Freeport-mcmoran, Inc. · NYSE:FCX

Freeport-mcmoran — BMO Capital Markets 24th Global Metals & Mining Conference 2015

34 slides from Freeport-mcmoran's conference presentation, Feb 23, 2015

  1. Slide 1: Richard C. Adkerson, President & CEO

    Richard C. Adkerson President & CEO February 23, 2015 www.fcx.com

  2. 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

  3. Slide 3: FCX – A Premier U.S. Based Natural Resource Company

    FCX – A Premier U.S. Based Natural Resource Company  World’s Largest Publicly Traded Copper Producer  Long-lived Reserves with Large Incremental Resources  High-Quality U.S. Based Oil & Gas Assets  Growing Cash Flow & Production Profile Through Brownfield Expansion  Experienced Technical Team 

  4. Slide 4: FCX's Global Footprint

    FCX’s Global Footprint Major Operations & Development Projects North America1 Reserves Cu 35.6 bn lbs Mo 2.42 bn lbs Copper Oil & Gas 635 MMBOE2 Sales Copper/Gold/Silver Cu 1.9 bn lbs Molybdenum Mo 95 mm lbs3 Grasberg (90.64%) Oil & Gas 152 MBOE/d Cobalt Oil/Natural Gas Reserves Cu 29.0 bn lbs Au 28

  5. Slide 5: Business Update

    Business Update Copper Business Oil & Gas Business  Cerro Verde Project on Track for  Continued Strong Operational Performance Completion by Year-end 2015  Substantial Resources Identified  Tenke and Morenci Completed  Significant Lower Risk Development  Ore Grades to Increase at Grasberg Oppo

  6. Slide 6: Protecting the Balance Sheet

    Protecting the Balance Sheet • Completed $5 Bn in Asset Sales ($4.3 Bn Net of Tax) • Significant Reduction in Capital Budget Actions ̶ $1.5 Billion Reduction to Date ̶ 34% Reduction in O&G CAPEX • 4Q14 Financings ̶ Prepaid 2015 Maturities & Higher Coupon Debt Current • Third Party Funding for O&G Ex

  7. Slide 7: Strength in Assets

    Strength in Assets  Long-lived Reserves  Diverse Portfolio of High Quality, World Scale Copper Assets  Strategic GOM Oil Position with Existing Infrastructure  Valuable Resource Potential Copper (Bn lbs) Oil Equivalents (3) (MMBOE) ~11,000 104 103 100+ 635 Proven & Proven & Probable Probable Res

  8. Slide 8: World Class Copper Discoveries Are Extremely Rare

    World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves 2014e Copper Production Million metric tons Thousand metric tons 0 5 10 15 20 25 30 35 0 200 400 600 800 1000 1200 1400 1981 Escondida - 1981 Escondida - 1981 1880 Collahuasi - 1880 Chuquicamata - 1910 1988 Grasberg Comple

  9. Slide 9: Copper Market Commentary

    Copper Market Commentary  Fundamentals Remain Supportive  Commodity Trading Negatively Influencing Market Sentiment  China – Addressing Slowing Growth Rate with Economic Stimulus  U.S. Growing at Moderate Rate  Supply Side Challenges Persist  Price Impacts on Scrap Market  Positive Long-term

  10. Slide 10: Supply Side Challenges in Copper Persist

    Supply Side Challenges in Copper Persist Wood Mackenzie’s Current Outlook for Refined Production for 3-year Period of 2013 – 2015 is ~2 mm Tonnes Lower Than December 2012 Outlook (mm tonnes) 2013 2014e 2015e December 2012 Forecast 21.2 22.6 23.9 Current Forecast 20.8 22.1 22.9 Variance (0.4) (0.5) (

  11. Slide 11: Copper Markets – Long-term Fundamentals Support Positive Outlook

    Copper Markets – Long-term Fundamentals Support Positive Outlook Total Copper Consumption 40  Assuming 2.5% Global Growth +7.6 mm Over Next 10 Years, Copper 30 +5.2 mm 28% Cu in mm tonnes 23% Market Expected to Grow by +7.6 mm tonnes (28%) 20 Mature Markets 10 Emerging  Over Same Period, Productio

  12. Slide 12: Portfolio of World Scale Mines

    Portfolio of World Scale Mines Positive Exploration Results – “Big Mines Get Bigger” Mines with Potential Capacity for 1 billion lbs of copper per annum* Morenci Grasberg Tenke Cerro Verde Fungurume El Abra * Grasberg capable of producing over 1 bln lbs/annum, Morenci (100%) & Cerro Verde in develop

  13. Slide 13: Cerro Verde Mill Expansion

    Cerro Verde Mill Expansion • Detailed engineering & major procurement activities complete HPGR & Secondary Flotation Crushing Plant • To become world’s largest concentrating facility • Construction advancing on schedule & more than 50% complete • Completion expected in late 2015 • Expected to add 60

  14. Slide 14: Grasberg BC & DMLZ Underground Mine Development

    Grasberg BC & DMLZ Underground Mine Development • Completed development on access to Grasberg BC Service Shaft at underground ore bodies the 2,500 meter elevation • Completed 123 km of development in Grasberg BC & 90 km in DMLZ • Key development activities include work on ore flow systems & Grasberg

  15. Slide 15: Indonesian Matters

    Indonesian Matters  Engaged in Active Discussions with Government to Amend COW − Positive Long-term Partnership − Economic Engine for Development of Papua − Operations Provide Significant Benefits to Indonesian Economy − All Rights Under COW to Continue Until Agreed Amendment − Negotiations to Take

  16. Slide 16: 2014 Oil & Gas Highlights

    2014 Oil & Gas Highlights 2014 Sales* – 56.8 MMBOE  Continued Strong Operational Performance GOM 47%  Portfolio Positioned for Long-Term California Other Growth in Deepwater GOM 25% Eagle 13% Ford 15% - Successful Drilling Results - High Quality Oil Development 2014 Cash Margin* – $2.9 Billion Pro

  17. Slide 17: Responding to Market Conditions

    Responding to Market Conditions  Significant Reduction in Capital Budget 2015 Oil Puts Indexed to Brent ̶ 2015 Reduced by $1.2 Billion (~34%) Unhedged 18% ̶ 2016 Reduced by $1.7 Billion (~43%) − Defer Discretionary Spending 84 MBbls/d $90 Floor $70 Limit  Focus on Highest Priority Projects (80% in

  18. Slide 18: Strategic Position in Deepwater Gulf of Mexico

    Strategic Position in Deepwater Gulf of Mexico Major Exploration/ Operating/ Development Exploitation Producing Assets Projects Opportunities  Significant Current Oil  Financially Attractive  Strategic Acreage Production with Strong Development Activities Near Existing Facilities Cash Margins to

  19. Slide 19: Sales Profile

    Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 3 6 2 2.5 5.4 1.9 1 1.25 1.3 5.0 0 4 4.3 2014 2015e 2016e 2017e 3.9 Note: Consolidated gold sales include 123k ozs in 2014, 120k ozs in 2015e, 170k ozs in 2016e and 230k ozs in 2017e for noncontrolling interest. Molybdenum Sales (mill

  20. Slide 20: 2015e Operating Estimates

    2015e Operating Estimates 2015e Unit Production Costs (per pound of copper) North South America America Indonesia Africa Consolidated Cash Unit Costs (1) Site Production & Delivery (2) $1.72 $1.59 $2.27 $1.71 $1.81 By-product Credits (0.17) (0.07) (1.75) (0.46) (0.53) Treatment Charges 0.12 0.19 0.2

  21. Slide 21: EBITDA and Cash Flow at Various Copper Prices

    EBITDA and Cash Flow at Various Copper Prices Average EBITDA ($1,300 Gold, $10 Molybdenum & $65 Oil) (US$ billions) $15 $10 $5 2016e/2017e Average $0 Cu $2.50/lb Cu $3.00/lb Cu $3.50/lb Average Operating Cash Flow (excluding Working Capital changes) ($1,300 Gold, $10 Molybdenum & $65 Oil) $12 (US$ b

  22. Slide 22: Capital Expenditures

    Capital Expenditures (1) (US$ billions) $8 $7.2 $6.0 $6 Oil & Gas $5.1 $4.8 3.2 2.3 $4 2.3 Major 2.4 Projects TOTAL 2.5 (2) $2 2.9 MINING 3.7 1.7 1.4 4.0 2.8 2.4 Other Mining 1.2 1.1 1.0 1.1 $0 2014 2015e 2016e 2017e (1) Capital expenditure estimates include projects in progress. Project spending wi

  23. Slide 23: Committed to Balance Sheet Management

    Committed to Balance Sheet Management Strong Track Record  Large Resource Base with Strong 12/31/2014 Balances ($ in bns) Cash Flows and Capital Discipline  Increasing Volumes & Declining CAPEX Profile $18.7 $18.3  Pursuing O&G JVs and Other Third Party Transactions  Taking Actions to be Respons

  24. Slide 24: Key Priorities

    Key Priorities  Protect Balance Sheet & Liquidity  Manage Operations and CAPEX to Maximize Cash Flow in Weak Market Environment  Fund O&G Investments Within Cash Flows and 3rd Party Investments  Complete Near-term Mining Projects  Preserve Large Resource Base for Future Strong Track Record for

  25. Slide 25: Reference Slides

    — FREEPORT-McMoRAN STRENGTH IN RESOURCES Reference Slides

  26. Slide 26: 2015e Outlook

    2015e Outlook Sales Outlook Unit Cost  Copper: 4.3 Billion lbs.  $1.53/lb(2) of Copper  Gold: 1.3 Million ozs.  $18/BOE  Molybdenum: 95 Million lbs.  Oil Equivalents(1): 55.5 MMBOE (~70% Oil) Operating Cash Flows (3) Capital Expenditures  ~$4 Billion (@$2.60/lb Copper for 2015)  $6 Billion 

  27. Slide 27: Sensitivities (US$ millions)

    Sensitivities (US$ millions) 2016e/2017e Operating Change EBITDA Cash Flow Copper: +/- $0.10/lb $500 $350 Molybdenum: +/- $1.00/lb $100 $80 Gold: +/- $50/ounce $100 $60 Oil Sales: +/- $5/bbl(1) $190 $150 Oil Sales Net of Diesel Costs:(1,2) +/- $5/bbl $145 $120 Natural Gas: +/- $0.50/Mcf $35 $28 Curr

  28. Slide 28: PT-FI Mine Plan

    PT-FI Mine Plan PT-FI’s Share of Metal Sales, 2015e-2022e 2015e – 2019e PT-FI Share Total: 5.9 billion lbs copper Copper, billion lbs Annual Average: 1.2 billion lbs Gold, million ozs 2015e – 2019e PT-FI Share Total: 8.0 million ozs gold Annual Average: 1.6 million ozs 2.5 1.9 1.6 1.4 1.3 1.3 1.3 1.

  29. Slide 29: PT Freeport Indonesia

    PT Freeport Indonesia Grasberg Minerals District Life-of-Mine Production Sequencing* Plan View 206mm mt Grasberg Open Pit 0.95% Cu & 1.08 g/t Au 152mm mt Grasberg & DOZ 0.56% Cu & 0.73 g/t Au Kucing Liar Grasberg Big Gossan 54mm mt open pit 2.22% Cu & 0.97 g/t Au DMLZ 526mm mt Deep MLZ 0.83% Cu & 0.

  30. Slide 30: Preliminary Reserves at 12/31/14

    Preliminary Reserves at 12/31/14 Consolidated Proven & Probable Reserves Copper Molybdenum Gold billion lbs billion lbs million ozs Reserves @ 12/31/13 (1) 111.2 3.26 31.3 12/31/14 Divestiture* (3.7) -- (1.0) Copper Reserves Revisions (0.1) (0.05) (0.6) by Geographical Region Production (3.9) (0.10)

  31. Slide 31: Deepwater Gulf of Mexico Focus Areas

    Deepwater Gulf of Mexico Focus Areas Development/Exploration Project Inventory Net Unrisked Louisiana Resource Potential Asset Area (Billion BOE) Green Canyon Area 1.9 Marlin/Horn Mountain Area 0.6 Dorado Marlin Vito Area 1.0 Keathley Canyon Area 1.2 King Viosca Knoll Deepwater GOM Total 4.7 Ram Pow

  32. Slide 32: Deepwater GOM Progress Report

    Deepwater GOM Progress Report Positive Drilling Results • 1st Delineation Well Logged 234’ of net oil pay Holstein Deep • 2nd Delineation Well Currently Drilling; 3rd Well Planned • Increased Resource Potential to over 250 MMBOE • Exploration Well Encountered Multiple Sub-Salt Miocene Sands Power Na

  33. Slide 33: Preliminary SEC Oil & Gas Proved Reserves 390 MMBOE as of 12/31/14

    Preliminary SEC Oil & Gas Proved Reserves 390 MMBOE as of 12/31/14 Excludes Positive Results from Highlander & Holstein Deep Achieved in Late 2014* By Commodity By Category By Region 6:1 Ratio PDNP 13% Oil 71% GOM California PDP 43% 39% 50% PUD 37% 3% Gas 18% 26% NGLs Haynesville/ Other NOTE: The pr

  34. Slide 34: 2015e Oil & Gas Operating Estimates

    2015e Oil & Gas Operating Estimates Madden & Operating Cost: $2.15/Mcfe California Haynesville Pricing: NYMEX Operating Cost: $32/bbl Pricing: Brent Based Gulf of Mexico Operating Cost: $13/bbl Pricing: HLS/NYMEX 2015e Oil & Gas Sales by Region California Haynesville/ GOM Madden/Other 72 39 130 117

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