Freeport-mcmoran, Inc. · NYSE:FCX

Freeport-mcmoran — Barclays Select Series 2013: Americas Mining & Materials Forum

35 slides from Freeport-mcmoran's conference presentation, Mar 21, 2013

  1. Slide 1: Barclays Select Series 2013: Americas Mining & Materials Forum

    Barclays Select Series 2013: Americas Mining & Materials Forum March 21, 2013 www.fcx.com CONNECTING THE FUTURE®

  2. 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 those statements regarding project

  3. Slide 3: Additional Information about the Proposed Transactions and Where to Find It

    Additional Information about the Proposed Transactions and Where to Find It PXP Transaction In connection with the proposed transaction, FCX has filed with the SEC a registration statement on Form S-4 that includes a preliminary proxy statement of PXP that also constitutes a prospectus of FCX. FCX a

  4. Slide 4: FCX Overview

    FCX Overview  Global Leader in Production of Copper, Gold and Molybdenum  Geographically Diverse  Substantial Long-Lived, Low Cost Reserve Position  Financially Attractive Growth Projects  Strong Financial Profile  Environmentally Responsible  Experienced Team  Proposed O&G Acquisitions to E

  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 Southern Rio Tinto Anglo KGHM Antofagasta RAO Norilsk Copper American ____________________ Source: Brook Hunt 4Q12 Report. Rankings based on

  6. Slide 6: Markets

    Markets 2,500 500 Oil Price* ($/bbl) $150 LME Copper Price 2,000 400 $125 000’s Metric Tons Cents Per Pound $100 1,500 300 $75 1,000 200 $50 Global Exchange 500 100 Stocks* $25 0 0 $0 Jan-03 Jan-06 Jan-09 Jan-12 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 * Includes LME, Comex and Shanghai exchange in

  7. Slide 7: Copper Market Commentary

    Copper Market Commentary  China Remains Important Demand Driver - Economic Activity Improving - Potential for Further Stimulus - Growing Copper Concentrate Imports/Lower Cathode Imports  Improving U.S. Demand - Healthy Automotive Sector - Recovering Housing Sector  European Demand Remains Weak 

  8. Slide 8: World Class Copper Discoveries Are Extremely Rare

    World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves 2012e Copper Production Million metric tons Thousand metric tons 0 5 10 15 20 25 30 0 200 400 600 800 1000 1200 Escondida - 1979 Escondida - 1979 Grasberg Complex - 1988 1988 Chuquicamata - 1910 Collahuasi - 1979 Antamina

  9. Slide 9: Highly Attractive Brownfield Copper Development Projects

    Highly Attractive Brownfield Copper 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

  10. Slide 10: Volume Growth with Brownfield Projects in Progress

    Volume Growth with Brownfield Projects in Progress Copper (billion lbs per year) 2015e-2020e v. 2012 5.0+ +15%+ 4.4 SA +20% NA 3.65 Africa Indonesia Indonesia Africa Brownfield Projects South America • Proven Technology • Capital efficiency • Economies of scale North • Risks better America understoo

  11. Slide 11: 2012 Highlights

    2012 Highlights  Production Growth in North America and Africa  Unusually Low 2012 Ore Grades in Indonesia – Expect Significant Increases in 2013 and Beyond  Advanced Financially Attractive Brownfield Development Projects • Tenke Phase II Substantially Complete • Cerro Verde EIS Approved; Constru

  12. Slide 12: 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 by year- end 2013; current rate: 50K t/d  Mine sequencing/geotechnical factors • Outlook for improving metal p

  13. Slide 13: FCX Acquisitions of PXP & MMR – Transaction Rationale

    FCX Acquisitions of PXP & MMR – Transaction Rationale  Positive Long-Term Global Economic Outlook  Limited Opportunities to Invest in Copper Beyond Brownfield Expansions  Attractive Opportunity to Acquire High Quality Assets • Strong Margins and Cash Flows • Enhances Financially Attractive Growth

  14. Slide 14: Phelps Dodge Case Study

    Phelps Dodge Case Study  $26 Billion Acquisition in 2007 Rapid Delevering  Highly Successful Transformational Transaction ($ in bns)  Asset & Geographic $20 Diversification $17.6  Significant Reserve Additions $15 • +46 billion lbs Cu* $10  Developed World-Class Copper $7.2 Portfolio • Recogniz

  15. Slide 15: Long Track Record of Generating Value for Shareholders

    Long Track Record of Generating Value for Shareholders Exploration & History of Prudent Capital Solid Financial Allocation & Opportunistic Development Performance Acquisitions  Grasberg Discovery &  Financial Discipline  Achieving Production Development  Successful Phelps Dodge Targets  Tenke F

  16. Slide 16: FCX’s Global Footprint

    FCX’s Global Footprint Major Operations & Development Projects North America1 All major mining assets majority-controlled and operated Reserves Cu 38.8 bn lbs Mo 2.69 bn lbs Oil & Gas 688 mm bbls2 Copper Sales Copper/Gold/Silver Cu 1.4 bn lbs Molybdenum Mo 90 mm lbs3 Oil & Gas 175 MBOE/d Cobalt Gras

  17. Slide 17: Combined Reserves and Resources

    Combined Reserves and Resources (billion lbs of copper) (million barrels of oil equivalents) 8,600+ 230 113 Mineralized Near-term billion Material (b) Potential: ~8,000 lbs (contained copper) 117 at $2.20 Cu price 688 Reserves Probable: 213 at $2.00 Cu price Proved: 475 Reserves (a) Reserves (a) & 2

  18. Slide 18: Attractive Portfolio of Brownfield Copper Expansions

    Attractive Portfolio of Brownfield Copper Expansions 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%) & C

  19. Slide 19: High Quality U.S. Oil & Gas Portfolio

    High Quality U.S. Oil & Gas Portfolio Proved & Probable Reserves (1) Natural Gas 688 MMBOE (81% Oil/Liquids) Oil Other 3% Haynesville 5% GOM Shelf 8% California 41% Deepwater GOM 34% 9% Eagle Ford 2013e Production by Region 175 MBOE/d 2013e Production Mix Other GOM 3% Shelf 11% Gas Deepwater 28% GOM

  20. Slide 20: Enhanced Geographic & Commodity Diversification

    Enhanced Geographic & Commodity Diversification 2013e EBITDA (1) Existing Pro forma South North America North America America 29% 48% South 29% America 21% Indonesia 11% 31% 8% Indonesia Africa 23% Africa Mining EBITDA Margin: 74% Mining Mining: ~ 50% 100% Oil & Gas: ~75% Oil & Gas 26% (1) Based on

  21. Slide 21: Enhanced Exploration Leverage with Multiple Near-term Catalysts

    Enhanced Exploration Leverage with Multiple Near-term Catalysts Deepwater GOM Shallow Water Ultra-Deep Onshore U.S.  Near-term Net Potential  2 Wells Drilling  Eagle Ford – ~85 MMBOE of 1,000+ MMBOE  Recent Positive Results on  Haynesville – ~5 Tcfe • Phobos Currently Drilling Lineham Creek Ons

  22. Slide 22: Diverse Production Profile with Strong Growth

    Diverse Production Profile with Strong Growth Gold Sales (million ozs) Copper Sales (billion lbs) 2 1.8 1.8 5.0+ 1.4 5 1.0 4.5 1 4.3 4 0 3.65 2012 ____________________ 2013e 2014e 2015e Note: Consolidated gold sales include approximately 102k ozs in 2012, 140k ozs in 2013e, 175k ozs in 2014e and 170

  23. Slide 23: FCX Pro Forma EBITDA & Cash Flows

    FCX Pro Forma EBITDA & Cash Flows EBITDA Operating Cash Flow* $25 $20 ~45% $15 Increase 2015e/ $ billions 2016e ~45% Avg. 2015e/ Increase $10 2016e Avg. 2013/ 2013/ $5 2014 2014 Avg. Avg. $0 $3.00 $3.50 $4.00 $3.00 $3.50 $4.00 Copper Prices Copper Prices $1,500 Au/$12 Mo/$100 Oil/$4.50 Gas $1,500 Au

  24. Slide 24: Focused and Disciplined Capital Allocation Philosophy

    Focused and Disciplined Capital Allocation Philosophy Maintain Strong Balance Sheet & Credit Profile Ensure Establish Short, Allocate Capital to Focus on Potential Medium and Long Low Cost, Long-lived, Largest is Well Term Potential for Expandable Assets Resources Understood Primary Assets Technical

  25. Slide 25: Capital Expenditures

    Capital Expenditures (1) (2) Major Mining Projects Other Mining Oil & Gas (US$ billions) $8 $7.3 $7.1 $6.3 $6 2.5 2.9 3.3 $4 1.8 1.4 1.0 $2 2.8 3.0 (2) 2.0 $0 2013e 2014e 2015e (1) Capital expenditure estimates include projects in progress. Project spending will continue to be reviewed and revised s

  26. Slide 26: Oil & Gas Cash Flows – Targeted to be Self-funding

    Oil & Gas Cash Flows – Targeted to be Self-funding Operating Cash Flow CAPEX (US$ billions) $4.0 $3.0 $2.0 $1.0 $0.0 2013e 2014e 2015e NOTE: Assumes pricing of $100/bbl Brent crude for oil and $4.50/MMbtu for natural gas e= estimate. See Cautionary Statement. 26

  27. Slide 27: Significant Debt Reduction

    Significant Debt Reduction Year-End Net Debt at Varying Copper Prices (US$ billions) $20 $16.3 $15 $10 $7.7 $5 $2.0 $0 ($3.5) -$5 ’13-’16 Avg. Copper Price $3.00 $3.50 $4.00 9/30/12 Pro Forma Net Debt/’13-’16 Avg. EBITDA 0.6x 0.1x N/A Pro Forma YE 2016e Note: Sensitivity assumes $12 Molybdenum, $1,5

  28. Slide 28: Recent Debt Offering

    Recent Debt Offering  Issued $6.5 Billion of New Notes on March 7, 2013 with Weighted Average Interest Rate of 3.9% • $1.5 Billion of 2.375% Senior Notes Due March 15, 2018 • $1.0 Billion of 3.100% Senior Notes Due March 15, 2020 • $2.0 Billion of 3.875% Senior Notes Due March 15, 2023 • $2.0 Billi

  29. Slide 29: Financial Policy

    Financial Policy  Maintain Strong Balance Sheet & Liquidity Position  Reduce Debt Incurred in Acquisitions Using Projected Substantial Cash Flows Generated from Combined Business  Invest in Projects with Strong Financial Returns/Capital Discipline  Anticipate Continuing Current Common Stock Divi

  30. Slide 30: Combined Company Highlights

    Combined Company Highlights  Creates A Premier U.S. Based Natural Resources Producer  World’s Largest Publicly Traded Copper Producer  Significant Producer of Oil, Gold & Molybdenum  Significant Long-term Natural Gas Resources  Strong Margins & Cash Flows  High Quality, Long-lived and Geograph

  31. Slide 31: Reference Slides

    Reference Slides

  32. Slide 32: 2013e Operating Estimates

    2013e Operating Estimates 2013e Unit Production Costs (per pound of copper) North South America America Indonesia Africa Consolidated Cash Unit Costs (2) Site Production & Delivery (1) $1.98 $1.65 $2.27 $1.32 $1.89 By-product Credits (0.26) (0.32) (1.94) (0.37) (0.72) Treatment Charges 0.10 0.17 0.2

  33. Slide 33: 2013e Oil & Gas Operating Estimates

    2013e Oil & Gas Operating Estimates Rocky Mtns. & Operating Cost: $1.65/Mcfe California Haynesville Pricing: NYMEX Operating Cost: $27/bbl Pricing: Brent Based Gulf of Mexico Shelf/ Deepwater Operating Cost: $15/bbl Pricing: LLS Eagle Ford Operating Cost: $10/bbl Pricing: LLS/NYMEX 2013e Oil & Gas S

  34. Slide 34: Oil & Natural Gas Hedging Positions

    Oil & Natural Gas Hedging Positions Oil Indexed to Brent 2013 2014 2015 Puts Collars 25k bbls/d 5k bbls/d 75k bbls/d 30k bbls/d Swaps $90 floor $95 floor $100 floor $90 floor 40k bbls/d $80 limit $70 limit $70 limit $75 limit Unhedged @ $109.23 $124 Ceiling $126 Ceiling $5.74 ADP $6.09 ADP 43% Puts

  35. Slide 35: Energy – A Significant Component of Mining Cost

    Energy – A Significant Component of Mining Cost Site Operating Costs by Category Components of Energy (Consolidated) (Total of $1.6 Billion) Purchased Materials Power Manpower 32% 6,800 GWh 29% Diesel 36% 255 mm gallons Other 59% Acid 13% 5% 6% Energy 21% Coal: 700k mt & Natural Gas: 1 million MMBTU

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