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FREEPORT-MCMORAN COPPER & GO
Symbol U : FCX
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Freeport-McMoRan Copper & Gold Inc. Reports Fourth-Quarter and Year Ended December 31, 2012 Results

2013-01-22 08:00 ET - News Release


PHOENIX -- (Business Wire)

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX):

  • Net income attributable to common stock for fourth-quarter 2012 was $743 million, $0.78 per share, compared with net income of $640 million, $0.67 per share, for fourth-quarter 2011. Net income attributable to common stock for the year 2012 was $3.0 billion, $3.19 per share, compared with $4.6 billion, $4.78 per share, for the year 2011.
  • Consolidated sales from mines for fourth-quarter 2012 totaled 972 million pounds of copper, 254 thousand ounces of gold and 21 million pounds of molybdenum, compared with 823 million pounds of copper, 133 thousand ounces of gold and 19 million pounds of molybdenum for fourth-quarter 2011. Consolidated sales for the year 2012 totaled 3.65 billion pounds of copper, 1.0 million ounces of gold and 83 million pounds of molybdenum, compared with 3.70 billion pounds of copper, 1.4 million ounces of gold and 79 million pounds of molybdenum for the year 2011.
  • Consolidated sales from mines for the year 2013 are expected to approximate 4.3 billion pounds of copper, 1.4 million ounces of gold and 90 million pounds of molybdenum, including 940 million pounds of copper, 230 thousand ounces of gold and 23 million pounds of molybdenum for first-quarter 2013.
  • Consolidated unit net cash costs (net of by-product credits) averaged $1.54 per pound of copper for fourth-quarter 2012, compared with $1.57 per pound for fourth-quarter 2011. Based on current sales volume and cost estimates and assuming average prices of $1,700 per ounce for gold and $11 per pound for molybdenum, consolidated unit net cash costs (net of by-product credits) are estimated to average $1.35 per pound of copper for the year 2013.
  • Operating cash flows totaled $1.3 billion for fourth-quarter 2012 (including $122 million of net working capital sources and other tax payments) and $3.8 billion (net of $1.4 billion in working capital uses and other tax payments) for the year 2012, compared with $746 million for fourth-quarter 2011 (net of $335 million in working capital uses and other tax payments) and $6.6 billion (net of $461 million in working capital uses and other tax payments) for the year 2011. Based on current sales volume and cost estimates and assuming average prices of $3.65 per pound for copper, $1,700 per ounce for gold and $11 per pound for molybdenum, operating cash flows are estimated to approximate $7 billion for the year 2013, excluding results of pending acquisitions.
  • Capital expenditures totaled $976 million for fourth-quarter 2012 and $3.5 billion for the year 2012, compared with $785 million for fourth-quarter 2011 and $2.5 billion for the year 2011. Excluding amounts for pending acquisitions, capital expenditures are expected to approximate $4.6 billion for the year 2013, including $2.8 billion for major projects and $1.8 billion for sustaining capital.
  • At December 31, 2012, consolidated cash totaled $3.7 billion and total debt totaled $3.5 billion.
  • On December 5, 2012, FCX announced definitive agreements to acquire Plains Exploration & Production Company (PXP) and McMoRan Exploration Co. (MMR) in transactions totaling $20 billion, which would create a premier U.S.-based natural resource company. The transactions are expected to close in second-quarter 2013.

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported fourth-quarter 2012 net income attributable to common stock of $743 million, $0.78 per share, compared with $640 million, $0.67 per share, for fourth-quarter 2011. Fourth-quarter 2012 net income included a net credit of $40 million ($0.04 per share) associated with adjustments to environmental obligations and related litigation reserves and a gain for insurance recoveries, partly offset by charges for labor agreement costs at Candelaria and for costs associated with the PXP and MMR transactions. Fourth-quarter 2011 net income included a net charge of $73 million ($0.08 per share) associated with adjustments to environmental obligations and related litigation reserves and bonuses for new labor agreements and other employee costs at PT Freeport Indonesia, Cerro Verde and El Abra. For the year 2012, FCX reported net income attributable to common stock of $3.0 billion, $3.19 per share, compared with $4.6 billion, $4.78 per share, for the year 2011.

James R. Moffett, Chairman of the Board, and Richard C. Adkerson, President and Chief Executive Officer said, "Our global team continues to achieve strong and safe production while aggressively managing costs and executing on financially attractive projects to grow our copper production from 3.66 billion pounds in 2012 to over 5 billion pounds per annum in 2015. We are positive about the long-term outlook for our business, the markets we serve and the opportunities that the pending oil and gas acquisitions will provide. We are focused on executing our strategy of developing long-term resources in a cost effective and financially attractive manner to generate long-term value for shareholders."

SUMMARY FINANCIAL AND OPERATING DATA

       
Three Months EndedYears Ended
December 31,December 31,
  2012     20112012     2011
Financial Data (in millions, except per share amounts)
Revenuesa $ 4,513 $ 4,162 $ 18,010 $ 20,880
Operating income $ 1,358

b,c,d,e

$ 1,297 b,d $ 5,814 b,c,d,e $ 9,140 b,d
Net income attributable to common stockf $ 743 b,c,d,e $ 640 b,d $ 3,041 b,c,d,e,g,h $ 4,560 b,d,g,h
Diluted net income per share of common stock $ 0.78 b,c,d,e $ 0.67 b,d $ 3.19 b,c,d,e,g,h $ 4.78 b,d,g,h
Diluted weighted-average common
shares outstanding 954 953 954 955
Operating cash flowsi $ 1,265 $ 746 $ 3,774 $ 6,620
Capital expenditures $ 976 $ 785 $ 3,494 $ 2,534
 
Mining Operating Data
Copper (millions of recoverable pounds)
Production 1,005 823 3,663 3,691
Sales, excluding purchases 972 823 3,648 3,698
Average realized price per pound $ 3.60 $ 3.42 $ 3.60 $ 3.86
Site production and delivery costs per poundj $ 2.01 $ 1.96 $ 2.00 $ 1.72
Unit net cash costs per poundj $ 1.54 $ 1.57 $ 1.48 $ 1.01
Gold (thousands of recoverable ounces)
Production 251 181 958 1,383
Sales, excluding purchases 254 133 1,010 1,378
Average realized price per ounce $ 1,681 $ 1,656 $ 1,665 $ 1,583
Molybdenum (millions of recoverable pounds)
Production 24 18 85 83
Sales, excluding purchases 21 19 83 79
Average realized price per pound $ 12.62 $ 15.08 $ 14.26 $ 16.98

a. Includes the impact of adjustments to provisionally priced sales recognized in prior periods (refer to the "Consolidated Statements of Income" on page IV for further discussion).

b. Includes net (credits) charges for adjustments to environmental obligations and related litigation reserves totaling $(42) million ($(24) million to net income attributable to common stockholders or $(0.03) per share) for fourth-quarter 2012, $29 million ($23 million to net income attributable to common stockholders or $0.02 per share) for fourth-quarter 2011, $(62) million ($(40) million to net income attributable to common stockholders or $(0.04) per share) for the year 2012 and $107 million ($86 million to net income attributable to common stockholders or $0.09 per share) for the year 2011.

c. The 2012 periods include a gain of $59 million ($31 million to net income attributable to common stockholders or $0.03 per share) for the settlement of the insurance claim for business interruption and property damage relating to the 2011 incidents affecting PT Freeport Indonesia's concentrate pipelines.

d. The 2012 periods include a charge of $16 million ($8 million to net income attributable to common stockholders or $0.01 per share) associated with labor agreement costs at Candelaria. The 2011 periods include charges totaling $116 million ($50 million to net income attributable to common stockholders or $0.05 per share) primarily associated with bonuses for new labor agreements and other employee costs at PT Freeport Indonesia, Cerro Verde and El Abra.

e. The 2012 periods include charges of $9 million ($7 million to net income attributable to common stockholders or $0.01 per share) for costs associated with the PXP and MMR transactions.

f. FCX defers recognizing profits on intercompany sales until final sales to third parties occur (refer to the "Consolidated Statements of Income" on page IV for a summary of net impacts from changes in these deferrals).

g. Includes net losses on early extinguishment of debt totaling $149 million ($0.16 per share) for the year 2012, and $60 million ($0.06 per share) for the year 2011.

h. The year 2012 includes a net credit of $98 million, net of noncontrolling interests ($0.11 per share) associated with adjustments to Cerro Verde's deferred income taxes. The year 2011 includes a charge of $49 million, net of noncontrolling interests ($0.05 per share) for additional taxes associated with Cerro Verde's election to pay a special mining burden during the remaining term of its current stability agreement. For further discussion refer to the supplemental schedule, "Provision for Income Taxes," on page XXVI, which is also available on FCX's website, "www.fcx.com."

i. Includes net working capital sources (uses) and other tax payments of $122 million for fourth-quarter 2012, $(335) million for fourth-quarter 2011, $(1.4) billion for the year 2012 and $(461) million for the year 2011.

j. Reflects per pound weighted-average site production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, excluding net noncash and other costs. For reconciliations of per pound unit costs by operating division to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is also available on FCX's website, “www.fcx.com.”

OPERATIONS

Consolidated. Fourth-quarter 2012 consolidated copper sales of 972 million pounds were higher than the October 2012 estimates of 930 million pounds, primarily reflecting higher production in North and South America. Fourth-quarter 2012 consolidated sales of 254 thousand ounces of gold and 21 million pounds of molybdenum approximated the October 2012 estimates of 255 thousand ounces of gold and 20 million pounds of molybdenum. Fourth-quarter 2012 consolidated copper and gold sales were higher than fourth-quarter 2011 sales of 823 million pounds of copper and 133 thousand ounces of gold primarily reflecting the impact of PT Freeport Indonesia labor disruptions in fourth-quarter 2011. Operations and productivity have improved in 2012 at PT Freeport Indonesia.

Consolidated sales from mines for the year 2013 are expected to approximate 4.3 billion pounds of copper, 1.4 million ounces of gold and 90 million pounds of molybdenum, including 940 million pounds of copper, 230 thousand ounces of gold and 23 million pounds of molybdenum in first-quarter 2013. Projected copper sales for 2013 are expected be 18 percent higher than 2012 sales, reflecting access to higher grade ore at PT Freeport Indonesia and in South America and higher production in North America and Africa. Projected 2013 gold sales are expected to be 37 percent higher than 2012, primarily reflecting higher ore grades at Grasberg.

Consolidated average unit net cash costs (net of by-product credits) of $1.54 per pound of copper in fourth-quarter 2012 were lower than unit net cash costs of $1.57 per pound in fourth-quarter 2011 reflecting charges in fourth-quarter 2011 associated with new labor agreements and other employee costs, partly offset by higher fourth-quarter 2012 mining costs in North and South America.

FCX expects to gain access to higher grade ore at Grasberg in late 2013, which will result in higher copper and gold production volumes. Approximately 29 percent of 2013 consolidated copper sales volumes and 37 percent of consolidated gold sales volumes are expected in fourth-quarter 2013. Quarterly unit net cash costs vary with fluctuations in sales volumes and average realized prices for gold and molybdenum. Assuming average prices of $1,700 per ounce of gold and $11 per pound of molybdenum and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for FCX's copper mining operations are expected to average $1.67 per pound of copper in first-quarter 2013 and $1.35 per pound for the year 2013. The impact of price changes on 2013 consolidated unit net cash costs would approximate $0.015 per pound for each $50 per ounce change in the average price of gold and $0.015 per pound for each $2 per pound change in the average price of molybdenum.

North America Copper Mines. FCX operates seven open-pit copper mines in North America - Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Tyrone and Chino in New Mexico. All of the North America mining operations are wholly owned, except for Morenci. FCX records its 85 percent joint venture interest in Morenci using the proportionate consolidation method. In addition to copper, certain of FCX's North America copper mines (Sierrita, Bagdad, Morenci and Chino) also produce molybdenum concentrates.

Operating and Development Activities. FCX has completed projects to increase production at its North America copper mines, including restarting certain mining and milling operations and increasing mining rates at Morenci and Chino. Ramp up activities at Chino are continuing, with annual production of approximately 250 million pounds of copper targeted in 2014. FCX continues to evaluate opportunities to invest in additional production capacity at its North America copper mines in response to positive exploration results in recent years.

At Morenci, FCX is engaged in a project to expand mining and milling capacity to process additional sulfide ores identified through exploratory drilling. The approximate $1.4 billion project is targeting incremental annual production of approximately 225 million pounds of copper in 2014 (an approximate 40 percent increase from 2012) through an increase in milling rates from 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day and mining rates from 700,000 short tons per day to 900,000 short tons per day. Engineering activities are progressing and construction activities are under way.

Operating Data. Following is summary consolidated operating data for the North America copper mines for the fourth quarters and years ended 2012 and 2011:

       
Three Months EndedYears Ended
December 31,December 31,
  2012     20112012     2011
Copper (millions of recoverable pounds)
Production 358 341 1,363 1,258
Sales, excluding purchases 321 333 1,351 1,247
Average realized price per pound $ 3.63 $ 3.44 $ 3.64 $ 3.99
 
Molybdenum (millions of recoverable pounds)
Productiona 9 8 36 35
 
Unit net cash costs per pound of copper:
Site production and delivery, excluding adjustments $ 2.00 $ 1.73 $ 1.91 $ 1.78
By-product credits, primarily molybdenumb (0.35 ) (0.37 ) (0.36 ) (0.48 )
Treatment charges 0.13   0.12   0.12   0.11  
Unit net cash costsc $ 1.78   $ 1.48   $ 1.67   $ 1.41  

a. Reflects molybdenum production from certain of the North America copper mines. Sales of molybdenum are reflected in the Molybdenum division (refer to page 9).

b. Molybdenum credits reflect volumes produced at market-based pricing.

c. For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is also available on FCX's website, “www.fcx.com.”

Consolidated copper sales volumes from North America of 321 million pounds in fourth-quarter 2012 were lower than fourth-quarter 2011 sales of 333 million pounds primarily reflecting timing of shipments.

FCX expects sales from the North America copper mines to approximate 1.45 billion pounds of copper for the year 2013, compared with 1.35 billion pounds of copper in 2012, primarily reflecting higher production at Morenci and Chino.

Average unit net cash costs (net of by-product credits) for the North America copper mines of $1.78 per pound of copper in fourth-quarter 2012 were higher than unit net cash costs of $1.48 per pound in fourth-quarter 2011, primarily reflecting increased mining and milling activities.

FCX estimates that average unit net cash costs (net of by-product credits) for the North America copper mines would approximate $1.82 per pound of copper for the year 2013, based on current sales volume and cost estimates and assuming an average molybdenum price of $11 per pound. North America's average unit net cash costs for 2013 would change by approximately $0.04 per pound for each $2 per pound change in the average price of molybdenum. North America's average unit net cash costs for 2013 are expected to be higher than 2012 because of lower molybdenum credits and higher mining rates.

South America Mining. FCX operates four copper mines in South America - Cerro Verde in Peru and El Abra, Candelaria and Ojos del Salado in Chile. FCX owns a 53.56 percent interest in Cerro Verde, a 51 percent interest in El Abra, and an 80 percent interest in both the Candelaria and Ojos del Salado mining complexes. All operations in South America are consolidated in FCX's financial statements. South America mining includes open-pit and underground mining. In addition to copper, the Cerro Verde mine produces molybdenum concentrates, and the Candelaria and Ojos del Salado mines produce gold and silver.

Operating and Development Activities. At Cerro Verde, FCX is engaged in a large-scale expansion. The approximate $4.4 billion project would expand the concentrator facilities from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day and provide incremental annual production of approximately 600 million pounds of copper and 15 million pounds of molybdenum beginning in 2016. Cerro Verde received approval of the environmental impact assessment in fourth-quarter 2012. Detailed engineering and long-lead item procurement are under way, and construction is expected to commence in 2013.

FCX is also engaged in pre-feasibility studies for a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries. Exploration results at El Abra have identified a significant sulfide resource.

Operating Data. Following is summary consolidated operating data for the South America mining operations for the fourth quarters and years ended 2012 and 2011:

       
Three Months EndedYears Ended
December 31,December 31,
  2012     20112012     2011
Copper (millions of recoverable pounds)
Production 349 337 1,257 1,306
Sales 350 357 1,245 1,322
Average realized price per pound $ 3.60 $ 3.45 $ 3.58 $ 3.77
 
Gold (thousands of recoverable ounces)
Production 26 28 83 101
Sales 26 29 82 101
Average realized price per ounce $ 1,686 $ 1,626 $ 1,673 $ 1,580
 
Molybdenum (millions of recoverable pounds)
Productiona 2 2 8 10
 
Unit net cash costs per pound of copper:
Site production and delivery, excluding adjustments $ 1.67 b $ 1.56 b $ 1.60 b $ 1.38 b
By-product credits (0.29 ) (0.27 ) (0.26 ) (0.35 )
Treatment charges 0.16   0.15   0.16   0.17  
Unit net cash costsc $ 1.54   $ 1.44   $ 1.50   $ 1.20  

a. Reflects molybdenum production from Cerro Verde. Sales of molybdenum are reflected in the Molybdenum division (refer to page 9).

b. The 2012 periods include $16 million ($0.04 per pound of copper for fourth-quarter 2012 and $0.01 per pound for the year 2012) associated with labor agreement costs at Candelaria. The 2011 periods include $50 million ($0.14 per pound of copper for fourth-quarter 2011 and $0.04 per pound for the year 2011) associated with bonuses paid at Cerro Verde and El Abra pursuant to the new labor agreements.

c. For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is also available on FCX's website, “www.fcx.com.”

Copper sales from South America mining totaled 350 million pounds in fourth-quarter 2012 and 357 million pounds in fourth-quarter 2011.

FCX expects South America's sales to approximate 1.33 billion pounds of copper and 140 thousand ounces of gold for the year 2013, compared with 2012 sales of 1.25 billion pounds of copper and 82 thousand ounces of gold, primarily reflecting the mining of higher grade ore at Candelaria.

Average unit net cash costs (net of by-product credits) for South America of $1.54 per pound of copper in fourth-quarter 2012 were higher than unit net cash costs of $1.44 per pound in fourth-quarter 2011, primarily reflecting higher mining and input costs (including energy), partly offset by lower costs relating to labor agreements.

FCX estimates that average unit net cash costs (net of by-product credits) for South America mining would approximate $1.50 per pound of copper for the year 2013, based on current sales volume and cost estimates and assuming average prices of $1,700 per ounce of gold and $11 per pound of molybdenum.

Indonesia Mining. Through its 90.64 percent owned and wholly consolidated subsidiary PT Freeport Indonesia, FCX operates the world's largest copper and gold mine in terms of reserves at its Grasberg operations in Papua, Indonesia. PT Freeport Indonesia produces copper concentrates, which contain significant quantities of gold and also silver.

Operating and Development Activities. FCX has several projects in progress in the Grasberg minerals district, primarily related to the development of large-scale, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to ramp up over several years to approximately 240,000 metric tons of ore per day following the currently anticipated transition from the Grasberg open pit in 2016. Development of the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) is advancing. The DMLZ is expected to commence production in 2015, and the Grasberg Block Cave mine is scheduled to commence production in 2017. Over the next five years, estimated aggregate capital spending on these projects is currently expected to average $715 million per year ($565 million per year net to PT Freeport Indonesia).

Production from the Deep Ore Zone (DOZ) underground mine averaged 51,200 metric tons of ore per day in fourth-quarter 2012, and is expected to ramp up to the design rate of 80,000 metric tons of ore per day by year-end 2013, following completion of ongoing panel repairs.

The high-grade Big Gossan underground mine, which began producing in fourth-quarter 2010, averaged 2,100 metric tons of ore per day in fourth-quarter 2012. Full rates of 7,000 metric tons of ore per day are expected in 2014.

Operating Data. Following is summary consolidated operating data for the Indonesia mining operations for the fourth quarters and years ended 2012 and 2011:

       
Three Months EndedYears Ended
December 31,December 31,
  2012     20112012       2011
Copper (millions of recoverable pounds)
Production 200 68 695 846
Sales 204 50 716 846
Average realized price per pound $ 3.59 $ 3.31 $ 3.58 $ 3.85
 
Gold (thousands of recoverable ounces)
Production 221 149 862 1,272
Sales 224 102 915 1,270
Average realized price per ounce $ 1,680 $ 1,664 $ 1,664 $ 1,583
 
Unit net cash costs per pound of copper:
Site production and delivery, excluding adjustments $ 2.91 $ 6.92 a $ 3.12 $ 2.21 a
Gold and silver credits (1.93 ) (3.72 ) (2.22 ) (2.47 )
Treatment charges 0.22 0.22 0.21 0.19
Royalty on metals 0.13   0.15   0.13   0.16  
Unit net cash costsb $ 1.33   $ 3.57   $ 1.24   $ 0.09  

a. The 2011 periods include $66 million ($1.30 per pound of copper for fourth-quarter 2011 and $0.08 per pound for the year 2011) associated with bonuses and other strike-related costs.

b. For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is also available on FCX's website, “www.fcx.com.”

Indonesia's fourth-quarter 2012 sales of 204 million pounds of copper and 224 thousand ounces of gold were higher than fourth-quarter 2011 sales of 50 million pounds of copper and 102 thousand ounces of gold, primarily reflecting the impact in fourth-quarter 2011 of labor related disruptions and temporary suspension of milling operations.

At the Grasberg mine, the sequencing of mining areas with varying ore grades causes fluctuations in the timing of ore production resulting in varying quarterly and annual sales of copper and gold. FCX expects sales from Indonesia to approximate 1.1 billion pounds of copper and 1.2 million ounces of gold for the year 2013, compared with 716 million pounds of copper and 915 thousand ounces of gold for the year 2012. FCX expects sales from Indonesia to increase in fourth-quarter 2013 as PT Freeport Indonesia gains access to higher ore grades and achieves the targeted ramp up in production from the DOZ mine. Approximately 33 percent of Indonesia's projected copper sales and 38 percent of projected gold sales are expected in fourth-quarter 2013.

Indonesia's unit net cash costs (including gold and silver credits) of $1.33 per pound of copper in fourth-quarter 2012 were lower than unit net cash costs of $3.57 per pound in fourth-quarter 2011 primarily reflecting higher sales volumes. Fourth-quarter 2011 costs also included $66 million, or $1.30 per pound of copper, for bonuses and other strike-related costs.

FCX estimates Indonesia's unit net cash costs (net of gold and silver credits) would approximate $0.68 per pound of copper for the year 2013, based on current sales volume and cost estimates and assuming an average gold price of $1,700 per ounce. Indonesia's unit net cash costs for 2013 would change by approximately $0.055 per pound for each $50 per ounce change in the average price of gold. Because of the fixed nature of a large portion of Indonesia's costs, unit costs vary from quarter to quarter depending on copper and gold sales volumes, as well as average realized gold prices for the quarterly period. Indonesia's unit net cash costs for first-quarter 2013 are expected to approximate $1.57 per pound of copper and are expected to decline in future quarterly periods as volumes increase.

Africa Mining. Through its 56 percent owned and wholly consolidated subsidiary Tenke Fungurume Mining S.A.R.L (TFM), FCX operates the Tenke Fungurume (Tenke) mine in the Katanga province of the Democratic Republic of Congo (DRC). In addition to copper, the Tenke mine produces cobalt hydroxide.

Operating and Development Activities. An expansion of the project to optimize the current plant and increase capacity is substantially complete. The expanded mill will be capable of throughput of 14,000 metric tons of ore per day, and expanded processing facilities will enable the addition of approximately 150 million pounds of copper per year. The approximate $850 million project, which included mill upgrades, additional mining equipment, a new tankhouse and a new sulphuric acid plant, is being completed within budget. The addition of a second sulphuric acid plant is expected to be completed in 2015.

FCX continues to engage in drilling activities, exploration analyses and metallurgical testing to evaluate the potential of the highly prospective minerals district at Tenke. These analyses are being incorporated in future plans to evaluate opportunities for expansion. Future expansions are subject to a number of factors, including economic and market conditions, and the business and investment climate in the DRC.

On January 21, 2013, FCX, through a newly formed joint venture entered into a definitive agreement with OM Group, Inc. to acquire a large scale cobalt chemical refinery located in Kokkola, Finland, and the related sales and marketing business. The acquisition would provide direct end-market access for the cobalt hydroxide production at Tenke. FCX will be the operator of the joint venture with an effective 56 percent ownership interest, with the remaining effective ownership interests held by its partners in TFM, including 24 percent by Lundin Mining Corporation and 20 percent by La Générale des Carrières et des Mines (Gécamines). Under the terms of the agreement, initial consideration of $325 million (subject to working capital adjustments) will be paid at closing, with the potential for additional consideration of up to $110 million over a period of three years, contingent upon the achievement of revenue-based performance targets. The acquisition is subject to customary closing conditions, including required regulatory approvals, and is expected to close in second-quarter 2013.

Operating Data. Following is summary consolidated operating data for the Africa mining operations for the fourth quarters and years ended 2012 and 2011:

       
Three Months EndedYears Ended
December 31,December 31,
  2012     20112012     2011
Copper (millions of recoverable pounds)
Production 98 77 348 281
Sales 97 83 336 283
Average realized price per pounda $ 3.50 $ 3.32 $ 3.51 $ 3.74
 
Cobalt (millions of contained pounds)
Production 6 7 26 25
Sales 6 6 25 25
Average realized price per pound $ 6.95 $ 8.78 $ 7.83 $ 9.99
 
Unit net cash costs per pound of copper:
Site production and delivery, excluding adjustments $ 1.38 $ 1.58 $ 1.49 $ 1.57
Cobalt creditsb (0.21 ) (0.35 ) (0.33 ) (0.58 )
Royalty on metals 0.07   0.07   0.07   0.08  
Unit net cash costsc $ 1.24   $ 1.30   $ 1.23   $ 1.07  

a. Includes point-of-sale transportation costs as negotiated in customer contracts.

b. Net of cobalt downstream processing and freight costs.

c. For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is also available on FCX's website, “www.fcx.com.”

During 2012, Tenke achieved record mining, milling and production rates. Copper sales from Africa of 97 million pounds in fourth-quarter 2012 were higher than fourth-quarter 2011 copper sales of 83 million pounds primarily reflecting higher mining and milling rates principally related to the ramp-up of the second phase expansion.

FCX expects Africa's sales to approximate 410 million pounds of copper and 30 million pounds of cobalt for the year 2013, compared with 336 million pounds of copper and 25 million pounds of cobalt for the year 2012.

Africa's unit net cash costs (net of cobalt credits) of $1.24 per pound of copper were lower than unit net cash costs of $1.30 per pound in fourth-quarter 2011 primarily reflecting higher volumes, partly offset by higher mining costs and lower cobalt credits.

FCX estimates Africa's unit net cash costs would approximate $1.03 per pound of copper for the year 2013, based on current sales volume and cost estimates and assuming an average cobalt price of $12 per pound. Africa's unit net cash costs for 2013 would change by approximately $0.09 per pound for each $2 per pound change in the average price of cobalt.

Molybdenum. FCX is the world's largest producer of molybdenum. FCX conducts molybdenum mining operations at its wholly owned Henderson underground mine and Climax open-pit mine in Colorado, and also sells molybdenum produced from its North and South America copper mines.

Operating and Development Activities. The Climax molybdenum mine, which was commissioned in second-quarter 2012, includes a new 25,000 metric ton per day mill facility. Production in fourth-quarter 2012 totaled 5 million pounds of molybdenum and is targeted at 20 million pounds for 2013, with potential to produce 30 million pounds per year, depending on market conditions. FCX intends to operate the Climax and Henderson mines in a flexible manner to meet market requirements. FCX believes that Climax is one of the most attractive primary molybdenum mines in the world, with large-scale production capacity, attractive cash costs and future growth options.

Operating Data. Following is summary consolidated operating data for the Molybdenum operations for the fourth quarters and years ended 2012 and 2011:

       
Three Months EndedYears Ended
December 31,December 31,
  2012     20112012     2011
Molybdenum (millions of recoverable pounds)
Production 13

a

8 41 a 38
Sales, excluding purchasesb 21 19 83 79
Average realized price per pound $ 12.62 $ 15.08 $ 14.26 $ 16.98
 
Unit net cash cost per pound of molybdenumc $ 7.53 $ 6.87 $ 7.07 $ 6.34

a. Molybdenum production from the Climax mine totaled 5 million pounds in fourth-quarter 2012 and 7 million pounds for the year 2012 reflecting production since the start of commercial operations in May 2012. The 2011 periods reflect production only from the Henderson molybdenum mine.

b. Includes sales of molybdenum produced at the North and South America copper mines.

c. Reflects unit net cash costs for the Henderson molybdenum mine, excluding net noncash and other costs. For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is also available on FCX's website, “www.fcx.com.”

For the year 2013, FCX expects molybdenum sales to approximate 90 million pounds (including production of approximately 40 million pounds from the North and South America copper mines), compared with 83 million pounds in 2012 (including production of 44 million pounds from the North and South America copper mines).

Unit net cash costs at the Henderson mine of $7.53 per pound of molybdenum in fourth-quarter 2012 were higher than unit net cash costs of $6.87 per pound in fourth-quarter 2011, primarily reflecting lower production volumes and higher input costs.

Based on current sales volume and cost estimates, FCX expects unit net cash costs for primary molybdenum mines to average $7.00 per pound of molybdenum for the year 2013 (reflecting approximately $7.50 per pound for Henderson and $6.50 per pound for Climax).

PRELIMINARY RECOVERABLE PROVEN AND PROBABLE RESERVES

FCX has significant reserves, resources and future development opportunities within its portfolio of assets. FCX's preliminary estimated consolidated recoverable proven and probable reserves at December 31, 2012, include 116.5 billion pounds of copper, 32.5 million ounces of gold and 3.42 billion pounds of molybdenum, which were determined using long-term average prices of $2.00 per pound for copper, $750 per ounce for gold and $10.00 per pound for molybdenum, consistent with the long-term average prices used at year-end 2011. The preliminary recoverable proven and probable reserves presented in the table below represent the estimated metal quantities from which FCX expects to be paid after application of estimated metallurgical recovery rates and smelter recovery rates, where applicable. Recoverable reserves are that part of a mineral deposit, which FCX estimates can be economically and legally extracted or produced at the time of the reserve determination.

               
Preliminary Recoverable Proven and Probable Reserves
at December 31, 2012
Copper       Gold       Molybdenum
(billions of lbs) (millions of ozs) (billions of lbs)
North America 38.8 0.4 2.69
South America 38.8 1.2 0.73
Indonesia 31.0 30.9
Africa 7.9    
Consolidated basisa 116.5   32.5   3.42
 
Net equity interestb 93.2   29.4   3.08

a. Consolidated basis reserves represent estimated metal quantities after reduction for joint venture partner interests at the Morenci mine in North America and the Grasberg minerals district in Indonesia. Excluded from the table above are FCX's estimated recoverable proven and probable reserves of 0.84 billion pounds for cobalt at Tenke Fungurume and 321.4 million ounces for silver in Indonesia, South America and North America.

b. Net equity interest reserves represent estimated consolidated basis metal quantities further reduced for noncontrolling interest ownership. Excluded from the table above are FCX's estimated recoverable proven and probable reserves totaling 0.47 billion pounds for cobalt at Tenke Fungurume and 264.2 million ounces for silver in Indonesia, South America and North America.

The following table summarizes changes in FCX's estimated consolidated recoverable proven and probable copper, gold and molybdenum reserves during 2012:

                 
CopperGoldMolybdenum
(billions of lbs) (millions of ozs) (billions of lbs)
Reserves at December 31, 2011 119.7 33.9 3.42
Net additions/revisions 0.5 (0.4 ) 0.08
Production (3.7 ) (1.0 ) (0.08 )
Reserves at December 31, 2012 116.5   32.5   3.42  
 

At December 31, 2012, in addition to preliminary consolidated recoverable proven and probable reserves, FCX's preliminary estimated mineralized material (assessed using a long-term average copper price of $2.20 per pound for copper) totals 113 billion pounds of incremental contained copper. FCX continues to pursue aggressively opportunities to convert this mineralized material into reserves, future production volumes and cash flow.

EXPLORATION ACTIVITIES

FCX is actively conducting exploration activities near its existing mines with a focus on opportunities to expand reserves that will support the development of additional future production capacity in the large minerals districts where it currently operates. Favorable exploration results indicate opportunities for significant future potential reserve additions in North and South America and in the Tenke Fungurume minerals district. The drilling data in North America continue to indicate the potential for expanded sulfide production.

Exploration spending for the year 2013 is expected to approximate $235 million, compared with $251 million in 2012. Exploration activities will continue to focus primarily on the potential for future reserve additions in FCX's existing minerals districts. Approximately one third of the 2013 budget is associated with greenfield exploration projects.

PROVISIONAL PRICING AND OTHER

For the year 2012, 46 percent of FCX's mined copper was sold in concentrate, 28 percent as cathode and 26 percent as rod from North America operations. Under the long-established structure of sales agreements prevalent in the industry, copper contained in concentrate and cathode is provisionally priced at the time of shipment. The provisional prices are finalized in a contractually specified future month (generally one to four months from the shipment date) primarily based on quoted monthly average spot copper prices on the London Metal Exchange (LME). Because a significant portion of FCX's concentrate and cathode sales in any quarterly period usually remain subject to final pricing, the quarter-end forward price is a major determinant of recorded revenues and the average recorded copper price for the period. During fourth-quarter 2012, LME spot copper prices averaged $3.59 per pound, compared to FCX's recorded average price of $3.60 per pound.

At September 30, 2012, FCX had provisionally priced copper sales at its copper mining operations, primarily South America and Indonesia, totaling 325 million pounds (net of intercompany sales and noncontrolling interests) recorded at an average of $3.72 per pound. Lower prices resulted in adjustments to these provisionally priced copper sales that unfavorably impacted fourth-quarter 2012 consolidated revenues by $73 million ($31 million to net income attributable to common stock or $0.03 per share), compared with adjustments to the September 30, 2011, provisionally priced copper sales that favorably impacted fourth-quarter 2011 consolidated revenues by $125 million ($56 million to net income attributable to common stock or $0.06 per share).

Adjustments to the December 31, 2011, provisionally priced copper sales favorably impacted consolidated revenues by $101 million ($43 million to net income attributable to common stock or $0.05 per share) for the year 2012, compared with adjustments to the December 31, 2010, provisionally priced copper sales that unfavorably impacted consolidated revenues by $12 million ($5 million to net income attributable to common stock or $0.01 per share) for the year 2011.

At December 31, 2012, FCX had provisionally priced copper sales at its copper mining operations, primarily South America and Indonesia, totaling 341 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $3.59 per pound, subject to final pricing over the next several months. FCX estimates that each $0.05 change in the price realized from the December 31, 2012, provisional price recorded would have an approximate $11 million effect on 2013 net income attributable to common stock. The LME spot copper price closed at $3.64 per pound on January 21, 2013.

FCX defers recognizing profits on its sales from its mining operations to Atlantic Copper and on 25 percent of Indonesia's sales to PT Smelting (PT Freeport Indonesia's 25 percent-owned Indonesian smelting unit) until final sales to third parties occur. FCX's net deferred profits on its Indonesia and South America concentrate inventories at Atlantic Copper and PT Smelting to be recognized in future periods' net income attributable to common stock totaled $121 million at December 31, 2012. Refer to the "Consolidated Statements of Income" on page IV for a summary of net impacts from changes in these deferrals. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in FCX's net deferred profits and quarterly earnings.

CASH FLOWS

FCX generated operating cash flows of $1.3 billion for fourth-quarter 2012 (including net working capital sources and other tax payments of $122 million) and $3.8 billion for the year 2012 (net of working capital uses and other tax payments of $1.4 billion).

Based on current sales volume and cost estimates and assuming average prices of $3.65 per pound of copper, $1,700 per ounce of gold and $11 per pound of molybdenum, FCX's consolidated operating cash flows, excluding results from pending acquisitions, are estimated to approximate $7 billion for the year 2013 (including $450 million from net working capital sources and other tax payments). The impact of price changes on operating cash flows would approximate $350 million for each $0.10 per pound change in the average price of copper, $55 million for each $50 per ounce change in the average price of gold and $110 million for each $2 per pound change in the average price of molybdenum.

Capital expenditures totaled $976 million for fourth-quarter 2012 and $3.5 billion for the year 2012. Excluding amounts for pending acquisitions, capital expenditures are currently estimated to approximate $4.6 billion for the year 2013 (including $2.8 billion for major projects and $1.8 billion for sustaining capital). Major projects for 2013 primarily include underground development activities at Grasberg and the expansion projects at Cerro Verde and Morenci. FCX is also considering additional investments at several of its sites. Capital spending plans will continue to be reviewed and adjusted in response to changes in market conditions and other factors.

CASH AND DEBT

At December 31, 2012, FCX had consolidated cash of $3.7 billion. Net of noncontrolling interests' share, taxes and other costs, cash available to the parent company totaled $2.7 billion as shown below (in billions):

       
December 31,
2012
Cash at domestic companiesa $ 1.3
Cash at international operations 2.4  
Total consolidated cash and cash equivalents 3.7
Less: Noncontrolling interests' share (0.8 )
Cash, net of noncontrolling interests' share 2.9
Less: Withholding taxes and other (0.2 )
Net cash available$2.7  

a.Includes cash at the parent company and North America operations.

At December 31, 2012, FCX had $3.5 billion in debt. FCX had no borrowings and $43 million of letters of credit issued under its revolving credit facility resulting in total availability of $1.5 billion at December 31, 2012.

FINANCIAL POLICY

FCX has a long-standing tradition of seeking to build shareholder value through investing in projects with attractive rates of return and returning cash to shareholders through common stock dividends and share purchases. FCX paid common stock dividends of $1.1 billion during 2012. FCX's current annual dividend rate for its common stock is $1.25 per share. On December 26, 2012, FCX's Board of Directors (the Board) declared a regular quarterly dividend of $0.3125 per share, which will be paid on February 1, 2013. FCX intends to continue to maintain a strong financial position, invest in financially attractive growth projects and provide cash returns to shareholders. The Board will continue to review FCX's financial policy on an ongoing basis.

PENDING ACQUISITIONS of PLAINS EXPLORATION & PRODUCTION COMPANY (PXP) AND McMoRAN EXPLORATION CO. (MMR)

On December 5, 2012, FCX announced definitive agreements to acquire PXP and MMR. PXP per-share consideration is equivalent to 0.6531 shares of FCX common stock and $25.00 in cash (approximately $3.4 billion in cash and 91 million shares of FCX common stock). MMR per-share consideration consists of $14.75 in cash (approximately $3.4 billion in cash, or $2.1 billion net of MMR interests currently owned by FCX and PXP) and 1.15 units of a royalty trust, which will hold a five percent overriding royalty interest in future production from MMR's existing ultra-deep exploration prospects. The value of the transactions, including assumed debt of the targets, approximates $20 billion.

The combined company would be a premier U.S.-based natural resource company with a growing production profile and an industry leading global portfolio of mineral assets and significant oil and gas resources. The addition of a high quality, U.S.-focused oil and gas resource base is expected to provide strong margins and cash flows, exploration leverage and financially attractive long-term investment opportunities to enhance long-term returns for FCX shareholders. After giving effect to the transactions, FCX's estimated pro forma total debt would have approximated $20 billion (or $16 billion net of cash) at September 30, 2012, and total pro forma outstanding FCX common shares would have approximated 1.04 billion. On a pro forma basis for 2013, the combined company's estimated EBITDA (equal to operating income plus depreciation, depletion, and amortization) is expected to approximate $12 billion (approximately 74 percent from mining and 26 percent from oil and gas, with 48 percent of combined EBITDA from U.S. operations).

Completion of the transactions is subject to receipt of PXP and MMR shareholder approval, regulatory approvals (including U.S. antitrust clearance under the Hart-Scott-Rodino Act), and other customary conditions. On December 26, 2012, the U.S. Federal Trade Commission granted early termination of the Hart-Scott-Rodino waiting period with respect to both transactions. PXP and MMR shareholder meetings to approve the transactions will be scheduled upon the effectiveness of the registration statements filed with the U.S. Securities and Exchange Commission on December 28, 2012. The transactions are expected to close in second-quarter 2013.

WEBCAST INFORMATION

A conference call with securities analysts to discuss FCX's fourth-quarter 2012 results is scheduled for today at 10:00 a.m. Eastern Time. The conference call will be broadcast on the Internet along with slides. Interested parties may listen to the conference call live and view the slides by accessing “www.fcx.com.” A replay of the webcast will be available through Friday, February 22, 2013.

--------------------------------------

FCX is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. FCX has a dynamic portfolio of operating, expansion and growth projects in the copper industry and is the world's largest producer of molybdenum.

FCX's portfolio of assets includes the Grasberg minerals district in Indonesia, the world’s largest copper and gold mine in terms of recoverable reserves; significant mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde and El Abra operations in South America; and the Tenke Fungurume minerals district in the DRC. Additional information about FCX is available on FCX's website at "www.fcx.com."

Cautionary Statement and Regulation G Disclosure:This press release contains forward-looking statements in which FCX discusses its potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as those statements regarding projected ore grades and milling rates, projected production and sales volumes, projected unit net cash costs, projected operating cash flows, projected capital expenditures, exploration efforts and results, mine production and development plans, the impact of deferred intercompany profits on earnings, liquidity, other financial commitments and tax rates, the impact of copper, gold, molybdenum and cobalt price changes, reserve estimates, future dividend payments and potential share purchases, and estimated EBITDA for 2013 assuming completion of the pending acquisitions. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” “intends,” “likely,” “will,” “should,” “to be,” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of FCX's Board and will depend on FCX's financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.

This press release also includes forward-looking statements regarding mineralized material not included in reserves. The mineralized material described in this press release will not qualify as reserves until comprehensive engineering studies establish their economic feasibility. Accordingly, no assurance can be given that the estimated mineralized material not included in reserves will become proven and probable reserves.

FCX cautions readers that forward-looking statements are not guarantees of future performance and its actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause FCX's actual results to differ materially from those anticipated in the forward-looking statements include commodity prices, mine sequencing, production rates, industry risks, regulatory changes, political risks, the outcome of ongoing discussions with the Indonesian government, the potential effects of violence in Indonesia, the resolution of administrative disputes in the Democratic Republic of Congo, weather- and climate-related risks, labor relations, environmental risks, litigation results, currency translation risks, risks associated with completion of the pending acquisitions, and other factors described in more detail under the heading “Risk Factors” in FCX's Annual Report on Form 10-K for the year ended December 31, 2011, filed with the U.S. Securities and Exchange Commission (SEC) as updated by our subsequent filings with the SEC.

Investors are cautioned that many of the assumptions on which FCX's forward-looking statements are based are likely to change after its forward-looking statements are made, including for example commodity prices, which FCX cannot control, and production volumes and costs, some aspects of which FCX may or may not be able to control. Further, FCX may make changes to its business plans that could or will affect its results. FCX cautions investors that it does not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in FCX's assumptions, changes in business plans, actual experience or other changes, and FCX undertakes no obligation to update any forward-looking statements.

This press release also contains certain financial measures such as unit net cash costs per pound of copper and per pound of molybdenum. As required by SEC Regulation G, reconciliations of these measures to amounts reported in FCX's consolidated financial statements are in the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is also available on FCX's website, “www.fcx.com.”

ADDITIONAL INFORMATION ABOUT THE PROPOSED PXP AND MMR 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 statement of PXP that also constitutes a prospectus of FCX. FCX and PXP also plan to file other relevant documents with the SEC regarding the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the definitive proxy statement/prospectus (if and when it becomes available) and other relevant documents filed by FCX and PXP with the SEC at the SEC's website at www.sec.gov. You may also obtain these documents by contacting FCX's Investor Relations department at (602) 366-8400, or via e-mail at IR@fmi.com; or by contacting PXP's Investor Relations department at (713) 579-6291, or via email at investor@pxp.com.

FCX and PXP and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about FCX's directors and executive officers is available in FCX's proxy statement dated April 27, 2012, for its 2012 Annual Meeting of Stockholders. Information about PXP's directors and executive officers is available in PXP's proxy statement dated April 13, 2012, for its 2012 Annual Meeting of Stockholders. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the definitive proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the merger when they become available. Investors should read the definitive proxy statement/prospectus carefully when it becomes available. You may obtain free copies of these documents from FCX or PXP using the sources indicated above.

This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

MMR Transaction

In connection with the proposed transaction, the royalty trust formed in connection with the transaction has filed with the SEC a registration statement on Form S-4 that includes a preliminary proxy statement of MMR that also constitutes a prospectus of the royalty trust. FCX, the royalty trust and MMR also plan to file other relevant documents with the SEC regarding the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the proxy statement/prospectus (if and when it becomes available) and other relevant documents filed by FCX, the royalty trust and MMR with the SEC at the SEC's website at www.sec.gov. You may also obtain these documents by contacting FCX's Investor Relations department at (602) 366-8400, or via e-mail at IR@fmi.com; or by contacting MMR's Investor Relations department at (504) 582-4000, or via email at IR@fmi.com.

FCX and MMR and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about FCX's directors and executive officers is available in FCX's proxy statement dated April 27, 2012, for its 2012 Annual Meeting of Stockholders. Information about MMR's directors and executive officers is available in MMR's proxy statement dated April 27, 2012, for its 2012 Annual Meeting of Stockholders. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the definitive proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the merger when they become available. Investors should read the definitive proxy statement/prospectus carefully when it becomes available. You may obtain free copies of these documents from FCX or MMR using the sources indicated above.

This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

 
FREEPORT-McMoRan COPPER & GOLD INC.
SELECTED OPERATING DATA
         
Three Months Ended December 31,
Production Sales

COPPER (millions of recoverable pounds)

2012 2011 2012 2011
(FCX's net interest in %)

North America

Morenci (85%)a 142 131 127 132
Bagdad (100%) 50 49 46 49
Safford (100%) 46 50 40 45
Sierrita (100%) 37 46 35 46
Miami (100%) 15 20 14 19
Tyrone (100%) 22 20 20 19
Chino (100%) 45 24 38 22
Other (100%) 1   1   1   1
Total North America 358   341   321   333
 

South America

Cerro Verde (53.56%) 152 145 149 154
El Abra (51%) 89 88 98 93
Candelaria/Ojos del Salado (80%) 108   104   103   110
Total South America 349   337   350   357
 

Indonesia

Grasberg (90.64%)b 200   68   204   50
 

Africa

Tenke Fungurume (56%)c 98   77   97   83
 
Consolidated1,005   823   972   823
Less noncontrolling interests 197   170   200   179
Net808   653   772   644
 
Consolidated sales from mines 972 823
Purchased copper 28   38
Total copper sales, including purchases1,000   861
 
Average realized price per pound $ 3.60 $ 3.42
 

GOLD (thousands of recoverable ounces)

(FCX's net interest in %)
North America (100%) 4 4 4 2
South America (80%) 26 28 26 29
Indonesia (90.64%)b 221   149   224   102
Consolidated251   181   254   133
Less noncontrolling interests 27   20   26   15
Net224   161   228   118
 
Consolidated sales from mines 254 133
Purchased gold  
Total gold sales, including purchases 254   133
 
Average realized price per ounce $ 1,681 $ 1,656
 

MOLYBDENUM (millions of recoverable pounds)

(FCX's net interest in %)
Henderson (100%) 8 8 N/A N/A
Climax (100%) 5 N/A N/A
North America (100%)a 9 8 N/A N/A
Cerro Verde (53.56%) 2   2   N/A N/A
Consolidated24   18   21   19
Less noncontrolling interests 1   1   1   1
Net23   17   20   18
 
Consolidated sales from mines 21 19
Purchased molybdenum  
Total molybdenum sales, including purchases21   19
 
Average realized price per pound $ 12.62 $ 15.08
 

COBALT (millions of contained pounds)

(FCX's net interest in %)
Consolidated - Tenke Fungurume (56%)c6   7   6   6
Less noncontrolling interests 2   3   3   2
Net4   4   3   4
 
Average realized price per pound $ 6.95 $ 8.78
 
a. Amounts are net of Morenci's 15 percent joint venture partner's interest.
b. Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.
c. Effective March 26, 2012, FCX's interest in Tenke Fungurume was prospectively reduced from 57.75 percent to 56 percent.
 
FREEPORT-McMoRan COPPER & GOLD INC.
SELECTED OPERATING DATA (continued)
         
Years Ended December 31,
Production Sales

COPPER (millions of recoverable pounds)

2012 2011 2012 2011
(FCX's net interest in %)

North America

Morenci (85%)a 537 522 532 521
Bagdad (100%) 197 194 196 201
Safford (100%) 175 151 175 147
Sierrita (100%) 157 177 162 175
Miami (100%) 66 66 68 59
Tyrone (100%) 83 76 82 79
Chino (100%) 144 69 132 62
Other (100%) 4   3   4   3
Total North America 1,363   1,258   1,351   1,247
 

South America

Cerro Verde (53.56%) 595 647 589 657
El Abra (51%) 338 274 338 276
Candelaria/Ojos del Salado (80%) 324   385   318   389
Total South America 1,257   1,306   1,245   1,322
 

Indonesia

Grasberg (90.64%)b 695   846   716   846
 

Africa

Tenke Fungurume (56%)c 348   281   336   283
 
Consolidated3,663   3,691   3,648   3,698
Less noncontrolling interests 723   710   717   717
Net2,940   2,981   2,931   2,981
 
Consolidated sales from mines 3,648 3,698
Purchased copper 125   223
Total copper sales, including purchases3,773   3,921
 
Average realized price per pound $ 3.60 $ 3.86
 

GOLD (thousands of recoverable ounces)

(FCX's net interest in %)
North America (100%) 13 10 13 7
South America (80%) 83 101 82 101
Indonesia (90.64%)b 862   1,272   915   1,270
Consolidated958   1,383   1,010   1,378
Less noncontrolling interests 98   139   102   139
Net860   1,244   908   1,239
 
Consolidated sales from mines 1,010 1,378
Purchased gold 2   1
Total gold sales, including purchases1,012   1,379
 
Average realized price per ounce $ 1,665 $ 1,583
 

MOLYBDENUM (millions of recoverable pounds)

(FCX's net interest in %)
Henderson (100%) 34 38 N/A N/A
Climax (100%)d 7 N/A N/A N/A
North America (100%)a 36 35 N/A N/A
Cerro Verde (53.56%) 8   10   N/A N/A
Consolidated85   83   83   79
Less noncontrolling interests 4   5   4   4
Net81   78   79   75
 
Consolidated sales from mines 83 79
Purchased molybdenum  
Total molybdenum sales, including purchases83   79
 
Average realized price per pound $ 14.26 $ 16.98
 

COBALT (millions of contained pounds)

(FCX's net interest in %)
Consolidated - Tenke Fungurume (56%)c26   25   25   25
Less noncontrolling interests 11   11   11   10
Net15   14   14   15
 
Average realized price per pound $ 7.83 $ 9.99
 
a. Amounts are net of Morenci's 15 percent joint venture partner's interest.
b. Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.
c. Effective March 26, 2012, FCX's interest in Tenke Fungurume was prospectively reduced from 57.75 percent to 56 percent.
d. Includes results from the Climax molybdenum mine since the start of commercial operations in May 2012.
 
FREEPORT-McMoRan COPPER & GOLD INC.
SELECTED OPERATING DATA (continued)
               
Three Months Ended Years Ended
December 31, December 31,
2012 2011 2012 2011
100% North America Copper Mines

Solution Extraction/Electrowinning (SX/EW) Operations

Leach ore placed in stockpiles (metric tons per day) 1,090,600 1,019,500 998,600 888,300
Average copper ore grade (percent) 0.21 0.23 0.22 0.24
Copper production (millions of recoverable pounds) 227 219 866 801
 

Mill Operations

Ore milled (metric tons per day) 251,100 230,700 239,600 222,800
Average ore grades (percent):
Copper 0.38 0.39 0.37 0.38
Molybdenum 0.03 0.03 0.03 0.03
Copper recovery rate (percent) 84.7 81.5 83.9 83.1
Production (millions of recoverable pounds):
Copper 156 145 592 549
Molybdenum 9 8 36 35
 
100% South America Mining

SX/EW Operations

Leach ore placed in stockpiles (metric tons per day) 229,900 232,500 229,300 245,200
Average copper ore grade (percent) 0.57 0.60 0.55 0.50
Copper production (millions of recoverable pounds) 111 125 457 439
 

Mill Operations

Ore milled (metric tons per day) 195,500 179,900 191,400 189,200
Average ore grades:
Copper (percent) 0.68 0.69 0.60 0.66
Gold (grams per metric ton) 0.12 0.14 0.10 0.12
Molybdenum (percent) 0.02 0.02 0.02 0.02
Copper recovery rate (percent) 91.4 88.5 90.1 89.6
Production (recoverable):
Copper (millions of pounds) 238 212 800 867
Gold (thousands of ounces) 26 28 83 101
Molybdenum (millions of pounds) 2 2 8 10
 
100% Indonesia Mining
Ore milled (metric tons per day):a
Grasberg open pit 125,200 40,600 118,800 112,900
DOZ underground mine 51,200 30,300 44,600 51,700
Big Gossan underground mine 2,100 900 1,600 1,500
Total 178,500 71,800 165,000 166,100
Average ore grades:
Copper (percent) 0.66 0.65 0.62 0.79
Gold (grams per metric ton) 0.59 1.09 0.59 0.93
Recovery rates (percent):
Copper 88.9 88.9 88.7 88.3
Gold 75.9 80.5 82.7 81.2
Production (recoverable):
Copper (millions of pounds) 200 79 695 882
Gold (thousands of ounces) 221 183 862 1,444
 
100% Africa Mining
Ore milled (metric tons per day) 13,300 11,900 13,000 11,100
Average ore grades (percent):
Copper 3.81 3.40 3.62 3.41
Cobalt 0.35 0.38 0.37 0.40
Copper recovery rate (percent) 94.8 93.8 92.4 92.5
Production (millions of pounds):
Copper (recoverable) 98 77 348 281
Cobalt (contained) 6 7 26 25
 
100% Henderson Molybdenum Mine
Ore milled (metric tons per day) 19,900 19,300 20,800 22,300
Average molybdenum ore grade (percent) 0.22 0.24 0.23 0.24
Molybdenum production (millions of recoverable pounds) 8 8 34 38
 
a. Amounts represent the approximate average daily throughput processed at PT Freeport Indonesia's mill facilities from each producing mine.
 
FREEPORT-McMoRan COPPER & GOLD INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
         
Three Months Ended Years Ended
December 31, December 31,
2012 2011 2012 2011
(In Millions, Except Per Share Amounts)
Revenues $ 4,513 a $ 4,162 a $ 18,010 a $ 20,880 a
Cost of sales:
Production and delivery 2,740 b 2,394 b 10,382 b 9,898 b
Depreciation, depletion and amortization 323   266   1,179   1,022  
Total cost of sales 3,063 2,660 11,561 10,920
Selling, general and administrative expenses 120 c 92 431 c 415
Exploration and research expenses 71 77 285 271
Environmental obligations and shutdown costs (40 ) d 36 d (22 ) d 134 d
Gain on insurance settlement (59 ) e   (59 ) e  
Total costs and expenses 3,155   2,865   12,196   11,740  
Operating income 1,358 1,297 5,814 9,140
Interest expense, net (38 ) f (62 ) f (186 ) f (312 ) f
Losses on early extinguishment of debt (168 ) (68 )
Other income, net 4   18   27   58  

Income before income taxes and equity in affiliated companies' net earnings

1,324 1,253 5,487 8,818
Provision for income taxes (382 ) (389 ) (1,510 ) g (3,087 ) g
Equity in affiliated companies' net earnings 3   2   3   16  
Net income 945 866 3,980 5,747
Net income attributable to noncontrolling interests (202 ) (226 ) (939 ) g (1,187 ) g
Net income attributable to FCX common stockholders $ 743   a,b,c,d,e,h $ 640   a,b,d,h $ 3,041   a,b,c,d,e,g,h $ 4,560   a,b,d,g,h
 
Net income per share attributable to
FCX common stockholders:
Basic $ 0.78   $ 0.67   $ 3.20   $ 4.81  
Diluted $ 0.78   $ 0.67   $ 3.19   $ 4.78  
 
Weighted-average common shares outstanding:
Basic 949   948   949   947  
Diluted 954   953   954   955  
 
Dividends declared per share of common stock $ 0.3125   $ 0.25   $ 1.25   $ 1.50  

a. Includes (unfavorable) favorable adjustments to provisionally priced copper sales recognized in prior periods totaling $(73) million ($(31) million to net income attributable to common stockholders) in fourth-quarter 2012, $125 million ($56 million to net income attributable to common stockholders) in fourth-quarter 2011, $101 million ($43 million to net income attributable to common stockholders) for the year 2012 and $(12) million ($(5) million to net income attributable to common stockholders) for the year 2011.

b. The 2012 periods include a charge of $16 million ($8 million to net income attributable to common stockholders) associated with labor agreement costs at Candelaria. The 2011 periods include charges totaling $116 million ($50 million to net income attributable to common stock) associated with bonuses for new labor agreements and other employee costs at PT Freeport Indonesia, Cerro Verde and El Abra.

c. The 2012 periods include charges of $9 million ($7 million to net income attributable to common stockholders) for costs associated with the PXP and MMR transactions.

d. Includes net (credits) charges for adjustments to environmental obligations and related litigation reserves totaling $(42) million ($(24) million to net income attributable to common stockholders) for fourth-quarter 2012, $29 million ($23 million to net income attributable to common stockholders) for fourth-quarter 2011, $(62) million ($(40) million to net income attributable to common stockholders) for the year 2012 and $107 million ($86 million to net income attributable to common stockholders) for the year 2011.

e. The 2012 periods reflect a gain of $59 million ($31 million to net income attributable to common stockholders) for the settlement of the insurance claim for business interruption and property damage relating to the 2011 incidents affecting PT Freeport Indonesia's concentrate pipelines.

f. Consolidated interest expense, before capitalized interest, totaled $57 million in fourth-quarter 2012, $96 million in fourth-quarter 2011, $267 million for the year 2012 and $421 million for the year 2011. Lower interest expense in the 2012 periods primarily reflects the impact of the first-quarter 2012 refinancing transaction.

g. The year 2012 includes a net credit of $205 million($107 million attributable to noncontrolling interests and $98 million to net income attributable to common stockholders) associated with adjustments to Cerro Verde's deferred income taxes. The year 2011 includes a tax charge of $53 million ($4 million attributable to noncontrolling interests and $49 million to net income attributable to common stockholders) for additional taxes associated with Cerro Verde's election to pay a special mining burden during the remaining term of its current stability agreement. For further discussion refer to the supplemental schedule, "Provision for Income Taxes," on page XXVI, which is also available on FCX's website, "www.fcx.com."

h. FCX defers recognizing profits on intercompany sales until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net (reductions) additions to net income attributable to common stockholders of $(10) millionin fourth-quarter 2012, $39 million in fourth-quarter 2011, $(80) million for the year 2012 and $156 million for the year 2011.

 
FREEPORT-McMoRan COPPER & GOLD INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
         
December 31, December 31,
2012 2011
(In Millions)
ASSETS
Current assets:
Cash and cash equivalents $ 3,705 $ 4,822
Trade accounts receivable 927 892
Other accounts receivable 702 250
Inventories:
Mill and leach stockpiles 1,672 1,289
Materials and supplies, net 1,504 1,354
Product 1,400 1,226
Other current assets 387   214  
Total current assets 10,297 10,047
Property, plant, equipment and development costs, net 20,999 18,449
Long-term mill and leach stockpiles 1,955 1,686
Long-term receivables 769 675
Intangible assets, net 334 325
Other assets 1,086   888  
Total assets $ 35,440   $ 32,070  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 2,324 $ 2,194
Current deferred income taxes 384 103
Dividends payable 299 240
Current portion of reclamation and environmental obligations 241 236
Accrued income taxes 93 163
Current portion of debt 2   4  
Total current liabilities 3,343 2,940
Long-term debt, less current portion 3,525 3,533
Deferred income taxes 3,490 3,255
Reclamation and environmental obligations, less current portion 2,127 2,138
Other liabilities 1,644   1,651  
Total liabilities 14,129 13,517
Equity:
FCX stockholders' equity:
Common stock 107 107
Capital in excess of par value 19,119 19,007
Retained earnings 2,399 546
Accumulated other comprehensive loss (506 ) (465 )
Common stock held in treasury (3,576 ) (3,553 )
Total FCX stockholders' equity 17,543 15,642
Noncontrolling interests 3,768   2,911  
Total equity 21,311   18,553  
Total liabilities and equity $ 35,440   $ 32,070  
 
FREEPORT-McMoRan COPPER & GOLD INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
     
Years Ended
December 31,
2012     2011
(In Millions)
Cash flow from operating activities:
Net income $ 3,980 $ 5,747
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization 1,179 1,022
Stock-based compensation 100 117
Pension plans contributions (140 ) (46 )
Net charges for reclamation and environmental obligations, including accretion 22 208
Payments of reclamation and environmental obligations (246 ) (170 )
Losses on early extinguishment of debt 168 68
Deferred income taxes 269 523
Increase in long-term mill and leach stockpiles (269 ) (262 )
Other, net 128 (126 )
(Increases) decreases in working capital and other tax payments:
Accounts receivable (365 ) 1,246
Inventories (729 ) (431 )
Other current assets (76 ) (57 )
Accounts payable and accrued liabilities 209 (387 )
Accrued income and other tax payments (456 ) (832 )
Net cash provided by operating activities 3,774   6,620  
 
Cash flow from investing activities:
Capital expenditures:
North America copper mines (827 ) (495 )
South America (931 ) (603 )
Indonesia (843 ) (648 )
Africa (539 ) (193 )
Molybdenum (258 ) (461 )
Other (96 ) (134 )
Other, net 31   (1 )
Net cash used in investing activities (3,463 ) (2,535 )
 
Cash flow from financing activities:
Repayments of debt (3,186 ) (1,313 )
Proceeds from debt 3,029 48
Cash dividends paid:
Common stock (1,129 ) (1,423 )
Noncontrolling interests (113 ) (391 )
Contributions from noncontrolling interests 15 62
Excess tax benefit from stock-based awards 8 23
Other, net (52 ) (7 )
Net cash used in financing activities (1,428 ) (3,001 )
 
Net (decrease) increase in cash and cash equivalents (1,117 ) 1,084
Cash and cash equivalents at beginning of year 4,822   3,738  
Cash and cash equivalents at end of year $ 3,705   $ 4,822  

Contacts:

Freeport-McMoRan Copper & Gold Inc.
Financial Contacts:
Kathleen L. Quirk, 602-366-8016
or
David P. Joint, 504-582-4203
or
Media Contact:
Eric E. Kinneberg, 602-366-7994

Source: Freeport-McMoRan Copper & Gold Inc.

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