Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Freeport Mcmoran Copper & Gold — Q2 2012 Earnings Presentation
40 slides from Freeport-mcmoran's earnings presentation, Jul 19, 2012
Slide 1: 2nd Quarter 2012 Earnings Conference Call
2 Quarter 2012 “\. Earnings Conference Call
Slide 2: Cautionary Statement
FrReepont-McMoRan COPPER & GOLD Cautionary Statement This presentation contains forward-looking statements in which we discuss factors we believe may affect our potential future performance. Forward- looking statements are all statements other than statements of historical facts, such as statements
Slide 3: Highlights
FrReepont-McMoRan COPPER & GOLD Highlights Solid Operating and Financial Performance Improving Productivity at Grasberg Advanced Brownfield Development Projects + Achieved First Copper at Tenke + Initiated Construction at Morenci + Cerro Verde Permitting Being Advanced Shipped First Molybdenum from
Slide 4: Financial Highlights
FrReepont-McMoRan COPPER & GOLD Financtal Highlights Sales Data 1912 Copper Consolidated Volumes (mm Ibs) 927 Average Realization (per Ib) $3.53 Site Production & Delivery Unit Costs (per Ib) $2.01 Unit Net Cash Costs (per Ib) $1.49 Id Consolidated Volumes (000’s ozs) 266 Average Realization (per oz
Slide 5: Quarterly Operating Highlights
FrReepont-McMoRan COPPER & GOLD Quarterly Operating Highlights 2Q12 Unit Production Costs. (per pound of copper) North South America America Indonesia —_Africa Consolidated Cash Unit Costs Site Production & Delivery $1.88 $1.56 $3.23 $1.48 $2.01 By-Product Credits (0.36) (0.23) (2.20) (0.33) (0.68)
Slide 6: Markets
FrReepont-McMoRan COPPER & GOLD Markets 2,500 2,000 £ : 5 ‘1,500 = LME Copper Price 2 @ g & 1.000 3 ro} 8 Fl ~~ Global Exchange Stocks* Jan- Jub Jan Jul Jan Jub Jan- uk Jan- Jub Jam uk Jan- Jub Jan- Juk Jan) Juk Jan uk 0% 03 «04 04 05 05 06 06 07 07 08 0 09 09 10 10 4 41 12 * Inchides LME, Comex and
Slide 7: Copper Market Commentary
FrReepont-McMoRan COPPER & GOLD Copper Market Commentary /7, = China Remains Important Demand Driver = Improving U.S. Copper Demand - Recent Auto and Housing Data Have Been Positive = Weak European Demand = Global Inventories Remain Relatively Low = Ongoing Supply Challenges
Slide 8: Value Creation Focus
FrReepont-McMoRan COPPER & GOLD Value Creation Focus INVESTMENT CASH MINERAL RESERVE IN ATTRACTIVE “@ PRODUCTION FLOWS/ RESOURCES ADDITIONS DEVELOPMENT GROWTH RETURNS | PROJECTS Fe opper Resources at 12/31/2011 Recoverable Reserves 120 bn Ibs Mineralized Material (contained) ” 115 bn Ibs Total Reser
Slide 9: Climax Molybdenum Start-up
FReepont-McMoRan COPPER & GOLD Climax Molybdenum Start- ¢ Start-up in March 2012 ¢ First shipment of molybdenum in 2Q12 ¢ Ramp up to 20mm lIbs/yr during 2013 ¢ Capacity to Increase to 30mm Ibs/yr * Production Dependent on Market Fitst Shipmeat Conditions ai * ~$735mm in costs incurred through 6/30/1
Slide 10: Highly Attractive Brownfield Development Projects
FReeport-McMoRAN come“ Highly Attractive Brownfield Development Projects // Incr. Cu Capital* Achieve Mill Expansions (t/d) (om lbsi) (bins) Full Rates Cerro Verde (360K) 600 $4.0 2016 Morenci (115K) 225 14 2014 Tenke (14K) 0.9 2013 TOTAL * excludes capitaized interest + Underground uth America® = d
Slide 11: Development Opportunities: Morenci Mill Expansion
FREepont-McMoRan “rnt*= Development Opportunities =a Morenci Mill Expansion Mie Key Project Metrics Positive drilling results continue to expand potential milling sulfide resource in this multi-year program © Expand mill to 115K t/d Copper (bin Ibs ) ¢ Increase mining rate to 900K st/d 26.5 (from 70
Slide 12: Development Opportunities: Cerro Verde Mill Expansion
FREepont-McMoRan Development Opportunities Z Cerro Verde Mill Expansion Mi lll CopPER & GoLD Expand mill from 120K t/d to 360K t/d Increase mining rate from 320K t/d to 850K t/d Capital costs: ~$4 billion Incremental Production: 600mm Ibs Cu/year, 15mm lbs Mo/year Reserve Life: ~90 years current, ~3
Slide 13: Development Opportunities: Tenke Expansion
FREepont-McMoRan Fol eer ae De velopment Opportunities - Key Project Metrics Expand mill to 14K t/d Increase mining rate from 60K t/d to 150K t/d Add tankhouse capacity Capital costs: $850 million Incremental Production: =e 150mm Ibs Cu/year First Copper in, 2012 Construction under way — i targeted
Slide 14: Grasberg BC & DMLZ Underground Mine Development
FReepont-McMoRan |CopPER & GOLD Grasberg BC & DMLZ Underground Mine Development « Completed significant development on access to underground ore bodies Grasberg Open pit e« Completed 60 km of development for Grasberg BC & 25 km for DMLZ e Key development activities include work on ore flow systems &
Slide 15: Update on Indonesia
FReepont-McMoRan COPPER & GoLD Update on Indonesia Mi = Productivity Improvements in 2Q 2012 ¢ Open Pit Mining Approaching Normal Levels ¢ Continued Ramp-up of DOZ Underground Mine to Capacity of 80k t/d Expected by Year End » Working Cooperatively with Government on Review of Contract of Work and C
Slide 16: Americas Growth Outlook
FReepont-McMoRan COPPER & GoLD Americas Growth Outlook , Mu Copper Production billion Ibs per year Potential Projects 3.5 D 29 Fae under review . Expansion 2.6 bgonaon CO cad I a 7 ’ Morenci y Mill Exp. #2 ElAbra | W115 \ i A Mill \ bin tbs) aa : Lone y Twin Star 7 ‘Serta 2010 2012e 2014e 2016e e =
Slide 17: Africa Growth Outlook
FReepont-McMoRan COPPER & GoLD Africa Growth Outlook Copper Production billion Ibs per year 0.3 0.15 Ps l 2009 20i12e 2014e Potential with Potential additional _ with Sulfides oxide e = estimate. See Cautionary Statement. a7
Slide 18: Portfolio of World Scale Mines
Freeront-McMoRAaN Copper & Goo = Portfolio of World Scale Mines (1 Gf Positive Exploration Results — ‘Big Mines Get Bigger”. Mines:-with Potential Capacity for 1 billion Ibs of copper per annum* Morenci wenke Fungurume cpaeed Cerro Verde x * j El Abra™ * Grasberg currently producing over.1 bin Ibs/a
Slide 19: Exploration Targets in Major Mineral Districts
FReepont-McMoRan rere cee Exploration Targets in Major Mineral Districts fl j $275 million in 2012e Australasia — & Other Areas Note: FCX's consolidated share; @ = estimate. See Cautionary Statement. 19
Slide 20: 2012 Outlook
FrReepont-McMoRan COPPER & GOLD 2012 Outlook > Sales Outlook: . > Unit Net Cash Cost: ° > Operating Cash Flows?: « > Capital Expenditures: ° Copper: 3.6 Billion Ibs. Gold: 1.1 Million ozs. Molybdenum: 81 Million Ibs. $1.47/Ibin 2012e Reflects Impact of Lower Volumes at Grasberg Costs in Future Years
Slide 21: Near-Term Sales Profile
FrReepont-McMoRan COPPER & GOLD Near-Term Sales Profile Copper Sales (billion Ibs) 5.0+ as 43 2011 2012e 2013e 2014e Indudes Projects ‘Currently Under Way* “Tore Consaleare eapoer sales include approximately 717 mm bs in 2011, 700 mmibs in 20128 25 mm bs in 2013, and 775 mmm bs in 20140 for noncontr
Slide 22: 2012e Quarterly Payable Metal Sales
FrReepont-McMoRan COPPER & GOLD 2012e Quarterly Payable Metal Sales Co, 1,250 1,000 827 750 500 250 2Q12 3Q12e 4Q12e incl sporaataly 158 mm is 1Q42, 178 mm lin 2012. 195 mmibs in 40420 fer noncontoling itaesy excludes 2 = estimate, See Cautionary Statement. 500 375 288 16s 8 250 225 125 o + 2912 3Q1
Slide 23: 2012 Operating Estimates
FrReepont-McMoRan COPPER & GOLD 2012 Operating Estimates 2012e Unit Production Costs peal orem) Aveita) camera, tility Alien, (Gbnadildtecd Cash Unit Costs Site Production & Delivery 2) $1.89 $1.60 $3.04 $1.47 $2.00 By-product Credits (0.35) (0.28) (2.14) (0.38) (0.70) Treatment Charges 0.11 0.16 0.
Slide 24: Reconciliation of Unit Cash Costs
FReepont-McMoRan COPPER & GoLD Reconciliation of Unit Cash Costs 7/7 Consolidated ¢ per Ib of copper 2011 101¢ Grasberg (a) 27 North America (b) 9 South America (c) 10 Total 46 2012e 147¢ Impact of Higher 2013e/2014e Grasberg Volumes (31¢) With Higher Grasberg Volumes 116¢ (2) lower volumes (copper
Slide 25: EBITDA and Cash Flow
FrReepont-McMoRan COPPER & GOLD EBITDA and Cash Flow at Various Copper Prices Average EBITDA* ($1,200 Gold & $12 Molybdenum) $12 9 $6 $3 $0 (Uss billions) Cu $3.00/Ib Cu $3.50/Ib Cu $4.00/Ib Average Operating Cash Flow (excluding Working Capital changes)* ($1,200 Gold & $12 Molybdenum) $10 $8 $6 $4
Slide 26: Sensitivities
FrReepont-McMoRan COPPER & GOLD Sensitivities Operating Change EBITDA Cash Flow (USS milfions) Copper: -/+ $0.10/Ib $410 $280 Molybdenum: -/+ $1.00/Ib $80 $65 Gold: -/+ $50/ounce $80 $50 Diesel: -/+ 10% $90 $65 Purchased Power”: -/+ 10% $50 $40 Currencies@: +/- 10% $150 $110 @) $3-#fpalon base case
Slide 27: Capital Expenditures
FrReepont-McMoRan COPPER & GOLD Capital Expenditures i Major Projects HAI Other (Uss billions) $5 $4.5 $4.0 $4] ica $2.5 $2] $15 $05 2011 2012e 2013e (2) Capitalexpenditure estimates indude projectsin progress. Project spending wil continue to be reviewedand revised subject to market conditons. Excl
Slide 28: Financial Policy
FrReepont-McMoRan COPPER & GOLD Financial Policy = Maintain Strong Balance Sheet & Liquidity Position = Invest in Attractive Growth Projects/Capital Discipline = Current Common Stock Dividend Rate: $1.25/Share per Annum = Board to Review Financial Policy on an Ongoing Basis
Slide 29: FCX Investment Summary
FrReepont-McMoRan COPPER & GOLD FCX Investment Summary World’s Premier Publicly Traded Copper Company World’s Largest Molybdenum Producer & Significant Gold Producer Long-lived Reserves, Geographically Diverse Operations Flexible Operating Structure Can Respond to Varying Market Conditions Significa
Slide 30: Reference
Reference Slides
Slide 31: PT-FI Mine Plan
FReepont-McMoRan Eoeeen Boxe PT-FI Mine Plan PT-FI‘s Share of Metal Sales, 2012e-2016e Total: 5.8 billion Ibs copper Z Copper, billion Ibs 2012e — 2016¢ PT-FI Share | Annual Average: 1.16 billion Ibs | L = Gold, million ozs 2012e — 2016e PT-FI Share Total: 8.3 million ozs gold Annual Average: 1.66 m
Slide 32: Grasberg Open Pit
|FREEPoRT-McMoRAN Copren s Gown Ss Grasberg Open Pit
Slide 33: Mining Sequence in 2012
FReepont-McMoRan |CopPER & GOLD Mining Sequence in 2012 Copper Equivalent Cross Section MMM MMMM 8E and 9N are the Primary Ore Pushbacks in 2012 Legend: Mm 0.25 - 0.99% CuEq Mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq >3.00% CuEq
Slide 34: Mining Sequence in 2012
FReepont-McMoRan |CopPER & GOLD Mining Sequence in 2012 Copper Equivalent Cross Section MMM MMMM 8E and 9N are the Primary Ore Pushbacks in 2012 Grasberg Plan View Legend: Mm 0.25 - 0.99% CuEq Mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq >3.00% CuEq
Slide 35: Mining Sequence in 2012
FReepont-McMoRan |CopPER & GOLD Mining Sequence in 2012 Copper Equivalent Cross Section MMM MMMM 8E and 9N are the Primary Ore Pushbacks in 2012 Legend: Mm 0.25 - 0.99% CuEq Mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq >3.00% CuEq
Slide 36: Mining Sequence in 2012
FReepont-McMoRan |CopPER & GOLD Mining Sequence in 2012 Copper Equivalent Cross Section ti / MM MMMM 8E and 9N are the Primary Ore Pushbacks in 2012 Legend: Mm 0.25 - 0.99% CuEq Mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq >3.00% CuEq
Slide 37: Mining Sequence in 2013
FReepont-McMoRan |CopPER & GOLD Mining Sequence in 2013 Copper Equivalent Cross Section MMM MMMM A 9N and 9S are the Primary Ore Pushbacks in 2013 Grasberg Plan View Legend: Mm 0.25 - 0.99% CuEq Mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq >3.00% CuEq 37
Slide 38: Mining Sequence in 2014
FReepont-McMoRan |CopPER & GOLD Mining Sequence in 2014 Copper Equivalent Cross Section MMM MMMM A 9N and 9S are the Primary Ore Pushbacks in 2014 Grasberg Plan View Legend: Mm 0.25 - 0.99% CuEq Mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq >3.00% CuEq
Slide 39: Mining Sequence in 2015
FReepont-McMoRan |CopPER & GOLD Mining Sequence in 2015 Copper Equivalent Cross Section MMM MMMM 9S is the Primary Ore Pushback in 2015 Grasberg Plan View Legend: Mm 0.25 - 0.99% CuEq Mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq >3.00% CuEq 39
Slide 40: Mining Sequence in 2016
FReepont-McMoRan |CopPER & GOLD Mining Sequence in 2016 Copper Equivalent Cross Section ti / MM MMMM 9S is the Primary Ore Pushback in 2016 Grasberg Plan View Legend: Mm 0.25 - 0.99% CuEq Mm 1.00 - 1.99% CuEq 2.00 - 2.99% CuEq >3.00% CuEq
Freeport Mcmoran Copper & Gold — Q2 2012 Earnings Presentation on 6ix