Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Q2 2022 Earnings Presentation
33 slides from Freeport-mcmoran's earnings presentation, Jul 21, 2022
Slide 1: FCX Conference Call 2nd Quarter 2022 Results
FCX Conference Call 2nd Quarter 2022 Results July 21, 2022
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 plans, projections, or expectation
Slide 3: 2Q22 Highlights
2Q22 Highlights April • Solid operational results Key Stats Actual Estimate o Copper & gold sales 5% & 18% above April 2022 guidance Copper Sales (mm lbs) 1,087 1,040 o Copper & gold sales 17% & 56% above 2Q21 actuals Gold Sales (k ozs) 476 405 o 2Q unit net cash costs in line with April 2022 guidan
Slide 4: Current Copper Market Conditions
Current Copper Market Conditions Price insufficient to support new mine supply development Inventories Cu Price (metric tons) ($/lb) Copper Structurally Supported by 1,500,000 $5.00 Favorable Long-term Fundamentals Copper Price 1,200,000 $4.50 • Physical demand remains strong Incentive Price: $4.25*
Slide 5: S&P Global Copper Study Published in July 2022
S&P Global Copper Study Published in July 2022 Key takeaways from independent study led by Dan Yergin as project chairman • Copper — the “metal of electrification” — is essential to all energy transition plans • Copper demand is projected to grow from 25 million metric tons (MMt) today to about 50 M
Slide 6: Management Success & Experience in Successfully Navigating Prior Downturns
Management Success & Experience in Successfully Navigating Prior Downturns 2008/2009 2015/2016 2020 Global Financial crisis 18 months China slowdown COVID-19 Pandemic after Phelps Dodge Acquisition • Aggressive actions to reduce capital & costs • Significant reduction in costs and capital • Effectiv
Slide 7: 2Q 2022 Operations and Project Update
2Q 2022 Operations and Project Update North America South America Indonesia Cu Sales: 389 mm lbs Cu Sales: 288 mm lbs Cu Sales: 410 mm lbs Au Sales: 474 k ozs • Lone Star - Arizona • Cerro Verde - Peru • Grasberg o Increasing operating rates to achieve 300 o Concentrator facilities set a quarterly r
Slide 8: Annual Sales Profile
Annual Sales Profile July 2022 Estimate Copper Sales(1) (billion lbs) Gold Sales(2) (million ozs) 5 2 1.7 1.7 1.6 4.45 1.4 4.2 4.2 4 3.8 1 3 0 2021 2022e 2023e 2024e 2 Molybdenum Sales (million lbs) 100 1 82 80 80 80 75 50 0 2021 2022e 2023e 2024e 25 (1) Consolidated copper sales include 741 mm lbs
Slide 9: Reconciliation of 2022e Unit Net Cash Cost Guidance
Reconciliation of 2022e Unit Net Cash Cost Guidance ($ and ¢ per pound of copper) April 2022e July 2022e 2022e Site Production Guidance Guidance Costs Breakdown Price Assumptions Impacts Price Assumptions $4.75 Cu / $1,950 Au / $3.25 Cu / $1,700 Au / Other $19 Mo $16 Mo 11%*** Acid Materials Site Pr
Slide 10: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices ($ in bns except copper, gold and molybdenum prices) Sensitivities EBITDA l ($1,700/oz gold, $16/lb molybdenum) Average ’23e/’24e (US$ in mms) $16 EBITDA $12 Copper +/-$0.10/lb $430 $8 Molybdenum +/-$1.00/lb $ 80 Gold +/-$50/oz $ 80 $4 Average ’23e/’24e
Slide 11: Consolidated Capital Expenditures
Consolidated Capital Expenditures Excluding Indonesia Smelter Projects CAPEX (1) ($ in bns) $ Net of Scheduled Contributions $3.1 $3.1 Discretionary $2.9(2) Discretionary $0.6 $0.9 $1.9 Planned Planned (2) (3) $1.7 $1.3 $0.9 (3) Major Projects $1.3 Other $0.6 $1.2 $1.3 2021 2022e 2023e (1) See slide
Slide 12: Future Growth Embedded in Existing Asset Base
Future Growth Embedded in Existing Asset Base Provides Increased Leverage to Copper Prices New Leach Bagdad Lone Star El Abra Kucing Liar Technologies Expansion Expansions Expansion Grasberg District Americas Arizona Arizona Chile Indonesia • Advancing sulfide • Double concentrator • Near-term oxide
Slide 13: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity Attractive debt maturity profile (US$ bns) $8 $7.9 Total Debt & Cash at 6/30/22 Open Market Debt Retirements FCX Revolver $ - FCX/FMC Senior Notes 8.1 • Purchased $754 mm of Sr. Notes in open market 5.315% PT-FI Senior Notes 3.0 during 2022, including $582 mm in 2Q
Slide 14: Financial Policy
Financial Policy Cash returns Priorities to stockholders Share Repurchase Program Scorecard as of July 20, 2022 Up to 50% Free Authorized Repurchased Remaining Cash Flow(1) to Be Returned $5.0 ~$1.8 ~$3.2 To stockholders under billion billion billion performance-based payout Includes $0.5 bn in 1Q22
Slide 15: Executing Clearly Defined Strategy Focused on Copper
Executing Clearly Defined Strategy Focused on Copper Responsible Experienced producer of scale management team Long-lived Strong reserves balance sheet Embedded Cash returns growth options for shareholders 15
Slide 16: THE FUTURE
THE FUTURE fe =o = aa TT = Le
Slide 17: Reference Slides
ELECTRIFYING THE FUTURE Reference Slides
Slide 18: Copper – Metal of the Future
Copper – Metal of the Future Critical to Global Decarbonization Global Decarbonization is Expected to Drive Intensity of Copper Use More than 65% of the Renewable energy world’s copper is used technologies use four to in applications that five times more copper deliver electricity than fossil fuel p
Slide 19: The Copper Mark
The Copper Mark Recognition for Responsible Production COPPER MARK STATUS BY SITE: • Assurance framework developed to demonstrate the copper industry’s AWARDED responsible production practices Atlantic Copper smelter & Miami mine & smelter (AZ) refinery (Spain) Morenci mine (AZ) • Producers particip
Slide 20: Financial Highlights
Financial Highlights Sales Data 2Q22 2Q21 Copper Consolidated Volumes (mm lbs) 1,087 929 Average Realization (per lb) $ 4.03 $ 4.34 Site Production & Delivery Costs (per lb) $ 2.09 $ 2.02 Unit Net Cash Costs (per lb) $ 1.41 $ 1.48 Gold Consolidated Volumes (000’s ozs) 476 305 Average Realization (pe
Slide 21: 2Q22 Mining Operating Summary
2Q22 Mining Operating Summary Sales From Mines for 2Q22 & 2Q21 by Region North America South America (2) Indonesia (3) 389 389 410 474 288 310 302 230 (1) (1) 20 22 Cu Mo Au mm lbs mm lbs 000 ozs 2Q22 2Q21 2Q22 2Q21 2Q22 2Q21 2Q22 2Q21 2Q22 2Q21 North South 2Q22 Unit Net Cash Costs (per lb of Cu) Am
Slide 22: 2022e Operational Data
2022e Operational Data 2022e Sales by Region North America South America Indonesia 1,505 1,549 1,160 (2) (1) 1.7 80 Cu Mo Au mm lbs mm lbs mm ozs North South 2022e Unit Net Cash Costs (3) (per lb of Cu) America America Indonesia Consolidated Site Production & Delivery, excl. adjs.(4) $2.48 $2.49 $1.
Slide 23: 2022e Outlook
2022e Outlook Sales Unit Net Cash Operating Capital Outlook Cost of Copper Cash Flows (2) Expenditures • Copper: 4.2 billion lbs • Site prod. & delivery • ~$4.5 billion(3) @ • $3.1 billion (4) (excluding o 2022e: $2.13/lb $3.25/lb copper for smelter(5)) • Gold: 1.7 million ozs 2H22e o 3Q22e: $2.23/l
Slide 24: 2022e Quarterly Sales
2022e Quarterly Sales Copper Sales (million lbs) Gold Sales (thousand ozs) 1,200 500 476 409 400 420 1,087 1,083 400 1,024 1,020 300 1,000 200 100 800 0 1Q22 2Q22 3Q22e 4Q22e Note: Consolidated gold sales include 76k ozs in 1Q22, 89k ozs in 2Q22, 600 75k ozs in 3Q22e and 78k ozs in 4Q22e for noncont
Slide 25: PT-FI Mine Plan Metal Sales, 2021 – 2026e
PT-FI Mine Plan Metal Sales, 2021 – 2026e Copper 2022e – 2026e Gold 2022e – 2026e Total: 7.9 billion lbs copper Total: 7.9 million ozs gold Annual Average: ~1.6 billion lbs Annual Average: ~1.6 million ozs 1.7 1.7 1.65 1.55 1.6 1.6 1.55 1.5 1.5 1.3 1.3 1.35 Cu Au bn mm lbs ozs 2021 2022e 2023e 2024e
Slide 26: Lone Star Update
Lone Star Update Oxides Sulfides 2P Reserves: 4.9 billion lbs Mineral Potential: ~50 billion lbs (3) 120 (1) ● Success of oxide development advances 96 opportunity for scale Low capital 75 intensity ● Design to incorporate combined leach and investment concentrate facilities – similar to Morenci in
Slide 27: Advancing New Leach Technologies
Advancing New Leach Technologies Taking Leach to the Next Level ● Industry leader with long history of leach production Copper in Leach Stockpiles ● Internal and external initiatives to advance sulfide Unrecoverable by leaching technologies and to drive continuous Traditional Leach Methods recovery
Slide 28: Indonesia Downstream Processing Activities
Indonesia Downstream Processing Activities Greenfield Smelter PT Smelting Expansion Precious Metals Refinery (PMR) • 1.7 mm mt of annual concentrate capacity • 30% increase to existing smelter to add • To be constructed to process gold and 300,000 mt of annual concentrate capacity silver from greenf
Slide 29: Indonesia Downstream Processing Update
Indonesia Downstream Processing Update PT-FI’s Downstream Commitment July 2022 ● PT-FI committed in 2018 IUPK to construct 2 mm tpy in-country Cu concentrate processing capacity o Greenfield project expected to be completed as soon as feasible in 2024(1) o PT Smelting expansion expected to be comple
Slide 30: Discretionary Capital Projects
Discretionary Capital Projects* Kucing Liar Grasberg Mill Recovery Project ● Commenced long-term mine development activities ● Installing new copper cleaner circuit ● Approximate 10-year development timeframe ● Improved Cu concentrate grades/metal recoveries ● Sustain large-scale, low-cost Cu/Au pro
Slide 31: 2Q22 Copper Realization & 3Q22e Guidance
2Q22 Copper Realization & 3Q22e Guidance 2Q22 LME Average $4.31/lb Copper Price 3-Mo. Fwd Price for Copper $3.75lb at the End of June $4.03/lb FCX 2Q22 Consolidated Copper Price Realization (Generally, 50/50 weight of qtrly avg and 3-mo forward price at end of period) FCX 2Q22 Prior Period Revenue/E
Slide 32: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in mm) 12 mos ended 2Q22 6/30/2022 Net income attributable to common stock $840 $4,872 Interest expense, net 156 592 Income tax provision 571 2,649 Depreciation, depletion and amortization 507 2,092 Metals inventory adjustments 18 33 Net gain on sales of assets (2)
Slide 33: FREEPORT
FREEPORT FOREMOSTYN COPPER