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4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc.

Freeport-Mcmoran Inc. · Jan 26, 2009 · 46 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. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 1
    4th Quarter 2008 Earnings Conference Call January 26, 2009 www.fcx.com
  2. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 2
    Markets 2,000 400 1,750 350 1,500 300 000s Metric Tons Cents Per Pound LME Copper Price 250 1,250 1,000 200 750 150 500 100 250 50 LME & COMEX Exchange Stocks* 0 0 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02…
  3. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 3
    Copper Market What Happened Change in Prices Continued Financial Market Turbulence, Since Mid-September 2008 Credit Issues, and Outlook for Global 0% Economy are Major Force in Price Collapse Anticipation of Surpluses and Slowing…
  4. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 4
    Underlying Fundamentals of Copper Business Remain Positive Supply Constraints/Shortfalls Reached Record 1.4 Million Metric Tons in 2008 Absence of New Projects Current Market Will Further Delay Projects 60% of Todays Mines…
  5. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 5
    Near-Term Business Strategy Revisions Prior Strategy (since PD acquisition) Revised Strategy Reduce Debt Aggressively reduce costs and capital Define the potential spending of our resources Protect liquidity Develop growth and…
  6. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 6
    Summary Impacts Reduce Volumes in 2009e/2010e Compared with October 2008 Estimates Copper 9% in 2009e and 17% in 2010e Molybdenum 25% in 2009e and 40% in 2010e 26% Reduction in Estimated 2009 Unit Site Production and Delivery…
  7. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 7
    4Q08 Summary Sales Data 4Q08 4Q07 Copper (1) Consolidated Volumes (mm lbs) 1,197 878 Average Realization (per lb) 1.55 3.20 (2) Gold Consolidated Volumes (000s ozs) 462 161 Average Realization (per oz) 818 797 Molybdenum (1)…
  8. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 8
    Phelps Dodge Transaction Purchased Phelps Dodge in a Different Economic Environment Significant Changes in Market Conditions in 4Q08 Resulted in Charges to Reduce the Carrying Value of Assets and Goodwill Phelps Dodge Transaction…
  9. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 9
    Impairment Assessment Results Individual assets are assessed for impairment under applicable accounting requirements using year-end pricing and cost assumptions Asset/Liability Asset/Liability Impairment Impairment Criteria…
  10. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 10
    Comparison to Original Purchase Price Allocation Price Assumptions Copper Price Molybdenum Price 3.50 30 3.00 Purchase Price 25 Allocation Pricing Purchase Price 2.50 Allocation Pricing 20 2.00 15 1.60 1.50…
  11. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 11
    Phelps Dodge Acquisition Key Metrics Reserves & Cash and Cash Flow in billions Mineralized Material 7.0 billion lbs Copper Molybdenum 4.2 79 * 2.5* 66 55 2.0 at at at at at at at at 12/31/06 12/31/08 12/31/08…
  12. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 12
    Preliminary Reserves at 12/31/08 Consolidated Proven & Probable Reserves Copper Molybdenum Gold 12/31/08 billion lbs billion lbs million ozs Copper Reserves Reserves 12/31/07 93.2 2.04 41.0 by Geographical Region…
  13. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 13
    A World of Opportunities Consolidated Proven & Probable Copper Reserves 102 billion lbs of Copper Reserves at 12/31/08 +12.8 billion lbs of net additions North 28.3 America Reserves: 28.3 Additions: 3.9 85% of additions at…
  14. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 14
    Copper Reserves & Mineralized Material Preliminary Estimates as of 12/31/08 102 99 at 1.60 at 2.00 copper price copper price Reserves (a) Mineralized Material (b) (billion lbs of (billion lbs of contained copper)…
  15. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 15
    Operating Plan Revisions Run Lean Reviewed operating plans at each Operations site to develop low-cost operating Sierrita scenarios Bagdad Cerro Verde Curtail high-cost copper volumes El Abra Grasberg Reduce moly volumes in…
  16. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 16
    Operating Plans Review North America Copper Revisions Reduce mining & crushed leach rates at Morenci by 50% Reduce mining & stacking rate at Safford by 50% Suspend mining/milling at Chino; produce from leach pads Reduce mining rate…
  17. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 17
    Operating Plans Review South America & Indonesia South America Indonesia Reduce costs, capex Reduce costs, capex Reduce mining rates in Grasberg accessing higher Candelaria/Ojos district grade material in 2009 Defer incremental…
  18. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 18
    Operating Plans Review Molybdenum Reduce Henderson underground mine production by 25% Molybdenum Curtail moly circuit at Sales Estimates Cerro Verde (million lbs) 2008 2009e 2010e Reduce cost/defer capital October 74 80 100…
  19. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 19
    Sales Profile 2007 - 2010e Gold Sales (million ozs) Copper Sales (billion lbs) 3 2.3 2.2 2.2 5 2 1.3 4.1 1 3.9 3.9 4 3.8 0 2007 2008 2009e 2010e Pro Forma* 3 ____________________ Note: Consolidated gold sales include…
  20. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 20
    Sales Estimates Rollforward October 21st v. Current Copper (million lbs) 2009e 2010e October 4,300 4,600 Revisions* North America (a) (360) (635) South America (b) (40) (140) Indonesia 0 (25) Total Change (400) (800) Current…
  21. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 21
    2008 and 2009e Sales by Region 2008 Sales by Region North America South America Indonesia 1,434 1,521 1,111 71 Au 1.2 mm ozs Cu Mo Cu 0.1 Cu Au mm lbs mm lbs mm lbs mm lbs mm ozs 2008 2008 2008 2008 2008 2008 2009e…
  22. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 22
    2008 and 2009e Unit Production Costs by Region 2008 North South (per pound of copper) America America Indonesia Consolidated Unit Cash Costs Site Production & Delivery (1) 1.88 1.13 1.59 1.51 Royalties (1) - - 0.10 0.03 Treatment…
  23. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 23
    Site Operating Costs by Category 2009e 42% Materials Manpower 30% North 27% 28% Indonesia America 7% Acid Other 11% 19% Energy 19% 17% 33% 20% 36% 25% South Consolidated America 7% 16% 4% 18% 22% 19% Note: e =…
  24. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 24
    Exploration 2008 2009e 248 million 75 million 22% 17% North America 7% 44% 34% South 20% America 4% 10% Indonesia Africa 13% 29% Activities focused on incorporating significant data Australasia obtained in 2008 into our…
  25. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 25
    EBITDA and Cash Flow at Various Copper Prices 2009e & 2010e Average Annual EBITDA (800 Gold & 9 Molybdenum) 5 (US billions) 4 3 2 1 0 Cu 1.25/lb Cu 1.50/lb Cu 1.75/lb 2009e & 2010e Average Annual Operating Cash Flow…
  26. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 26
    Sensitivities (2009e & 2010e Avg.) Operating Change EBITDA Cash Flow (US millions) Copper: -/+ 0.10/lb 375 260 Molybdenum: -/+ 1.00/lb 55 50 Gold: -/+ 50/ounce 100 60 Diesel (1): -/+ 10% 25 15 Purchased Power (2): -/+ 10% 35 20…
  27. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 27
    Capital Expenditures (1) Major Projects All Other (US billions) 3.0 2.7 2.5 1.1 2.0 1.5 1.3 1.0 1.0 0.6 1.6 0.5 0.5 (2) 0.7 0.5 (3) 0.0 2008 2009e 2010e (1) Capital expenditure estimates will continue to be reviewed…
  28. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 28
    Tenke Fungurume Development Project Update Construction Site January 2009 A Heavy Duty Shop F B Dump Pocket I C Stockpile J D Grinding D H (SAG mill) (SAG mill) E E Leach & CCD (counter current G decantation) F Cobalt A…
  29. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 29
    Tenke Fungurume Development Project Update Construction activities being advanced Kwatebala Mining Initial production target -- 2H09; Aggregate annual production of 250MM lbs Cu & 18MM lbs Co 1.75 billion in aggregate capital…
  30. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 30
    Underground Mine Development in Indonesia Grasberg District Ore Bodies In 2008, completed significant underground Grasberg development open pit Big Gossan Mine Initiated development of infrastructure for the Grasberg Block Cave…
  31. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 31
    Achievement of Significant Debt Reduction (US billions) 20 (1) 17.6 15 Total Debt 10 7.4 5 0 At Time of PD Acquisition 12/31/08 in March 2007 (1) Pro Forma year-end 2006 total debt of 1.6 billion plus 16 billion in…
  32. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 32
    FCX Debt Maturities 12/31/08 6,000 (US millions) Total Debt & Cash at 12/31/08 5,000 (US billions) Senior Notes Issued in 2007 6.0 Heritage PD Debt 0.6 4,010 4,000 Other Debt 0.8 Total Debt 7.4 8.375% Senior Notes Consolidated…
  33. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 33
    Financial Policy Maintain Strong Balance Sheet & Liquidity Position Aggressive Cost Management Capital Investments Will be Limited in Current Market Environment Near-Term Focus Will be on Protecting Liquidity While…
  34. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 34
    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…
  35. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 35
    Reference Slides 36
  36. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 36
    Grasberg Open Pit 9N 8E 7S 9S 8S N 37
  37. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 37
    PT-FI Mine Plan PT-FIs Share of Metal Sales, 2009e-2013e Copper, billion lbs Gold, million ozs 2009e 2013e PT-FI Share 2009e 2013e PT-FI Share Total: 6.1 billion lbs Total: 8.8 million ozs Annual Average: 1.2 billion lbs Annual…
  38. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 38
    Mining Sequence in 2009 Copper Equivalent Cross Section A B 7S and 8E are the Primary Ore Pushbacks in 2009 8E 7S Grasberg Plan View End B 2008 1Q09 A Legend: 0.25 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00…
  39. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 39
    Mining Sequence in 2009 Copper Equivalent Cross Section A B 7S and 8E are the Primary Ore Pushbacks in 2009 8E Grasberg Plan View 7S End B 2008 2Q09 A Legend: 0.25 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00…
  40. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 40
    Mining Sequence in 2009 Copper Equivalent Cross Section A B 7S and 8E are the Primary Ore Pushbacks in 2009 8E Grasberg Plan View 7S End B 2008 A 3Q09 Legend: 0.25 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00…
  41. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 41
    Mining Sequence in 2009 Copper Equivalent Cross Section A B 7S and 8E are the Primary Ore Pushbacks in 2009 8E Grasberg Plan View 7S End B 2008 A 4Q09 Legend: 0.25 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00…
  42. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 42
    Mining Sequence in 2010 Copper Equivalent Cross Section A B 8E is the Primary Ore Pushback in 2010 9S Grasberg Plan View End 8E B 2009 A 2010 Legend: 0.25 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00 1.99%…
  43. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 43
    Mining Sequence in 2011 Copper Equivalent Cross Section A B 8E and 9N are the Primary Ore Pushbacks in 2011 9S 9N* Grasberg Plan View End 2010 B 8E A 2011 Legend: 0.25 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00…
  44. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 44
    Mining Sequence in 2012 Copper Equivalent Cross Section A B 9N is the Primary Ore Pushback in 2012 9S 9N* Grasberg Plan View End 2011 B A 2012 Legend: 0.25 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00 1.99%…
  45. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 45
    Mining Sequence in 2013 Copper Equivalent Cross Section A B 9N and 9S are the Primary Ore Pushbacks in 2013 9S Grasberg Plan View B End 9N 2012 A Legend: 2013 0.25 - 0.99 0.50 0.99% CuEq % Eq Cu 1.00 - 1.99 1.00…
  46. 4th Quarter 2008 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 46
    2009e Quarterly Payable Metal Sales Gold Sales (thousand ozs) Copper Sales (million lbs) 600 575 600 525 1,250 500 450 990 1,010 300 1,000 960 940 150 0 1Q09e 2Q09e 3Q09e 4Q09e 750 ____________________ Note: Consolidated…

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