FCX Freeport McMoRan Inc

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

▪ Net income attributable to common stock for fourth-quarter 2011 was $640 million, $0.67 per share, compared with net income of $1.5 billion, $1.63 per share, for fourth-quarter 2010. Net income attributable to common stock for the year 2011 was $4.6 billion, $4.78 per share, compared with $4.3 billion, $4.57 per share, for the year 2010.

▪ Consolidated sales from mines for fourth-quarter 2011 totaled 823 million pounds of copper, 133 thousand ounces of gold and 19 million pounds of molybdenum, compared with 941 million pounds of copper, 590 thousand ounces of gold and 17 million pounds of molybdenum for fourth-quarter 2010. Consolidated sales for the year 2011 totaled 3.7 billion pounds of copper, 1.4 million ounces of gold and 79 million pounds of molybdenum, compared with 3.9 billion pounds of copper, 1.9 million ounces of gold and 67 million pounds of molybdenum for the year 2010.

▪ Consolidated sales from mines for the year 2012 are expected to approximate 3.8 billion pounds of copper, 1.2 million ounces of gold and 80 million pounds of molybdenum, including 875 million pounds of copper, 425 thousand ounces of gold and 20 million pounds of molybdenum for first-quarter 2012.

▪ Consolidated unit net cash costs (net of by-product credits) averaged $1.57 per pound of copper for fourth-quarter 2011, compared with $0.53 per pound for fourth-quarter 2010, and $1.01 per pound for the year 2011, compared with $0.79 per pound for the year 2010. Based on current sales volume and cost estimates and assuming average prices of $1,600 per ounce for gold and $13 per pound for molybdenum, consolidated unit net cash costs (net of by-product credits) are estimated to average $1.38 per pound of copper for the year 2012.

▪ Operating cash flows totaled $746 million for fourth-quarter 2011 and $6.6 billion for the year 2011, compared with $2.1 billion for fourth-quarter 2010 and $6.3 billion for the year 2010. Based on current sales volume and cost estimates and assuming average prices of $3.50 per pound for copper, $1,600 per ounce for gold and $13 per pound for molybdenum, operating cash flows are estimated to approximate $4.7 billion for the year 2012.

▪ Capital expenditures totaled $785 million for fourth-quarter 2011 and $2.5 billion for the year 2011, compared with $535 million for fourth-quarter 2010 and $1.4 billion for the year 2010. Capital expenditures are expected to approximate $4.0 billion for the year 2012, including $2.4 billion for major projects and $1.6 billion for sustaining capital.

▪ At December 31, 2011, total debt approximated $3.5 billion and consolidated cash approximated $4.8 billion. During the year 2011, FCX repaid $1.2 billion in debt and paid common stock dividends totaling $1.4 billion ($1.50 per common share).

▪ FCX's preliminary estimate of consolidated recoverable proven and probable reserves at December 31, 2011, totaled 119.7 billion pounds of copper, 33.9 million ounces of gold and 3.42 billion pounds of molybdenum.

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported fourth-quarter 2011 net income attributable to common stock of $640 million, $0.67 per share, compared with $1.5 billion, $1.63 per share, for fourth-quarter 2010. For the year 2011, FCX reported net income attributable to common stock of $4.6 billion, $4.78 per share, compared with $4.3 billion, $4.57 per share, for the year 2010.

James R. Moffett, Chairman of the Board, and Richard C. Adkerson, President and Chief Executive Officer, said, "FCX's fourth-quarter results reflect strong operating performance in the Americas and in Africa, and were unfavorably impacted by disruptions at our Grasberg operations in Indonesia. Despite the fourth-quarter disruptions, we achieved record financial results in 2011. We are pleased to have reached agreement with the union at the Grasberg mine and with the accomplishments of our team in completing pipeline repairs. We are taking steps to restore full operations. We are continuing to advance our growth projects which are expected to result in meaningful increases to copper and molybdenum production in future periods. Our exploration programs continue to identify opportunities to grow our reserve base. We ended the year with significantly more cash than debt and have a positive outlook for the future prospects of our business."

         

SUMMARY FINANCIAL AND MINING OPERATING DATA

  Three Months Ended Years Ended December 31, December 31,   2011     2010 2011     2010 Financial Data (in millions, except per share amounts) Revenuesa $ 4,162 $ 5,603 $ 20,880 $ 18,982 Operating incomeb $ 1,297

c

$ 3,097 $ 9,140

c

$ 9,068 Net income attributable to common stock $ 640

c

$ 1,549

d

$ 4,560

c,d,e

$ 4,273

d

Diluted net income per share of common stock $ 0.67

c

$ 1.63

d,f

$ 4.78

c,d,e

$ 4.57

d,f

Diluted weighted-average common shares outstanding 953 953

f

955 949

f

Operating cash flows $ 746

g

$ 2,055

g

$ 6,620

g

$ 6,273

g

Capital expenditures $ 785 $ 535 $ 2,534 $ 1,412   Mining Operating Data Copper (millions of recoverable pounds) Production 823 1,007 3,691 3,908 Sales, excluding purchases 823 941 3,698 3,896 Average realized price per pound $ 3.42 $ 4.18 $ 3.86 $ 3.59 Site production and delivery costs per poundh $ 1.96

c

$ 1.46 $ 1.72

c

$ 1.40 Unit net cash costs per poundh $ 1.57

c

$ 0.53 $ 1.01

c

$ 0.79 Gold (thousands of recoverable ounces) Production 181 629 1,383 1,886 Sales, excluding purchases 133 590 1,378 1,863 Average realized price per ounce $ 1,656 $ 1,398 $ 1,583 $ 1,271 Molybdenum (millions of recoverable pounds) Production 18 19 83 72 Sales, excluding purchases 19 17 79 67 Average realized price per pound $ 15.08 $ 16.60 $ 16.98 $ 16.47    

a.

Includes the impact of adjustments to provisionally priced concentrate and cathode sales recognized in prior periods (refer to discussion on page IV).

b.

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

c.

Includes charges totaling $116 million ($50 million to net income attributable to common stock or $0.05 per share) for fourth-quarter 2011 and the year 2011 primarily associated with signing bonuses for new labor agreements and other employee costs at PT Freeport Indonesia, Cerro Verde and El Abra. These charges impacted FCX's consolidated unit costs by $0.14 per pound of copper for fourth-quarter 2011 and $0.03 per pound of copper for the year 2011.

d.

Includes net losses on early extinguishment of debt totaling $3 million (less than $0.01 per share) in fourth-quarter 2010, $60 million ($0.06 per share) for the year 2011, and $71 million ($0.07 per share) for the year 2010.

e.

Includes additional taxes of $49 million ($0.05 per share) for the year 2011 associated with Peru's new mining tax and royalty regime. For further discussion refer to the supplemental schedule, "Provision for Income Taxes," on page XXVI, which is available on FCX's website, "www.fcx.com."

f.

Amounts have been adjusted to reflect the February 1, 2011, two-for-one stock split.

g.

Includes working capital uses of $335 million for fourth-quarter 2011, $305 million for fourth-quarter 2010, $461 million for the year 2011 and $834 million for the year 2010.

h.

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

 

OPERATIONS

Consolidated. Fourth-quarter 2011 consolidated copper sales of 823 million pounds of copper and 133 thousand ounces of gold were lower than October 2011 estimates of 915 million pounds of copper and 305 thousand ounces of gold and the fourth-quarter 2010 sales of 941 million pounds of copper and 590 thousand ounces of gold, primarily because of labor disruptions and the temporary suspension of milling operations at PT Freeport Indonesia as a result of damage to the concentrate and fuel pipelines. Copper and gold sales were higher than the revised December 2011 estimates of 800 million pounds of copper and 105 thousand ounces of gold, primarily because of higher Grasberg production and timing of shipments, principally in North America. The estimated impact of the labor and pipeline disruptions, net to PT Freeport Indonesia, totaled 165 million pounds of copper and 170 thousand ounces of gold for fourth-quarter 2011, and 235 million pounds of copper and 275 thousand ounces of gold for the year 2011.

Fourth-quarter 2011 consolidated molybdenum sales of 19 million pounds were higher than the October 2011 estimate of 18 million pounds and fourth-quarter 2010 sales of 17 million pounds.

PT Freeport Indonesia's milling operations were temporarily suspended during fourth-quarter 2011 because of damage to concentrate and fuel pipelines resulting from civil unrest that occurred during the course of the strike. The financial terms of a new two-year labor agreement for PT Freeport Indonesia were reached in mid-December 2011. Repairs to the damaged pipelines are substantially complete and PT Freeport Indonesia has begun ramping up production. PT Freeport Indonesia is working cooperatively with the Government of Indonesia to address security issues. Maintaining security is a requirement of returning to normal operations. Mobilization of the workforce is in progress and full operations are expected to be restored during first-quarter 2012.

Consolidated sales from mines for the year 2012 are expected to approximate 3.8 billion pounds of copper, 1.2 million ounces of gold and 80 million pounds of molybdenum, including 875 million pounds of copper, 425 thousand ounces of gold and 20 million pounds of molybdenum in first-quarter 2012. FCX's projected 2012 copper sales volumes are expected to be higher, compared to 2011, primarily because of higher production from North America and Indonesia, partly offset by slightly lower production in South America. Gold sales in 2012 are projected to be lower than 2011 sales because of mine sequencing in Indonesia. Molybdenum sales in 2012 are expected to be similar to 2011, with higher production from primary molybdenum mines offset by lower production from FCX's North and South America copper mines. The achievement of projected 2012 sales volumes depends on a number of factors, including the timing of restoring normal operations at Grasberg following the extended disruption.

As anticipated, consolidated average unit net cash costs (net of by-product credits) of $1.57 per pound of copper in fourth-quarter 2011 were higher than unit net cash costs of $0.53 per pound in fourth-quarter 2010 primarily because of lower copper and gold volumes in Indonesia. Fourth-quarter 2011 consolidated unit net cash costs include $116 million ($0.14 per pound) primarily related to signing bonuses for new labor agreements and other employee costs in Indonesia and South America. Higher unit net cash costs also reflected higher mining and input costs in North and South America.

Assuming average prices of $1,600 per ounce of gold and $13 per pound of molybdenum and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for FCX's copper mining operations are expected to average approximately $1.38 per pound of copper for the year 2012. Consolidated unit net cash costs for 2012 are expected to be higher than in 2011 because of higher site production and delivery costs associated with labor, energy and other inputs, and lower by-product credits, partly offset by higher copper volumes. Quarterly unit net cash costs vary with fluctuations in sales volumes and average realized prices for gold and molybdenum. The impact of price changes 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 $0.02 per pound for each $2 per pound change in the average price of molybdenum.

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

Operating and Development Activities. During 2010, FCX initiated plans to increase production at its North America copper mines, which had been curtailed in late 2008 because of weak market conditions. Projects included restarting milling operations and increasing mining rates at Morenci and Chino, and restarting the Miami mine. The project at Morenci is complete with an incremental impact of 125 million pounds of copper per year, and the ramp-up activities at Miami and Chino are continuing. Production at Miami totaled 66 million pounds of copper in 2011 and is expected to be similar in 2012. Production at Chino, which produced 69 million pounds of copper in 2011, is expected to increase to approximately 200 million pounds of copper per year by 2014.

FCX also has a number of opportunities to invest in additional production capacity at several of its North America copper mines. Positive exploration results in recent years indicate the potential for additional sulfide development in North America.

At Morenci, FCX is advancing a feasibility study to expand mining and milling capacity to process additional sulfide ores identified through positive exploratory drilling. This project, which would require significant investment, would increase milling rates from the current level of 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day and target incremental annual copper production of approximately 225 million pounds within a three-year timeframe. Completion of the feasibility study is expected in the first half of 2012.

Operating Data. Following is summary consolidated operating data for the North America copper mines for the fourth quarters and years ended 2011 and 2010:

            Three Months Ended Years Ended December 31, December 31,   2011       2010 2011       2010 Copper (millions of recoverable pounds) Production 341 281 1,258 1,067 Sales, excluding purchases 333 238 1,247 1,085 Average realized price per pound $ 3.44 $ 3.93 $ 3.99 $ 3.42   Molybdenum (millions of recoverable pounds) Productiona 8 7 35 25   Unit net cash costs per pound of copper: Site production and delivery, excluding adjustments $ 1.73 $ 1.65 $ 1.78 $ 1.50 By-product credits, primarily molybdenum (0.37 ) (0.44 ) (0.48 ) (0.35 ) Treatment charges 0.12   0.12   0.11   0.09   Unit net cash costsb $ 1.48   $ 1.33   $ 1.41   $ 1.24    

a.

Reflects molybdenum production from certain of the North America copper mines. Sales of molybdenum are reflected in the Molybdenum division (refer to page 10).

b.

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

 

Consolidated copper sales volumes from North America of 333 million pounds in fourth-quarter 2011 were higher than fourth-quarter 2010 sales of 238 million pounds primarily reflecting increased mining rates and timing of shipments.

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

As anticipated, average unit net cash costs (net of by-product credits) for the North America copper mines of $1.48 per pound of copper in fourth-quarter 2011 were higher than unit net cash costs of $1.33 per pound in fourth-quarter 2010, primarily reflecting higher site production and delivery costs associated with increased mining and milling activities and higher input costs. Higher unit net cash costs also reflected lower molybdenum credits.

FCX estimates that average unit net cash costs (net of by-product credits) for the North America copper mines would approximate $1.67 per pound of copper for the year 2012, based on current sales volume and cost estimates and assuming an average molybdenum price of $13 per pound. North America's average unit net cash costs for 2012 would change by approximately $0.04 per pound for each $2 per pound change in the average price of molybdenum. Higher projected unit net cash costs in 2012, compared to 2011, primarily reflect higher mining and milling rates and lower by-product credits associated with lower molybdenum grades and prices, partly offset by higher projected copper volumes.

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 80 percent of the Candelaria and Ojos del Salado mining complexes. All operations in South America are consolidated in FCX's financial statements. South America mining includes open-pit and underground mining. In addition to copper, the Cerro Verde mine produces molybdenum concentrates, and the Candelaria and Ojos del Salado mines produce gold and silver.

Operating and Development Activities. During 2011, FCX commenced production from El Abra's newly commissioned stacking and leaching facilities to transition from production of oxide to sulfide ores. Production from the sulfide ore approximates 300 million pounds of copper per year, replacing the depleting oxide copper production. The aggregate capital investment for this project is expected to total $725 million through 2015, including $580 million for the initial phase of the project that is expected to be completed in first-quarter 2012.

FCX is also engaged in pre-feasibility studies for a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries. Positive exploration results at El Abra indicate the potential for a significant sulfide resource. Exploration activities are continuing.

At Cerro Verde, plans for a large-scale concentrator expansion continue to be advanced. The approximate $4.0 billion project would expand the concentrator facilities from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day and provide incremental annual production of approximately 600 million pounds of copper and 15 million pounds of molybdenum beginning in 2016. An environmental impact assessment was filed in fourth-quarter 2011.

Operating Data. Following is summary consolidated operating data for the South America mining operations for the fourth quarters and years ended 2011 and 2010:

            Three Months Ended Years Ended December 31, December 31,   2011     2010 2011     2010 Copper (millions of recoverable pounds) Production 337 347 1,306 1,354 Sales 357 340 1,322 1,335 Average realized price per pound $ 3.45 $ 4.26 $ 3.77 $ 3.68   Gold (thousands of recoverable ounces) Production 28 25 101 93 Sales 29 24 101 93 Average realized price per ounce $ 1,626 $ 1,394 $ 1,580 $ 1,263   Molybdenum (millions of recoverable pounds) Productiona 2 2 10 7   Unit net cash costs per pound of copper: Site production and delivery, excluding adjustments $ 1.56

b

$ 1.26 $ 1.38

b

$ 1.21 By-product credits (0.27 ) (0.27 ) (0.35 ) (0.21 ) Treatment charges 0.15   0.17   0.17   0.15   Unit net cash costsc $ 1.44  

b

$ 1.16   $ 1.20  

b

$ 1.15  

a.

  Reflects molybdenum production from Cerro Verde. Sales of molybdenum are reflected in the Molybdenum division (refer to page 10).

b.

Includes impacts of $50 million ($0.14 per pound of copper for fourth-quarter 2011 and $0.04 per pound of copper for the year 2011) associated with signing bonuses paid at Cerro Verde and El Abra pursuant to the new labor agreements.

c.

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

Copper sales from South America mining of 357 million pounds in fourth-quarter 2011 were higher than fourth-quarter 2010 sales of 340 million pounds primarily reflecting higher production at El Abra and timing of shipments, partly offset by lower volumes at Cerro Verde.

In fourth-quarter 2011, there was an approximate two-month labor strike at Cerro Verde during the negotiation of a new labor agreement. The strike did not have a significant impact on production, and a new three-year agreement with the union was reached in late December 2011. Also during fourth-quarter 2011, El Abra negotiated a new four-year labor agreement with its union, which will replace the agreement scheduled to expire in July 2012.

FCX expects South America's sales to approximate 1.3 billion pounds of copper and 100 thousand ounces of gold for the year 2012, similar to 2011 sales of 1.3 billion pounds of copper and 101 thousand ounces of gold. Lower projected ore grades at Cerro Verde and Candelaria in 2012 are expected to be partly offset by higher production at El Abra.

Average unit net cash costs (net of by-product credits) for South America of $1.44 per pound of copper in fourth-quarter 2011 were higher than unit net cash costs of $1.16 per pound in fourth-quarter 2010, primarily reflecting higher site production and delivery costs associated with increased mining costs and the impact of the signing bonuses paid pursuant to new labor agreements.

FCX estimates that average unit net cash costs (net of by-product credits) for South America mining would approximate $1.41 per pound of copper for the year 2012, based on current sales volume and cost estimates and assuming average prices of $1,600 per ounce of gold and $13 per pound of molybdenum. Higher projected unit net cash costs in 2012, compared to 2011, primarily reflect increases in input costs, including labor and energy, lower by-product credits and slightly lower projected volumes.

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

Operating and Development Activities. FCX has several projects in process in the Grasberg minerals district, primarily related to the development of the large-scale, high-grade underground ore bodies located beneath and nearby the Grasberg open pit. In aggregate, these underground ore bodies are expected to ramp up to approximately 240,000 metric tons of ore per day following the currently anticipated transition from the Grasberg open pit in 2016.

The Deep Ore Zone (DOZ) mine, one of the world's largest underground mines, has been expanded to a capacity of 80,000 metric tons of ore per day and a feasibility study for the Deep Mill Level Zone (DMLZ) has been completed. The high-grade Big Gossan mine, which began producing in fourth-quarter 2010, is expected to reach full rates of 7,000 metric tons of ore per day by mid-2013. Substantial progress has been made in developing infrastructure and underground workings that will enable access to the underground ore bodies. Development of the terminal infrastructure and mine access for the Grasberg Block Cave and DMLZ ore bodies is in progress. Over the next five years, estimated aggregate capital spending is expected to average approximately $700 million ($550 million net to PT Freeport Indonesia) per year on underground development activities.

Operating Data. Following is summary consolidated operating data for the Indonesia mining operations for the fourth quarters and years ended 2011 and 2010:

            Three Months Ended Years Ended December 31, December 31,   2011     2010 2011     2010 Copper (millions of recoverable pounds) Production 68 309 846 1,222 Sales 50 295 846 1,214 Average realized price per pound $ 3.31 $ 4.34 $ 3.85 $ 3.69   Gold (thousands of recoverable ounces) Production 149 601 1,272 1,786 Sales 102 565 1,270 1,765 Average realized price per ounce $ 1,664 $ 1,399 $ 1,583 $ 1,271   Unit net cash costs per pound of copper: Site production and delivery, excluding adjustments $ 6.92

a

$ 1.55 $ 2.21

a

$ 1.53 Gold and silver credits (3.72 ) (2.81 ) (2.47 ) (1.92 ) Treatment charges 0.22 0.19 0.19 0.22 Royalty on metals 0.15   0.16   0.16   0.13  

Unit net cash costs (credits)b

$ 3.57  

a

$ (0.91 ) $ 0.09  

a

$ (0.04 )  

a.

Includes impacts of $66 million ($1.30 per pound of copper for fourth-quarter 2011 and $0.08 per pound of copper for the year 2011) associated with signing bonuses and other strike-related costs.

b.

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 schedule, “Product Revenues and Production Costs,” beginning on page VII, which is available on FCX's website, “www.fcx.com.”

 

Indonesia's fourth-quarter 2011 copper sales of 50 million pounds and gold sales of 102 thousand ounces were lower than fourth-quarter 2010 copper sales of 295 million pounds and gold sales of 565 thousand ounces, reflecting the impact of labor-related disruptions and the temporary suspension of milling operations because of damage to the concentrate and fuel pipelines.

The estimated impact of the labor and pipeline disruptions (net to PT Freeport Indonesia), including the eight-day work stoppage in July 2011, totaled 165 million pounds of copper and 170 thousand ounces of gold in fourth-quarter 2011, and 235 million pounds of copper and 275 thousand ounces of gold for the year 2011.

In December 2011, PT Freeport Indonesia reached an agreement with union officials to end the three-month strike that commenced on September 15, 2011. Pursuant to the terms, PT Freeport Indonesia agreed to increase base wages by 24 percent in the first year and by 13 percent in the second year (equivalent to a 40 percent increase over two-years on a compounded basis). PT Freeport Indonesia also paid a bonus equivalent to three months of base wages and agreed to provide other benefits, including enhancements to housing allowances, educational assistance and retirement savings plans. The parties also agreed that future wage negotiations would be based on living costs and the competitiveness of wages within Indonesia.

FCX expects sales from Indonesia to approximate 930 million pounds of copper and 1.1 million ounces of gold for the year 2012, compared to 2011 sales of 846 million pounds of copper and 1.3 million ounces of gold. Gold sales in 2012 are projected to be lower than in 2011 because of mining in a lower grade section of the Grasberg mine in 2012. At the Grasberg mine, the sequencing of mining areas with varying ore grades also causes fluctuations in the timing of ore production resulting in varying quarterly and annual sales of copper and gold. The achievement of projected 2012 sales volumes depends on a number of factors, including the timing of restoring full operations at Grasberg following the extended disruption.

Unit net cash costs (including gold and silver credits) for Indonesia averaged $3.57 per pound of copper in fourth-quarter 2011, compared to a net credit of $0.91 per pound in fourth-quarter 2010, primarily reflecting lower copper and gold sales volumes and the impact of signing bonuses and other strike-related costs.

FCX estimates Indonesia's average unit net cash costs (net of gold and silver credits) would approximate $0.98 per pound of copper for the year 2012, based on current sales volume and cost estimates and assuming an average gold price of $1,600 per ounce. Indonesia's unit net cash costs for 2012 would change by approximately $0.06 per pound for each $50 per ounce change in the average price of gold. Higher projected unit net cash costs in 2012, compared to 2011, primarily reflect higher input costs, including labor and energy, and lower by-product credits, partly offset by higher projected copper volumes. Quarterly unit net cash costs are expected to vary significantly with variations in quarterly metal sales volumes.

Africa Mining. FCX currently holds an effective 57.75 percent interest in the Tenke Fungurume (Tenke) copper and cobalt mining concessions in the Katanga province of the Democratic Republic of Congo (DRC) and is the operator of Tenke. In addition to copper, the Tenke mine produces cobalt hydroxide. Tenke's operations are consolidated in FCX's financial statements. FCX's interest in Tenke will be reduced to 56 percent after receiving the required government approval of the modifications to Tenke Fungurume Mining's bylaws that reflect the agreement reached in December 2010 with the DRC government.

Operating and Development Activities. The milling facilities at Tenke, which were designed to produce at a rate of 8,000 metric tons of ore per day, continue to perform above capacity, with throughput averaging 11,900 metric tons of ore per day in fourth-quarter 2011 and 11,100 metric tons of ore per day for the year 2011. Mining rates have been increased to enable additional copper production from the initial project capacity of 250 million pounds per year to approximately 290 million pounds per year.

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

FCX continues to engage in drilling activities, exploration analyses and metallurgical testing to evaluate the potential of the highly prospective minerals district at Tenke. These analyses are being incorporated in future plans to evaluate opportunities for expansion.

Operating Data. Following is summary consolidated operating data for the Africa mining operations for the fourth quarters and years ended 2011 and 2010:

            Three Months Ended Years Ended December 31, December 31,   2011       2010 2011       2010 Copper (millions of recoverable pounds) Production 77 70 281 265 Sales 83 68 283 262 Average realized price per pounda $ 3.32 $ 4.05 $ 3.74 $ 3.45   Cobalt (millions of contained pounds) Production 7 6 25 20 Sales 6 7 25 20 Average realized price per pound $ 8.78 $ 10.46 $ 9.99 $ 10.95   Unit net cash costs per pound of copper: Site production and delivery, excluding adjustments $ 1.58 $ 1.48 $ 1.57 $ 1.40 Cobalt creditsb (0.35 ) (0.68 ) (0.58 ) (0.58 ) Royalty on metals 0.07   0.09   0.08   0.08   Unit net cash costsc $ 1.30   $ 0.89   $ 1.07   $ 0.90    

a.

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

b.

Net of cobalt downstream processing and freight costs.

c.

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

 

Copper sales from Africa of 83 million pounds in fourth-quarter 2011 were higher than fourth-quarter 2010 copper sales of 68 million pounds primarily reflecting the timing of shipments and higher production.

FCX expects Africa's sales to approximate 290 million pounds of copper and 25 million pounds of cobalt for the year 2012, compared with 283 million pounds of copper and 25 million pounds of cobalt for the year 2011.

Unit net cash costs (net of cobalt credits) for Africa of $1.30 per pound of copper were higher than unit net cash costs of $0.89 per pound in fourth-quarter 2010, primarily reflecting higher site production and delivery costs related to higher input costs. Higher unit net cash costs also reflected lower cobalt credits.

FCX estimates Africa's average unit net cash costs would approximate $1.13 per pound of copper for the year 2012, based on current sales volume and cost estimates and assuming an average cobalt price of $12 per pound. Higher projected unit net cash costs in 2012, compared to 2011, primarily reflect lower cobalt credits, partly offset by higher projected copper volumes. Africa's unit net cash costs for 2012 would change by approximately $0.11 per pound for each $2 per pound change in the average price of cobalt.

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

Development Activities. Construction activities at the Climax molybdenum mine are substantially complete, and FCX plans to commence production during 2012. Production from the Climax molybdenum mine is expected to ramp up to a rate of 20 million pounds per year during 2013 and, depending on market conditions, may be increased to 30 million pounds per year. FCX intends to operate the Climax and Henderson molybdenum mines in a flexible manner to meet market requirements. FCX believes that Climax is one of the most attractive primary molybdenum development projects in the world, with large-scale production capacity, attractive cash costs and future growth options. The costs of the initial phase of the project, most of which have been incurred, approximate $700 million.

Operating Data. Following is summary consolidated operating data for the Molybdenum operations for the fourth quarters and years ended 2011 and 2010:

            Three Months Ended Years Ended December 31, December 31,   2011       2010 2011       2010 Molybdenum (millions of recoverable pounds) Productiona 8 10 38 40 Sales, excluding purchasesb 19 17 79 67 Average realized price per pound $ 15.08 $ 16.60 $ 16.98 $ 16.47   Unit net cash cost per pound of molybdenumc $ 6.87 $ 6.36 $ 6.34 $ 5.90  

a.

Reflects production at the Henderson molybdenum mine.

b.

Includes sales of molybdenum produced at 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 VII, which is available on FCX's website, “www.fcx.com.”

 

Consolidated molybdenum sales of 19 million pounds in fourth-quarter 2011 were higher than fourth-quarter 2010 sales of 17 million pounds.

For the year 2012, FCX expects molybdenum sales to approximate 80 million pounds (including production of approximately 40 million pounds from the North and South America copper mines), compared with 79 million pounds in 2011 (including production of 45 million pounds from the North and South America copper mines).

Unit net cash costs at the Henderson mine of $6.87 per pound of molybdenum in fourth-quarter 2011 were higher than unit net cash costs of $6.36 per pound in fourth-quarter 2010, primarily reflecting higher input costs, including labor and materials.

Based on current sales volume and cost estimates, FCX expects average unit net cash costs for the Henderson mine to approximate $7.00 per pound of molybdenum for the year 2012.

RECOVERABLE PROVEN AND PROBABLE RESERVES

FCX has significant reserves, resources and future development opportunities within its portfolio of assets. FCX's preliminary estimated consolidated recoverable proven and probable reserves at December 31, 2011, include 119.7 billion pounds of copper, 33.9 million ounces of gold and 3.42 billion pounds of molybdenum, which were determined using long-term average prices of $2.00 per pound for copper, $750 per ounce for gold and $10.00 per pound for molybdenum. FCX has added significant reserves in recent years and drilling activities conducted at its existing mines during 2011 indicated the potential for significant reserve additions in future periods.

    Preliminary Recoverable Proven and Probable Reservesa December 31, 2011 Copper       Gold       Molybdenum (billions of lbs) (millions of ozs) (billions of lbs) North America 40.6 0.4 2.71 South America 39.1 1.3 0.71 Indonesia 31.6 32.2 — Africa 8.4 — — Consolidated basisb 119.7 33.9 3.42   Net equity interestc 96.1 30.6 3.09  

a.

Preliminary recoverable proven and probable reserves are estimated metal quantities from which FCX expects to be paid after application of estimated metallurgical recovery rates and smelter recovery rates, where applicable. Recoverable reserves are that part of a mineral deposit, which FCX estimates can be economically and legally extracted or produced at the time of the reserve determination.

b.

Consolidated basis reserves represent estimated metal quantities after reduction for joint venture partner interests at the Morenci mine in North America and the Grasberg minerals district in Indonesia. Excluded from the table above are FCX's estimated recoverable proven and probable reserves of 0.86 billion pounds for cobalt at Tenke Fungurume and 330.3 million ounces for silver in Indonesia, South America and North America.

c.

Net equity interest reserves represent estimated consolidated basis metal quantities further reduced for noncontrolling interest ownership. Excluded from the table above are FCX's estimated recoverable proven and probable reserves totaling 0.49 billion pounds for cobalt at Tenke Fungurume and 272.1 million ounces for silver in Indonesia, South America and North America.  

The following table summarizes changes in FCX's estimated preliminary consolidated recoverable proven and probable copper, gold and molybdenum reserves during 2011:

    Copper       Gold       Molybdenum (billions of lbs) (millions of ozs) (billions of lbs) Reserves at December 31, 2010 120.5 35.5 3.39 Net additions/revisions 2.9 (0.2) 0.11 Production (3.7) (1.4) (0.08) Reserves at December 31, 2011 119.7 33.9 3.42

At December 31, 2011, in addition to preliminary consolidated recoverable proven and probable reserves, FCX's preliminary estimated mineralized material (assessed using a long-term average copper price of $2.20 per pound for copper) totals 115 billion pounds of incremental contained copper. FCX continues to pursue aggressively opportunities to convert this mineralized material into reserves, future production volumes and cash flow.

EXPLORATION ACTIVITIES

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

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

PROVISIONAL PRICING AND OTHER

For the year 2011, 51 percent of FCX's mined copper was sold in concentrate, 26 percent as cathode and 23 percent as rod from North America operations. Under the long-established structure of sales agreements prevalent in the industry, substantially all of FCX's copper concentrate and cathode sales are provisionally priced at the time of shipment. The provisional prices are finalized in a contractually specified future month (generally one to four months from the shipment date) primarily based on quoted London Metal Exchange (LME) monthly average spot prices. Because a significant portion of FCX's concentrate and cathode sales in any quarterly period usually remain subject to final pricing, the quarter-end forward price is a major determinant of recorded revenues and the average recorded copper price for the period. During fourth-quarter 2011, LME spot copper prices averaged $3.40 per pound, compared to FCX's recorded average price of $3.42 per pound.

At September 30, 2011, FCX had provisionally priced copper sales at its copper mining operations, primarily South America and Indonesia, totaling 406 million pounds (net of intercompany sales and noncontrolling interests) recorded at an average of $3.18 per pound. Higher prices resulted in adjustments to these provisionally priced copper sales that favorably impacted fourth-quarter 2011 consolidated revenues by $125 million ($56 million to net income attributable to common stock or $0.06 per share), compared with adjustments to the September 30, 2010, provisionally priced copper sales that favorably impacted fourth-quarter 2010 consolidated revenues by $186 million ($79 million to net income attributable to common stock or $0.08 per share). Adjustments to the December 31, 2010, provisionally priced copper sales unfavorably impacted consolidated revenues by $12 million ($5 million to net income attributable to common stock or $0.01 per share) for the year 2011, compared with adjustments to the December 31, 2009, provisionally priced copper sales that unfavorably impacted consolidated revenues by $24 million ($10 million to net income attributable to common stock or $0.01 per share) for the year 2010.

At December 31, 2011, FCX had provisionally priced copper sales at its copper mining operations, primarily South America and Indonesia, totaling 252 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $3.44 per pound, subject to final pricing over the next several months. FCX estimates that each $0.05 change in the price realized from the December 31, 2011, provisional price recorded would have an approximate $9 million effect on 2012 net income attributable to common stock. The LME spot copper price on January 18, 2012, was $3.70 per pound.

FCX defers recognizing profits on its sales from its Indonesia and South America mining operations to Atlantic Copper and on 25 percent of Indonesia's mining sales to PT Smelting (PT Freeport Indonesia's 25 percent-owned Indonesian smelting unit) until final sales to third parties occur. FCX's net deferred profits on its Indonesia and South America concentrate inventories at Atlantic Copper and PT Smelting to be recognized in future periods' net income attributable to common stock totaled $42 million at December 31, 2011. Refer to the "Consolidated Statements of Income" on page IV for a summary of net impacts from changes in these deferrals. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in FCX's net deferred profits and quarterly earnings. Additionally, as PT Freeport Indonesia's operations return to full operating rates, FCX expects to defer a significant amount of PT Freeport Indonesia's profit on intercompany sales until final sales to third parties occur.

CASH FLOWS

FCX generated operating cash flows of $746 million for fourth-quarter 2011 and $6.6 billion for the year 2011. These amounts are net of working capital uses of $335 million for fourth-quarter 2011 and $461 million for the year 2011.

Based on current sales volume and cost estimates and assuming average prices of $3.50 per pound of copper, $1,600 per ounce of gold and $13 per pound of molybdenum, FCX's consolidated operating cash flows are estimated to approximate $4.7 billion for the year 2012, net of working capital uses of $0.8 billion. The impact of price changes on operating cash flows would approximate $150 million for each $0.05 per pound change in the average price of copper, $50 million for each $50 per ounce change in the average price of gold and $90 million for each $2 per pound change in the average price of molybdenum.

Capital expenditures, including capitalized interest, totaled $785 million for fourth-quarter 2011 and $2.5 billion for the year 2011. FCX's capital expenditures are currently estimated to approximate $4.0 billion for the year 2012, including $2.4 billion for major projects and $1.6 billion for sustaining capital. Major projects for 2012 primarily include underground development activities at Grasberg, the expansion at Tenke Fungurume and the concentrator expansion at Cerro Verde. FCX is also considering additional investments at several of its sites. Capital spending plans will continue to be reviewed and adjusted in response to changes in market conditions and other factors.

CASH AND DEBT

At December 31, 2011, FCX had consolidated cash of $4.8 billion. Net of noncontrolling interests' share, taxes and other costs, cash available to the parent company totaled $3.9 billion as shown below (in billions):

    December 31, 2011 Cash at domestic companiesa $ 2.4 Cash at international operations 2.4 Total consolidated cash and cash equivalents 4.8 Less: Noncontrolling interests' share (0.8) Cash, net of noncontrolling interests' share 4.0 Less: Withholding taxes and other (0.1) Net cash available $ 3.9  

a.

Includes cash at FCX's parent company and North America operations.  

At December 31, 2011, FCX had $3.5 billion in debt. FCX had no borrowings and $44 million of letters of credit issued under its revolving credit facility resulting in total availability of $1.5 billion at December 31, 2011. Since January 1, 2009, FCX has repaid $3.8 billion in debt resulting in estimated annual interest savings of approximately $260 million based on current interest rates.

FCX does not have significant debt maturities in the near term (a total of $4 million through 2016); however, FCX may consider opportunities to prepay debt in advance of scheduled maturities. FCX has $3.0 billion in debt that is redeemable in whole or in part, at its option, at make-whole redemption prices prior to April 2012, and afterwards at stated redemption prices.

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. In addition to FCX's current annual common stock dividend of $1.00 per share ($0.25 per share quarterly), on June 1, 2011, FCX paid a supplemental common stock dividend of $0.50 per share. For the year 2011, FCX paid common stock dividends of $1.4 billion, which includes $474 million for the supplemental dividend paid on June 1, 2011. FCX intends to continue to maintain a strong financial position, invest aggressively in attractive growth projects and provide cash returns to shareholders. The Board will continue to review FCX's financial policy on an ongoing basis.

WEBCAST INFORMATION

A conference call with securities analysts to discuss FCX's fourth-quarter 2011 results is scheduled for today at 10:00 a.m. Eastern Time. The conference call will be broadcast on the Internet along with slides. Interested parties may listen to the conference call live and view the slides by accessing “www.fcx.com.” A replay of the webcast will be available through Friday, February 17, 2012.

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

The company's portfolio of assets includes the Grasberg minerals district in Indonesia, significant mining operations in North and South America, and the Tenke Fungurume minerals district in the DRC. The Grasberg minerals district contains the largest single recoverable copper reserve and the largest single gold reserve of any mine in the world based on the latest available reserve data provided by third-party industry consultants. 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, potential prepayments of debt, future dividend payments and potential share purchases. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” “intends,” “likely,” “will,” “should,” “to be,” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of FCX's Board of Directors (the Board) and will depend on FCX's financial results, cash requirements, future prospects, and other factors deemed relevant by the Board. This press release also includes forward-looking statements regarding mineralized material not included in reserves. The mineralized material described in this press release will not qualify as reserves until comprehensive engineering studies establish their economic feasibility. Accordingly, no assurance can be given that the estimated mineralized material not included in reserves will become proven and probable reserves.

FCX cautions readers that forward-looking statements are not guarantees of future performance and its actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause FCX's actual results to differ materially from those anticipated in the forward-looking statements include commodity prices, mine sequencing, production rates, industry risks, regulatory changes, political risks, the potential effects of violence in Indonesia, the resolution of administrative disputes in the Democratic Republic of Congo, weather- and climate-related risks, labor relations, environmental risks, litigation results, currency translation risks and other factors described in more detail under the heading “Risk Factors” in FCX's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the U.S. Securities and Exchange Commission (SEC) as updated by our subsequent filings with the SEC.

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

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

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

COPPER (millions of recoverable pounds)

2011 2010 2011 2010 (FCX's net interest in %)

North America

Morenci (85%)a 131 116 132 98 Bagdad (100%) 49 55 49 45 Safford (100%) 50 35 45 30 Sierrita (100%) 46 36 46 32 Miami (100%) 20 8 19 6 Tyrone (100%) 20 21 19 18 Chino (100%) 24 9 22 8 Other (100%) 1   1   1   1 Total North America 341   281   333   238  

South America

Cerro Verde (53.56%) 145 172 154 169 El Abra (51%) 88 76 93 77 Candelaria/Ojos del Salado (80%) 104   99   110   94 Total South America 337   347   357   340  

Indonesia

Grasberg (90.64%)b 68   309   50   295  

Africa

Tenke Fungurume (57.75%) 77   70   83   68   Consolidated 823   1,007   823   941 Less noncontrolling interests 170   195   179   192 Net 653   812   644   749   Consolidated sales from mines 823 941 Purchased copper 38   39 Total copper sales, including purchases 861   980   Average realized price per pound $ 3.42 $ 4.18  

GOLD (thousands of recoverable ounces)

(FCX's net interest in %) North America (100%) 4 3 2 1 South America (80%) 28 25 29 24 Indonesia (90.64%)b 149   601   102   565 Consolidated 181   629   133   590 Less noncontrolling interests 20   62   15   58 Net 161   567   118   532   Consolidated sales from mines 133 590 Purchased gold —   — Total gold sales, including purchases 133   590   Average realized price per ounce $ 1,656 $ 1,398  

MOLYBDENUM (millions of recoverable pounds)

(FCX's net interest in %) Henderson (100%) 8 10 N/A N/A North America (100%) 8

a

7 N/A N/A Cerro Verde (53.56%) 2   2   N/A N/A Consolidated 18   19   19   17 Less noncontrolling interests 1   1   1   1 Net 17   18   18   16   Consolidated sales from mines 19 17 Purchased molybdenum —   — Total molybdenum sales, including purchases 19   17   Average realized price per pound $ 15.08 $ 16.60  

COBALT (millions of contained pounds)

(FCX's net interest in %) Consolidated - Tenke Fungurume (57.75%) 7   6   6   7 Less noncontrolling interests 3   2   2   3 Net 4   4   4   4   Average realized price per pound $ 8.78 $ 10.46  

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.

  FREEPORT-McMoRan COPPER & GOLD INC. SELECTED OPERATING DATA (continued)                     Years Ended December 31, Production Sales

COPPER (millions of recoverable pounds)

2011 2010 2011 2010 (FCX's net interest in %)

North America

Morenci (85%)a 522 437 521 434 Bagdad (100%) 194 203 201 206 Safford (100%) 151 143 147 155 Sierrita (100%) 177 147 175 152 Miami (100%) 66 18 59 17 Tyrone (100%) 76 82 79 83 Chino (100%) 69 34 62 35 Other (100%) 3   3   3   3 Total North America 1,258   1,067   1,247   1,085  

South America

Cerro Verde (53.56%) 647 668 657 654 El Abra (51%) 274 320 276 315 Candelaria/Ojos del Salado (80%) 385   366   389   366 Total South America 1,306   1,354   1,322   1,335  

Indonesia

Grasberg (90.64%)b 846   1,222   846   1,214  

Africa

Tenke Fungurume (57.75%) 281   265   283   262   Consolidated 3,691   3,908   3,698   3,896 Less noncontrolling interests 710   766   717   756 Net 2,981   3,142   2,981   3,140   Consolidated sales from mines 3,698 3,896 Purchased copper 223   182 Total copper sales, including purchases 3,921   4,078   Average realized price per pound $ 3.86 $ 3.59  

GOLD (thousands of recoverable ounces)

(FCX's net interest in %) North America (100%) 10 7 7 5 South America (80%) 101 93 101 93 Indonesia (90.64%)b 1,272   1,786   1,270   1,765 Consolidated 1,383   1,886   1,378   1,863 Less noncontrolling interests 139   186   139   184 Net 1,244   1,700   1,239   1,679   Consolidated sales from mines 1,378 1,863 Purchased gold 1   1 Total gold sales, including purchases 1,379   1,864   Average realized price per ounce $ 1,583 $ 1,271  

MOLYBDENUM (millions of recoverable pounds)

(FCX's net interest in %) Henderson (100%) 38 40 N/A N/A North America (100%) 35

a

25 N/A N/A Cerro Verde (53.56%) 10   7   N/A N/A Consolidated 83   72   79   67 Less noncontrolling interests 5   3   4   3 Net 78   69   75   64   Consolidated sales from mines 79 67 Purchased molybdenum —   2 Total molybdenum sales, including purchases 79   69   Average realized price per pound $ 16.98 $ 16.47  

COBALT (millions of contained pounds)

(FCX's net interest in %) Consolidated - Tenke Fungurume (57.75%) 25   20   25   20 Less noncontrolling interests 11   8   10   8 Net 14   12   15   12   Average realized price per pound $ 9.99 $ 10.95  

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.

  FREEPORT-McMoRan COPPER & GOLD INC. SELECTED OPERATING DATA (continued)                       Three Months Ended Years Ended December 31, December 31, 2011 2010 2011 2010 100% North America Copper Mines

Solution Extraction/Electrowinning (SX/EW) Operations

Leach ore placed in stockpiles (metric tons per day) 1,019,500 692,700 888,300 648,800 Average copper ore grade (percent) 0.23 0.23 0.24 0.24 Copper production (millions of recoverable pounds) 219 183 801 746  

Mill Operations

Ore milled (metric tons per day) 230,700 208,500 222,800 189,200 Average ore grades (percent): Copper 0.39 0.35 0.38 0.32 Molybdenum 0.03 0.03 0.03 0.03 Copper recovery rate (percent) 81.5 82.6 83.1 83.0 Production (millions of recoverable pounds): Copper 145 118 549 398 Molybdenum 8 7 35 25   100% South America Mining

SX/EW Operations

Leach ore placed in stockpiles (metric tons per day) 232,500 289,800 245,200 268,800 Average copper ore grade (percent) 0.60 0.38 0.50 0.41 Copper production (millions of recoverable pounds) 125 119 439 504  

Mill Operations

Ore milled (metric tons per day) 179,900 193,800 189,200 188,800 Average ore grades: Copper (percent) 0.69 0.67 0.66 0.65 Gold (grams per metric ton) 0.14 0.12 0.12 0.10 Molybdenum (percent) 0.02 0.02 0.02 0.02 Copper recovery rate (percent) 88.5 90.2 89.6 90.0 Production (recoverable): Copper (millions of pounds) 212 228 867 850 Gold (thousands of ounces) 28 25 101 93 Molybdenum (millions of pounds) 2 2 10 7   100% Indonesia Mining Ore milled (metric tons per day) 71,800 234,300 166,100 230,200 Average ore grades: Copper (percent) 0.65 0.88 0.79 0.85 Gold (grams per metric ton) 1.09 1.17 0.93 0.90 Recovery rates (percent): Copper 88.9 88.9 88.3 88.9 Gold 80.5 84.1 81.2 81.7 Production (recoverable): Copper (millions of pounds) 79 355 882 1,330 Gold (thousands of ounces) 183 666 1,444 1,964   100% Africa Mining Ore milled (metric tons per day) 11,900 11,100 11,100 10,300 Average ore grades (percent): Copper 3.40 3.40 3.41 3.51 Cobalt 0.38 0.40 0.40 0.40 Copper recovery rate (percent) 93.8 92.6 92.5 91.4 Production (millions of pounds): Copper (recoverable) 77 70 281 265 Cobalt (contained) 7 6 25 20   100% Henderson Molybdenum Mine Ore milled (metric tons per day) 19,300 22,800 22,300 22,900 Average molybdenum ore grade (percent) 0.24 0.24 0.24 0.25 Molybdenum production (millions of recoverable pounds) 8 10 38 40 FREEPORT-McMoRan COPPER & GOLD INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)                   Three Months Ended Years Ended December 31, December 31, 2011 2010 2011 2010 (In Millions, Except Per Share Amounts) Revenues $ 4,162

a

$ 5,603

a

$ 20,880

a

$ 18,982

a

Cost of sales: Production and delivery 2,394 2,101 9,898 8,335 Depreciation, depletion and amortization 266   248   1,022   1,036   Total cost of sales 2,660 2,349 10,920 9,371 Selling, general and administrative expenses 92 104 415 381 Exploration and research expenses 77 39 271 143 Environmental obligations and shutdown costs 36   14   134   19   Total costs and expenses 2,865   2,506   11,740   9,914   Operating income 1,297

b

3,097

b

9,140

b

9,068

b

Interest expense, net (62 )

c

(92 )

c

(312 )

c

(462 )

c

Losses on early extinguishment of debt — (4 ) (68 ) (81 ) Other income (expense), net 18   (15 ) 58   (13 )

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

1,253 2,986 8,818 8,512 Provision for income taxes (389 ) (1,027 ) (3,087 ) (2,983 ) Equity in affiliated companies' net earnings 2   5   16   15   Net income 866 1,964 5,747 5,544 Net income attributable to noncontrolling interests (226 ) (415 ) (1,187 ) (1,208 ) Preferred dividends —  

d

—  

d

—  

d

(63 ) Net income attributable to FCX common stockholders $ 640  

a,b

$ 1,549  

a,b

$ 4,560  

a,b

$ 4,273  

a,b

  Net income per share attributable to FCX common stockholders: Basic $ 0.67   $ 1.64  

e

$ 4.81   $ 4.67  

e

Diluted $ 0.67   $ 1.63  

e

$ 4.78   $ 4.57  

e

  Weighted-average common shares outstanding: Basic 948   943  

e

947   915  

e

Diluted 953   953  

e

955   949  

e

  Dividends declared per share of common stock $ 0.25   $ 0.75  

e

$ 1.50   $ 1.125  

e

   

a.

Includes favorable (unfavorable) adjustments to provisionally priced copper sales recognized in prior periods totaling $125 million ($56 million to net income attributable to common stockholders) in fourth-quarter 2011, $186 million ($79 million to net income attributable to common stockholders) in fourth-quarter 2010, $(12) million ($(5) million to net income attributable to common stockholders) for the year 2011 and $(24) million ($(10) million to net income attributable to common stockholders) for the year 2010.

b.

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 increases (reductions) of $116 million ($57 million to net income attributable to common stockholders) in fourth-quarter 2011, $(15) million ($(1) million to net income attributable to common stockholders) in fourth-quarter 2010, $283 million ($139 million to net income attributable to common stockholders) for the year 2011 and $(137) million ($(67) million to net income attributable to common stockholders) for the year 2010.

c.

Consolidated interest expense, before capitalized interest, totaled $96 million in fourth-quarter 2011, $119 million in fourth-quarter 2010, $421 million for the year 2011 and $528 million for the year 2010. Lower interest expense in the 2011 periods primarily reflects the impact of debt repayments during 2010 and 2011.

d.

During 2010, FCX's 63/4% Mandatorily Convertible Preferred Stock automatically converted into shares of FCX common stock; as a result, FCX no longer has requirements to pay preferred dividends.

e.

Amounts have been adjusted to reflect the February 1, 2011, two-for-one stock split.     FREEPORT-McMoRan COPPER & GOLD INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)           December 31, December 31, 2011 2010 (In Millions) ASSETS Current assets: Cash and cash equivalents $ 4,822 $ 3,738 Trade accounts receivable 892 2,132 Other accounts receivable 250 293 Inventories: Materials and supplies, net 1,354 1,169 Product 1,316 1,409 Mill and leach stockpiles 1,199 856 Other current assets 214   254   Total current assets 10,047 9,851 Property, plant, equipment and development costs, net 18,449 16,785 Long-term mill and leach stockpiles 1,686 1,425 Long-term receivables 675 200 Intangible assets, net 325 328 Other assets 888   797   Total assets $ 32,070   $ 29,386     LIABILITIES AND EQUITY Current liabilities: Accounts payable and accrued liabilities $ 2,252 $ 2,441 Dividends payable 240 240 Current portion of reclamation and environmental obligations 236 207 Accrued income taxes 163 648 Rio Tinto's share of joint venture cash flows 45 132 Current portion of debt 4   95   Total current liabilities 2,940 3,763 Long-term debt, less current portion 3,533 4,660 Deferred income taxes 3,255 2,873 Reclamation and environmental obligations, less current portion 2,138 2,071 Other liabilities 1,651   1,459   Total liabilities 13,517 14,826 Equity: FCX stockholders' equity: Common stock 107 107 Capital in excess of par value 19,007 18,751

Retained earnings (accumulated deficit)

546 (2,590 ) Accumulated other comprehensive loss (465 ) (323 ) Common stock held in treasury (3,553 ) (3,441 ) Total FCX stockholders' equity 15,642 12,504 Noncontrolling interests 2,911   2,056   Total equity 18,553   14,560   Total liabilities and equity $ 32,070   $ 29,386     FREEPORT-McMoRan COPPER & GOLD INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)       Years Ended December 31, 2011       2010 (In Millions) Cash flow from operating activities: Net income $ 5,747 $ 5,544 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 1,022 1,036 Stock-based compensation 117 121 Charges for reclamation and environmental obligations, including accretion 208 167 Payments of reclamation and environmental obligations (170 ) (196 ) Losses on early extinguishment of debt 68 81 Deferred income taxes 523 286 Increase in long-term mill and leach stockpiles (262 ) (103 ) Changes in other assets and liabilities

(76

) 79 Other, net

(96

) 92 (Increases) decreases in working capital: Accounts receivable 1,246 (680 ) Inventories (431 ) (593 ) Other current assets (57 ) (24 ) Accounts payable and accrued liabilities (387 ) 331 Accrued income and other taxes (832 ) 132   Net cash provided by operating activities 6,620   6,273     Cash flow from investing activities: Capital expenditures: North America copper mines (495 ) (233 ) South America (603 ) (470 ) Indonesia (648 ) (436 ) Africa (193 ) (100 ) Molybdenum (461 ) (89 ) Other (134 ) (84 ) Investment in McMoRan Exploration Co. 25 (500 ) Other, net (26 ) 43   Net cash used in investing activities (2,535 ) (1,869 )   Cash flow from financing activities: Proceeds from debt 48 70 Repayments of debt (1,313 ) (1,724 ) Cash dividends and distributions paid: Common stock (1,423 ) (885 ) Preferred stock — (95 ) Noncontrolling interests (391 ) (816 ) Contributions from noncontrolling interests 62 28 Net proceeds from stock-based awards 3 81 Excess tax benefit from stock-based awards 23 19 Other, net (10 ) —   Net cash used in financing activities (3,001 ) (3,322 )   Net increase in cash and cash equivalents 1,084 1,082 Cash and cash equivalents at beginning of year 3,738   2,656   Cash and cash equivalents at end of year $ 4,822   $ 3,738