Freeport-McMoRan Copper & Gold Inc. Reports First-Quarter 2012 Results

19.04.2012  |  Business Wire

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

• Net income attributable to common stock for first-quarter 2012
  was $764 million, $0.80 per share, compared with net income of $1.5
  billion, $1.57 per share, for first-quarter 2011. First-quarter 2012
  net income included $149 million($0.16 per share)in
  losses on early extinguishment of debt.
  
• Consolidated sales from mines for first-quarter 2012 totaled
  827 million pounds of copper, 288 thousand ounces of gold and 21
  million pounds of molybdenum, compared with 926 million pounds of
  copper, 480 thousand ounces of gold and 20 million pounds of
  molybdenum for first-quarter 2011.
  
• Consolidated sales from mines for the year 2012 are expected to
  approximate 3.7 billion pounds of copper, 1.1 million ounces of gold
  and 81 million pounds of molybdenum, including 895 million pounds of
  copper, 235 thousand ounces of gold and 20 million pounds of
  molybdenum for second-quarter 2012.
  
• Consolidated unit net cash costs (net of by-product credits)
  averaged $1.26 per pound of copper for first-quarter 2012, compared
  with $0.79 per pound for first-quarter 2011. Based on current 2012
  sales volume and cost estimates and assuming average prices of $1,600
  per ounce for gold and $14 per pound for molybdenum for the remainder
  of 2012, consolidated unit net cash costs (net of by-product credits)
  are estimated to average $1.43 per pound of copper for the year 2012.
  
• Operating cash flows for first-quarter 2012 totaled $801
  million (which were net of $720 million in working capital uses),
  compared with $2.4 billion for first-quarter 2011 (which included $114
  million from working capital sources). Based on current 2012 sales
  volume and cost estimates and assuming average prices of $3.50 per
  pound for copper, $1,600 per ounce for gold and $14 per pound for
  molybdenum for the remainder of 2012, operating cash flows are
  estimated to approximate $4.2 billion for the year 2012 (net of an
  estimated $1.1 billion in working capital uses).
  
• Capital expenditures totaled $707 million for first-quarter
  2012, compared with $505 million for first-quarter 2011. Capital
  expenditures are expected to approximate $4.3 billion for the year
  2012, including $2.7 billion for major projects and $1.6 billion for
  sustaining capital.
  
• 
  At March ?31, 2012, consolidated cash approximated $4.5
  billionand total debt approximated $3.5 billion. In
  February 2012, FCX sold $3.0 billion of senior notes in three tranches
  with a weighted average interest rate of approximately three percent.
  FCX used the proceeds from this offering (plus cash on hand) to redeem
  the remaining $3.0 billion of its 8.375% Senior Notes.
  
• 
  In February 2012, FCX's Board of Directors authorized an increase in
  the common stock dividend to an annual rate of $1.25 per share
  ($0.3125 per share quarterly), with the first quarterly dividend to be
  paid on May 1, 2012, to shareholders of record on April 13, 2012.
  

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported first-quarter
2012 net income attributable to common stock of $764 million, $0.80 per
share, compared with $1.5 billion, $1.57 per share, for first-quarter
2011.

James R. Moffett, Chairman of the Board, and Richard C. Adkerson,
President and Chief Executive Officer, said, 'Our first-quarter results
reflect strong performance at our North and South America operations and
in Africa. We progressed in restoring normal operations at our Grasberg
operations in Indonesia. During the quarter, we advanced our growth
projects, which are targeted to increase our annual copper production by
over 25 percent over the next three to four years. We also completed a
highly attractive debt refinancing transaction during the quarter. Our
Board authorized a 25 percent increase in our common stock dividend,
with the first quarterly dividend to be paid on May 1, 2012. We are
highly positive about the long-term prospects of our business and
markets. Our company is well-positioned with long-lived reserves and
mineral resources, an attractive mid-term and longer-term organic growth
profile and a strong financial position.'

OPERATIONS

Consolidated. First-quarter 2012 consolidated sales of 827
million pounds of copper and 288 thousand ounces of gold were lower than
the January 2012 estimates of 875 million pounds of copper and 425
thousand ounces of gold. Copper sales in first-quarter 2012 were higher
than the revised March 2012 estimate of 795 million pounds, but gold
sales were below the revised estimate of 300 thousand ounces. As
previously reported, labor-related work interruptions and the related
temporary suspension of operations affected production at PT Freeport
Indonesia during first-quarter 2012. This was partly offset by higher
sales from North America.

The estimated impact of the work interruptions and the related temporary
suspension of operations at PT Freeport Indonesia during first-quarter
2012 totaled approximately 80 million pounds of copper and 125 thousand
ounces of gold. Operations and productivity at PT Freeport Indonesia
have improved recently. For the period April 1 through April 15, 2012,
PT Freeport Indonesia's milling rates averaged approximately 200,000
metric tons of ore per day, compared with the first-quarter 2012 average
of 114,800 metric tons of ore per day and the January 2012 forecast for
the year 2012 of 224,000 metric tons of ore per day. Full operations,
which are dependent on maintaining security and productivity in the
workplace, are expected to be restored during second-quarter 2012.

First-quarter 2012 consolidated molybdenum sales of 21 million pounds
were higher than the January 2012 estimate of 20 million pounds and
first-quarter 2011 sales of 20 million pounds.

Consolidated sales from mines for the year 2012 are expected to
approximate 3.7 billion pounds of copper, 1.1 million ounces of gold and
81 million pounds of molybdenum, including 895 million pounds of copper,
235 thousand ounces of gold and 20 million pounds of molybdenum in
second-quarter 2012. Sales estimates for the year 2012 have been revised
from our January 2012 estimates by approximately 100 million pounds of
copper and 100 thousand ounces of gold because of reduced operations at
PT Freeport Indonesia. The achievement of projected 2012 sales volumes
is dependent on a number of factors, including returning to normal
operations at Grasberg during second-quarter 2012.

As anticipated, consolidated average unit net cash costs (net of
by-product credits) of $1.26 per pound of copper in first-quarter 2012
were higher than unit net cash costs of $0.79 per pound in first-quarter
2011 primarily because of lower copper volumes in Indonesia, higher
mining and input costs in North and South America and lower by-product
credits.

Assuming average prices of $1,600 per ounce of gold and $14 per pound of
molybdenum for the remainder of 2012 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 approximately $1.43 per pound of copper for the year 2012.
Quarterly unit net cash costs vary with fluctuations in sales volumes
and average realized prices for gold and molybdenum. Second-quarter 2012
unit net cash costs are expected to be higher than first-quarter 2012
and the average for the year primarily reflecting lower gold volumes in
Indonesia. The impact of price changes on consolidated unit net cash
costs would approximate $0.01 per pound for each $50 per ounce change in
the average price of gold during the remainder of 2012 and $0.015 per
pound for each $2 per pound change in the average price of molybdenum
during the remainder of 2012.

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 (primarily Sierrita, Bagdad and Morenci) also
produce molybdenum concentrates.

Operating and Development Activities. During 2011 and 2010, FCX
increased production at its North America copper mines. The projects
included restarting milling operations and increasing mining rates at
Morenci and Chino, and restarting the Miami mine. Ramp up activities at
Chino are continuing, with annual production of approximately 250
million pounds of copper targeted in 2014. FCX continues to evaluate a
number of opportunities to invest in additional production capacity at
several of its North America copper mines. Exploration results in recent
years indicate the potential for significant additional sulfide
development in North America.

At Morenci, FCX recently completed a feasibility study to expand mining
and milling capacity to process additional sulfide ores identified
through exploratory drilling. The approximate $1.4 billion project would
increase milling rates from the current level of 50,000 metric tons of
ore per day to approximately 115,000 metric tons of ore per day, and
mining rates from the current level of 700,000 short tons per day to
900,000 short tons per day and target incremental annual production of
approximately 225 million pounds of copper in 2014. FCX expects to
commence engineering, procurement and initial construction activities
during 2012.

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

Consolidated copper sales volumes from North America of 338 million
pounds in first-quarter 2012 were higher than first-quarter 2011 sales
of 276 million pounds primarily reflecting increased production
associated with the ramp up of mining and milling activities.

FCX expects sales from the North America copper mines to approximate 1.3
billion pounds of copper for the year 2012, compared with 1.2 billion
pounds of copper in 2011.

As anticipated, average unit net cash costs (net of by-product credits)
for the North America copper mines of $1.51 per pound of copper in
first-quarter 2012 were higher than unit net cash costs of $1.37 per
pound in first-quarter 2011, reflecting increased mining and milling
activities, partly offset by higher copper volumes. Unit net cash costs
also reflected lower molybdenum credits in first-quarter 2012.

FCX estimates that average unit net cash costs (net of by-product
credits) for the North America copper mines would approximate $1.68 per
pound of copper for the year 2012, based on current sales volume and
cost estimates and assuming an average molybdenum price of $14 per pound
for the remainder of 2012. North America's average unit net cash costs
for 2012 would change by approximately $0.03 per pound for each $2 per
pound change in the average price of molybdenum during the remainder of
2012.

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. During 2011, FCX commenced
production from El Abra's sulfide ores. Production from the sulfide ore
is expected to approximate 300 million pounds of copper per year,
replacing the currently depleting oxide copper production. The aggregate
capital investment for this project is expected to approximate $800
million through 2015, which includes $580 million for the recently
completed initial phase of the project.

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 indicate the potential for a significant sulfide resource.
Exploration activities are continuing.

At Cerro Verde, plans for a large-scale concentrator expansion continue
to be advanced. The approximate $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. An environmental impact
assessment was filed in fourth-quarter 2011, permitting is being
advanced and engineering and procurement of long-lead items are in
progress.

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

Copper sales from South America mining of 286 million pounds in
first-quarter 2012 were lower than first-quarter 2011 sales of 312
million pounds primarily reflecting anticipated lower ore grades at
Cerro Verde and Candelaria, partly offset by higher production at El
Abra.

FCX expects South America's sales to approximate of 1.3 billion pounds
of copper and 100 thousand ounces of gold for the year 2012, similar to
2011 sales of 1.3 billion pounds of copper and 101 thousand ounces of
gold.

As anticipated, average unit net cash costs (net of by-product credits)
for South America of $1.40 per pound of copper in first-quarter 2012
were higher than unit net cash costs of $1.13 per pound in first-quarter
2011, primarily reflecting increased input costs and lower copper sales
volumes. Unit net cash costs also reflected lower molybdenum credits in
first-quarter 2012.

FCX estimates that average unit net cash costs (net of by-product
credits) for South America mining would approximate $1.44 per pound of
copper for the year 2012, based on current sales volume and cost
estimates and assuming average prices of $1,600 per ounce of gold and
$14 per pound of molybdenum during the remainder of 2012.

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 the large-scale, high-grade underground ore bodies
located beneath and nearby the Grasberg open pit. In aggregate, these
underground ore bodies are expected to ramp up to approximately 240,000
metric tons of ore per day following the currently anticipated
transition from the Grasberg open pit in 2016. Over the next five years,
estimated aggregate capital spending on these projects is expected to
average $700 million per year ($550 million per year net to PT Freeport
Indonesia). Considering the long-term nature and large size of these
projects, actual costs could differ materially from these estimates.

The high-grade Big Gossan mine, which began producing in fourth-quarter
2010, is expected to reach full rates of 7,000 metric tons of ore per
day in 2013. Substantial progress has been made in developing
infrastructure and underground workings that will enable access to the
underground ore bodies. Development of the terminal infrastructure and
mine access for the Grasberg Block Cave and Deep Mill Level Zone ore
bodies is in progress.

Operating Data. Following is summary consolidated operating data
for the Indonesia mining operations for the first quarters of 2012 and
2011:

Indonesia's first-quarter 2012 copper sales of 134 million pounds and
gold sales of 266 thousand ounces were significantly lower than
first-quarter 2011 copper sales of 278 million pounds and gold sales of
454 thousand ounces, primarily reflecting anticipated lower ore grades
combined with work interruptions and the related temporary suspension of
operations during first-quarter 2012.

The terms of a new two-year labor agreement for PT Freeport Indonesia's
employees were reached in mid-December 2011 and production began ramping
up following repairs to damaged concentrate and fuel pipelines, which
resulted from civil unrest that occurred during the course of the
approximate three-month long strike. During first-quarter 2012, PT
Freeport Indonesia experienced work interruptions in connection with its
efforts to resume normal operations, with an estimated impact of
approximately 80 million pounds of copper and 125 thousand ounces of
gold. Operations and productivity at PT Freeport Indonesia have improved
recently. For the period April 1 through April 15, 2012, PT Freeport
Indonesia's milling rates averaged approximately 200,000 metric tons of
ore per day, compared with the first-quarter 2012 average of 114,800
metric tons of ore per day and the January 2012 forecast for the year
2012 of 224,000 metric tons of ore per day. Full operations, which are
dependent on maintaining security and productivity in the workplace, are
expected to be restored during second-quarter 2012.

FCX expects sales from Indonesia to approximate 800 million pounds of
copper and 1.0 million ounces of gold for the year 2012, compared with
846 million pounds of copper and 1.3 million ounces of gold for the year
2011. These estimates reflect the work interruptions experienced during
first-quarter 2012 and returning to normal operations at Grasberg during
second-quarter 2012. Gold sales in 2012 also reflect mining in a lower
grade section of the Grasberg mine in 2012, compared with 2011. At the
Grasberg mine, the sequencing of mining areas with varying ore grades
also causes fluctuations in the timing of ore production resulting in
varying quarterly and annual sales of copper and gold.

Unit net cash costs (including gold and silver credits) for Indonesia
averaged a net cost of $0.33 per pound of copper in first-quarter 2012,
compared to a net credit of $0.16 per pound in first-quarter 2011,
primarily reflecting lower sales volumes.

FCX estimates Indonesia's average unit net cash costs (net of gold and
silver credits) would approximate $1.11 per pound of copper for the year
2012, based on current sales volume and cost estimates and assuming an
average gold price of $1,600 per ounce for the remainder of 2012.
Compared to first-quarter 2012, unit site production and delivery costs
are expected to decline for the remainder of 2012 because of higher
projected copper volumes. However, unit net cash costs are expected to
be higher for the remainder of 2012 because of lower gold credits.
Indonesia's unit net cash costs for 2012 would change by approximately
$0.05 per pound for each $50 per ounce change in the average price of
gold during the remainder of 2012. Because of the fixed nature of a
large portion of Indonesia's costs, unit costs vary from quarter to
quarter depending on volumes of copper and gold sold, as well as average
realized gold prices during the period. FCX expects Indonesia's unit net
cash costs to decline significantly in future years, compared to the
year 2012, because of higher projected copper and gold volumes.

Africa Mining. FCX holds an effective 56 percent interest in the
Tenke Fungurume (Tenke) copper and cobalt mining concessions in the
Katanga province of the Democratic Republic of Congo (DRC) and is the
operator of Tenke. During first-quarter 2012, Tenke received government
approval of the modifications to its bylaws, which formalized the
previously reported changes in ownership. Effective March 26, 2012, FCX
and Lundin Mining Corporation's ownership interest in Tenke totals 80
percent (from 82.5 percent) and G?camines' ownership interest totals 20
percent (from 17.5 percent).

In addition to copper, the Tenke mine produces cobalt hydroxide. Tenke's
operations are consolidated in FCX's financial statements.

Operating and Development Activities. The milling facilities at
Tenke, which were designed to produce at a rate of 8,000 metric tons of
ore per day, continue to perform above capacity, with throughput
averaging 12,200 metric tons of ore per day in first-quarter 2012.
Mining rates have been increased to enable additional copper production
from the initial project capacity of 250 million pounds per year to
approximately 290 million pounds per year.

FCX is constructing a second phase of the project, which would include
optimizing the current plant and increasing capacity. FCX plans to
expand the mill rate to 14,000 metric tons of ore per day and is
constructing related processing facilities that would target the
addition of approximately 150 million pounds of copper per year in 2013.
The approximate $850 million project includes mill upgrades, additional
mining equipment, a new tankhouse and sulphuric acid plant expansion.

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.

Operating Data. Following is summary consolidated operating data
for the Africa mining operations for the first quarters of 2012 and 2011:

Copper sales from Africa of 69 million pounds in first-quarter 2012 were
higher than first-quarter 2011 copper sales of 60 million pounds
reflecting higher mining and milling rates.

FCX expects Africa's sales to approximate 300 million pounds of copper
and 25 million pounds of cobalt for the year 2012, compared with 283
million pounds of copper and 25 million pounds of cobalt for the year
2011.

Unit net cash costs (net of cobalt credits) for Africa of $1.25 per
pound of copper in first-quarter 2012 were higher than unit net cash
costs of $0.86 per pound in first-quarter 2011, primarily reflecting
higher input costs from higher mining and milling rates and lower cobalt
credits, partly offset by higher copper sales volumes.

FCX estimates Africa's average unit net cash costs would approximate
$1.13 per pound of copper for the year 2012, based on current sales
volume and cost estimates and assuming an average cobalt price of $12
per pound for the remainder of 2012. Africa's unit net cash costs for
2012 would change by approximately $0.08 per pound for each $2 per pound
change in the average price of cobalt during the remainder of 2012.

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.

Development Activities. During first-quarter 2012, FCX commenced
operations at its newly constructed Climax molybdenum mine. Construction
activities from the first phase of the project are substantially
complete. Production from the Climax mine is expected to ramp up to a
rate of 20 million pounds of molybdenum per year during 2013, and
depending on market conditions, may be increased to 30 million pounds of
molybdenum per year. FCX intends to operate the Climax and Henderson
molybdenum mines in a flexible manner to meet market requirements. FCX
believes that Climax is one of the most attractive primary molybdenum
development projects 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 first quarters of 2012 and 2011:

Consolidated molybdenum sales of 21 million pounds in first-quarter 2012
were higher than first-quarter 2011 sales of 20 million pounds. For the
year 2012, FCX expects molybdenum sales to approximate 81 million pounds
(including production of approximately 40 million pounds from the North
and South America copper mines), compared with 79 million pounds in 2011
(including production of 45 million pounds from the North and South
America copper mines).

Unit net cash costs at the Henderson mine of $6.88 per pound of
molybdenum in first-quarter 2012 were higher than unit net cash costs of
$6.13 per pound in first-quarter 2011, primarily reflecting higher input
costs, including labor and materials. Based on current sales volume and
cost estimates, FCX expects average unit net cash costs for the
Henderson mine to approximate $7.00 per pound of molybdenum for the year
2012.

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. 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 2012 is expected to approximate $275
million, compared to $221 million in 2011. Exploration activities will
continue to focus primarily on the potential for future reserve
additions in FCX's existing minerals districts.

PROVISIONAL PRICING AND OTHER

During first-quarter 2012, 41 percent of FCX's mined copper was sold in
concentrate, 31 percent as rod from North America operations and 28
percent as cathode. Under the long-established structure of sales
agreements prevalent in the industry, copper contained in concentrates
and cathodes 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.
LME spot copper prices averaged $3.77 per pound during first-quarter
2012, compared to FCX's average realized price of $3.82 per pound.

At December ?31, 2011, FCX had provisionally priced copper sales at its
copper mining operations, primarily South America and Indonesia,
totaling 252 million pounds (net of intercompany sales and
noncontrolling interests) recorded at an average of $3.44 per pound.
Higher prices during first-quarter 2012 resulted in adjustments to these
provisionally priced copper sales and favorably impacted first-quarter
2012 consolidated revenues by $109 million ($47 million to net income
attributable to common stock or $0.05 per share), compared with
adjustments to the December ?31, 2010, provisionally priced copper sales
that unfavorably impacted first-quarter 2011 consolidated revenues by
$10 million ($4 million to net income attributable to common stock or
less than $0.01 per share).

At March ?31, 2012, FCX had provisionally priced copper sales at its
copper mining operations, primarily South America and Indonesia,
totaling 214 million pounds of copper (net of intercompany sales and
noncontrolling interests) recorded at an average of $3.83 per pound,
subject to final pricing over the next several months. FCX estimates
that each $0.05 change in the price realized from the March ?31, 2012,
provisional price recorded would have an approximate $15 million effect
on its 2012 consolidated revenues ($8 million to net income attributable
to common stock). The LME spot copper price closed at $3.67 per pound on
April ?18, 2012.

FCX defers recognizing profits on its sales from its Indonesia, South
America and North America mining operations to Atlantic Copper and on 25
percent of Indonesia's mining sales to PT Smelting (PT-FI's 25
percent-owned Indonesian smelting unit) until final sales to third
parties occur. FCX's net deferred profits on its Indonesia, South
America and North America concentrate inventories at Atlantic Copper and
PT Smelting to be recognized in future periods' net income attributable
to common stock totaled $87 million at March ?31, 2012. Refer to the
'Consolidated Statements of Income' on page III 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. Additionally, as PT Freeport Indonesia's operations
return to full operating rates, FCX expects to defer a significant
amount of PT Freeport Indonesia's profit on intercompany sales until
final sales to third parties occur.

CASH FLOWS

FCX generated operating cash flows of $801 million for first-quarter
2012, which were net of working capital uses of $720 million. Based on
current sales volume and cost estimates and assuming average prices of
$3.50 per pound of copper, $1,600 per ounce of gold and $14 per pound of
molybdenum for the remainder of 2012, FCX's consolidated operating cash
flows are estimated to approximate $4.2 billion for the year 2012 (net
of an estimated $1.1 billion in working capital uses). The impact of
price changes for the remainder of 2012 on operating cash flows would
approximate $110 million for each $0.05 per pound change in the average
price of copper, $35 million for each $50 per ounce change in the
average price of gold and $70 million for each $2 per pound change in
the average price of molybdenum.

Capital expenditures, including capitalized interest, totaled $707
million for first-quarter 2012. FCX's capital expenditures are currently
estimated to approximate $4.3 billion for the year 2012 (including $2.7
billion for major projects and $1.6 billion for sustaining capital).
Major projects for 2012 primarily include underground development
activities at Grasberg, the expansion at Tenke Fungurume, the
concentrator expansion at Cerro Verde and the mill expansion at 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 March 31, 2012, FCX had consolidated cash of $4.5 billion. Net of
noncontrolling interests' share, taxes and other costs, cash available
to the parent company totaled $3.4 billion as shown below (in billions):

At March ?31, 2012, FCX had $3.5 billion in debt. FCX had no borrowings
and $44 million of letters of credit issued under its revolving credit
facility, resulting in total availability of approximately $1.5 billion
at March ?31, 2012.

In February 2012, FCX sold $3.0 billion of senior notes in three
tranches with a weighted average interest rate of approximately three
percent. FCX used the proceeds from this offering (plus cash on hand),
to redeem the remaining $3.0 billion of its 8.375% Senior Notes. FCX
recorded a loss on early extinguishment of debt of $168 million ($149
million to net income attributable to common stock or $0.16 per share)
in first-quarter 2012 in connection with this redemption. Annual
interest cost savings associated with this refinancing approximates $160
million.

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. On February 7, 2012, the Board of Directors authorized an
increase in the common stock dividend from an annual rate of $1.00 per
share to $1.25 per share ($0.3125 per share quarterly), with the first
quarterly dividend to be paid on May 1, 2012, to shareholders of record
on April 13, 2012. FCX intends to continue to maintain a strong
financial position, invest aggressively in attractive growth projects
and provide cash returns to shareholders. The Board will continue to
review FCX's financial policy on an ongoing basis.

WEBCAST INFORMATION

A conference call with securities analysts to discuss FCX's
first-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, May ?18, 2012.

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.

The company′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 Democratic Republic of Congo.
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, potential prepayments of debt, future dividend
payments and potential share purchases.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 of Directors (the Board) and will depend on FCX's financial
results, cash requirements, future prospects, and other factors deemed
relevant by the Board.

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 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 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
FCX's 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 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 (credits) 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 VI, which is available on FCX's
website, 'www.fcx.com.'