Freeport-McMoRan Inc. (NYSE: FCX) announced today that it has entered
into a definitive agreement to sell a 13 percent ownership interest in
its Morenci unincorporated joint venture to Sumitomo Metal Mining Co.,
Ltd. (SMM) for $1.0 billion in cash.
Richard C. Adkerson, FCX’s President and Chief Executive Officer,
said: “We are pleased to expand our partnership at Morenci with Sumitomo.
This transaction represents an important initial step toward our
objective to accelerate debt reduction and restore our balance sheet,
while retaining a portfolio of high quality assets and resources.”
Mr. Adkerson continued: “Our Morenci partnership with Sumitomo was
first established 30 years ago and both companies are confident of the
operation’s long-term future. With its long-lived reserves,
substantial resource position, attractive cost structure and best in
class operating team, the Morenci joint venture is positioned to be a
continuing strong contributor to the success of FCX and Sumitomo.”
The Morenci unincorporated joint venture is currently owned 85 percent
by FCX and 15 percent by Sumitomo Metal Mining Arizona Inc. (SMMAz is
owned 80 percent by SMM and 20 percent by Sumitomo Corporation).
Following completion of the transaction, the joint venture will be owned
72 percent by FCX, 15 percent by SMMAz, and 13 percent by an affiliate
that is fully owned by SMM.
As of December 31, 2015, FCX’s 85 percent share of consolidated
recoverable reserves totaled 12.0 billion pounds of copper and its 85
percent share of 2015 production approximated 900 million pounds of
copper. In 2015, FCX’s 85 percent share of Morenci revenues totaled $2.2
billion and production and delivery costs totaled $1.5 billion.
The transaction is expected to close in mid-2016, subject to regulatory
approvals and customary closing conditions. FCX expects to use the
proceeds to repay borrowings under its bank term loan and revolving
FCX expects to record an approximate $550 million gain on the
transaction. FCX expects to use losses to offset cash taxes on the
FCX is a premier U.S.-based natural resources company with an
industry-leading global portfolio of mineral assets, significant oil and
gas resources and a growing production profile. FCX is the world's
largest publicly traded copper producer.
FCX's portfolio of assets includes the Grasberg minerals district in
Indonesia, one of the world's largest copper and gold deposits;
significant mining operations in the Americas, including the large-scale
Morenci minerals district in North America and the Cerro Verde operation
in South America; the Tenke Fungurume minerals district in the DRC; and
significant U.S. oil and natural gas assets in the Deepwater GOM,
onshore and offshore California and in the Haynesville natural gas
shale, and a position in the Inboard Lower Tertiary/Cretaceous natural
gas trend onshore in South Louisiana.
Cautionary Statement Regarding Forward-Looking Statements: This
press release contains forward-looking statements, which are all
statements other than statements of historical facts, such as
expectations related to completion of the pending transaction. 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. FCX cautions
readers that forward-looking statements are not guarantees of future
performance and 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 the ability of the parties to secure regulatory approvals,
satisfy closing conditions and consummate the pending transaction 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,
2014, 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
View source version on businesswire.com: http://www.businesswire.com/news/home/20160214005059/en/
Source: Freeport-McMoRan Inc.