Freeport-McMoRan, Inc. · NYSE:FCX
Freeport-McMoRan — Q2 2020 Earnings Presentation
39 slides from Freeport-McMoRan's earnings presentation, Jul 23, 2020
Slide 1: FCX Conference Call 2nd Quarter 2020 Results
FCX Conference Call 2nd Quarter 2020 Results July 23, 2020 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 and in the province of Papua; the Indonesian government’s extension of PT-FI’s export license after future performance. Forward-looking statements are
Slide 3: Meeting the Challenge - 2Q 2020 Highlights
Meeting the Challenge - 2Q 2020 Highlights April Key Stats Actual Estimate ▪ Prioritizing health and safety Copper Sales (mm lbs) 759 690 ▪ Strong execution of April 2020 revised operating plans Gold Sales (k ozs) 184 165 • Copper & gold sales 10-12% above target Unit Net Cash Costs ($/lb) $1.47 $1.
Slide 4: Supporting Communities Where We Operate
Supporting Communities Where We Operate Providing Monetary and In-kind Contributions of Medical Supplies and Food FCX has been using the strength of its global supply chain to acquire, purchase, donate and deliver much needed medical supplies and more to COVID-19 relief efforts as part of its commit
Slide 5: 2019 Annual Reports on Sustainability & Climate
2019 Annual Reports on Sustainability & Climate “Building on Strength” 2019 Annual Report on Sustainability 2019 Climate Report ▪ 19th consecutive year FCX has published a ▪ Inaugural Climate Report published in June 2020 comprehensive report on sustainability ▪ Details FCX’s historical performance
Slide 6: Copper Gaining Momentum
Copper Gaining Momentum Market metric tons $/lb 1,400,000 3.30 Commentary Copper Price 1,200,000 3.10 ▪ Chinese economy recovering 1,000,000 2.90 ▪ Global fiscal & monetary stimulus adding support 800,000 2.70 ▪ Supply constraints in focus 600,000 2.50 • Mine supply • Scrap scarcity 400,000 2.30 ▪ D
Slide 7: Copper – Metal for the Future
Copper – “Metal for the Future” ▪ Essential metal in a digital world Copper Utilization Key to Global Decarbonization ▪ Critical to the technologies necessary to deliver clean energy and support the global transition to a low-carbon economy • By 2030, copper could reduce global carbon emissions by 1
Slide 8: Cerro Verde Update
Cerro Verde Update ▪ Safely & effectively restoring production under strict COVID-19 restrictions ▪ In June, averaged 316,800 mt/d (~80% of 2019 avg) ▪ Expect rates to improve to ~350,000 mt/d in 2H20e ▪ Growing to 400,000 mt/d over time Average Mill Rate (000’s mt/d) 397 350 317 164 4Q19 Apr-20 Jun
Slide 9: Grasberg Underground Ramp-up Accelerating
Grasberg Underground Ramp-up Accelerating 2021e-2023e Annual Average 100% as % of Targeted Average 2021e-2023e 1.55 bn lbs Cu & 1.6 mm ozs Au Quarterly Production Annualized 75% 50% 25% 0% 2Q19 4Q19 2Q20 4Q20e 2Q21e 4Q21e 2022e Cumulative Drawbells* 103 166 261 361 447 529 667 Note: Includes product
Slide 10: Indonesian Smelter Update
Indonesian Smelter Update Experiencing delays associated with COVID-19 Gresik • Gresik area was declared a “Red Zone” • International contractor dislocation • PT-FI in discussions with Indonesian government on deferred schedule for the project as well as other alternatives in light of COVID-19 and g
Slide 11: Lone Star Leach Project in Arizona
Lone Star Leach Project in Arizona Substantially Complete Building value in new U.S. cornerstone asset ▪ Low-risk development in established ▪ Commissioning in progress; substantially complete mining district ▪ On track to commence production in 2H20 • Located 8 miles north of Safford • 18 miles sou
Slide 12: Optimization Through Innovation
Optimization Through Innovation Processing/Concentrating Continuing to advance with internal resources Throughput & ▪ Unlocking bottlenecks Recovery Optimization ▪ Digital twin for processing Intelligence • Real time data driven decisions (TROI) ▪ Enhanced mine fragmentation tools • Digital tool dev
Slide 13: Expanding Margins & Cash Flow
Expanding Margins & Cash Flow Rising Copper & Gold Sales & Declining Unit Costs Annual EBITDA Estimates (1) ($ in billions) ~$7 Gold Revenues ~$2.7 bn per annum 3.8 ~$6 at $1,800/oz Gold 21% 3.15 Each $100/oz change = $140 mm $3.4 $1.53 1.4 < $1.20 0.8 75% >22% Cu Au bn mm ~$2.70/lb lbs ozs $/lb Cu(
Slide 14: The Freeport Edge
The Freeport Edge Global Industry Trusted World-Class Block Cave Responsible Leader Operator Developer Leader Producer One of the world’s Strong track Industry leading Industry leading Long-standing largest publicly record and track record for technical commitment traded copper franchise in 4 major
Slide 15: Strong, Resilient & Meeting The Challenge! TEAM
Strong, Resilient & Meeting The Challenge! TEAM 15 15
Slide 16: Financial Review & Outlook
Financial Review & Outlook 16
Slide 17: Annual Sales Profile
Annual Sales Profile July 2020 Estimate Copper Sales(1) (billion lbs) Gold Sales(2) (million ozs) 5 2 1.6 1.4 4.1 4 3.8 1 0.8 3.15 3 0 2020e 2021e 2022e 2 Molybdenum Sales (million lbs) 100 1 77 80 80 75 50 0 2020e 2021e 2022e 25 (1) Consolidated copper sales include 590 mm lbs in 2020e, 735 mm lbs
Slide 18: 2020e Quarterly Sales
2020e Quarterly Sales Copper Sales(1) (millions lbs) Gold Sales (thousand ozs) 1,000 300 280 220 875 184 200 790 144 729 759 750 100 0 1Q20 2Q20 3Q20e 4Q20e Note: Consolidated gold sales include approximately 26k ozs in 1Q20, 34k ozs 500 in 2Q20, 41k ozs in 3Q20e and 52k ozs in 4Q20e for noncontroll
Slide 19: Consolidated Unit Net Cash Costs Estimates
Consolidated Unit Net Cash Costs Estimates After By-Product Credits Annual Unit Net Cash Cost Estimates (2) $1.90 (after by-product credits) 2020e $1.53/lb 2021e <$1.20/lb $1.47 $1.44 $1.36 (1) (1) (2) (2) 1Q20 2Q20 3Q20e 4Q20e (1) Excludes COVID-19 related costs. (2) Estimates assume average prices
Slide 20: EBITDA and Cash Flow at Various Copper Prices
(1) EBITDA and Cash Flow at Various Copper Prices Cash Flows Expected to Grow Following 2020 Transition Year ($ in bns except copper, gold and molybdenum prices) Sensitivities Average ’21e/’22e EBITDA l ($1,800/oz gold, $7/lb molybdenum) (US$ in mms) $8 EBITDA $6 Copper +/-$0.10/lb $375 Molybdenum +
Slide 21: Consolidated Capital Expenditures
Consolidated Capital Expenditures ($ in bns) $ Net of Scheduled Contributions $2.2 $2.0 $2.0 $1.9 (1) $2.0(1) $1.8(1) Major Projects $1.0(2) $1.3(2) $1.4(2) Other $0.7 $0.8 $1.0 2020e 2021e 2022e (1) Net of scheduled contributions from PT Inalum for expansion capital spending that will be reflected
Slide 22: Strong Financial Position & Liquidity
Strong Financial Position & Liquidity (US$ bns) Net Debt* $ Liquidity Position as of 6/30/20 $8.4 Consolidated Cash $1.5 Undrawn Credit Facility $3.5 Total Liquidity $5.0 $5.3 ▪ In July 2020, FCX priced a debt offering and commenced tender offers to improve financial flexibility through extending ma
Slide 23: Financial Policy
Financial Policy ▪ Near-term focus prioritizes liquidity and balance sheet strength while preserving large long-lived mineral resources PRIORITIES ▪ In March 2020, announced suspension of common stock dividend in response to global pandemic and uncertain business Balance environment Sheet Organic St
Slide 24: World's Premier Publicly Traded Copper Producer
World’s Premier Publicly Traded Copper Producer Portfolio of High Quality Experienced Management Team Copper / Gold Assets Difficult to Replicate Industry Leader with Size, Scale and Durability Strong Track Record and Commitment to Communities / Copper Supported by Positive Environmental Responsibil
Slide 25: Freeport Foremost in Copper
FREEPORT FOREMOST IN COPPER
Slide 26: Reference Slides
Reference Slides FREEPORT
Slide 27: Financial Highlights
Financial Highlights Sales Data 2Q20 1H20 Copper Consolidated Volumes (mm lbs) 759 1,488 Average Realization (per lb) $2.55 $2.53 (1) Site Production & Delivery Costs (per lb) $1.82 $2.00 Unit Net Cash Costs (per lb) $1.47 $1.68 Gold Consolidated Volumes (000’s ozs) 184 328 Average Realization (per
Slide 28: 2Q20 Mining Operating Summary
2Q20 Mining Operating Summary Sales From Mines for 2Q20 & 2Q19 by Region North America South America (2) Indonesia (3) 368 369 287 219 (1) 24 172 151 18 (1) 180 185 Cu Mo Au mm lbs mm lbs 000 ozs 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 North South 2Q20 Unit Production Costs (per lb of Cu)
Slide 29: 2020e Outlook
2020e Outlook ▪ Copper: 3.15 billion lbs Sales ▪ Gold: 0.8 million ozs Outlook ▪ Molybdenum: 77 million lbs Unit Cost ▪ Site production & delivery 2020e: $1.88/lb (3Q20e: $1.83/lb) of Copper ▪ After by-product credits 2020e(1) : $1.53/lb (3Q20e: $1.44/lb) Operating ▪ ~$2.6 billion @ $2.85/lb copper
Slide 30: Sensitivities
Sensitivities (US$ in mms, except copper, gold and molybdenum prices) 2020e Change (2H20e) EBITDA Copper +/- $0.10/lb $190 Molybdenum +/- $1.00/lb $20 Gold +/- $50/ounce $30 Currencies(1) +/- 10% $90 Diesel +/- 10% $15 2021e-2022e Avg. Change EBITDA Operating Cash Flow Copper +/- $0.10/lb $375 $285
Slide 31: 2020e Operational Data
2020e Operational Data 2020e Sales by Region North America South America Indonesia 1,430 950 770 77 (1) (2) 0.8 Cu Mo Au mm lbs mm lbs mm ozs North South 2020e Unit Net Cash Costs (3) (per lb of Cu) America America Indonesia Consolidated Site Production & Delivery (4) $1.90 $1.89 $1.83 $1.88 By-prod
Slide 32: 2020e Site Production Costs Breakdown
2020e Site Production Costs Breakdown North America South America Indonesia Consolidated Acid Other 8% 5% 7% 10% Energy Materials 5% and 30%* 26% 13% Supplies 38% 35% 23% 16% 38% Labor 14% 30% 41% 27% 34% * Support costs, taxes/fees, social costs & other e = estimate. See Cautionary Statement. 32
Slide 33: PT-FI Mine Plan
PT-FI Mine Plan Metal Sales, 2020e - 2024e Copper 2020e – 2024e Gold 2020e – 2024e Total: 7.1 billion lbs copper Total: 7.3 million ozs gold Annual Average: 1.4 billion lbs Annual Average: 1.5 million ozs 1.8 1.7 1.7 1.6 1.6 1.6 1.4 1.4 0.77 0.82 Cu Au bn mm lbs ozs 2020e 2021e 2022e 2023e 2024e Tra
Slide 34: World Class Block Cave Design
World Class Block Cave Design Substantial Infrastructure in Place to Support Large-Scale Production Grasberg Block Cave DMLZ Plan View Ramp-up Schedule Plan View 100 m eters Ramp-up Schedule (2) 100 m eters (000’s t/d of Ore) (000’s t/d of Ore) 128 129 N 77 N 73 72 PB3 102 62 PB2N 2 PB1S 2022 Curren
Slide 35: Project Update
Project Update Grasberg Transition on Track - Consistently Meeting Expectations Drawbelling Ore Extraction (000 t/d) Deep MLZ (DMLZ) & DMLZ GBC DMLZ 40 40 37 34 36 36 40 Grasberg Block 30 Forecast 30 25 30 28 33 24 Cave (GBC) 20 12 12 14 13 17 20 20 15 18 10 10 averaged 54,800 t/d 10 4 10 10 7 0 0 i
Slide 36: FCX Debt Maturities as of 6/30/20
FCX Debt Maturities as of 6/30/20 (US$ bns) $8 Total Debt & Cash at 6/30/20 FCX Revolver $ - Senior Notes 9.0 Cerro Verde Credit Facility 0.8 $6 Other 0.1 Total Debt $ 9.9 $5.5 Consolidated Cash $ 1.5 Undrawn Credit Facility 3.5 Total Liquidity $ 5.0 $4 4.125%, 4.25% $2 $1.9 5.00%, 5.25%, $1.3 5.40%
Slide 37: 2Q20 Copper Realization & 3Q20e Guidance
2Q20 Copper Realization & 3Q20e Guidance 2Q20 LME Average $2.43/lb Copper Price 3-Mo. Fwd Price for Copper $2.73/lb at the End of June $2.55/lb(1) FCX 2Q20 Consolidated Copper Price Realization (Generally, 50/50 weight of qtrly avg and 3-mo forward price at end of period) FCX 2Q20 Prior Period Reven
Slide 38: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 12 mos ended ($ in mm) 2Q20 6/30/2020 Net income (loss) attributable to common stock $53 $(638) Interest expense, net 115 584 Income tax provision 96 456 Depreciation, depletion and amortization 358 1,412 Metals inventory adjustments (139) 203 Net gain on sales of asse
Slide 39: Freeport Foremost in Copper
FREEPORT FOREMOST IN COPPER