Freeport-mcmoran, Inc. · NYSE:FCX

Freeport-mcmoran — Goldman Sachs Annual Global Metals & Mining, Steel Conference 2012

26 slides from Freeport-mcmoran's conference presentation, Nov 28, 2012

  1. Slide 1: Annual Metals, Mining, and Steel Conference

    Annual Metals, Mining, and Steel Conference Kathleen L. Quirk Executive VP & CFO November 28, 2012 www.fcx.com CONNECTING THE FUTURE®

  2. 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

  3. 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 

  4. 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 82 mm lbs2 Cobalt Grasberg (90.64%) Reserves Cu 31.6 bn lbs Au 32.2

  5. 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 3Q12 Report. Rankings based on

  6. 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 Global Exchange Stocks* 0 0 Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10 11 11 12 12 * Inc

  7. Slide 7: Copper Market Commentary

    Copper Market Commentary  China Remains Important Demand Driver  Improving U.S. Copper Demand - Recent Auto and Housing Data Have Been Positive  Weak European Demand  Global Inventories Remain Relatively Low  Ongoing Supply Challenges 7

  8. Slide 8: 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

  9. Slide 9: 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

  10. Slide 10: Highly Attractive Brownfield Development Projects

    Highly Attractive Brownfield 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 sulfide expansions Morenci (115K)

  11. Slide 11: 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

  12. Slide 12: 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. 12

  13. Slide 13: Grasberg BC & DMLZ Underground Mine Development

    Grasberg BC & DMLZ Underground Mine Development • Completed significant development on access to underground ore bodies • To-date, completed 66 km of development in Grasberg BC Grasberg open pit & 32 km in DMLZ; record development in both mines in 3Q • Key development activities include work on ore

  14. Slide 14: Update on Grasberg

    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 during 2013; current rate: 50K t/d  Mine sequencing/geotechnical factors • Outlook for improving metal product

  15. Slide 15: 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 (100%) & Cerro Verde in developm

  16. Slide 16: Climax Molybdenum Start-Up

    Climax Molybdenum Start-Up Climax Processing Facilities  Construction completed mid-2012  Start-up in March 2012, first moly shipment in 2Q12  Ramp up to 20mm lbs/yr during 2013, subject to market conditions  Capacity to increase to 30mm lbs/yr  Reserves at year-end 2011 total 578 million lbs 1

  17. Slide 17: Exploration Targets in Major Mineral Districts

    Exploration Targets in Major Mineral Districts $255 million in 2012e North America 30% Australasia 6% South & Other Areas America Indonesia 29% 12% Africa 23% Note: FCX’s consolidated share; e = estimate. See Cautionary Statement. 17

  18. Slide 18: 2012 Outlook

    2012 Outlook  Sales Outlook: • Copper: 3.6 Billion lbs. • Gold: 1.0 Million ozs. • Molybdenum: 82 Million lbs.  Unit Net Cash Cost(1): • $1.50/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

  19. Slide 19: Near-Term Sales Profile

    Near-Term Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 5.0+ 2 1.8 5 1.4 1.4 4.5 4.3 1.0 1 4 3.7 3.6 0 2011 2012e 2013e 2014e 3 ____________________ Note: Consolidated gold sales include approximately 139k ozs in 2011, 105k ozs in 2012e, 140k ozs in 2013e, and 180k ozs in 2014e f

  20. Slide 20: 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) $1.90 $1.61 $3.24 $1.53 $2.03 By-product Credits (0.35) (0.27) (2.24) (0.36) (0.70) Treatment Charges 0.12 0.16 0.21

  21. Slide 21: Reconciliation of Unit Cash Costs

    Reconciliation of Unit Cash Costs Consolidated ¢ per lb of copper 2011 101¢ Grasberg (a) 28 North America (b) 9 South America (c) 11 Tenke (d) 1 Total 49 2012e 150¢ Impact of Higher 2013e/2014e Grasberg Volumes (34¢) With Higher Grasberg Volumes 116¢ (a) lower volumes (copper down 16%, gold down 28%

  22. Slide 22: EBITDA and Cash Flow at Various Copper Prices

    EBITDA and Cash Flow at Various Copper Prices Average EBITDA* ($1,500 Gold & $12 Molybdenum) $18 (US$ billions) $15 $12 ~50% $9 2015e/2016e Increase Average $6 2013e/2014e $3 Average $0 Cu $3.00/lb Cu $3.50/lb Cu $4.00/lb Average Operating Cash Flow (excluding Working Capital changes)* ($1,500 Gold

  23. Slide 23: Sensitivities

    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% $90 $65 Purchased Power(2): -/+ 10% $50 $40 Currencies(3): +/- 10% $150 $110 (1) $3.60/gallon base case assumption. (2) 7.0¢/k

  24. Slide 24: Capital Expenditures

    Capital Expenditures (1) Major Projects All Other (US$ billions) $5 $4.6 $4 $3.6 1.6 $3 $2.5 1.4 $2 1.1 (3) (3) 3.0 $1 (2) 2.2 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

  25. Slide 25: Financial Policy

    Financial Policy  Maintain Strong Balance Sheet & Liquidity Position  Invest in Attractive Growth Projects/Capital Discipline  Current Common Stock Dividend Rate: $1.25/Share per Annum  Board to Review Financial Policy on an Ongoing Basis 25

  26. Slide 26: 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  Strong Near-term and Longer-term Growth Profile  Flexible Operating Structure Can Respond to Varying M

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