News Release Details

FCX Reports Fourth-Quarter and Year Ended December 31, 2007 Results

01/23/08

PHOENIX--()--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 Dodges 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, FCXs 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.
  • FCXs 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. FCXs 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:
















Increase (Decrease) in


Pre-tax




Net Income
(In millions, except per share amounts)
Income
Net Income
Per Share
Three Months Ended December 31, 2007











Purchase accounting impactsa
$ (235)

$ (143)

$ (0.35)

Noncash mark-to-market accounting adjustments on Phelps Dodges copper price program



37


23


0.06
Total special items
$ (198)

$ (120)

$ (0.29)













Year Ended December 31, 2007











Purchase accounting impactsa
$ (1,264)

$ (795)

$ (2.00)

Noncash mark-to-market accounting adjustments on Phelps Dodges copper price program



(175)


(106)


(0.27)
Net losses on debt reductions

(173)


(132)


(0.33)
Gains on sales of marketable equity securities

85


52


0.13
Total special items
$ (1,527)

$ (981)

$ (2.47)













a.


FCX has recorded its allocation of the approximate $26 billion purchase price to Phelps Dodge's assets and liabilities based on its current estimates of fair values as of March 19, 2007. The net purchase accounting impacts primarily reflect the impact of increases in the carrying values of acquired property, plant, and equipment and metals inventories (including mill and leach stockpiles), and also include amortization of acquired intangible assets and liabilities resulting from this preliminary purchase price allocation. (See page 5.) These items do not affect operating cash flows. The purchase price allocation will be finalized during first-quarter 2008.

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 FCXs 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 FINANCIAL AND OPERATING DATA





















Years Ended


Fourth Quarter
December 31,


2007

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










Revenues
$ 4,184b

$ 1,643
$ 16,939b

$ 5,791c
Operating income
$ 1,152b, d

$ 863
$ 6,555b, d

$ 2,869c

Income from continuing operations applicable to common stocke


$ 423b, d

$ 426
$ 2,734b, d, f

$ 1,396c, f
Net income applicable to common stocke
$ 414b, d

$ 426
$ 2,769b, d, f

$ 1,396c, f
Diluted net income (loss) per share of common stockg:










Continuing operations
$ 1.07b, d

$ 1.99
$ 7.41 b, d, f
$ 6.63c, f
Discontinued operations

(0.02)


-

0.09


-
Diluted net income per share of common stock
$ 1.05b, d

$ 1.99
$ 7.50 b, d, f
$ 6.63c, f
Diluted average common shares outstandingg, h

409


222

397


221
Operating cash flows
$ 1,298

$ 798
$ 6,225

$ 1,866
Capital expenditures
$ 617

$ 73
$ 1,755

$ 251












Operating Data Sales from Mines










Copper (millions of recoverable pounds)










FCXs consolidated share

878


432

3,357


1,201
Average realized price per pound
$ 3.16b

$ 2.88
$ 3.28b

$ 3.13












Gold (thousands of recoverable ounces)










FCXs consolidated share

161


508

2,298


1,736
Average realized price per ounce
$ 803

$ 628
$ 682

$ 567c












Molybdenum (millions of recoverable pounds)










FCXs consolidated share

19


N/A

52


N/A
Average realized price per pound
$ 27.84


N/A
$ 26.81


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 credits for noncash mark-to-market accounting adjustments on copper price protection programs totaling $37 million ($23 million to net income or $0.06 per share) and an increase in average realized prices of $0.04 per pound of copper in fourth-quarter 2007 and charges totaling $175 million ($106 million to net income or $0.27 per share) and a reduction in average realized prices of $0.05 per pound for full-year 2007, representing the change in the mark-to-market liability to fair value. FCX paid $598 million upon settlement of these contracts in January 2008. Also includes impacts of adjustments to provisionally priced concentrate and cathode sales recognized in prior periods (see discussion on page 6).

c.


Includes loss on redemption of FCX's 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 $40 per ounce for the revenue adjustment relating to the redemption.

d.


Includes the purchase accounting impact of the increases in the carrying values of acquired property, plant, and equipment, metals inventories and intangible assets and liabilities, which increased costs by a net $232 million ($143 million to net income or $0.35 per share) in fourth-quarter 2007 and $1.3 billion ($785 million to net income or $1.98 per share) for full-year 2007, based on the currently estimated purchase price allocation (see discussion on page 5).

e.


After preferred dividends.

f.


Includes net losses on early extinguishment of debt totaling $173 million ($132 million to net income or $0.33 per share) for full-year 2007 and $32 million ($30 million to net income or $0.14 per share) for full-year 2006 for debt prepayments. Also includes gains totaling $85 million ($52 million to net income or $0.13 per share) for full-year 2007 primarily related to sales of marketable equity securities. Full-year 2006 includes net gains of $30 million ($30 million to net income or $0.13 per share) from the disposition of land and certain royalty rights.

g.


Reflects assumed conversion of FCX's 7% Convertible Senior Notes and 5 1/2% Convertible Perpetual Preferred Stock. Also reflects assumed conversion for the year ended December 31, 2007, of FCX's 6 3/4% Mandatory Convertible Preferred Stock, which was issued on March 28, 2007. See Note h 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 December 31, 2007, totaled 382 million. Assuming conversion of the instruments discussed in Note g above, total potential common shares outstanding would be 445 million at December 31, 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):






















(Loss)









Income from




Operating

Continuing


Revenues
Income

Operations
Three Months Ended December 31, 2007










FCX, excluding Phelps Dodge
$ 952
$ 123

$ (230)a
Phelps Dodge resultsb

3,112

1,261


860
Purchase accounting impacts:










Inventories and mill and leach stockpiles

-

(81)


(50)
Property, plant and equipment

-

(226)


(143)
Intangible assets and liabilities

120

75


50
Consolidated
$ 4,184
$ 1,152

$ 487












Year Ended December 31, 2007










FCX, excluding Phelps Dodge
$ 6,034
$ 3,055

$ 824a
Phelps Dodge resultsb

10,785

4,756


2,903c
Purchase accounting impacts:










Inventories and mill and leach stockpiles

-

(737)


(464)
Property, plant and equipment

-

(595)


(375)
Intangible assets and liabilities

120

76


54
Consolidated
$ 16,939
$ 6,555

$ 2,942












a.


Includes net losses on early extinguishment of debt totaling $173 million ($132 million to net income or $0.33 per share) for full-year 2007 for debt prepayments. Also includes net interest expense totaling $111 million ($86 million to net income or $0.21 per share) in fourth-quarter 2007 and $429 million ($335 million to net income or $0.84 per share) for full-year 2007 for new debt used to acquire Phelps Dodge.

b.


Includes credits to revenues for noncash mark-to-market accounting adjustments on copper price protection programs totaling $37 million ($23 million to net income or $0.06 per share) in fourth-quarter 2007 and charges totaling $175 million ($106 million to net income or $0.27 per share) for full-year 2007, representing the change in the mark-to-market liability to fair value. With the acquisition of Phelps Dodge, FCX assumed Phelps Dodge's copper hedging contracts for which the price of 486 million pounds of copper sold in 2007 was capped at $2.00 per pound. These copper price protection programs matured at December 31, 2007, and FCX paid $598 million upon settlement in January 2008. FCX does not currently intend to enter into similar hedging programs in the future.

c.


Includes gains totaling $85 million ($52 million to net income or $0.13 per share) for full-year 2007 primarily related to sales of marketable equity securities.

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):
























Preliminary


Phelps Dodge




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


16.2


22.2
Other assets

3.1


0.2


3.3
Allocation to goodwill

-


5.6


5.6
Total assets

14.2


24.8


39.0
Deferred income taxes (current and long-term)

(0.7)


(6.8)


(7.5)
Other liabilities

(4.1)


(0.4)


(4.5)
Minority interests

(1.2)


-


(1.2)
Total
$ 8.2

$ 17.6

$ 25.8













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.

























2007




First
Second
Third
Fourth




2008
(In millions)
Quarter
Quarter
Quarter
Quarter
Total
Estimate
Production costs
$ 96
$ 269
$ 291

$ 81

$ 737

$ 60
Depreciation, depletion and amortization

28

186

155


226


595


940
Amortization of intangibles

-

-

(1)


(75)


(76)


75
Total
$ 124
$ 455
$ 445

$ 232

$ 1,256

$ 1,075






















Reduction of net income
$ 79
$

284


$

279



$ 143

$ 785

$ 670






















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.

















Years Ended


Fourth Quarter
December 31,


2007
2006
2007
2006


Actual
Pro forma
Pro forma
Pro forma
Consolidated Operating Data








Copper (millions of recoverable pounds)








Production

926

1,044

3,884

3,639
Salesa

878

1,031

3,862

3,630
Average realized price per pound, excluding hedging
$ 3.12
$ 2.99
$ 3.28
$ 3.06
Average realized price per pound, including hedging
$ 3.16
$ 3.19
$ 3.23
$ 2.79
Unit net cash costsb
$ 1.08
$ 0.71
$ 0.75
$ 0.70
Gold (thousands of recoverable ounces)








Production

186

544

2,329

1,863
Salesa

161

538

2,320

1,866
Average realized price per ounce
$ 803
$ 627
$ 682
$ 566c
Molybdenum (millions of recoverable pounds)








Production

17

17

70

68
Salesa

19

18

69

69
Average realized price per pound
$ 27.84
$ 22.68
$ 25.87
$ 21.87










a.
Excludes sales of purchased metal.
b.
Reflects weighted average unit net cash costs, net of by-product credits, for all mines. For reconciliations of unit net cash costs per pound by geographic region to production and delivery costs applicable to sales reported in FCX's consolidated financial statements or pro forma consolidated financial results refer to the supplemental schedule, "Product Revenues and Production Costs," beginning on page VIII, which is available on our web site, "www.fcx.com."
c.
Includes a reduction of approximately $37 per ounce for a loss on redemption of FCX's Gold-Denominated Preferred Stock, Series II.

FCX sells copper contained in concentrate, cathodes, rod and wire. Approximately two-thirds of FCXs 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 FCXs 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, FCXs 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 FCXs 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, FCXs 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 FCXs 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.
















Years Ended


Fourth Quarter
December 31,
Consolidated
2007
2006
2007
2006
North American Mining Operations
Actual
Pro forma
Pro forma
Pro forma









Copper (millions of recoverable pounds)







Production

327

329

1,320

1,305
Salesa

316

333

1,332

1,303
Average realized price per pound:







Excluding hedging
$ 3.24
$ 3.13
$ 3.26
$ 3.03
Including hedgingb
$ 3.35
$ 3.75
$ 3.12
$ 2.26









Molybdenum (millions of recoverable pounds)







Production

16

17

69

68
Salesa

19

18

69

69
Average realized price per pound
$ 27.84
$ 22.68
$ 25.87
$ 21.87









a.


Excludes sales of purchased metal.

b.


Includes impact of hedging gains (losses) related to copper price protection programs.

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 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.

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.




























Years Ended


Fourth Quarter
December 31,


2007
2006
2007
2006


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















Site production and delivery, after adjustments
$ 1.56

$ 1.31

$ 1.43

$ 1.14
By-product credits, primarily molybdenum

(0.69)


(0.59)


(0.66)


(0.60)
Treatment charges

0.11


0.06


0.09


0.07
Unit net cash costsa
$ 0.98

$ 0.78

$ 0.86

$ 0.61

















a.


For a reconciliation of actual and pro forma unit net cash costs per pound to production and delivery costs applicable to actual or pro forma sales reported in FCX's consolidated financial statements or pro forma consolidated financial results refer to the supplemental schedule, "Product Revenues and Production Costs," beginning on page VIII, which is available on our web site, www.fcx.com.

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 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 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.
















Years Ended


Fourth Quarter
December 31,
Consolidated
2007
2006
2007
2006
South American Mining Operations
Actual
Pro forma
Pro forma
Pro forma









Copper (millions of recoverable pounds):







Production

391

280

1,413

1,133
Sales

379

266

1,399

1,126
Average realized price per pound
$ 3.06
$ 3.00
$ 3.25
$ 3.03









Gold (thousands of recoverable ounces):







Production

33

26

116

112
Sales

30

26

114

111
Average realized price per ounce
$ 792
$ 619
$ 701
$ 552









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 Verdes 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.




























Years Ended


Fourth Quarter

December 31,


2007

2006

2007

2006


Actual

Pro forma

Pro forma

Pro forma
Per pound of copper:















Site production and delivery, after adjustments
$ 0.96

$ 0.97

$ 0.91

$ 0.82
By-product credits, primarily gold

(0.12)


(0.07)


(0.09)


(0.08)
Treatment charges

0.18


0.15


0.20


0.17
Unit net cash costsa
$ 1.02

$ 1.05

$ 1.02

$ 0.91

















a.


For a reconciliation of actual and pro forma unit net cash costs per pound to production and delivery costs applicable to actual or pro forma sales reported in FCX's consolidated financial statements or pro forma consolidated financial results refer to the supplemental schedule, "Product Revenues and Production Costs," beginning on page VIII, which is available on our web site, www.fcx.com.

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 Verdes 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 Verdes 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 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 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.

















Years Ended
Consolidated
Fourth Quarter
December 31,
Indonesian Mining Operations
2007
2006
2007
2006










Copper (millions of recoverable pounds):








Production

208

435

1,151

1,201
Sales

183

432

1,131

1,201
Average realized price per pound
$ 3.03
$ 2.88
$ 3.32
$ 3.13










Gold (thousands of recoverable ounces):








Production

147

514

2,198

1,732
Sales

124

508

2,185

1,736
Average realized price per ounce
$ 807
$ 628
$ 681
$ 567a










a.


Amount was $606 per ounce before a loss on redemption of FCX's Gold-Denominated Preferred Stock, Series II.

FCXs 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-FIs 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-FIs cost structure. Because the majority of PT-FIs costs are fixed, unit costs vary with the volumes sold and the price of gold.













Years Ended


Fourth Quarter

December 31,


2007

2006

2007

2006
Per pound of copper:















Site production and delivery, after adjustments
$ 1.66

$ 0.77

$ 1.19

$ 1.03
Gold and silver credits

(0.64)


(0.77)


(1.36)


(0.93)
Treatment charges

0.29


0.33


0.34


0.40
Royalties

0.08


0.11


0.12


0.10
Unit net cash costsa
$ 1.39

$ 0.44

$ 0.29

$ 0.60

















a.


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

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, FCXs 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-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 additions to FCXs 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 FCXs 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, 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 $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. PDICs operating results are reported as discontinued operations in FCXs 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

FCXs 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 FCXs 2006 assumptions of $1.00 per pound for copper and $400 per ounce for gold and Phelps Dodges 2006 assumptions of $1.05 per pound for copper and $5.00 per pound for molybdenum.










Preliminary Recoverable Reservesa


at December 31, 2007


Copper
Gold
Molybdenum


(billions of lbs)
(millions of ozs)
(billions of lbs)
North America
25.8
0.2
1.8
South America
26.0
1.4
0.2
Indonesia
37.1
39.4
-
Africa
4.3
-
-
Consolidated Basisb
93.2
41.0
2.0







Net Equity Interestc
77.0
37.0
1.9







a.


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

b.


Consolidated basis represents estimated metal quantities after reduction for joint venture partner interests at the Morenci mine in North America and the Grasberg mining complex in Indonesia.

c.


Net equity interest represents estimated consolidated basis metal quantities further reduced for minority interest owners.

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 Doms proximity to the mill complex and updates to the long-term mine plans for the underground ore bodies.










Consolidated Reserves Rollforward


Copper
Gold
Molybdenum


(billions of lbs)
(millions of ozs)
(billions of lbs)
Reserves Dec. 31, 2006a
93.6
42.5
2.0

Net additions/revisions


3.5
0.8
0.1
Production
(3.9)
(2.3)
(0.1)
Reserves Dec. 31, 2007
93.2
41.0
2.0







a.


Includes Phelps Dodge amounts prior to the acquisition.

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 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. 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 FCXs 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.

FCXs 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 companys minesites increased from 26 at the end of March 2007 to 55 currently.

PT-FIs 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):







December 31,


2007
Cash from United States operations
$ 0.1
Cash from international operations

1.5
Total consolidated cash

1.6
Less minority interests share

(0.3)
Cash, net of minority interests share

1.3
Withholding tax if distributed

(0.2)
Net cash available to parent company
$ 1.1





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 FCXs debt transactions since September 30, 2007 (in billions):






Total debt at September 30, 2007
$ 8.7
Repayments of term loans

(1.5)
Other borrowings

0.3
Other repayments

(0.3)
Total debt at December 31, 2007
$ 7.2





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

FCXs 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 FCXs 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, FCXs 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. FCXs 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 FCXs operations would enable the company to consider additional returns to shareholders. FCXs management and its Board of Directors review the companys 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 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, 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 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.



























FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED OPERATING DATA





























Three Months Ended December 31,

COPPER, Pro Formaa


Production
Sales
(millions of recoverable pounds)
2007
2006
2007
2006













MINED COPPER (FCXs net interest in %)











North America













Morenci (85%)
159b

178b

159b

180b
Bagdad (100%)
51

46

49

46
Sierrita (100%)
37

40

36

40
Chino (100%)
56

42

49

42
Tyrone (100%)
14

15

13

16
Miami (100%)
5

4

5

5
Tohono (100%)
-

1

1

1
Safford (100%)
1

-

-

-
Other (100%)
4

3

4

3
Total North America
327

329

316

333













South America













Candelaria/Ojos del Salado (80%)
127

99

117

95
Cerro Verde (53.6%)
169

66

168

60
El Abra (51%)
95

115

94

111
Total South America
391

280

379

266













Indonesia













Grasberg (90.6%)
208c

435c

183c

432c
Consolidated
926

1,044

878

1,031













Less minority participants share
169

147

165

141
Net
757

897

713

890













Consolidated sales from mines






878

1,031
Purchased copper






126

127
Total consolidated sales






1,004

1,158













Average realized price per pound











Excluding hedging






$3.12

$2.99
Including hedging






$3.16d

$3.19d













GOLD, Pro Formaa













(thousands of recoverable ounces)
























MINED GOLD (FCXs net interest in %)
























North America (100%)
6b

4b

7b

4b
South America (80%)
33

26

30

26
Indonesia (90.6%)
147c

514c

124c

508c
Consolidated
186

544

161

538













Less minority participants shares
20

53

18

52
Net
166

491

143

486













Consolidated sales from mines






161

538
Purchased gold






-

1
Total consolidated sales






161

539













Average realized price per ounce






$803

$627













MOLYBDENUM, Pro Formaa













(millions of recoverable pounds)
























MINED MOLYBDENUM (FCXs net interest in %)
























Henderson (100%)
9

9

N/A

N/A
By-product North America (100%)b
7

8

N/A

N/A
By-product Cerro Verde (53.56%)
1

-

N/A

N/A
Consolidated
17

17

19

18













Purchased molybdenum






2

1
Total consolidated sales






21

19













Average realized price per pound






$27.84

$22.68













a.
The fourth-quarter 2006 data include Phelps Dodge's pre-acquisition results for comparative purposes only.
b.
Amounts are net of Morenci's joint venture partner's 15 percent interest.
c.
Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.
d.
Includes additions of $0.04 per pound for fourth-quarter 2007 and $0.20 per pound for fourth-quarter 2006 for mark-to-market accounting adjustments on copper price protection programs.


























FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED OPERATING DATA

(continued)





























Years Ended December 31,

COPPER, Pro Formaa


Production
Sales
(millions of recoverable pounds)
2007

2006

2007

2006
MINED COPPER (FCXs net interest in %)











North America













Morenci (85%)
687b

693b

693b

692b
Bagdad (100%)
202

165

200

165
Sierrita (100%)
150

162

157

161
Chino (100%)
190

186

186

186
Tyrone (100%)
50

64

53

64
Miami (100%)
20

19

24

19
Tohono (100%)
3

5

3

5
Safford (100%)
1

-

-

-
Other (100%)
17

11

16

11
Total North America
1,320c

1,305

1,332c

1,303













South America













Candelaria/Ojos del Salado (80%)
453

429

447

425
Cerro Verde (53.6%)
594

222

587

214
El Abra (51%)
366

482

365

487
Total South America
1,413cc

1,133

1,399

1,126













Indonesia













Grasberg (90.6%)
1,151d

1,201d

1,131d

1,201d
Consolidated
3,884

3,639

3,862

3,630













Less minority participants share
653

537

647

535
Net
3,231

3,102

3,215

3,095













Consolidated sales from mines






3,862

3,630
Purchased copper






650

736
Total consolidated sales






4,512

4,366













Average realized price per pound











Excluding hedging






$3.28

$3.06
Including hedging






$3.23e

$2.79e













GOLD, Pro Formaa













(thousands of recoverable ounces)











MINED GOLD (FCXs net interest in %)











North America (100%)
15b

19b

21b

19b
South America (80%)
116f

112

114f

111
Indonesia (90.6%)
2,198d

1,732d

2,185d

1,736d
Consolidated
2,329

1,863

2,320

1,866













Less minority participants shares
229

184

228

185
Net
2,100

1,679

2,092

1,681













Consolidated sales from mines






2,320

1,866
Purchased gold






6

12
Total consolidated sales






2,326

1,878













Average realized price per ounce






$682

$566g













MOLYBDENUM, Pro Formaa













(millions of recoverable pounds)











MINED MOLYBDENUM (FCXs net interest in %)











Henderson (100%)
39

37

N/A

N/A
By-product North America (100%)b
30

31

N/A

N/A
By-product Cerro Verde (53.56%)
1

-

N/A

N/A
Consolidated
70h

68

69h

69













Purchased molybdenum






9

8
Total consolidated sales






78

77













Average realized price per pound






$25.87

$21.87













a.
Includes Phelps Dodge's pre-acquisition results for comparative purposes only.
b.
Amounts are net of Morenci's joint venture partner's 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 Dodge's pre-acquisition results.
d.
Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.
e.
Includes reductions of $0.05 per pound for the year ended December 31, 2007, and $0.27 per pound for the year ended December 31, 2006, 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 Dodge's pre-acquisition results.
g.
Includes a reduction of approximately $37 per ounce for a loss on redemption of FCX's Gold-Denominated Preferred Stock, Series II.
h.
Includes molybdenum production of 14 million pounds and sales of 17 million pounds for Phelps Dodge's pre-acquisition results.


















FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED OPERATING DATA

(continued)





















Three Months Ended
Years Ended


December 31,
December 31,

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)
971,800
754,800
798,200
801,200
Average copper ore grade (%)
0.24
0.27
0.23
0.30
Copper production (millions of recoverable pounds)
218
249
940
1,013









Mill Operations









Ore milled (metric tons per day)
232,300
212,600
223,800
199,300
Average ore grade (%)







Copper
0.40
0.33
0.35
0.33
Molybdenum
0.02
0.02
0.02
0.02
Production (millions of recoverable pounds)







Copper
137
111
501
414
Molybdenum
7
8
30
31









Henderson Molybdenum Mine


















Ore milled (metric tons per day)
24,000
22,700
24,000
22,200
Average molybdenum ore grade (%)
0.23
0.22
0.23
0.23
Molybdenum production (millions of recoverable pounds)
9
9
39
37









South America (copper mines)
















SX/EW Operations









Leach ore placed in stockpiles (metric tons per day)
289,600
257,200
289,400
257,400
Average copper ore grade (%)
0.42
0.46
0.43
0.45
Copper production (millions of recoverable pounds)
139
172
569
695









Mill Operations









Ore milled (metric tons per day)
180,300
80,900
167,900
68,500
Average ore grade (%)







Copper
0.80
0.72
0.74
0.87
Molybdenum 0.02 0.02 0.02 0.02
Production (millions of recoverable pounds)



Copper 252 108 844 438
Molybdenum 1 - 1 -









Indonesia (copper mine)
















Mill Operations









Ore milled (metric tons per day)
208,600
246,500
212,600
229,400









Average ore grade







Copper (%)
0.65
1.08
0.82
0.85
Gold (grams per metric ton)
0.52
0.95
1.24
0.85
Recovery rates (%)







Copper
88.8
89.5
90.5
86.1
Gold
76.5
84.2
86.2
80.9
Copper (millions of recoverable pounds)







Production
227
469
1,211
1,300
Sales
201
466
1,190
1,300
Gold (thousands of recoverable ounces)







Production
246
571
2,608
1,824
Sales
220
564
2,591
1,831









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
Years Ended


December 31,
December 31,


2007
2006
2007a
2006


(In Millions, Except Per Share Amounts)
Revenuesb
$ 4,184

$ 1,643

$ 16,939

$ 5,791
Cost of sales:















Production and delivery

2,422c


650


8,527c


2,525
Depreciation, depletion and amortization

400c


81


1,246c


228

Total cost of sales



2,822


731


9,773


2,753
Exploration and research expenses

58


3


145


12
Selling, general and administrative expenses

152d


46


466d


157
Total costs and expenses

3,032


780


10,384


2,922
Operating income

1,152


863


6,555


2,869
Interest expense, net

(127)


(14)


(513)


(76)
Losses on early extinguishment and conversion of debt, net

(2)


-


(173)


(32)
Gains on sales of assets

-


1


85e


31
Other income, net

47


11


157


28
Equity in affiliated companies net earnings (losses)

5


(1)


22


6

Income from continuing operations before income taxes and minority interests



1,075


860


6,133


2,826
Provision for income taxes

(525)f


(365)


(2,400)


(1,201)
Minority interests in net income of consolidated subsidiaries

(63)f


(53)


(791)


(168)
Income from continuing operations

487


442


2,942


1,457

(Loss) income from discontinued operations (net of taxes of $3 million in fourth quarter and $23 million for the year)



(9)g




-


35g


-
Preferred dividends

(64)


(16)


(208)


(61)
Net income applicable to common stock
$ 414

$ 426

$ 2,769

$ 1,396

















Basic net income (loss) per share of common stock:















Continuing operations

$1.10


$2.17


$8.02


$7.32
Discontinued operations

(0.02)g


-


0.10g


-
Basic net income per share of common stock

$1.08


$2.17


$8.12


$7.32

















Diluted net income (loss) per share of common stock:















Continuing operations

$1.07


$1.99


$7.41


$6.63
Discontinued operations

(0.02)g


-


0.09g


-
Diluted net income per share of common stockh

$1.05


$1.99


$7.50


$6.63

















Average common shares outstanding:















Basic

382i


197


341i


191
Dilutedh

409


222


397


221

















Dividends declared per share of common stock

$0.4375


$2.125


$1.375


$5.0625

















a.
Includes Phelps Dodge results beginning March 20, 2007.
b.
Includes positive (negative) adjustments to prior period concentrate sales totaling $(281) million in fourth-quarter 2007, $(71) million in fourth-quarter 2006, $90 million in year 2007 and $139 million in year 2006. In addition, credits (charges) for mark-to-market accounting adjustments on copper price protection program totaled $37 million in fourth-quarter 2007 and $(175) million in year 2007. Year 2006 also includes a $69 million loss on mandatory redemption of FCX's Gold-Denominated Preferred Stock, Series II.
c.
Includes impact of purchase accounting adjustments related to the Phelps Dodge acquisition, which increased production costs by $125 million in fourth-quarter 2007 and $781 million in year 2007 and increased depreciation, depletion and amortization by $226 million in fourth-quarter 2007 and $595 million in year 2007.
d.
Includes additional costs relating to the acquisition of Phelps Dodge totaling $96 million in fourth-quarter 2007 and $236 million in year 2007. Also includes stock-based compensation costs related to second-quarter 2007 stock option grants totaling $6 million in fourth-quarter 2007 and $39 million in year 2007.
e.
Primarily represents gains on sales of marketable equity securities.
f.
Includes a $111 million one-time tax charge associated with the reversal of the Phelps Dodge APB Opinion No. 23 indefinite reinvestment assertion on certain earnings in South America, which was fully offset by a reduction in minority interests' share of net income.
g.
Relates to the operations of PDIC, which FCX sold on October 31, 2007.
h.

Reflects assumed conversion of FCX's 7% Convertible Senior Notes and 5 1/2% Convertible Perpetual Preferred Stock, resulting in the exclusion of interest expense totaling less than $0.1 million in fourth-quarter 2007, $0.1 million in fourth-quarter 2006, $0.2 million in year 2007 and $13 million in year 2006 and dividends totaling approximately $15 million in each of the fourth quarters of 2007 and 2006 and approximately $60 million in each of the years 2007 and 2006. Year 2007 also includes assumed conversion of FCX's 6 3/4% Mandatory Convertible Preferred Stock, of which FCX sold 28.75 million shares on March 28, 2007, reflecting exclusion of dividends totaling $147 million. This instrument was not dilutive for fourth-quarter 2007. The assumed conversions reflect the inclusion of 23 million common shares in fourth-quarter 2007, 23 million common shares in fourth-quarter 2006, 53 million common shares in year 2007 and 29 million common shares in year 2006.

i.
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)





















December 31,


2007
2006


(In Millions)
ASSETS







Current assets:







Cash and cash equivalents
$ 1,626

$ 907
Accounts receivable

1,295


486
Inventories

2,178


724
Mill and leach stockpiles

707


-
Prepaid expenses, restricted cash and other

97


34
Total current assets

5,903


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

25,784


3,099
Trust assets

606


-
Long-term mill and leach stockpiles

1,106


-
Goodwill

5,393a


-
Other assets and deferred charges

1,243


140
Total assets
$ 40,035

$ 5,390









LIABILITIES AND STOCKHOLDERS EQUITY







Current liabilities:







Accounts payable and accrued liabilities
$ 2,309

$ 776
Copper price protection program

598


-
Accrued income taxes

420


165
Dividends payable

212


13
Current portion of reclamation and environmental obligations

209


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

31


19

Total current liabilities



3,779


973
Long-term debt, less current portion:







Senior notes

6,928


620
Project financing, equipment loans and other

252


41
Total long-term debt, less current portion

7,180


661
Deferred income taxes

7,704


800
Other liabilities and deferred credits

1,059


268
Reclamation and environmental obligations, less current portion

840


30
Total liabilities

20,562


2,732
Minority interests

1,239


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

13,407


2,668
Retained earnings

3,601


1,415
Accumulated other comprehensive income (loss)

42


(20)
Common stock held in treasury

(2,841)


(2,749)
Total stockholders equity

18,234


2,445
Total liabilities and stockholders equity
$ 40,035

$ 5,390









a.

During the fourth quarter of 2007, revisions to previously estimated 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. FCX expects to finalize the purchase price allocation during the first quarter of 2008.



















FREEPORT-McMoRan COPPER & GOLD INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)





















Years Ended December 31,


2007a
2006


(In Millions)
Cash flow from operating activities:







Net income
$ 2,977

$ 1,457

Adjustments to reconcile net income to net cash provided by operating activities:









Unrealized losses on copper price protection program

175


-
Depreciation, depletion and amortization

1,264


228
Minority interests in net income of consolidated subsidiaries

802


168
Noncash compensation and benefits

214


85
Losses on early extinguishment and conversion of debt, net

173


32
Gains on sales of assets

(85)


(31)
Deferred income taxes

(288)


(16)
Other

(65)


(25)

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









Accounts receivable

428


196
Inventories

272


(146)
Prepaid expenses, restricted cash and other

21


(27)
Accounts payable and accrued liabilities

313


15
Accrued income taxes

24


(152)
Net cash provided by operating activities

6,225


1,866
Cash flow from investing activities:







Acquisition of Phelps Dodge, net of cash acquired

(13,910)


(5)
Phelps Dodge capital expenditures

(1,333)


-
PT Freeport Indonesia capital expenditures

(368)


(234)
Other capital expenditures

(54)


(17)
Net proceeds from sale of PDIC

597


-
Proceeds from sale of assets

260


34
Other

(53)


(2)
Net cash used in investing activities

(14,861)


(224)
Cash flow from financing activities:







Proceeds from term loans under bank credit facility

12,450


-
Repayments of term loans under bank credit facility

(12,450)


-
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

744


103
Repayments of other debt

(1,069)


(394)
Purchases of FCX common shares

-


(100)
Cash dividends paid:







Common stock

(421)


(916)
Preferred stock

(175)


(61)
Minority interests

(967)b


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

(14)


15
Excess tax benefit from exercised stock options

16


21
Bank credit facilities fees and other

(258)


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

9,355


(1,499)
Net increase in cash and cash equivalents

719


143
Cash and cash equivalents at beginning of year

907


764
Cash and cash equivalents at end of year
$ 1,626

$ 907









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