Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Freeport Mcmoran Copper & Gold — Q2 2006 Earnings Presentation
31 slides from Freeport-mcmoran's earnings presentation, Jul 18, 2006
Slide 1: 2nd Quarter 2006 Earnings Conference Call
24 Quarter 2006 Earnings Conference Call James R. Moffett Richard C. Adkerson Chairman of the Board President and Chief Executive Officer Kathleen L. Quirk Mark J. Johnson Senior Vice President, Senior Vice President and Chief Financial Officer Chief Operating Officer July 18, 2006 i=] FREEPORT-McMo
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains forward-looking statements in which we discuss factors we believe may affect our performance in the future, Forwarclooking statements are all statements other than historical facts, such as statements regarding projected ore grades and milling rates, p
Slide 3: Quarter Highlights
24 Quarter Highlights Operating Data 2006: LHOG: Copper Volumes (1m /bs) 220 445 Realization (per ) $3.33 $3.27 Gold Volumes (000% ozs} 278 750 Realization (er oz) $614 $585) Financial Results (inmillions; except per-share amounts) Net Income $367 $619 ©) Diluted Earnings Per Share $1.74 $2.97 2) Op
Slide 4: First Half Financial Transactions
| First Half Financial Transactions = Common Dividends — $352 Million ($1.88/Share) = Share Purchases — $100 Million ($49.94/Share) = Debt Reduction — $184 Million e Net Debt at 6/30/06 = $0.7 Billion, Including $0.3 Billion Convertible Notes with a $30.87 Conversion Price Total Debt Reduction and S
Slide 5: 2Q06 Operations
Fv . a 2Q06 Operations = _ ¢ In May, 2.5 million tonnes of atypical ore in the “6 North” pushback ¢ This type of material adversely affected ore flow, mill recoveries & concentrate grades. « We have implemented steps to Mill Throughput mitigate adverse impacts of this type 000's td of ore in the fut
Slide 6: Full Year Outlook
Full Year Outlook = Sales of 1.2 Billion Ibs. Copper, 1.7 Million ozs. of Gold = Continuation of Strong Cash Flows = At Prices of $3.00/Ib. Copper and $600/0z. Gold in Second Half, Full Year Operating Cash Flows Would Approximate $1.6 Billion - Second Half Operating Cash Flows Would Approximate $1.2
Slide 7: 2006 Outlook Quarterly Payable Metal Sales
Pounds in millions 500 400 100 2006 Outlook Quarterly Payable Metal Sales PT-FU's share of Copper PT-FI's share of Gold 1.2 billion pounds 1.7 million ounces 625 610 475 500+ 472 3 z 8 3 375 2 320 © e 278 ¢ 250 5 ie} 125 <— 45% —>|<— 55% — oO 1906 2906 3Q06 AQ06 1Q06 2906 3Q06 AQO6 Actual Estimate A
Slide 8: Unit Production Costs
Unit Production Costs (per pound of copper) 1H06 2Ho6e” 2006e” Cash Unit Costs Site Production & Delivery 123¢ 88q¢ 101¢ Royalties 9 10 10 Treatment Charges 43 39 40 Gold/Silver Credits 107 (74) (85) Net Cash Unit Costs 68¢ 63¢ 66¢ (1) Estimate based on 2006 volumes of 1.2 billion pounds of copper a
Slide 9: z fale ol eae
z fale ol eae
Slide 10: Mine Plan Update
i= a Mine Plan Update 2006-2010 Metal Plan « Reflects updates to incorporate recent mining activities & new geotechnical data « Revised metal plan reflects a deferral of high grade ore from 2007/2008. « Plans incorporate expansion of DOZ to 80,000 t/d. « Revised estimates average 1.24 billion lbs/1.
Slide 11: Five Year Metal Revisions
El Five Year Metal Revisions i Geotechnical Considerations Grasberg Drill Density oe . . . — Tne —”~C«Ce:« Significant increase iin geologic data since 2004 20,300 additional drill meters 40% increase in meters ¢ Additional mining has resulted in significant increase in rock exposed in highwall. ¢ I
Slide 12: Mining Sequence in 2006
-) Mining Sequence in 2006 i Copper Equivalent Cross Section A Following mine-out of remaining ore in 6S in 1006, 6N is the Primary Ore Pushback in 2006 Leaend: mm 0.50-0.99% Eqcu 4 mm 2.00-2.99% Eqcu mm > 3.00% Eqcu
Slide 13: Mining Sequence in 2006
-) Mining Sequence in 2006 i Copper Equivalent Cross Section A Following mine-out of remaining ore in 6S in 1006, 6N is the Primary Ore Pushback in 2006 Leaend: mm 0.50-0.99% Eqcu 4 mm 2.00-2.99% Eqcu mm > 3.00% Eqcu
Slide 14: Mining Sequence in 2006
-) Mining Sequence in 2006 i Copper Equivalent Cross Section A Following mine-out of remaining ore in 6S in 1006, 6N is the Primary Ore Pushback in 2006 Leaend: mm 0.50-0.99% Eqcu 4 mm 2.00-2.99% Eqcu mm > 3.00% Eqcu
Slide 15: Mining Sequence in 2006
-) Mining Sequence in 2006 i Copper Equivalent Cross Section A Following mine-out of remaining ore in 6S in 1006, 6N is the Primary Ore Pushback in 2006 Leaend: mm 0.50-0.99% Eqcu 4 mm 2.00-2.99% Eqcu mm > 3.00% Eqcu
Slide 16: Mining Sequence in 2007
Mining Sequence in 2007 Copper Equivalent Cross Section Following mine-out of a relatively small amount of high grade ore from 6N in 2007, 7S will be the Primary Ore Pushback Previous Plan in Ore == J 4 “Revised mine plan results in a deferral of a relatively small amount of high grade ore trom 6N w
Slide 17: Mining Sequence in 2008
P44) Mining Sequence in 2008 i Copper Equivalent Cross Section Previous Plan in High Grade 7S is the Primary Ore Pushback in 2008 Leaend: mm 0.50-0.99% Eqcu 1.00 - 1.99 % Eqcu mm 2.00-2.99% Eqcu mm > 3.00% Eqcu
Slide 18: Mining Sequence in 2009
-4) Mining Sequence in 2009 i Copper Equivalent Cross Section 7S & 8E are the Primary Ore Pushbacks Previous Plan in High Grade Legend: mm 0.50 -0.99 % Eqcu 1.00 - 1.99 % Eq Cu mm 2.00 -2.99 % Eqcu mm >3.00% Eqcu
Slide 19: Mining Sequence in 2010
a Mining Sequence in 2010 i Copper Equivalent Cross Section 8E is the Primary Ore Pushback in 2010 Legend: mm 0.50-0.99% Eqcu 1.00 - 1.99 % Eqcu mm 2.00-2.99% Eqcu mm > 3.00% Eqcu
Slide 20: PT-FI Mine Plan
PT-FI Mine Plan PT-FI’s Share of Metal Sales, 2006e-2010e Copper, billion lbs Gold, milfion ozs 2006e - 2010e PT-Fi Share 2006¢ - 2010e PT-Fi Share Total: 6.2 billion ibs Total: 9.3 million ozs Annual Average: 1.24 billion ibs Annual Average: 1.9 million ozs 2.1 1.9 7 1.8 1.8 1.4 12 1.3 1.2 11 E 200
Slide 21: Positive Markets
Jan-99 “LME and Comex, excluding Shanghai stocks, producer, consumer and merchant stocks. $725 $625 gsa5 a S 425} $325 $225 Dec-98 Jun-99 Dec-99 Jun-O0 Dec-00 Jun-01 Dec-01 Jun-O2 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Ds Positive Markets LME Copper Price punog .Bd s1uaD, LME & COMEX Exchange Sto
Slide 22: FCX Operating Cash Flows at Varying Copper & Gold Prices
FCX Operating Cash Flows (Annual Avg. 2006e-2010e at Varying Copper & Gold Prices ( in millions, except copper and gold prices) $2,000 @ $1500 . 2 a 2 > iz = < F AY $1,000 So : 3 3 a ¢ 1 a oy © $500 © So oS a $0 $1.50 $2.00 $2.50 $3.00 $400 $500 $600 $700 $500 $2.0 Copper Sensitivities Gold Sensitiv
Slide 23: Commodity Price Sensitivities
Commodity Price Sensitivities FCX Earnings & Cash Flow Annual Impacts +$25/o0z Gold $24 +10¢/Ib Copper $62 (0) impact Per share* (¢/share) HB impact ( millions) *EPS based on 187 million basic shares outstanding. Note: At projected five-year annual average production of 1.24 billion Ibs. of copper a
Slide 24: FCX Capital Expenditures
FCX Capital Expenditures ($ in millions) i PT-FI 2006e — 2010e Annual Average ~ $215 Million q Long-term Long-tern $250 $250 melects 215 $ $200 $170 $143 $120 $120 $110 ae $80 2005 2006e 2007e 2008e 2009e 2010e e = estimate. Amounts are projections; see cautionary statement. “Includes PT-FI's share
Slide 25: Development Projects
| Development Projects = DOZ Expansions = Common Infrastructure = On-going Mill Optimization - High Pressure Grinding Rolls = Big Gossan 25
Slide 26: DOZ Underground Mine
Z Underground Mine « Expansion to 50,000 t/d on track for completion in mid-2007 « Anticipate further expansion to 80,000 t/d -- Accelerates metal production from Ertsberg East -- Accelerated development & mobile equipment -- Additional ventilation infrastructure -- Accelerated capital to 2007-2010
Slide 27: Common Infrastructure
Common Infrastructure Access to Underground Reserves 2Q 2007 Complete tunnel to Grasberg BC ¥ Grasherg © ieee ae a 94 Begin mine development & other facilities Grasberg Block using Liar Cave “Spur” / Kucing Liar mz, June 2006. ~3 km in each tunnel COW A completed y, Ore Bodies 7 Infrastructure Plan
Slide 28: Cash Flows at $3.00/$600
Cash Flows at $3.00/$600 ( in billions) === Operating Cash Flow Excess Cash Flow* Excess Cash Flow* $0.85 Minority Distribution Y Preferred Uses of ian oc Cash Flow Debt Maturities 2HO6e Annual Avg. 2007e-2010e “Before Common Dividends, Share Purchases, Debt Prepayment (Regular Common Dividend appro
Slide 29: Historical Shareholder Returns
Historical Shareholder Returns = $1.6 Billion in FCX Open Market Purchases Since 1995 Spin-off - 2,0 Million FCX Common Shares for $100 Million, $49.94 per Share Average in 2Q06 - 81.8 Million Shares in Open Market Purchases at an Average Price of $19.42 per Share Since Inception = $2.4 Billion in C
Slide 30: Financial Policy
| Financtal Policy " Maintain Strong Balance Sheet and Financial Flexibility " Maintain Regular Quarterly Dividend That Can Be Sustained Within Broad Range of Commodity Prices " In Periods of High Commodity Prices, Supplement Regular Dividend With Special Dividends/Share Purchases 31
Slide 31: Strong Cash Flow Generator
Strong Cash Flow Generator Long-lived Reserves Unhedged Exposure to Copper & Gold Markets Improved Balance Sheet/Enhanced Shareholder Returns Attractive Valuation 32
Freeport Mcmoran Copper & Gold — Q2 2006 Earnings Presentation on 6ix