Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Freeport-McMoRan Copper & Gold — Bank of America Merrill Lynch Global Metals, Mining & Steel Conference 2012
29 slides from Freeport-mcmoran's conference presentation, May 15, 2012
Slide 1: Richard C. Adkerson, President & CEO, May 15, 2012
Richard C. Adkerson President & CEO May 15, 2012 www.fcx.com CONNECTING THE FUTURE®
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains forward-looking statements in which we discuss factors we believe may affect our potential future performance. Forward- looking statements are all statements other than statements of historical facts, such as statements regarding projected ore grades a
Slide 3: Connecting the Future: 2011 Annual Report Highlights
“Connecting the Future” 2011 Annual Report Highlights Global Leader in Production of Copper, Gold and Molybdenum Well Situated to Meet Growing Demand for Metals Geographically Diverse Long-Lived Reserves Growing Production Profile Strong Financial Position Environmentally Responsible
Slide 4: FCX's Global Footprint
FCX’s Global Footprint Major Mine Operations & Development Projects All major assets majority-controlled and operated North America1 Reserves Copper Cu 40.6 bn lbs Mo 2.71 bn lbs Copper/Gold/Silver Sales Molybdenum Cu 1.3 bn lbs Mo 81 mm lbs2 Cobalt Grasberg (90.64%) Reserves Cu 31.6 bn lbs Au 32.2
Slide 5: World's Leading Copper Producers
World’s Leading Copper Producers Top 10 Copper Producers (2012e) (000 t) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Codelco FCX BHP Billiton Xstrata Anglo Southern Rio Tinto KGHM Antofagasta RAO Norilsk American Copper ____________________ Source: Brook Hunt 1Q12 Report. Rankings based on
Slide 6: Markets
Markets 2,500 500 2,000 400 000’s Metric Tons Cents Per Pound 1,500 300 LME Copper Price 1,000 200 500 100 LME & COMEX Exchange Stocks* 0 0 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 *LME and Comex, excluding S
Slide 7: Copper Market Commentary
Copper Market Commentary China Remains Important Demand Driver U.S. – Positive Growth Trends • Manufacturing & Employment Gains • Auto Sales and Production are Growing • Residential Construction is Slowly Improving • Market/Customer Sentiment is Positive Sovereign Debt Issues & Uncertain Envir
Slide 8: Chinese Copper Consumption
Chinese Copper Consumption Lower Growth Rates on Higher Base – Significant Volume Growth Copper Consumption (Mt) 16.4 6% Average Annual Growth +9.2Mt 13% Average 7.2 Annual Growth 1.2 +6.0Mt 1995 2010 2025e % of Global Consumption 10% 37% 51% Source: Brook Hunt, March 2012 8
Slide 9: Supply Challenges
Supply Challenges Existing Production Resource Depletion & Declining Grades Supply Disruptions • Average Production Losses of ~1.0Mt/Year from 2005 to 2011 (average ~6.4% of annual production target) * Technical Risks & Rising Costs • Leaching Low Grade Deposits • Mines Going Underground • Env
Slide 10: World Class Copper Discoveries Are Extremely Rare
World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves 2012e Copper Production Million metric tons Thousand metric tons 0 5 10 15 20 25 30 0 200 400 600 800 1000 1200 Grasberg Complex - 1988 Escondida - 1979 KGHM Polish Copper - 1957 Chuquicamata - 1910 Escondida - 1979 Los Br
Slide 11: Value Creation Focus
Value Creation Focus INVESTMENT CASH MINERAL RESERVE IN ATTRACTIVE PRODUCTION FLOWS/ RESOURCES ADDITIONS DEVELOPMENT GROWTH RETURNS PROJECTS FCX Copper Resources at 12/31/2011 Recoverable Reserves (a) 120 bn lbs Mineralized Material (contained) (b) 115 bn lbs Total Reserves (a) & Mineralized Materia
Slide 12: Copper Reserves & Mineralized Material
Copper Reserves & Mineralized Material as of 12/31/11 billion lbs of copper 12/31/11 235 Mineralized Material (b) by Geographical Region Mineralized 115 Material (b) billion (contained copper) lbs North 120 at $2.20 Cu price America 54% South Indonesia America Reserves 17% 17% 12% at $2.00 Cu price
Slide 13: Highly Attractive Brownfield Development Projects
Highly Attractive Brownfield Development Projects North America • Morenci Under Expansion in Development* progress 225 mm lbs Cu • Sulphide Potential Expansions ~800 mm lbs Cu South America Grasberg Tenke Fungurume Under • Large Scale Under Cerro Verde Under • Oxide • Underground Development** Devel
Slide 14: 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 Tenke Grasberg Fungurume Cerro Verde El Abra * Grasberg currently producing over 1 bln lbs/annum, Morenci & Cerro Verde in development to
Slide 15: Americas Growth Outlook
Americas Growth Outlook Copper Production billion lbs per year 3.5 Potential Projects under review 2.9 Cerro Verde Expansion 2.6 Morenci 2.4 Expansion Chino Restart Morenci Mill Exp. #2 El Abra ~1.5 Ajo Mill bln lbs Lone Twin Star Buttes/ Sierrita 2010 2012e 2014e 2016e e = estimate. See Cautionary
Slide 16: Africa Growth Outlook
Africa Growth Outlook Copper Production ?? billion lbs per year Phase 4 Expansion 0.6 Phase 3 0.4 Oxides Expansion Phase 2 0.3 Expansion 0.15 2009 2012e 2014e Potential with Potential additional with Sulfides oxide e = estimate. See Cautionary Statement. 16
Slide 17: Grasberg BC & DMLZ Underground Mine Development
Grasberg BC & DMLZ Underground Mine Development • Completed significant development on access to underground ore bodies • Completed 55 km of development for Grasberg BC & 20 km for DMLZ • Key development activities include work on ore flow systems & Grasberg BC shaft • Development capital* of $6.4 b
Slide 18: Financial Benefits to Indonesia
Financial Benefits to Indonesia ($ billions) Contributed Over $60 Billion to National GDP in Total Since 1992 Planning Over $15 Billion in New Investments Largest Private Employer in Papua and One of the Largest Taxpayers in Indonesia Last (2) 2010 2011 5 Years Direct Benefits (1) Taxes $1.5
Slide 19: Climax Molybdenum Start-Up
Climax Molybdenum Start-Up Start-up in March 2012 Construction essentially complete with commissioning on-going in 2Q12* Ramp up to 20mm lbs/yr during 2013 SAG Mill Start-up Depending on market conditions, First Concentrate Climax may increase to 30mm lbs/yr * ~$700mm in costs incurred throu
Slide 20: 1Q12 Highlights
1Q12 Highlights Strong Operating Performance in Americas and Africa Continuing Progress to Restore Normal Operations at Grasberg Advanced Growth Projects, Targeting Over 25% Increase Over the Next Three to Four Years Completed Highly Attractive Debt Refinancing Board Authorized 25% Increas
Slide 21: 2012 Outlook
2012 Outlook Sales Outlook: • Copper: 3.7 Billion lbs. • Gold: 1.1 Million ozs. • Molybdenum: 81 Million lbs. Unit Net Cash Cost(1): • $1.43/lb in 2012e • Reflects Impact of Lower Volumes at Grasberg • Costs in Future Years Expected to Decline with Higher Volumes Operating Cash Flows(2): • ~$4
Slide 22: Near-Term Sales Profile
Near-Term Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 5.0+ 2 1.6 1.7 5 1.4 4.5 4.3 1.1 1 4 3.7 3.7 0 2011 2012e 2013e 2014e 3 ____________________ Note: Consolidated gold sales include approximately 139k ozs in 2011, 115k ozs in 2012e, 160k ozs in 2013e, and 170k ozs in 2014e f
Slide 23: 2012 Operating Estimates
2012 Operating Estimates 2012e Unit Production Costs (per pound of copper) North South America America Indonesia Africa Consolidated Cash Unit Costs (1) Site Production & Delivery (2) $1.92 $1.58 $2.98 $1.50 $2.00 By-product Credits (0.35) (0.30) (2.20) (0.45) (0.74) Treatment Charges 0.11 0.16 0.20
Slide 24: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices Average EBITDA* ($1,200 Gold & $12 Molybdenum) $12 (US$ billions) $9 $6 $3 $0 Cu $3.00/lb Cu $3.50/lb Cu $4.00/lb Average Operating Cash Flow (excluding Working Capital changes)* ($1,200 Gold & $12 Molybdenum) $10 (US$ billions) $8 $6 $4 $2 $0 Cu $3.00/l
Slide 25: Capital Expenditures
Capital Expenditures (1) Major Projects All Other (US$ billions) $5 $4.3 $4.2 $4 1.6 1.3 $3 $2.5 $2 1.1 (4) 2.7 (3) 2.9 $1 (2) 1.4 $0 2011 2012e 2013e (1) Capital expenditure estimates include projects in progress. Project spending will continue to be reviewed and revised subject to market condition
Slide 26: Balance Sheet
Balance Sheet (US$ billions) Significant Liquidity $20 $17.6 (1) Strong Credit Metrics $15 Investment Grade Rated by S&P, Moody’s, Fitch Total Debt $10 $7.4 $5 $3.5 $0 At Time of PD Acquisition in 12/31/08 3/31/12 March 2007 Consolidated Cash $3.4 $0.9 $4.5 Net Debt/(Cash) $14.2 $6.5 $(1.0) Mo
Slide 27: Debt Refinancing
Debt Refinancing Issued $3.0 Billion of New Notes on February 13, 2012 with Weighted Average Interest Rate of 3% • $0.5 Billion of 1.4% Senior Notes Due February 2015 • $0.5 Billion of 2.15% Senior Notes Due March 2017 • $2.0 Billion of 3.55% Senior Notes Due March 2022 Proceeds Used to Redeem $
Slide 28: Financial Policy
Financial Policy Maintain Strong Balance Sheet & Liquidity Position Invest in Attractive Growth Projects/Capital Discipline Board Action Increased Common Stock Dividend Rate: $1.25/Share per Annum Board to Review Financial Policy on an Ongoing Basis 28
Slide 29: FCX Investment Summary
FCX Investment Summary World’s Premier Publicly Traded Copper Company World’s Largest Molybdenum Producer & Significant Gold Producer Long-lived Reserves, Geographically Diverse Operations Flexible Operating Structure Can Respond to Varying Market Conditions Significant Reserve Growth 29