Freeport-mcmoran, Inc. · NYSE:FCX
Freeport-mcmoran — Q2 2019 Earnings Presentation
31 slides from Freeport-mcmoran's earnings presentation, Jul 24, 2019
Slide 1: 2nd Quarter 2019 Earnings Conference Call
2nd Quarter 2019 Earnings Conference Call July 24, 2019 fcx.com
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements This presentation 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 relati
Slide 3: 2Q19 Highlights
2Q19 Highlights Americas Operations Lone Star Project Located in Arizona, USA Strong Performance On Track for First Copper Innovation/Advanced Production by YE 2020 Analytics Gaining Momentum Low Capital Intensive Oxide Expansion Opportunity Grasberg Open Pit Grasberg Underground Mine Se
Slide 4: Executing The Plan
Executing The Plan Growing 2019e v. 2021e Sales ~30% ~80% (1) Profile Increase Increase in Copper in Gold Declining Unit Net ~25% (2) Reduction Cash Costs in Unit Costs Strong Financial (3) 100%+ With Leverage Results & EBITDA Increase to Improved Copper Market Conditions Generation in EBITDA Value
Slide 5: Grasberg Underground
Grasberg Underground Initiating Production Phase Established Long-lived Minerals District Long History and an Industry Copper Gold (bn lbs) (mm ozs) Leader in Block Caving Historical Production 36 54 Expected Future Production 36 30 Significant Investments & Planning for Underground Era & Since
Slide 6: World Class Block Cave Design
World Class Block Cave Design Substantial Infrastructure in Place to Support Large-Scale Production Grasberg Block Cave DMLZ Ramp-up Schedule Ramp-up Schedule (000’s t/d of Ore) (000’s t/d of Ore) 130 80 80 103 59 64 28 30 9 8 3 Cave Fronts 2 Cave Fronts 2019e 2020e 2021e 2022e 2023e 2019e 2020e 202
Slide 7: Hitting the Milestones
Hitting the Milestones Positive Progress in 2Q19 Initiated Caving in 2 New Production Blocks (PB) in Grasberg Block Cave and 1 New PB in DMLZ Undercutting (square meters) Production Blocks Grasberg BC DMLZ Grasberg BC DMLZ 2Q19 20,000 +25% Above Forecast 4,468 4% Above Forecast 1Q19 1 . 1 2Q19 3 2 C
Slide 8: Lone Star Leach Development in Arizona
Lone Star Leach Development in Arizona Building Value in New U.S. Cornerstone Asset Low-Risk Development in Established July 2019 Mining District; Wholly owned Located 8 miles North of Safford; 18 miles Southwest of Morenci $850mm Initial Project (~50% Complete) Estimated Production: 200 mm
Slide 9: Driving Productivity Through Innovation
Driving Productivity Through Innovation Leveraging Bagdad Additional Data Analytics Case Study Opportunity Rapid Data Analysis +10-15% Increase in Implement Across Portfolio Agile Methodology Throughput Potential to Add 200 mm lbs Empowers Multi- +1% Point Recovery of Copper per annum
Slide 10: Copper Market
Copper Market Favorable Fundamental Outlook tonnes $/lb Trade Issues and Macro 1,400,000 Copper Price $3.30 Sentiment Impacting Price and Short-term Demand 1,200,000 $3.10 Market Remains Relatively 1,000,000 $2.90 Balanced Mine Disruptions in First 800,000 $2.70 Half Double Year Ago Period 600
Slide 11: Proven Assets. Fundamental Value.
“Proven Assets. Fundamental Value.” High-Quality Assets with Proven Track Record - Difficult to Replicate FCX Cu Eq. Cost to Develop Implied Replacement Capacity(1) Green Field Capacity Value of Current Capacity ~4.5 bn lbs $8 - $10/lb $36-$45 bn (FCX Equity Share) FCX is Well Positioned Strong/
Slide 12: Financial Outlook
Financial Outlook PROVEN ASSETS. FUNDAMENTAL VALUE. FREEPORT-McMoRan
Slide 13: Sales Profile
Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 5 3 2.4 4.2 2 4 3.8 1.5 3.5 0.85 3.3 1 0.8 3 0 2018 2019e 2020e 2021e Note: Consolidated gold sales include 223k ozs in 2018, 156k ozs in 2019e, 155k ozs in 2020e and 275k ozs in 2021e for noncontrolling interest. 2 Molybdenum Sales (
Slide 14: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices ($ in bn) EBITDA ($1,400/oz Gold, $12/lb Molybdenum) $10 $8 $6 $4 Transition $2 Year Average 2020e ’21e/’22e $0 Cu $3.00/lb Cu $3.25/lb Cu $3.50/lb Operating Cash Flow Excludes Working Capital Changes ($1,400/oz Gold, $12/lb Molybdenum) $8 $6 $4 Transiti
Slide 15: Consolidated Capital Expenditures
Consolidated Capital Expenditures ($ in bn) Net of Scheduled Contributions $2.6 $2.6 $2.5 (2) $2.5(2) $2.0 $1.2(1) $1.6(1) $1.6(1) Major Mining Projects $0.8 $1.0 $1.0 Other Mining 2018 2019e 2020e (1) Major mining projects include CAPEX associated with Grasberg underground development ($1.0 bn in 2
Slide 16: Strong Financial Position & Liquidity
Strong Financial Position & Liquidity ($ in bn) Liquidity Position as of 6/30/19 Consolidated Cash $2.6 $20.2 Undrawn Credit Facility $3.5 Total Liquidity $6.1 $7.3 Net Debt* YE 2015 6/30/19 No Debt Maturities Through 2020 * Net debt equals consolidated debt less consolidated cash. See Cautionary St
Slide 17: Executing Clearly Defined Strategy to Build Value for Shareholders
Executing Clearly Defined Strategy to Build Value for Shareholders Substantial Growth in Cash Flow Growing Sales Continued Profile Execution of Grasberg Declining Unit Underground Costs Innovation-Driven Ramp-up Doubling EBITDA Productivity & Cash Flow Improvements (2019e v. 2021e) Completion
Slide 18: Reference Slides
Reference Slides PROVEN ASSETS. FUNDAMENTAL VALUE. FREEPORT-McMoRan
Slide 19: Financial Highlights
Financial Highlights Sales Data 2Q19 1H19 Copper Consolidated Volumes (mm lbs) 807 1,591 Average Realization (per lb) $2.75 $2.78 Site Production & Delivery Costs (per lb) $2.26 $2.21 Unit Net Cash Costs (per lb) $1.92 $1.85 Gold Consolidated Volumes (000’s ozs) 189 431 Average Realization (per oz)
Slide 20: 2Q19 Mining Operating Summary
2Q19 Mining Operating Summary North South 2Q19 Unit Production Costs (per lb of Cu) America America Indonesia Consolidated Cash Unit Costs Site Production & Delivery, excluding adjustments $2.05 $1.92 $3.40 $2.26 By-product Credits (0.26) (0.28) (1.69) (0.54) Treatment Charges 0.11 0.18 0.26 0.16 Ro
Slide 21: 2019e Outlook
2019e Outlook Copper: 3.3 Billion lbs. Sales Gold: 0.8 Million ozs. Outlook Molybdenum: 94 Million lbs. Unit Cost Site Production & Delivery 2019e: $2.10/lb (3Q19e: $1.98/lb) of Copper After By-product Credits 2019e: $1.75/lb(1) (3Q19e: $1.63/lb) Operating ~$1.9 Billion @ $2.75/lb Copper
Slide 22: 2019e Operating Estimates
2019e Operating Estimates North South 2019e Unit Production Costs (per lb of Cu) America America Indonesia Consolidated Cash Unit Costs (1) Site Production & Delivery (2) $2.05 $1.78 $2.85 $2.10 By-product Credits (0.25) (0.29) (1.77) (0.56) Treatment Charges 0.11 0.18 0.25 0.17 Royalties & Export D
Slide 23: PT-FI Underground Ramp-up
PT-FI Underground Ramp-up Contribution by Deposit Grasberg open pit DOZ Big Gossan DMLZ Grasberg Block Cave sberg & ng Liar Grasberg open pit DMLZ 216 217 an DOZ Ore Milled Grasberg Block Cave (000’s t/d) Kucing Liar Amole 160 80K t/d 2,900 m elev DOZ Big 80K t/d Kucing Liar Spur Gossan Grasberg MLA
Slide 24: PT-FI Mine Plan
PT-FI Mine Plan Metal Sales, 2019e-2023e Copper 2019e – 2023e Gold 2019e – 2023e Total: 6.2 billion lbs copper Total: 6.8 million ozs gold Annual Average: 1.24 billion lbs Annual Average: 1.35 million ozs 1.8 1.8 1.7 1.7 1.5 1.4 Transition Years 0.83 0.78 0.83 0.63 Cu Au bn mm lbs ozs 2019e 2020e 20
Slide 25: 2019e Quarterly Sales
2019e Quarterly Sales Copper Sales (million lbs) Gold Sales (thousand ozs) 900 300 830 840 242 230 784 807 189 200 180 100 600 0 1Q19 2Q19 3Q19e 4Q19e Note: Consolidated gold sales include approximately 44k ozs in 1Q19, 35k ozs in 2Q19, 43k ozs in 3Q19e and 34k ozs in 4Q19e for noncontrolling intere
Slide 26: Sensitivities
Sensitivities (US$ millions) Operating 2020e Change EBITDA Cash Flow Copper: +/- $0.10/lb $335 $265 Molybdenum: +/- $1.00/lb $85 $75 Gold: +/- $50/ounce $40 $20 Currencies: (1) +/- 10% $195 $135 2021e-2022e Avg. Change Copper: +/- $0.10/lb $425 $330 Molybdenum: +/- $1.00/lb $90 $85 Gold: +/- $50/oun
Slide 27: 2Q19 Copper Realization & 3Q19 Guidance
2Q19 Copper Realization & 3Q19 Guidance 2Q19 LME Average $2.77/lb Copper Price 3-Mo. Fwd Price for Copper $2.71/lb at the End of June $2.75/lb(1) FCX 2Q19 Consolidated Copper Price Realization (Generally, 50/50 Weight of Qtrly Avg and 3-mo Forward Price at End of Period) FCX 2Q19 Prior Period Revenu
Slide 28: FCX Debt Maturities as of 6/30/19
FCX Debt Maturities as of 6/30/19 (US$ billions) Total Debt & Cash at 6/30/19 $8 Actual FCX Revolver $ - Senior Notes 9.0 Cerro Verde Credit Facility 0.8 $6 Other Debt 0.1 Total Debt $ 9.9 Consolidated Cash $ 2.6 $4 $3.1 $2.7 $2.4 CV Non-recourse $2 5.40% & 5.45% $0.9 $0.8 Sr. Notes CV Non-recourse
Slide 29: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (in millions) 12 mos ended 2Q19 6/30/19 Net (Loss) Income Attributable to Common Stock – Continuing Operations $ (72) $999 Interest expense, net 132 930 Income tax (benefit) provision (15) 60 Depreciation, depletion and amortization 352 1,560 Net loss (gain) on sales o
Slide 30: Underground Block Cave Mine Development
Underground Block Cave Mine Development Block Cave Development Diagram Air Gap Cave Muck Pile Drill Rings Drill Rig Undercut Lvl Active Future Drawbell Drawbell Slot Raise Drawpoints Grizzly & Orepass Extraction Level 30
Slide 31: Underground Block Cave Mine Development Glossary of Key Terms
Underground Block Cave Mine Development Glossary of Key Terms Air Gap space between the cave muck pile and the uncaved ore above it Block Caving a mass mining method that primarily utilizes the action of gravity for extraction and fragmentation of the ore By undercutting about 3-5% of the bottom of