News Release Details

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

HIGHLIGHTS

• Income from continuing operations applicable to common stock for fourth-quarter 2007 totaled $423 million, $1.07 per share (including net charges of $120 million, $0.29 per share, for special items discussed on page 2), compared with $426 million, $1.99 per share, for fourth-quarter 2006.
• Consolidated 2007 sales from mines totaled 878 million pounds of copper, 161 thousand ounces of gold and 19 million pounds of molybdenum for fourth-quarter 2007, and 3.4 billion pounds of copper, 2.3 million ounces of gold and 52 million pounds of molybdenum for full-year 2007. Pro forma 2007 sales, including pre-acquisition Phelps Dodge sales, totaled 3.9 billion pounds of copper, 2.3 million ounces of gold and 69 million pounds of molybdenum.
• Consolidated 2008 sales from mines are expected to approximate 4.3 billion pounds of copper, 1.3 million ounces of gold and 75 million pounds of molybdenum, including 885 million pounds of copper, 170 thousand ounces of gold and 19 million pounds of molybdenum for first-quarter 2008.
• Operating cash flows totaled $1.3 billion for fourth-quarter 2007 and $6.2 billion for the year, including Phelps Dodge’s amounts beginning March 20, 2007. Assuming average prices of $3.00 per pound of copper, $800 per ounce for gold and $30 per pound for molybdenum, operating cash flows in 2008 would approximate $5 billion.
• Capital expenditures approximated $617 million for fourth-quarter 2007 and $1.8 billion for 2007. Projected 2008 capital expenditures total $2.4 billion, including the addition of several new incremental expansion projects in North and South America and the recently approved project to restart the Climax molybdenum mine in Colorado.
• Commissioning of a major new copper mine in Safford, Arizona, is under way. First copper production was achieved by year-end 2007 with ramp-up to 240 million pounds of copper per year planned by mid-2008.
• Total debt approximated $7.2 billion and consolidated cash was $1.6 billionat December 31, 2007, compared with total debt of $8.7 billion and consolidated cash of $2.4 billion at September 30, 2007. During fourth-quarter 2007, FCX fully repaid the remaining portion of the $10 billion in term loans issued for the Phelps Dodge acquisition.
• Completed sale of international wire and cable business, Phelps Dodge International Corporation (PDIC), for $735 million in October 2007.
• In December 2007, FCX’s Board of Directors approved an increase in its annual common stock dividend from $1.25 to $1.75 per share and authorized a new 20-million share open market share purchase program.
• FCX’s preliminary estimate of consolidated recoverable reserves as of December 31, 2007, totaled 93.2 billion pounds of copper, 41.0 million ounces of gold and 2.0 billion pounds of molybdenum. Estimated recoverable reserves include 3.5 billion pounds of copper in mill and leach stockpiles.

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported fourth-quarter 2007 income from continuing operations applicable to common stock of $423 million, $1.07 per share, compared with $426 million, $1.99 per share, for the fourth quarter of 2006. For the year ended December 31, 2007, FCX reported income from continuing operations applicable to common stock of $2.7 billion, $7.41 per share, compared with $1.4 billion, $6.63 per share, in 2006. FCX’s 2007 financial and operating results include its wholly owned subsidiary Phelps Dodge’s results following its acquisition by FCX on March 19, 2007.

Results for the 2007 periods included the following special items:

Results for full-year 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 FCX’s Gold-Denominated Preferred Stock, Series II, and net gains of $30 million ($30 million to net income or $0.13 per share) from the disposition of land and certain royalty rights.

James R. Moffett, Chairman of the Board, and Richard C. Adkerson, President and Chief Executive Officer, said, “Our fourth-quarter and full-year 2007 performance reflects the strength of our business and the combination of the great Grasberg ore body with large-scale copper and molybdenum operations in the Americas. We look forward to expanding our production profile in 2008 and advancing development projects in the Democratic Republic of Congo, Americas and Indonesia. We have significant reserves and growth opportunities to supply products to a world that has growing requirements for the commodities we produce. We have structured our business to use our significant cash flows to invest in attractive development projects, maintain a strong balance sheet and provide 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):

Purchase Accounting. During the fourth quarter of 2007, FCX revised its preliminary purchase price allocation based on revised valuation estimates for its property, plant and equipment, which includes proven and probable reserves, resulting in an approximate $1.4 billion increase in the related estimated fair values. FCX will finalize the purchase price allocation during first-quarter 2008. A summary of the current purchase price allocation to the acquired assets and liabilities on March 19, 2007, follows (in billions):

The following table summarizes the impacts of purchase accounting fair value adjustments associated with the increases in the carrying values of the acquired metal inventories, including mill and leach stockpiles, property, plant and equipment, and intangible assets and liabilities resulting from the acquisition of Phelps Dodge. These charges do not affect cash flows. The impact on production costs from inventory valuations is expected to continue to decline in 2008.

OPERATIONS

Consolidated copper sales of 878 million pounds in the fourth quarter of 2007 approximated previous estimates of 875 million pounds reported on October 24, 2007. Slightly lower production and sales from North and South America were offset by higher sales from Indonesia. Consolidated gold sales of 161,000 ounces in fourth-quarter 2007 were higher than previous estimates of 100,000 ounces because of mine sequencing at the Grasberg mine in Indonesia. As expected, consolidated gold sales in the 2007 fourth quarter were lower than the year ago period because of mining a section of lower grade ore. Consolidated molybdenum sales in fourth-quarter 2007 approximated 19 million pounds. Pro forma consolidated sales for 2007 (including pre-acquisition Phelps Dodge sales) were 3.9 billion pounds of copper, 2.3 million ounces of gold and 69 million pounds of molybdenum. Consolidated unit net cash costs were $1.08 per pound in the fourth quarter of 2007 and $0.75 per pound on a pro forma basis for the year 2007. As expected, fourth-quarter 2007 unit costs were higher than prior 2007 quarterly periods and the 2007 average because of lower volumes at Grasberg. Assuming average prices of $3.00 per pound for copper, $800 per ounce for gold and $30 per pound for molybdenum for 2008, unit net cash costs for the year 2008 would average approximately $0.96 per pound. Pro forma amounts in the tables below reflect the inclusion of Phelps Dodge results prior to the March 19, 2007 acquisition.

FCX sells copper contained in concentrate, cathodes, rod and wire. Approximately two-thirds of FCX’s copper sales are concentrate and cathodes and the remaining one-third (principally North America) is rod and wire. Under the long-established structure of sales agreements prevalent in the industry, copper contained in concentrates and cathodes is generally provisionally priced at the time of shipment. The provisional prices are finalized in a specified future period (generally one to four months from the shipment date) based on quoted LME or COMEX prices. The sales subject to final pricing are generally settled in a subsequent month or quarter. Because a significant portion of FCX’s concentrate and cathode sales in any quarterly period usually remain subject to final pricing, the quarter-end price is a major determinant of recorded revenues and the average recorded realized price for copper for the period.

While LME copper prices averaged $3.28 per pound during the fourth quarter of 2007, FCX’s recorded realizations of $3.12 per pound, excluding hedging, during the fourth quarter of 2007 were heavily weighted to the applicable forward copper prices at the end of the quarter ($3.02 per pound). Approximately half of FCX’s consolidated copper sales during the fourth quarter were provisionally priced at the time of shipment and are subject to final pricing in 2008.

At December 31, 2007, FCX’s consolidated copper sales included 402 million pounds of copper, priced at an average of $3.02 per pound, subject to final pricing over the next several months. Each $0.05 change in the price realized from the December 31, 2007, price would result in an approximate $14 million effect on FCX’s 2008 net income. The LME closing spot price for copper on January 22, 2008, was $3.20 per pound. Fourth-quarter 2007 adjustments to concentrate sales recognized in prior quarters decreased revenues by $281 million ($137 million to net income or $0.33 per share) compared with a decrease of $71 million ($38 million to net income or $0.17 per share) in the fourth quarter of 2006.

North American Mining. FCX operates six open-pit copper mining complexes in North America (Morenci, Bagdad, Sierrita and Safford 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, FCX is pursuing a project to restart the Climax 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 in North America totaled 316 million pounds in the fourth quarter of 2007, lower than the pro forma fourth-quarter 2006 sales because of the timing of sales. Consolidated copper sales from North American operations totaled 1.3 billion pounds in each of the years ended December 31, 2007 and 2006.

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.

Consolidated molybdenum sales from the Henderson and by-product mines totaled 69 million pounds in each of the years ended December 31, 2007 and 2006.

Approximately 85 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. For 2009, 90 percent of sales is expected to be priced at approximate prevailing market prices. The Metals Week Dealer Oxide closing price for molybdenum on January 21, 2008, was $33.25 per pound.

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

North America unit net cash costs were higher in fourth-quarter 2007 as compared with fourth-quarter 2006 primarily because of higher mining costs associated with additional tons mined, higher energy and labor costs and higher maintenance costs at the Morenci and Bagdad mines. Unit net cash costs were higher for the full year 2007 as compared with the full year 2006 because of higher labor, maintenance, operating supplies and energy costs, partly offset by favorable by-product credits as a result of higher molybdenum prices.

Assuming an average copper price of $3.00 per pound and an average molybdenum price of $30 per pound for 2008 and achievement of current 2008 sales estimates, FCX estimates that its 2008 average unit net cash costs for its North American mines, including molybdenum credits, would approximate $1.00 per pound of copper.

Unit Net Cash Costs for Henderson Molybdenum Mine. Fourth-quarter 2007 unit net cash costs of $4.68 per pound of molybdenum at the Henderson molybdenum mine were higher, compared with pro forma unit net cash costs of $4.03 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 2008 sales estimates, FCX estimates 2008 average unit net cash costs for its Henderson mine at approximately $4.50 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 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 interest in Cerro Verde, an open-pit mine producing both electrowon copper cathodes and copper concentrates.

South American copper sales in the fourth quarter of 2007 were higher than in the fourth quarter of 2006 primarily reflecting higher production from Cerro Verde’s new concentrator (see page 13), partly offset by lower production at El Abra as a result of lower ore grades. Consolidated copper sales totaled 1.4 billion pounds for the full year 2007 and 1.1 billion pounds from South American operations in 2006. The increases for full-year 2007, compared with full-year 2006, reflect incremental production from a new concentrator at Cerro Verde.

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

South America unit net cash costs were slightly lower in the fourth quarter of 2007 compared with the fourth quarter of 2006 primarily because of increased production from the recently expanded mill at Cerro Verde. Partly offsetting the benefits of Cerro Verde’s increased production were higher mining and mill costs at Candelaria and higher energy costs at El Abra. For the full year 2007, unit net cash costs were higher because of higher energy, treatment, labor, maintenance and freight costs, partly offset by the benefits of higher production from the recently expanded mill at Cerro Verde and favorable by-product credits.

In third-quarter 2007, FCX agreed to a five-year voluntary contribution program in Peru, resulting in charges totaling $8 million, $0.02 per pound, in the fourth quarter of 2007 and $49 million, $0.03 per pound, in 2007. Contributions in future periods, which are not tax deductible, are expected to be 3.75 percent of Cerro Verde’s net annual profit after income taxes.

Assuming achievement of current 2008 sales estimates, FCX estimates that its 2008 average unit net cash costs for its South American mines, including gold credits, would approximate $1.05 per pound of copper.

Indonesian Mining. Through its 90.6 percent owned subsidiary PT Freeport Indonesia (PT-FI), FCX operates the world’s 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 second half of 2007. Therefore, PT-FI reported lower fourth-quarter 2007 sales volumes compared with the fourth quarter of 2006. Copper and gold volumes in the fourth quarter of 2007 were higher than previous estimates primarily because of changes in the timing of access to higher grade ore in the Grasberg open pit.

FCX’s consolidated share of annual sales from Indonesia in 2008 is projected to approximate 1.2 billion pounds of copper and 1.2 million ounces of gold. These estimates for gold are lower than previous forecasts of 1.4 million ounces of gold because of mine plan changes. 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 continue mining in a relatively low-grade section of the Grasberg open pit in the first half of 2008 and in a higher-grade section in the second half of 2008. Approximately 65 percent of 2008 copper sales and 75 percent of 2008 gold sales are estimated in the second half of the year.

Unit Net Cash Costs. PT-FI’s unit net cash costs, including gold and silver credits, averaged $0.29 per pound for the year ended December 31, 2007 and $0.60 per pound for the year ended December 31, 2006. The lower unit net cash costs in 2007 were primarily the result of higher gold and silver credits. Fourth-quarter 2007 average unit net cash costs of $1.39 per pound of copper were higher than the $0.44 per pound in the 2006 quarter, reflecting the significantly lower copper and gold volumes, partly offset by higher gold prices during fourth-quarter 2007. 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. Because the majority of PT-FI’s costs are fixed, unit costs vary with the volumes sold and the price of gold.

Assuming average copper prices of $3.00 per pound and average gold prices of $800 per ounce for 2008 and achievement of current 2008 sales estimates, PT-FI estimates that its 2008 unit net cash costs, including gold and silver credits, would approximate $0.80 per pound. The change from 2007 primarily reflects lower gold volumes.

OTHER ITEMS

Atlantic Copper, FCX’s wholly owned Spanish smelting unit, reported an operating loss of $7 million in the fourth quarter of 2007, compared with operating income of $19 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.

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 additions to FCX’s net income totaling $19 million, $0.05 per share, in the fourth quarter of 2007, and $8 million, $0.02 per share, for the year 2007. For the 2006 periods, changes in these net deferrals resulted in additions to FCX’s net income totaling $4 million, $0.02 per share, in the fourth quarter and $17 million, $0.08 per share, for the year 2006. At December 31, 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 $93 million. Based on copper prices of $3.00 per pound and gold prices of $800 per ounce for 2008 and current shipping schedules, FCX estimates that the net change in deferred profits on intercompany sales will result in an increase to net income of approximately $40 million in the first quarter of 2008. 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.

FCX also defers recognizing profits on intercompany molybdenum sales from the Henderson, Bagdad, Sierrita, Chino, Morenci and Cerro Verde mines to Climax Molybdenum Marketing Corporation (CMMC) until the final sales to third parties occur. Changes in these net deferrals resulted in reductions to FCX's net income totaling $13 million, $0.03 per share, in the fourth quarter of 2007, and $220 million, $0.55 per share, for the year 2007. Based on molybdenum prices of $30 per pound, FCX estimates that the net change in these deferred profits will not have a material impact on first-quarter 2008 net income. Absent significant changes in molybdenum prices, FCX does not anticipate significant changes in these deferred profits at current production and sales levels.

Discontinued Operations. On October 31, 2007, FCX sold its international wire and cable business, PDIC, for $735 million. The transaction generated proceeds of approximately $650 million net of taxes and other costs. PDIC’s operating results are reported as discontinued operations in FCX’s condensed consolidated statements of income. (Loss) income from discontinued operations for PDIC totaled $(9) million, $(0.02) per share, in the fourth quarter of 2007 and $35 million, $0.09 per share, in 2007, including transaction and related costs associated with the disposition.

PROVEN AND PROBABLE RESERVES

FCX’s estimated consolidated recoverable reserves include 93.2 billion pounds of copper, 41.0 million ounces of gold, 2.0 billion pounds of molybdenum, 230.9 million ounces of silver and 0.6 billion pounds of cobalt. Estimated recoverable reserves were assessed using a copper price of $1.20 per pound, a gold price of $450 per ounce and a molybdenum price of $6.50 per pound, compared with FCX’s 2006 assumptions of $1.00 per pound for copper and $400 per ounce for gold and Phelps Dodge’s 2006 assumptions of $1.05 per pound for copper and $5.00 per pound for molybdenum.

Net additions to recoverable copper reserves totaled approximately 2.3 billion pounds at the North American mines and approximately 1.8 billion pounds at the South American mines because of higher price assumptions partly offset by increased costs. Partly offsetting these additions were net reductions at the Indonesian mines primarily because the Dom ore bodies (0.7 billion pounds of copper, 0.2 million ounces of gold, net of joint venture participant share) were reclassified as mineralized material following an updated risk assessment of the Dom’s proximity to the mill complex and updates to the long-term mine plans for the underground ore bodies.

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. Recently completed or current major projects include the expansion of Cerro Verde which was completed in 2006 and operated at capacity in the second half of 2007; a major new mining complex currently being commissioned 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; the development of the large-scale, high-grade underground ore bodies in the Grasberg district; a project to restart open-pit mining 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 continuing to review its assets to evaluate the potential for expansion opportunities associated with existing ore bodies. As an initial step, FCX will be developing attractive economic projects for incremental expansions at the Morenci, Sierrita and Bagdad mines in Arizona and the Cerro Verde mine in Peru. These projects will require an estimated capital cost approximating $400 million and would provide incremental production ramping up to over 200 million pounds of copper and 7 million pounds of molybdenum by 2011. Detailed engineering for these projects is under way. In addition, FCX is taking steps to restart the Miami mine in Arizona, which is expected to produce approximately 100 million pounds of copper per year over an approximate five-year period beginning in 2010. Capital investment for this restart is expected to approximate $100 million. FCX is continuing to review potential large-scale expansion opportunities and other organic growth opportunities.

North America. Construction of a major new copper mine in Safford, Arizona, is substantially completed and first copper was produced by year-end 2007. 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 the mine is being commissioned in advance of initial expectations. The total capital investment for this project approximated $675 million. FCX will continue to pursue significant additional exploration and development potential in this district, including the Lone Star project currently being evaluated with a drilling program.

In December 2007, FCX announced its plans to proceed with 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 $500 million project involves open pit mining and the construction of new milling facilities. Annual production is expected to approximate 30 million pounds of molybdenum beginning in 2010 at estimated cash costs approximating $3.50 per pound. The project is designed to enable the consideration of further large scale expansion of the Climax mine. FCX is evaluating a second phase of the Climax project which could potentially double annual molybdenum production to 60 million pounds.

The concentrate-leach, direct electrowinning facility at Morenci is ramping up production following commissioning in third-quarter 2007. This project uses FCX’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. This project included the restart of a mill in the first half of 2007. Mill throughput adds 115 million pounds of copper per year and is operating near capacity of 54,000 short tons per day. The overall project required a total capital investment of approximately $250 million.

South America. The recently expanded mill at Cerro Verde reached design capacity of 108,000 metric tons of ore per day in mid-2007 and averaged approximately 106,300 metric tons per day in the fourth quarter. This expansion enables Cerro Verde to produce approximately 650 million pounds per year (approximately 348 million pounds per year for FCX’s share) and 8 million pounds of molybdenum per year for the next several years.

At the end of 2006, a feasibility study was completed to evaluate the development of a large sulfide deposit at El Abra. This project would extend the mine life by over ten years. 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 estimated to approximate $450 million, the majority of which will be spent between 2008 and 2011. FCX is working with Chilean authorities on an environmental impact study associated with this project.

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 expansion of the currently producing Deep Ore Zone (DOZ) mine to 50,000 metric tons of ore per day is complete with fourth-quarter rates averaging 59,000 metric tons per day. A further expansion of the DOZ mine 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, 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 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 approximating 100 million metric tons with ore grades of 2.3 percent copper and 0.3 percent cobalt. Construction of this high potential project is in progress. Operations are targeted to commence during 2009, with average annual production of approximately 250 million pounds of copper and approximately 18 million pounds of cobalt.

FCX is responsible for funding 70 percent of project development costs. The total capital investment for this project is currently estimated at approximately $900 million, with approximately 35 percent incurred through December 31, 2007. Capital cost estimates will continue to be reviewed as engineering and construction activities progress.

Exploration Activities. FCX is conducting exploration activities near its existing mines and in other high potential areas around the world. Aggregate exploration expenditures in 2008 are expected to approximate $175 million, compared with $119 million in 2007.

FCX’s exploration efforts in North America include drilling of the Lone Star deposit located approximately four miles from the ore body within the Safford district, 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 company’s minesites increased from 26 at the end of March 2007 to 55 currently.

PT-FI’s 2008 exploration efforts in Indonesia include testing 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 December 31, 2007, FCX had consolidated cash of $1.6 billion and net cash available to the parent company of $1.1 billion as shown below (in billions):

At December 31, 2007, FCX had $7.2 billion in debt, including $6.0 billion in acquisition debt, $0.8 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 since September 30, 2007 (in billions):

Since completion of the Phelps Dodge transaction on March 19, 2007, FCX has repaid a total of $10.4 billion in debt and has fully repaid the original $10 billion in term loans issued in connection with the acquisition.

OUTLOOK

FCX’s consolidated sales volumes for 2008 are currently projected to approximate 4.3 billion pounds of copper, 1.3 million ounces of gold and 75 million pounds of molybdenum. Projected sales volumes for the first quarter of 2008 approximate 885 million pounds of copper, 170 thousand ounces of gold and 19 million pounds of molybdenum. Because of mine sequencing at Grasberg and the ramp-up of production at Safford, second-half 2008 production is expected to be higher than the first half. Approximately 56 percent of consolidated copper sales and 72 percent of consolidated gold sales are expected in the second half of the year. The achievement of FCX’s sales estimates will be dependent 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 2008 and assuming 2008 average prices of $3.00 per pound of copper, $800 per ounce of gold and $30 per pound of molybdenum, FCX’s consolidated operating cash flows would approximate $5 billion in 2008. Operating cash flows in the first quarter are expected to be the lowest of the year, impacted by the $598 million payment in January 2008 to settle the 2007 copper price protection contract, taxes and other working capital items and the timing of production. Using flat pricing assumptions during the year, second-half 2008 operating cash flows would be significantly higher than the first half. FCX’s capital expenditures for 2008 are currently estimated to approximate $2.4 billion. FCX expects to generate cash flows during 2008 significantly greater than its capital expenditures, minority interests distributions, dividends and other cash requirements.

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 placed a high priority on debt reduction during 2007 and has achieved meaningful debt reduction since the Phelps Dodge acquisition. In December 2007, FCX increased its common stock annual dividend from $1.25 to $1.75 per share, with the first quarterly dividend of $0.4375 to be paid in February 2008, and authorized a new 20-million share open market share purchase program. As of January 22, 2008, no shares have been purchased under the program. Common dividends currently total approximately $670 million per year and preferred dividends total approximately $255 million per year. The continuation of the positive performance of FCX’s operations would enable the company to consider additional returns to shareholders. FCX’s management and its Board of Directors review the company’s financial policy on an ongoing basis.

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

The company's portfolio of assets 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, 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 FCX’s consolidated financial statements or pro forma consolidated financial results are in the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VIII, which is 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 fourth-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, February 15, 2008.