Freeport-McMoRan, Inc. · NYSE:FCX
Freeport-McMoRan — Q4 2022 Earnings Presentation
39 slides from Freeport-McMoRan's earnings presentation, Jan 25, 2023
Slide 1: FCX Conference Call: 4th Quarter and Year Ended 2022 Results
FCX Conference Call 4th Quarter and Year Ended 2022 Results January 25, 2023
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: 2022 Performance
2022 Performance Solid Cash Flow Net Debt Solid Execution Increased Cash Generation & Capital Excluding Smelter Led to Sales Growth Returns to Shareholders (6) Management Below Financial Policy Target Copper (bn lbs) (1) Gold (mms ozs) (2) $ in bn $ in bn $ in bn 4.2 $9.5 3.8 1.8 $3 - $4 Bn $3.4 Net
Slide 4: 2022 Accomplishments
2022 Accomplishments OPERATIONS FINANCIAL ESG • Copper and gold sales growth • Implemented performance-based • Achieved Copper Mark at all payout under financial policy remaining Americas copper • Successful PT-FI underground sites; PT-FI engaged in transition – sustaining large- • Successful PT-FI
Slide 5: Copper Market Commentary
Copper Market Commentary Inventories Cu Price (metric tons) ($/lb) Copper Structurally Supported by 1,500,000 $5.00 Copper Price Favorable Long-term Fundamentals • Physical demand healthy 1,200,000 $4.50 • Low inventories 900,000 $4.00 • Ongoing industry supply disruptions • Secular growth in metals
Slide 6: Long-Lived Reserve Base
Long-Lived Reserve Base 25+ year implied reserve life for copper, excluding mineral resources Incremental Copper Reserves (1) By Region Mineral Mineral Consolidated Reserves (1) Resources (2) As of 12/31/2022 (recoverable) (contained) South Indonesia America Copper (bn lbs) 111.0 234.7 28% 28% Gold
Slide 7: Overview of Freeport-McMoRan's Molybdenum Business
Overview of Freeport-McMoRan’s Molybdenum Business • 2022 production 85mm lbs: 61% by-product / 39% primary World’s Largest Molybdenum Producer • By-product molybdenum produced at Bagdad, Sierrita, Morenci and (mm lbs) 0 20 40 60 80 100 Cerro Verde • Two primary molybdenum mines located in Colorado
Slide 8: 2022 Operational Data
2022 Operational Data 2022 Sales by Region North America South America Indonesia 1,469 1,582 1,162 (2) (1) 1.8 75 Cu Mo Cu Cu Au mm lbs mm lbs mm lbs mm lbs mm ozs North South 2022 Unit Net Cash Costs (per lb of Cu) America America Indonesia Consolidated Site Production & Delivery, excl. adjs.(3) $2
Slide 9: PT-FI Successful Transition to Underground Mining
PT-FI Successful Transition to Underground Mining • Sustaining large-scale, low-cost production Unit Net Cash Cost ($/lb of Cu) • Produced 3.0 mm dmts of copper concentrate in 2022 – Annual Record 2019 2020 2021 2022 $1.28 $0.43 $0.19 $0.09 • World’s largest underground operation • Positive long-ter
Slide 10: Indonesia Greenfield Smelter Project Update
Indonesia Greenfield Smelter Project Update PT-FI committed in 2018 IUPK to construct 2 mm tpy in-country Cu concentrate processing capacity (1) Preliminary Estimate of Spending on Greenfield Smelter & PMR (shared 51% PT Inalum/49% FCX)(2) ($ in bns) Anode Furnace Installation $1.8 Flash Converting
Slide 11: Future Growth Embedded in Existing Asset Base
Future Growth Embedded in Existing Asset Base Provides Increased Leverage to Copper Prices New Leach Bagdad Lone Star El Abra Kucing Liar Technologies Expansion Expansions Expansion Grasberg District Americas Arizona Arizona Chile Indonesia • Advancing sulfide • Double concentrator • Near-term oxide
Slide 12: Annual Sales Profile
Annual Sales Profile January 2023 Estimate Copper 5 Gold 2 1.8 1.7 1.8 1.6 Sales Sales 1.4 4.2 4.2 4.2 4.2 (billion lbs) (million ozs) 4 3.8 1 0 3 2021 2022 2023e* 2024e* 2025e NOTE: Consolidated gold sales include 253k ozs in 2021, 339k ozs in 2022, 812k ozs in 2023e, 871k ozs in 2024e and 769k ozs
Slide 13: Reconciliation of 2023e Unit Net Cash Cost Guidance
Reconciliation of 2023e Unit Net Cash Cost Guidance ($ and ¢ per pound of copper) 2023e Site Production January 2023e Costs Breakdown (1) 2022 Actual Impacts Guidance (2) Other (3) Site Production & Delivery $2.19 +10¢ $2.29 12%(5) Acid Materials By-product Credits (1.01) -3¢ (1.04) 5% and Supplies
Slide 14: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices Assuming $1,900/oz gold, $20/lb molybdenum Sensitivities Average ’24e/’25e ($ in bns except copper, gold and molybdenum prices) (US$ in mms) EBITDA $16 EBITDA $12 Copper +/-$0.10/lb $425 Molybdenum +/-$1.00/lb $ 80 $8 Gold +/-$50/oz $ 80 $4 Average Curre
Slide 15: Consolidated Capital Expenditures
Consolidated Capital Expenditures Excluding Indonesia Smelter Projects CAPEX (1) ($ in bns) $3.4 Discretionary $3.0 $2.7 $1.0 Discretionary Discretionary $2.5(2) $0.8 Major Planned Planned Planned Projects (2) (2) (2) $1.4 $1.7 $1.3 $0.8 Other Other Other $1.0 $1.1 $1.4 2022 2023e 2024e (1) See slid
Slide 16: Financial Policy: Performance-Based Payout Framework
Financial Policy: Performance-Based Payout Framework ~50% free cash flow(1) for shareholder returns Maintain Strong Cash Returns Advance Organic Balance Sheet to Stockholders Growth Opportunities Net Debt/Adjusted EBITDA Less than 1x $2.2 • Positioned for future growth • New projects in progress o K
Slide 17: 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 17
Slide 18: The Future
THE FUTURE fe =o = aa TT = Le
Slide 19: Reference Slides
ELECTRIFYING THE FUTURE Reference Slides
Slide 20: 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 21: 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 22: 2022 ESG Highlights
2022 ESG Highlights • Achieved the Copper Mark at all 11 of our eligible copper producing sites in North America, South America and Europe; PT-FI completed the assurance process and submitted its validation package • Signed letters of commitment for the new Molybdenum Mark for Climax and Henderson m
Slide 23: The Copper Mark & Molybdenum Mark
The Copper Mark & Molybdenum Mark Recognition for Responsible Production STATUS BY SITE: Assurance framework developed to demonstrate the copper industry’s AW ARDED responsible production practices Atlantic Copper smelter & Miami smelter, mine refinery (Spain) & rod mill (AZ) Producers participating
Slide 24: Financial Highlights
Financial Highlights Sales Data 4Q22 2022 Copper Consolidated Volumes, excluding purchases (mm lbs) 1,042 4,213 Average Realization (per lb) $ 3.77 $ 3.90 Site Production & Delivery Costs (per lb) $ 2.28 $ 2.19 Unit Net Cash Costs (per lb) $ 1.53 $ 1.50 Gold Consolidated Volumes (000’s ozs) 458 1,82
Slide 25: 4Q22 Mining Operating Summary
4Q22 Mining Operating Summary Sales From Mines for 4Q22 & 4Q21 by Region North America South America (2) Indonesia (3) 387 370 455 338 364 392 317 286 19 (1) 19 (1) Cu Mo Au mm lbs mm lbs 000 ozs 4Q22 4Q21 4Q22 4Q21 4Q22 4Q21 4Q22 4Q21 4Q22 4Q21 North South 4Q22 Unit Net Cash Costs (per lb of Cu) Am
Slide 26: Actions in 2022 to Strengthen Balance Sheet
Actions in 2022 to Strengthen Balance Sheet FCX PT-FI CERRO VERDE Open Market Debt Retirements Raised $3 bn in Senior Notes to Refinanced $350 mm term loan ▪ Purchased ~$1.1 bn of Sr. Notes in fund Indonesia Smelter Projects with revolver open market during 2022, including ▪ Average weighted cost of
Slide 27: Solid Balance Sheet and Liquidity
Solid Balance Sheet and Liquidity Attractive Debt Maturity Profile (US$ bns) $8 Total Debt & Cash at 12/31/22 Significant liquidity FCX Revolver $ - ▪ $8.1 bn in consolidated cash and cash equiv. FCX/FMC Senior Notes 7.6 PT-FI Senior Notes 3.0 ▪ $3.0 bn in availability under FCX credit facility $6.5
Slide 28: 2023e Outlook
2023e Outlook Sales Unit Net Cash Operating Capital Outlook Cost of Copper Cash Flows (1,2) Expenditures • Copper: 4.2 billion lbs • Site prod. & delivery • ~$7.2 billion(3) @ • $3.4 billion (excluding smelter o 2023e: $2.29/lb $4.00/lb copper for projects(4)) • Gold: 1.7 million ozs 2023e o 1Q23e:
Slide 29: 2022 and 2023e Sales by Region
2022 and 2023e Sales by Region 2022 Sales by Region North America South America Indonesia 1,582 1,469 1,162 75 (1) 1.8 (2) Cu Mo Au mm lbs mm lbs mm ozs 2023e Sales by Region North America South America Indonesia 1,500 1,460 1,200 80 (1) 1.7 (2) Cu Mo Au mm lbs mm lbs mm ozs (1) Includes molybdenum
Slide 30: 2023e Quarterly Sales
2023e Quarterly Sales Copper 1200 Gold 600 1,100 1,090 460 460 480 Sales 1,070 Sales 450 (million lbs) 1000 (thousand ozs) 300 900 300 150 800 0 1Q23e* 2Q23e 3Q23e 4Q23e NOTE: Consolidated gold sales include 94k ozs in 1Q23e, 236k ozs in 2Q23e, 236k ozs in 600 3Q23e and 246k ozs in 4Q23e for noncont
Slide 31: 2022 and 2023e Unit Production Costs by Region
2022 and 2023e Unit Production Costs by Region North South 2022 Unit Production Costs (per lb of Cu) America America Indonesia Consolidated Cash Unit Costs Site Production & Delivery (1) $2.58 $2.52 $1.58 $2.19 By-product Credits (0.33) (0.34) (2.13) (1.01) Treatment Charges 0.10 0.15 0.22 0.16 Roya
Slide 32: PT-FI Mine Plan Metal Production, 2022 – 2027e
PT-FI Mine Plan Metal Production, 2022 – 2027e Copper 2023e – 2027e Gold 2023e – 2027e Total: 8.1 billion lbs copper Total: 7.8 million ozs gold Annual Average: ~1.6 billion lbs Annual Average: ~1.6 million ozs 1.9 1.8 1.8 1.7 1.6 1.6 1.6 1.6 1.6 1.6 1.3 1.2 Cu Au bn mm lbs ozs 2022 2023e 2024e 2025
Slide 33: 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 34: 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 recovery improvement Traditional Le
Slide 35: Lone Star Update
Lone Star Update Oxides Sulfides Preliminary 2P Reserves: 6.7 billion lbs Mineral Potential: ~50 billion lbs (3) 120 (1) ● Success of oxide development advances opportunity for scale 85 Low capital 75 intensity ● Design to incorporate combined leach and investment concentrate facilities – similar to
Slide 36: 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 37: 4Q22 Copper Realization & 1Q23e Guidance
4Q22 Copper Realization & 1Q23e Guidance 4Q22 LME Average $3.63/lb Copper Price 3-Mo. Fwd Price for Copper $3.80/lb at the End of December $3.77/lb FCX 4Q22 Consolidated Copper Price Realization (Generally, 50/50 weight of qtrly avg and 3-mo forward price at end of period) FCX 4Q22 Prior Period Reve
Slide 38: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in mm) 12 mos ended 4Q22 12/31/2022 Net income attributable to common stock $697 $3,468 Interest expense, net 137 560 Income tax provision 557 2,267 Depreciation, depletion and amortization 515 2,019 Metals inventory adjustments (14) 29 Net gain on sales of assets -
Slide 39: Freeport
FREEPORT FOREMOSTYN COPPER