News Release Details

FCX Reports Third-Quarter and Nine-Month 2007 Results

10/24/07

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

HIGHLIGHTS

  • Income from continuing operations applicable to common stock for third-quarter 2007 totaled $763 million, $1.85 per share (including charges to net income of $299 million, $0.67 per share, for special items discussed on page 2), compared with $351 million, $1.67 per share, for the third quarter of 2006 (including net losses of $36 million, $0.16 per share, on debt reductions).
  • FCXs consolidated sales from its mines totaled 949 million pounds of copper, 269 thousand ounces of gold and 16 million pounds of molybdenum for third-quarter 2007, and 2.5 billion pounds of copper, 2.1 million ounces of gold and 33 million pounds of molybdenum for the first nine months of 2007.
  • Full-year 2007 pro forma projected consolidated sales from FCXs mines, including pre-acquisition Phelps Dodge sales, approximate 3.9 billion pounds of copper, 2.3 million ounces of gold and 68 million pounds of molybdenum, including 875 million pounds of copper, 100 thousand ounces of gold and 18 million pounds of molybdenum for fourth-quarter 2007.
  • FCXs operating cash flows totaled $2.2 billion for third-quarter 2007 and $4.9 billion for the first nine months of 2007, including Phelps Dodges amounts beginning March 20, 2007. Assuming average prices of $3.50 per pound for copper, $750 per ounce for gold and $30 per pound for molybdenum for the fourth quarter of 2007, operating cash flows would approximate $6.2 billion for 2007, including approximately $1.3 billion for the fourth quarter of 2007.
  • FCX capital expenditures approximated $466 million for third-quarter 2007 and $1.1 billion for the first nine months of 2007. Capital expenditures are expected to approximate $1.9 billion for 2007.
  • Total debt approximated $8.7 billion and consolidated cash was $2.4 billion at September 30, 2007, compared with total debt of $9.8 billion and consolidated cash of $2.1 billion at June 30, 2007. Assuming average prices of $3.50 per pound for copper, $750 per ounce for gold and $30 per pound for molybdenum for the fourth quarter of 2007, total debt at year-end 2007 would approximate $7.3 billion and cash would approximate $1.5 billion.
  • In September 2007, FCX entered into an agreement to sell its international wire and cable business, Phelps Dodge International Corporation (PDIC), for $735 million. FCX expects to use the estimated net proceeds approximating $620 million to repay debt.

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported third-quarter 2007 income from continuing operations applicable to common stock of $763 million, $1.85 per share, compared with $351 million, $1.67 per share, for the third quarter of 2006. For the nine months ended September 30, 2007, FCX reported income from continuing operations applicable to common stock of $2.3 billion, $6.46 per share, compared with $970 million, $4.64 per share, in the 2006 period. FCXs nine-month 2007 financial and operating results include its wholly owned subsidiary Phelps Dodges results following its acquisition by FCX on March 19, 2007.

Results for the 2007 periods included the following special items:






Net Income

Pre-tax


Net Income
Per Share
(In millions, except per share amounts) Impact
Impact
Impact
Three Months Ended September 30, 2007








Purchase accounting impactsa

$

432


$

271


$

0.61


Noncash mark-to-market accounting adjustments








on Phelps Dodges copper price programs
44

26

0.06
Net losses on debt reductions
36

31

0.07
Gain on sale of marketable equity securities
(47)

(29)

(0.06)
Total special items $

465


$

299


$

0.67












Nine Months Ended September 30, 2007








Purchase accounting impactsa $

996


$

624


$

1.64


Noncash mark-to-market accounting adjustments








on Phelps Dodges copper price programs
212

129

0.34
Net losses on debt reductions
171

141

0.37
Gains on sales of marketable equity securities
(85)

(52)

(0.14)
Total special items $

1,294


$

842


$

2.21


a. FCX recorded its preliminary allocation of the approximate $26 billion purchase price to Phelps Dodges assets and liabilities based on estimated fair values as of March 19, 2007. The charges to cost of sales primarily reflect the increases to property, plant, and equipment and metals inventories (including mill and leach stockpiles) resulting from this preliminary purchase price allocation. (See page 5.) These items do not affect operating cash flows. The purchase price allocation will be revised as valuation analyses are completed.


Third-quarter 2006 results included net losses on debt reductions totaling $43 million ($36 million to net income or $0.16 per share). Results for the first nine months of 2006 included net losses on debt reductions totaling $114 million ($74 million to net income or $0.33 per share), including a $69 million ($37 million to net income or $0.17 per share) loss on the redemption of FCXs Gold-Denominated Preferred Stock, Series II.

James R. Moffett, Chairman of the Board, and Richard C. Adkerson, Chief Executive Officer, said, Our third-quarter performance reflects a continuation of positive market conditions for copper, gold and molybdenum and strong operating results at our North American, South American and Indonesian operations. We are optimistic about the outlook to deliver strong volumes of metals which will enable us to generate significant cash flows, invest in attractive development projects, achieve our debt reduction objectives and provide returns to shareholders.

SUMMARY FINANCIAL AND OPERATING DATA


Third Quarter
Nine Months

2007
2006
2007a
2006
Financial Data (in millions, except per share amounts)







Revenues $5,066b
$1,636
$12,755b
$4,148c
Operating income $1,87b,d


$735
$5,403b,d


$2,006c
Income from continuing operations applicable to common stocke







$763b,d,f


$351f
$2,311b,d,f


$970c,f


Net income applicable to common stocke $775b,d,f


$351f
$2,355b,d,f


$970c,f


Diluted net income per share of common stockg:







Continuing operations $1.85b,d,f

b,d,f

$1.67f
$6.46b,d,f


$4.64c,f


Discontinued operations 0.02
-
0.12
-
Diluted net income per share of common stock $1.87b,d,f

b,d,f

$1.67f
$6.58b,d,f


$4.64c,f


Diluted average common shares outstandingg, h 447
221
380
221
Operating cash flows $2,177
$692
$4,927
$1,068
Capital expenditures $466
$68
$1,138
$178









Operating Data Sales from Mines







Copper (millions of recoverable pounds)







FCXs consolidated share 949
324
2,479
769
Average realized price per pound $3.53b
$3.43
$3.43b
$3.38









Gold (thousands of recoverable ounces)







FCXs consolidated share 269
478
2,137
1,228
Average realized price per ounce $692.43
$608.57
$668.80
$540.67c









Molybdenum (millions of recoverable pounds)







FCXs consolidated share 16
N/A
33
N/A
Average realized price per pound $27.89
N/A
$26.22
N/A

Note: Disclosures of after-tax amounts throughout this release are calculated by reference to the applicable tax rate.

a. Includes Phelps Dodge results beginning March 20, 2007.

b. Includes charges for noncash mark-to-market accounting adjustments on copper price protection programs totaling $44 million ($26 million to net income or $0.06 per share) and a reduction in average realized prices of $0.04 per pound of copper in third-quarter 2007 and $212 million ($129 million to net income or $0.34 per share) and a reduction in average realized prices of $0.08 per pound in the 2007 nine-month period, representing the increase in the mark-to-market liability to fair value of $635 million at September 30, 2007.

c. Includes loss on redemption of FCXs Gold-Denominated Preferred Stock, Series II totaling $69 million ($37 million to net income or $0.17 per share) and a reduction in average realized prices of $56.40 per ounce for the revenue adjustment relating to the redemption.

d. Includes the purchase accounting impact of the increase in the carrying amount of Phelps Dodges property, plant, and equipment and metals inventories totaling $446 million ($281 million to net income or $0.63 per share) in third-quarter 2007 and $1.0 billion ($646 million to net income or $1.70 per share) in the 2007 nine-month period, based on the preliminary purchase price allocation.

e. After preferred dividends.

f. Includes net losses on early extinguishment of debt totaling $36 million ($31 million to net income or $0.07 per share) in third-quarter 2007, $30 million ($29 million to net income or $0.13 per share) in third-quarter 2006, $171 million ($141 million to net income or $0.37 per share) in the 2007 nine-month period and $32 million ($30 million to net income or $0.14 per share) in the 2006 nine-month period for debt prepayments. Also includes gains totaling $47 million ($29 million to net income or $0.06 per share) in third-quarter 2007 and $85 million ($52 million to net income or $0.14 per share) in the 2007 nine-month period on sales of marketable equity securities.

g. Reflects assumed conversion of FCXs 7% Convertible Senior Notes and 5½% Convertible Perpetual Preferred Stock. Also reflects assumed conversion of FCXs 6¾% Mandatory Convertible Preferred Stock, which was issued on March 28, 2007. See Note g on page IV.

h. On March 19, 2007, FCX issued 136.9 million common shares to acquire Phelps Dodge. On March 28, 2007, FCX sold 47.15 million common shares. Common shares outstanding on September 30, 2007, totaled 382 million. Assuming conversion of the instruments discussed in Note g above, total potential common shares outstanding would be 444 million at September 30, 2007.

SUMMARY CONTRIBUTION ANALYSIS

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






Income from



Operating
Continuing

Revenues
Income
Operations
Three Months Ended September 30, 2007








FCX, excluding Phelps Dodge $ 1,260
$ 577
$ 50a
Phelps Dodge resultsb
3,806

1,732



1,047c


Purchase accounting impacts:








Inventories and mill and leach stockpiles
-

(291)



(184)


Property, plant and equipment
-

(155)

(97)
Other
-

14

10
Consolidated $ 5,066
$ 1,877
$ 826










Nine Months Ended September 30, 2007










FCX, excluding Phelps Dodge $ 5,082
$ 2,932
$ 1,054a
Phelps Dodge resultsb
7,673

3,467



2,025c


Purchase accounting impacts:








Inventories and mill and leach stockpiles
-

(656)



(414)


Property, plant and equipment
-

(369)

(232)
Other
-

29

22
Consolidated $ 12,755
$ 5,403
$ 2,455

a. Includes net losses on early extinguishment of debt totaling $36 million ($31 million to net income or $0.07 per share) in third-quarter 2007 and $171 million ($141 million to net income or $0.37 per share) in the 2007 nine-month period for debt prepayments, including the refinancing of FCXs term loan. Also includes net interest expense totaling $129 million ($109 million to net income or $0.24 per share) in third-quarter 2007 and $318 million ($270 million to net income or $0.71 per share) in the 2007 nine-month period for new debt used to acquire Phelps Dodge.

b. Includes charges to revenues for noncash mark-to-market accounting adjustments on copper price protection programs totaling $44 million ($26 million to net income or $0.06 per share) in third-quarter 2007 and $212 million ($129 million to net income or $0.34 per share) in the 2007 nine-month period, representing the increase in the mark-to-market liability to fair value of $635 million at September 30, 2007. With the acquisition of Phelps Dodge, FCX assumed Phelps Dodges copper hedging contracts for which the price of 486 million pounds of copper to be sold in 2007 is capped at $2.00 per pound. These copper price protection programs will mature at December 31, 2007, and settle in the first quarter of 2008 based on the average LME price for 2007. FCX does not currently intend to enter into similar hedging programs in the future.

c. Includes gains totaling $47 million ($29 million to net income or $0.06 per share) in third-quarter 2007 and $85 million ($52 million to net income or $0.14 per share) in the 2007 nine-month period on sales of marketable equity securities.

Purchase Accounting. During the third quarter of 2007, FCX made adjustments to its preliminary purchase price allocation based on updated valuation models for its mill and leach stockpiles resulting in an approximate $1.0 billion increase in the related estimated fair values. The increase in these fair values resulted in higher net purchase accounting impacts than previous estimates for the third quarter ($446 million pre-tax for third quarter actual compared to $300 million pre-tax in previous estimates). FCX is continuing to work with third-party consultants to assign fair values to all assets acquired and liabilities assumed in the acquisition. Further changes to the preliminary values could be significant and could result in changes to reported interim financial results. A current summary of the preliminary purchase price allocation to the assets and liabilities on March 19, 2007, follows (in billions):


Phelps Dodge


Preliminary

Purchase



Historical
Fair Value
Price

Balances
Adjustments
Allocation
Cash and cash equivalents $ 4.2
$ -
$ 4.2
Inventories, including mill and leach stockpiles
0.9

2.8

3.7
Property, plant and equipment
6.0

14.8

20.8
Other assets
3.1

(0.3)

2.8
Allocation to goodwill
-

6.5

6.5
Total assets
14.2

23.8

38.0
Deferred income taxes (current and long-term)
(0.7)

(6.1)

(6.8)
Other liabilities
(4.1)

(0.1)

(4.2)
Minority interests
(1.2)

-

(1.2)
Total $ 8.2
$ 17.6
$ 25.8

The following table summarizes the estimated impacts of purchase accounting fair value adjustments on 2007 production costs and depreciation, depletion and amortization expense associated with the increases in the carrying values of Phelps Dodges metal inventories, mill and leach stockpiles and property, plant and equipment resulting from the acquisition of Phelps Dodge. These charges do not affect cash flows and are subject to change as FCX completes the final purchase price allocation.


2007

First
Second
Third
Fourth


Quarter
Quarter
Quarter
Quarter
Total
(In millions) Actual
Actual
Actual
Estimate
Estimate
Production costs $ 96
$ 269
$

291


$ 100
$

756

Depreciation, depletion and amortization
28

186

155

200

569
Total $ 124
$ 455
$

446


$ 300
$

1,325
















Impact on net income $ 79
$ 286
$

281


$ 189
$

835

OPERATIONS

Consolidated copper sales of 949 million pounds in the third quarter of 2007 were higher than previous estimates of 900 million pounds reported on July 25, 2007, primarily because of a reduction in inventories resulting from the timing of shipments. Consolidated gold sales of 269,000 ounces in third-quarter 2007 were substantially higher than previous estimates because of mine sequencing at the Grasberg mine in Indonesia. As expected, consolidated gold sales in the 2007 third quarter were lower than the year ago period because of mining a section of lower grade ore. Consolidated unit net cash costs of $1.03 per pound were higher than the year-ago period primarily because of lower volumes at our Indonesian operations and higher costs in North America. Assuming average prices of $3.50 per pound for copper, $750 per ounce for gold and $30 per pound for molybdenum for the fourth quarter of 2007, unit net cash costs for the year 2007 would average approximately $0.75 per pound.


Third Quarter
Nine Months

2007
2006
2007
2006

Actual
Pro forma
Pro forma
Pro forma
Consolidated Operating Data







Copper (millions of recoverable pounds)







Production 911
911
2,958
2,595
Salesa 949
922
2,984
2,599
Average realized price per pound, excluding hedging $3.57
$3.47
$3.38
$3.14
Average realized price per pound, including hedging $3.53
$3.32
$3.34
$2.67
Unit net cash costsb

$1.05


$0.77
$0.65
$0.70
Gold (thousands of recoverable ounces)







Production 216
481
2,143
1,319
Salesa 269
510
2,159
1,328
Average realized price per ounce $692.43
$611.94
$666.46
$540.94c
Molybdenum (millions of recoverable pounds)







Production 18
16
53
51
Salesa 16
16
50
51
Average realized price per pound $27.89
$22.59
$25.12
$21.59

a. Excludes sales of purchased metal.

b. Reflects weighted average unit net cash costs, net of by-product credits, for all FCX mines. For reconciliations of unit net cash costs per pound by geographic region to production and delivery costs applicable to sales reported in FCXs consolidated financial statements and pro forma consolidated financial results refer to the schedule, Product Revenues and Production Costs, available on our web site, www.fcx.com.

c. Includes a reduction of approximately $52 per ounce for a loss on redemption of FCXs Gold-Denominated Preferred Stock, Series II.

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 primary 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.



Third Quarter
Nine Months
Consolidated
2007
2006
2007
2006
North American Mining Operations
Actual
Pro forma
Pro forma
Pro forma









Copper (millions of recoverable pounds)







Production
357
322
993
976
Salesa
376
303
1,016
970
Average realized price per pound:







Excluding hedging
$3.48
$3.48

$3.29


$3.00
Including hedgingb
$3.37
$3.00
$3.06
$1.75









Molybdenum (millions of recoverable pounds)







Production
18
16
53
51
Salesa
16
16
50
51
Average realized price per pound
$27.89
$22.59
$25.12
$21.59

a. Excludes sales of purchased metal.

b. Includes impact of hedging losses related to copper price protection programs.

Consolidated copper sales in North America totaled 376 million pounds in the third quarter of 2007, higher than the pro forma 2006 sales because of increased production at Morenci and Bagdad and the timing of shipments. 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 325 million pounds in the fourth quarter of 2007.

FCX is the worlds 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.

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 18 million pounds in the fourth quarter of 2007.

Approximately 65 percent of FCXs 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 October 22, 2007, was $32.125 per pound.

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


Third Quarter
Nine Months

2007
2006
2007
2006

Actual
Pro forma
Pro forma
Pro forma
Per pound of copper:











Site production and delivery, after adjustments $ 1.40
$ 1.23
$ 1.39
$ 1.08
By-product credits, primarily molybdenum
(0.66)

(0.66)

(0.650

(0.60)
Treatment charges
0.09

0.07

0.08

0.07
Unit net cash costsa $ 0.84
$ 0.64
$ 0.83
$ 0.55

a. For a reconciliation of actual and pro forma unit net cash costs per pound to production and delivery costs applicable to actual and pro forma sales disclosed in FCXs consolidated financial statements and pro forma consolidated financial results refer to the schedule, Product Revenues and Production Costs, available on our web site, www.fcx.com. Totals may not sum because of rounding.

North American unit net cash costs were higher in the third quarter of 2007 compared with the third quarter of 2006 primarily because of higher maintenance, labor and other input costs.

Assuming an average copper price of $3.50 per pound and an average molybdenum price of $30 per pound for the fourth quarter 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 $0.80 per pound of copper.

Unit Net Cash Costs for Primary Molybdenum Mine. Third-quarter 2007 unit net cash costs of $4.34 per pound of molybdenum at the Henderson primary molybdenum mine were higher, compared with pro forma unit net cash costs of $3.92 per pound for the 2006 quarter, primarily because of higher input costs, including labor, supplies and service costs, and higher taxes, partially offset by lower energy costs. Assuming achievement of current 2007 sales estimates, FCX estimates pro forma 2007 average unit net cash costs for its Henderson mine at approximately $4.30 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 FCXs 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. The new concentrator reached full capacity in mid-2007 and averaged 104,700 metric tons of ore per day in the third quarter.



Third Quarter
Nine Months
Consolidated
2007
2006
2007
2006
South American Mining Operations
Actual
Pro forma
Pro forma
Pro forma









Copper (millions of recoverable pounds):







Production
377
281
1,022
853
Sales
376
295
1,020
860
Average realized price per pound
$3.63
$3.52
$3.48
$3.08









Gold (thousands of recoverable ounces):







Production
31
27
83
86
Sales
31
27
84
85
Average realized price per ounce
$679.30
$672.59
$666.94
$545.88

South American copper sales in the third quarter of 2007 were higher than in the third quarter of 2006 primarily reflecting higher production from Cerro Verdes new concentrator (see page 11), partly offset by 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 385 million pounds in the fourth quarter 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 third-quarter 2007 actual unit net cash costs at the South American copper mines and pro forma unit net cash costs for the third quarter of 2006 and the first nine months of 2007 and 2006.


Third Quarter
Nine Months

2007
2006
2007
2006

Actual
Pro forma
Pro forma
Pro forma
Per pound of copper:











Site production and delivery, after adjustments $

0.98


$ 0.87
$

0.89


$ 0.77
By-product credits, primarily gold
(0.09)

(0.07)

(0.08)

(0.08)
Treatment charges
0.24

0.20

0.21

0.18
Unit net cash costsa $

1.14


$ 1.00
$

1.02


$ 0.87

a. For a reconciliation of actual and pro forma unit net cash costs per pound to production and delivery costs applicable to actual and pro forma sales disclosed in FCXs consolidated financial statements and pro forma consolidated financial results refer to the schedule, Product Revenues and Production Costs, available on our web site, www.fcx.com. Totals may not sum because of rounding.


South American unit net cash costs were higher in the third quarter of 2007 compared with the third quarter of 2006 primarily because of costs associated with Cerro Verdes voluntary contribution program and higher energy, maintenance and other costs, partly offset by higher volumes. During the quarter, FCX agreed to the 5-year voluntary contribution program in Peru, resulting in a $33 million charge, $0.09 per pound, including $23 million, $0.06 per pound, related to production prior to the third quarter of 2007. The contribution in future periods is expected to be 3.75 percent of Cerro Verde profits. These amounts are not tax deductible.

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 $1.00 per pound of copper.

Indonesian Mining. Through its 90.6 percent owned subsidiary PT Freeport Indonesia (PT-FI), FCX operates the worlds largest copper and gold mine in terms of reserves at its Grasberg operations in Papua, Indonesia. After mining a high-grade section of the Grasberg open pit during the first half of 2007, PT-FI mined in a relatively low-grade section in the third quarter of 2007. Therefore, PT-FI reported lower third-quarter 2007 sales volumes compared with the third quarter of 2006. Gold volumes were higher than previous estimates primarily because of changes in the timing of access to higher grade ore in the Grasberg open pit.

Consolidated
Third Quarter
Nine Months
Indonesian Mining Operations
2007
2006
2007
2006










Copper (millions of recoverable pounds):








Production
177
308
943
766
Sales
197
324
948
769
Average realized price per pound
$3.63
$3.43
$3.48
$3.38










Gold (thousands of recoverable ounces):








Production
182
449
2,051
1,218
Sales
234
478
2,061
1,228
Average realized price per ounce
$694.95
$608.57
$668.47
$540.67a

a. Amount was $597.07 per ounce before a loss on redemption of FCXs Gold-Denominated Preferred Stock, Series II.

FCXs consolidated share of annual sales from Indonesia in 2007 is projected to approximate 1.1 billion pounds of copper and over 2.1 million ounces of gold, in excess of 100,000 ounces higher than previous estimates 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 expects to be mining in a relatively low-grade section of the Grasberg open pit in the fourth quarter of 2007 and in the first half of 2008. As a result, fourth-quarter 2007 projected sales volumes, totaling approximately 165 million pounds of copper and 70 thousand ounces of gold, reflect the processing of lower ore grades.

Unit Net Cash Costs. PT-FIs unit net cash costs, including gold and silver credits, averaged $1.30 per pound of copper during the third quarter of 2007, compared with $0.70 per pound in the 2006 quarter. The higher unit net cash costs in the 2007 quarter compared with the 2006 quarter reflect the significantly lower copper and gold volumes, partly offset by higher gold prices. Unit site production and delivery costs will vary with fluctuations in production volumes because of the primarily fixed nature of PT-FIs cost structure. Because the majority of PT-FIs costs are fixed, unit costs vary with the volumes sold and the price of gold, and therefore are currently projected to be significantly higher during the second half of 2007 than the average net cash credits of $0.25 per pound in the first half of the year.


Third Quarter
Nine Months

2007
2006
2007
2006
Per pound of copper:











Site production and delivery, after adjustments $ 1.76
$ 1.10
$ 1.10
$ 1.17
Gold and silver credits
(0.90)

(0.95)

(1.50)

(1.02)
Treatment charges
0.34

0.44

0.35

0.43
Royalties
0.10

0.11

0.12

0.11
Unit net cash costsa $ 1.30
$ 0.70
$ 0.07
$ 0.69

a. For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCXs consolidated financial statements refer to the schedule, Product Revenues and Production Costs, available on our web site, www.fcx.com.

Assuming average copper prices of $3.50 per pound and average gold prices of $750 per ounce for the fourth quarter 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 $0.36 per pound.

OTHER ITEMS

At September 30, 2007, FCXs consolidated copper sales included 442 million pounds of copper, priced at an average of $3.65 per pound, subject to final pricing over the next several months. Each $0.05 change in the price realized from the September 30, 2007, price would result in an approximate $15 million effect on FCXs 2007 net income. The LME closing spot price for copper on October 23, 2007 was $3.55 per pound. Third-quarter 2007 adjustments to concentrate sales recognized in prior quarters decreased revenues by $37 million ($22 million to net income or $0.05 per share) compared with an increase of $33 million ($18 million to net income or $0.08 per share) in the third quarter of 2006.

Atlantic Copper, FCXs wholly owned Spanish smelting unit, reported operating income of $1 million in the third quarter of 2007, compared with operating income of $20 million in the 2006 period. Operating income was lower in the 2007 quarter because of lower treatment rates and higher operating costs resulting from a stronger euro and higher energy costs. In June 2007, Atlantic Copper successfully completed a scheduled 23-day maintenance turnaround which impacted operating results by approximately $24 million in the first nine months of 2007.

FCX defers recognizing profits on PT-FIs sales to Atlantic Copper and on 25 percent of PT-FIs sales to PT Smelting, PT-FIs 25 percent-owned Indonesian smelting unit, until the final sales to third parties occur. Changes in these net deferrals resulted in an addition to FCXs net income totaling $91 million, $0.20 per share, in the third quarter of 2007, and a reduction to net income of $11 million, $0.03 per share, in the first nine months of 2007. For the 2006 periods, changes in these net deferrals resulted in a reduction to FCXs net income totaling $44 million, $0.20 per share, in the third quarter and an addition to net income of $13 million, $0.06 per share, in the first nine months. At September 30, 2007, FCXs 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 $112 million. Based on copper prices of $3.50 per pound and gold prices of $750 per ounce for the fourth 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 $40 million in the fourth 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.

Discontinued Operations. On September 12, 2007, FCX entered into an agreement to sell its international wire and cable business, PDIC, for $735 million including the acquisition of minority interests. Accordingly, PDICs operating results have been reported as discontinued operations in FCXs condensed consolidated statements of income; and PDICs assets and liabilities have been reported as held for sale in FCXs condensed consolidated balance sheets. Income from discontinued operations for PDIC totaled $12 million, $0.02 per share, in the third quarter of 2007 and $44 million, $0.12 per share, in the first nine months of 2007. The sale of PDIC is subject to regulatory approvals and other customary closing conditions and is expected to close in the fourth quarter of 2007. FCX expects to use the estimated net proceeds of approximately $620 million to repay debt. FCX expects to record charges of up to approximately $20 million ($12 million to net income) for transaction and related costs associated with the disposition.

DEVELOPMENT and EXPLORATION ACTIVITIES

Development Activities. FCX has significant development activities under way to expand its 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 restart of a mill and the construction of a concentrate-leach, direct-electrowinning facility 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; potential restart of a large, high-grade primary molybdenum mine at Climax and development of the highly prospective Tenke Fungurume project in the Democratic Republic of Congo.

In addition to the projects currently under way, FCX is undertaking a review of its assets to evaluate the potential for incremental expansion opportunities associated with existing ore bodies.

North America. Construction of the concentrate-leach, direct electrowinning facility at Morenci is essentially complete and the facility is currently being commissioned. This project uses FCXs 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. With the recent restart of the mill, this project is designed to add 115 million pounds of copper per year. The overall project required a total capital investment of approximately $250 million.

The Safford copper mine will produce ore from two open-pit mines located in southeastern Arizona and includes a solution extraction/electrowinning facility. Construction commenced in August 2006 and is nearing completion. First production is expected in late 2007, with ramp-up to full production of approximately 240 million pounds per year in the first half of 2008. The total capital investment for this project approximates $625 million. FCX believes there is significant additional exploration and development potential in this district, including the Lone Star project.

FCX is in the final stages of evaluating the restart of the Climax mine near Leadville, Colorado. Climax is believed to be the largest, highest grade and lowest cost undeveloped molybdenum ore body in the world. The initial project would involve the restart of open pit mining and the construction of a new mill. Annual production would approximate 30 million pounds of molybdenum at estimated cash costs approximating $3.50 per pound. Capital costs estimates for the initial project approximate $500 million and the facilities could be in operation by 2010. Long lead time equipment has been ordered and a final investment decision is expected by year-end 2007. The evaluation is expected to confirm the restart as an attractive economic project. The project is designed to enable the consideration of further large scale expansion and FCX will consider a second phase of the Climax project which could potentially double annual molybdenum production.

South America. Cerro Verdes recently completed $900 million mill expansion project to process sulfide ore reserves through a new concentrator is performing well. In June 2007, the mill reached design capacity of 108,000 metric tons of ore per day and averaged 104,700 metric tons per day in the third quarter. With the completion of the expansion, copper production at Cerro Verde is expected to approximate 650 million pounds per year (approximately 348 million pounds per year for FCXs 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 FCXs share) for the next five years.

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 would be used to process the additional reserves, minimizing capital spending requirements. Total initial capital for the project is approximately $450 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. The Deep Ore Zone (DOZ) 50,000 metric tons of ore per day expansion is complete with third-quarter rates averaging 55,600 metric tons per day. A further expansion to 80,000 metric tons per day is under way with completion targeted by 2010. Other projects 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, 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 mineralized areas below 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. Construction of this high potential project is in progress.

Operations are targeted to commence in 2009, with average annual production of approximately 250 million pounds of copper and approximately 18 million pounds of cobalt for the first 10 years. Based on the 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 projects estimated capital cost of $900 million increased from the previous estimate of $650 million primarily reflecting various inflationary pressures and scope changes. Capital cost estimates will continue to be reviewed. Approximately $157 million in capital costs have been incurred through September 30, 2007.

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 $135 million.

FCXs 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, as well as targets in the Morenci and Bagdad districts. FCX is also conducting exploration activities near the Henderson ore body. In South America, exploration is ongoing in and around the Cerro Verde and Candelaria/Ojos del Salado deposits. In Africa, FCX is actively pursuing targets outside of the area of initial development at Tenke Fungurume. The number of drill rigs operating on these and other programs near the companys minesites increased from 26 at the end of March 2007 to 39 currently.

PT-FIs 2007 exploration efforts in Indonesia will continue to test extensions of the Deep Grasberg and Kucing Liar mine complex and to evaluate targets in the area between the Ertsberg East and Grasberg mineral systems from the new Common Infrastructure tunnels. Initial drill results from the Common Infrastructure tunnel are positive and additional drilling is in process. FCX continues its efforts to resume exploration activities in certain prospective areas in Papua, outside Block A (the Grasberg contract area).

CASH and DEBT

At September 30, 2007, FCX had consolidated cash of $2.4 billion and net cash available to the parent company of $1.6 billion as shown below (in billions):


September 30,

2007
Cash from United States operations $ 0.1
Cash from international operations
2.3
Total consolidated cash
2.4
Less minority interests share
(0.6)
Cash, net of minority interests share
1.8
Withholding tax if distributed
(0.2)
Net cash available to parent company $ 1.6

At September 30, 2007, FCX had $8.7 billion in debt, including $7.6 billion in acquisition debt, $0.7 billion in Phelps Dodge debt assumed in the transaction and $0.4 billion of previously existing FCX debt. The following table summarizes FCXs debt transactions since June 30, 2007 (in billions):

Total debt at June 30, 2007 $ 9.8
Repayments:


Term loans, net
(0.9)
Other
(0.2)
Total debt at September 30, 2007 $ 8.7

As discussed above, FCX anticipates proceeds net of taxes and transaction expenses of approximately $620 million for the sale of PDIC and will use proceeds from this sale to reduce debt further. Since completion of the Phelps Dodge transaction on March 19, 2007, FCX has repaid a total of $8.9 billion in debt, including $8.4 billion of an original $10 billion term loan.

OUTLOOK

FCXs pro forma consolidated sales volumes for 2007, including pre-acquisition Phelps Dodge sales, are currently projected to approximate 3.9 billion pounds of copper, 2.3 million ounces of gold and 68 million pounds of molybdenum. Projected sales volumes for the fourth quarter of 2007 approximate 875 million pounds of copper, 100 thousand ounces of gold and 18 million pounds of molybdenum. The achievement of FCXs 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 fourth quarter of 2007 and assuming average prices of $3.50 per pound of copper, $750 per ounce of gold and $30 per pound of molybdenum in the fourth quarter of 2007, FCXs consolidated operating cash flows would approximate $6.2 billion in 2007, including approximately $1.3 billion projected in the fourth quarter of 2007. Each $0.20 per pound change in copper prices in the fourth quarter would affect 2007 cash flows by approximately $140 million. FCXs capital expenditures for 2007 are currently estimated to approximate $1.9 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 $3.50 per pound of copper, $750 per ounce of gold and $30 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 $7.3 billion and consolidated cash would approximate $1.5 billion. Based on these assumptions, FCXs term debt (which had a $1.55 billion balance at September 30, 2007) would be substantially repaid by year-end 2007.

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. FCXs 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 FCXs operations would enable the company to reduce its debt further and to consider additional returns to shareholders. FCXs management and its Board of Directors review the companys financial policy on an ongoing basis. There are 12.2 million shares remaining under FCXs 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 worlds largest producer of molybdenum. The company's portfolio of assets include the Grasberg mining complex, the world's largest copper and gold mine in terms of reserves, significant mining operations in the Americas, including the large scale Morenci/Safford minerals district in North America and the Cerro Verde and El Abra operations in South America, and the potential world-class Tenke Fungurume development project in the Democratic Republic of Congo. Additional information about FCX is available on our web site 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, projected sale of PDIC, 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 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 FCXs 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 third-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, November 16, 2007.

FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED OPERATING DATA



Three Months Ended September 30,
COPPER, Pro Formaa
Production
Sales
(millions of recoverable pounds)
2007
2006
2007
2006













MINED COPPER (FCXs net interest in %)











North America











Morenci (85%)
187b

176b

202b

173b
Bagdad (100%)
58

41

58

36
Sierrita (100%)
41

40

44

34
Chino (100%)
49

41

51

41
Tyrone (100%)
12

17

15

16
Miami (100%)
6

5

6

1
Tohono (100%)
1

1

-

1
Manufacturing and other (100%)
3

1

-

1
Total North America
357

322

376

303













South America











Candelaria/Ojos del Salado (80%)
118

105

118

110
Cerro Verde (53.6%)
171

54

174

53
El Abra (51%)
88

122

84

132
Total South America
377

281

376

295













Indonesia











Grasberg (90.6%)
177c

308c

197c

324c
Consolidated
911

911

949

922













Less minority participants share
163

135

164

142
Net
748

776

785

780













Consolidated sales from mines






949

922
Purchased copper






167

195
Total consolidated sales






1,116

1,117













Average realized price per pound











Excluding hedging






$3.57

$3.47
Including hedging






$3.53d

$3.32d













GOLD, Pro Formaa











(thousands of recoverable ounces)
























MINED GOLD (FCXs net interest in %)
























North America (100%)
3b

5b

4b

5b
South America (80%)
31

27

31

27
Indonesia (90.6%)
182c

449c

234c

478c
Consolidated
216

481

269

510













Less minority participants shares
24

47

28

51
Net
192

434

241

459













Consolidated sales from mines






269

510
Purchased gold






2

3
Total consolidated sales






271

513













Average realized price per ounce






$692.43

$611.94













MOLYBDENUM, Pro Formaa











(millions of recoverable pounds)
























MINED MOLYBDENUM (FCXs net interest in %)
























North America











Henderson (100%)
10

9

N/A

N/A
By-product (100%)
8

7

N/A

N/A
Consolidated
18

16

16

16













Purchased molybdenum






2

3
Total consolidated sales






18

19













Average realized price per pound






$27.89

$22.59

a.The third-quarter 2006 data include Phelps Dodges pre-acquisition results for comparative purposes only.

b.Amounts are net of Morencis joint venture partners 15 percent interest.

c.Amounts are net of Grasbergs joint venture partners interest, which varies in accordance with the terms of the joint venture agreement.

d.Includes reductions of $0.04 per pound for third-quarter 2007 and $0.15 per pound for third-quarter 2006 for mark-to-market accounting adjustments on copper price protection programs.

FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED OPERATING DATA

(continued)



Nine Months Ended September 30,
COPPER, Pro Formaa
Production
Sales
(millions of recoverable pounds)
2007
2006
2007
2006













MINED COPPER (FCXs net interest in %)











North America











Morenci (85%)
528b

515b

534b

512b
Bagdad (100%)
151

119

151

119
Sierrita (100%)
113

122

121

121
Chino (100%)
134

144

137

144
Tyrone (100%)
36

49

40

48
Miami (100%)
15

15

19

14
Tohono (100%)
3

4

2

4
Manufacturing and other (100%)
13

8

12

8
Total North America
993c

976

1,016c

970













South America











Candelaria/Ojos del Salado (80%)
326

330

330

330
Cerro Verde (53.6%)
425

156

419

154
El Abra (51%)
271

367

271

376
Total South America
1,022c

853

1,020c

860













Indonesia











Grasberg (90.6%)
943d

766d

948d

769d
Consolidated
2,958

2,595

2,984

2,599













Less minority participants share
484

390

482

394
Net
2,474

2,205

2,502

2,205













Consolidated sales from mines






2,984

2,599
Purchased copper






524

609
Total consolidated sales






3,508

3,208













Average realized price per pound











Excluding hedging






$3.41

$3.14
Including hedging






$3.34e

$2.67e













GOLD, Pro Formaa











(thousands of recoverable ounces)
























MINED GOLD (FCXs net interest in %)











North America (100%)
9b

15b

14b

15b
South America (80%)
83f

86

84f

85
Indonesia (90.6%)
2,051d

1,218d

2,061d

1,228d
Consolidated
2,143

1,319

2,159

1,328













Less minority participants shares
209

131

210

133
Net
1,934

1,188

1,949

1,195













Consolidated sales from mines






2,159

1,328
Purchased gold






6

11
Total consolidated sales






2,165

1,339













Average realized price per ounce






$666.46

$540.94g













MOLYBDENUM, Pro Formaa











(millions of recoverable pounds)
























MINED MOLYBDENUM (FCXs net interest in %)











North America











Henderson (100%)
30

28

N/A

N/A
By-product (100%)
23

23

N/A

N/A
Consolidated
53h

51

50h

51













Purchased molybdenum






7

7
Total consolidated sales






57

58













Average realized price per pound






$25.12

$21.59

a.Includes Phelps Dodges pre-acquisition results for comparative purposes only.

b.Amounts are net of Morencis joint venture partners 15 percent interest.

c.Includes North American copper production of 258 million pounds and sales of 283 million pounds and South American copper production of 259 million pounds and sales of 222 million pounds for Phelps Dodges pre-acquisition results.

d.Amounts are net of Grasbergs joint venture partners interest, which varies in accordance with the terms of the joint venture agreement.

e.Includes reductions of $0.07 per pound for the 2007 nine-month period and $0.47 per pound for the 2006 nine-month period for mark-to-market accounting adjustments on copper price protection programs.

f.Includes gold production of 21 thousand ounces and sales of 18 thousand ounces for Phelps Dodges pre-acquisition results.

g.Includes a reduction of approximately $52 per ounce for a loss on redemption of FCXs Gold-Denominated Preferred Stock, Series II.

h.Includes molybdenum production of 14 million pounds and sales of 17 million pounds for Phelps Dodges pre-acquisition results.

FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED OPERATING DATA

(continued)



Three Months Ended
Nine Months Ended


September 30,
September 30,
Statistical Data from Mining Operations, 100%a
2007
2006
2007
2006









North America (copper and molybdenum mines)
















Copper Mines
















Solution Extraction/Electrowinning (SX/EW) Operations







Leach ore placed in stockpiles (metric tons per day)
797,600
772,600
739,800
816,900
Average copper ore grade (%)
0.21
0.32
0.25
0.30
Copper production (millions of recoverable pounds)
216
223
637
675









Mill Operations







Ore milled (metric tons per day)
226,400
203,100
221,000
194,800
Average ore grade (%)







Copper
0.36
0.33
0.34
0.33
Molybdenum
0.03
0.02
0.02
0.02
Production (millions of recoverable pounds)







Copper
141
99
356
301
Molybdenum
8
7
23
23









Primary Molybdenum Mine
















Ore milled (metric tons per day)
22,300
19,500
24,000
22,000
Average molybdenum ore grade (%)
0.25
0.25
0.23
0.23
Molybdenum production (millions of recoverable pounds)
10
9
30
28









South America (copper mines)
















SX/EW Operations







Leach ore placed in stockpiles (metric tons per day)
286,700
265,600
289,300
257,500
Average copper ore grade (%)
0.45
0.42
0.42
0.45
Copper production (millions of recoverable pounds)
139
176
430
523









Mill Operations







Ore milled (metric tons per day)
181,400
69,300
163,700
64,300
Average copper ore grade (%)
0.76
0.81
0.72
0.88
Copper production (millions of recoverable pounds)
238
105
592
330









Indonesia (copper mine)
















Mill Operations







Ore milled (metric tons per day)
198,600
230,100
213,900
223,600









Average ore grade







Copper (%)
0.58
0.85
0.88
0.76
Gold (grams per metric ton)
0.70
0.83
1.47
0.81
Recovery rates (%)







Copper
89.1
85.9
90.9
84.3
Gold
83.0
80.5
87.4
79.4
Copper (millions of recoverable pounds)







Production
194
325
984
831
Sales
214
343
989
834
Gold (thousands of recoverable ounces)







Production
327
456
2,362
1,253
Sales
383
487
2,371
1,267

a.Includes Phelps Dodge pre-acquisition results for comparative purposes only.

FREEPORT-McMoRan COPPER & GOLD INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


Three Months Ended
Nine Months Ended

September 30,
September 30,

2007
2006
2007a
2006

(In Millions, Except Per Share Amounts)

Revenuesb

$ 5,066
$ 1,636
$ 12,755
$ 4,148
Cost of sales:











Production and delivery
2,662c

792

6,105c

1,875
Depreciation, depletion and amortization
356c

60

846c

147
Total cost of sales
3,018

852

6,951

2,022
Exploration and research expenses
40

4

87

9
Selling, general and administrative expenses
131d

45

314d

111
Total costs and expenses
3,189

901

7,352

2,142
Operating income
1,877

735

5,403

2,006
Interest expense, net
(155)

(18)

(386)

(62)
Losses on early extinguishment and conversion of debt, net
(36)

(30)

(171)

(32)
Gains on sales of assets
47e

21

85e

30
Other income, net
48

6

110

17
Equity in affiliated companies net earnings
5

2

17

7
Income from continuing operations before income taxes and minority interests












1,786

716

5,058

1,966
Provision for income taxes
(653)

(304)

(1,875)

(836)
Minority interests in net income of consolidated subsidiaries
(307)

(46)

(728)

(115)
Income from continuing operations
826

366

2,455

1,015
Income from discontinued operations (net of taxes of $5 million in three-month period and $20 million in nine-month period)












12f

-

44f

-
Preferred dividends
(63)

(15)

(144)

(45)
Net income applicable to common stock $ 775
$ 351
$ 2,355
$ 970













Basic net income per share of common stock:











Continuing operations
$2.00

$1.85

$7.06

$5.14
Discontinued operations
0.03f

-

0.13f

-
Basic net income per share of common stock
$2.03

$1.85

$7.19

$5.14













Diluted net income per share of common stock:











Continuing operations
$1.85

$1.67

$6.46

$4.64
Discontinued operations
0.02f

-

0.12f



-
Diluted net income per share of common stockg
$1.87

$1.67

$6.58

$4.64













Average common shares outstanding:











Basic
382h

190

327h

189
Dilutedg
447

221

380

221













Dividends paid per share of common stock
$0.3125

$1.0625

$0.9375

$2.9375

a. Includes Phelps Dodge results beginning March 20, 2007.

b. Includes positive (negative) adjustments to prior period concentrate sales totaling $(37) million in the 2007 quarter, $33 million in the 2006 quarter, $90 million in the 2007 nine-month period and $139 million in the 2006 nine-month period.In addition, charges for mark-to-market accounting adjustments for losses on copper price protection program totaled $44 million in the 2007 quarter and $212 million in the 2007 nine-month period.The 2006 nine-month period also includes a $69 million loss on the mandatory redemption of FCXs Gold-Denominated Preferred Stock, Series II.

c. Includes impact of purchase accounting adjustments related to the Phelps Dodge acquisition, which increased production costs by $277 million in the 2007 quarter and $627 million in the 2007 nine-month period and increased depreciation, depletion and amortization by $155 million in the 2007 quarter and $369 million in the 2007 nine-month period.

d. Includes additional costs relating to the acquisition of Phelps Dodge totaling $69 million in the 2007 quarter and $137 million in the 2007 nine-month period.Also includes stock-based compensation costs related to second-quarter 2007 stock option grants totaling $9 million in the 2007 quarter and $33 million in the 2007 nine-month period.

e. Represents gains on sales of marketable equity securities.

f. Relates to the operations of PDIC, which FCX entered into an agreement to sell on September 12, 2007.

g. Reflects assumed conversion of FCXs 7% Convertible Senior Notes and 5½% Convertible Perpetual Preferred Stock, resulting in the exclusion of interest expense totaling less than $0.1 million in the 2007 quarter, $3 million in the 2006 quarter, $0.2 million in the 2007 nine-month period and $13 million in the 2006 nine-month period and dividends totaling $15 million in each of the third quarters of 2007 and 2006 and $45 million in each of the nine-month periods of 2007 and 2006.The 2007 periods also include assumed conversion of FCXs 6¾% Mandatory Convertible Preferred Stock, of which FCX sold 28.75 million shares on March 28, 2007, reflecting exclusion of dividends totaling $48 million for the 2007 quarter and $99 million for the 2007 nine-month period.The assumed conversions reflect the inclusion of 62 million common shares in the 2007 quarter, 30 million common shares in the 2006 quarter, 50 million common shares in the 2007 nine-month period and 31 million common shares in the 2006 nine-month period.

h. On March 19, 2007, FCX issued 136.9 million shares to acquire Phelps Dodge; and on March 28, 2007, FCX sold 47.15 million common shares in a public offering.

FREEPORT-McMoRan COPPER & GOLD INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)



September 30,

December 31,


2007

2006


(In Millions)
ASSETS







Current assets:







Cash and cash equivalents
$ 2,377

$ 907
Accounts receivable

2,165


486
Inventories

2,135


724
Mill and leach stockpiles

614


-
Prepaid expenses, restricted cash and other

152


34
Assets held for sale

1,231a


-
Total current assets

8,674


2,151
Property, plant, equipment and development costs, net

24,020


3,099
Trust assets

609


-
Long-term mill and leach stockpiles

1,099


-
Goodwill

6,332b


-
Other assets

655


140
Total assets
$ 41,389

$ 5,390









LIABILITIES AND STOCKHOLDERS EQUITY







Current liabilities:







Accounts payable and accrued liabilities
$ 2,695

$ 789
Accrued income taxes

815


165
Copper price protection program

635


-
Current portion of long-term debt and short-term borrowings

67


19
Liabilities related to assets held for sale

472a


-
Total current liabilities

4,684


973
Long-term debt, less current portion:







Senior notes

6,953


620
Term loan

1,550


-
Project financing, equipment loans and other

162


41
Total long-term debt, less current portion

8,665


661
Deferred income taxes

6,816


800
Other liabilities and deferred credits

1,492


298
Total liabilities

21,657


2,732
Minority interests

1,699


213
Stockholders equity:







5½% Convertible perpetual preferred stock

1,100


1,100
6¾% Mandatory convertible preferred stock

2,875


-
Common stock

50


31
Capital in excess of par value

13,359


2,668
Retained earnings

3,474


1,415
Accumulated other comprehensive loss

(1)


(20)
Common stock held in treasury

(2,824)


(2,749)
Total stockholders equity

18,033


2,445
Total liabilities and stockholders equity
$ 41,389

$ 5,390

a.Represents the assets and liabilities of PDIC.

b.Second-quarter and third-quarter 2007 adjustments to the preliminary fair values assigned to the assets acquired and the liabilities assumed from Phelps Dodge and adjustments to the purchase price resulted in a $0.9 billion reduction in goodwill.Additional adjustments, which could be significant, are expected in future periods until FCX finalizes its valuation of the assets acquired and liabilities assumed.

FREEPORT-McMoRan COPPER & GOLD INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)



Nine Months Ended


September 30,


2007a

2006


(In Millions)
Cash flow from operating activities:







Net income
$ 2,499

$ 1,015
Adjustments to reconcile net income to net cash provided by operating activities:















Unrealized losses on copper price protection program

212


-
Depreciation, depletion and amortization

864


147
Minority interests in net income of consolidated subsidiaries

738


115
Noncash compensation and benefits

143


51
Losses on early extinguishment and conversion of debt, net

171


32
Gains on sales of assets

(85)


(30)
Deferred income taxes

(279)


13
Other

21


25
(Increases) decreases in working capital, excluding amounts acquired from Phelps Dodge:















Accounts receivable

(299)


131
Inventories

358


(182)
Prepaid expenses, restricted cash and other

-


(24)
Accounts payable and accrued liabilities

369


(77)
Accrued income taxes

215


(148)
Net cash provided by operating activities

4,927


1,068
Cash flow from investing activities:







Acquisition of Phelps Dodge, net of cash acquired

(13,907)


-
Phelps Dodge capital expenditures

(834)


-
PT Freeport Indonesia capital expenditures

(273)


(165)
Other capital expenditures

(31)


(13)
Sale of assets and other

79


31
Net cash used in investing activities

(14,966)


(147)
Cash flow from financing activities:







Proceeds from term loans under bank credit facility

12,450


-
Repayments of term loans under bank credit facility

(10,900)


-
Net proceeds from sales of senior notes

5,880


-
Net proceeds from sale of 6¾% mandatory convertible preferred stock

2,803


-
Net proceeds from sale of common stock

2,816


-
Proceeds from other debt

412


125
Repayments of other debt

(752)


(322)
Purchases of FCX common shares

-


(100)
Cash dividends paid:







Common stock

(301)


(559)
Preferred stock

(112


(45)
Minority interests

(440)b


(114)b
Net (payments for) proceeds from exercised stock options

(15)


14
Excess tax benefit from exercised stock options

9


21
Bank credit facilities fees and other

(250)


(6)
Net cash provided by (used in) financing activities

11,600


(986)
Cash included in assets held for sale

(91)


-
Net increase (decrease) in cash and cash equivalents

1,470


(65)
Cash and cash equivalents at beginning of year

907


764
Cash and cash equivalents at end of period
$ 2,377

$ 699

a.Includes Phelps Dodge results beginning March 20, 2007.

b.Represents minority interests share of dividends.

Contacts

Freeport-McMoRan Copper & Gold Inc.
Financial Contacts:
Kathleen L. Quirk, 602-366-8016
or
David P. Joint, 504-582-4203
or
Media Contact:
William L. Collier, 504-582-1750

Categories: Press Releases