News Release Details

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

• Net income for second-quarter 2007 (including special items discussed below) totaled $1.1 billion, $2.62 per share, compared with net income of $367 million, $1.74 per share, for the second quarter of 2006. Net income for the first six months of 2007 totaled $1.6 billion, $4.80 per share, compared with net income of $619 million, $2.97 per share, for the first six months of 2006.
• FCX’s consolidated sales from its mines totaled 1.0 billion pounds of copper, 913 thousand ounces of gold and 15 million pounds of molybdenum for second-quarter 2007 and 1.5 billion pounds of copper, 1.9 million ounces of gold and 17 million pounds of molybdenum for the first six months of 2007.
• Full-year 2007 pro forma projected consolidated sales from FCX’s mines, including pre-acquisition Phelps Dodge sales, approximate 3.9 billion pounds of copper, 2.1 million ounces of gold and 68 million pounds of molybdenum, including 900 million pounds of copper, 125 thousand ounces of gold and 16 million pounds of molybdenum for third-quarter 2007.
• FCX’s operating cash flows approximated $2.1 billion for second-quarter 2007 and $2.8 billion for the first six months of 2007, including Phelps Dodge’s amounts beginning March 20, 2007. Assuming average prices of $3.25 per pound for copper, $650 per ounce for gold and $25 per pound for molybdenum for the remainder of 2007, operating cash flows would exceed $6 billion for 2007, including over $3.2 billion for the second half of 2007.
• FCX capital expenditures approximated $530 million for second-quarter 2007 and $672 million for the first six months of 2007. Capital expenditures are expected to approximate $1.8 billion for 2007.
• Total debt approximated $9.8 billion and consolidated cash was $2.1 billion at June 30, 2007, compared with total debt of $12.0 billion and consolidated cash of $3.1 billion at March 31, 2007. Assuming average prices of $3.25 per pound for copper, $650 per ounce for gold and $25 per pound for molybdenum for the remainder of 2007, total debt at year-end 2007 would approximate $8.2 billion and cash would approximate $1.7 billion.

SUMMARY FINANCIAL AND OPERATING DATA

Pro Forma Financial Data. Pro forma financial results assume that FCX acquired Phelps Dodge effective January 1, 2007, for the 2007 periods and effective January 1, 2006, for the 2006 periods. The most significant adjustments relate to the impact of fair value adjustments to inventories (including mill and leach stockpiles) and property, plant, equipment and development costs using March 19, 2007, metals prices and assumptions.

The following table summarizes the estimated impacts of fair value adjustments on 2007 production costs and depreciation, depletion and amortization expense resulting from the acquisition of Phelps Dodge. These amounts do not affect cash flows and are based on the preliminary purchase price allocations and projected sales volumes. Changes to fair value estimates of inventories (including mill and leach stockpiles) and/or property, plant and equipment, as well as changes in the timing of quarterly sales volumes, could result in actual amounts differing significantly from those shown below. Additionally, inventories (including mill and leach stockpiles) are subject to lower of cost or market assessments, and significant declines in metals prices could result in future impairment charges.

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported second-quarter 2007 net income applicable to common stock of $1.1 billion, $2.62 per share, compared with net income of $367 million, $1.74 per share, for the second quarter of 2006. For the six months ended June 30, 2007, FCX reported net income of $1.6 billion, $4.80 per share, compared with $619 million, $2.97 per share, in the 2006 period. FCX’s six-month 2007 financial and operating results include its wholly owned subsidiary Phelps Dodge’s results following its acquisition by FCX on March 19, 2007.

FCX recorded its preliminary allocation of the approximate $26 billion purchase price to Phelps Dodge’s assets and liabilities based on estimated fair values as of March 19, 2007. The increases to property, plant, equipment and development costs and metals inventories (including mill and leach stockpiles) resulting from this preliminary purchase price allocation resulted in higher cost of sales of $454 million ($285 million to net income or $0.64 per share) for the second quarter of 2007 and $578 million ($364 million to net income or $1.05 per share) for the first six months of 2007. (See table on page 3.) These items do not affect operating cash flows.

Second-quarter 2007 results also included (1) charges for noncash mark-to-market accounting adjustments on Phelps Dodge’s copper price protection programs totaling $130 million ($80 million to net income or $0.18 per share), (2) net losses on debt reductions totaling $47 million ($35 million to net income or $0.08 per share), including $30 million ($25 million to net income or $0.06 per share) for partial prepayment of borrowings related to the acquisition of Phelps Dodge and $17 million ($10 million to net income or $0.02 per share) for FCX’s redemption of its 10?% Senior Notes and (3) gains totaling $38 million ($23 million to net income or $0.05 per share) for the sale of marketable equity securities. For the first six months of 2007, charges for noncash mark-to-market accounting adjustments on Phelps Dodge’s copper price protection programs totaled $168 million ($103 million to net income or $0.30 per share) and net losses on debt reductions totaled $135 million ($110 million to net income or $0.32 per share) primarily for partial prepayment of borrowings related to the acquisition of Phelps Dodge.

Results for the first six months of 2006 included net losses totaling $71 million ($38 million to net income or $0.17 per share), including a $69 million ($37 million to net income or $0.17 per share) loss on the redemption of FCX’s Gold-Denominated Preferred Stock, Series II and $2 million ($1 million to net income or $0.01 per share) for conversion of FCX’s 7% Convertible Senior Notes due 2011 and purchases of 10?% Senior Notes.

James R. Moffett, Chairman of the Board, and Richard C. Adkerson, Chief Executive Officer, said, “Our second-quarter financial performance reflects strong results in our North American, South American and Indonesian operations, and a continuation of positive market conditions for copper, gold and molybdenum. The outlook for our business is strong and we anticipate continuing to generate strong cash flows which will be used to enhance shareholder value through investments in attractive growth projects, debt reduction and cash returns to shareholders.”

SUMMARY CONTRIBUTION ANALYSIS

FCX’s operating performance, including Phelps Dodge’s results beginning March 20, 2007, and the impact of purchase accounting adjustments, is shown below for the 2007 periods (in millions):

OPERATIONS

FCX’s operating results, including the results of PT-FI’s mining operations and the smelting and refining operations of Atlantic Copper and PT-FI’s 25%-owned affiliate PT Smelting, together with pro forma Phelps Dodge results, follow. Second-quarter 2007 reflects actual results. Pro forma results for the 2007 six-month period and the 2006 periods assume inclusion of the Phelps Dodge operations effective January 1, 2006.

North American Mining. FCX operates five open-pit copper mining complexes in North America (Morenci, Bagdad and Sierrita in Arizona and Chino and Tyrone in New Mexico) and conducts molybdenum mining operations at the Henderson mine in Colorado. By-product molybdenum is produced at Sierrita, Bagdad, Chino and Morenci. In addition, a new copper mining complex is under construction at Safford, Arizona, and FCX is assessing the restart of the Climax primary molybdenum mine in Colorado. All of these mining operations are wholly owned, except for Morenci. FCX records its 85 percent joint venture interest in Morenci using the proportionate consolidation method. The North American copper mining operations are operated in an integrated fashion and have long-lived reserves with significant additional development potential.

Consolidated copper sales from North American operations totaled 1.3 billion pounds in 2006 and are expected to approximate 1.3 billion pounds for the full year 2007. Consolidated copper sales from North American operations are expected to approximate 685 million pounds in the second half of 2007.

FCX is the world’s largest producer of molybdenum through the Henderson molybdenum mine and as a by-product at several of its copper mines. The Henderson block-cave underground mining complex produces high-purity, chemical-grade molybdenum concentrates, which are further processed into value-added molybdenum chemical products. A feasibility study is nearing completion for reopening the Climax open-pit molybdenum mine, which has been on care-and-maintenance status since 1995. The Climax mine could resume operation by 2010. The feasibility study is expected to confirm the restart as an attractive economic project. Consequently, FCX began ordering certain long lead-time equipment in the second quarter of 2007.

Consolidated molybdenum sales from the primary and by-product mines totaled 69 million pounds in 2006 and are expected to approximate 68 million pounds for the full year 2007. Consolidated molybdenum sales are expected to approximate 34 million pounds in the second half of 2007.

Approximately 60 percent of FCX’s expected 2007 and approximately 75 percent of expected 2008 molybdenum production is committed for sale throughout the world pursuant to annual or quarterly agreements based primarily on prevailing market prices one month prior to the time of sale. The Metals Week Dealer Oxide closing price for molybdenum on July 23, 2007, was $31.25 per pound.

Unit Net Cash Costs for North American Copper Mines. The following table summarizes second-quarter 2007 actual unit net cash costs at the North American copper mines and pro forma unit net cash costs for the second quarter of 2006 and the first six months of 2007 and 2006.

North American unit net cash costs were higher in the second quarter of 2007 compared with the second quarter of 2006 primarily because of higher maintenance, labor and other input costs at Morenci and Bagdad and higher milling costs at Chino.

Assuming an average copper price of $3.25 per pound and an average molybdenum price of $25 per pound for the remainder of 2007 and achievement of current 2007 sales estimates, FCX estimates that its pro forma 2007 average unit net cash costs for its North American mines, including molybdenum credits, would approximate $0.84 per pound of copper. Average unit net cash costs for 2007 would change by approximately $0.02 per pound for each $2 per pound change in the average price of molybdenum for the remainder of 2007.

Unit Net Cash Costs for Primary Molybdenum Mine. Second-quarter 2007 unit net cash costs of $4.15 per pound of molybdenum at the Henderson primary molybdenum mine were higher, compared with pro forma unit net cash costs of $3.31 per pound for the 2006 quarter, primarily because of higher input costs, including labor, supplies and service costs, and higher taxes. Assuming achievement of current 2007 sales estimates, FCX estimates that its pro forma 2007 average unit net cash costs for its Henderson mine would approximate $4.20 per pound of molybdenum.

South American Mining. FCX operates four copper mines in South America – Candelaria, Ojos del Salado and El Abra in Chile and Cerro Verde in Peru. These operations are consolidated in FCX’s financial statements, with outside ownership reported as minority interests.

FCX owns 80 percent of the Candelaria and Ojos del Salado mining complexes, which include the Candelaria open-pit and underground mines and the Ojos del Salado underground mines. These mines use certain common processing facilities to produce copper concentrates. FCX owns a 51 percent interest in El Abra, an open-pit mine producing electrowon copper cathodes. FCX owns a 53.6 percent equity interest in Cerro Verde, an open-pit mine producing both electrowon copper cathodes and copper concentrates. Cerro Verde recently completed a $900 million expansion project to process sulfide ore reserves through a new concentrator.

Consolidated copper sales in the second quarter of 2007 were higher than in the second quarter of 2006 primarily reflecting the start up of expanded production at Cerro Verde and lower production at El Abra. Consolidated copper sales totaled 1.1 billion pounds from South American operations in 2006 and are expected to approximate 1.4 billion pounds for the full year 2007. Consolidated copper sales volumes from South American operations are expected to total 775 million pounds in the second half of 2007. The projected increases for full-year 2007, compared with full-year 2006, include incremental production from the new Cerro Verde concentrator.

Unit Net Cash Costs. The following table summarizes second-quarter 2007 actual unit net cash costs at the South American copper mines and pro forma unit net cash costs for the second quarter of 2006 and the first six months of 2007 and 2006.

South American unit net cash costs were higher in the second quarter of 2007 compared with the second quarter of 2006 primarily because of Cerro Verde mill ramp-up activities, higher employee-related costs at Cerro Verde and Candelaria and additional costs associated with the voluntary contribution program, and higher equipment maintenance and longer hauls at Candelaria.

Assuming achievement of current 2007 sales estimates, FCX estimates that its pro forma annual 2007 average unit net cash costs for its South American mines, including gold credits, would approximate $0.90 per pound of copper.

Indonesian Mining. Through its 90.6 percent owned subsidiary PT-FI, FCX operates the world’s largest copper and gold mine in terms of reserves at its Grasberg operations in Papua, Indonesia. PT-FI reported higher second-quarter 2007 sales volumes compared with the second quarter of 2006, primarily because of higher ore grades. PT-FI’s share of sales totaled 334 million pounds of copper and 880 thousand ounces of gold. Gold sales were approximately 300 thousand ounces higher than previous estimates because of higher ore grades.

FCX’s consolidated share of annual sales from Indonesia in 2007 is projected to approximate 1.1 billion pounds of copper and 2.0 million ounces of gold. PT-FI’s estimated 2007 gold sales are higher than the 1.8 million ounces previously estimated primarily because of higher ore grades. At the Grasberg mine, the sequencing in mining areas with varying ore grades causes fluctuations in the timing of ore production, resulting in varying quarterly and annual sales of copper and gold. PT-FI will be mining in a relatively low-grade section of the Grasberg open pit in the second half of 2007. As a result, second-half 2007 sales volumes, totaling approximately 365 million pounds of copper and 170 thousand ounces of gold, are expected to be significantly lower than the first-half volumes. PT-FI recently reached agreement for a new two-year labor agreement that expires in September 2009.

Unit Net Cash Costs. PT-FI’s unit net cash (credits) costs, including gold and silver credits, averaged a net credit of $0.18 per pound of copper during the second quarter of 2007, compared with a net cost of $0.98 per pound in the 2006 quarter. The lower unit net cash costs in the 2007 quarter compared with the 2006 quarter primarily reflect higher copper and gold volumes and higher gold prices. Unit site production and delivery costs will vary with fluctuations in production volumes because of the primarily fixed nature of PT-FI’s cost structure.

Assuming average copper prices of $3.25 per pound and average gold prices of $650 per ounce for the remainder of 2007 and achievement of current 2007 sales estimates, PT-FI estimates that its annual 2007 unit net cash costs, including gold and silver credits, would approximate $0.44 per pound. Because the majority of PT-FI’s costs are fixed, unit costs vary with the volumes sold and the price of gold, and are therefore currently projected to be significantly higher during the second half of 2007 than in the first half of 2007. Unit net cash costs for 2007 would change by less than $0.01 per pound for each $25 per ounce change in the average price of gold for the remainder of 2007. The London P.M. gold fixing price closed at $684.30 per ounce on July 24, 2007.

OTHER ITEMS

At June 30, 2007, FCX’s consolidated copper sales included 490 million pounds of copper, priced at an average of $3.45 per pound, subject to final pricing over the next several months. Each $0.05 change in the price realized from the June 30, 2007, price would result in an approximate $15 million effect on FCX’s 2007 net income. The LME closing spot price for copper on July 24, 2007 was $3.66 per pound. Second-quarter 2007 adjustments to concentrate sales recognized in prior quarters increased revenues by $180 million ($95 million to net income or $0.21 per share) compared with an increase of $147 million ($78 million to net income or $0.35 per share) in the second quarter of 2006.

FCX’s international wire and cable business, Phelps Dodge International Corporation (PDIC), which operates factories in nine countries throughout Latin America, Asia and Africa, is engaged in the manufacturing of energy cables for various industries. PDIC had revenues of $364 million and record operating income of $45 million in the second quarter of 2007. FCX may consider a sale of its international wire and cable business.

Atlantic Copper, FCX’s wholly owned Spanish smelting unit, reported an operating loss of $4 million in the second-quarter 2007, compared with operating income of $22 million in the 2006 period. In June 2007, Atlantic Copper successfully completed its scheduled 23-day maintenance turnaround which impacted operating results by $16 million in the second quarter of 2007 and is expected to impact third-quarter 2007 operating results by $10 million, including a $7 million impact from lower volumes. Major maintenance turnarounds typically occur approximately every nine years for Atlantic Copper, with significantly shorter term maintenance turnarounds occurring in the interim.

FCX defers recognizing profits on PT-FI’s sales to Atlantic Copper and on 25 percent of PT-FI’s sales to PT Smelting, PT-FI’s 25 percent-owned Indonesian smelting unit, until the final sales to third parties occur. Changes in these net deferrals resulted in an addition to FCX’s net income totaling $7 million, $0.02 per share, in the second quarter of 2007, and a reduction to net income of $103 million, $0.30 per share, in the first six months of 2007. For the 2006 periods, changes in these net deferrals resulted in additions to FCX’s net income totaling $18 million, $0.08 per share, in the second quarter and $57 million, $0.26 per share, in the first six months. At June 30, 2007, FCX’s net deferred profits on PT-FI concentrate inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income after taxes and minority interest sharing totaled $203 million. Based on copper prices of $3.25 per pound and gold prices of $650 per ounce for the third quarter of 2007 and current shipping schedules, FCX estimates that the net change in these deferred profits on intercompany sales will result in an increase to net income of approximately $100 million in the third quarter of 2007. The actual change in deferred intercompany profits may differ substantially from this estimate because of changes in the timing of shipments to affiliated smelters and metal prices.

DEVELOPMENT and EXPLORATION ACTIVITIES

Development Activities. FCX has significant development activities under way to expand its copper production capacity, extend its mine lives and develop large-scale underground ore bodies. Current major projects include the recent expansion of Cerro Verde; construction of a major new mining complex at Safford, Arizona; the concentrate-leach, direct-electrowinning facility being constructed at Morenci; a sulfide leach project to extend the mine life at El Abra; various projects to develop the large-scale, high-grade underground ore bodies in the Grasberg district and development of the highly prospective Tenke Fungurume project in the Democratic Republic of Congo.

The mill restart at Morenci is ramping-up with the achievement of operating capacity expected in the third quarter of 2007. This project, which includes construction of a concentrate-leach, direct-electrowinning facility, is expected to provide an incremental 115 million pounds of copper per year. The concentrate-leach project uses Phelps Dodge’s proprietary medium-temperature, pressure-leaching and direct electrowinning technology which will enhance cost savings by processing concentrate on-site instead of shipping concentrate to smelters for treatment and by providing acid for leaching operations. Mill restart and construction of the concentrate-leach, direct-electrowinning facility required a total capital investment of approximately $250 million.

The Safford copper mine is expected to produce ore from two open-pit copper mines located in southeastern Arizona and includes a solution extraction/electrowinning facility which is scheduled for start-up in early 2008. Construction commenced in August 2006 and the project is expected to be completed in late 2007, with ramp-up to full production of approximately 240 million pounds per year in the first half of 2008. The Safford mining complex will require a total capital investment of approximately $580 million. FCX believes there is significant additional exploration and development potential in this district, including the large Lone Star project.

Cerro Verde has recently completed an approximate $900 million mill expansion project to process sulfide ore reserves through a new concentrator. Processing of the sulfide ore began in the fourth quarter of 2006 and in June 2007, the mill reached design capacity of 108,000 metric tons of ore per day. With the completion of the expansion, copper production at Cerro Verde initially is expected to approximate 650 million pounds per year (approximately 348 million pounds per year for FCX’s share). In addition, the expansion is expected to produce an average of approximately 8 million pounds of molybdenum per year (approximately 4 million pounds per year for FCX’s share) for the next five years. Cerro Verde also has a long-term contract that provides for fixed treatment and refining charges through 2011 on approximately 50 percent of its projected copper concentrate production.

At the end of 2006, a feasibility study was completed to evaluate the development of the large sulfide deposit at El Abra. This project would extend the mine life by nine years and copper production from the sulfides is targeted to begin in 2010. The existing facilities at El Abra will be used to process the additional reserves, minimizing capital spending requirements. Total initial capital for the project is approximately $350 million, the majority of which will be spent between 2008 and 2011. In March 2007, an environmental impact study associated with the sulfide project was submitted to Chilean authorities.

Indonesia. PT-FI has several projects in progress throughout the Grasberg District, including developing its large-scale underground ore bodies located beneath and adjacent to the Grasberg open pit. In the second quarter of 2007, PT-FI completed the expansion of the DOZ mine to 50,000 metric tons of ore per day and is working towards a further expansion to 80,000 metric tons per day. Other projects in progress include the development of the high-grade Big Gossan mine, expected to ramp-up to full production of 7,000 metric tons per day in late 2010; and the continued development of the Common Infrastructure project, which will provide access to the Grasberg underground ore body, the Kucing Liar ore body and future development of the area containing the DOZ mine.

Africa. FCX holds an effective 57.75 percent interest in the Tenke Fungurume copper/cobalt mining concessions in the Katanga province of the Democratic Republic of Congo. FCX is the operator of the project. The initial project at Tenke Fungurume is based on ore reserves of 103 million metric tons with ore grades of 2.1 percent copper and 0.3 percent cobalt. Based on the current mine plan, ore grades for the first ten years are expected to average 4.6 percent copper and 0.4 percent cobalt. During the second quarter of 2007, FCX advanced earthworks activities and completed an arrangement for electrical power to be supplied for the Tenke Fungurume project.

Operations are targeted to commence in 2009, with initial production of approximately 250 million pounds of copper and approximately 18 million pounds of cobalt per year for the first 10 years. Based on the recent feasibility study, which assumes a long-term cobalt price of $12 per pound, life-of-mine unit net cash costs after by-product credits are estimated to be a net credit of $0.19 per pound of copper.

FCX is responsible for funding 70 percent of project development costs. The Tenke Fungurume project will require a capital investment of approximately $650 million, of which approximately $115 million has been spent as of June 30, 2007, including amounts spent prior to the acquisition of Phelps Dodge. For the remainder of 2007, FCX expects to spend approximately $250 million.

Exploration Activities. FCX is conducting exploration activities near its existing mines and in other high potential areas around the world. Aggregate exploration expenditures in 2007 are expected to approximate $125 million.

FCX’s exploration efforts in North America include drilling within the Safford district of the Lone Star deposit, located approximately four miles from the ore body currently under development, and targets in the Morenci district. FCX is also conducting exploration activities near the Henderson ore body. In Africa, FCX is actively pursuing targets outside of the area of initial development at Tenke Fungurume and is completing a pre-feasibility study on the separate Kisanfu project.

PT-FI’s 2007 exploration efforts in Indonesia will continue to test extensions of the Deep Grasberg and Kucing Liar mine complex. PT-FI also continues to evaluate targets in the area between the Ertsberg and Grasberg mineral systems from the new Common Infrastructure tunnels, possible extensions of the Deep Mill Level Zone deposit, the Ertsberg open-pit resource through surface drilling programs and the open-pit potential of the Wanagon gold prospect. During 2007, FCX resumed exploration activities suspended in recent years in certain prospective areas outside Block A (the Grasberg contract area) including the Kamopa prospect, the Ular Merah copper/gold prospect and the Wabu gold prospect.

OUTLOOK

FCX’s pro forma consolidated sales volumes for 2007, including pre-acquisition Phelps Dodge sales, are currently projected to approximate 3.9 billion pounds of copper, 2.1 million ounces of gold and 68 million pounds of molybdenum. Projected sales volumes for the third quarter of 2007 approximate 900 million pounds of copper, 125 thousand ounces of gold and 16 million pounds of molybdenum. The achievement of FCX’s sales estimates will be dependent, among other factors, on the achievement of targeted mining rates and expansion plans, the successful operation of production facilities, the impact of weather conditions and other factors.

Using estimated sales volumes for the remainder of 2007 and assuming average prices of $3.25 per pound of copper, $650 per ounce of gold and $25 per pound of molybdenum in the balance of the year, FCX’s consolidated operating cash flows would exceed $6 billion in 2007, including over $3.2 billion projected in the second half of 2007. Each $0.20 per pound change in copper prices in the second half would affect 2007 cash flows by approximately $300 million. Each $50 per ounce change in gold prices in the second half would affect 2007 cash flows by approximately $10 million, and each $2 per pound change in molybdenum prices would affect 2007 cash flows by approximately $30 million. FCX’s capital expenditures for 2007 are currently estimated to approximate $1.8 billion.

FCX expects to generate cash flows during 2007 significantly greater than its capital expenditures, minority interests distributions, dividends and other cash requirements. Assuming average prices of $3.25 per pound of copper, $650 per ounce of gold and $25 per pound of molybdenum in the balance of the year, and assuming excess cash is applied to reduce debt, total debt at year-end 2007 would approximate $8.2 billion and consolidated cash would approximate $1.7 billion.

CASH and DEBT

At June 30, 2007, FCX had consolidated cash of $2.1 billion and net cash available to the parent company of $1.4 billion as shown below (in billions):

At June 30, 2007, FCX had $9.8 billion in debt, including $8.5 billion in acquisition debt, $0.9 billion in Phelps Dodge debt assumed in the transaction and $0.4 billion of previously existing FCX debt. The following table summarizes FCX’s debt transactions in the second quarter of 2007 (in billions):

In the second quarter of 2007, FCX prepaid $1.9 billion of term debt and redeemed its 10?% Senior Notes due 2010 ($272 million) for $286 million. In July 2007, FCX refinanced its term debt to achieve interest cost savings and improved terms. FCX established a new $2.45 billion Term Loan A and used the proceeds to repay fully amounts borrowed under its $7.5 billion senior term loan (Term Loan B). Interest cost savings associated with this transaction approximate 0.75 percent per annum. FCX expects to record a charge of approximately $31 million to net income in the third quarter of 2007 for the early extinguishment of Term Loan B.

FINANCIAL POLICY

FCX has a long track record for maximizing shareholder values through pursuing development projects with high rates of return and returning cash to shareholders through common stock dividends and share purchases. FCX’s common stock annual dividend of $1.25 per share totals approximately $475 million per year. Preferred dividends total approximately $255 million per year.

Following the significant increase in debt associated with the acquisition of Phelps Dodge, FCX placed a high priority on debt reduction. As a result of the $5.6 billion of net proceeds from the issuance of common stock and 6¾% mandatory convertible preferred stock in March 2007 and positive performance of its operations, FCX has achieved meaningful debt reduction since the Phelps Dodge acquisition. The continuation of the positive performance of FCX’s operations would enable the company to reduce its debt further and to consider additional returns to shareholders. FCX’s management and its Board of Directors review the company’s financial policy on an ongoing basis. There are 12.2 million shares remaining under FCX’s Board-authorized 20-million share open market purchase program.

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 Grasberg mining complex, the world’s largest copper and gold mine in terms of reserves, is the company’s key asset. FCX also operates significant mining operations in North and South America and is developing the potential world-class Tenke Fungurume project in the Democratic Republic of Congo. Additional information about FCX is available on our website at www.fcx.com.

Cautionary Statement and Regulation G Disclosure: This press release contains forward-looking statements in which we discuss factors we believe may affect our performance in the future. Forward-looking statements are all statements other than historical facts, such as statements regarding projected ore grades and milling rates, projected sales volumes, projected unit net cash costs, projected operating cash flows, projected capital expenditures, the impact of copper, gold and molybdenum price changes, the impact of changes in deferred intercompany profits on earnings, projected debt and cash balances, and the impact of purchase accounting, including on production costs and depreciation, depletion and amortization expenses. Accuracy of the forward-looking statements depends on assumptions about events that change over time and is thus susceptible to periodic change based on actual experience and new developments. FCX cautions readers that it assumes no obligation to update or publicly release any revisions to the forward-looking statements in this press release and, except to the extent required by applicable law, does not intend to update or otherwise revise the forward-looking statements more frequently than quarterly. Additionally, important factors that might cause future results to differ from these projections include mine sequencing, production rates, industry risks, commodity prices, political risks, weather-related risks, labor relations, currency translation risks and other factors described in FCX's Quarterly Report on Form 10-Q for the three months ended March 31, 2007, filed with the Securities and Exchange Commission (SEC).

This press release also contains certain financial measures such as unit net cash costs (credits) per pound of copper and unit net cash costs per pound of molybdenum. As required by SEC Regulation G, reconciliations of these measures to amounts reported in FCX’s consolidated financial statements are available on our web site, “www.fcx.com.”

A copy of this press release is available on our web site, “www.fcx.com.” A conference call with securities analysts about second-quarter 2007 results is scheduled for today at 10:00 a.m. EDT. The conference call will be broadcast on the Internet along with slides. Interested parties may listen to the webcast live and view the slides by accessing “www.fcx.com.” A replay of the webcast will be available through Friday, August 17, 2007.