Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Goldman Sachs Global Metals & Mining Conference 2016
28 slides from Freeport-mcmoran's conference presentation, Nov 16, 2016
Slide 1: Global Metals & Mining Conference
Global Metals & Mining Conference Kathleen L. Quirk Executive Vice President & CFO November 16, 2016
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
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. Executing Clearly Defined Strategy Maintaining Cost Focus and Capital Discipline Strengthening Balance Sheet Industry Leading Copper
Slide 4: World-Class Copper Portfolio
World-Class Copper Portfolio Long-term Value in High Quality Asset Base Cu Reserves: 32 bn lbs Cu Reserves: 31 bn lbs Cu Reserves: 28 bn lbs Mo Reserves: 2.4 bn lbs Mo Reserves: 0.7 bn lbs Au Reserves: 27 mm ozs Mineralized Mat.: 46 bn lbs Mineralized Mat.: 24 bn lbs Mineralized Mat.: 21 bn lbs Impl
Slide 5: World's Leading Copper Producers
World’s Leading Copper Producers Top 10 Copper Producers (2016) (000 t) 2,000 1,500 1,000 500 0 FCX Codelco Glencore BHP Southern KGHM Rio Tinto First Antofagasta Anglo Copper Quantum American Source: Wood Mackenzie September 26, 2016. Rankings based on net equity ownership. 5
Slide 6: Copper Market Commentary
Copper Market Commentary Projected Surpluses Continue to be Lower Than Expected Recent Supply Growth Unsustainable Prolonged Period of Low Prices Will Impact Future Supplies While Inventories Have Risen, Levels Remain Relatively Low by Historical Standards Small Increases in Demand or Supp
Slide 7: World Class Copper Discoveries Are Extremely Rare
World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves 2016e Copper Production Million metric tons Thousand metric tons 0 5 10 15 20 25 30 35 0 200 400 600 800 1000 1200 1981 Escondida - 1981 Escondida - 1981 1880 Collahuasi - 1880 Grasberg Complex - 1988 1988 Grasberg Complex
Slide 8: FCX Reserves/Mineralized Material/Resources
FCX Reserves/Mineralized Material/Resources as of 12/31/15, Adjusted for 2016 Asset Sales 2P Reserves (1) Mineralized Material (2) Resources (3) North North America America North 35% 51% America South 67% America Indonesia Serbia Indonesia South 34% 23% 18% South 31% America America 26% 15% 90 Billi
Slide 9: Large Development Project Inventory: Copper Sulfide Opportunities
Large Development Project Inventory Copper Sulfide Opportunities 1 km % Copper N >=0.00% >=0.10% • Bagdad >=0.20% >=0.30% Reserve Pit >=0.40% >=0.60% >=0.80% >=1.00% • Chino +0.3% Cu • El Abra • Lone Star/Safford 1 km N Reserve Pit • Morenci % Copper >=0.00% • Sierrita >=0.20% >=0.30% >=0.40% >=0.50
Slide 10: Tracking Our Achievements
Tracking Our Achievements Declining Unit Costs for Copper • $6.6 Billion in Announced Asset Sales $1.74 -20% Decline − $5.2 Billion Expected to Close in 4Q16 $1.39 − No Additional Sales Required $1.52 Net Unit Cash − Retention of High-Quality Copper Portfolio Costs (after by-product) $1.14 $/lb • Cl
Slide 11: Restoring Balance Sheet Strength
Restoring Balance Sheet Strength Year-End 2017e Net Debt at Varying Copper Prices (1) (US$ billions) $20.0 $17.9 $15.0 $10.7 $9.5 $10.0 $8.4 $5.0 $0.0 9/30/2016 $2.00 $2.25 $2.50 Net Debt/2017e EBITDA 2.2x 1.6x 1.2x YE 2017e (1) Includes asset sale proceeds from the Tenke, Deepwater GOM and Onshore
Slide 12: Grasberg Operations & Regulatory Matters
Grasberg Operations & Regulatory Matters Operations Lower 3Q16 Mining Rate in Open Pit Grasberg Open Pit Ore Grades - July Estimate: 200K t/d - Actual: 171K t/d 1.5 10-day Work Stoppage in Late Sept. Also 1.0 Affects Timing of Access to Higher Grade Ore 2016 Shortfall Substantially Recovered i
Slide 13: Grasberg Minerals District
Grasberg Minerals District PT-FI Share of Plan SalesView Copper Gold (bns lbs) (mms ozs) Grasberg & Kucing Liar Grasberg 2016e 1.2 1.24 open pit 2017e 1.45 2.75 DMLZ 2018e 1.0 1.4 Big 2019e – 1.2 1.5 Gossan DOZ 2022e Avg. Grasberg DMLZ & Grasberg BC Reserves* Kucing Block Cave Grasberg Liar Amole (a
Slide 14: 2017e EBITDA and Cash Flow at Various Copper Prices
2017e EBITDA and Cash Flow at Various Copper Prices EBITDA ($1,250/oz Gold, $7/lb Molybdenum)* Each 10¢ change in copper = $410 mm $8 (US$ billions) $6 $4 $2 2017e $0 Cu $2.00/lb Cu $2.25/lb Cu $2.50/lb Operating Cash Flow (excluding Working Capital changes) ($1,250/oz Gold, $7/lb Molybdenum)* $6 (U
Slide 15: Committed to Balance Sheet Management – Strong Track Record
Committed to Balance Sheet Management – Strong Track Record (US$ billions) Manageable Near-Term Debt Maturity Schedule Pro Forma for Asset Sale Transactions* $4 FCX Debt Structure $3.3 bn of Pro Forma Cash Including Asset Sale Transactions Pro Forma for Asset Sale $3 12/31/15 9/30/16 Transactions $3
Slide 16: Focused on Execution
Focused on Execution Cost, Capital & Production Performance Safety & Securing Long- Environmental Term Rights in Management Indonesia Building Long- Term Value Debt Reduction Strong Track Record 16
Slide 17: Reference Slides
Reference Slides 17
Slide 18: Status of Tenke Transaction
Status of Tenke Transaction $2.65 bn in Proceeds; $120 mm in Contingent Consideration* Required Regulatory Approvals Have Been Obtained China Molybdenum Shareholder Approval Obtained in September 2016 Closing Pending Resolution of Lundin Right of First Offer Gecamines Claims Have No Legal Ba
Slide 19: Oil & Gas Asset Sale Transactions
Oil & Gas Asset Sale Transactions Simplifies FCX’s Business and Reduces Its Capital Intensity Deepwater Onshore GOM CA Announced Purchase and Sale Agreement 9/12/16 10/14/16 Buyer Anadarko Sentinel Peak Cash Consideration $2.0 bn(1) $592 mm Contingent Consideration $150 mm(2) $150 mm(3) Abandonment
Slide 20: Financial Highlights
Financial Highlights Sales Data 3Q16 3Q15 Copper (1) Consolidated Volumes (mm lbs) 1,231 1,001 Average Realization (per lb) $2.18 $2.38 Site Production & Delivery Costs (per lb) $1.39 $1.74 Unit Net Cash Costs (per lb) $1.14 $1.52 Gold Consolidated Volumes (000’s ozs) 317 294 Average Realization (pe
Slide 21: 3Q 2016 Mining Operating Summary
3Q 2016 Mining Operating Summary 3Q16 Unit Production Costs Cash Unit Costs North South Consolidated (per pound of copper) America America Indonesia Africa Including Africa Site Production & Delivery $1.44 $1.27 $1.37 $1.57 $1.39 By-Product Credits (0.17) (0.12) (1.29) (0.46) (0.49) Treatment Charge
Slide 22: 2016e Operating Estimates
2016e Operating Estimates 2016e Unit Production Costs (per pound of copper) North South Consolidated America America Indonesia Africa Including Africa Cash Unit Costs (1) Site Production & Delivery (2) $1.42 $1.28 $1.48 $1.59 $1.42 By-product Credits (0.12) (0.11) (1.36) (0.38) (0.45) Treatment Char
Slide 23: Sales Profile
Sales Profile CopperCopper Sales (billion Sales lbs) (billion lbs) Gold Sales (million ozs) 6 3 2.75 4.8 2 4 4.1 4.3 1 1.25 1.26 0 2015 2016e 2017e Note: Consolidated gold sales include 115k ozs in 2015, 115k ozs in 2016e and 255k ozs in 2017e for noncontrolling interest. 2 Molybdenum Sales (million
Slide 24: 2016e Quarterly Sales
2016e Quarterly Sales Copper Sales (million lbs) Gold Sales (thousand ozs) 1,500 600 590 400 1,340 1,231 200 317 1,123 201 156 1,111 1,000 0 1Q16 2Q16 3Q16 4Q16e Note: Consolidated gold sales include approximately 18k ozs in 1Q16, 14k ozs in 2Q16, 29k ozs in 3Q16 and 54k ozs in 4Q16e for noncontroll
Slide 25: Capital Expenditures
Capital Expenditures (US$ billions) $6.35 Future Spending Dependent on Improvement in Market Conditions Oil & Gas 3.0 Major $2.8 Mining Projects TOTAL MINING 1.2 $1.7 2.4 3.3 1.2 1.0 Other Mining 1.6 0.9 0.4 0.7 2015 2016e 2017e Note: Includes capitalized interest. e= estimate. See Cautionary Statem
Slide 26: PT-FI Mine Plan
PT-FI Mine Plan PT-FI’s Share of Metal Sales, 2016e-2022e 2016e – 2020e PT-FI Share Total: 5.8 billion lbs copper Copper, billion lbs Annual Average: 1.15 billion lbs Gold, million ozs 2016e – 2020e PT-FI Share Total: 7.9 million ozs gold Annual Average: 1.58 million ozs 2.75 1.5 1.45 1.4 1.3 1.2 1.
Slide 27: Sensitivities (US$ millions)
Sensitivities (US$ millions) 4Q16e Operating Change EBITDA Cash Flow Copper: +/- $0.10/lb $200 $150 Molybdenum: +/- $1.00/lb $9 $7 Gold: +/- $50/ounce $35 $20 Currencies:(1) +/- 10% $36 $26 2017e Copper: +/- $0.10/lb $410 $325 Molybdenum: +/- $1.00/lb $55 $45 Gold: +/- $50/ounce $130 $78 Currencies:
Slide 28: FCX Debt Maturities as of 9/30/16
FCX Debt Maturities as of 9/30/16 Pro Forma for Announced Asset Sale Transactions* $10 (US$ billions) Pro Forma Total Debt & Cash at 9/30/16 (US$ billions) Pro Forma for Asset Sale $8 Actual Transactions FCX Revolver & Term Loan $ 2.5 $ - FCX & FMC Sr. Notes 11.9 11.9 FM O&G Senior Notes 2.5 2.5 $6
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