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4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc.

Freeport-Mcmoran Inc. · Jan 19, 2012 · 45 slides

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Slides

  1. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 1
    Connecting the World 4th Quarter 2011 Earnings Conference Call www.fcx.com January 19, 2012
  2. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 2
    2011 Highlights Excellent Financial Performance - Exceeded 2010 Records Solid Operating Performance Impacted by Labor Disruptions New Labor Agreements at Grasberg, Cerro Verde & El Abra Advanced Growth Projects to Increase…
  3. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 3
    4Q11 & 2011 Highlights Sales Data 4Q11 4Q10 2011 2010 Copper Consolidated Volumes (mm lbs) 823 941 3,698 3,896 Average Realization (per lb) 3.42 4.18 3.86 3.59 (1) (1) Site Production & Delivery Unit Costs (per lb) 1.96 1.46 1.72…
  4. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 4
    Quarterly Operating Highlights 4Q11 Unit Production Costs (per pound of copper) North South America America* Indonesia* Africa Consolidated* Cash Unit Costs Site Production & Delivery (1) 1.73 1.56 6.92 1.58 1.96 By-Product Credits…
  5. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 5
    Markets 2,500 500 2,000 400 LME Copper Price 000s Metric Tons Cents Per Pound 1,500 300 1,000 200 500 100 LME & COMEX Exchange Stocks* 0 0 Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan-…
  6. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 6
    Copper Market Commentary Physical Markets Remain Relatively Tight Positive Data from China Strong Imports Global Inventories Declining U.S. Economic Data Improving Auto Sales and Production are Growing Residential Construction is…
  7. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 7
    Labor Agreements Grasberg Cerro Verde 90-Day Strike: September 15 61-Day Strike (Ended on November 28, December 15 2011) Temporary Mill Disruption Beginning Insignificant Impact on Production in Late October Resulting from Damage…
  8. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 8
    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…
  9. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 9
    Preliminary Reserves at 12/31/11 Consolidated Proven & Probable Reserves Copper Molybdenum Gold billion lbs billion lbs million ozs 12/31/11 Reserves 12/31/10 (1) 120.5 3.39 35.5 Copper Reserves Additions/revisions* (2) 2.9…
  10. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 10
    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…
  11. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 11
    Significant Reserve Additions Since 12/31/06 Exploration Spend Reserve Additions +46 billion lbs Cu* 0.8 billion 2.3x cumulative production since 12/31/06 Candelaria/Ojos Bagdad South North America America Morenci Cerro…
  12. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 12
    North American Copper Projects Morenci Mill Restart (a) Miami Restart (b) Morenci Mine Rate Increase (a) Chino Restart (c) (a) Morenci Mill Restart & Mine Rate Increase completed in 2011; incremental copper of 125mm lbs/year…
  13. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 13
    Climax Molybdenum Restart Advanced Stage Project Start-up in 2012 with ramp up to 20mm lbs/yr during 2013 Depending on market conditions, SAG Mill Discharge Climax may increase to 30mm lbs/yr Construction 95% complete*…
  14. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 14
    El Abra Sulfolix Commenced production in Sulfolix Stacking 1Q11 Project extends life 10+ years 300MM lbs Cu/yr Capital Cost: 725MM through 2015 with 580MM* for initial phase to be completed in first-quarter 2012 Large…
  15. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 15
    Long-Term Underground Mine Development in Indonesia Grasberg Block Cave 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…
  16. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 16
    Advanced Stage Copper Projects Incremental Preliminary Copper Capital* Achieve Mill Expansions (mm lbs/year) ( billions) Full Rates Status EIS filed Cerro Verde (360K) 600 4.0 2016 4Q11 Completing Morenci (115K) 225 1.2 2014…
  17. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 17
    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…
  18. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 18
    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,…
  19. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 19
    Development Opportunities Tenke Fungurume Expansion 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 Kwatebala Mine Incremental…
  20. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 20
    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 21
  21. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 21
    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…
  22. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 22
    2012 Outlook Sales Outlook: Copper: 3.8 Billion lbs. Gold: 1.2 Million ozs. Molybdenum: 80 Million lbs. Unit Net Cash Cost(1): 1.38/lb in 2012e Reflects Impact of Lower Volumes at Grasberg Future Costs Expected to Decline with…
  23. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 23
    Near-Term Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 5.0+ 2 1.6 1.7 5 1.4 1.2 4.3 4.3 1 4 3.7 3.8 0 2011 2012e 2013e 2014e 3 ____________________ Note: Consolidated gold sales include approximately…
  24. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 24
    2012e Quarterly Payable Metal Sales Gold Sales (thousand ozs) Copper Sales (million lbs) 500 425 1,250 375 285 275 250 995 1,015 250 1,000 930 875 125 0 1Q12e 2Q12e 3Q12e 4Q12e 750 ____________________ Note: Consolidated…
  25. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 25
    2011 and 2012e Sales by Region 2011 Sales by Region North America South America Indonesia* Africa 1,322 1,247 79(1) 846 1.3 283 25 0.1 Cu Co mm lbs Mo Au mm lbs Cu Cu mm ozs Cu Au mm lbs mm lbs mm lbs mm lbs mm ozs 2011…
  26. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 26
    2011 and 2012e Unit Production Costs by Region 2011 (per pound of copper) North South America America* Indonesia* Africa Consolidated* Cash Unit Costs Site Production & Delivery (1) 1.78 1.38 2.21 1.57 1.72 By-product Credits (0.48)…
  27. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 27
    Reconciliation of Unit Cash Costs Consolidated per lb of copper 2011 101 Grasberg (a) 20 North America (b) 10 South America (c) 7 Total 37 2012e 138 Impact of Higher 2013e/2014e Grasberg Volumes (20) With Higher Grasberg…
  28. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 28
    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…
  29. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 29
    Sensitivities Operating Change EBITDA Cash Flow (US millions) Copper: -/+ 0.10/lb 400 275 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%…
  30. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 30
    Capital Expenditures (1) Major Projects All Other (US billions) 5 4.0 4 3.5 3 1.6 2.5 1.3 2 1.1 (3) 1 2.4 2.2 (4) (2) 1.4 0 2011 2012e 2013e (1) Capital expenditure estimates will continue to be reviewed and…
  31. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 31
    Balance Sheet Repaid 3.8 bn in Debt Since (US billions) YE 2008 (50% Reduction) 20 Significant Liquidity 17.6 (1) Strong Credit Metrics 15 No Near-term Maturities Investment Grade Rated by S&P, Moodys, Fitch Total Debt…
  32. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 32
    Financial Policy Maintain Strong Balance Sheet & Liquidity Position Invest in Attractive Growth Projects Opportunistic Debt Repayment Current Common Stock Dividend Rate: 1.00/Share per Annum Paid 950 Million in Supplemental…
  33. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 33
    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…
  34. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 34
    Click to edit Master title style Reference Slides
  35. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 35
    PT-FI Mine Plan PT-FIs Share of Metal Sales, 2012e-2016e 2012e 2016e PT-FI Share Total: 5.9 billion lbs copper Copper, billion lbs Annual Average: 1.18 billion lbs Gold, million ozs 2012e 2016e PT-FI Share Total: 8.4 million ozs…
  36. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 36
    Grasberg Open Pit 9N 8E 9S N 37
  37. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 37
    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 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00…
  38. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 38
    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 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00…
  39. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 39
    Mining Sequence in 2012 Copper Equivalent Cross Section A B 8E and 9N are the Primary Ore Pushbacks in 2012 9S 9N 3Q12 Grasberg Plan View End 2011 B 8E Legend: 1Q12 0.25 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99…
  40. 4th Quarter 2011 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 3Q12 Grasberg Plan View End 2011 B 8E Legend: 1Q12 0.25 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99…
  41. 4th Quarter 2011 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 9N Grasberg Plan View End B 2012 Legend: 8E 0.25 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00 1.99%…
  42. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 42
    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 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00 1.99% CuEq %…
  43. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 43
    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 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.99% CuEq 2015 1.00 % Eq Cu…
  44. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 44
    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 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00 1.99% CuEq % Eq Cu 2.00 -…
  45. 4th Quarter 2011 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 45
    Site Operating Costs by Category Consolidated Materials 33% 33% Manpower 28% 29% Other 6% 12% 5% 10% Energy Acid 22% 22% 2011 2012e Note: e = estimate. See Cautionary Statement. 46

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