Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Q3 2018 Earnings Presentation
29 slides from Freeport-mcmoran's earnings presentation, Oct 24, 2018
Slide 1: 3Q 2018 Earnings Conference Call
34 Quarter 2018 Earnings Conference Call October 24, 2018
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
POWERED: Cautionary Statement BY.COPPER 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
Slide 3: 3Q18 Highlights
POWERED: BY COPPER 3Q18 Highlights = = Sharp Focus on Productivity, Cost Consolidated Results Mimo) Management, Capital Discipline and Initiatives to Build Value for Shareholders $3.9 » Unit Net Cash Costs: $0.93/Ib, 23% Below 3Q17 = Operating Cash Flows Exceeded CAPEX by $740 mm in 3Q & ~$2.5 bn YT
Slide 4: Copper Market Commentary
POWERED: BY COPPER Copper Market Commentary = = Global Demand Remains Healthy inne Sib + U.S. Construction & Manufacturing Positive + European Market Steady 1,000,000 $3.30 - a e ° CopperPrice » Large Chinese Fabricators Running High 900,000 $3.20 Utilization * Many FCX Customers Indicate Strong Ord
Slide 5: World Class Copper Discoveries Are Extremely Rare
POWERED: World Class Copper Discoveries BY COPPER Are Extremely Rare = Recoverable Copper Reserves [ftummmarmm 2018e Copper Production [Wenmmms ° 10 20 20 40 © 200 400 600 800 1000 1200 1400 Escondida - 1981 Escondida- 1981 Cotchuasi- 1880 Grasberg Complex. 1988, KGHM Polish Copper - 1957 ‘Obliahuas
Slide 6: 3Q18 Operations Update
POWERED: BY COPPER 3Q18 Operations Update | Americas | | Indonesia | = Ongoing Focus on Productivity and Cost = Strong 3Q and YTD Performance Management = Mining Final Phase of Surface Mine - Pit = Production and Cost Outlook Expected to Steepening Has Accelerated Metal be More Stable Following Acti
Slide 7: Lone Star Development Potential
(with 60 bn Ibs contained copper potential*) Saray 12/31/2017 Reserves Positive Drilling Results 4.4 bn Ibs of Copper 3018 Sulfide Intercepts Oxides Only Drill Hole meters % Cu Potential to Grow LS18-272 4110.56 5 Ls18-291 5670.42 Economics LS18-285 1,670 0.44 For Initial Oxides 18-266 4180.41 ‘$850
Slide 8: PT-FI Underground Ramp-up
POWERED. PT-Fl Underground Ramp-up BY. COPPER Contribution by Deposit —— Ore Milled Aggregate Metal (000’s t/d) (bn Ibs Cu & mm ozs Au) Grasbergopenpit mmDOZ smmBigGossan DMLZ mGrasbergBC 215 2.7 176 = 161 80K Ud 18 19 18 17 = ue} 105 58K Ud 1.2 25K tid hogogae 2218€ 2019€ 2020e 2021e 2022e Cu Au Cu
Slide 9: De-risking a World-Class Asset - Win/Win Partnership
POWERED: De-risking a World-Class Asset - “Win/Win” Partnership —a@cegass With Long-term Stability = Enhanced Alignment of Interests Gresberg Copper eserves » ~51%/49% Partnership with Indonesian Government SOE 38.8 FCX Equity Share » Extension of Long-term Operating Rights * Rights Through 2041 wit
Slide 10: Global Leadership Position
= Global Leadership Position Operate All Assets — Operational Synergies, Shared Resources, Portfolio- Based Capital Allocation Significant Current Production Capacity with Long-Term Expansion Options * 75% of Reserves + Mineralized Material in the Americas Experienced Team: Operations, Development,
Slide 11: 2018e Outlook
POWERED: BY COPPER 2018e Outlook* = Copper: 3.8 Billion Ibs. Sales Outlook = Gold: 2.45 Million ozs. = Molybdenum: 95 Million Ibs. Unit Gost = Site Production & Delivery: $1.75/lb of Copper, © After By-product Credits: $1.06/Ib” (4Q18e: $1.45/Ib) 2 = ~$4.2 Billion (@ $2.85/lb Copper for 4Q18e, Inclu
Slide 12: Sales Profile
Sales Profile POWERED: BY COPPER CopperSales KU) g > e g D < © = 2017 2018e 2019e 2020e - 2022e AVG* Note: Consolidated copper salesinclude 670 mm bs in 2017, 685 mmibs in 2018e, 670 mm Ios in2019e and ~690 mm lbs per year in 2020e - 20226 fornoncontroling interest excludes purchased copper. “Previo
Slide 13: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow BY COPPER at Various Copper Prices (USS billions) ENT =]U1eW ($1,200/0z Gold, $12/Ib Molybdenum) $10 ition Ys Average 9er'20e Cu $3.00/Ib Cu $3.25/lb Cu $3.50/Ib PNiorte te) Sacliivebet bata Excludes Working Capital Changes ($1,200/oz Gold, $12/lb Molybdenum) SVLBs Transition Yr
Slide 14: Capital Expenditures
POWERED: BY COPPER Capital Expenditures (USS billions) $2.3 $2.0 $1.4 2017 2018e 2019e * Major mining projects include CAPEX associated with Gresberg underground development ($0.8 bn per year in 2018 and 2019e) and Lone Star ($0.24bn in 2018 and {$0.37 bnin2019e). Assumes extension of PT-FI's long t
Slide 15: Financial Policy
POWERED: BY COPPER Financial Policy = Net Debt at 9/30/18: $6.6 Bn* » LTM Leverage Ratio: 0.8x Balanced Approach * Significant Deleveraging Over Last Two Years * Positive Market to Enable Enhanced Returns to Shareholders Goenlpetine te. Shareholders * Disciplined Approach to Investing in Attractive
Slide 16: FCX: Primed for Success
POWERED: BY COPPER FCX: Primed for Success = = Premier Portfolio of Copper Assets = Copper Arguably Most Attractive Fundamental Market Outlook = Strong Margins and Cash Flows = Long-lived Reserves = Attractive Long-term Development Pipeline Within Existing Portfolio = Geographically Diversified - 75
Slide 17: Reference Slides
POWERED BY COPPER Reference Slides
Slide 18: Financial Highlights
POWERED: BY COPPER Financial Highlights 3Q18 —-9-mos 2018 Copper Consolidated Volumes (mm ibs) 1,044 3,026 Average Realization (per /b) $2.80 $2.96 Site Production & Delivery Costs “ (per ib) $1.73 $1.70 Unit Net Cash Costs (per ib) $0.93 $0.95 Gold Consolidated Volumes (000’s ozs) 837 2,123 Average
Slide 19: 3Q18 Mining Operating Summary
POWERED: BY COPPER 3Q18 Mining Operating Summary North South 18 Unit Production Costs [GGaitigen) America America Indonesia Consolidated Cash Unit Costs (Credits) Site Production & Delivery, excluding adjustments $1.98 $1.84” $1.40 $1.73 By-Product Credits (0.26) (0.23) (2.72) (1.12) Treatment Charg
Slide 20: 2018e Operating Estimates
POWERED BY COPPER 2018e Operating Estimates = EQXCEMUN Tee =" <'c) america America Indonesia _Consolidated Cash Unit Costs ( Site Production & Delivery (2) $1.92 $1.78 $1.50 $1.75 By-product Credits (0.25) (0.25) (2.66) (0.98) Treatment Charges 0.11 0.19 0.26 0.18 Royalties & Export Duties - 0.01 0.
Slide 21: 2018e Quarterly Sales
POWERED BY COPPER 2018e Quarterly Sales | CopperSales | (million Ibs) Gold Sales _ (thousand ozs) 4,200 5 1000 1,044 i 900 1018 2018 3018 fl 600 | Note: Consolidated gold sales ndude approxmately 57 ozs in 1218, 6K ozs in 2018, 78k o7sin 3Q18 and 30k o7sin 4Qi8e for noncontroling interest. (million
Slide 22: 9/27/18 Definitive PT-FI Divestment Agreement
POWERED. BY. GOPPER. 9/27/18 Definitive PT-Fl Divestment Agreement = PT Inalum (an Indonesian SOE) and Provincial/Local Government to Acquire: + PT Indocopper Investama (PT-II) Shares Owned by FCX for $350 mm Cash (5.6% Interest After 2022) + Rio Tinto JV Interests for $3.5 bn Cash (40% After 2022)
Slide 23: PT-FI Mine Plan
PT-FI Mine Plan BY COPPER PT-Fl’s Share (Net of Rio Tinto) of Metal Sales, 2017-2022e Pier iYe.ae Total: 5.3 billion lbs copper 2018e-—2022e Btomagu uneets) PT-Fl Share ‘Annual Average: 1.06 billion Ibs PROSE MEEE Annual Average: 1.5 million ozs || Copper, billion Ibs | | Gold, million ozs 2.44 18 1
Slide 24: Grasberg Mining District
POWERED BY COPPER Grasberg Mining District PT-FI History of Block Caving Grasberg open pit Grasberg Block Cave Amole GBTblock cave mine Depleted § 10Zblackcave mine & Depew 2/900 m elev + GrasbergBC In development + Kucing Liar Future devesopment |Frecpont-McMoRAN
Slide 25: Sensitivities
Sensitivities 2019e - 2020e Change POWERED BY COPPER (USS millions) Operating EBITDA Cash Flow Copper: +/- $0.10/Ib Molybdenum: +/- $1.00/Ib Gold: +/- $50/ounce Currencies: +/- 10% 2021e - 2022e Change $325 $245 $80 $75 $40 $20 $165 $115 Copper: +/- $0.10/Ib Molybdenum: +/- $1.00/Ib Gold: +/- $50/ou
Slide 26: FCX Debt Maturities as of 9/30/18
POWERED BY COPPER FCX Debt Maturities as of 9/30/18 (USS billions) Sam Total Debt & Cash (Emus Actual ME FCX Revolver $- i Senior Notes 99 $6 Cerro Verde Credit Facility 12 Total Debt Si44 Consolidated Cash $46 $4 CVNon- Sr Notes and, 355% 455% FMC Sr Notes Sr, Notes Sr Notes 2018 2019 2020 2021 202
Slide 27: Adjusted EBITDA Reconciliation
POWERED BY COPPER Adjusted EBITDA Reconciliation (in millions) LT Ended 3018 9/30/18 Net Income Attributable to Common Stock — Continuing Operations $ 560 $3,161 Interest expense, net 143 604 Income tax provision 522 1,679 Depreciation, depletion and amortization 458 1,808 Net gain on sales of asset
Slide 28: 3Q18 LME Average
3Q18 LME Average Copper Price $2.77!b 3-Mo. Fwd Price for Copper $2.84/Ib at the End of September ° $2.80/Ib* (Generally, 50/50 Weight of Qtrly Avg and 3-mo Forward Price at End of Period) FCX 3Q18 Consolidated Copper Price Realization FCX 3Q18 Prior Period Revenue/EBITDA: $(111) mm Open Lb Adj. Net
Slide 29: 2018e Consolidated Effective Tax Rate
POWERED. BY. GOPPER 2018e Consolidated Effective Tax Rate Projected Quarterly Rate Annual Rate* 38% 38% 33% 36% 44% 38% ~32% ~3T% NOTE: For financial statement purposes only; does not reflect cash taxes. * The consolidated effective income tax rate is a function of the combined effective tax rates f