Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Freeport-McMoRan Copper & Gold — Bank of America Merrill Lynch Global Metals, Mining & Steel Conference 2013
33 slides from Freeport-mcmoran's conference presentation, May 14, 2013
Slide 1: Global Metals, Mining & Steel Conference 2013 Barcelona
EXPANDING RESOURCES Global Metals, Mining & Steel Conference 2013 Barcelona Richard C. Adkerson President & CEO May 14, 2013 www.fcx.com
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
EXPANDING RESOURCES 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 those statemen
Slide 3: Additional Information About the Pending Transactions and Where to Find It
EXPANDING RESOURCES Additional Information About the Pending Transactions and Where to Find It PXP Transaction In connection with the proposed transaction, FCX has filed with the SEC a registration statement on Form S-4 that includes a definitive proxy statement of PXP that also constitutes a prospe
Slide 4: Expanding Resources: 2012 Annual Report Highlights
EXPANDING RESOURCES “Expanding Resources” 2012 Annual Report Highlights Established, Long-Lived Reserves Geographically Diverse AR Low Costs/Strong Margins COVER Growing Production/Cash Flow Profile Asset Base to Strengthen Through Pending Acquisitions of North American Based Oil & Gas Ass
Slide 5: Key Strengths
EXPANDING RESOURCES Key Strengths Operational Excellence Track Record for Reserve Additions Brownfield Development & Organic Growth Opportunities World Class Assets with Exposure to Supply Constrained Markets Disciplined Investments & Prudent Capital Allocation Focused on Returns Firmly Focused on C
Slide 6: 1Q13 Highlights
EXPANDING RESOURCES 1Q13 Highlights Strong Operating Performance Globally Productivity Improvements at Grasberg Advanced Brownfield Development Projects - Completed Second Phase Expansion at Tenke - Advancing Morenci Mill Expansion - Commenced Initial Construction at Cerro Verde Completed Hi
Slide 7: Pending Oil & Gas Acquisitions
EXPANDING RESOURCES Pending Oil & Gas Acquisitions Good Strategic Fit High Quality U.S. Focused Assets - Strong Oil Margins & Hedge Protected Cash Flows - Financially Attractive & Complimentary Growth Profile - Attractive Portfolio of Exploration Prospects - Positive Market Fundamentals Attrac
Slide 8: Reasons for PXP Shareholders to Support Transaction
EXPANDING RESOURCES Reasons for PXP Shareholders to Support Transaction Negotiated Terms Offer Significant Premium to PXP Standalone Values Terms Incorporated Significant Potential Exploration/Development Upside PXP Board/Management Believe Negotiated Terms are in Best Interest of Shareholders
Slide 9: Enhanced Commodity Exposure to Long-term Global Growth Trends
EXPANDING RESOURCES Enhanced Commodity Exposure to Long-term Global Growth Trends Emerging Market Growth and Urbanization Will Continue to Drive Commodity Demand Global Energy Consumption Expected to Grow by >30% by 2035 (1) Global Refined Copper Consumption Expected to Grow by ~60% by 2025 (2
Slide 10: Enhanced Geographic & Commodity Diversification
EXPANDING RESOURCES Enhanced Geographic & Commodity Diversification Pro Forma 2013e EBITDA (1) North Mining America 74% EBITDA Margin: 48% South America Mining: ~ 50% 21% Oil & Gas: ~75% Oil & Gas Africa Indonesia 26% 8% 23% (1) Includes pending oil and gas acquisitions. Based on pricing assumptions
Slide 11: World's Leading Copper Producers
EXPANDING RESOURCES World’s Leading Copper Producers Top 10 Copper Producers (2013e) (000 t) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Codelco FCX BHP Billiton Xstrata Southern Rio Tinto Anglo KGHM Antofagasta RAO Norilsk Copper American ____________________ Source: Wood Mackenzie 1Q13.
Slide 12: FCX's Global Footprint
EXPANDING RESOURCES FCX’s Global Footprint Major Operations & Development Projects North America1 All major mining assets majority-controlled and operated Reserves Cu 38.8 bn lbs Mo 2.69 bn lbs Copper Oil & Gas 688 mm bbls2 Sales Copper/Gold/Silver Cu 1.4 bn lbs Molybdenum Mo 92 mm lbs3 Grasberg (90
Slide 13: Copper Market Commentary
EXPANDING RESOURCES Copper Market Commentary China Remains Important Demand Driver - Expect Continued Infrastructure Development and Commodity Intensity - Slower Growth on Larger Base - Growing Copper Concentrate Imports/Lower Cathode Imports Improving U.S. Demand - Healthy Automotive Sector - I
Slide 14: World Class Copper Discoveries Are Extremely Rare
EXPANDING RESOURCES World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves 2013e Copper Production Million metric tons Thousand metric tons 0 5 10 15 20 25 30 0 200 400 600 800 1000 1200 1979 Escondida - 1979 Escondida -1979 1979 Grasberg Complex - 1988 Grasberg Complex -1988
Slide 15: Brownfield Development Projects
EXPANDING RESOURCES Brownfield Development Projects +1 Billion Pounds per Annum Increase by 2016 Tenke Phase II Expansion Morenci SO2 Furnace Ball Mill Tenke Phase 2 $0.9 Billion* Morenci ~ $1.4 Billion • Completed on Time and • Construction in Process Within Budget • Startup in 2014 • 50% Incre
Slide 16: Volume Growth with Brownfield Projects in Progress
EXPANDING RESOURCES Volume Growth with Brownfield Projects in Progress Copper (billion lbs per year) 2015e-2020e v. 2012 5.0+ +15%+ 4.4 SA +20% NA 3.65 Africa Indonesia Indonesia Africa Brownfield Projects South America • Proven Technology • Capital efficiency • Economies of scale North • Risks bett
Slide 17: Growing Production Profile
EXPANDING RESOURCES Growing Production Profile Gold Sales (million ozs) Copper Sales (billion lbs) 2 1.8 1.8 5.0+ 1.4 5 1.0 1 4.5 4.3 4 0 3.65 2012 ____________________ 2013e 2014e 2015e Note: Consolidated gold sales include approximately 102k ozs in 2012, 140k ozs in 2013e, 175k ozs in 2014e and 17
Slide 18: FCX Pro Forma EBITDA, Cash Flows & Capital Expenditures
EXPANDING RESOURCES FCX Pro forma (1) EBITDA, Cash Flows & Capital Expenditures EBITDA Operating Cash Flow* CAPEX $25 $20 ~45% $15 Increase 2015/ $ billions 2016 ~45% Avg. 2015/ Increase $10 2016 Avg. O&G 2013/ 40% $5 2013/ 35% 2014 52% 2014 Avg. Avg. Mining 60% 65% 48% $0 $3.00 $3.50 $4.00 $3.00 $3
Slide 19: Oil & Gas Cash Flows – Targeted to be Self-funding
EXPANDING RESOURCES Oil & Gas Cash Flows – Targeted to be Self-funding Operating Cash Flow CAPEX (US$ billions) $4.0 $3.0 $2.0 $1.0 $0.0 2013e 2014e 2015e NOTE: Assumes pricing of $100/bbl Brent crude for oil and $4.50/MMbtu for natural gas e= estimate. See Cautionary Statement. 19
Slide 20: Significant Debt Reduction
EXPANDING RESOURCES Significant Debt Reduction Year-End Net Debt at Varying Copper Prices (US$ billions) $20 Target: $12 Billion $16.0 $15 $10 $7.7 $5 $2.0 $0 ($3.5) -$5 12/31/12 ’13-’16 Avg. Copper Price $3.00 $3.50 $4.00 Pro Forma (1) Net Debt/’13-’16 Avg. EBITDA 0.6x 0.1x N/A Pro Forma YE 2016e (
Slide 21: Phelps Dodge Case Study
EXPANDING RESOURCES Phelps Dodge Case Study $26 Billion Acquisition in 2007 Rapid Delevering Highly Successful Transformational Transaction ($ in bns) Asset & Geographic $20 Diversification $17.6 Significant Reserve Additions $15 • +46 billion lbs Cu* $10 Developed World-Class Copper $7.2
Slide 22: Financial Policy
EXPANDING RESOURCES Financial Policy Maintain Strong Balance Sheet & Liquidity Position Reduce Debt Incurred for Pending Acquisitions Using Projected Substantial Cash Flows Generated from Combined Business Invest in Projects with Strong Financial Returns/Capital Discipline Anticipate Continu
Slide 23: Long Track Record of Generating Value for Shareholders
EXPANDING RESOURCES Long Track Record of Generating Value for Shareholders Exploration & History of Prudent Capital Solid Financial Allocation & Opportunistic Development Performance Acquisitions Grasberg Discovery & Financial Discipline Achieving Production Development Successful Phelps Dod
Slide 24: Reference Slides
EXPANDING RESOURCES EXPANDING RESOURCES Reference Slides
Slide 25: Grasberg Underground Development
EXPANDING RESOURCES Grasberg Underground Development • To date, completed 80 km of development Grasberg open pit in Grasberg BC & 53 km in DMLZ Tracking start-up schedule Grasberg Block Cave • Current activities include work on ore flow Kucing Liar systems & Grasberg BC shaft Big DOZ Gossan • Deve
Slide 26: Update on Grasberg
EXPANDING RESOURCES Update on Grasberg • Unusually low metal production in 2012 compared with historical levels Lower grades in Grasberg open pit DOZ ramp-up: panel repairs more extensive – expect 80K t/d by year- end 2013; current rate: 50K t/d Mine sequencing/geotechnical factors • Outlook f
Slide 27: Copper Reserves & Mineralized Material
EXPANDING RESOURCES Copper Reserves & Mineralized Material as of 12/31/12 billion lbs of copper 12/31/12 230 Mineralized Material (b) by Geographical Region Mineralized 113 Material (b) billion (contained copper) lbs North 117 at $2.20 Cu price America 52% South Indonesia America Reserves 17% 19% 12
Slide 28: Highly Attractive Brownfield Copper Development Projects
EXPANDING RESOURCES Highly Attractive Brownfield Copper Development Projects Expansion Projects in Progress North America* Mill Expansions (t/d) Incr. Cu (mm lbs/yr) Capital* Achieve ($ blns) Full Rates • Morenci Expansion Cerro Verde (360K) 600 $4.4 2016 (225 mm lbs Cu) under way • Potential sulfid
Slide 29: 2013e Operating Estimates
EXPANDING RESOURCES 2013e Operating Estimates 2013e Unit Production Costs (per pound of copper) North South America America Indonesia Africa Consolidated (3) Cash Unit Costs (1) Site Production & Delivery (2) $2.03 $1.57 $2.32 $1.41 $1.89 By-product Credits (0.24) (0.29) (1.66) (0.30) (0.62) Treatme
Slide 30: 2013e Oil & Gas Operating Estimates
EXPANDING RESOURCES 2013e Oil & Gas Operating Estimates Rocky Mtns. & Operating Cost: $1.65/Mcfe California Haynesville Pricing: NYMEX Operating Cost: $27/bbl Pricing: Brent Based Gulf of Mexico Shelf/ Deepwater Operating Cost: $15/bbl Eagle Ford Pricing: LLS Operating Cost: $10/bbl Pricing: LLS/NYM
Slide 31: Oil & Natural Gas Hedging Positions
EXPANDING RESOURCES Oil & Natural Gas Hedging Positions Oil Indexed to Brent 2013 2014 2015 Puts Collars 25k bbls/d 5k bbls/d 75k bbls/d 30k bbls/d Swaps $90 floor $95 floor $100 floor $90 floor 40k bbls/d $80 limit $70 limit $70 limit $75 limit Unhedged @ $109.23 $124 Ceiling $126 Ceiling $5.74 ADP
Slide 32: Energy – A Significant Component of Mining Cost
EXPANDING RESOURCES Energy – A Significant Component of Mining Cost Site Operating Costs by Category Components of Energy (Consolidated) (Total of $1.6 Billion) Purchased Materials Power Manpower 32% 6,800 GWh 29% Diesel 35% 255 mm gallons Other 59% Acid 13% 5% 6% Energy 21% Coal: 700k mt & Natural
Slide 33: Sensitivities
EXPANDING RESOURCES Sensitivities Operating Change EBITDA Cash Flow (US$ millions) Copper: -/+ $0.10/lb $405 $275 Molybdenum: -/+ $1.00/lb $80 $65 Gold: -/+ $50/ounce $75 $45 Diesel(1): -/+ 10% $100 $75 Purchased Power(2): -/+ 10% $50 $35 Currencies(3): +/- 10% $175 $130 (1) $3.80/gallon base case a