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1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc.

Freeport-Mcmoran Inc. · Apr 19, 2012 · 47 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 1
    1st Quarter 2012 Earnings Conference Call April 19, 2012 www.fcx.com CONNECTING THE FUTURE
  2. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 2
    Connecting the Future 2011 Annual Report Highlights Global Leader in Production of Copper, Gold and Molybdenum Well Situated to Meet Growing Demand for Metals Geographically Diverse Long-Lived Reserves Growing Production…
  3. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 3
    1Q12 Highlights Strong Operating Performance in Americas and Africa Continuing Progress to Restore Normal Operations at Grasberg Advanced Growth Projects, Targeting Over 25% Increase Over the Next Three to Four Years…
  4. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 4
    1Q12 Highlights Sales Data 1Q12 1Q11 Copper Consolidated Volumes (mm lbs) 827 926 Average Realization (per lb) 3.82 4.31 Site Production & Delivery Unit Costs (per lb) 1.96 1.61 Unit Net Cash Costs (per lb) 1.26 0.79 Gold…
  5. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 5
    Grasberg Update Reached Terms of New 2-yr Labor Agreement for PT-FI Employees in Mid-December 2011 During 1Q12, PT-FI Experienced Work Interruptions in Connection with Efforts to Resume Normal Operations 1Q12 Production Impacts:…
  6. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 6
    Quarterly Operating Highlights 1Q12 Unit Production Costs (per pound of copper) North South America America Indonesia Africa Consolidated Cash Unit Costs Site Production & Delivery (1) 1.80 1.53 3.51 1.50 1.96 By-Product Credits…
  7. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 7
    Markets 2,500 500 2,000 400 000s Metric Tons Cents Per Pound 1,500 300 LME Copper Price 1,000 200 500 100 LME & COMEX Exchange Stocks* 0 0 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08…
  8. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 8
    Copper Market Commentary China Remains Important Demand Driver Urbanization & Infrastructure Development Slowing Growth on Larger Base = Significant Consumption U.S. Positive Growth Trends Manufacturing & Employment Gains Auto…
  9. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 9
    PT-FI Contract of Work 50-Year Agreement Signed in 1991 Initial Term Through 2021 Two 10-Year Extensions Through 2041 COW Provides Fixed Taxes and Royalty Rates 35% Tax Rate (Current Statutory Rate = 25%) Royalty Rates: 3.5%…
  10. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 10
    Financial Benefits to Indonesia ( billions) Contributed Over 60 Billion to National GDP in Total Since 1992 Planning Over 15 Billion in New Investments Largest Private Employer in Papua and One of the Largest Taxpayers in…
  11. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 11
    Value Creation Focus INVESTMENT CASH MINERAL RESERVE IN ATTRACTIVE PRODUCTION FLOWS/ RESOURCES ADDITIONS DEVELOPMENT GROWTH RETURNS PROJECTS FCX Copper Resources at 12/31/2011 Recoverable Reserves (a) 120 bn lbs Mineralized…
  12. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 12
    Copper Reserves & Mineralized Material as of 12/31/11 billion lbs of copper 12/31/11 235 Mineralized Material (b) by Geographical Region Mineralized 115 Material (b) billion (contained copper) lbs North 120 at 2.20 Cu price…
  13. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 13
    Completed Copper Projects Incremental Copper North American Restarts mm lbs/year Status Morenci Mill Restart 125mm lbs in production Morenci Mine Rate Increase in Miami Restart 70mm lbs production in Chino Restart 150mm lbs in…
  14. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 14
    Climax Molybdenum Start-Up Start-up in March 2012 Construction essentially complete with commissioning on-going in 2Q12* Ramp up to 20mm lbs/yr during 2013 SAG Mill Start-up Depending on market conditions, First Concentrate…
  15. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 15
    Long-Term Underground Mine Development in Indonesia Significant undeveloped UG reserves Aggregate reserves of 37 billion lbs Cu & 32 million ozs Au DOZ capacity of 80K t/d Initiated mining at Big Gossan full rates of 7K t/d in…
  16. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 16
    Grasberg BC & DMLZ Underground Mine Development Completed significant development on access to underground ore bodies Completed 55 km of development for Grasberg BC & 20 km for DMLZ Key development activities include work on ore…
  17. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 17
    Copper Projects in Progress Incremental Copper Capital* Achieve (mm lbs/year) ( billions) Full Rates Status Mill Expansions (t/d) EIS filed 4Q11; Cerro Verde (360K) 600 4.0 2016 engineering & long-lead items Detailed Morenci…
  18. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 18
    Development Opportunities Morenci Mill Expansion 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 (bln lbs) Increase mining…
  19. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 19
    Development Opportunities Cerro Verde Mill Expansion Key Project Metrics 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 lbs Cu/year,…
  20. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 20
    Development Opportunities Tenke Fungurume Expansion Key Project Metrics Construction Progress 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…
  21. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 21
    Potential Additional Projects North America South America Sulfides/Mill Projects El Abra Mill Large Scale Morenci Sierrita Africa Bagdad Ajo Future Expansion Twin Buttes of Tenke Oxides Safford/Lone Star Tenke Sulfides 22
  22. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 22
    Americas Growth Outlook Copper Production billion lbs per year 3.5 Potential Projects under review 2.9 Cerro Verde Expansion 2.6 Morenci 2.4 Expansion Chino Restart Morenci Mill Exp. 2 El Abra 1.5 Ajo Mill bln lbs…
  23. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 23
    Africa Growth Outlook Copper Production billion lbs per year Phase 4 Expansion 0.6 Phase 3 0.4 Oxides Expansion Phase 2 0.3 Expansion 0.15 2009 2012e 2014e Potential with Potential additional with Sulfides oxide e =…
  24. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 24
    Exploration Targets in Major Mineral Districts 275 million in 2012e South America North 27% America 27% Africa 27% 3% 16% Australasia Indonesia & Other Areas Note: FCXs consolidated share; e = estimate. See Cautionary…
  25. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 25
    2012 Outlook Sales Outlook: Copper: 3.7 Billion lbs. Gold: 1.1 Million ozs. Molybdenum: 81 Million lbs. Unit Net Cash Cost(1): 1.43/lb in 2012e Reflects Impact of Lower Volumes at Grasberg Costs in Future Years Expected to…
  26. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 26
    Near-Term Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 5.0+ 2 1.6 1.7 5 1.4 4.5 4.3 1.1 1 4 3.7 3.7 0 2011 2012e 2013e 2014e 3 ____________________ Note: Consolidated gold sales include approximately…
  27. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 27
    2012e Quarterly Payable Metal Sales Gold Sales (thousand ozs) Copper Sales (million lbs) 500 1,250 375 305 288 295 235 985 990 250 1,000 895 125 827 0 1Q12 2Q12e 3Q12e 4Q12e 750 ____________________ Note: Consolidated gold…
  28. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 28
    2012 Operating Estimates 2012e Unit Production Costs (per pound of copper) North South America America Indonesia Africa Consolidated Cash Unit Costs (1) Site Production & Delivery (2) 1.92 1.58 2.98 1.50 2.00 By-product Credits…
  29. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 29
    Reconciliation of Unit Cash Costs Consolidated per lb of copper 2011 101 Grasberg (a) 24 North America (b) 10 South America (c) 8 Total 42 2012e 143 Impact of Higher 2013e/2014e Grasberg Volumes (24) With Higher Grasberg…
  30. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 30
    EBITDA and Cash Flow at Various Copper Prices Average EBITDA* (1,200 Gold & 12 Molybdenum) 12 (US billions) 9 6 3 0 Cu 3.00/lb Cu 3.50/lb Cu 4.00/lb Average Operating Cash Flow (excluding Working Capital changes)* (1,200…
  31. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 31
    Sensitivities Operating Change EBITDA Cash Flow (US millions) Copper: -/+ 0.10/lb 410 280 Molybdenum: -/+ 1.00/lb 80 65 Gold: -/+ 50/ounce 80 50 Diesel(1): -/+ 10% 100 70 Purchased Power(2): -/+ 10% 50 40 Currencies(3): +/- 10%…
  32. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 32
    Capital Expenditures (1) Major Projects All Other (US billions) 5 4.3 4.2 4 1.6 1.3 3 2.5 2 1.1 (4) 2.7 (3) 2.9 1 (2) 1.4 0 2011 2012e 2013e (1) Capital expenditure estimates include projects in progress. Project…
  33. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 33
    Balance Sheet (US billions) Significant Liquidity 20 17.6 (1) Strong Credit Metrics 15 Investment Grade Rated by S&P, Moodys, Fitch Total Debt 10 7.4 5 3.5 0 At Time of PD Acquisition in 12/31/08 3/31/12 March 2007…
  34. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 34
    Debt Refinancing Issued 3.0 Billion of New Notes on February 13, 2012 with Weighted Average Interest Rate of 3% 0.5 Billion of 1.4% Senior Notes Due February 2015 0.5 Billion of 2.15% Senior Notes Due March 2017 2.0 Billion of 3.55%…
  35. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 35
    Financial Policy Maintain Strong Balance Sheet & Liquidity Position Invest in Attractive Growth Projects Board Action Increased Common Stock Dividend Rate: 1.25/Share per Annum Board to Review Financial Policy on an Ongoing…
  36. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 36
    FCX Investment Summary Worlds Premier Publicly Traded Copper Company Worlds Largest Molybdenum Producer & Significant Gold Producer Long-lived Reserves, Geographically Diverse Operations Flexible Operating Structure Can Respond…
  37. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 37
    Reference Slides
  38. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 38
    PT-FI Mine Plan PT-FIs Share of Metal Sales, 2012e-2016e 2012e 2016e PT-FI Share Total: 5.8 billion lbs copper Copper, billion lbs Annual Average: 1.16 billion lbs Gold, million ozs 2012e 2016e PT-FI Share Total: 8.3 million ozs…
  39. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 39
    Grasberg Open Pit 9N 8E 9S N 40
  40. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 40
    Mining Sequence in 2012 Copper Equivalent Cross Section A B 8E and 9N are the Primary Ore Pushbacks in 2012 9S 9N Grasberg Plan View End 2011 B 8E Legend: 1Q12 0.25 0.50 - 0.99 0.99% CuEq % Eq Cu 1.00 1.00 - 1.99…
  41. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 41
    Mining Sequence in 2012 Copper Equivalent Cross Section A B 8E and 9N are the Primary Ore Pushbacks in 2012 9S 9N 2Q12 Grasberg Plan View End 2011 B 8E Legend: 1Q12 0.25 0.50 - 0.99 0.99% CuEq % Eq Cu 1.00 1.00 -…
  42. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 42
    Mining Sequence in 2012 Copper Equivalent Cross Section A B 8E and 9N are the Primary Ore Pushbacks in 2012 9S 9N 2Q12 3Q12 Grasberg Plan View End 2011 B 8E Legend: 1Q12 0.25 0.50 - 0.99 0.99% CuEq % Eq Cu 1.00 1.00…
  43. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 43
    Mining Sequence in 2012 Copper Equivalent Cross Section A B 8E and 9N are the Primary Ore Pushbacks in 2012 9S 9N 2Q12 3Q12 Grasberg Plan View End 2011 4Q12 B 8E Legend: 1Q12 0.25 0.50 - 0.99 0.99% CuEq % Eq Cu 1.00…
  44. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 44
    Mining Sequence in 2013 Copper Equivalent Cross Section A B 9N and 9S are the Primary Ore Pushbacks in 2013 9S 9N Grasberg Plan View End B 2012 Legend: 8E 0.25 0.50 - 0.99 0.99% CuEq % Eq Cu 1.00 1.00 - 1.99 2.00…
  45. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 45
    Mining Sequence in 2014 Copper Equivalent Cross Section A B 9N and 9S are the Primary Ore Pushbacks in 2014 9S 9N Grasberg Plan View B End Legend: 2013 0.25 0.50 - 0.99 0.99% CuEq % Eq Cu 1.00 1.00 - 1.99 1.99% CuEq…
  46. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 46
    Mining Sequence in 2015 Copper Equivalent Cross Section A B 9S is the Primary Ore Pushback in 2015 Grasberg Plan View End B 9S 2014 Legend: 0.25 0.50 - 0.99 0.99% CuEq % Eq Cu 1.00 1.00 - 1.99 1.99% CuEq 2015 % Eq…
  47. 1st Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 47
    Mining Sequence in 2016 Copper Equivalent Cross Section A B 9S is the Primary Ore Pushback in 2016 Grasberg Plan View End B 2015 Legend: 9S 0.25 0.50 - 0.99 0.99% CuEq % Eq Cu 1.00 1.00 - 1.99 1.99% CuEq % Eq Cu…

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