produce 1 bin /bs/annum
Slide 14: Board Review of Strategic Alternatives for Oil and Gas Business
| FREEPORT-McMoRan Board Review of Strategic Alternatives. for Oil and Gas Business fate eau cone = Achieve Self-Funding of Business OBICCuVCS = Pursue Alternatives to Enhance Value to FCX Shareholders = High-Quality Asset Base = * Attractive Inventory of Low Risk Development Opportunities Business
Slide 15: FM O&G 3Q 2015 Highlights
[==] FREEPoRT-McMoRAn FM O&G 3Q 2015 Highlights 3Q15 EBITDA: $0.3 Billion; 2015 Sales =/13/2 MMBOE Trailing 12 Months: $1.3 Billion GOM Positive Drilling Results in Deepwater ae GOM De-risk Business Plan California - Horn Mountain Deep 23% - King - 2 Wells Field Develo Continued at Heidelberg and Ho
Slide 16: Deepwater GOM Infrastructure with Excess Capacity
Deepwater GOM Infrastructure Z with Excess Capacity ae Total Processing Capacity of ~250 MBbI of Oil/da y Marlin Horn Mountain 100% Owned 100% Owned Holstein 100% Owned 3Q15 Sales: 9 MBOE/d Oil Capacity ~11% Utilization + 75,000 BOPD + 72,000 MCFD Drilled Wells in Inventory: 3 Drilled Wells in Inven
Slide 17: Deepwater Gulf of Mexico Focus Areas
=vy FREEPORT-McMoRan “ = 6/ : ie fs 2 os S C4 =F Deepwater Gulf of Mexico Focus Areas. — Peli B Holstein Wi acicg iF V Regthley Canyon Cal ( 1 wk 2] See EAs Se are
Slide 18: Deepwater GOM Production Growth
[en FREEPorT-McMoRan Deepwater GOM Prodicuenae, g Z _ From Strategic Focus, Wee = i le Drilled 13 Successful 100% Owned Wells Since 2014; | 3 Placed on Production; Others to Support Near-term Growth — Projected Startup 2015 2016 2017 bad Marlin (MC Area) Horn Mtn. (MC Area) Horn Mtn. (MC Area) = Kin
Slide 19: 2015 Sales Outlook and Unit Cost
Sales Outlook Unit Cost = Copper: 4.1 Billion Ibs. = $1.52/Ib@ of Copper = Gold: 1.2 Million ozs. = $19/BOE = Molybdenum: 90 Million Ibs. * Oil Equivalents”: 52.7 MMBOE (~67% Oil) Operating Cash Flows Capital Expenditures = ~$3.3 Billion (@$2.40/Ib Copper for = $6.3 Billion Remainder of 2015) - $3.5
Slide 20: Sales Volumes 2014-2017e
2014 2015e 2016e 2017e Oil & Gas Sales (MMBOE) 75 7 2014 2015e 2016e 2017e Congoldated cooper sales nclide 715mm bs n 2014, 695mm bs n 20158 1,020 mmbs in '980 mm Bs hn 2017e for noncontroling nterest; secidespurcased eppoet 21s4ncuded 268m bs oF copper ses fom Candetsra/Qjos, which was sold in Nove
Slide 21: Cash Unit Costs 2015e
[==] FREEPoRT-McMoRAn ind of copper) uth ae ‘ America America _ Indonesia Africa Consolidated Cash Unit Costs Site Production & Delivery 2 $1.71 $1.59 $2.34 $1.60 $1.79 By-product Credits (0.13) (0.05) (1.87) (0.50) (0.48) Treatment Charges 0.12 0.19 0.30 = 0.15 Royalties & Export Duties : - 0.29 0.
Slide 22: 2016e/2017e Average Operating Cash Flow Sensitivity
$6 2016e/2017e $3 Average $0 + Cu $2.25/Ib Cu $2.75/Ib Cu $3.25/Ib ling Working Capital changes) A ig ing Cash Flow ($1,200 Gold, $6 Molybdenum & $56 Oil) $9 (Uss bilions) 2016e/2017e Average Cu $3.25/Ib Cu $2.25/Ib Cu $2.75/Ib ‘Note: For 2016¢/2017e average, each $50/e2 change i gold approximates $
Slide 23: Sensitivities to Price Changes
Change Copper: +/- $0.10/Ib Molybdenum: +/- $1.00/Ib Gold: +/- $50/ounce Oil Sales: +/- $5/bbI” Oil Sales Net ve Diesel Costs:@7 +/- $5/bbI Natural Gas: +/- $0.50/Mcf Currencies: +/- 10% $125 (2)Amounts are net of mning cost mpacts of a $5/bb! change in ol prices. $90 (@) U.S. Dolar Exchange Rates:
Slide 24: e= estimate. See Cautionary Statement.
e= estimate. See Cautionary Statement. 24
Slide 25: At-the-Market (ATM) Equity Programs
| FREEPO 'T-McMoRar _At-the-Market (ATM) Equity Programs = Announced $2 Billion in ATM Equity Programs During 3Q15 - Further Step to Strengthen Balance Sheet and Liquidity = Raised Gross Proceeds of $1.2 Billion Through the Sale of 114.8 Million Shares of Common Stock ($10.63 per Share) To Date - In
Slide 26: Strong Track Record
‘Srrang Track Record = Large Resource Base with Strong Cash Flows and Capital Discipline Net Debt as of 9/30/2015 (G in bns) = Aggressive Actions to Protect Balance Sheet $20.4 = Increasing Volumes & Declining CAPEX Profile Will Enhance Credit Metrics = Strong Liquidity Position and Outlook for Dele
Slide 27: Positioned to Build Long-Term Value for Shareholders
Positioned to Build Longer Value for Sharenojders: = Established Long-lived Reserves = Large-Scale Current Production Base = Significant Portfolio of Undeveloped Resources = Global Organization of Highly Qualified Dedicated Workers and Management = Prudent M. inR to Current Weak Market Conditions =
Slide 28: Reference Slides
{-:0 FREEPORT-McMoRan Reference Slides
Slide 29: Sales Data
Sales Data Copper Consolidated Volumes (mm Ibs) Average Realized Prices (per Ib) Site Production & Delivery Costs (per Ib) Unit Net Cash Costs (per Ib) old Consolidated Volumes (000's ozs) Average Realized Prices (per 0z) fit Consolidated Volumes (MMBOE) Realized Revenues (per BOE)” Cash Production
Slide 30: Cash Unit Costs and Mine Sales by Region
Cash Unit Costs North South - . (per pound of copper) America America Indonesia Africa Cc Site Production & Delivery $1.68 $1.54 $2.16 $1.63 $1.74 By-Product Credits (0.12) (0.04) (1.59) (0.53) (0.44) Treatment Charges 12 0.18 0.31 - 0.15 Royalties & Export Duties - - 0.30 0.05 0.07 Unit Net Cash Co
Slide 31: Copper, Gold and Oil & Gas Sales
Copper Sales (million Ibs) 1,200 1,000 — 800 600 400 200 Gold Sales (thousand ozs) 400 5 B52 19152015 3Q15 4Q15e Note: Consolidated gold sales | approximately 24 ozs in 1015, Kors in 2015, 2kozsin Disa ‘028in 4Q15e for noncontroling interest. 1015 2Q15 3Q15. 4Q15e Note: Consol ck rosa sm bs 108 a Be
Slide 32: PT-FI Share of Metal Sales
a FREePort-McMoRan PT-FIs Share of Metal Sales, [5e-2022€ 2015¢ — 2019e PT-FI Share Total: 5.7 billion Ibs copper copper, billion Ibs Annual Average: 1.14 billion lbs — |. Gold, million ozs 2015e — 2019e PT-FI Share Total: 7.7 million ozs gold Annual Average: 1.54 million ozs os if a cae - j au ih v
Slide 33: Life-of-Mine Production Sequence
Life-of-Mine Production Sequens 1 £790 mt 039696 bur & 4.06 a) Grasberg: ‘open pit 4.0120 mt 1.00% Cu &0.77 g/t A DDO DE i a Grasberg RUCIIGTITS 7 2585 E1070) AU, i Hut Block Cave COW Term, including extensions 2015 2017 2019 2021 202 22 227 2029 2031 203 203 2037 2039 2041 Big Gossan Spur 4 N Porta
Slide 34: Significant Copper Resources & Potential
ns ee Sig ignificant Copper esources & Potential billion Ibs of copper : ‘uture Resource Reserves* H 1 0 4. Development Opportunities 2 + El Abra Mineralized = North America Sulfides Material**, = Tenke (contained Cu) Reserves & Mineralized Reserves 207 Material Potential*** bk (contained Cu) —/ Res
Slide 35: 3Q 2015 Oil & Gas Margins by Region
3Q 2015 Ojl & Gas Margins by Region 5 5 Haynesville/ Operating Margin per BOE Sionids Maier ten e Realized Revenue $39.84 $16.20 $38.99 $43.00 Cash Production Costs 32.82 9.49 15.96 18.85 Cash Operating Margin $7.02 $6.71 $23.03 $24.15 015 Oil & Gas Sales by Region California GOM 103 MBOE/D Haynesvi
Slide 36: Oil & Gas Operating Costs and Pricing by Region
Operating Cost: $2.05/Mcfe California Pricing: NYMEX Operating Cost: $31/bbI Gulf of Mexico Operating Cost: $16/bbI Pricing: HLS/NYMEX (Se Oil & Gas Sales by Region Madden/Other 37 143 jc. b a. De. § Includes ~6 MBbI/d of NGLS and GOM Shel/tT Production NOTE: Operating costs exclude DDS and Gi. DD (
Slide 37: Adjusted EBITDA Reconciliation
[| FREEPoRT-McMoRan Adjusted EBITDA Reconciliation VALUE AT OUR CORE (in millions) 12-Month 3Q 2015 Trailing Net loss attributable to common stock $(3,830) (11,007) Interest expense, net 163 605 Income tax benefit (360) (2,452) Depreciation, depletion and amortization 888 3,656 Impairment of oil and
Slide 38: O&G Adjusted EBITDA Reconciliation
FREEPORT-McMoRan O&G Adjusted EBITDA ReconGiiation VALUE AT OUR CORE Gamillions) 12 Month 3Q 2015 Trailing Net loss before income taxes +$(3,969) +$(15,340) Interest expense, net Be 169 Depreciation, depletion and amortization 451 2,021 Impairment of oil and gas properties 3,652 14,588 ” (280) Other