Freeport-mcmoran, Inc. · NYSE:FCX

Freeport-mcmoran — Deutsche Bank 2016 Global Industrials and Materials Conference

31 slides from Freeport-mcmoran's conference presentation, Jun 8, 2016

  1. Slide 1: 7th Annual Global Industrials & Materials Summit

    7th Annual Global Industrials & Materials Summit Kathleen L. Quirk Executive Vice President & CFO June 8, 2016

  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 projections or expectations relati

  3. Slide 3: Proving Our Mettle

    “Proving Our Mettle” met·tle /ˈmedl/ n: 1. a person’s ability to cope well with difficulties or to face a demanding situation in a spirited and resilient way. 2015 Annual Report Highlights  Executing Clearly Defined Strategy  Maintaining Cost Focus and Capital Discipline  Strengthen Balance Sheet

  4. Slide 4: Premier Portfolio of Long-Lived, Geographically Diverse Global Mining Assets

    Premier Portfolio of Long-Lived, Geographically Diverse Global Mining Assets Largest Copper Mine World’s Largest One of Largest Copper/ High Grade Copper/ in North America Concentrating Facility Gold Reserves in World Cobalt Resource Cu Reserves: 34 bn lbs Cu Reserves: 31 bn lbs Cu Reserves: 28 bn l

  5. Slide 5: Long-term Structural Deficit in Copper Generally Expected

    Long-term Structural Deficit in Copper Generally Expected Supply Demand Shortfall Declines Reasonable ~7 Mt in Base Production + Long-term Demand Estimates = SUPPLY GAP by 2025 (with No New Projects) ~18% Decline Over ~1.7% Compound Next 10 Years Annual Growth Rate • $3.30/lb incentive copper price

  6. Slide 6: Executing in a Weak Commodity Market Supported by Portfolio of High Quality Assets

    Executing in a Weak Commodity Market Supported by Portfolio of High Quality Assets Adjusted Mine Plans Curtailed High Cost Production CAPEX Completion Reductions & of Major Cost Management • Execution of Clearly Projects Defined Strategy • Strengthen Balance Sheet • Maintain High Quality Portfolio o

  7. Slide 7: Sale of 56% Interest in Tenke

    Sale of 56% Interest in Tenke  Announced Definitive Agreement on May 9, 2016  China Molybdenum Co. Ltd. (CMOC) to Acquire 70% of TF Holdings Limited  $2.65 Billion Cash to FCX − Plus Contingent Consideration of Up to $120 mm* − Exclusive Negotiations with CMOC to Sell Statistics Freeport Cobalt a

  8. Slide 8: Asset Sale Transactions To Date in 2016

    Asset Sale Transactions To Date in 2016 2015 Date of EBITDA@ Expected Agreement Consideration ~$2.43 Cu Closing ($ in billions) ($ in millions) (1) Morenci (13% Interest) 2/15/16 $1.0 $115 Closed (2) Timok Exploration Project 3/3/16 $0.3 $(16) Closed Oil and Gas Royalty Interests 4/21/16 $0.1 ~$10 2

  9. Slide 9: Cerro Verde Project Execution

    Cerro Verde Project Execution • Completed Construction of World’s Largest Concentrating Facility • Strong Performance on Capital Cost Management and Startup • Achieved Full Capacity Operating Rates During 1Q16 Cerro Verde Mill Rate Performance 000’s t/d milled 373 338 309 301 Concentrator #2 222 (Ex

  10. Slide 10: Significant Copper Resources & Potential

    Significant Copper Resources & Potential billion lbs of copper Future Resource Development Opportunities Indonesia Africa ** America 99 America Reserves* South North  El Abra Major Sulfide Deposit  North America Sulfides Mineralized  Tenke Material*** (contained Cu) Reserves & Mineralized Reserve

  11. Slide 11: Positive Free Cash Flow in Mining Business with Significant Leverage to Recovery

    Positive Free Cash Flow in Mining Business with Significant Leverage to Recovery ($ in billions) 2016e 2015 1Q16 2016e EBITDA CAPEX $6.8 $5.7 $4.6 $3.3 $3.3 Major Avg. Cu: Projects $1.8 $2.42 $2.4 $0.8 $1.4 Avg. Cu: $0.5 Other $0.9 $2.17 $0.4 EBITDA CAPEX EBITDA CAPEX (1) @ $2.00 @ $2.25 @ $2.50 CAP

  12. Slide 12: Oil & Gas Highlights

    Oil & Gas Highlights Focused on Managing Costs and Enhancing Asset Values  New Organization Structure 1Q16* 1Q15 - Reduce Costs LOE ($/bbl) $15.85 $20.26 - Align Capital Allocation with Corporate Objectives CAPEX (mm’s) $523 $1,033  Significant Capital Investment Winding Down - Maintain Near Term

  13. Slide 13: Deepwater Gulf of Mexico Focus Areas

    Deepwater Gulf of Mexico Focus Areas 1Q 2016 Net Production Rates Louisiana Asset Area MBOE/d Holstein Facility 9 Marlin Facility 30 \ Horn Mountain Facility Lucius 8 18 Dorado Marlin Other 3 Viosca Knoll Deepwater GOM Total 68 Horn Mountain Deep King Horn Mississippi Mountain Canyon Vito KO/QV Gree

  14. Slide 14: 2017e Oil & Gas EBITDA at Various Prices and CAPEX

    2017e Oil & Gas EBITDA at Various Prices and CAPEX ($ in billions) $1.8 $1.4 $1.0 $0.6 $0.5 @ $35 Brent @ $45 Brent @ $55 Brent @ $65 Brent 2017e CAPEX NOTE: EBITDA equals operating income plus depreciation, depletion and amortization. Amounts are estimates for illustrative purposes based on model r

  15. Slide 15: Sales Profile

    Sales Profile CopperCopper Sales (billion Sales lbs) (billion lbs) Gold Sales (million ozs) 6 3 2 2.5 1.85 1 1.25 5.0 0 4.6 2015 2016e 2017e 4 4.1 Note: Consolidated gold sales include 115k ozs in 2015, 170k ozs in 2016e and 235k ozs in 2017e for noncontrolling interest. Molybdenum Sales (million lb

  16. Slide 16: EBITDA and Cash Flow at Various Copper Prices

    EBITDA and Cash Flow at Various Copper Prices Average EBITDA ($1,200 Gold, $6 Molybdenum & $47 Oil)* $9 (US$ billions) $6 $3 2016e/2017e Average $0 Cu $2.00/lb Cu $2.25/lb Cu $2.50/lb Average Operating Cash Flow (excluding Working Capital changes) ($1,200 Gold, $6 Molybdenum & $47 Oil)* $6 (US$ bill

  17. Slide 17: Capital Expenditures

    Capital Expenditures (US$ billions) $6.35 Future Spending Dependent on Improvement in Market Conditions Oil & Gas 3.0 $3.3 Major Mining 1.5 (1) $2.2 Projects TOTAL MINING 0.5 (1) 2.4 3.3 1.4 0.8 Other 1.8 1.7 Mining 0.4 0.9 0.9 2015 2016e 2017e (1) Excludes idle GOM rig cash costs totaling $0.8 bill

  18. Slide 18: Committed to Balance Sheet Management – Strong Track Record

    Committed to Balance Sheet Management – Strong Track Record (US$ billions) Manageable Near-Term Debt Maturity Schedule Pro Forma for Morenci, Timok & Tenke Transactions PF FCX Debt Structure as of 3/31/16 $3 (US$ billions) $2.2 Bn of Pro Forma Cash $3.5 bn Revolver $ 0.5 Bank Term Loans 1.1 $2 FCX &

  19. Slide 19: Focused on Execution

    Focused on Execution Cost, Capital & Production Performance Safety & Securing Long- Environmental term Rights in Management Indonesia Asset Sales Debt Reduction Strong Track Record 19

  20. Slide 20: Reference Slides

    Reference Slides 20

  21. Slide 21: Financial Highlights

    Financial Highlights Sales Data 1Q16 1Q15 Copper Consolidated Volumes (mm lbs) 1,123 960 Average Realization (per lb) $2.17 $2.72 Site Production & Delivery Costs (per lb) $1.51 $1.93 Unit Net Cash Costs (per lb) $1.38 $1.64 Gold Consolidated Volumes (000’s ozs) 201 263 Average Realization (per oz)

  22. Slide 22: Sale of Interest in Timok Copper-Gold Project Located in Serbia

    Sale of Interest in Timok Copper-Gold Project Located in Serbia  Consideration to FCX Includes: - $135 mm Payable at Closing - Up to $20 mm to be Spent by Purchaser in Connection with Agreed Exploration and Study Work on the Lower Zone - $45 mm Payable to FCX Upon the Earliest to Occur of (i) a Bui

  23. Slide 23: Termination & Settlement of Deepwater Rig Contracts

    Termination & Settlement of Deepwater Rig Contracts Rowan Settlement Noble Settlement  FCX Will Pay Rowan $215 mm  FCX to Provide Noble with in Cash $540 mm in Cash, FCX Stock or Noble Bonds (at FCX  FCX Agreed to Contingent option) Payment of Up To $30 mm Based on Oil Prices over Next  FCX Agre

  24. Slide 24: 2016e Operating Estimates

    2016e Operating Estimates 2016e Unit Production Costs (per pound of copper) North South America America Indonesia Africa (4) Consolidated Cash Unit Costs (1) Site Production & Delivery (2) $1.41 $1.26 $1.21 $1.62 $1.33 By-product Credits (0.06) (0.08) (1.66) (0.35) (0.54) Treatment Charges 0.10 0.24

  25. Slide 25: 2016e Quarterly Sales

    2016e Quarterly Sales Copper Sales* (million lbs) Gold Sales (thousand ozs) 1000 1,500 950 750 1,405 500 505 1,335 250 201 195 0 1,123 1,150 1Q16 2Q16e 3Q16e 4Q16e 1,000 Note: Consolidated gold sales include approximately 18k ozs in 1Q16, 18k ozs in 2Q16e, 47k ozs in 3Q16e and 87k ozs in 4Q16e for n

  26. Slide 26: PT-FI Mine Plan

    PT-FI Mine Plan PT-FI’s Share of Metal Sales, 2016e-2022e 2016e – 2020e PT-FI Share Total: 5.9 billion lbs copper Copper, billion lbs Annual Average: 1.18 billion lbs Gold, million ozs 2016e – 2020e PT-FI Share Total: 7.85 million ozs gold Annual Average: 1.57 million ozs 2.5 1.85 1.6 1.4 1.3 1.3 1.

  27. Slide 27: Sensitivities (US$ millions) 2016e

    Sensitivities (US$ millions) 2016e Operating Change EBITDA Cash Flow Copper: +/- $0.10/lb $425 $340 Molybdenum: +/- $1.00/lb $28 $22 Gold: +/- $50/ounce $75 $45 Oil Sales: +/- $5/bbl(1) $150 $120 Oil Sales Net of Diesel Costs:(1,2) +/- $5/bbl $125 $100 Natural Gas: +/- $0.50/Mcf $20 $16 Currencies:(

  28. Slide 28: Sensitivities (US$ millions) 2017e

    Sensitivities (US$ millions) 2017e Operating Change EBITDA Cash Flow Copper: +/- $0.10/lb $435 $350 Molybdenum: +/- $1.00/lb $35 $28 Gold: +/- $50/ounce $125 $75 Oil Sales: +/- $5/bbl(1) $200 $160 Oil Sales Net of Diesel Costs:(1,2) +/- $5/bbl $160 $130 Natural Gas: +/- $0.50/Mcf $23 $19 Currencies:

  29. Slide 29: 2016e Oil & Gas Operating Estimates

    2016e Oil & Gas Operating Estimates Madden & Operating Cost: $1.90/Mcfe California Haynesville Pricing: NYMEX Operating Cost: $29/bbl Gulf of Mexico Operating Cost: $11/bbl Pricing: HLS/NYMEX 2016e Oil & Gas Sales by Region California Haynesville/ GOM Madden/Other 104 84 89 32 Oil Gas Oil Gas MBOE/D

  30. Slide 30: Adjusted EBITDA Reconciliation

    Adjusted EBITDA Reconciliation (in millions) 12 Months 1Q 2016 Ended 3/31/2016 Net loss attributable to common stock $(4,184) $(13,946) Interest expense, net 200 699 Income tax provision (benefit) 70 (1,170) Depreciation, depletion and amortization 722 3,280 Impairment of oil and gas properties 3,78

  31. Slide 31: FCX Debt Maturities as of 3/31/16 Pro Forma for Morenci, Timok & Tenke Transactions

    FCX Debt Maturities as of 3/31/16 Pro Forma for Morenci, Timok & Tenke Transactions $10 (US$ billions) PF Total Debt & Cash at 3/31/16 (US$ billions) FCX Revolver & Term Loan $ 1.6 $8 FCX & FMC Sr. Notes 12.3 FM O&G Senior Notes 2.5 Other 2.5 Total Debt $18.9 $6 Consolidated Cash $ 2.2 $4.0 $4 FCX $

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