PHOENIX--(BUSINESS WIRE)--
Freeport-McMoRan Inc. (NYSE: FCX):
-
Net income attributable to common stock totaled $692 million,
$0.47 per share, for first-quarter 2018. After adjusting for net gains
of $13 million, $0.01 per share, first-quarter 2018 adjusted net
income attributable to common stock totaled $679 million, $0.46 per
share.
-
Consolidated sales totaled 993 million pounds of copper, 610
thousand ounces of gold and 24 million pounds of molybdenum for
first-quarter 2018.
-
Consolidated sales for the year 2018 are expected to
approximate 3.8 billion pounds of copper, 2.4 million ounces of gold
and 95 million pounds of molybdenum, including 970 million pounds of
copper, 700 thousand ounces of gold and 24 million pounds of
molybdenum for second-quarter 2018.
-
Average realized prices for first-quarter 2018 were $3.11 per
pound for copper, $1,312 per ounce for gold and $11.95 per pound for
molybdenum.
-
Average unit net cash costs for first-quarter 2018 were $0.98
per pound of copper and are expected to average $1.01 per pound of
copper for the year 2018.
-
Operating cash flows totaled $1.4 billion (net of $21 million
in working capital uses and timing of other tax payments) for
first-quarter 2018. Based on current sales volume and cost estimates,
and assuming average prices of $3.15 per pound for copper, $1,300 per
ounce for gold and $12.00 per pound for molybdenum for the remainder
of 2018, operating cash flows are expected to approximate $5.6 billion
(including $0.2 billion in working capital sources and timing of other
tax payments) for the year 2018.
-
Capital expenditures for first-quarter 2018 totaled $402
million (including approximately $250 million for major mining
projects). Capital expenditures for the year 2018 are expected to
approximate $2.0 billion, including $1.1 billion for major mining
projects primarily associated with underground development activities
in the Grasberg minerals district in Indonesia and development of the
Lone Star oxide project in Arizona.
-
During first-quarter 2018, FCX repaid borrowings totaling $1.5
billion, and in April 2018, FCX repaid $454 million in debt,
consisting of the redemption of $404 million of senior notes due 2022
and $50 million of senior notes due 2023.
-
At March 31, 2018, consolidated debt totaled $11.6 billion
and consolidated cash totaled $3.7 billion. FCX had no
borrowings and $3.5 billion available under its revolving credit
facility at March 31, 2018.
-
In February 2018, FCX's Board of Directors (the Board) reinstated a
cash dividend on FCX's common stock. On March 28, 2018, FCX declared
a quarterly cash dividend of $0.05 per share, which will be paid
on May 1, 2018.
Freeport-McMoRan Inc. (NYSE: FCX) reported net income attributable to
common stock of $692 million ($0.47 per share) for first-quarter 2018,
compared with $228 million ($0.16 per share) for first-quarter 2017.
After adjusting for net gains of $13 million ($0.01 per share), adjusted
net income attributable to common stock totaled $679 million ($0.46 per
share) for first-quarter 2018. Refer to the supplemental schedule,
"Adjusted Net Income," on page VI, which is available on FCX's website, "fcx.com,"
for additional information.
Richard C. Adkerson, President and Chief Executive Officer, said,
"During the first quarter, our global team maintained our focus on
productivity, cost management and capital discipline. Our results
reflect strong cash flows, continued strengthening of our balance sheet
and advancement of initiatives to build value for shareholders. We
continue to engage in negotiations with the Indonesian government to
restore long-term stability for our Grasberg operations and look forward
to reaching a mutually positive resolution. Our improved financial
position enabled our Board to reinstate cash dividends to shareholders
and a continuation of strong results and positive market conditions will
enable further strengthening of our balance sheet, investments in
attractive long-term growth projects and the consideration of additional
cash returns to shareholders. Our shareholders are well positioned to
benefit from FCX’s global leadership position in copper, supported by a
large, high-quality portfolio of long-lived, geographically diverse
assets and a positive market outlook for copper."
SUMMARY FINANCIAL DATA
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
(in millions, except per share amounts)
|
|
Revenuesa,b
|
|
$
|
4,868
|
|
|
|
|
$
|
3,341
|
|
Operating incomea
|
|
$
|
1,459
|
|
|
|
|
$
|
597
|
|
Net income from continuing operations
|
|
$
|
828
|
|
|
|
|
$
|
268
|
|
Net (loss) income from discontinued operationsc
|
|
$
|
(11
|
)
|
|
|
|
$
|
38
|
|
Net income attributable to common stockd,e
|
|
$
|
692
|
|
|
|
|
$
|
228
|
|
Diluted net income (loss) per share of common stock:
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.48
|
|
|
|
|
$
|
0.13
|
|
Discontinued operations
|
|
(0.01
|
)
|
|
|
|
0.03
|
|
|
|
$
|
0.47
|
|
|
|
|
$
|
0.16
|
|
Diluted weighted-average common shares outstanding
|
|
1,458
|
|
|
|
|
1,454
|
|
Operating cash flowsf
|
|
$
|
1,369
|
|
|
|
|
$
|
792
|
|
Capital expenditures
|
|
$
|
402
|
|
|
|
|
$
|
344
|
|
At March 31:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
3,702
|
|
|
|
|
$
|
4,001
|
|
Total debt, including current portion
|
|
$
|
11,606
|
|
|
|
|
$
|
15,363
|
|
a.
|
For segment financial results, refer to the supplemental
schedules, "Business Segments," beginning on page VIII, which are
available on FCX's website, "fcx.com."
|
|
b.
|
Includes adjustments to prior period provisionally priced
concentrate and cathode copper sales totaling $(78) million ($(35)
million to net income attributable to common stock or $(0.02) per
share) in first-quarter 2018 and $91 million ($39 million to net
income attributable to common stock or $0.03 per share) in
first-quarter 2017. For further discussion, refer to the
supplemental schedule, "Derivative Instruments," on page VII,
which is available on FCX's website, "fcx.com."
|
|
c.
|
Primarily reflects adjustments to the fair value of contingent
consideration related to the 2016 sale of FCX's interest in TF
Holdings Limited, which will continue to be adjusted through
December 31, 2019.
|
|
d.
|
Includes net gains of $13 million ($0.01 per share) in
first-quarter 2018 and $8 million ($0.01 per share) in
first-quarter 2017 that are described in the supplemental
schedule, "Adjusted Net Income," on page VI, which is available on
FCX's website, "fcx.com."
|
|
e.
|
FCX defers recognizing profits on intercompany sales until
final sales to third parties occur. For a summary of net impacts
from changes in these deferrals, refer to the supplemental
schedule, "Deferred Profits," on page VII, which is available on
FCX's website, "fcx.com."
|
|
f.
|
Includes net working capital (uses) sources and timing of other
tax payments of $(21) million in first-quarter 2018 and $189
million in first-quarter 2017.
|
|
SUMMARY OPERATING DATA
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
|
2017
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
Production
|
|
952
|
|
|
|
851
|
|
Sales, excluding purchases
|
|
993
|
|
|
|
809
|
|
Average realized price per pound
|
|
$
|
3.11
|
|
|
|
$
|
2.67
|
|
Site production and delivery costs per pounda
|
|
$
|
1.67
|
|
|
|
$
|
1.60
|
|
Unit net cash costs per pounda
|
|
$
|
0.98
|
|
|
|
$
|
1.39
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
|
Production
|
|
599
|
|
|
|
239
|
|
Sales, excluding purchases
|
|
610
|
|
|
|
182
|
|
Average realized price per ounce
|
|
$
|
1,312
|
|
|
|
$
|
1,229
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
Production
|
|
22
|
|
|
|
23
|
|
Sales, excluding purchases
|
|
24
|
|
|
|
24
|
|
Average realized price per pound
|
|
$
|
11.95
|
|
|
|
$
|
8.71
|
|
a.
|
Reflects per pound weighted-average production and delivery
costs and unit net cash costs (net of by-product credits) for all
copper mines, before net noncash and other costs. For
reconciliations of per pound unit costs by operating division to
production and delivery costs applicable to sales reported in
FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on
page X, which are available on FCX's website, "fcx.com."
|
Consolidated Sales Volumes
First-quarter 2018 copper sales of 993 million pounds
approximated the January 2018 estimate of 1.0 billion pounds, and were
higher than first-quarter 2017 sales of 809 million pounds, primarily
reflecting higher operating rates in Indonesia.
First-quarter 2018 gold sales of 610 thousand ounces were lower
than the January 2018 estimate of 675 thousand ounces, primarily because
of lower-than-expected mill throughput rates associated with maintenance
activities at Grasberg. First-quarter 2018 gold sales were higher than
first-quarter 2017 sales of 182 thousand ounces, primarily reflecting
higher ore grades and operating rates in Indonesia.
Lower operating rates in first-quarter 2017 reflected the regulatory
restrictions on PT-FI's concentrate exports from mid-January 2017 to
mid-April 2017.
First-quarter 2018 molybdenum sales of 24 million pounds
approximated the January 2018 estimate and first-quarter 2017 sales of
24 million pounds.
Sales volumes for the year 2018 are expected to approximate 3.8 billion
pounds of copper, 2.4 million ounces of gold and 95 million pounds of
molybdenum, including 970 million pounds of copper, 700 thousand ounces
of gold and 24 million pounds of molybdenum in second-quarter 2018.
Projections for 2018 and other forward looking statements in this
release assume resolution of PT-FI’s long-term mining rights or an
extension of PT-FI’s temporary IUPK after June 30, 2018.
Consolidated Unit Costs
Consolidated average unit net cash costs (net of by-product credits) for
FCX's copper mines of $0.98 per pound of copper in first-quarter 2018
were lower than unit net cash costs of $1.39 per pound in first-quarter
2017, primarily reflecting higher sales volumes and by-product credits.
Assuming average prices of $1,300 per ounce of gold and $12.00 per pound
of molybdenum for the remainder of 2018 and achievement of current sales
volume and cost estimates, consolidated unit net cash costs (net of
by-product credits) for copper mines are expected to average $1.01 per
pound of copper for the year 2018. The impact of price changes on
consolidated unit net cash costs would approximate $0.025 per pound for
each $50 per ounce change in the average price of gold and $0.02 per
pound for each $2 per pound change in the average price of molybdenum
for the remainder of 2018. Quarterly unit net cash costs vary with
fluctuations in sales volumes and realized prices, primarily for gold
and molybdenum.
MINING OPERATIONS
North America Copper Mines. FCX operates seven open-pit copper
mines in North America - Morenci, Bagdad, Safford, Sierrita and Miami in
Arizona, and Chino and Tyrone in New Mexico. In addition to copper,
certain of FCX's North America copper mines produce molybdenum
concentrate, gold and silver.
All of the North America mining operations are wholly owned, except for
Morenci. FCX records its 72 percent undivided joint venture interest in
Morenci using the proportionate consolidation method.
Operating and Development Activities. FCX has significant
undeveloped reserves and resources in North America and a portfolio of
potential long-term development projects. Future investments will be
undertaken based on the results of economic and technical feasibility
studies, and are dependent on market conditions. FCX continues to study
opportunities to reduce the capital intensity of its potential long-term
development projects.
Through exploration drilling, FCX has identified a significant resource
at its wholly owned Lone Star project located near the Safford operation
in eastern Arizona. FCX has commenced an initial project to develop the
Lone Star oxide ores with first production expected by the end of 2020.
Total estimated capital costs, including mine equipment and
pre-production stripping, approximate $850 million and will benefit from
the utilization of existing infrastructure at the adjacent Safford
operation. At March 31, 2018, approximately $35 million has been
incurred for this project. Production from the Lone Star oxide ores is
expected to average approximately 200 million pounds of copper per year
with an approximate 20-year mine life. The project also advances the
potential for development of a larger-scale district opportunity. FCX is
conducting additional drilling to follow up on positive exploration
results as it continues to evaluate longer term opportunities available
from the significant long-term sulfide potential in the Lone
Star/Safford minerals district.
Operating Data. Following is summary consolidated operating data
for the North America copper mines for the three months ended March 31,
2018 and 2017:
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
|
2017
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
Production
|
|
348
|
|
|
|
392
|
|
|
Sales, excluding purchases
|
|
384
|
|
|
|
375
|
|
|
Average realized price per pound
|
|
$
|
3.16
|
|
|
|
$
|
2.68
|
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
Productiona
|
|
7
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
Unit net cash costs per pound of copperb
|
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
1.84
|
|
|
|
$
|
1.50
|
|
|
By-product credits
|
|
(0.20
|
)
|
|
|
(0.15
|
)
|
|
Treatment charges
|
|
0.10
|
|
|
|
0.11
|
|
|
Unit net cash costs
|
|
$
|
1.74
|
|
|
|
$
|
1.46
|
|
|
a.
|
Refer to summary operating data on page 3 for FCX's
consolidated molybdenum sales, which includes sales of molybdenum
produced at the North America copper mines.
|
|
b.
|
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
schedules, "Product Revenues and Production Costs," beginning on
page X, which are available on FCX's website, "fcx.com."
|
North America's consolidated copper sales volumes of 384 million pounds
in first-quarter 2018 were higher than first-quarter 2017 sales of 375
million pounds, primarily reflecting timing of shipments. North America
copper sales are estimated to approximate 1.5 billion pounds for the
year 2018, compared with 1.5 billion pounds in 2017.
Average unit net cash costs (net of by-product credits) for the North
America copper mines of $1.74 per pound of copper in first-quarter 2018
were higher than unit net cash costs of $1.46 per pound in first-quarter
2017, primarily reflecting higher repair and maintenance costs.
Average unit net cash costs (net of by-product credits) for the North
America copper mines are expected to approximate $1.71 per pound of
copper for the year 2018, based on achievement of current sales volume
and cost estimates and assuming an average molybdenum price of $12.00
per pound for the remainder of 2018. North America's average unit net
cash costs for the year 2018 would change by approximately $0.03 per
pound for each $2 per pound change in the average price of molybdenum
for the remainder of 2018.
South America Mining. FCX operates two copper mines in South
America - Cerro Verde in Peru (in which FCX owns a 53.56 percent
interest) and El Abra in Chile (in which FCX owns a 51 percent
interest). These operations are consolidated in FCX's financial
statements. In addition to copper, the Cerro Verde mine produces
molybdenum concentrate and silver.
Operating and Development Activities. The Cerro Verde expansion
project, which commenced operations in September 2015, achieved capacity
operating rates in early 2016. The project expanded the concentrator
facilities' capacity from 120,000 metric tons of ore per day to 360,000
metric tons of ore per day. Cerro Verde's expanded operations benefit
from its large-scale, long-lived reserves and cost efficiencies. The
project has continued to perform well, with average mill throughput
rates of 385,500 metric tons of ore per day in first-quarter 2018,
including a daily record of 462,900 metric tons of ore.
Exploration results at El Abra indicate a significant sulfide resource,
which could potentially support a major mill project similar to
facilities recently constructed at Cerro Verde. FCX continues to
evaluate a major expansion at El Abra to process additional sulfide
material and to achieve higher recoveries. Future investments will
depend on technical studies, which are being advanced, economic factors
and market conditions.
Operating Data. Following is summary consolidated operating data
for the South America mining operations for the three months ended
March 31, 2018 and 2017:
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
|
|
2017
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
Production
|
|
293
|
|
|
|
|
304
|
|
|
Sales
|
|
290
|
|
|
|
|
309
|
|
|
Average realized price per pound
|
|
$
|
3.08
|
|
|
|
|
$
|
2.66
|
|
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
Productiona
|
|
6
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Unit net cash costs per pound of copperb
|
|
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
1.78
|
|
|
|
|
$
|
1.48
|
|
|
By-product credits
|
|
(0.25
|
)
|
|
|
|
(0.18
|
)
|
|
Treatment charges
|
|
0.20
|
|
|
|
|
0.22
|
|
|
Royalty on metals
|
|
0.01
|
|
|
|
|
0.01
|
|
|
Unit net cash costs
|
|
$
|
1.74
|
|
|
|
|
$
|
1.53
|
|
|
a.
|
Refer to summary operating data on page 3 for FCX's
consolidated molybdenum sales, which includes sales of molybdenum
produced at Cerro Verde.
|
|
b.
|
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
schedules, "Product Revenues and Production Costs," beginning on
page X, which are available on FCX's website, "fcx.com."
|
South America's consolidated copper sales volumes of 290 million pounds
in first-quarter 2018 were lower than first-quarter 2017 sales of 309
million pounds, primarily reflecting lower ore grades and recovery rates
at Cerro Verde. Sales from South America mining are expected to
approximate 1.2 billion pounds of copper for the year 2018, compared
with 1.2 billion pounds of copper in 2017.
Average unit net cash costs (net of by-product credits) for South
America mining of $1.74 per pound of copper in first-quarter 2018 were
higher than unit net cash costs of $1.53 per pound in first-quarter
2017, primarily reflecting higher mining rates and lower ore grades.
Average unit net cash costs (net of by-product credits) for South
America mining are expected to approximate $1.64 per pound of copper for
the year 2018, based on current sales volume and cost estimates and
assuming an average price of $12.00 per pound of molybdenum for the
remainder of 2018.
Indonesia Mining. Through its 90.64 percent owned and
consolidated subsidiary PT Freeport Indonesia (PT-FI), FCX's assets
include one of the world's largest copper and gold deposits at the
Grasberg minerals district in Papua, Indonesia. PT-FI operates a
proportionately consolidated joint venture, which produces copper
concentrate that contains significant quantities of gold and silver.
Regulatory Matters. PT-FI continues to actively engage with
Indonesian government officials to address regulatory changes that
conflict with its contractual rights in a manner that provides long-term
stability for PT-FI’s operations and investment plans, and protects
value for FCX’s shareholders.
Following a framework understanding reached in August 2017, the parties
have been engaged in negotiation and documentation of a special license
(IUPK) and accompanying documentation for assurances on legal and fiscal
terms to provide PT-FI with long-term mining rights through 2041. In
addition, the IUPK would provide that PT-FI construct a smelter within
five years of reaching a definitive agreement and include agreement for
the divestment of 51 percent of the project area interests to Indonesian
participants at fair market value.
In late 2017, the Indonesian government (including the regional
government of Papua Province and Mimika Regency) and PT Indonesia Asahan
Aluminium (Inalum), a state-owned enterprise, which leads the Indonesian
government's consortium of investors, formed a special purpose company
to acquire Grasberg project area interests. Inalum is owned 100 percent
by the Indonesian government and currently holds 9.36 percent of PT-FI's
outstanding common stock.
FCX continues to engage with Inalum and PT-FI’s joint venture partner on
potential arrangements that would result in the Inalum consortium
acquiring interests that would meet the Indonesian government’s 51
percent ownership objective in a manner satisfactory to all parties, and
in a structure that would provide for continuity of FCX’s management of
PT-FI’s operations and governance of the business. The parties continue
to negotiate documentation on a comprehensive agreement for PT-FI’s
extended operations and to reach agreement on timing, process and
governance matters relating to the divestment. The parties have a mutual
objective of completing negotiations and the required documentation as
soon as possible.
PT-FI is also engaged in discussions with Indonesia's Ministry of
Environment and Forestry regarding approval of pending environmental
permits and April 2018 ministerial actions imposing new environmental
standards, which are subject to a six-month transition period and
conflict with PT-FI's approved environmental management programs.
Resolution of these matters is a requirement for concluding a
comprehensive agreement for PT-FI's extended operations.
In December 2017, the Indonesian government extended PT-FI’s temporary
IUPK to June 30, 2018, to enable normal operations to continue during
the negotiation period. In February 2018, PT-FI's export license was
extended to February 15, 2019. Until a definitive agreement is reached,
PT-FI has reserved all rights under its Contract of Work (COW),
including dispute resolution procedures.
Operating and Development Activities. PT-FI is currently mining
the final phase of the Grasberg open pit, which contains high copper and
gold ore grades. PT-FI expects to mine high-grade ore until
transitioning to the Grasberg Block Cave underground mine in the first
half of 2019.
PT-FI has several projects in the Grasberg minerals district related to
the development of its large-scale, long-lived, high-grade underground
ore bodies. In aggregate, these underground ore bodies are expected to
produce large-scale quantities of copper and gold following the
transition from the Grasberg open pit. Substantial progress has been
made to prepare for the transition to mining of the Grasberg Block Cave
underground mine. Mine development activities are sufficiently advanced
to commence caving by early 2019. The ore flow system and underground
rail line are expected to be installed during 2018.
PT-FI continues to review its mine plan for the Deep Mill Level Zone
underground mine, which is currently in pre-commercial production. In
response to recent mining-induced seismic activity, the development
plans have been revised to a slower start-up to full production to
manage rock stress encountered in the early phase of cave development.
Subject to reaching a definitive agreement with the Indonesian
government to support PT-FI's long-term investment plans, estimated
annual capital spending on these projects would average $0.8 billion per
year ($0.7 billion per year net to PT-FI) over the next five years.
Considering the long-term nature and size of these projects, actual
costs could vary from these estimates. In response to market conditions
and Indonesian regulatory uncertainty, the timing of these expenditures
continues to be reviewed. If PT-FI is unable to reach a definitive
agreement with the Indonesian government on its long-term mining rights,
FCX intends to reduce or defer investments significantly in its
underground development projects and will pursue dispute resolution
procedures under its COW.
Operating Data. Following is summary consolidated operating data
for the Indonesia mining operations for the three months ended March 31,
2018 and 2017:
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
2017
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
Production
|
|
311
|
|
|
155
|
|
|
Sales
|
|
319
|
|
|
125
|
|
|
Average realized price per pound
|
|
$
|
3.06
|
|
|
$
|
2.63
|
|
|
|
|
|
|
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
Production
|
|
595
|
|
|
232
|
|
|
Sales
|
|
603
|
|
|
177
|
|
|
Average realized price per ounce
|
|
$
|
1,312
|
|
|
$
|
1,229
|
|
|
|
|
|
|
|
|
Unit net cash (credits) costs per pound of coppera
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
1.36
|
|
|
$
|
2.13
|
|
|
Gold and silver credits
|
|
(2.59
|
)
|
|
(1.88
|
)
|
|
Treatment charges
|
|
0.25
|
|
|
0.28
|
|
|
Export duties
|
|
0.14
|
|
|
0.11
|
|
|
Royalty on metals
|
|
0.21
|
|
|
0.16
|
|
|
Unit net cash (credits) costs
|
|
$
|
(0.63
|
)
|
|
$
|
0.80
|
|
|
a.
|
For a reconciliation of unit net cash (credits) costs per pound
to production and delivery costs applicable to sales reported in
FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on
page X, which are available on FCX's website, "fcx.com."
|
Indonesia's consolidated sales of 319 million pounds of copper and 603
thousand ounces of gold in first-quarter 2018 were higher than
first-quarter 2017 sales of 125 million pounds of copper and 177
thousand ounces of gold, primarily reflecting higher operating rates and
gold ore grades. Lower operating rates in first-quarter 2017 reflected
the regulatory restrictions on PT-FI's concentrate exports from
mid-January 2017 to mid-April 2017.
During first-quarter 2018, Indonesia mining's copper and gold production
was adversely affected by lower- than-expected mill throughput rates
associated with maintenance activities on PT-FI's ore-flow systems and
the characteristics of ore processed during the quarter. Corrective
actions are being taken to restore reliability and productivity.
Assuming achievement of planned operating rates for the remainder of
2018, consolidated sales volumes from Indonesia mining are expected to
approximate 1.15 billion pounds of copper and 2.4 million ounces of gold
for the year 2018, compared with 1.0 billion pounds of copper and 1.5
million ounces of gold for the year 2017.
A significant portion of PT-FI's costs are fixed and unit costs vary
depending on production volumes and other factors. As a result of higher
sales volumes and gold and silver credits, Indonesia had unit net cash
credits (including gold and silver credits) of $0.63 per pound of copper
in first-quarter 2018, compared with unit net cash costs of $0.80 per
pound in first-quarter 2017.
Assuming an average gold price of $1,300 per ounce for the remainder of
2018 and achievement of current sales volume and cost estimates, unit
net cash credits (including gold and silver credits) for Indonesia
mining are expected to approximate $0.55 per pound of copper for the
year 2018. Indonesia mining's unit net cash credits for the year 2018
would change by approximately $0.09 per pound for each $50 per ounce
change in the average price of gold for the remainder of 2018. Because
of the fixed nature of a large portion of Indonesia's costs, unit net
cash credits/costs vary from quarter to quarter depending on copper and
gold volumes.
Indonesia mining's projected sales volumes and unit net cash credits for
the year 2018 are dependent on a number of factors, including
operational performance, workforce productivity, timing of shipments,
and Indonesia regulatory matters, including the resolution of PT-FI's
long-term mining rights or an extension of PT-FI's temporary IUPK after
June 30, 2018.
Molybdenum Mines. FCX has two wholly owned molybdenum mines - the
Henderson underground mine and the Climax open-pit mine - both in
Colorado. The Henderson and Climax mines produce high-purity,
chemical-grade molybdenum concentrate, which is typically further
processed into value-added molybdenum chemical products. The majority of
molybdenum concentrate produced at the Henderson and Climax mines, as
well as from FCX's North America and South America copper mines, is
processed at FCX's conversion facilities.
Operating and Development Activities. Production from the
Molybdenum mines totaled 9 million pounds of molybdenum in first-quarter
2018 and 8 million pounds in first-quarter 2017. Refer to summary
operating data on page 3 for FCX's consolidated molybdenum sales and
average realized prices, which includes sales of molybdenum produced at
the Molybdenum mines, and from FCX's North America and South America
copper mines.
Unit net cash costs for the Molybdenum mines averaged $8.57 per pound of
molybdenum in first-quarter 2018 and $7.02 per pound in first-quarter
2017. Based on current sales volume and cost estimates, average unit net
cash costs for the Molybdenum mines are expected to approximate $8.75
per pound of molybdenum for the year 2018.
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 schedules, "Product
Revenues and Production Costs," beginning on page X, which are available
on FCX's website, "fcx.com."
Mining Exploration Activities. FCX's mining exploration
activities are generally associated with its existing mines, focusing on
opportunities to expand reserves and resources to support development of
additional future production capacity. A drilling program to further
delineate the Lone Star resource continues to indicate additional
mineralization in this district. Exploration results continue to
indicate opportunities for significant future potential reserve
additions in North America and South America. Exploration spending is
expected to approximate $72 million for the year 2018, consistent with
the year 2017.
CASH FLOWS, CASH and DEBT
Operating Cash Flows. FCX generated operating cash flows of $1.4
billion (net of $21 million in working capital uses and timing of other
tax payments) in first-quarter 2018.
Based on current sales volume and cost estimates, and assuming average
prices of $3.15 per pound of copper, $1,300 per ounce of gold and $12.00
per pound of molybdenum for the remainder of 2018, FCX's consolidated
operating cash flows are estimated to approximate $5.6 billion for the
year 2018 (including $0.2 billion in working capital sources and timing
of other tax payments). The impact of price changes during the remainder
of 2018 on operating cash flows would approximate $250 million for each
$0.10 per pound change in the average price of copper, $90 million for
each $50 per ounce change in the average price of gold and $85 million
for each $2 per pound change in the average price of molybdenum.
Capital Expenditures. Capital expenditures totaled $402 million
for first-quarter 2018 (including approximately $250 million for major
mining projects). Capital expenditures are expected to approximate $2.0
billion for the year 2018, including $1.1 billion for major mining
projects primarily associated with underground development activities in
the Grasberg minerals district and development of the Lone Star oxide
project.
If PT-FI is unable to reach a definitive agreement with the Indonesian
government on its long-term mining rights, FCX intends to reduce or
defer investments significantly in its underground development projects
and will pursue dispute resolution procedures under its COW.
Cash. Following is a summary of the U.S. and international
components of consolidated cash and cash equivalents available to the
parent company, net of noncontrolling interests' share, taxes and other
costs at March 31, 2018 (in billions):
|
Cash at domestic companies
|
|
|
$
|
2.5
|
|
|
Cash at international operations
|
|
|
1.2
|
|
|
Total consolidated cash and cash equivalents
|
|
|
3.7
|
|
|
Noncontrolling interests' share
|
|
|
(0.4
|
)
|
|
Cash, net of noncontrolling interests' share
|
|
|
3.3
|
|
|
Withholding taxes and other
|
|
|
(0.1
|
)
|
|
Net cash available
|
|
|
$
|
3.2
|
|
Debt. Following is a summary of total debt and the related
weighted-average interest rates at March 31, 2018 (in billions, except
percentages):
|
|
|
|
|
Weighted-
|
|
|
|
|
|
Average
|
|
|
|
|
|
Interest Rate
|
|
Senior Notes
|
|
$
|
10.4
|
|
|
4.7%
|
|
Cerro Verde credit facility
|
|
1.2
|
|
|
3.8%
|
|
Total debt
|
|
$
|
11.6
|
|
|
4.6%
|
During first-quarter 2018, FCX repaid borrowings totaling $1.5 billion,
consisting of $1.4 billion for senior notes due March 2018 and $0.1
billion for the Cerro Verde credit facility.
In April 2018, FCX redeemed $404 million of senior notes due 2022 and
$50 million of senior notes due 2023. FCX expects to record a gain of
$10 million in second-quarter 2018 related to these redemptions, and the
aggregate annual cash interest savings approximate $30 million.
At March 31, 2018, FCX had no borrowings, $13 million in letters of
credit issued and $3.5 billion available under its revolving credit
facility. During April 2018, FCX entered into a new $3.5 billion,
five-year revolving credit facility with substantially similar structure
and terms as its prior facility, which was scheduled to mature in May
2019.
FINANCIAL POLICY
In February 2018, the Board reinstated a cash dividend on FCX common
stock. On March 28, 2018, FCX declared a quarterly cash dividend of
$0.05 per share, which will be paid on May 1, 2018, to shareholders of
record as of April 13, 2018. The declaration of dividends is at the
discretion of the Board and will depend upon FCX’s financial results,
cash requirements, future prospects and other factors deemed relevant by
the Board.
WEBCAST INFORMATION
A conference call with securities analysts to discuss FCX's
first-quarter 2018 results is scheduled for today at 10:00 a.m. Eastern
Time. The conference call will be broadcast on the Internet along with
slides. Interested parties may listen to the conference call live and
view the slides by accessing “fcx.com.”
A replay of the webcast will be available through Friday, May 25, 2018.
-----------------------------------------------------------------------------------------------------------
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 is the world's largest publicly traded copper producer.
FCX’s portfolio of assets includes the Grasberg minerals district in
Indonesia, one of the world's largest copper and gold deposits; and
significant mining operations in the Americas, including the large-scale
Morenci minerals district in North America and the Cerro Verde operation
in South America. Additional information about FCX is available on FCX's
website at "fcx.com."
Cautionary Statement and Regulation G Disclosure: This press
release contains forward-looking statements in which FCX discusses its
potential future performance. Forward-looking statements are all
statements other than statements of historical facts, such as
projections or expectations relating to ore grades and milling rates,
production and sales volumes, unit net cash costs, operating cash flows,
capital expenditures, exploration efforts and results, development and
production activities and costs, liquidity, tax rates, the impact of
copper, gold and molybdenum price changes, the impact of deferred
intercompany profits on earnings, reserve estimates, future dividend
payments, and share purchases and sales. The words “anticipates,” “may,”
“can,” “plans,” “believes,” “estimates,” “expects,” “projects,”
"targets," “intends,” “likely,” “will,” “should,” “to be,” ”potential"
and any similar expressions are intended to identify those assertions as
forward-looking statements. The declaration of dividends is at the
discretion of the Board and will depend on FCX's financial results, cash
requirements, future prospects, and other factors deemed relevant by the
Board.
FCX cautions readers that forward-looking statements are not
guarantees of future performance and actual results may differ
materially from those anticipated, projected or assumed in the
forward-looking statements. Important factors that can cause FCX's
actual results to differ materially from those anticipated in the
forward-looking statements include supply of and demand for, and prices
of, copper, gold and molybdenum; mine sequencing; production
rates; potential inventory adjustments; potential impairment of
long-lived mining assets; the outcome of negotiations with the
Indonesian government regarding PT-FI's long-term mining rights; the
potential effects of violence in Indonesia generally and in the province
of Papua; industry risks; regulatory changes; political risks; labor
relations; weather- and climate-related risks; environmental risks
(including resolution of the administrative sanctions and other
environmental matters pending before Indonesia's Ministry of Environment
and Forestry); litigation results (including the final disposition of
Indonesian tax disputes and the outcome of Cerro Verde's royalty dispute
with the Peruvian national tax authority); and other factors described
in more detail under the heading “Risk Factors” in FCX's Annual Report
on Form 10-K for the year ended December 31, 2017, filed with the U.S.
Securities and Exchange Commission (SEC) as updated by FCX's subsequent
filings with the SEC. With respect to FCX's operations in Indonesia,
such factors include whether PT-FI will be able to resolve complex
regulatory matters in Indonesia by June 30, 2018, or obtain an extension
of its temporary IUPK after June 30, 2018.
Investors are cautioned that many of the assumptions upon which FCX's
forward-looking statements are based are likely to change after the
forward-looking statements are made, including for example commodity
prices, which FCX cannot control, and production volumes and costs, some
aspects of which FCX may not be able to control. Further, FCX may make
changes to its business plans that could affect its results. FCX
cautions investors that it does not intend to update forward-looking
statements more frequently than quarterly notwithstanding any changes in
its assumptions, changes in business plans, actual experience or other
changes, and FCX undertakes no obligation to update any forward-looking
statements.
This press release also contains certain financial measures such as
unit net cash (credits) costs per pound of copper and molybdenum and
adjusted net income, which are not recognized under U.S. generally
accepted accounting principles. As required by SEC Regulation G,
reconciliations of these measures to amounts reported in FCX's
consolidated financial statements are in the supplemental schedules of
this press release, which are also available on FCX's website, "fcx.com."
|
FREEPORT-McMoRan INC.
|
|
SELECTED OPERATING DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
MINING OPERATIONS:
|
|
Production
|
|
Sales
|
|
|
COPPER (millions of
recoverable pounds)
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
North America
|
|
|
|
|
|
|
|
|
|
|
Morenci (72%)a
|
|
169
|
|
|
181
|
|
|
187
|
|
|
172
|
|
|
|
Bagdad (100%)
|
|
49
|
|
|
40
|
|
|
51
|
|
|
38
|
|
|
|
Safford (100%)
|
|
33
|
|
|
42
|
|
|
36
|
|
|
43
|
|
|
|
Sierrita (100%)
|
|
41
|
|
|
41
|
|
|
44
|
|
|
38
|
|
|
|
Miami (100%)
|
|
4
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
|
Chino (100%)
|
|
38
|
|
|
62
|
|
|
45
|
|
|
60
|
|
|
|
Tyrone (100%)
|
|
13
|
|
|
20
|
|
|
15
|
|
|
18
|
|
|
|
Other (100%)
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
|
Total North America
|
|
348
|
|
|
392
|
|
|
384
|
|
|
375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South America
|
|
|
|
|
|
|
|
|
|
|
Cerro Verde (53.56%)
|
|
243
|
|
|
262
|
|
|
242
|
|
|
268
|
|
|
|
El Abra (51%)
|
|
50
|
|
|
42
|
|
|
48
|
|
|
41
|
|
|
|
Total South America
|
|
293
|
|
|
304
|
|
|
290
|
|
|
309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indonesia
|
|
|
|
|
|
|
|
|
|
|
Grasberg (90.64%)b
|
|
311
|
|
|
155
|
|
|
319
|
|
|
125
|
|
|
|
Total
|
|
952
|
|
|
851
|
|
|
993
|
|
c
|
809
|
|
c
|
|
Less noncontrolling interests
|
|
167
|
|
|
157
|
|
|
166
|
|
|
156
|
|
|
|
Net
|
|
785
|
|
|
694
|
|
|
827
|
|
|
653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
$
|
3.11
|
|
|
$
|
2.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GOLD (thousands of recoverable
ounces)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
North America (100%)
|
|
4
|
|
|
7
|
|
|
7
|
|
|
5
|
|
|
|
Indonesia (90.64%)b
|
|
595
|
|
|
232
|
|
|
603
|
|
|
177
|
|
|
|
Consolidated
|
|
599
|
|
|
239
|
|
|
610
|
|
|
182
|
|
|
|
Less noncontrolling interests
|
|
55
|
|
|
22
|
|
|
57
|
|
|
17
|
|
|
|
Net
|
|
544
|
|
|
217
|
|
|
553
|
|
|
165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per ounce
|
|
|
|
|
|
$
|
1,312
|
|
|
$
|
1,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOLYBDENUM (millions of
recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
Henderson (100%)
|
|
4
|
|
|
3
|
|
|
N/A
|
|
N/A
|
|
|
Climax (100%)
|
|
5
|
|
|
5
|
|
|
N/A
|
|
N/A
|
|
|
North America copper mines (100%)a
|
|
7
|
|
|
9
|
|
|
N/A
|
|
N/A
|
|
|
Cerro Verde (53.56%)
|
|
6
|
|
|
6
|
|
|
N/A
|
|
N/A
|
|
|
Consolidated
|
|
22
|
|
|
23
|
|
|
24
|
|
|
24
|
|
|
|
Less noncontrolling interests
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
|
Net
|
|
19
|
|
|
20
|
|
|
21
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
$
|
11.95
|
|
|
$
|
8.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a. Amounts are net of Morenci's undivided joint venture partners'
interests.
|
|
|
|
|
|
|
|
|
|
|
|
|
b. Amounts are net of Grasberg's joint venture partner's
interest, which varies in accordance with the terms of the joint
venture agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
c. Consolidated sales volumes exclude purchased copper of 74
million pounds in first-quarter 2018 and 58 million pounds in
first-quarter 2017.
|
|
|
FREEPORT-McMoRan INC.
|
|
|
SELECTED OPERATING DATA (continued)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2018
|
|
2017
|
|
|
100% North America Copper Mines
|
|
|
|
|
|
|
Solution Extraction/Electrowinning
(SX/EW) Operations
|
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
674,600
|
|
|
701,800
|
|
|
Average copper ore grade (percent)
|
|
0.27
|
|
|
0.28
|
|
|
Copper production (millions of recoverable pounds)
|
|
262
|
|
|
277
|
|
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
288,600
|
|
|
303,800
|
|
|
Average ore grades (percent):
|
|
|
|
|
|
|
Copper
|
|
0.35
|
|
|
0.41
|
|
|
Molybdenum
|
|
0.02
|
|
|
0.03
|
|
|
Copper recovery rate (percent)
|
|
88.0
|
|
|
86.4
|
|
|
Production (millions of recoverable pounds):
|
|
|
|
|
|
|
Copper
|
|
151
|
|
|
186
|
|
|
Molybdenum
|
|
7
|
|
|
9
|
|
|
|
|
|
|
|
|
|
100% South America Mining
|
|
|
|
|
|
|
SX/EW Operations
|
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
168,000
|
|
|
120,100
|
|
|
Average copper ore grade (percent)
|
|
0.33
|
|
|
0.42
|
|
|
Copper production (millions of recoverable pounds)
|
|
67
|
|
|
66
|
|
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
385,500
|
|
|
338,900
|
|
|
Average ore grades (percent):
|
|
|
|
|
|
|
Copper
|
|
0.39
|
|
|
0.44
|
|
|
Molybdenum
|
|
0.01
|
|
|
0.02
|
|
|
Copper recovery rate (percent)
|
|
79.0
|
|
|
84.5
|
|
|
Production (millions of recoverable pounds):
|
|
|
|
|
|
|
Copper
|
|
226
|
|
|
238
|
|
|
Molybdenum
|
|
6
|
|
|
6
|
|
|
|
|
|
|
|
|
|
100% Indonesia Mining
|
|
|
|
|
|
|
Ore milled (metric tons per day):a
|
|
|
|
|
|
|
Grasberg open pit
|
|
125,200
|
|
|
53,600
|
|
|
Deep Ore Zone underground mine
|
|
39,400
|
|
|
26,100
|
|
|
Deep Mill Level Zone (DMLZ) underground mineb
|
|
2,600
|
|
|
3,200
|
|
|
Grasberg Block Cave underground mineb
|
|
4,000
|
|
|
2,600
|
|
|
Big Gossan underground mineb
|
|
2,400
|
|
|
1,700
|
|
|
Total
|
|
173,600
|
|
|
87,200
|
|
|
Average ore grades:
|
|
|
|
|
|
|
Copper (percent)
|
|
1.12
|
|
|
1.15
|
|
|
Gold (grams per metric ton)
|
|
1.63
|
|
|
1.17
|
|
|
Recovery rates (percent):
|
|
|
|
|
|
|
Copper
|
|
92.0
|
|
|
92.2
|
|
|
Gold
|
|
84.7
|
|
|
84.8
|
|
|
Production (recoverable):
|
|
|
|
|
|
|
Copper (millions of pounds)
|
|
340
|
|
|
172
|
|
|
Gold (thousands of ounces)
|
|
673
|
|
|
241
|
|
|
|
|
|
|
|
|
|
100% Molybdenum Mines
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
23,100
|
|
|
21,600
|
|
|
Average molybdenum ore grade (percent)
|
|
0.21
|
|
|
0.21
|
|
|
Molybdenum production (millions of recoverable pounds)
|
|
9
|
|
|
8
|
|
|
|
|
|
|
|
|
a.
|
Amounts represent the approximate average daily throughput
processed at PT Freeport Indonesia's (PT-FI) mill facilities from
each producing mine and from development activities that result in
metal production.
|
|
|
|
|
b.
|
Targeted production rates once the DMLZ underground mine
reaches full capacity are expected to approximate 80,000 metric
tons of ore per day in 2021; production from the Grasberg Block
Cave underground mine is expected to commence in the first half of
2019, and production from the Big Gossan underground mine
restarted in fourth-quarter 2017.
|
|
FREEPORT-McMoRan INC.
|
|
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2018
|
|
|
2017a
|
|
|
|
|
(In Millions, Except Per Share Amounts)
|
|
|
Revenuesb
|
|
$
|
4,868
|
|
|
|
$
|
3,341
|
|
|
|
Cost of sales:
|
|
|
|
|
|
|
|
Production and delivery
|
|
2,808
|
|
|
|
2,188
|
|
c
|
|
Depreciation, depletion and amortization
|
|
451
|
|
|
|
389
|
|
|
|
Total cost of sales
|
|
3,259
|
|
|
|
2,577
|
|
|
|
Selling, general and administrative expenses
|
|
131
|
|
|
|
151
|
|
c
|
|
Mining exploration and research expenses
|
|
21
|
|
|
|
14
|
|
|
|
Environmental obligations and shutdown costs
|
|
9
|
|
|
|
25
|
|
|
|
Net gain on sales of assets
|
|
(11
|
)
|
|
|
(23
|
)
|
|
|
Total costs and expenses
|
|
3,409
|
|
|
|
2,744
|
|
|
|
Operating income
|
|
1,459
|
|
|
|
597
|
|
|
|
Interest expense, netd
|
|
(151
|
)
|
|
|
(167
|
)
|
|
|
Other income, net
|
|
28
|
|
e
|
|
8
|
|
|
|
Income from continuing operations before income taxes and equity in
affiliated companies' net (losses) earnings
|
|
1,336
|
|
|
|
438
|
|
|
|
Provision for income taxesf
|
|
(506
|
)
|
|
|
(174
|
)
|
|
|
Equity in affiliated companies' net (losses) earnings
|
|
(2
|
)
|
|
|
4
|
|
|
|
Net income from continuing operations
|
|
828
|
|
|
|
268
|
|
|
|
Net (loss) income from discontinued operationsg
|
|
(11
|
)
|
|
|
38
|
|
|
|
Net income
|
|
817
|
|
|
|
306
|
|
|
|
Net income attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
Continuing operations
|
|
(125
|
)
|
|
|
(75
|
)
|
|
|
Discontinued operations
|
|
—
|
|
|
|
(3
|
)
|
|
|
Net income attributable to FCX common stockh
|
|
$
|
692
|
|
|
|
$
|
228
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share attributable to common stock:
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.48
|
|
|
|
$
|
0.13
|
|
|
|
Discontinued operations
|
|
(0.01
|
)
|
|
|
0.03
|
|
|
|
|
|
$
|
0.47
|
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
1,449
|
|
|
|
1,446
|
|
|
|
Diluted
|
|
1,458
|
|
|
|
1,454
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
$
|
0.05
|
|
|
|
$
|
—
|
|
|
|
a.
|
The adoption of accounting guidance related to the presentation
of retirement benefits resulted in the reclassification of the
non-service components of net periodic benefit cost to other
income, net.
|
|
b.
|
Revenues include adjustments to provisionally priced
concentrate and cathode sales. For a summary of adjustments to
provisionally priced copper sales, refer to the supplemental
schedule, "Derivative Instruments," on page VII.
|
|
c.
|
Includes net mining and oil and gas charges that are summarized
in the supplemental schedule, "Adjusted Net Income," on page
VI.
|
|
d.
|
Consolidated interest costs (before capitalization) totaled
$176 million in first-quarter 2018 and $195 million in
first-quarter 2017.
|
|
e.
|
Includes interest received with the refund of PT-FI's prior
years' tax receivables, which is summarized in the supplemental
schedule, "Adjusted Net Income," on page VI.
|
|
f.
|
For a summary of FCX's provision for income taxes, refer to the
supplemental schedule, "Income Taxes," on page VI.
|
|
g.
|
Primarily reflects adjustments to the estimated fair value of
contingent consideration related to the 2016 sale of FCX’s
interest in TF Holdings Limited (TFHL), which will continue to be
adjusted through December 31, 2019.
|
|
h.
|
FCX defers recognizing profits on intercompany sales until
final sales to third parties occur. Refer to the supplemental
schedule, "Deferred Profits," on page VII for a summary of net
impacts from changes in these deferrals.
|
|
|
|
FREEPORT-McMoRan INC.
|
|
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(In Millions)
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
3,702
|
|
|
|
$
|
4,447
|
|
|
Trade accounts receivable
|
|
1,222
|
|
|
|
1,246
|
|
|
Income and other tax receivables
|
|
222
|
|
|
|
325
|
|
|
Inventories:
|
|
|
|
|
|
|
Mill and leach stockpiles
|
|
1,448
|
|
|
|
1,422
|
|
|
Materials and supplies, net
|
|
1,335
|
|
|
|
1,305
|
|
|
Product
|
|
1,102
|
|
|
|
1,166
|
|
|
Other current assets
|
|
367
|
|
|
|
270
|
|
|
Held for sale
|
|
708
|
|
|
|
598
|
|
|
Total current assets
|
|
10,106
|
|
|
|
10,779
|
|
|
Property, plant, equipment and mine development costs, net
|
|
22,792
|
|
|
|
22,844
|
|
|
Long-term mill and leach stockpiles
|
|
1,387
|
|
|
|
1,409
|
|
|
Other assets
|
|
2,352
|
|
|
|
2,270
|
|
|
Total assets
|
|
$
|
36,637
|
|
|
|
$
|
37,302
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
2,209
|
|
|
|
$
|
2,321
|
|
|
Accrued income taxes
|
|
749
|
|
|
|
565
|
|
|
Current portion of debt
|
|
483
|
|
|
|
1,414
|
|
|
Current portion of environmental and asset retirement obligations
|
|
396
|
|
|
|
388
|
|
|
Dividends payable
|
|
72
|
|
|
|
—
|
|
|
Held for sale
|
|
435
|
|
|
|
350
|
|
|
Total current liabilities
|
|
4,344
|
|
|
|
5,038
|
|
|
Long-term debt, less current portion
|
|
11,123
|
|
|
|
11,703
|
|
|
Deferred income taxes
|
|
3,642
|
|
|
|
3,622
|
|
|
Environmental and asset retirement obligations, less current portion
|
|
3,630
|
|
|
|
3,631
|
|
|
Other liabilities
|
|
1,972
|
|
|
|
2,012
|
|
|
Total liabilities
|
|
24,711
|
|
|
|
26,006
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Common stock
|
|
158
|
|
|
|
158
|
|
|
Capital in excess of par value
|
|
26,729
|
|
|
|
26,751
|
|
|
Accumulated deficit
|
|
(14,030
|
)
|
|
|
(14,722
|
)
|
|
Accumulated other comprehensive loss
|
|
(475
|
)
|
|
|
(487
|
)
|
|
Common stock held in treasury
|
|
(3,726
|
)
|
|
|
(3,723
|
)
|
|
Total stockholders' equity
|
|
8,656
|
|
|
|
7,977
|
|
|
Noncontrolling interests
|
|
3,270
|
|
|
|
3,319
|
|
|
Total equity
|
|
11,926
|
|
|
|
11,296
|
|
|
Total liabilities and equity
|
|
$
|
36,637
|
|
|
|
$
|
37,302
|
|
|
|
|
FREEPORT-McMoRan INC.
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
2017
|
|
|
|
(In Millions)
|
|
Cash flow from operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
817
|
|
|
$
|
306
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
451
|
|
|
389
|
|
|
Net gain on sales of assets
|
|
(11
|
)
|
|
(23
|
)
|
|
Stock-based compensation
|
|
49
|
|
|
34
|
|
|
Payments for Cerro Verde royalty dispute
|
|
(10
|
)
|
|
(11
|
)
|
|
Net charges for environmental and asset retirement obligations,
including accretion
|
|
53
|
|
|
71
|
|
|
Payments for environmental and asset retirement obligations
|
|
(38
|
)
|
|
(33
|
)
|
|
Net charges for defined pension and postretirement plans
|
|
18
|
|
|
33
|
|
|
Pension plan contributions
|
|
(24
|
)
|
|
(30
|
)
|
|
Deferred income taxes
|
|
22
|
|
|
20
|
|
|
Loss (gain) on disposal of discontinued operations
|
|
11
|
|
|
(32
|
)
|
|
Decrease in long-term mill and leach stockpiles
|
|
22
|
|
|
8
|
|
|
Oil and gas contract settlement payments
|
|
—
|
|
|
(70
|
)
|
|
Other, net
|
|
30
|
|
|
(59
|
)
|
|
Changes in working capital and other tax payments:
|
|
|
|
|
|
Accounts receivable
|
|
136
|
|
|
623
|
|
|
Inventories
|
|
(142
|
)
|
|
(135
|
)
|
|
Other current assets
|
|
(42
|
)
|
|
(13
|
)
|
|
Accounts payable and accrued liabilities
|
|
(96
|
)
|
|
(433
|
)
|
|
Accrued income taxes and timing of other tax payments
|
|
123
|
|
|
147
|
|
|
Net cash provided by operating activities
|
|
1,369
|
|
|
792
|
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
North America copper mines
|
|
(92
|
)
|
|
(28
|
)
|
|
South America
|
|
(67
|
)
|
|
(15
|
)
|
|
Indonesia
|
|
(203
|
)
|
|
(244
|
)
|
|
Molybdenum mines
|
|
(1
|
)
|
|
(1
|
)
|
|
Other
|
|
(39
|
)
|
|
(56
|
)
|
|
Intangible water rights and other, net
|
|
(90
|
)
|
|
(17
|
)
|
|
Net cash used in investing activities
|
|
(492
|
)
|
|
(361
|
)
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
Proceeds from debt
|
|
122
|
|
|
157
|
|
|
Repayments of debt
|
|
(1,633
|
)
|
|
(815
|
)
|
|
Cash dividends paid:
|
|
|
|
|
|
Common stock
|
|
—
|
|
|
(1
|
)
|
|
Noncontrolling interests
|
|
(80
|
)
|
|
(15
|
)
|
|
Stock-based awards net proceeds (payments)
|
|
3
|
|
|
(5
|
)
|
|
Net cash used in financing activities
|
|
(1,588
|
)
|
|
(679
|
)
|
|
|
|
|
|
|
|
Net decrease in cash, cash equivalents, restricted cash and
restricted cash equivalents
|
|
(711
|
)
|
|
(248
|
)
|
|
Decrease in cash and cash equivalents in assets held for sale
|
|
32
|
|
|
8
|
|
|
Cash, cash equivalents, restricted cash and restricted cash
equivalents at beginning of year
|
|
4,631
|
|
|
4,403
|
|
|
Cash, cash equivalents, restricted cash and restricted cash
equivalents at end of perioda
|
|
$
|
3,952
|
|
|
$
|
4,163
|
|
|
a.
|
Includes restricted cash and restricted cash equivalents of
$250 million at March 31, 2018, and $162 million at March 31, 2017.
|
|
FREEPORT-McMoRan INC.
|
|
ADJUSTED NET INCOME
|
Adjusted net income is intended to provide investors and others with
information about FCX's recurring operating performance. This
information differs from net income attributable to common stock
determined in accordance with U.S. generally accepted accounting
principles (GAAP) and should not be considered in isolation or as a
substitute for measures of performance determined in accordance with
U.S. GAAP. FCX's adjusted net income follows, which may not be
comparable to similarly titled measures reported by other companies (in
millions, except per share amounts).
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
2017
|
|
|
|
Pre-tax
|
|
|
After-taxa
|
|
Per Share
|
|
Pre-tax
|
|
|
After-taxa
|
|
Per Share
|
|
Net income attributable to common stock
|
|
N/A
|
|
|
$
|
692
|
|
|
$
|
0.47
|
|
|
N/A
|
|
|
$
|
228
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PT-FI charges for workforce reductions
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(21
|
)
|
|
$
|
(11
|
)
|
|
$
|
(0.01
|
)
|
|
Morenci asset impairment charge
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
|
(0.01
|
)
|
|
Net oil and gas charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
b
|
(1
|
)
|
|
—
|
|
|
Net adjustments to environmental obligations and related litigation
reserves
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
|
(0.01
|
)
|
|
Net gain on sales of assets
|
|
11
|
|
c
|
11
|
|
|
0.01
|
|
|
23
|
|
|
23
|
|
|
0.01
|
|
|
PT-FI interest on tax refund
|
|
24
|
|
d
|
13
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(Loss) gain on discontinued operationse
|
|
(11
|
)
|
|
(11
|
)
|
|
(0.01
|
)
|
|
41
|
|
|
35
|
|
|
0.03
|
|
|
|
|
$
|
24
|
|
|
$
|
13
|
|
|
$
|
0.01
|
|
|
$
|
4
|
|
|
$
|
8
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to common stock
|
|
N/A
|
|
|
$
|
679
|
|
|
$
|
0.46
|
|
|
N/A
|
|
|
$
|
220
|
|
|
$
|
0.15
|
|
|
a.
|
Reflects impact to FCX net income attributable to common stock
(i.e., net of any taxes and noncontrolling interests).
|
|
b.
|
Includes charges totaling $21 million in selling, general and
administrative expenses for contract termination costs, mostly
offset by adjustments of $20 million in production and delivery
costs for contingent payments related to 2016 drillship
settlements.
|
|
c.
|
Reflects adjustments to the estimated fair value of the
potential $150 million in contingent consideration related to the
2016 sale of onshore California oil and gas properties, which will
continue to be adjusted through December 31, 2020.
|
|
d.
|
Reflects interest received with the refund of prior years' tax
receivables.
|
|
e.
|
Primarily reflects adjustments to the estimated fair value of
the potential $120 million in contingent consideration related to
the 2016 sale of FCX’s interest in TFHL, which will continue to be
adjusted through December 31, 2019.
|
INCOME TAXES
Following is a summary of the approximate amounts used in the
calculation of FCX's consolidated income tax provision for three months
ended March 31, 2018 and 2017 (in millions, except percentages):
|
|
Three Months Ended March 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
Income Tax
|
|
|
|
|
|
Income Tax
|
|
|
|
|
Effective
|
|
(Provision)
|
|
|
|
Effective
|
|
(Provision)
|
|
|
Incomea
|
|
Tax Rate
|
|
Benefit
|
|
Incomea
|
|
Tax Rate
|
|
Benefit
|
|
U.S.
|
$
|
170
|
|
|
(2)%
|
|
$
|
4
|
|
|
$
|
10
|
|
|
70%
|
|
$
|
(7
|
)
|
|
South America
|
183
|
|
|
39%
|
|
(72
|
)
|
|
260
|
|
|
39%
|
|
(101
|
)
|
|
Indonesia
|
933
|
|
|
43%
|
|
(401
|
)
|
|
152
|
|
|
44%
|
|
(67
|
)
|
|
Eliminations and other
|
50
|
|
|
N/A
|
|
(3
|
)
|
|
16
|
|
|
N/A
|
|
(1
|
)
|
|
Rate adjustmentb
|
—
|
|
|
N/A
|
|
(34
|
)
|
|
—
|
|
|
N/A
|
|
2
|
|
|
Continuing operations
|
$
|
1,336
|
|
|
38%
|
c
|
$
|
(506
|
)
|
|
$
|
438
|
|
|
40%
|
|
$
|
(174
|
)
|
|
a.
|
Represents income from continuing operations by geographic
location before income taxes and equity in affiliated companies'
net (losses) earnings.
|
|
b.
|
In accordance with applicable accounting rules, FCX adjusts its
interim provision for income taxes equal to its consolidated tax
rate.
|
|
c.
|
The consolidated effective income tax rate is a function of the
combined effective tax rates for the jurisdictions in which FCX
operates. Accordingly, variations in the relative proportions of
jurisdictional income result in fluctuations to FCX's consolidated
effective income tax rate. Assuming achievement of current sales
volume and cost estimates and average prices of $3.15 per pound
for copper, $1,300 per ounce for gold and $12.00 per pound for
molybdenum for the remainder of 2018, FCX estimates its
consolidated effective tax rate for the year 2018 will approximate
36 percent and would decrease with higher prices.
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180424005824/en/
Source: Freeport-McMoRan Inc.