Freeport-McMoRan Copper & Gold Inc. Reports First-Quarter 2013 Results
Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX):
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Net income attributable to common stock for first-quarter 2013
was $648 million, $0.68 per share, compared with net income of $764
million, $0.80 per share, for first-quarter 2012.
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Consolidated sales from mines for first-quarter 2013 totaled
954 million pounds of copper, 214 thousand ounces of gold and 25
million pounds of molybdenum, compared with 827 million pounds of
copper, 288 thousand ounces of gold and 21 million pounds of
molybdenum for first-quarter 2012.
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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 92 million pounds of molybdenum, including 1.0 billion pounds of
copper, 295 thousand ounces of gold and 23 million pounds of
molybdenum for second-quarter 2013.
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Consolidated unit net cash costs (net of by-product credits)
averaged $1.57 per pound of copper for first-quarter 2013, compared
with $1.26 per pound for first-quarter 2012. Based on current 2013
sales volume and cost estimates and assuming average prices of $1,400
per ounce for gold and $11 per pound for molybdenum for the remainder
of 2013, consolidated unit net cash costs (net of by-product credits)
are estimated to average approximately $1.45 per pound of copper for
the year 2013.
-
Operating cash flows totaled $831 million (net of $430
million in working capital uses and changes in other tax payments) for
first-quarter 2013, compared with $801 million (net of $720 million in
working capital uses and changes in other tax payments) for
first-quarter 2012. Excluding results of pending acquisitions, based
on current sales volume and cost estimates and assuming average prices
of $3.25 per pound for copper, $1,400 per ounce for gold and $11 per
pound for molybdenum for the remainder of 2013, operating cash flows
are estimated to approximate $5.5 billion (including $0.4 billion in
net working capital sources and changes in other tax payments) for the
year 2013.
-
Capital expenditures totaled $805 million for first-quarter
2013, compared with $707 million for first-quarter 2012. Other
investing activities for first-quarter 2013 included $321 million (net
of cash acquired) for payments by the Freeport Cobalt joint venture to
fund the acquisition of a cobalt chemical refinery. Excluding amounts
for pending acquisitions, capital expenditures are expected to
approximate $4.4 billion for the year 2013, including $2.6 billion for
major projects and $1.8 billion for sustaining capital.
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FCX completed $10.5 billion in debt financings associated with
the pending acquisitions of Plains Exploration & Production Company
(PXP) and McMoRan Exploration Co. (MMR) consisting of $4.0 billion in
bank term loans (which will be funded at closing of the transactions)
and $6.5 billion of senior notes. The weighted-average interest rate
of these financings approximates 3.1 percent. The acquisitions of PXP
and MMR are expected to close in second-quarter 2013.
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At March 31, 2013, consolidated cash totaled $9.6 billion and total
debt totaled $10.1 billion.
Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported first-quarter
2013 net income attributable to common stock of $648 million, $0.68 per
share, compared with $764 million, $0.80 per share, for first-quarter
2012. First-quarter 2013 net income attributable to common stock
included charges totaling $50 million, $0.05 per share, associated with
debt extinguishment costs for the termination of the acquisition bridge
loan facilities and for costs associated with pending acquisitions and
the March 2013 cobalt chemical refinery acquisition. First-quarter 2012
net income attributable to common stock included a charge of $149
million, $0.16 per share, associated with debt extinguishment costs for
the redemption of FCX's 8.375% senior notes.
James R. Moffett, Chairman of the Board, and Richard C. Adkerson,
President and Chief Executive Officer, said, "Our first-quarter results
reflect our focus on strong and safe production, aggressive cost
management and advancing financially attractive projects to grow our
copper production, increase cash flows and provide strong returns for
shareholders. We also completed attractive financing transactions
during the quarter, providing low-cost debt to fund the pending oil and
gas acquisitions. We look forward to completing the transactions in the
second quarter and to executing our strategy of developing long-term
resources to generate long-term value for shareholders through expanded
investment opportunities."
SUMMARY FINANCIAL AND OPERATING DATA
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Three Months Ended
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March 31,
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2013
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2012
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Financial Data (in millions, except per share amounts)
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|
|
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|
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Revenuesa |
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$
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4,583
|
|
|
|
$
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4,605
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|
|
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Operating income
|
|
$
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1,355
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b |
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$
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1,734
|
|
|
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Net income attributable to common stockc |
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$
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648
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b,d |
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$
|
764
|
|
d |
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Diluted net income per share of common stock
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|
$
|
0.68
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|
b,d |
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$
|
0.80
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|
d |
|
Diluted weighted-average common shares outstanding
|
|
953
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|
|
|
955
|
|
|
|
Operating cash flows
|
|
$
|
831
|
|
e |
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$
|
801
|
|
e |
|
Capital expenditures
|
|
$
|
805
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|
|
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$
|
707
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|
|
|
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Mining Operating Data
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Copper (millions of recoverable pounds)
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|
|
|
|
|
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|
Production
|
|
980
|
|
|
|
833
|
|
|
|
Sales, excluding purchases
|
|
954
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|
|
|
827
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Average realized price per pound
|
|
$
|
3.51
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|
|
|
$
|
3.82
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|
|
|
Site production and delivery costs per poundf |
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$
|
1.94
|
|
|
|
$
|
1.96
|
|
|
|
Unit net cash costs per poundf |
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$
|
1.57
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|
|
|
$
|
1.26
|
|
|
|
Gold (thousands of recoverable ounces)
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|
|
|
|
|
|
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Production
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235
|
|
|
|
252
|
|
|
|
Sales, excluding purchases
|
|
214
|
|
|
|
288
|
|
|
|
Average realized price per ounce
|
|
$
|
1,606
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|
|
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$
|
1,694
|
|
|
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Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
Production
|
|
22
|
|
|
|
21
|
|
|
|
Sales, excluding purchases
|
|
25
|
|
|
|
21
|
|
|
|
Average realized price per pound
|
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$
|
12.75
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|
|
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$
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15.34
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|
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a. |
Includes the impact of adjustments to provisionally priced
concentrate and cathode sales recognized in prior periods. Refer
to the "Consolidated Statements of Income" on page III for a
summary of the impacts.
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b. |
Includes charges of $14 million ($10 million to net income
attributable to common stock or $0.01 per share) for costs
associated with the pending acquisitions of PXP and MMR and for
the March 2013 cobalt chemical refinery acquisition.
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c. |
FCX defers recognizing profits on intercompany sales until final
sales to third parties occur. Refer to the "Consolidated
Statements of Income" on page III for a summary of net impacts
from changes in these deferrals.
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d. |
Includes losses on early extinguishment of debt totaling $45
million ($40 million to net income attributable to common stock or
$0.04 per share) for first-quarter 2013 related to the termination
of the acquisition bridge loan facilities and $168 million ($149
million to net income attributable to common stock or $0.16 per
share) for first-quarter 2012 associated with the redemption of
FCX's remaining 8.375% senior notes.
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e. |
Net of working capital uses and changes in other tax payments of
$430 million for first-quarter 2013 and $720 million for
first-quarter 2012.
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f. |
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 VI, which is available on FCX's website, "www.fcx.com."
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OPERATIONS
Consolidated. First-quarter 2013 consolidated copper sales of 954
million pounds were higher than the January 2013 estimate of 940 million
pounds (primarily reflecting higher production and sales from Africa)
and also higher than first-quarter 2012 sales of 827 million pounds
primarily because of higher production from Indonesia and Africa.
First-quarter 2013 consolidated gold sales of 214 thousand ounces were
lower than the January 2013 estimate of 230 thousand ounces (primarily
reflecting timing of shipments) and lower than first-quarter 2012 sales
of 288 thousand ounces primarily because of anticipated lower ore grades
in Indonesia.
First-quarter 2013 consolidated molybdenum sales of 25 million pounds
were higher than the January 2013 estimate of 23 million pounds and
first-quarter 2012 sales of 21 million pounds primarily because of
stronger sales in the metallurgical and chemical sectors.
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
92 million pounds of molybdenum, including 1.0 billion pounds of copper,
295 thousand ounces of gold and 23 million pounds of molybdenum for
second-quarter 2013.
As anticipated, consolidated average unit net cash costs (net of
by-product credits) of $1.57 per pound of copper in first-quarter 2013
were higher than unit net cash costs of $1.26 per pound in first-quarter
2012 reflecting lower by-product credits.
Assuming average prices of $1,400 per ounce of gold and $11 per pound of
molybdenum for the remainder of 2013 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 $1.45 per pound of copper for the year 2013.
Projected unit net cash costs for 2013 are higher than previous
estimates primarily because of lower gold credits. The impact of price
changes for the remainder of 2013 on consolidated unit net cash costs
would approximate $0.015 per pound for each $50 per ounce change in the
average price of gold and $0.01 per pound for each $2 per pound change
in the average price of molybdenum. Quarterly unit net cash costs vary
with fluctuations in sales volumes and average realized prices
(primarily gold and molybdenum prices), and are expected to decline
during the second half of the year as FCX gains access to higher grade
ore in Indonesia (54 percent of 2013 consolidated copper sales volumes
and 63 percent of consolidated gold sales volumes are expected in the
second half of 2013).
North America Copper Mines. FCX operates seven open-pit copper
mines in North America - Morenci, Bagdad, Safford, Sierrita and Miami in
Arizona, and Chino and Tyrone 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, which are sold to FCX's molybdenum sales
company at market-based pricing.
Operating and Development Activities. FCX has increased
production from its North America copper mines in recent years and
continues to evaluate a number of opportunities to invest in additional
production capacity at several of its North America copper mines in
response to positive exploration results in recent years.
At Morenci, FCX is expanding mining and milling capacity to process
additional sulfide ores identified through exploratory drilling. The
approximate $1.4 billion project is targeting incremental annual
production of approximately 225 million pounds of copper in 2014 (an
approximate 40 percent increase from 2012) through an increase in
milling rates from 50,000 metric tons of ore per day to approximately
115,000 metric tons of ore per day and mining rates from 700,000 short
tons per day to 900,000 short tons per day. The targeted increase in
mining rates has been achieved, engineering activities are nearing
completion and construction activities for the new mill and related
facilities are in progress.
Operating Data. Following is summary consolidated operating data
for the North America copper mines for the first quarters of 2013 and
2012:
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Three Months Ended
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March 31,
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2013
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2012
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Copper (millions of recoverable pounds)
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Production
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343
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|
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337
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Sales, excluding purchases
|
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353
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|
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338
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Average realized price per pound
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$
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3.60
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$
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3.82
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|
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|
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Molybdenum (millions of recoverable pounds)
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|
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Productiona |
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8
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|
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10
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|
|
|
|
|
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Unit net cash costs per pound of copperb:
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|
|
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Site production and delivery, excluding adjustments
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|
$
|
1.99
|
|
|
$
|
1.80
|
|
|
By-product credits, primarily molybdenum
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|
(0.26
|
)
|
|
(0.41
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)
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Treatment charges
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|
0.13
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|
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0.12
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Unit net cash costs
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$
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1.86
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|
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$
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1.51
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a. |
Refer to consolidated operating data on page 3 for FCX's
consolidated molybdenum sales, which includes sales of molybdenum
produced at the North America copper mines.
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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 VI, which is available on FCX's website, "www.fcx.com."
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|
Consolidated copper sales volumes from North America of 353 million
pounds in first-quarter 2013 were higher than first-quarter 2012 sales
of 338 million pounds primarily reflecting increased production at the
Chino mine.
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 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 $1.86 per pound of copper in first-quarter 2013
were higher than unit net cash costs of $1.51 per pound in first-quarter
2012 primarily reflecting higher mining rates and lower molybdenum
credits.
FCX estimates that average unit net cash costs (net of by-product
credits) for the North America copper mines would approximate $1.89 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
for the remainder of 2013. North America's average projected unit net
cash costs would change by approximately $0.025 per pound for each $2
per pound change in the average price of molybdenum for the remainder of
2013.
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 Candelaria and Ojos del Salado mines produce gold and silver, and
the Cerro Verde mine produces molybdenum concentrates that are sold to
FCX's molybdenum sales company at market-based pricing.
Operating and Development Activities. FCX has commenced initial
construction activities associated with a large-scale expansion at Cerro
Verde. The project, with an estimated cost of $4.4 billion, will 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.
FCX continues to engage in studies to evaluate 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.
Operating Data. Following is summary consolidated operating data
for the South America mining operations for the first quarters of 2013
and 2012:
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Three Months Ended
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March 31,
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2013
|
|
2012
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
Production
|
|
298
|
|
|
293
|
|
|
Sales
|
|
285
|
|
|
286
|
|
|
Average realized price per pound
|
|
$
|
3.48
|
|
|
$
|
3.83
|
|
|
|
|
|
|
|
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Gold (thousands of recoverable ounces)
|
|
|
|
|
|
Production
|
|
21
|
|
|
19
|
|
|
Sales
|
|
21
|
|
|
19
|
|
|
Average realized price per ounce
|
|
$
|
1,617
|
|
|
$
|
1,680
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
Productiona |
|
2
|
|
|
2
|
|
|
|
|
|
|
|
|
Unit net cash costs per pound of copperb:
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
1.62
|
|
|
$
|
1.53
|
|
|
By-product credits
|
|
(0.29
|
)
|
|
(0.29
|
)
|
|
Treatment charges
|
|
0.18
|
|
|
0.16
|
|
|
Unit net cash costs
|
|
$
|
1.51
|
|
|
$
|
1.40
|
|
|
a. |
Refer to consolidated operating data on page 3 for FCX's
consolidated molybdenum sales, which includes sales of molybdenum
produced at Cerro Verde.
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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 VI, which is available on FCX's website, "www.fcx.com."
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|
Consolidated copper sales volumes from South America of 285 million
pounds in first-quarter 2013 approximated first-quarter 2012 sales of
286 million pounds as higher grade ore at Candelaria offset lower grade
ore at Cerro Verde.
FCX expects South America's sales to approximate 1.34 billion pounds of
copper for the year 2013, compared with sales of 1.25 billion pounds of
copper in 2012, primarily reflecting higher grade ore at Candelaria.
Average unit net cash costs (net of by-product credits) for South
America of $1.51 per pound of copper in first-quarter 2013 were higher
than unit net cash costs of $1.40 per pound in first-quarter 2012
primarily reflecting higher costs for maintenance and repairs.
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 2013, based on current sales volume and cost
estimates and assuming average prices of $1,400 per ounce of gold and
$11 per pound of molybdenum for the remainder of 2013.
Indonesia Mining. Through its 90.64 percent owned and wholly
consolidated subsidiary PT Freeport Indonesia, FCX's assets include one
of the world's largest copper and gold deposits at the Grasberg minerals
district in Papua, Indonesia. PT Freeport Indonesia produces copper
concentrates, which contain significant quantities of gold and 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 produce approximately 240,000 metric tons of ore per
day following the currently anticipated transition from the Grasberg
open pit in 2017. Development of the Grasberg Block Cave and Deep Mill
Level Zone (DMLZ) is advancing according to schedule, which would enable
the DMLZ to commence production in 2015 and the Grasberg Block Cave mine
to commence production in 2017. Over the next five years, estimated
aggregate capital spending on these projects is currently expected to
average $735 million per year ($585 million per year net to PT Freeport
Indonesia).
Operating Data. Following is summary consolidated operating data
for the Indonesia mining operations for the first quarters of 2013 and
2012:
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|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2013
|
|
2012
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
Production
|
|
219
|
|
|
123
|
|
|
Sales
|
|
198
|
|
|
134
|
|
|
Average realized price per pound
|
|
$
|
3.43
|
|
|
$
|
3.81
|
|
|
|
|
|
|
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
Production
|
|
212
|
|
|
229
|
|
|
Sales
|
|
191
|
|
|
266
|
|
|
Average realized price per ounce
|
|
$
|
1,604
|
|
|
$
|
1,695
|
|
|
|
|
|
|
|
|
Unit net cash costs per pound of coppera:
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
2.61
|
|
|
$
|
3.51
|
|
|
Gold and silver credits
|
|
(1.63
|
)
|
|
(3.51
|
)
|
|
Treatment charges
|
|
0.23
|
|
|
0.19
|
|
|
Royalty on metals
|
|
0.13
|
|
|
0.14
|
|
|
Unit net cash costs
|
|
$
|
1.34
|
|
|
$
|
0.33
|
|
|
a. |
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 VI, which is available on FCX's website, "www.fcx.com."
|
|
|
|
Indonesia's first-quarter 2013 copper sales of 198 million pounds were
higher than first-quarter 2012 copper sales of 134 million pounds when
labor-related disruptions affected operations. Productivity measures
have continued to improve resulting in first-quarter 2013 daily mill
throughput averaging 199,400 metric tons per day, including 59,000
metric tons per day from the Deep Ore Zone (DOZ) underground mine.
As expected, Indonesia's first-quarter 2013 gold sales of 191 thousand
ounces were lower than first-quarter 2012 gold sales of 266 thousand
ounces primarily as a result of lower ore grades from mine sequencing.
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 1.25
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 the second half of 2013 as
PT Freeport Indonesia gains access to higher ore grades and achieves the
targeted ramp up in production from the DOZ underground mine to
approximately 80,000 metric tons per day (57 percent of Indonesia's
projected copper sales and 63 percent of Indonesia's projected gold
sales are expected in the second half of 2013).
Indonesia's unit net cash costs (including gold and silver credits) of
$1.34 per pound of copper in first-quarter 2013 were higher than unit
net cash costs of $0.33 per pound in first-quarter 2012 primarily
reflecting lower gold credits, partly offset by higher copper sales
volumes.
FCX estimates Indonesia's average unit net cash costs (net of gold and
silver credits) would approximate $1.00 per pound of copper for the year
2013, based on current sales volume and cost estimates and assuming an
average gold price of $1,400 per ounce for the remainder of 2013.
Projected unit net cash costs for 2013 are higher than previous
estimates primarily because of lower gold credits. Indonesia's projected
unit net cash costs would change by approximately $0.05 per pound for
each $50 per ounce change in the average price of gold for the remainder
of 2013. 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 are expected to
decline during the second half of the year as it gains access to higher
grade ore.
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. TFM has completed its
second phase expansion project, which included optimizing the current
plant and increasing mine, mill and processing capacity. The expanded
mill is capable of throughput of 14,000 metric tons of ore per day to
enable increasing copper production by 150 million pounds to over 430
million pounds per year. Costs incurred to date total approximately $615
million and included mill upgrades, additional mining equipment and a
new tankhouse. A second sulphuric acid plant, which was included in the
$850 million total estimated project capital cost, is expected to be
installed in 2015. The expanded mill facility is performing well, with
first-quarter 2013 average throughput rates of 14,600 metric tons per
day.
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.
Operating Data. Following is summary consolidated operating data
for the Africa mining operations for the first quarters of 2013 and 2012:
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2013
|
|
2012
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
Production
|
|
120
|
|
|
80
|
|
|
Sales
|
|
118
|
|
|
69
|
|
|
Average realized price per pounda |
|
$
|
3.40
|
|
|
$
|
3.74
|
|
|
|
|
|
|
|
|
Cobalt (millions of contained pounds)
|
|
|
|
|
|
Production
|
|
6
|
|
|
6
|
|
|
Sales
|
|
6
|
|
|
5
|
|
|
Average realized price per pound
|
|
$
|
7.28
|
|
|
$
|
8.46
|
|
|
|
|
|
|
|
|
Unit net cash costs per pound of copperb:
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
1.39
|
|
|
$
|
1.50
|
|
|
Cobalt creditsc |
|
(0.23
|
)
|
|
(0.33
|
)
|
|
Royalty on metals
|
|
0.07
|
|
|
0.08
|
|
|
Unit net cash costs
|
|
$
|
1.23
|
|
|
$
|
1.25
|
|
|
a. |
Includes point-of-sale transportation costs as negotiated in
customer contracts.
|
|
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 VI, which is available on FCX's website, "www.fcx.com."
|
|
c. |
Net of cobalt downstream processing and freight costs.
|
|
|
|
Africa mining operations established new records in first-quarter 2013
for mining, milling and copper sales. Copper sales from Africa of 118
million pounds in first-quarter 2013 were higher than first-quarter 2012
copper sales of 69 million pounds primarily reflecting higher mining and
milling rates principally related to the ramp up of the expansion
project and higher ore grades.
FCX expects Africa's sales to approximate 435 million pounds of copper
and 28 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 $1.23 per pound
of copper in first-quarter 2013 were slightly lower than unit net cash
costs of $1.25 per pound in first-quarter 2012, primarily reflecting the
benefit of higher sales volumes, partly offset by lower cobalt credits.
FCX estimates Africa's average unit net cash costs would approximate
$1.18 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 for the remainder of 2013. Africa's projected unit net cash
costs would change by approximately $0.065 per pound for each $2 per
pound change in the average price of cobalt for the remainder of 2013.
Freeport Cobalt. On March 29, 2013, through the newly formed and
wholly consolidated Freeport Cobalt joint venture, FCX acquired a
large-scale cobalt chemical refinery located in Kokkola, Finland, and
the related sales and marketing business. FCX is the operator of the
joint venture with an effective 56 percent ownership interest. The
remaining effective ownership interests are held by FCX's partners in
TFM, including 24 percent by Lundin Mining Corporation and 20 percent by
La Générale des Carrières et des Mines.
This acquisition enhances FCX's cobalt marketing position, product
portfolio and product development capabilities, and provides direct
end-market access for the cobalt hydroxide production from TFM.
Initial consideration paid was $355 million, including $34 million of
acquired cash. Under the terms of the agreement, there is 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 was funded 70 percent by FCX and 30
percent by Lundin, which amounts will be repaid prior to any shareholder
distributions.
Molybdenum Mines. FCX has two wholly owned molybdenum mines in
North America – the Henderson underground mine and the Climax open-pit
mine, both in Colorado. The Henderson and Climax mines produce
high-purity, chemical-grade molybdenum concentrates, which are typically
further processed into value-added molybdenum chemical products.
Operating Data. Following is summary consolidated operating data
for the molybdenum mines for the first quarters of 2013 and 2012:
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2013a |
|
2012a |
|
Molybdenum production (millions of recoverable pounds)b |
|
12
|
|
|
9
|
|
|
|
|
|
|
|
Unit net cash cost per pound of molybdenumc |
|
$
|
7.32
|
|
|
$
|
6.88
|
|
a. |
Reflects operating data for the Henderson and Climax mines for
first-quarter 2013, and operating data only for the Henderson mine
for first-quarter 2012.
|
|
b. |
Refer to consolidated operating data on page 3 for FCX's
consolidated molybdenum sales, which includes sales of molybdenum
produced at the molybdenum mines, as well as from certain of the
North and South America copper mines.
|
|
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 VI, which is available on FCX's website, "www.fcx.com."
|
|
|
|
The Climax molybdenum mine was commissioned in second-quarter 2012 and
includes a new 25,000 metric ton per day mill facility. Molybdenum
production from the Climax mine totaled 5 million pounds in
first-quarter 2013 and is targeted at 20 million pounds for the year
2013 (with potential to produce up to approximately 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.
Average unit net cash costs for FCX's molybdenum mines were $7.32 per
pound of molybdenum in first-quarter 2013, compared with $6.88 per pound
in first-quarter 2012, reflecting higher input costs at Henderson and
the addition of production from Climax.
Based on current sales volume and cost estimates, FCX expects unit net
cash costs for the molybdenum mines to average approximately $7.25 per
pound of molybdenum for the year 2013 (reflecting approximately $7.50
per pound for Henderson and $6.90 per pound for Climax).
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 is expected to approximate $235 million for the
year 2013, compared to $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 global greenfield exploration
projects.
CASH FLOWS
FCX generated operating cash flows of $831 million (net of $430 million
in working capital uses and changes in other tax payments) for
first-quarter 2013. Excluding results from pending acquisitions, based
on current sales volume and cost estimates and assuming average prices
of $3.25 per pound of copper, $1,400 per ounce of gold and $11 per pound
of molybdenum for the remainder of 2013, FCX's consolidated operating
cash flows are estimated to approximate $5.5 billion (including $0.4
billion in net working capital sources and changes in other tax
payments) for the year 2013. The impact of price changes during the
remainder of 2013 on operating cash flows would approximate $270 million
for each $0.10 per pound change in the average price of copper, $50
million for each $50 per ounce change in the average price of gold and
$80 million for each $2 per pound change in the average price of
molybdenum.
Capital expenditures totaled $805 million for first-quarter 2013.
Excluding amounts for pending acquisitions, capital expenditures are
currently estimated to approximate $4.4 billion for the year 2013
(including $2.6 billion for major projects and $1.8 billion for
sustaining capital). Major projects for 2013 primarily include the
expansions at Cerro Verde and Morenci and underground development
activities at Grasberg. 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.
Other investing activities for first-quarter 2013 included $321 million
(net of cash acquired) for payments by the Freeport Cobalt joint venture
to fund the March 2013 acquisition of a cobalt chemical refinery.
CASH AND DEBT
Following is a summary of cash available to the parent company, net of
noncontrolling interests' share, taxes and other costs at March 31, 2013
(in billions):
|
|
March 31,
|
|
|
|
2013
|
|
|
Cash at domestic companies
|
$
|
7.0
|
|
a |
|
Cash at international operations
|
2.6
|
|
|
|
Total consolidated cash and cash equivalents
|
9.6
|
|
|
|
Less: Noncontrolling interests' share
|
(0.9
|
)
|
|
|
Cash, net of noncontrolling interests' share
|
8.7
|
|
|
|
Less: Withholding taxes and other
|
(0.2
|
)
|
|
|
Net cash available
|
$
|
8.5
|
|
|
|
a. |
Includes net proceeds from the March 2013 sale of $6.5 billion of
senior notes that will be used to fund a portion of the pending
acquisitions of PXP and MMR.
|
|
|
|
At March 31, 2013, FCX had $10.1 billion in debt, including the March
2013 issuance of $6.5 billion of senior notes.
During first-quarter 2013, FCX sold $6.5 billion of senior notes in four
tranches and also entered into an agreement for a $4.0 billion bank term
loan (the Term Loan). No amounts are currently available to FCX under
the Term Loan, which will be funded at closing of the PXP and MMR
acquisitions. The weighted-average interest rate of these financings
approximates 3.1 percent. FCX expects to use the net proceeds from these
financings to fund the pending acquisitions of PXP and MMR, including
for the payment of cash consideration for the acquisitions and the
repayment of certain indebtedness of PXP and MMR. If the PXP acquisition
is not completed, FCX will be required to redeem all the outstanding
7-year, 10-year and 30-year notes (which total $5 billion) at 101
percent plus accrued and unpaid interest.
At March 31, 2013, FCX had no borrowings and $43 million of letters of
credit issued under its revolving credit facility, resulting in
availability of $1.5 billion. In February 2013, FCX entered into a new
$3.0 billion senior unsecured revolving credit facility, which will
refinance and replace its existing revolving credit facility upon
completion of the pending acquisition of PXP.
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 $297 million in
first-quarter 2013. FCX's current annual dividend rate for its common
stock is $1.25 per share. On March 27, 2013, FCX's Board of Directors
(the Board) declared a regular quarterly dividend of $0.3125 per share,
which will be paid on May 1, 2013. 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.
PENDING ACQUISITIONS OF PXP AND MMR
On December 5, 2012, FCX announced definitive agreements to acquire, in
separate transactions, PXP and MMR. PXP per-share consideration is
equivalent to 0.6531 shares of FCX common stock and $25 in cash. MMR
per-share consideration consists of $14.75 in cash and 1.15 units of a
royalty trust, which will hold a five percent overriding royalty
interest in future production of MMR's existing shallow water ultra-deep
prospects. 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, North America-focused oil and
gas resource base is expected to provide strong current cash flows and
significant growth potential, enhanced geographic diversification and
complementary exposure to markets positioned for global growth.
Completion of each transaction is subject to receipt of PXP and MMR
stockholder approval of their respective transaction. The PXP
transaction is not conditioned on the closing of the MMR transaction,
and the MMR transaction is not conditioned on the closing of the PXP
transaction. The transactions are expected to close in second-quarter
2013, subject to satisfaction of all conditions to closing.
WEBCAST INFORMATION
A conference call with securities analysts to discuss FCX's
first-quarter 2013 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 17, 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, one of the world's largest copper and gold deposits 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. 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.
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, 2012, 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 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 VI, which is also available on FCX's website, "www.fcx.com."
ADDITIONAL INFORMATION ABOUT THE PENDING PXP AND MMR TRANSACTIONS AND
WHERE TO FIND IT
PXP Transaction. In connection with the pending
transaction, FCX has filed with the SEC a registration statement on Form
S-4/A 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 pending 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 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 pending
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 pending
transaction, FCX and the royalty trust formed in connection with the
transaction have filed with the SEC a registration statement on Form
S-4/A that includes a preliminary proxy statement of MMR that also
constitutes a prospectus of FCX and the royalty trust. FCX, the royalty
trust and MMR also plan to file other relevant documents with the SEC
regarding the pending 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 pending
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 March 31,
|
|
|
|
|
Production
|
|
|
Sales
|
|
|
COPPER (millions of recoverable
pounds)
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
|
|
|
|
|
|
|
|
Morenci (85%)a |
|
138
|
|
|
130
|
|
|
141
|
|
|
132
|
|
|
Bagdad (100%)
|
|
49
|
|
|
48
|
|
|
51
|
|
|
49
|
|
|
Safford (100%)
|
|
31
|
|
|
46
|
|
|
37
|
|
|
45
|
|
|
Sierrita (100%)
|
|
44
|
|
|
43
|
|
|
43
|
|
|
44
|
|
|
Miami (100%)
|
|
14
|
|
|
20
|
|
|
14
|
|
|
20
|
|
|
Chino (100%)
|
|
43
|
|
|
29
|
|
|
43
|
|
|
27
|
|
|
Tyrone (100%)
|
|
23
|
|
|
20
|
|
|
23
|
|
|
20
|
|
|
Other (100%)
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
Total North America
|
|
343
|
|
|
337
|
|
|
353
|
|
|
338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South America
|
|
|
|
|
|
|
|
|
|
|
Cerro Verde (53.56%)
|
|
122
|
|
|
139
|
|
|
119
|
|
|
136
|
|
|
El Abra (51%)
|
|
90
|
|
|
82
|
|
|
79
|
|
|
79
|
|
|
Candelaria/Ojos del Salado (80%)
|
|
86
|
|
|
72
|
|
|
87
|
|
|
71
|
|
|
Total South America
|
|
298
|
|
|
293
|
|
|
285
|
|
|
286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indonesia
|
|
|
|
|
|
|
|
|
|
|
Grasberg (90.64%)b |
|
219
|
|
|
123
|
|
|
198
|
|
|
134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Africa
|
|
|
|
|
|
|
|
|
|
|
Tenke Fungurume (56%)c |
|
120
|
|
|
80
|
|
|
118
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
980
|
|
|
833
|
|
|
954
|
|
|
827
|
|
|
Less noncontrolling interests
|
|
191
|
|
|
165
|
|
|
182
|
|
|
158
|
|
|
Net
|
|
789
|
|
|
668
|
|
|
772
|
|
|
669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated sales from mines
|
|
|
|
|
|
954
|
|
|
827
|
|
|
Purchased copper
|
|
|
|
|
|
49
|
|
|
27
|
|
|
Total copper sales, including purchases
|
|
|
|
|
|
1,003
|
|
|
854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
$
|
3.51
|
|
|
$
|
3.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GOLD (thousands of
recoverable ounces)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
North America (100%)
|
|
2
|
|
|
4
|
|
|
2
|
|
|
3
|
|
|
South America (80%)
|
|
21
|
|
|
19
|
|
|
21
|
|
|
19
|
|
|
Indonesia (90.64%)b |
|
212
|
|
|
229
|
|
|
191
|
|
|
266
|
|
|
Consolidated
|
|
235
|
|
|
252
|
|
|
214
|
|
|
288
|
|
|
Less noncontrolling interests
|
|
24
|
|
|
25
|
|
|
22
|
|
|
28
|
|
|
Net
|
|
211
|
|
|
227
|
|
|
192
|
|
|
260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated sales from mines
|
|
|
|
|
|
214
|
|
|
288
|
|
|
Purchased gold
|
|
|
|
|
|
1
|
|
|
—
|
|
|
Total gold sales, including purchases
|
|
|
|
|
|
215
|
|
|
288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per ounce
|
|
|
|
|
|
$
|
1,606
|
|
|
$
|
1,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOLYBDENUM (millions of
recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
Henderson (100%)
|
|
7
|
|
|
9
|
|
|
N/A
|
|
N/A
|
|
|
Climax (100%)
|
|
5
|
|
|
—
|
|
|
N/A
|
|
N/A
|
|
|
North America copper mines (100%)a |
|
8
|
|
|
10
|
|
|
N/A
|
|
N/A
|
|
|
Cerro Verde (53.56%)
|
|
2
|
|
|
2
|
|
|
N/A
|
|
N/A
|
|
|
Consolidated
|
|
22
|
|
|
21
|
|
|
25
|
|
|
21
|
|
|
Less noncontrolling interests
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
Net
|
|
21
|
|
|
20
|
|
|
24
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated sales from mines
|
|
|
|
|
|
25
|
|
|
21
|
|
|
Purchased molybdenum
|
|
|
|
|
|
—
|
|
|
—
|
|
|
Total molybdenum sales, including purchases
|
|
|
|
|
|
25
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
$
|
12.75
|
|
|
$
|
15.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBALT (millions of contained
pounds)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
Consolidated - Tenke Fungurume (56%)c |
|
6
|
|
|
6
|
|
|
6
|
|
|
5
|
|
|
Less noncontrolling interests
|
|
3
|
|
|
3
|
|
|
3
|
|
|
2
|
|
|
Net
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
$
|
7.28
|
|
|
$
|
8.46
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2013
|
|
2012
|
|
100% North America Copper Mines
|
|
|
|
|
|
Solution Extraction/Electrowinning
(SX/EW) Operations
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
1,000,100
|
|
|
1,032,900
|
|
Average copper ore grade (percent)
|
|
0.22
|
|
|
0.23
|
|
Copper production (millions of recoverable pounds)
|
|
209
|
|
|
218
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
250,600
|
|
|
236,000
|
|
Average ore grades (percent):
|
|
|
|
|
|
Copper
|
|
0.39
|
|
|
0.37
|
|
Molybdenum
|
|
0.03
|
|
|
0.03
|
|
Copper recovery rate (percent)
|
|
84.3
|
|
|
80.0
|
|
Production (millions of recoverable pounds):
|
|
|
|
|
|
Copper
|
|
158
|
|
|
142
|
|
Molybdenum
|
|
8
|
|
|
10
|
|
|
|
|
|
|
|
100% South America Mining
|
|
|
|
|
|
SX/EW Operations
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
262,800
|
|
|
196,300
|
|
Average copper ore grade (percent)
|
|
0.50
|
|
|
0.55
|
|
Copper production (millions of recoverable pounds)
|
|
109
|
|
|
118
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
188,600
|
|
|
186,000
|
|
Average ore grades:
|
|
|
|
|
|
Copper (percent)
|
|
0.58
|
|
|
0.55
|
|
Gold (grams per metric ton)
|
|
0.11
|
|
|
0.09
|
|
Molybdenum (percent)
|
|
0.02
|
|
|
0.02
|
|
Copper recovery rate (percent)
|
|
90.8
|
|
|
89.2
|
|
Production (recoverable):
|
|
|
|
|
|
Copper (millions of pounds)
|
|
189
|
|
|
175
|
|
Gold (thousands of ounces)
|
|
21
|
|
|
19
|
|
Molybdenum (millions of pounds)
|
|
2
|
|
|
2
|
|
|
|
|
|
|
|
100% Indonesia Mining
|
|
|
|
|
|
Ore milled (metric tons per day)a |
|
|
|
|
|
Grasberg open pit
|
|
137,400
|
|
|
80,500
|
|
DOZ underground mine
|
|
59,000
|
|
|
33,100
|
|
Big Gossan underground mine
|
|
3,000
|
|
|
1,200
|
|
Total
|
|
199,400
|
|
|
114,800
|
|
Average ore grades:
|
|
|
|
|
|
Copper (percent)
|
|
0.66
|
|
|
0.64
|
|
Gold (grams per metric ton)
|
|
0.52
|
|
|
0.84
|
|
Recovery rates (percent):
|
|
|
|
|
|
Copper
|
|
88.5
|
|
|
89.6
|
|
Gold
|
|
71.8
|
|
|
82.1
|
|
Production (recoverable):
|
|
|
|
|
|
Copper (millions of pounds)
|
|
219
|
|
|
123
|
|
Gold (thousands of ounces)
|
|
212
|
|
|
229
|
|
|
|
|
|
|
|
100% Africa Mining
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
14,600
|
|
|
12,200
|
|
Average ore grades (percent):
|
|
|
|
|
|
Copper
|
|
4.44
|
|
|
3.61
|
|
Cobalt
|
|
0.32
|
|
|
0.38
|
|
Copper recovery rate (percent)
|
|
93.7
|
|
|
91.2
|
|
Production (millions of pounds):
|
|
|
|
|
|
Copper (recoverable)
|
|
120
|
|
|
80
|
|
Cobalt (contained)
|
|
6
|
|
|
6
|
|
|
|
|
|
|
|
100% Molybdenum Minesb |
|
|
|
|
|
Ore milled (metric tons per day)
|
|
35,900
|
|
|
19,900
|
|
Average molybdenum ore grade (percent)
|
|
0.20
|
|
|
0.25
|
|
Molybdenum production (millions of recoverable pounds)
|
|
12
|
|
|
9
|
|
a. |
Amounts represent the approximate average daily throughput
processed at PT Freeport Indonesia's mill facilities from each
producing mine.
|
|
b. |
First-quarter 2013 reflects operating data for the Henderson and
Climax mines; first-quarter 2012 reflects operating data only for
the Henderson mine.
|
|
|
|
|
FREEPORT-McMoRan COPPER & GOLD INC.
|
|
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
(In Millions, Except Per Share Amounts)
|
|
Revenues
|
|
$
|
4,583
|
|
a |
$
|
4,605
|
|
a |
|
Cost of sales:
|
|
|
|
|
|
|
Production and delivery
|
|
2,719
|
|
|
2,428
|
|
|
|
Depreciation, depletion and amortization
|
|
329
|
|
|
267
|
|
|
|
Total cost of sales
|
|
3,048
|
|
|
2,695
|
|
|
|
Selling, general and administrative expenses
|
|
113
|
|
b |
104
|
|
|
|
Exploration and research expenses
|
|
52
|
|
|
62
|
|
|
|
Environmental obligations and shutdown costs
|
|
15
|
|
|
10
|
|
|
|
Total costs and expenses
|
|
3,228
|
|
|
2,871
|
|
|
|
Operating income
|
|
1,355
|
|
|
1,734
|
|
|
|
Interest expense, net
|
|
(57
|
)
|
c |
(63
|
)
|
c |
|
Losses on early extinguishment of debt
|
|
(45
|
)
|
|
(168
|
)
|
|
|
Other expense, net
|
|
(3
|
)
|
|
(13
|
)
|
|
|
Income before income taxes and equity in affiliated
|
|
|
|
|
|
|
companies' net earnings
|
|
1,250
|
|
|
1,490
|
|
|
|
Provision for income taxes
|
|
(428
|
)
|
|
(491
|
)
|
|
|
Equity in affiliated companies' net earnings
|
|
2
|
|
|
2
|
|
|
|
Net income
|
|
824
|
|
|
1,001
|
|
|
|
Net income attributable to noncontrolling interests
|
|
(176
|
)
|
|
(237
|
)
|
|
|
Net income attributable to FCX common stock
|
|
$
|
648
|
|
a,b,d |
$
|
764
|
|
a,d |
|
|
|
|
|
|
|
|
Net income per share attributable to FCX common stock:
|
|
|
|
|
|
|
Basic
|
|
$
|
0.68
|
|
|
$
|
0.81
|
|
|
|
Diluted
|
|
$
|
0.68
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
950
|
|
|
949
|
|
|
|
Diluted
|
|
953
|
|
|
955
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
$
|
0.3125
|
|
|
$
|
0.3125
|
|
|
|
a. |
Includes (unfavorable) favorable adjustments to provisionally
priced copper sales recognized in the prior periods totaling $(11)
million ($(5) million to net income attributable to common stock)
in first-quarter 2013 and $109 million ($47 million to net income
attributable to common stock) in first-quarter 2012. For further
discussion of adjustments to provisionally priced sales refer to
the supplemental schedule, "Provisional Pricing" on page XVI.
|
|
b. |
Includes charges of $14 million ($10 million to net income
attributable to common stock) for costs associated with the
pending acquisitions of PXP and MMR and for the March 2013 cobalt
chemical refinery acquisition.
|
|
c. |
Consolidated interest expense, excluding capitalized interest,
totaled $75 million in first-quarter 2013 and $99 million in
first-quarter 2012. Lower interest expense in first-quarter 2013
primarily reflected the impact of the February 2012 refinancing
transaction, partly offset by $17 million of additional interest
expense in first-quarter 2013 related to the March 2013 sale of
$6.5 billion of senior notes.
|
|
d. |
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 additions (reductions) to net income attributable to common
stock of $25 million in first-quarter 2013 and $(32) million in
first-quarter 2012. For further discussion refer to the
supplemental schedule, "Deferred Profits" on page XVII.
|
|
|
|
|
FREEPORT-McMoRan COPPER & GOLD INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
(In Millions)
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
9,595
|
|
a |
$
|
3,705
|
|
|
Trade accounts receivable
|
|
1,082
|
|
|
927
|
|
|
Other accounts receivable
|
|
687
|
|
|
702
|
|
|
Inventories:
|
|
|
|
|
|
Mill and leach stockpiles
|
|
1,698
|
|
|
1,672
|
|
|
Materials and supplies, net
|
|
1,575
|
|
|
1,504
|
|
|
Product
|
|
1,536
|
|
|
1,400
|
|
|
Other current assets
|
|
410
|
|
|
387
|
|
|
Total current assets
|
|
16,583
|
|
|
10,297
|
|
|
Property, plant, equipment and development costs, net
|
|
21,689
|
|
|
20,999
|
|
|
Long-term mill and leach stockpiles
|
|
2,081
|
|
|
1,955
|
|
|
Other assets
|
|
2,235
|
|
|
2,189
|
|
|
Total assets
|
|
$
|
42,588
|
|
|
$
|
35,440
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
2,892
|
|
|
$
|
3,007
|
|
|
Current portion of reclamation and environmental obligations
|
|
254
|
|
|
241
|
|
|
Accrued income taxes
|
|
125
|
|
|
93
|
|
|
Current portion of debt
|
|
4
|
|
|
2
|
|
|
Total current liabilities
|
|
3,275
|
|
|
3,343
|
|
|
Long-term debt, less current portion
|
|
10,088
|
|
a |
3,525
|
|
|
Deferred income taxes
|
|
3,580
|
|
|
3,490
|
|
|
Reclamation and environmental obligations, less current portion
|
|
2,130
|
|
|
2,127
|
|
|
Other liabilities
|
|
1,666
|
|
|
1,644
|
|
|
Total liabilities
|
|
20,739
|
|
|
14,129
|
|
|
Equity:
|
|
|
|
|
|
FCX stockholders' equity:
|
|
|
|
|
|
Common stock
|
|
107
|
|
|
107
|
|
|
Capital in excess of par value
|
|
19,163
|
|
|
19,119
|
|
|
Retained earnings
|
|
2,750
|
|
|
2,399
|
|
|
Accumulated other comprehensive loss
|
|
(500
|
)
|
|
(506
|
)
|
|
Common stock held in treasury
|
|
(3,580
|
)
|
|
(3,576
|
)
|
|
Total FCX stockholders' equity
|
|
17,940
|
|
|
17,543
|
|
|
Noncontrolling interests
|
|
3,909
|
|
|
3,768
|
|
|
Total equity
|
|
21,849
|
|
|
21,311
|
|
|
Total liabilities and equity
|
|
$
|
42,588
|
|
|
$
|
35,440
|
|
|
a. |
Includes net proceeds from the March 2013 sale of $6.5 billion of
senior notes that will be used to fund a portion of the pending
acquisitions of PXP and MMR.
|
|
|
|
|
FREEPORT-McMoRan COPPER & GOLD INC.
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
(In Millions)
|
|
Cash flow from operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
824
|
|
|
$
|
1,001
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
329
|
|
|
267
|
|
|
Stock-based compensation
|
|
41
|
|
|
32
|
|
|
Pension plan contributions
|
|
(22
|
)
|
|
(52
|
)
|
|
Net charges for reclamation and environmental obligations, including
accretion
|
|
34
|
|
|
35
|
|
|
Payments of reclamation and environmental obligations
|
|
(36
|
)
|
|
(45
|
)
|
|
Losses on early extinguishment of debt
|
|
45
|
|
|
168
|
|
|
Deferred income taxes
|
|
136
|
|
|
168
|
|
|
Increase in long-term mill and leach stockpiles
|
|
(126
|
)
|
|
(61
|
)
|
|
Other, net
|
|
36
|
|
|
8
|
|
|
Decreases (increases) in working capital and other tax payments:
|
|
|
|
|
|
Accounts receivable
|
|
(113
|
)
|
|
(482
|
)
|
|
Inventories
|
|
(67
|
)
|
|
(248
|
)
|
|
Other current assets
|
|
(48
|
)
|
|
40
|
|
|
Accounts payable and accrued liabilities
|
|
(201
|
)
|
|
(64
|
)
|
|
Accrued income taxes and other tax payments
|
|
(1
|
)
|
|
34
|
|
|
Net cash provided by operating activities
|
|
831
|
|
|
801
|
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
North America copper mines
|
|
(258
|
)
|
|
(143
|
)
|
|
South America
|
|
(226
|
)
|
|
(152
|
)
|
|
Indonesia
|
|
(191
|
)
|
|
(182
|
)
|
|
Africa
|
|
(57
|
)
|
|
(127
|
)
|
|
Molybdenum mines
|
|
(40
|
)
|
|
(93
|
)
|
|
Other
|
|
(33
|
)
|
|
(10
|
)
|
|
Acquisition of cobalt chemical business, net of cash acquired
|
|
(321
|
)
|
|
—
|
|
|
Other, net
|
|
14
|
|
|
(7
|
)
|
|
Net cash used in investing activities
|
|
(1,112
|
)
|
|
(714
|
)
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
Proceeds from debt
|
|
6,615
|
|
|
3,004
|
|
|
Repayments of debt
|
|
(39
|
)
|
|
(3,159
|
)
|
|
Cash dividends paid:
|
|
|
|
|
|
Common stock
|
|
(297
|
)
|
|
(238
|
)
|
|
Noncontrolling interests
|
|
(35
|
)
|
|
(1
|
)
|
|
Excess tax benefit from stock-based awards
|
|
1
|
|
|
7
|
|
|
Other, net
|
|
(74
|
)
|
|
(26
|
)
|
|
Net cash provided by (used in) financing activities
|
|
6,171
|
|
|
(413
|
)
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
5,890
|
|
|
(326
|
)
|
|
Cash and cash equivalents at beginning of year
|
|
3,705
|
|
|
4,822
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
9,595
|
|
|
$
|
4,496
|
|
