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4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc.

Freeport-Mcmoran Inc. · Jan 22, 2013 · 46 slides

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  1. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 1
    4th Quarter 2012 Earnings Conference Call January 22, 2013 www.fcx.com CONNECTING THE FUTURE
  2. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 2
    Additional Information about the Proposed Transactions and Where to Find It PXP Transaction In connection with the proposed transaction, FCX has filed with the SEC a registration statement on Form S-4 that includes a preliminary proxy…
  3. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 3
    2012 Highlights Production Growth in North America and Africa Unusually Low 2012 Ore Grades in Indonesia Expect Significant Increases in 2013 and Beyond Advanced Financially Attractive Brownfield Development Projects Tenke Phase…
  4. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 4
    Financial Highlights Sales Data 4Q12 4Q11 Copper Consolidated Volumes (mm lbs) 972 823 Average Realization (per lb) 3.60 3.42 Site Production & Delivery Unit Costs (per lb) 2.01 1.96 Unit Net Cash Costs (per lb) 1.54 1.57 Gold…
  5. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 5
    Quarterly Operating Highlights 4Q12 Unit Production Costs (per pound of copper) North South America America Indonesia Africa Consolidated Cash Unit Costs Site Production & Delivery (1) 2.00 1.67 2.91 1.38 2.01 By-Product Credits…
  6. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 6
    Update on Grasberg Unusually low metal production in 2012 compared with historical levels Lower grades in Grasberg open pit DOZ ramp-up: panel repairs more extensive expect 80K t/d by year- end 2013; current rate: 50K t/d Mine…
  7. 4th 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 Global Exchange Stocks* 100 0 0 Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul-…
  8. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 8
    Copper Market Commentary China Remains Important Demand Driver - Economy Showing Signs of Strengthening - Potential for Further Stimulus Improving U.S. Demand - Healthy Automotive Sector - Recovering Housing Sector European…
  9. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 9
    Preliminary Reserves at 12/31/12 Consolidated Proven & Probable Reserves Copper Molybdenum Gold billion lbs billion lbs million ozs 12/31/12 Reserves 12/31/11 (1) 119.7 3.42 33.9 Copper Reserves Additions/revisions* (2) 0.5…
  10. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 10
    Copper Reserves & Mineralized Material as of 12/31/12 billion lbs of copper 12/31/12 230 Mineralized Material (b) by Geographical Region Mineralized 113 Material (b) billion (contained copper) lbs North 117 at 2.20 Cu price…
  11. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 11
    Potential Future Reserve Additions Potential Reserve Additions Key Targets +40-50 billion lbs Cu El Abra Other SA Kisanfu Ajo El Abra Twin Buttes Ajo Lone Star Twin Kisanfu Buttes Lone Star Other NA 12
  12. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 12
    World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves 2012e Copper Production Million metric tons Thousand metric tons 0 5 10 15 20 25 30 0 200 400 600 800 1000 1200 Grasberg Complex - 1988 Escondida -…
  13. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 13
    Highly Attractive Brownfield Copper Development Projects Expansion Projects in Progress North America* Mill Expansions (t/d) Incr. Cu (mm lbs/yr) Capital* Achieve ( blns) Full Rates Morenci Expansion Cerro Verde (360K) 600 4.4…
  14. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 14
    Volume Growth with Brownfield Projects in Progress Copper (billion lbs per year) 2015e-2020e v. 2012 5.0+ +15%+ 4.4 SA +20% NA 3.65 Africa Indonesia Indonesia Africa Brownfield Projects South America Proven Technology…
  15. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 15
    Brownfield Development 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…
  16. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 16
    Brownfield Development 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: 4.4 billion* Incremental Production: 600mm lbs Cu/year,…
  17. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 17
    Brownfield Development Tenke Fungurume Expansion Key Project Metrics Electrowinning Facilities 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…
  18. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 18
    Cobalt Refinery Acquisition Enhances market position as worlds largest producer of cobalt Initial purchase consideration of 325mm Potential for additional Kokkola Refinery consideration of up to 110mm over three years, contingent…
  19. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 19
    Grasberg Underground Development Significant development progress Grasberg open pit To-date, completed 73 km of development in Grasberg BC & 46 km in DMLZ Grasberg Current activities include work on ore flow Kucing Block Cave…
  20. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 20
    2013 Outlook* Sales Outlook: Copper: 4.3 Billion lbs. Gold: 1.4 Million ozs. Molybdenum: 90 Million lbs. Unit Net Cash Cost(1): 1.35/lb in 2013e 1.67/lb in 1Q13e Operating Cash Flows(2): 7 Billion (3.65/lb Copper) Includes 450…
  21. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 21
    Growing Production Profile Copper Sales (billion lbs) 5.0+ Gold Sales (million ozs) 5 2 1.8 1.8 4.5 4.3 1.4 1.0 4 1 3.65 3 0 2012 2013e 2014e 2015e ____________________ Note: Consolidated gold sales include approximately…
  22. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 22
    2013e Quarterly Payable Metal Sales Gold Sales (thousand ozs) Copper Sales (million lbs) 1,230 600 515 1,250 1,085 400 345 1,045 290 230 1,000 940 200 0 1Q13e 2Q13e 3Q13e 4Q13e 750 ____________________ Note: Consolidated…
  23. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 23
    2012 and 2013e Sales by Region 2012 Sales by Region North America South America Indonesia Africa 1,351 1,245 83(1) 716 336 0.9 25 95(2) Cu Co mm lbs Cu Mo Cu Au Cu mm lbs mm lbs 000s ozs Au mm lbs mm lbs mm lbs mm ozs…
  24. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 24
    2012 and 2013e Unit Production Costs by Region 2012 (per pound of copper) North South America America Indonesia Africa Consolidated Cash Unit Costs Site Production & Delivery (1) 1.91 1.60 3.12 1.49 2.00 By-product Credits (0.36)…
  25. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 25
    Reconciliation of Consolidated Unit Cash Costs per lb of copper 2012 148 Grasberg (a) (17) Tenke (b) (2) North America (c) 6 Total (13) 2013e 135 Impact of Higher 2014e Grasberg Volumes (20) 2013e With Higher Grasberg Volumes…
  26. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 26
    EBITDA and Cash Flow at Various Copper Prices Average EBITDA* (1,500 Gold & 12 Molybdenum) 18 (US billions) 15 12 50% 9 2015e/2016e Increase Average 6 2013e/2014e 3 Average 0 Cu 3.00/lb Cu 3.50/lb Cu 4.00/lb Average…
  27. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 27
    Sensitivities Operating Change EBITDA Cash Flow (US millions) Copper: -/+ 0.10/lb 405 275 Molybdenum: -/+ 1.00/lb 80 65 Gold: -/+ 50/ounce 75 45 Diesel(1): -/+ 10% 95 70 Purchased Power(2): -/+ 10% 55 40 Currencies(3): +/- 10%…
  28. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 28
    Exploration Targets in Major Mineral Districts 235 million in 2013e North America South 20% America 23% Other Areas 11% Africa Indonesia 20% 26% Note: FCXs consolidated share; e = estimate. See Cautionary Statement.…
  29. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 29
    Capital Expenditures (1) (2) Major Mining Projects Other Mining (US billions) 5 4.6 4.4 4 1.8 1.4 3.0 3 1.0 2 2.8 3.0 1 2.0 0 2013e 2014e 2015e (1) Estimates include projects in progress; exclude estimates from pending…
  30. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 30
    Recent Acquisitions Why Now Positive Long-Term Global Economic Outlook Limited Opportunities to Invest in Copper Beyond Brownfield Expansions Attractive Opportunity to Acquire High Quality Assets Strong Margins and Cash Flows…
  31. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 31
    Enhanced Geographic & Commodity Diversification 2013e EBITDA (1) Existing Pro forma South North America America North America 29% 48% South 29% America 21% Indonesia 8% Indonesia 11% 31% Africa 23% Africa Mining…
  32. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 32
    FCX Pro Forma EBITDA & Cash Flows EBITDA Operating Cash Flow* 25 20 45% 15 Increase 2015e/ billions 2016e 45% Avg. 2015e/ Increase 10 2016e Avg. 2013/ 2013/ 5 2014 2014 Avg. Avg. 0 3.00 3.50 4.00 3.00 3.50…
  33. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 33
    Focused and Disciplined Capital Allocation Philosophy Maintain Strong Balance Sheet & Credit Profile Ensure Establish Short, Allocate Capital to Focus on Potential Medium and Long Low Cost, Long-lived, Largest is Well Term…
  34. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 34
    Financial Policy Maintain Strong Balance Sheet & Liquidity Position Reduce Debt Incurred in Acquisitions Using Projected Substantial Cash Flows Generated from Combined Business Invest in Projects with Strong Financial…
  35. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 35
    Combined Company Highlights Creates A Premier U.S. Based Natural Resources Producer Worlds Largest Publicly Traded Copper Producer Significant Producer of Oil, Gold & Molybdenum Significant Long-term Natural Gas Resources…
  36. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 36
    Reference Slides
  37. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 37
    PT-FI Mine Plan PT-FIs Share of Metal Sales, 2013e-2021e 2013e 2017e PT-FI Share Total: 5.9 billion lbs copper Copper, billion lbs Annual Average: 1.18 billion lbs Gold, million ozs 2013e 2017e PT-FI Share Total: 8.3 million ozs…
  38. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 38
    Grasberg Open Pit 9N 8E 9S N 39
  39. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 39
    Mining Sequence in 2013 Copper Equivalent Cross Section A B 9N and 9S are the Primary Ore Pushbacks in 2013 9S 1Q13 9N 1Q13 End 2012 Grasberg Plan View B Legend: LEGEND 0.25 0.50-0.99% 0.99 %CuEq Eq Cu 1.00…
  40. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 40
    Mining Sequence in 2013 Copper Equivalent Cross Section A B 9N and 9S are the Primary Ore Pushbacks in 2013 9S 1Q13 9N 1Q13 2Q13 2Q13 End 2012 Grasberg Plan View B Legend: LEGEND 0.25 0.50-0.99% 0.99 %CuEq Eq Cu…
  41. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 41
    Mining Sequence in 2013 Copper Equivalent Cross Section A B 9N and 9S are the Primary Ore Pushbacks in 2013 9S 1Q13 9N 1Q13 2Q13 2Q13 3Q13 End 3Q13 2012 Grasberg Plan View B Legend: LEGEND 0.25 0.50-0.99% 0.99…
  42. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 42
    Mining Sequence in 2013 Copper Equivalent Cross Section A B 9N and 9S are the Primary Ore Pushbacks in 2013 9S 1Q13 9N 1Q13 2Q13 2Q13 3Q13 End 3Q13 2012 Grasberg Plan View 4Q13 4Q13 B Legend: LEGEND 0.25 0.50-0.99%…
  43. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 43
    Mining Sequence in 2014 Copper Equivalent Cross Section A B 9N and 9S are the Primary Ore Pushbacks in 2014 9S End 2013 9N Grasberg Plan View B 2014 Legend: LEGEND 0.25 0.50-0.99% 0.99 %CuEq Eq Cu 1.00 1.00-1.99%…
  44. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 44
    Mining Sequence in 2015 Copper Equivalent Cross Section A B 9S is the Primary Ore Pushback in 2015 9S End Grasberg Plan View 2014 2015 B Legend: LEGEND 0.25 0.50-0.99% 0.99 %CuEq Eq Cu 1.00 1.00-1.99% 1.99 %CuEq Eq…
  45. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 45
    Mining Sequence in 2016 Copper Equivalent Cross Section A B 9S is the Primary Ore Pushback in 2016 End 2015 Grasberg Plan View 9S B Legend: LEGEND 0.25 0.50-0.99% 0.99 %CuEq Eq Cu 2016 1.00 1.00-1.99% 1.99 %CuEq…
  46. 4th Quarter 2012 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 46
    Site Operating Costs by Category Consolidated Materials 32% 32% Manpower 30% 29% Other 5% 12% 13% Acid 5% Energy 21% 21% 2012 2013e Note: e = estimate. See Cautionary Statement. 47

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