Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Freeport-McMoRan Copper & Gold — Q4 2004 Earnings Presentation
30 slides from Freeport-mcmoran's earnings presentation, Jan 18, 2005
Slide 1: 4th Quarter/Year-end 2004 Earnings Conference Call
th Quarter/Year-end 2004 4th Earnings Conference Call James James R. R. Moffett Moffett Chairman Chairman of of the the Board Board Richard Richard C. C. Adkerson Adkerson President President and and Chief Chief Executive Officer Executive Officer January January 18, 18, 2005 2005
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. Forward-looking statements are all statements other than historical facts, such as statements regarding estimated anticipated sales volumes, pro
Slide 3: Tectonics Map of the Indian Ocean Basin
3,000 M iles Tectonics Map of the Indian Ocean Basin Location of December 2004 Sumatran Earthquake Source: U.S. Geological Survey; Earthquake Hazard Program3
Slide 4: Tectonic Setting of the Indonesian Seas
Tectonic Setting of the Indonesian Seas Tsunami Hazard Map Source: U.S. Geological Survey; Earthquake Hazard Program 44
Slide 5: 4Q 2004 Highlights
4Q 2004 Highlights ¾ Sold 419 Million Lbs. Copper – Avg. Price of $1.43/lb. ¾ Sold 618,100 Ozs. Gold – Avg. Price of $433/oz. ¾ Average Milling Rate Approximated 230K MTPD ¾ Unit Net Cash Costs of $0.17/lb. ¾ $213 Million of Net Income, Including $65 Million of Special Items Insurance Gain: FCX Sh
Slide 6: 2004 Highlights
2004 Highlights ¾ Achieved Plan to Return to Normal Operations and Ramp-up to High Grade in 4Q ¾ Resolved Insurance Claim Related to 2003 Slippage Events ¾ Reserve Additions Replaced 200% of Copper Production and 100% of Gold Production Estimated Recoverable Reserves at 12/31/04 of 40.7 Billion Po
Slide 7: Grasberg Open Pit
7S 6S (deeper in pit) Pushback 6S Grasberg Open Pit South Wall, January 2005 Pushback 6S, our primary ore pushback, provides the majority of metal in 2005 7
Slide 8: Grasberg Open Pit: Key Accomplishments in 2004
Grasberg Open Pit Key Accomplishments in 2004 ¾ Re-established Safe Access to High-Grade Areas ¾ Completed Accelerated Waste Stripping of 30 Million Tonnes on South Wall ¾ Completed Resloping/Removing Debris ¾ Installed Additional Monitoring Systems ¾ Completed Drill Program to Confirm Rock Quality
Slide 9: Long Lived Reserves
=i Long Lived Reserves OF OUR METALS | | Reserves plus Production* Total Reserves {§ Pt-Fr’s Share * 100% Production since discovery of Grasberg in 1988 Kucing Liar a> Big Gossan Block A COW Ore Bodies Plan View
Slide 10: Reserves
Reserves Aggregate & Net to PT-FI 2004 Reserve Roll Forward (1) Aggregate PT-FI’s Share Cu Au Cu Au (billion lbs) (million ozs) (billion lbs) (million ozs) Reserves @ 12/31/03 54.4 60.4 39.7 46.6 Additions/changes* 3.2 2.4 2.0 1.5 Production (1.1) (1.5) (1.0) (1.5) Net Change 2.1 0.9 1.0 -0- Reserve
Slide 11: Geologic Resources
Geologic Resources * Grasberg District Aggregate PT-FI’s Share Contained Contained Metric Cu Au Cu Au Tons Cu Au (billion (million (billion (million (million) (%) (g/t) pounds) ounces) pounds) ounces) Measured & Indicated 1,996 0.53 0.41 23.5 26.4 14.1 15.8 Inferred 501 0.49 0.53 5.4 8.6 3.2 5.2 Tot
Slide 12: Positive Outlook
Positive Outlook ¾ PT-FI Copper and Gold Sales Expected to Total 1.5 Billion lbs. and 2.9 Million ozs. in 2005 2004 2005e % Change Copper (MM lbs) 992 1,500 51% Gold (M ozs) 1,443 2,900 101% Net Cash Costs (per lb) 40¢ 0¢ (1) (100%) ¾ At Prices of $1.35 Copper and $420 Gold, Operating Cash Flows Exp
Slide 13: LME & COMEX Exchange Stocks
LME & COMEX Exchange Stocks* 1,400 160 1,200 LME Copper Price 140 1,000 120 000’s Metric Tons Cents Per Pound 800 100 600 80 400 60 200 40 LME & COMEX Exchange Stocks* 0 20 2005 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 *LME and Comex, excluding Shanghai stocks, producer, cons
Slide 14: London Gold Prices
$ per oz. 250 300 350 400 450 500 Dec-98 Mar-99 Jun-99 Sep-99 ECB Dec-99 Announcement Mar-00 Jun-00 Sep-00 Dec-00 Mar-01 Jun-01 Announcements Producer Hedging Sep-01 Dec-01 Sept. 11 Mar-02 Attacks on U.S. Jun-02 London Gold Prices Sep-02 Dec-02 Mar-03 Conflict Jun-03 Prior to Iraqi Sep-03 Dec-03 Mar
Slide 15: PT-FI Mine Plan
PT-FI Mine Plan PT-FI’s Share of Metal Sales, 2004-2009e Copper, billion lbs Gold, million ozs 2005e – 2009e PT-FI Share 2005e – 2009e PT-FI Share Total: 6.8 billion lbs Total: 11.0 million ozs Annual Average: 1.36 billion lbs Annual Average: 2.2 million ozs 2.9 2.5 1.9 1.9 1.8 1.4 1.5 1.5 1.4 1.3 1
Slide 16: Mining Sequence in 2005-2009
Mining Sequence in 2005-2009 Copper Equivalent Cross Section A B 8S 8N 7S Year-end 2004 6S 6N 2005 2007 2006 2009 2008 Legend: 0.50 – 0.99 % Eq Cu 1.00 – 1.99 % Eq Cu 2.00 – 2.99 % Eq Cu > 3.00 % Eq Cu 16
Slide 17: 2005 Outlook: Quarterly Payable Metal Sales
2005 Outlook Quarterly Payable Metal Sales PT-FI’s share of Copper PT-FI’s share of Gold 1.5 billion pounds 2.9 million ounces 500 1000 930 415 810 395 800 400 380 Ounces in thousands 640 310 Pounds in millions 300 600 520 200 400 100 200 46% 54% 40% 60% 0 0 1Q05 2Q05 3Q05 4Q05 1Q05 2Q05 3Q05 4Q05 E
Slide 18: 2005 Average Net Unit Cash Costs at Various Gold Prices
2005 Average Net Unit Cash Costs at Various Gold Prices (¢ per payable pound) 13¢ 8¢ 3¢ -1¢ -6¢ $350 $375 $400 $425 $450 NOTE: Based on copper and gold sales of 1.5 billion lbs and 2.9 million ozs for 2005. Quarterly unit costs will vary significantly with quarterly metal sales volumes. Royalties an
Slide 19: Unit Production Costs
Unit Production Costs (per pound of copper) (1) 2004 2005e Cash Unit Costs Site Production & Delivery, 77¢ 55¢ After Adjustments Royalties (2) 5 6 Treatment Charges (2) 20 21 Gold/Silver Credits (62) (82) Net Cash Unit Costs 40¢ -0-¢ DD&A Rate 17¢ 14¢ (1) Estimate based on 1.5 billion pounds of copp
Slide 20: Operating Cash Flows
Strong Cash Flow Generator – Operating Cash Flow Model Results – 2005e – 2007e Annual Averages ($ in millions, except copper and gold prices) $1,000 Copper Sensitivities Gold Sensitivities with $400 Gold with $1.25 Copper $800 Operating Cash Flows $600 $400 $200 $0 $1.00 $1.25 $1.50 $350 $400 $450 $
Slide 21: Commodity Price Sensitivities
Commodity Price Sensitivities FCX Earnings & Cash Flow Annual Impacts +$25/oz 20¢ 20¢ Gold $36 +10¢/lb 42¢ 42¢ Copper $75 Impact Per Share* (¢/share) Impact ($ millions) * EPS based on 179 million basic shares outstanding. Note: Assumes projected 2005 annual sales of 1.5 billion lbs. copper and 2.9
Slide 22: FCX Capital Expenditures
FCX Capital Expenditures* ($ in millions) AC & Other 2005 – 2009 Average Annual: ~$145 Million PT-FI $180 $141 $150 $140 $160 $160 $130 $130 $135 $135 $130 $130 $119 $119 $115 $115 $120 $120 2004 2005e 2006e 2007e 2008e 2009e e = estimate. Amounts are projections; see cautionary statement * Includes
Slide 23: 2005e Capital Expenditures
2005e Capital Expenditures ($ in millions) 2005e FCX Total: $180 million Common Infrastructure $17 DOZ 50K $19 Expansion Capital Sustaining* $95 $26 DOZ Capital* $23 Atlantic Copper & Other e = estimate. Amounts are projections; see cautionary statement * Includes a total of $20 million in Sustainin
Slide 24: DOZ Expansion to 50,000 t/d
DOZ Expansion to 50,000 t/d Project Overview ¾ DOZ outperforming expectations. Additional infrastructure & development required to sustain rates above 35K t/d. ¾ Expansion is financially attractive 27% IRR at 85¢ copper & $270 gold 46% IRR at $1.25 copper & $400 gold ¾ Expansion Capital totals $
Slide 25: Common Infrastructure
Common Infrastructure Access to Underground Reserves COW A Ore Bodies Plan View Grasberg Grasberg Block Portals at Ridge Camp Grasberg December 2004 UG Pit Cave “Spur” N Kucing Liar MLZ Deep Kucing Liar ESZ MLZ DOZ “Spur” N Big Gossan Dom BC Block A COW Ore Bodies Dom Pit MLZ Plan View Big Gossan Mi
Slide 26: Big Gossan Development Studies
Big Gossan Development Studies • Aggregate Reserves Grasberg Block A COW 9 33 million tonnes Underground Ore Bodies 2.8% Cu & 1.0 g/t Au Plan View 9 Recoverable Metal Grasberg Pit 1.7 billion lbs copper N 0.8 million ozs gold • Feasibility study to be Kucing Liar MLZ completed in 1Q05 Deep MLZ 9 Ope
Slide 27: 2005e-2007e Average Annual Cash Flow After Capital Expenditures
2005e – 2007e Average Annual Cash Flow After Capital Expenditures (1) (1) ($ in millions, except copper and gold prices) $800 Copper Sensitivities Gold Sensitivities with $400 Gold with $1.25 Copper Available for $600 debt reduction/ shareholder returns (2) $400 $200 Current Annual Dividend of $1.00
Slide 28: Debt Maturities
Debt Maturities ($ in millions) $1,200 Total Total Debt Debt @ @ 12/31/04 12/31/04 $1,952 $1,952 Less Less Cash Cash @ @ 12/31/04 12/31/04 ($552) ($552) Total Total After After Cash Cash $1,400 $1,400 $900 $600 $578 $578 $510 $510 7% Conv. Notes $345 $345 $297 $297 10⅛% Convert $300 FCX Senior price
Slide 29: Financial Policy
Financial Policy ¾ Maintain Strong Balance Sheet and Financial Flexibility Reduced Gross Debt by $276 Million and Net Debt by $330 Million in 2004 ¾ Continue to Reduce Debt Where Practical ¾ Establish Sustainable Regular Quarterly Common Dividend Initiated Dividend in February 2003 at $0.36/Shar
Slide 30: Summary
Summary ¾ Strong Cash Flow Generator ¾ Long-lived Reserves ¾ Unhedged Exposure to Copper & Gold Markets ¾ Improved Balance Sheet/Enhanced Shareholder Returns ¾ Attractive Valuation 30
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