Freeport-McMoRan Inc. (NYSE: FCX):
-
Net income attributable to common stock totaled $31 million,
$0.02 per share, in first-quarter 2019. After adjusting for net
charges of $36 million, $0.03 per share, first-quarter 2019 adjusted
net income attributable to common stock totaled $67 million, $0.05 per
share.
-
Consolidated sales totaled 784 million pounds of copper, 242
thousand ounces of gold and 22 million pounds of molybdenum in
first-quarter 2019.
-
Consolidated sales for the year 2019 are expected to
approximate 3.3 billion pounds of copper, 0.8 million ounces of gold
and 94 million pounds of molybdenum, including 800 million pounds of
copper, 265 thousand ounces of gold and 25 million pounds of
molybdenum in second-quarter 2019.
-
Average realized prices in first-quarter 2019 were $2.90 per
pound for copper, $1,291 per ounce for gold and $12.69 per pound for
molybdenum.
-
Average unit net cash costs in first-quarter 2019 were $1.78
per pound of copper and are expected to approximate $1.75 per pound of
copper for the year 2019.
-
Operating cash flows totaled $534 million (net of $27 million
in working capital uses and timing of other tax payments) in
first-quarter 2019. Based on current sales volume and cost estimates,
and assuming average prices of $3.00 per pound for copper, $1,300 per
ounce for gold and $13.00 per pound for molybdenum for the remainder
of 2019, operating cash flows are expected to approximate $2.3 billion
for the year 2019.
-
Capital expenditures totaled $622 million in first-quarter 2019
(including approximately $370 million for major mining projects).
Capital expenditures for the year 2019 are expected to approximate
$2.5 billion, including $1.5 billion for major mining projects
primarily associated with underground development activities in the
Grasberg minerals district in Indonesia and development of the Lone
Star copper leach project in Arizona.
-
In March 2019, FCX redeemed all of its outstanding $1 billion
aggregate principal amount of senior notes due 2020.
-
At March 31, 2019, consolidated debt totaled $9.9 billion
and consolidated cash totaled $2.8 billion. FCX had no
borrowings and $3.5 billion available under its revolving credit
facility at March 31, 2019.
-
On March 27, 2019, FCX declared a quarterly cash dividend of
$0.05 per share on its common stock, which will be paid on May 1, 2019.
Freeport-McMoRan Inc. (NYSE: FCX) reported net income attributable to
common stock of $31 million ($0.02 per share) in first-quarter 2019.
After adjusting for net charges of $36 million ($0.03 per share),
adjusted net income attributable to common stock totaled $67 million
($0.05 per share) in first-quarter 2019. Refer to the supplemental
schedule, "Adjusted Net Income," on page VI, which is available on FCX's
website, "fcx.com," for additional information.
Richard C. Adkerson, President and Chief Executive Officer, said,
"During the first quarter, our global team maintained its focus on
providing products necessary to support growing economies around the
world in a cost-efficient, safe and environmentally responsible manner.
Our transition to underground mining at Grasberg is advancing according
to plan, and we are encouraged by recent milestones. In North America
and South America, we are advancing the Lone Star copper leach project
in eastern Arizona and continuing to focus on opportunities to enhance
operating performance from existing mines. As we look forward, we are
optimistic about the future that our asset base and copper market
fundamentals are expected to provide shareholders. Our strategy will
continue to focus on maximizing the value of our existing resource base
through rigorous cost management, productivity and technology, executing
our plan to successfully transition from open-pit mining to large-scale
underground mining at Grasberg, generating cash flows to enhance
shareholder returns and creating value organically from our large
undeveloped resource position.”
|
|
|
SUMMARY FINANCIAL DATA
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
(in millions, except per share amounts)
|
|
Revenuesa,b
|
|
|
|
$
|
3,792
|
|
|
$
|
4,868
|
|
|
Operating incomea
|
|
|
|
$
|
321
|
|
|
$
|
1,459
|
|
|
Net income from continuing operations
|
|
|
|
$
|
75
|
|
|
$
|
828
|
|
|
Net income attributable to common stockc,d
|
|
|
|
$
|
31
|
|
|
$
|
692
|
|
|
Diluted net income (loss) per share of common stock:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
$
|
0.02
|
|
|
$
|
0.48
|
|
|
Discontinued operations
|
|
|
|
—
|
|
|
(0.01
|
)
|
|
|
|
|
|
$
|
0.02
|
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted-average common shares outstanding
|
|
|
|
1,457
|
|
|
1,458
|
|
|
Operating cash flowse
|
|
|
|
$
|
534
|
|
|
$
|
1,369
|
|
|
Capital expenditures
|
|
|
|
$
|
622
|
|
|
$
|
402
|
|
|
At March 31:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
2,833
|
|
|
$
|
3,749
|
|
|
Total debt, including current portion
|
|
|
|
$
|
9,905
|
|
|
$
|
11,718
|
|
|
|
|
|
|
|
|
|
|
|
|
a. For segment financial results, refer to the
supplemental schedules, "Business Segments," beginning on page VII,
which are available on FCX's website, "fcx.com."
b. Includes favorable (unfavorable) adjustments to prior
period provisionally priced concentrate and cathode copper sales
totaling $70 million ($29 million to net income attributable to common
stock or $0.02 per share) in first-quarter 2019 and $(78) million ($(35)
million to net income attributable to common stock or $(0.02) per share)
in first-quarter 2018. For further discussion, refer to the supplemental
schedule, "Derivative Instruments," on page VII, which is available on
FCX's website, "fcx.com."
c. Includes net (charges) gains of $(36) million ($(0.03)
per share) in first-quarter 2019 and $13 million ($0.01 per share) in
first-quarter 2018 that are described in the supplemental schedule,
"Adjusted Net Income," on page VI, which is available on FCX's website,
"fcx.com."
d. FCX defers recognizing profits on intercompany sales
until final sales to third parties occur. For a summary of net impacts
from changes in these deferrals, refer to the supplemental schedule,
"Deferred Profits," on page VII, which is available on FCX's website,
"fcx.com."
e. Net of working capital uses and timing of other tax
payments of $27 million in first-quarter 2019 and $21 million in
first-quarter 2018.
|
|
|
SUMMARY OPERATING DATA
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2019
|
|
|
2018
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
780
|
|
|
952
|
|
Sales, excluding purchases
|
|
|
|
784
|
|
|
993
|
|
Average realized price per pound
|
|
|
|
$
|
2.90
|
|
|
$
|
3.11
|
|
Site production and delivery costs per pounda
|
|
|
|
$
|
2.17
|
|
|
$
|
1.67
|
|
Unit net cash costs per pounda
|
|
|
|
$
|
1.78
|
|
|
$
|
0.98
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
166
|
|
|
599
|
|
Sales, excluding purchases
|
|
|
|
242
|
|
|
610
|
|
Average realized price per ounce
|
|
|
|
$
|
1,291
|
|
|
$
|
1,312
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
23
|
|
|
22
|
|
Sales, excluding purchases
|
|
|
|
22
|
|
|
24
|
|
Average realized price per pound
|
|
|
|
$
|
12.69
|
|
|
$
|
11.95
|
|
|
|
|
|
|
|
|
|
|
|
a. Reflects per pound weighted-average production and
delivery costs and unit net cash costs (net of by-product credits) for
all copper mines, before 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 schedules,
"Product Revenues and Production Costs," beginning on page IX, which are
available on FCX's website, "fcx.com."
Consolidated Sales Volumes
First-quarter 2019 copper sales of 784 million pounds and gold
sales of 242 thousand ounces were approximately five percent lower than
January 2019 sales estimates of 825 million pounds of copper and 255
thousand ounces of gold, reflecting impacts from weather events at El
Abra, unscheduled maintenance in North America and timing of shipments
in Indonesia. First-quarter 2019 copper and gold sales were lower than
first-quarter 2018 sales volumes primarily reflecting anticipated lower
mill rates and ore grades as PT Freeport Indonesia (PT-FI) transitions
mining from the open pit to underground.
First-quarter 2019 molybdenum sales of 22 million pounds were
lower than the January 2019 estimate and first-quarter 2018 sales of 24
million pounds.
Sales volumes for the year 2019 are expected to approximate 3.3 billion
pounds of copper, 0.8 million ounces of gold and 94 million pounds of
molybdenum, including 800 million pounds of copper, 265 thousand ounces
of gold and 25 million pounds of molybdenum in second-quarter 2019. As
PT-FI transitions mining from the open pit to underground, its
production is expected to be significantly lower in 2019 and 2020,
compared with 2018. Metal production is expected to improve
significantly by 2021 following a ramp-up period.
Consolidated Unit Costs
Consolidated average unit net cash costs (net of by-product credits) for
FCX's copper mines were $1.78 per pound of copper in first-quarter 2019.
As anticipated, average unit net cash costs were higher than the
first-quarter 2018 average of $0.98 per pound, primarily reflecting
lower sales volumes in Indonesia associated with PT-FI's transition.
Assuming average prices of $1,300 per ounce of gold and $13.00 per pound
of molybdenum for the remainder of 2019 and achievement of current sales
volume and cost estimates, consolidated unit net cash costs (net of
by-product credits) for copper mines are expected to average $1.75 per
pound of copper for the year 2019. FCX expects unit net cash costs to
decline by 2021 following a ramp-up period at PT-FI. 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 and
$0.02 per pound for each $2 per pound change in the average price of
molybdenum for the remainder of 2019. Quarterly unit net cash costs vary
with fluctuations in sales volumes and realized prices, primarily for
gold and molybdenum.
MINING OPERATIONS
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. In addition to copper,
certain of FCX's North America copper mines produce molybdenum
concentrate, gold and silver. All of the North America mining operations
are wholly owned, except for Morenci. FCX records its 72 percent
undivided joint venture interest in Morenci using the proportionate
consolidation method.
Operating and Development Activities. FCX has significant
undeveloped reserves and resources in North America and a portfolio of
potential long-term development projects. Future investments will be
undertaken based on the results of economic and technical feasibility
studies, and are dependent on market conditions. FCX continues to pursue
projects to enhance productivity through innovative technologies and to
study opportunities to reduce the capital intensity of its potential
long-term development projects.
Through exploration drilling, FCX has identified a significant resource
at its wholly owned Lone Star project located near the Safford operation
in eastern Arizona. An initial project to develop the Lone Star
leachable ores commenced in first-quarter 2018, with first production
expected by the end of 2020. Initial production from the Lone Star
leachable ores is expected to average approximately 200 million pounds
of copper per year, with the potential for future expansion options.
Total capital costs for the initial project, including mine equipment
and pre-production stripping, are expected to approximate $850 million
and will benefit from the utilization of existing infrastructure at the
adjacent Safford operation. As of March 31, 2019, approximately $385
million has been incurred for this project. The project also advances
exposure to a significant sulfide resource. FCX expects to incorporate
recent positive drilling and ongoing results in its future development
plans.
Operating Data. Following is summary consolidated operating data
for the North America copper mines:
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2019
|
|
|
2018
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
336
|
|
|
|
348
|
|
|
Sales, excluding purchases
|
|
|
|
320
|
|
|
|
384
|
|
|
Average realized price per pound
|
|
|
|
$
|
2.85
|
|
|
|
$
|
3.16
|
|
|
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Productiona
|
|
|
|
7
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
Unit net cash costs per pound of copperb
|
|
|
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
|
|
$
|
2.06
|
|
|
|
$
|
1.84
|
|
|
By-product credits
|
|
|
|
(0.26
|
)
|
|
|
(0.20
|
)
|
|
Treatment charges
|
|
|
|
0.11
|
|
|
|
0.10
|
|
|
Unit net cash costs
|
|
|
|
$
|
1.91
|
|
|
|
$
|
1.74
|
|
|
|
a. Refer to summary operating data on page 3 for FCX's
consolidated molybdenum sales, which includes sales of molybdenum
produced at the North America copper mines.
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 schedules,
"Product Revenues and Production Costs," beginning on page IX, which are
available on FCX's website, "fcx.com."
North America's consolidated copper sales volumes of 320 million pounds
in first-quarter 2019 were lower than first-quarter 2018 sales of 384
million pounds, primarily reflecting timing of shipments. North America
copper sales are estimated to approximate 1.4 billion pounds for the
year 2019, similar to 2018.
Average unit net cash costs (net of by-product credits) for the North
America copper mines of $1.91 per pound of copper in first-quarter 2019
were higher than unit net cash costs of $1.74 per pound in first-quarter
2018, primarily reflecting lower copper sales volumes.
Average unit net cash costs (net of by-product credits) for the North
America copper mines are expected to approximate $1.91 per pound of
copper for the year 2019, based on achievement of current sales volume
and cost estimates and assuming an average molybdenum price of $13.00
per pound for the remainder of 2019. North America's average unit net
cash costs for the year 2019 would change by approximately $0.03 per
pound for each $2 per pound change in the average price of molybdenum
for the remainder of 2019.
South America Mining. FCX operates two copper mines in South
America - Cerro Verde in Peru (in which FCX owns a 53.56 percent
interest) and El Abra in Chile (in which FCX owns a 51 percent
interest). These operations are consolidated in FCX's financial
statements. In addition to copper, the Cerro Verde mine produces
molybdenum concentrate and silver.
Operating and Development Activities. Cerro Verde's expanded
operations benefit from its large-scale, long-lived reserves and cost
efficiencies. Cerro Verde's concentrator facilities have continued to
perform well, with average mill throughput rates of 386,500 metric tons
of ore per day in first-quarter 2019. Debottlenecking projects and
additional initiatives to enhance operating rates are being advanced.
FCX continues to evaluate a large-scale expansion at El Abra to process
additional sulfide material and to achieve higher recoveries. El Abra's
large sulfide resource could potentially support a major mill project
similar to facilities constructed at Cerro Verde. Technical and economic
studies are being advanced to determine the optimal scope and timing for
the project.
Operating Data. Following is summary consolidated operating data
for South America mining:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2019
|
|
|
2018
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
299
|
|
|
|
293
|
|
|
Sales
|
|
|
|
290
|
|
|
|
290
|
|
|
Average realized price per pound
|
|
|
|
$
|
2.93
|
|
|
|
$
|
3.08
|
|
|
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Productiona
|
|
|
|
8
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
Unit net cash costs per pound of copperb
|
|
|
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
|
|
$
|
1.73
|
|
|
|
$
|
1.78
|
|
|
By-product credits
|
|
|
|
(0.34
|
)
|
|
|
(0.25
|
)
|
|
Treatment charges
|
|
|
|
0.19
|
|
|
|
0.20
|
|
|
Royalty on metals
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
Unit net cash costs
|
|
|
|
$
|
1.59
|
|
|
|
$
|
1.74
|
|
|
|
|
|
|
|
|
|
|
|
|
a. Refer to summary operating data on page 3 for FCX's
consolidated molybdenum sales, which includes sales of molybdenum
produced at Cerro Verde.
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 schedules,
"Product Revenues and Production Costs," beginning on page IX, which are
available on FCX's website, "fcx.com."
South America's consolidated copper sales volumes of 290 million pounds
in first-quarter 2019 approximated first-quarter 2018, with lower
volumes from El Abra being offset by higher volumes at Cerro Verde.
During first-quarter 2019, heavy rainfall and electrical storms resulted
in a suspension of El Abra's crushed leach stacking operations for
approximately 35 days; operations resumed in mid-March. The estimated
impact of the disruption on FCX's 2019 consolidated copper production
approximates 30 million pounds, approximately half of which was in
first-quarter 2019.
Sales from South America mining are expected to approximate 1.3 billion
pounds of copper for the year 2019, similar to 2018.
Average unit net cash costs (net of by-product credits) for South
America mining of $1.59 per pound of copper in first-quarter 2019 were
lower than unit net cash costs of $1.74 per pound in first-quarter 2018,
primarily reflecting higher by-product credits.
Average unit net cash costs (net of by-product credits) for South
America mining are expected to approximate $1.66 per pound of copper for
the year 2019, based on current sales volume and cost estimates and
assuming an average price of $13.00 per pound of molybdenum for the
remainder of 2019.
Indonesia Mining. PT-FI's assets include one of the world's
largest copper and gold deposits at the Grasberg minerals district in
Papua, Indonesia. PT-FI produces copper concentrate that contains
significant quantities of gold and silver. FCX has a 48.76 percent
ownership interest in PT-FI and manages its mining operations. PT-FI is
consolidated in FCX's financial statements.
The transaction completed in December 2018 regarding PT-FI's long-term
mining rights and share ownership provided for FCX and the other
pre-transaction PT-FI shareholders to retain the economics of the
revenue and cost sharing arrangements under the former joint venture
with Rio Tinto. As a result, FCX’s economic interest in PT-FI is
expected to approximate 81 percent through 2022.
Operating and Development Activities. PT-FI is currently mining
the final phase of the Grasberg open pit and expects to transition to
the Grasberg Block Cave (GBC) underground mine in mid-2019. PT-FI
continues to assess opportunities to recover additional ore from the
open pit during the remainder of 2019, subject to mine planning
considerations.
PT-FI continues to advance several projects in the Grasberg minerals
district related to the development of its large-scale, long-lived,
high-grade underground ore bodies. In aggregate, these underground ore
bodies are expected to produce large-scale quantities of copper and gold
following the transition from the Grasberg open pit.
PT-FI's estimated annual capital spending on underground mine
development projects is expected to average $0.7 billion per year over
the next four years, net of scheduled contributions from PT Indonesia
Asahan Aluminium (Persero) (PT Inalum). In accordance with applicable
accounting guidance, aggregate costs (before scheduled contributions
from PT Inalum), which are expected to average $0.9 billion per year
through 2022, will be reflected as an investing activity in FCX's cash
flow statement, and contributions from PT Inalum will be reflected as a
financing activity. Considering the long-term nature and size of these
projects, actual costs could vary from these estimates.
Substantial progress has been made to prepare for the transition to
mining of the GBC underground mine. First undercut blasting occurred in
late 2018 and several drawbells have been constructed and blasted to
prepare for mining. Cave production is in progress and on schedule. All
underground mining levels and the ore flow system are being
commissioned. Production rates over the next five years are expected to
ramp up to 130,000 metric tons of ore per day.
During third-quarter 2018, PT-FI commenced hydraulic fracturing
activities to manage rock stresses and pre-condition the Deep Mill Level
Zone (DMLZ) underground mine for large-scale production following mining
induced seismic activity experienced in 2017 and 2018. Results to date
have been effective in managing rock stresses and pre-conditioning the
cave. PT-FI expects to commence the ramp-up of production in the DMLZ
underground mine by mid-2019 and to reach full production rates of
80,000 metric tons per day in 2022. Estimates of timing of future
production continue to be reviewed and may be modified as additional
information becomes available.
In connection with completion of the December 2018 transaction, PT-FI
committed to construct a new smelter in Indonesia by December 21, 2023.
PT-FI has reviewed various process technologies and has initiated
front-end engineering and design for the selected technology. The
preliminary capital cost estimate for the project is in the $3 billion
range and PT-FI intends to pursue financing, commercial and potential
partner arrangements for this project. The economics of PT-FI’s share of
the new smelter will be shared by PT-FI’s shareholders according to
their respective share ownership percentages.
Operating Data. Following is summary consolidated operating data
for Indonesia mining:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2019
|
|
|
2018
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
145
|
|
|
|
311
|
|
|
Sales
|
|
|
|
174
|
|
|
|
319
|
|
|
Average realized price per pound
|
|
|
|
$
|
2.92
|
|
|
|
$
|
3.06
|
|
|
|
|
|
|
|
|
|
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
162
|
|
|
|
595
|
|
|
Sales
|
|
|
|
235
|
|
|
|
603
|
|
|
Average realized price per ounce
|
|
|
|
$
|
1,291
|
|
|
|
$
|
1,312
|
|
|
|
|
|
|
|
|
|
|
|
Unit net cash costs (credits) per pound of coppera
|
|
|
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
|
|
$
|
3.10
|
|
|
|
$
|
1.36
|
|
|
Gold and silver credits
|
|
|
|
(1.81
|
)
|
|
|
(2.59
|
)
|
|
Treatment charges
|
|
|
|
0.29
|
|
|
|
0.25
|
|
|
Export duties
|
|
|
|
0.10
|
|
|
|
0.14
|
|
|
Royalty on metals
|
|
|
|
0.16
|
|
|
|
0.21
|
|
|
Unit net cash costs (credits)
|
|
|
|
$
|
1.84
|
|
|
|
$
|
(0.63
|
)
|
|
|
|
|
|
|
|
|
|
|
|
a. For a reconciliation of unit net cash costs (credits)
per pound to production and delivery costs applicable to sales reported
in FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on page
IX, which are available on FCX's website, "fcx.com."
In March 2019, PT-FI's export license was extended to March 8, 2020.
PT-FI's approved export quota for the current export period totals
approximately 180,000 dry metric tons of concentrate, reflecting PT-FI's
production plan submitted to the Indonesian government in November 2018.
PT-FI plans to seek approval from the Indonesian government for an
increase in its export quota for the current export period.
Indonesia's consolidated sales of 174 million pounds of copper and 235
thousand ounces of gold in first-quarter 2019 were lower than
first-quarter 2018 sales of 319 million pounds of copper and 603
thousand ounces of gold, primarily reflecting anticipated lower mill
rates and ore grades as PT-FI transitions mining from the open pit to
underground.
As PT-FI transitions mining from the open pit to underground, production
is expected to be significantly lower in 2019 and 2020, compared with
historical levels. Metal production is expected to improve significantly
by 2021 following a ramp-up period. Consolidated sales volumes from
Indonesia are expected to approximate 0.6 billion pounds of copper and
0.8 million ounces of gold in 2019.
A significant portion of PT-FI's costs are fixed and unit costs vary
depending on production volumes and other factors. Indonesia's unit net
cash costs (including gold and silver credits) of $1.84 per pound of
copper in first-quarter 2019, compared with unit cash credits of $0.63
per pound in first-quarter 2018, primarily reflected lower gold and
silver credits and lower copper sales volumes.
Because of the fixed nature of a large portion of Indonesia's costs,
unit net cash costs vary from quarter to quarter depending on copper and
gold volumes. Assuming an average gold price of $1,300 per ounce for the
remainder of 2019 and achievement of current sales volume and cost
estimates, unit net cash costs (including gold and silver credits) for
Indonesia mining are expected to approximate $1.54 per pound of copper
for the year 2019. Indonesia mining's unit net cash costs for the year
2019 would change by approximately $0.05 per pound for each $50 per
ounce change in the average price of gold for the remainder of 2019.
Indonesia mining's projected sales volumes and unit net cash costs for
the year 2019 are dependent on a number of factors, including
operational performance, timing of shipments, export quotas and
workforce productivity.
Molybdenum Mines. FCX has two wholly owned molybdenum mines - the
Henderson underground mine and the Climax open-pit mine - both in
Colorado. The Henderson and Climax mines produce high-purity,
chemical-grade molybdenum concentrate, which is typically further
processed into value-added molybdenum chemical products. The majority of
molybdenum concentrate produced at the Henderson and Climax mines, as
well as from FCX's North America and South America copper mines, is
processed at FCX's conversion facilities.
Operating and Development Activities. Production from the
Molybdenum mines totaled 8 million pounds of molybdenum in first-quarter
2019 and 9 million pounds in first-quarter 2018. Refer to summary
operating data on page 3 for FCX's consolidated molybdenum sales and
average realized prices, which includes sales of molybdenum produced at
the Molybdenum mines, and from FCX's North America and South America
copper mines.
Unit net cash costs for the Molybdenum mines averaged $9.80 per pound of
molybdenum in first-quarter 2019 and $8.57 per pound in first-quarter
2018. Based on current sales volume and cost estimates, average unit net
cash costs for the Molybdenum mines are expected to approximate $9.60
per pound of molybdenum for the year 2019.
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 schedules, "Product
Revenues and Production Costs," beginning on page IX, which are
available on FCX's website, "fcx.com."
Mining Exploration Activities. FCX's mining exploration
activities are generally associated with its existing mines, focusing on
opportunities to expand reserves and resources to support development of
additional future production capacity. A drilling program to further
delineate the Lone Star resource continues to indicate significant
additional mineralization in this district, with higher ore grades than
FCX's other North America copper mines. Exploration results continue to
indicate opportunities for significant future potential reserve
additions in North America and South America. Exploration spending is
expected to approximate $70 million for the year 2019, compared with $78
million in 2018.
CASH FLOWS, CASH and DEBT
Operating Cash Flows. FCX generated operating cash flows of $534
million (net of $27 million in working capital uses and timing of other
tax payments) in first-quarter 2019.
Based on current sales volume and cost estimates, and assuming average
prices of $3.00 per pound of copper, $1,300 per ounce of gold and $13.00
per pound of molybdenum for the remainder of 2019, FCX's consolidated
operating cash flows are estimated to approximate $2.3 billion for the
year 2019. The impact of price changes during the remainder of 2019 on
operating cash flows would approximate $265 million for each $0.10 per
pound change in the average price of copper, $30 million for each $50
per ounce change in the average price of gold and $95 million for each
$2 per pound change in the average price of molybdenum.
Capital Expenditures. Capital expenditures totaled $622 million
in first-quarter 2019 (including approximately $370 million for major
mining projects).
Capital expenditures are expected to approximate $2.5 billion for the
year 2019, including $1.5 billion for major mining projects primarily
associated with underground development activities in the Grasberg
minerals district and development of the Lone Star project, and exclude
estimates associated with the new smelter in Indonesia. A large portion
of the capital expenditures relate to projects that are expected to add
significant production and cash flow in future periods, enabling FCX to
generate operating cash flows exceeding capital expenditures in future
years. FCX has cash on hand and the financial flexibility to fund these
expenditures and will continue to be disciplined in deploying capital.
Cash. Following is a summary of the U.S. and international
components of consolidated cash and cash equivalents available to the
parent company, net of noncontrolling interests' share, taxes and other
costs at March 31, 2019 (in billions):
|
|
|
|
|
|
|
|
|
|
Cash at domestic companies
|
|
|
|
$
|
1.9
|
|
|
|
|
Cash at international operations
|
|
|
|
0.9
|
|
|
|
|
Total consolidated cash and cash equivalents
|
|
|
|
2.8
|
|
|
|
|
Noncontrolling interests' share
|
|
|
|
(0.4
|
)
|
|
|
|
Cash, net of noncontrolling interests' share
|
|
|
|
$
|
2.4
|
|
|
|
|
Withholding taxes and other
|
|
|
|
—
|
|
|
a
|
|
Net cash available
|
|
|
|
$
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
a. Rounds to less than $0.1 billion.
Debt. At March 31, 2019, FCX's consolidated debt totaled $9.9
billion, with a related weighted-average interest rate of 4.7 percent.
FCX had no borrowings, $13 million in letters of credit issued and $3.5
billion available under its revolving credit facility at March 31, 2019.
During first-quarter 2019, FCX redeemed all of its outstanding $1
billion aggregate principal amount of 3.100% Senior Notes due 2020 and
repaid $200 million under Cerro Verde's credit facility. FCX recorded
losses on early extinguishment of debt totaling $6 million in
first-quarter 2019.
FINANCIAL POLICY
On March 27, 2019, FCX declared a quarterly cash dividend of $0.05 per
share on its common stock, which will be paid on May 1, 2019, to
shareholders of record as of April 15, 2019. The declaration of
dividends is at the discretion of the Board of Directors (Board) and
will depend upon FCX’s financial results, cash requirements, future
prospects and other factors deemed relevant by the Board.
WEBCAST INFORMATION
A conference call with securities analysts to discuss FCX's
first-quarter 2019 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 “fcx.com.” A replay of the webcast will be
available through Friday, May 24, 2019.
-----------------------------------------------------------------------------------------------------------
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 is one of the world's largest publicly traded copper
producers.
FCX’s portfolio of assets includes the Grasberg minerals district in
Indonesia, one of the world's largest copper and gold deposits; and
significant mining operations in the North America and South America,
including the large-scale Morenci minerals district in Arizona and the
Cerro Verde operation in Peru. Additional information about FCX is
available on FCX's website at "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
projections or expectations relating to ore grades and milling rates;
production and sales volumes; unit net cash costs; operating cash flows;
capital expenditures; FCX's expectations regarding its share of PT-FI's
net income and future cash flows through 2022; PT-FI's development,
financing, construction and completion of a new smelter in Indonesia;
PT-FI's compliance with environmental standards under the new framework
established by the Ministry of Environment and Forestry; exploration
efforts and results; development and production activities, rates and
costs; liquidity; tax rates; export quotas and duties; the impact of
copper, gold and molybdenum price changes; the impact of deferred
intercompany profits on earnings; reserve estimates; and future dividend
payments, share purchases and sales. The words “anticipates,” “may,”
“can,” “plans,” “believes,” “estimates,” “expects,” “projects,”
"targets," “intends,” “likely,” “will,” “should,” “to be,” ”potential"
and any similar expressions are intended to identify those assertions as
forward-looking statements. The declaration of dividends is at the
discretion of 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 actual results may differ
materially from those anticipated, expected, 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, but are not limited to, supply of
and demand for, and prices of, copper, gold and molybdenum; mine
sequencing; production rates; timing of shipments; results of
feasibility studies; potential inventory adjustments; potential
impairment of long-lived mining assets; the potential effects of
violence in Indonesia generally and in the province of Papua; the
Indonesian government's approval of an increase in PT-FI's export quota
for the current export period, which ends March 8, 2020, and extension
of PT-FI's export license after March 8, 2020; risks associated with
underground mining; satisfaction of requirements in accordance with
PT-FI's IUPK to extend mining rights from 2031 through 2041; industry
risks; regulatory changes; political and social risks; labor relations;
weather- and climate-related risks; environmental risks; litigation
results; cybersecurity incidents; 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, 2018, 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 upon which FCX's
forward-looking statements are based are likely to change after the
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 not be able to control. Further, FCX may make
changes to its business plans that could affect its results. FCX
cautions investors that it does not intend to update forward-looking
statements more frequently than quarterly notwithstanding any changes in
its 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 molybdenum and
adjusted net income, which are not recognized under U.S. generally
accepted accounting principles. As required by SEC Regulation G,
reconciliations of these measures to amounts reported in FCX's
consolidated financial statements are in the supplemental schedules of
this press release, which are also available on FCX's website, "fcx.com."
|
|
|
Freeport-McMoRan Inc.
|
|
SELECTED OPERATING DATA
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
|
2018
|
|
|
|
MINING OPERATIONS:
|
|
|
|
Production
|
|
|
Sales
|
|
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Morenci (72%)a
|
|
|
|
167
|
|
|
169
|
|
|
156
|
|
|
|
187
|
|
|
|
Bagdad (100%)
|
|
|
|
55
|
|
|
49
|
|
|
51
|
|
|
|
51
|
|
|
|
Safford (100%)
|
|
|
|
28
|
|
|
33
|
|
|
27
|
|
|
|
36
|
|
|
|
Sierrita (100%)
|
|
|
|
36
|
|
|
41
|
|
|
34
|
|
|
|
44
|
|
|
|
Miami (100%)
|
|
|
|
3
|
|
|
4
|
|
|
3
|
|
|
|
5
|
|
|
|
Chino (100%)
|
|
|
|
35
|
|
|
38
|
|
|
37
|
|
|
|
45
|
|
|
|
Tyrone (100%)
|
|
|
|
12
|
|
|
13
|
|
|
12
|
|
|
|
15
|
|
|
|
Other (100%)
|
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
|
1
|
|
|
|
Total North America
|
|
|
|
336
|
|
|
348
|
|
|
320
|
|
|
|
384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South America
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cerro Verde (53.56%)
|
|
|
|
261
|
|
|
243
|
|
|
256
|
|
|
|
242
|
|
|
|
El Abra (51%)
|
|
|
|
38
|
|
|
50
|
|
|
34
|
|
|
|
48
|
|
|
|
Total South America
|
|
|
|
299
|
|
|
293
|
|
|
290
|
|
|
|
290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indonesia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grasberg (48.76%)b
|
|
|
|
145
|
|
|
311
|
|
|
174
|
|
|
|
319
|
|
|
|
Total
|
|
|
|
780
|
|
|
952
|
|
|
784
|
|
c
|
|
993
|
|
c
|
|
Less noncontrolling interests
|
|
|
|
167
|
|
|
167
|
|
|
168
|
|
|
|
166
|
|
|
|
Net
|
|
|
|
613
|
|
|
785
|
|
|
616
|
|
|
|
827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
|
|
|
|
$
|
2.90
|
|
|
|
$
|
3.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America (100%)
|
|
|
|
4
|
|
|
4
|
|
|
7
|
|
|
|
7
|
|
|
|
Indonesia (48.76%)b
|
|
|
|
162
|
|
|
595
|
|
|
235
|
|
|
|
603
|
|
|
|
Consolidated
|
|
|
|
166
|
|
|
599
|
|
|
242
|
|
|
|
610
|
|
|
|
Less noncontrolling interests
|
|
|
|
30
|
|
|
55
|
|
|
44
|
|
|
|
57
|
|
|
|
Net
|
|
|
|
136
|
|
|
544
|
|
|
198
|
|
|
|
553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per ounce
|
|
|
|
|
|
|
|
|
|
$
|
1,291
|
|
|
|
$
|
1,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henderson (100%)
|
|
|
|
4
|
|
|
4
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Climax (100%)
|
|
|
|
4
|
|
|
5
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
North America (100%)a
|
|
|
|
7
|
|
|
7
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Cerro Verde (53.56%)
|
|
|
|
8
|
|
|
6
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Consolidated
|
|
|
|
23
|
|
|
22
|
|
|
22
|
|
|
|
24
|
|
|
|
Less noncontrolling interests
|
|
|
|
4
|
|
|
3
|
|
|
3
|
|
|
|
3
|
|
|
|
Net
|
|
|
|
19
|
|
|
19
|
|
|
19
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
|
|
|
|
$
|
12.69
|
|
|
|
$
|
11.95
|
|
|
|
|
a. Amounts are net of Morenci's undivided joint venture
partners' interests.
b. Effective December 21, 2018, FCX's share ownership in PT
Freeport Indonesia (PT-FI) is 48.76 percent. Through 2022, FCX’s
economic interest in PT-FI is expected to approximate 81 percent.
c. Consolidated sales volumes exclude purchased copper of 117
million pounds in first-quarter 2019 and 74 million pounds in
first-quarter 2018.
|
|
|
Freeport-McMoRan Inc.
|
|
SELECTED OPERATING DATA (continued)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2019
|
|
|
2018
|
|
100% North America Copper Mines
|
|
|
|
|
|
|
|
|
Leach Operations
|
|
|
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
|
|
705,000
|
|
|
674,600
|
|
Average copper ore grade (percent)
|
|
|
|
0.23
|
|
|
0.27
|
|
Copper production (millions of recoverable pounds)
|
|
|
|
226
|
|
|
239
|
|
|
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
|
|
315,600
|
|
|
288,600
|
|
Average ore grades (percent):
|
|
|
|
|
|
|
|
|
Copper
|
|
|
|
0.33
|
|
|
0.35
|
|
Molybdenum
|
|
|
|
0.02
|
|
|
0.02
|
|
Copper recovery rate (percent)
|
|
|
|
87.8
|
|
|
88.0
|
|
Production (millions of recoverable pounds):
|
|
|
|
|
|
|
|
|
Copper
|
|
|
|
176
|
|
|
174
|
|
Molybdenum
|
|
|
|
8
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
100% South America Mining
|
|
|
|
|
|
|
|
|
Leach Operations
|
|
|
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
|
|
166,700
|
|
|
168,000
|
|
Average copper ore grade (percent)
|
|
|
|
0.34
|
|
|
0.33
|
|
Copper production (millions of recoverable pounds)
|
|
|
|
59
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
|
|
386,500
|
|
|
385,500
|
|
Average ore grades (percent):
|
|
|
|
|
|
|
|
|
Copper
|
|
|
|
0.37
|
|
|
0.39
|
|
Molybdenum
|
|
|
|
0.02
|
|
|
0.01
|
|
Copper recovery rate (percent)
|
|
|
|
87.2
|
|
|
79.0
|
|
Production (millions of recoverable pounds):
|
|
|
|
|
|
|
|
|
Copper
|
|
|
|
240
|
|
|
226
|
|
Molybdenum
|
|
|
|
8
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
100% Indonesia Mining
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day):a
|
|
|
|
|
|
|
|
|
Grasberg open pit
|
|
|
|
102,800
|
|
|
125,200
|
|
Deep Ore Zone underground mine
|
|
|
|
30,300
|
|
|
39,400
|
|
Deep Mill Level Zone underground mine
|
|
|
|
6,800
|
|
|
2,600
|
|
Grasberg Block Cave underground mine
|
|
|
|
5,000
|
|
|
4,000
|
|
Big Gossan underground mine
|
|
|
|
5,600
|
|
|
2,400
|
|
Total
|
|
|
|
150,500
|
|
|
173,600
|
|
Average ore grades:
|
|
|
|
|
|
|
|
|
Copper (percent)
|
|
|
|
0.62
|
|
|
1.12
|
|
Gold (grams per metric ton)
|
|
|
|
0.58
|
|
|
1.63
|
|
Recovery rates (percent):
|
|
|
|
|
|
|
|
|
Copper
|
|
|
|
84.7
|
|
|
92.0
|
|
Gold
|
|
|
|
68.7
|
|
|
84.7
|
|
Production (recoverable):
|
|
|
|
|
|
|
|
|
Copper (millions of pounds)
|
|
|
|
145
|
|
|
340
|
|
Gold (thousands of ounces)
|
|
|
|
162
|
|
|
673
|
|
|
|
|
|
|
|
|
|
|
100% Molybdenum Mines
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
|
|
27,700
|
|
|
23,100
|
|
Average molybdenum ore grade (percent)
|
|
|
|
0.16
|
|
|
0.21
|
|
Molybdenum production (millions of recoverable pounds)
|
|
|
|
8
|
|
|
9
|
|
|
a. Amounts represent the approximate average daily throughput
processed at PT-FI mill facilities from each producing mine, related
stockpiles and development activities that result in metal production.
|
|
|
Freeport-McMoRan Inc.
|
|
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
(In Millions, Except Per Share Amounts)
|
|
|
|
Revenuesa
|
|
|
|
$
|
3,792
|
|
|
|
|
|
$
|
4,868
|
|
|
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Production and delivery
|
|
|
|
2,919
|
|
|
b
|
|
|
2,808
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
|
347
|
|
|
|
|
|
451
|
|
|
|
|
Cobalt inventory adjustments
|
|
|
|
57
|
|
|
|
|
|
—
|
|
|
|
|
Total cost of sales
|
|
|
|
3,323
|
|
|
|
|
|
3,259
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
|
112
|
|
|
|
|
|
131
|
|
|
|
|
Mining exploration and research expenses
|
|
|
|
27
|
|
|
|
|
|
21
|
|
|
|
|
Environmental obligations and shutdown costs
|
|
|
|
42
|
|
|
|
|
|
9
|
|
|
|
|
Net gain on sales of assets
|
|
|
|
(33
|
)
|
|
|
|
|
(11
|
)
|
|
|
|
Total costs and expenses
|
|
|
|
3,471
|
|
|
|
|
|
3,409
|
|
|
|
|
Operating income
|
|
|
|
321
|
|
|
|
|
|
1,459
|
|
|
|
|
Interest expense, netc
|
|
|
|
(146
|
)
|
|
|
|
|
(151
|
)
|
|
|
|
Net loss on early extinguishment of debt
|
|
|
|
(6
|
)
|
|
|
|
|
(1
|
)
|
|
|
|
Other income, net
|
|
|
|
14
|
|
|
|
|
|
29
|
|
|
d
|
|
Income from continuing operations before income taxes and equity
in affiliated companies' net losses
|
|
|
|
183
|
|
|
|
|
|
1,336
|
|
|
|
|
Provision for income taxese
|
|
|
|
(105
|
)
|
|
|
|
|
(506
|
)
|
|
|
|
Equity in affiliated companies' net losses
|
|
|
|
(3
|
)
|
|
|
|
|
(2
|
)
|
|
|
|
Net income from continuing operations
|
|
|
|
75
|
|
|
|
|
|
828
|
|
|
|
|
Net gain (loss) from discontinued operationsf
|
|
|
|
1
|
|
|
|
|
|
(11
|
)
|
|
|
|
Net income
|
|
|
|
76
|
|
|
|
|
|
817
|
|
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
(45
|
)
|
|
|
|
|
(125
|
)
|
|
|
|
Net income attributable to common stockholdersg
|
|
|
|
$
|
31
|
|
|
|
|
|
$
|
692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share attributable to common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
$
|
0.02
|
|
|
|
|
|
$
|
0.48
|
|
|
|
|
Discontinued operations
|
|
|
|
—
|
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
$
|
0.02
|
|
|
|
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
1,451
|
|
|
|
|
|
1,449
|
|
|
|
|
Diluted
|
|
|
|
1,457
|
|
|
|
|
|
1,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
|
|
$
|
0.05
|
|
|
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a. Includes adjustments to provisionally priced
concentrate and cathode sales. For a summary of adjustments to
provisionally priced copper sales, refer to the supplemental schedule,
"Derivative Instruments," on page VII.
b. Includes other charges totaling $22 million, which are
summarized in the supplemental schedules, "Adjusted Net Income," on page
VI.
c. Consolidated interest costs (before capitalization)
totaled $178 million in first-quarter 2019 and $176 million in
first-quarter 2018.
d. Includes $24 million of interest received with the
refund of PT-FI's prior years' tax receivables. Refer to the
supplemental schedule, "Adjusted Net Income," on page VI.
e. For a summary of FCX's provision for income taxes,
refer to the supplemental schedule, "Income Taxes," on page VI.
f. Primarily reflects adjustments to the estimated fair
value of contingent consideration related to the 2016 sale of FCX’s
interest in TF Holdings Limited, which will continue to be adjusted
through December 31, 2019.
g. FCX defers recognizing profits on intercompany sales
until final sales to third parties occur. For a summary of net impacts
from changes in these deferrals, refer to the supplemental schedule,
"Deferred Profits," on page VII.
|
|
|
Freeport-McMoRan Inc.
|
|
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
|
December 31, 2018
|
|
|
|
|
|
(In Millions)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
2,833
|
|
|
|
$
|
4,217
|
|
|
Trade accounts receivable
|
|
|
|
781
|
|
|
|
829
|
|
|
Income and other tax receivables
|
|
|
|
410
|
|
|
|
493
|
|
|
Inventories:
|
|
|
|
|
|
|
|
|
Materials and supplies, net
|
|
|
|
1,595
|
|
|
|
1,528
|
|
|
Mill and leach stockpiles
|
|
|
|
1,374
|
|
|
|
1,453
|
|
|
Product
|
|
|
|
1,492
|
|
|
|
1,778
|
|
|
Other current assets
|
|
|
|
502
|
|
|
|
422
|
|
|
Total current assets
|
|
|
|
8,987
|
|
|
|
10,720
|
|
|
Property, plant, equipment and mine development costs, net
|
|
|
|
28,497
|
|
|
|
28,010
|
|
|
Long-term mill and leach stockpiles
|
|
|
|
1,343
|
|
|
|
1,314
|
|
|
Other assets
|
|
|
|
2,232
|
|
|
|
2,172
|
|
|
Total assets
|
|
|
|
$
|
41,059
|
|
|
|
$
|
42,216
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
$
|
2,599
|
|
|
|
$
|
2,625
|
|
|
Accrued income taxes
|
|
|
|
150
|
|
|
|
165
|
|
|
Current portion of environmental and asset retirement obligations
|
|
|
|
422
|
|
|
|
449
|
|
|
Dividends payable
|
|
|
|
73
|
|
|
|
73
|
|
|
Current portion of debt
|
|
|
|
3
|
|
|
|
17
|
|
|
Total current liabilities
|
|
|
|
3,247
|
|
|
|
3,329
|
|
|
Long-term debt, less current portion
|
|
|
|
9,902
|
|
|
|
11,124
|
|
|
Deferred income taxes
|
|
|
|
4,067
|
|
|
|
4,032
|
|
|
Environmental and asset retirement obligations, less current portion
|
|
|
|
3,632
|
|
|
|
3,609
|
|
|
Other liabilities
|
|
|
|
2,370
|
|
|
|
2,230
|
|
|
Total liabilities
|
|
|
|
23,218
|
|
|
|
24,324
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
158
|
|
|
|
158
|
|
|
Capital in excess of par value
|
|
|
|
25,963
|
|
|
|
26,013
|
|
|
Accumulated deficit
|
|
|
|
(12,010
|
)
|
|
|
(12,041
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
(594
|
)
|
|
|
(605
|
)
|
|
Common stock held in treasury
|
|
|
|
(3,734
|
)
|
|
|
(3,727
|
)
|
|
Total stockholders' equity
|
|
|
|
9,783
|
|
|
|
9,798
|
|
|
Noncontrolling interestsa
|
|
|
|
8,058
|
|
|
|
8,094
|
|
|
Total equity
|
|
|
|
17,841
|
|
|
|
17,892
|
|
|
Total liabilities and equity
|
|
|
|
$
|
41,059
|
|
|
|
$
|
42,216
|
|
|
|
|
|
|
|
|
|
|
|
|
a. Includes $4.6 billion associated with the December 2018 PT-FI
transaction.
|
|
|
Freeport-McMoRan Inc.
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
(In Millions)
|
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
76
|
|
|
|
$
|
817
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
|
347
|
|
|
|
451
|
|
|
Cobalt inventory adjustments
|
|
|
|
57
|
|
|
|
—
|
|
|
Net gain on sales of assets
|
|
|
|
(33
|
)
|
|
|
(11
|
)
|
|
Stock-based compensation
|
|
|
|
29
|
|
|
|
49
|
|
|
Net charges for environmental and asset retirement obligations,
including accretion
|
|
|
|
64
|
|
|
|
53
|
|
|
Payments for environmental and asset retirement obligations
|
|
|
|
(46
|
)
|
|
|
(38
|
)
|
|
Net charges for defined pension and postretirement plans
|
|
|
|
26
|
|
|
|
18
|
|
|
Pension plan contributions
|
|
|
|
(16
|
)
|
|
|
(24
|
)
|
|
Net loss on early extinguishment of debt
|
|
|
|
6
|
|
|
|
1
|
|
|
Deferred income taxes
|
|
|
|
33
|
|
|
|
22
|
|
|
(Gain) loss on discontinued operations
|
|
|
|
(1
|
)
|
|
|
11
|
|
|
(Increase) decrease in long-term mill and leach stockpiles
|
|
|
|
(29
|
)
|
|
|
22
|
|
|
Other, net
|
|
|
|
48
|
|
|
|
19
|
|
|
Changes in working capital and other tax payments:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
19
|
|
|
|
136
|
|
|
Inventories
|
|
|
|
221
|
|
|
|
(142
|
)
|
|
Other current assets
|
|
|
|
42
|
|
|
|
(42
|
)
|
|
Accounts payable and accrued liabilities
|
|
|
|
(247
|
)
|
|
|
(96
|
)
|
|
Accrued income taxes and timing of other tax payments
|
|
|
|
(62
|
)
|
|
|
123
|
|
|
Net cash provided by operating activities
|
|
|
|
534
|
|
|
|
1,369
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
North America copper mines
|
|
|
|
(210
|
)
|
|
|
(92
|
)
|
|
South America
|
|
|
|
(61
|
)
|
|
|
(67
|
)
|
|
Indonesia
|
|
|
|
(319
|
)
|
|
|
(203
|
)
|
|
Molybdenum mines
|
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
Other
|
|
|
|
(28
|
)
|
|
|
(39
|
)
|
|
Proceeds from sales of oil and gas properties
|
|
|
|
84
|
|
|
|
—
|
|
|
Intangible water rights and other, net
|
|
|
|
(8
|
)
|
|
|
(90
|
)
|
|
Net cash used in investing activities
|
|
|
|
(546
|
)
|
|
|
(492
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from debt
|
|
|
|
114
|
|
|
|
122
|
|
|
Repayments of debt
|
|
|
|
(1,356
|
)
|
|
|
(1,633
|
)
|
|
Cash dividends and distributions paid:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
(73
|
)
|
|
|
—
|
|
|
Noncontrolling interests
|
|
|
|
(9
|
)
|
|
|
(80
|
)
|
|
Stock-based awards net (payments) proceeds
|
|
|
|
(7
|
)
|
|
|
3
|
|
|
Net cash used in financing activities
|
|
|
|
(1,331
|
)
|
|
|
(1,588
|
)
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash, cash equivalents, restricted cash and
restricted cash equivalents
|
|
|
|
(1,343
|
)
|
|
|
(711
|
)
|
|
Cash, cash equivalents, restricted cash and restricted cash
equivalents at beginning of year
|
|
|
|
4,455
|
|
|
|
4,710
|
|
|
Cash, cash equivalents, restricted cash and restricted cash
equivalents at end of perioda
|
|
|
|
$
|
3,112
|
|
|
|
$
|
3,999
|
|
|
|
|
|
|
|
|
|
|
|
|
a. Includes restricted cash and restricted cash
equivalents of $279 million at March 31, 2019, and $250 million at
March 31, 2018.
Freeport-McMoRan Inc.
ADJUSTED NET INCOME
Adjusted net income is intended to provide investors and others with
information about FCX's recurring operating performance. This
information differs from net income attributable to common stock
determined in accordance with U.S. generally accepted accounting
principles (GAAP) and should not be considered in isolation or as a
substitute for measures of performance determined in accordance with
U.S. GAAP. FCX's adjusted net income follows, which may not be
comparable to similarly titled measures reported by other companies (in
millions, except per share amounts).
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
Pre-tax
|
|
|
|
After-taxa
|
|
|
|
Per Share
|
|
|
Pre-tax
|
|
|
After-taxa
|
|
|
Per Share
|
|
Net income attributable to common stock
|
|
|
|
N/A
|
|
|
|
|
$
|
31
|
|
|
|
|
$
|
0.02
|
|
|
|
N/A
|
|
|
|
$
|
692
|
|
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cobalt inventory adjustments
|
|
|
|
(57
|
)
|
|
|
|
(26
|
)
|
|
|
|
(0.02
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other charges
|
|
|
|
(22
|
)
|
|
b
|
|
(10
|
)
|
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net adjustments to environmental obligations and related
litigation reserves
|
|
|
|
(35
|
)
|
|
|
|
(35
|
)
|
|
|
|
(0.02
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net gain on sales of assets
|
|
|
|
33
|
|
|
c
|
|
33
|
|
|
|
|
0.02
|
|
|
|
11
|
|
|
|
11
|
|
|
|
0.01
|
|
|
Net loss on early extinguishment of debt
|
|
|
|
(6
|
)
|
|
|
|
(5
|
)
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
PT-FI interest on tax refunds
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
24
|
|
|
|
13
|
|
|
|
0.01
|
|
|
Net tax credits
|
|
|
|
N/A
|
|
|
|
|
6
|
|
|
d
|
|
—
|
|
|
|
N/A
|
|
|
|
—
|
|
|
|
—
|
|
|
Gain (loss) on discontinued operations
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
—
|
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
$
|
(86
|
)
|
|
|
|
$
|
(36
|
)
|
|
|
|
$
|
(0.03
|
)
|
|
|
$
|
23
|
|
|
|
$
|
13
|
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to common stock
|
|
|
|
N/A
|
|
|
|
|
$
|
67
|
|
|
|
|
$
|
0.05
|
|
|
|
N/A
|
|
|
|
$
|
679
|
|
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a. Reflects impact to FCX net income attributable to
common stock (i.e., net of any taxes and noncontrolling interests).
b. Includes charges primarily associated with
weather-related issues at El Abra and for non-recurring employee costs
at PT-FI.
c. Includes a $20 million gain on sales of oil and gas
assets and $13 million for adjustments to the fair value of potential
contingent consideration related to the 2016 sale of onshore California
oil and gas properties. FCX would receive additional contingent
consideration related to this transaction consisting of $50 million per
year for 2019 and 2020 if the price of Brent crude oil averages over $70
per barrel in each of these calendar years.
d. Refer to "Income Taxes" below for further discussion
of net tax credits.
INCOME TAXES
Following is a summary of the approximate amounts used in the
calculation of FCX's consolidated income tax provision (in millions,
except percentages):
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2019
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
|
|
|
|
|
|
|
|
|
|
Income Tax
|
|
|
|
|
|
Income
|
|
|
Effective
|
|
|
|
(Provision)
|
|
|
|
|
|
|
Effective
|
|
|
(Provision)
|
|
|
|
|
|
(Loss)a
|
|
|
Tax Rate
|
|
|
|
Benefit
|
|
|
|
Incomea
|
|
|
Tax Rate
|
|
|
Benefit
|
|
U.S.b
|
|
|
|
$
|
(97
|
)
|
|
|
1
|
%
|
|
|
|
$
|
1
|
|
|
|
|
$
|
170
|
|
|
(2
|
)%
|
|
|
$
|
4
|
|
|
South America
|
|
|
|
263
|
|
|
|
40
|
%
|
|
|
|
(105
|
)
|
|
|
|
183
|
|
|
39
|
%
|
|
|
(72
|
)
|
|
Indonesia
|
|
|
|
79
|
|
|
|
33
|
%
|
|
|
|
(26
|
)
|
|
c
|
|
933
|
|
|
43
|
%
|
|
|
(401
|
)
|
|
Eliminations and other
|
|
|
|
(62
|
)
|
|
|
N/A
|
|
|
|
|
10
|
|
|
|
|
50
|
|
|
N/A
|
|
|
|
(3
|
)
|
|
Rate adjustmentd
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
|
15
|
|
|
|
|
—
|
|
|
N/A
|
|
|
|
(34
|
)
|
|
Continuing operations
|
|
|
|
$
|
183
|
|
|
|
57
|
%
|
|
e
|
|
$
|
(105
|
)
|
|
|
|
$
|
1,336
|
|
|
38
|
%
|
|
|
$
|
(506
|
)
|
|
|
a. Represents income from continuing operations before
income taxes and equity in affiliated companies' net losses.
b. In addition to FCX's North America mining operations,
the U.S. jurisdiction reflects corporate-level expenses, which includes
interest expense associated with senior notes, general and
administrative expenses, and environmental obligations and shutdown
costs.
c. Includes a tax credit of $8 million ($6 million net of
noncontrolling interest) associated with the reduction in PT-FI's
statutory tax rates in accordance with its special mining license (IUPK).
d. In accordance with applicable accounting rules, FCX
adjusts its interim provision for income taxes equal to its consolidated
tax rate.
e. FCX's first-quarter 2019 consolidated effective income
tax rate is a function of the combined effective tax rates for the
jurisdictions in which FCX operates, excluding the U.S. jurisdiction.
Because FCX's U.S. jurisdiction generated net losses in first-quarter
2019 that will not result in a realized tax benefit, applicable
accounting rules require FCX to adjust its estimated annual effective
tax rate to exclude the impact of U.S. net losses.
Assuming achievement of current sales volume and cost estimates and
average prices of $3.00 per pound for copper, $1,300 per ounce for gold
and $13.00 per pound for molybdenum for the remainder of 2019, FCX
estimates its consolidated effective tax rate for the year 2019 would
approximate 41 percent (comprised of an estimated effective rate of 41
percent on South America income, 38 percent on Indonesia income and 0
percent for the U.S.). Variations in the relative proportions of
jurisdictional income result in fluctuations to FCX's consolidated
effective income tax rate. Because of FCX's U.S. tax position, it does
not record a financial statement impact for income or losses generated
in the U.S., therefore, the consolidated effective tax rate is generally
higher than the international rates at lower copper prices and lower
than international rates at higher copper prices.
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