Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Q2 2016 Earnings Presentation
37 slides from Freeport-mcmoran's earnings presentation, Jul 26, 2016
Slide 1: 2nd Quarter 2016 Earnings Conference Call
fF Freeport-McMoRan 2nd Quarter 2016 Earnings Conference Call July 26, 2016 NYSE.
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
[ Freeport-McMoRan Cautionary Statement Regarding Forward-Looking Statements METTLE "s presentation contains forward-looking statements in which FCX discusses its potential future performance. Forward-looking statements are al! Zatements otter than statements of historical fects, ich 2s projections
Slide 3: Tracking Our Achievements
METTLE Tracking Our Achievements 4x *$4+ Billion in Asset Sales — Strengthen Balance Sheet and Highlight Value —9% of 2015 Consolidated Copper Reserves -Restructured O&G Business to Operate Within Cash Flow — Organizational Restructuring —Restructured $1.1 Bn in Drilling Contracts . ig Copper Vi Suc
Slide 4: Restoring Balance Sheet Strength
Hl Freepont-McMoRan METTLE Restoring Balance Sheet Strength Year-End 2017e Net Debt at Varying Copper Prices” Excluding Potential ATM Proceeds (USS billions) $18.8 6/30/2016 $2.00 $2.25 $2.50 Net Debt/'16-'17 Avg. EBITDA _2.4x 1.9x 14x YE 2017e Gy ndideg ese sale rocaeds hor the Tanke voneacon ipcin
Slide 5: Asset Sale Transactions To Date in 2016
Hl Freeport-McMoRAN METTLE Asset Sale Transactions To Date in 2016 4x 2015 Cash EBITDA@ Closing Consideration ~$2.43 Cu Date G in billions) (Gin millions) Morenci (13% Interest) $1.00 giis” 2916 Timok Exploration Project $0.137 $(16) 2Q16 Oil and Gas Royalty Interests $0.10 ~$10 2916 Other Land Sale
Slide 6: World-Class Copper Portfolio
Hl Freepont-McMoRan M ETTLE World-Class Copper Portfolio A Store of i fii Value indonesia Amer North south Am comet Gold Mine 7 copper hal 3 copper i Cu Reserves: 31 bn Ibs Gu Reserves: 28 bn Ibs rves: 0.7 bn Ibs Au Reserves: 27 mm oz: Mineralized ee ae bn Ibs Mineralized Mat.: 21 bn "Ibs Implied Li
Slide 7: Copper Market Commentary
Copper Market Commentary = Short-term Surpluses Smaller Than Projected = New Supply Coming as Expected = Lower Disruptions Than Recent History = Projected Medium-term Deficits with Modest Demand Growth = Higher Incentive Prices Necessary to Develop New Production
Slide 8: Copper Markets — Supply Constraints Support Positive Long-Term Outlook
Hl Freeport-McMoRan METTLE Copper Markets — Supply Constraints Support Positive Long-Term Outlook kt = «4 mm Tonnes (19%) Decline 22,000 in Base Mine Supply Over Next 10 Years = Currently Top 10 Mines in World Produce ~5.5 mm Tonnes per Annum 16,000 10,000 . * Existing Supply Before = Incentive Pric
Slide 9: Highlighting Cerro Verde
Highlighting Cerro Verde Cerro Verde Project Costs (in bn) $4.6 $4.5 pre Le Inauguration Ceremony May 23, 2016 Budget Actual Mill Rate Mining Rate Copper Sales Unit Net Cash Costs (kt/d) (kt/d) (mms Ibs) ($/lb) 352 626 270 $1.87 $1.22 338 — 116 cL 2Q15 216 Pre-Expansion 2Q16 2Q15 2916 2Q15 —-2Q16 Lo
Slide 10: High Quality Copper Resources
High Quality Copper Resources Long-Lived Mining Districts Morenci Cerro Verde Grasberg Discovered: 1870s Discovered: 1860s Discovered: 1988 107 copper in billion Ibs 1988-2015 9 1993-2015 = ess a ete appear go kg km ope io f2.2 will; af ven = See Coston stator.
Slide 11: Large Development Project Inventory
Large Development Project Inventory 4x Copper Sulfide Opportunities - Bagdad - Chino - El Abra - Lone Star/ Safford - Morenci - Sierrita Future development subject to market conditions nu
Slide 12: Pit Wall Design Optimization
M Pit Wall Design Optimization a SS I Freeront-McMoRan ETTLE Pit Wall Steepening Conceptual Cross-Section = Optimize slopes -- Targeting opportunities to steepen pit wall angles to minimize stripping & add ore = Steeper slope design to include clean bench faces & catch benches to minimize rock fall
Slide 13: Grasberg Minerals District
I Freeront-McMoRan METTLE Grasberg Minerals District 4x PT-FI Share of Sales Copper Gold Grasberg (bns Ibs) (mms ozs) open pit 2016e 1.3 1.7 —_ 2017e 13 2.5 > 2018e 1.0 11 ~j 2019e — 141 15 3 Grasberg 2022e Avg. B Block Cave 5 x Spur QS Big Gossan Spur N 4 - ortals (at Ridge Camp) So areas sett e =
Slide 14: Positive Free Cash Flow in Mining Business with Significant Leverage to Recovery
[i Freeport-McMoRan Positive Free Cash Flow in Mining Business with Significant Leverage to Recovery (Sin billions) 2016e 2015 41H16 2016e EBITDA CAPEX 6.1 $5.3 $4.5 $1.6 $0.9 EBITDA —CAPEX EBITDA CAPEX” v4 $2.00 @$2.25 @$2.50 Copper? Copper? Copper 2” CAPEX Each 10¢ Change in Copper: $325 mm Impact
Slide 15: Oil & Gas Highlights
Oil & Gas Highlights 4x Focused on Managing Costs and Enhancing Asset Values = Restructuring Savings - ~$150 mm per Annum Associated with LOE ($/bbI) $19 $15 Operating and Administrative Costs - ~$350 mm Related to ination of Deepwater Drillship Contracts CAPEX (mm’s) $806 $392 2Q16 Sales — 12.4 MMB
Slide 16: 2017e Oil & Gas EBITDA
2017e Oil & Gas EBITDA at Various Prices and CAPEX ; a < (Sin billions) $15 $1.2 —_ @$35Brent @$45Brent @$55Brent @$65Brent 2017eCAPEX /epletor associated with idle rigs. Amounts are estimates for Model reflects FM O8' 017e including 123 MBOE per day, $15/B0E operating e = estimate. See Ca
Slide 17: Valuable Deepwater Infrastructure with Excess Capacity
Valuable Deepwater Infrastructure with Excess Capacity _ k : ms , . Horn . Holstein Marlin Mountain ~ ; y / Three 100% Owned/Operated Deepwater Production Platforms Total Processing Capacity of 250 MbbI/d of Oil
Slide 18: 2016e Outlook
[i Freeport-McMoRan 2016e Outlook Sales Outlook | | Unit Cost = Copper: 5.0 Billion Ibs. = $1.06/Ib™ of Copper = Gold: 1.7 Million ozs. = $15.50/BOE = Molybdenum: 76 Million Ibs. = Oil Equivalents”: 47.4 MMBOE (~73% Oil) | Operating Cash Flows®) | | Capital Expenditures | = ~$4.5 Billion (@$2.25/lb
Slide 19: Sales Profile
Sales Profile Note: Consoldated copper sales indude 688 mm bs in 2015, 958 mm bs in 20162 and 760 mm bs in 2017e for noncontoling interest; excudes purchased copper. e = estimate. See Cautionary Statement. = Copper Sales (billion lbs) ) | Gold Sales (million ozs) ) 6 - . 3 2 25 1) | 225 a7, o 2015 2
Slide 20: EBITDA and Cash Flow at Various Copper Prices
[i Freeport-McMoRan EBITDA and Cash Flow at Various Copper Prices $9 (Uss billions) $6 $3 2016e/2017e Average $0 Cu $2.25/Ib Cu $2.50/ Ib Cu $2.00/ Ib Working Capital changes) ig Cash Flow ($1,300 Gold, $6 Molybdenum & $49 Oil)* $6 (US$ billions) 2016e/2017e Average Cu $2.25/Ib Cu $2.50/Ib Cu $2.00/
Slide 21: Capital Expenditures
Hl Freeport-McMoRAN METTLE Capital Expenditures (Ss billions) $6.35 Future Spending Dependent on Improvement in Market Conditions Oil & Gas $3.1 $2.3 2015 2016e 2017e Note: Incudes captalzed interest. e= estimate. See Cautionary Statement 2
Slide 22: Debt Exchanges
METTLE 3a9 Exchanges = During 2016, FCX Entered Into Multiple Privately Negotiated Debt-for-Equity Transactions = Exchanged $369 mm* in Face Amount of Bonds for 28 mm Shares of FCX Stock | ; Principal Annual Interest Senior Notes Amount Savings G in millions) 3.55% Due 2022 $ 108 $64 3.875% Due 2023
Slide 23: Committed to Balance Sheet Management — Strong Track Record
METTLE Committed to Balance Sheet Management — Strong Track Record (US$ billions) Manageable Near-Term Debt Maturity Schedule Pro Forma for Tenke Transaction* FCX Debt Structure as of 6/30/16 (US$ billions) for Tenke Actual _ Transaction $3.5 bn Revolver $- $- Bank Term Loans 24 1a FCX & FMC Sr. Not
Slide 24: Focused on Execution
Hl Freeront-McMoRan METTLE Focused on Execution Ex Lust, Sousa Pro lssle ) Securing Long- term Rights in) 140} SI id Strong Track Record
Slide 25: Reference Slides
Reference Slides
Slide 26: Financial Highlights
[i Freeport-McMoRan Financial Highlights | Sales pee 2016 2Q15_ | Consolidated Volumes (mm Ibs) 4141 964 Average Realization (per Ib) $2.18 $2.71 Site Production & Delvery Costs (per Ib) $1.43 $1.85 Unit Net Cash Costs (per Ib) $1.33 $1.50 Consolidated Volumes (000’s ozs) 156 352 Average Realization
Slide 27: 2Q 2016 Mining Operating Summary
I Freeront-McMoRan TLE 2Q 2016 Mining MET Operating Summary 2Q16 Unit Production Costs Cash Unit Costs North uth solidated ‘pound of copper) America America Indonesia Africa naading Africa Site Production & Delivery $1.40 $1.20 $1.77 $1.62 43 By-Product Credits (0.11) (0.12) (1.05) (0.33) (0.30) Tre
Slide 28: 2016e Operating Estimates
METTLE 2016e Operating Estimates ( 2016¢ Unit Production Costs (per pound of copper) North South Consolidated America America Indonesia Africa Including Africa Cash Unit Costs Site Production & Delivery 2) $1.41 $1.26 $1.30 $1.60 $1.36 By-product Credits (0.10) (0.41) (4.70) (0.37) (0.55) Treatment
Slide 29: 2016e Quarterly Sales
Hl Freepont-McMoRan METTLE 2016e Quarterly Sales % . f Copper Sales (million Ibs) ) | = CUTICLE) ) 1,500 750 955 1415 500 e 250 410 , a2oL 7723 7; 1916-2916 4Q16e 1000 k Note: Conga sales nclide approximately 18k ozs n 1016, 1% ors 7 2016, #k o2sh 3062 and 90k 07s n 42 6e for noncontroling interest.
Slide 30: PT-FI Mine Plan
PT-FI Mine Plan PT-FI’s Share of Metal Sales, 2016e-2022e Annual Averag' 2016e—2020e PT-FI Share| Total: 7.8 million ozs gold | Annual Average: 1.56 million ozs 2.5 1.0 11 2016e 2017e 2018e Note: 1.0 2019e BZ Copper, billion Ibs Gold, million ozs 1.2 2020e-2022e Annual Average 30 METTLE
Slide 31: Sensitivities (US$ millions) 2016e
METTLE Sensitivities (US$ millions) 4x 2016e Operating Change EBITDA Cash Flow Copper: +/- $0.10/Ib $325 $260 Molybdenum: +/- $1.00/Ib $23 $18 Gold: +/- $50/ounce $63 $40 Oil Sales: +/- $5/bbI@ $85 $68 Oil Sales Net of Diesel Costs:@7 +/- $5/bbl $65 $55 Natural Gas: +/- $0.50/Mcf $8 $6 Currencies: +
Slide 32: Sensitivities (US$ millions) 2017e
I Freeront-McMoRan Mi ETTLE Sensitivities (US$ millions) 4x 2017e Operating Change EBITDA Cash Flow Copper: +/- $0.10/Ib $400 $320 Molybdenum: +/- $1.00/Ib $45 $35 Gold: +/- $50/ounce $125 $75 Oil Sales: +/- $5/bbI@ $175 $140 Oil Sales Net of Diesel Costs:7 +/- $5/bbl $135 $110 Natural Gas: +/- $0.5
Slide 33: Termination & Settlement of Deepwater Rig Contracts
Termination & Settlement of Deepwater Rig Contracts | Noble Settlement | | RowanSettlement | = Settlement of $215 mm in = FCX Provided Noble with $540 mm in Value Through Cash* I f 48 Sh OF EX Skock minions. = FCX Agreed to Contingent Payment of Up To $30 mm = FCX Agreed to Contingent Based on Oil P
Slide 34: 2016e Oil & Gas Operating Estimates
{E Freeport-McMoRan 2016e Oil & Gas METTLE Operating Estimates 1 Madden & B Operating Cost: $1.85/Mcfe Haynesville* Pricing: NYMEX: Operating Cost: $26/bbI Gulfiof Mexico Operating Cost: $12/bbl Pricing: HLS/NYMEX 2016e Oil & Gas Sales by Region | California Haynesville"/ GOM Madden/Other 99 69 70 3
Slide 35: FCX Debt Maturities as of 6/30/16
FCX Debt Maturities as of 6/30/16 Pro Forma for Tenke Transaction* METTLE (US$ billions) (uss biltens) Pro Forma for Tenke $8 5 Actual __ Transaction ™ FCX Revolver & Term Loan $24 i FCX & FMC Sr. Notes 12.0 $6 4 ll FM O&G Senior Notes 25 @ Other 24 Total Debt $193 Consolidated Cash $04 2016* 2017 2
Slide 36: Adjusted EBITDA Reconciliation
Tl Freeport-McMoRan Adjusted EBITDA Reconciliation MET (in millions) 12Months 29 2016 Ended 6/. (286) '$(12,360) Interest coarse net 196 723 wvision (benefit) 116 (345) epescaen depleton and arertiation 632 2,834 Impairment of of and gas, popes 291 11,432 settlementjidle rig 639 814 Mining peearihay
Slide 37: Adjusted EBITDA - Discontinued Operations Reconciliation
Hl Freeport-McMoRan METTLE Adjusted EBITDA - Discontinued Operations Reconciliation (in millions) 1 2Q2016 Ended 6/30/2016 Net Loss Attributable to Common Stock from Discontinued Operations $(193) $(214) Reversal of eliminations and adjustments ‘*) 63 125 35 (38) Allocated interest expense i Income