PHOENIX--(BUSINESS WIRE)--
Freeport-McMoRan Inc. (NYSE: FCX):
-
Net income attributable to common stock totaled $556 million,
$0.38 per share, in third-quarter 2018. After adjusting for net gains
of $42 million, $0.03 per share, third-quarter 2018 adjusted net
income attributable to common stock totaled $514 million, $0.35 per
share.
-
Consolidated sales totaled 1.04 billion pounds of copper, 837
thousand ounces of gold and 22 million pounds of molybdenum in
third-quarter 2018.
-
Consolidated sales for the year 2018 are expected to
approximate 3.8 billion pounds of copper, 2.45 million ounces of gold
and 95 million pounds of molybdenum, including 790 million pounds of
copper, 330 thousand ounces of gold and 25 million pounds of
molybdenum in fourth-quarter 2018.
-
Average realized prices in third-quarter 2018 were $2.80 per
pound for copper, $1,191 per ounce for gold and $12.40 per pound for
molybdenum.
-
Average unit net cash costs in third-quarter 2018 were $0.93
per pound of copper and are expected to average $1.06 per pound of
copper for the year 2018.
-
Operating cash flows totaled $1.25 billion in third-quarter
2018 and $3.9 billion for the first nine months of 2018. Based on
current sales volume and cost estimates, and assuming average prices
of $2.85 per pound for copper, $1,200 per ounce for gold and $12.00
per pound for molybdenum for fourth-quarter 2018, operating cash flows
are expected to approximate $4.2 billion (net of $0.5 billion in
working capital uses and timing of other tax payments) for the year
2018.
-
Capital expenditures totaled $0.5 billion (including
approximately $0.4 billion for major mining projects) in third-quarter
2018 and $1.4 billion (including approximately $0.9 billion for major
mining projects) for the first nine months of 2018. Capital
expenditures for the year 2018 are expected to approximate $2.0
billion, including $1.2 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.
-
On September 27, 2018, FCX and PT Freeport Indonesia (PT-FI) entered
into a definitive agreement with PT Indonesia Asahan Aluminium
(Persero) (PT Inalum) consistent with previously agreed economic
terms. Closing is expected to occur in late 2018 or early 2019,
subject to satisfaction of conditions.
-
On September 26, 2018, FCX declared a quarterly cash dividend
of $0.05 per share on its common stock, which will be paid on November
1, 2018.
-
At September 30, 2018, consolidated debt totaled $11.1
billionand consolidated cash totaled $4.6 billion. FCX
had no borrowings and $3.5 billion available under its revolving
credit facility at September 30, 2018.
Freeport-McMoRan Inc. (NYSE: FCX) reported net income attributable to
common stock of $556 million ($0.38 per share) in third-quarter 2018 and
$2.1 billion ($1.45 per share) for the first nine months of 2018. After
adjusting for net gains of $42 million ($0.03 per share), primarily
reflecting adjustments to assets held for sale and the fair value of
potential contingent consideration, partly offset by nonrecurring
charges for Cerro Verde's new three-year collective labor agreement
(CLA), adjusted net income attributable to common stock totaled $514
million ($0.35 per share) in third-quarter 2018. Refer to the
supplemental schedule, "Adjusted Net Income," on page VII, which is
available on FCX's website, "fcx.com," for additional information.
Richard C. Adkerson, President and Chief Executive Officer, said,
"Our global team delivered a solid operating quarter and maintained a
sharp focus on productivity, cost management, capital discipline and
initiatives to build value for shareholders. The pending completion of
our new long-term partnership with the Indonesian government will enable
us to de-risk a world class asset. Supported by a premier portfolio of
geographically diverse long-lived copper assets, a solid balance sheet,
a large resource position to support future growth and a positive
fundamental outlook for copper, FCX is poised to deliver substantial
value to shareholders."
|
SUMMARY FINANCIAL DATA
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(in millions, except per share amounts)
|
Revenuesa,b |
|
|
|
$
|
4,908
|
|
|
$
|
4,310
|
|
|
$
|
14,944
|
|
|
|
$
|
11,362
|
Operating incomea |
|
|
|
$
|
1,315
|
|
|
$
|
928
|
|
|
$
|
4,438
|
|
|
|
$
|
2,211
|
Net income from continuing operations
|
|
|
|
$
|
668
|
|
|
$
|
242
|
|
|
$
|
2,535
|
|
|
|
$
|
836
|
Net income attributable to common stockc,d |
|
|
|
$
|
556
|
|
|
$
|
280
|
|
|
$
|
2,117
|
|
|
|
$
|
776
|
Diluted net income (loss) per share of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
$
|
0.38
|
|
|
$
|
0.19
|
|
|
$
|
1.46
|
|
|
|
$
|
0.50
|
Discontinued operations
|
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
|
0.03
|
|
|
|
|
$
|
0.38
|
|
|
$
|
0.19
|
|
|
$
|
1.45
|
|
|
|
$
|
0.53
|
Diluted weighted-average common shares outstanding
|
|
|
|
1,458
|
|
|
1,454
|
|
|
1,458
|
|
|
|
1,453
|
Operating cash flowse |
|
|
|
$
|
1,247
|
|
|
$
|
1,183
|
|
|
$
|
3,925
|
|
|
|
$
|
3,012
|
Capital expenditures
|
|
|
|
$
|
507
|
|
|
$
|
314
|
|
|
$
|
1,391
|
|
|
|
$
|
1,020
|
At September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
4,556
|
|
|
$
|
4,957
|
|
|
$
|
4,556
|
|
|
|
$
|
4,957
|
Total debt, including current portion
|
|
|
|
$
|
11,127
|
|
|
$
|
14,782
|
|
|
$
|
11,127
|
|
|
|
$
|
14,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
a.
For segment financial results, refer to the
supplemental schedules, "Business Segments," beginning on page IX,
which are available on FCX's website, "fcx.com."
|
|
b.
Includes adjustments to prior period
provisionally priced concentrate and cathode copper sales totaling
$(111) million ($(48) million to net income attributable to common
stock or $(0.03) per share) in third-quarter 2018, $95 million
($39 million to net income attributable to common stock or $0.03
per share) in third-quarter 2017, $(70) million ($(31) million to
net income attributable to common stock or $(0.02) per share) for
the first nine months of 2018 and $81 million ($35 million to net
income attributable to common stock or $0.02 per share) for the
first nine months of 2017. For further discussion, refer to the
supplemental schedule, "Derivative Instruments," beginning on page
VIII, which is available on FCX's website, "fcx.com."
|
|
c.
Includes net gains (charges) of $42 million
($0.03 per share) in third-quarter 2018, $(212) million ($(0.15)
per share) in third-quarter 2017, $69 million ($0.04 per share)
for the first nine months of 2018 and $(178) million ($(0.12) per
share) for the first nine months of 2017 that are described in the
supplemental schedule, "Adjusted Net Income," on page VII, which
is available on FCX's website, "fcx.com."
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|
d.
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 IX, which is
available on FCX's website, "fcx.com."
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e.
Includes net working capital sources (uses) and
timing of other tax payments of $59 million in third-quarter 2018,
$46 million in third-quarter 2017, $(154) million for the first
nine months of 2018 and $389 million for the first nine months of
2017.
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SUMMARY OPERATING DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Three Months Ended
September 30,
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
1,006
|
|
|
|
996
|
|
|
|
2,972
|
|
|
|
2,730
|
|
|
Sales, excluding purchases
|
|
|
|
1,044
|
|
|
|
932
|
|
|
|
3,026
|
|
|
|
2,683
|
|
|
Average realized price per pound
|
|
|
|
$
|
2.80
|
|
|
|
$
|
2.94
|
|
|
|
$
|
2.96
|
|
|
|
$
|
2.79
|
|
|
Site production and delivery costs per pounda |
|
|
|
$
|
1.73
|
|
b
|
|
$
|
1.56
|
|
c
|
|
$
|
1.70
|
|
b
|
|
$
|
1.59
|
|
c
|
Unit net cash costs per pounda |
|
|
|
$
|
0.93
|
|
b
|
|
$
|
1.20
|
|
c
|
|
$
|
0.95
|
|
b
|
|
$
|
1.25
|
|
c
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
760
|
|
|
|
418
|
|
|
|
2,105
|
|
|
|
1,010
|
|
|
Sales, excluding purchases
|
|
|
|
837
|
|
|
|
355
|
|
|
|
2,123
|
|
|
|
969
|
|
|
Average realized price per ounce
|
|
|
|
$
|
1,191
|
|
|
|
$
|
1,290
|
|
|
|
$
|
1,249
|
|
|
|
$
|
1,261
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
23
|
|
|
|
24
|
|
|
|
69
|
|
|
|
70
|
|
|
Sales, excluding purchases
|
|
|
|
22
|
|
|
|
22
|
|
|
|
70
|
|
|
|
71
|
|
|
Average realized price per pound
|
|
|
|
$
|
12.40
|
|
|
|
$
|
9.22
|
|
|
|
$
|
12.41
|
|
|
|
$
|
9.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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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 XII, which are available on FCX's website, "fcx.com."
|
|
b.
Includes $0.07 per pound of copper in
third-quarter 2018 and $0.02 per pound of copper for the first
nine months of 2018 associated with nonrecurring charges for Cerro
Verde's new three-year CLA. Refer to the supplemental schedule,
"Adjusted Net Income," on page VII, which is available on FCX's
website, "fcx.com," for additional information.
|
|
c.
Excludes $0.01 per pound of copper in
third-quarter 2017 and $0.04 per pound of copper for the first
nine months of 2017 associated with PT-FI workforce reductions.
Refer to the supplemental schedule, "Adjusted Net Income," on page
VII, which is available on FCX's website, "fcx.com," for
additional information.
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Consolidated Sales Volumes
Third-quarter 2018 copper sales of 1.04 billion pounds were 8
percent higher than the July 2018 estimate of 970 million pounds and 12
percent higher than third-quarter 2017 sales of 932 million pounds,
primarily reflecting higher ore grades and operating rates in Indonesia.
Third-quarter 2018 gold sales of 837 thousand ounces were 20
percent higher than the July 2018 estimate of 700 thousand ounces and
more than double third-quarter 2017 sales of 355 thousand ounces,
primarily reflecting higher ore grades and operating rates in Indonesia.
Third-quarter 2018 molybdenum sales of 22 million pounds were
lower than the July 2018 estimate of 24 million pounds and approximated
third-quarter 2017 sales.
Sales volumes for the year 2018 are expected to approximate 3.8 billion
pounds of copper, 2.45 million ounces of gold and 95 million pounds of
molybdenum, including 790 million pounds of copper, 330 thousand ounces
of gold and 25 million pounds of molybdenum in fourth-quarter 2018.
Projections for 2018 and other forward looking statements in this
release assume extension of PT-FI’s long-term mining rights or an
extension of PT-FI’s temporary special mining license (IUPK) after
October 31, 2018. Refer to "Indonesia Mining," beginning on page 7, for
further discussion of Indonesia regulatory matters.
Consolidated Unit Costs
Consolidated average unit net cash costs (net of by-product credits) for
FCX's copper mines of $0.93 per pound of copper in third-quarter 2018
were lower than unit net cash costs of $1.20 per pound in third-quarter
2017, primarily reflecting higher by-product credits, partly offset by
nonrecurring charges associated with Cerro Verde's new three-year CLA.
Assuming average prices of $1,200 per ounce of gold and $12.00 per pound
of molybdenum for fourth-quarter 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 $1.06 per
pound of copper for the year 2018 (including $1.45 per pound of copper
in fourth-quarter 2018). The impact of price changes for fourth-quarter
2018 on consolidated unit net cash costs would approximate $0.01 per
pound for each $50 per ounce change in the average price of gold and
$0.005 per pound for each $2 per pound change in the average price of
molybdenum. 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. An initial project to develop the Lone Star oxide
ores commenced in first-quarter 2018, with first production expected by
the end of 2020. Total capital costs, including mine equipment and
pre-production stripping, are expected to approximate $850 million and
will benefit from the utilization of existing infrastructure at the
adjacent Safford operation. As of September 30, 2018, approximately $200
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 exposure to a significant sulfide resource. FCX continues
to advance drilling activities to define future large-scale development
opportunities in the Lone Star/Safford minerals district.
Operating Data. Following is summary consolidated operating data
for the North America copper mines for the third quarters and first nine
months of 2018 and 2017:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
349
|
|
|
|
375
|
|
|
|
1,051
|
|
|
|
1,151
|
|
Sales, excluding purchases
|
|
|
|
350
|
|
|
|
347
|
|
|
|
1,095
|
|
|
|
1,130
|
|
Average realized price per pound
|
|
|
|
$
|
2.77
|
|
|
|
$
|
2.92
|
|
|
|
$
|
3.02
|
|
|
|
$
|
2.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Productiona |
|
|
|
8
|
|
|
|
8
|
|
|
|
23
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit net cash costs per pound of copper
b
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
|
|
$
|
1.98
|
|
|
|
$
|
1.65
|
|
|
|
$
|
1.92
|
|
|
|
$
|
1.57
|
|
By-product credits
|
|
|
|
(0.26
|
)
|
|
|
(0.17
|
)
|
|
|
(0.23
|
)
|
|
|
(0.16
|
)
|
Treatment charges
|
|
|
|
0.10
|
|
|
|
0.11
|
|
|
|
0.10
|
|
|
|
0.11
|
|
Unit net cash costs
|
|
|
|
$
|
1.82
|
|
|
|
$
|
1.59
|
|
|
|
$
|
1.79
|
|
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 XII, which are available on FCX's website,
"fcx.com."
|
|
North America's consolidated copper sales volumes totaled 350 million
pounds in third-quarter 2018 and 347 million pounds in third-quarter
2017. North America copper sales are estimated to approximate 1.4
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 $1.82 per pound of copper in third-quarter 2018
were higher than unit net cash costs of $1.59 per pound in third-quarter
2017, primarily reflecting increased mining rates and higher mining and
milling costs.
Average unit net cash costs (net of by-product credits) for the North
America copper mines are expected to approximate $1.78 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 fourth-quarter 2018. North America's average unit net cash
costs for the year 2018 would change by approximately $0.01 per pound
for each $2 per pound change in the average price of molybdenum.
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. Cerro Verde's expanded
operations benefit from its large-scale, long-lived reserves and cost
efficiencies. The Cerro Verde expansion project, which achieved capacity
operating rates in early 2016, expanded the concentrator facilities'
capacity from 120,000 metric tons of ore per day to 360,000 metric tons
of ore per day. During 2018, Cerro Verde received a modified
environmental permit allowing it to operate its existing concentrator
facilities at rates up to 409,500 metric tons of ore per day. Cerro
Verde's concentrator facilities have continued to perform well, with
average mill throughput rates of 384,800 metric tons of ore per day for
the first nine months of 2018.
FCX continues to evaluate a large-scale expansion at El Abra to process
additional sulfide material and to achieve higher recoveries. El Abra's
large sulfide resource could potentially support a major mill project
similar to facilities constructed at Cerro Verde. Technical and economic
studies are being advanced to determine the optimal scope and timing for
the project.
Operating Data. Following is summary consolidated operating data
for the South America mining operations for the third quarters and first
nine months of 2018 and 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
2018
|
|
|
|
2017
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
325
|
|
|
|
|
328
|
|
|
|
931
|
|
|
|
|
932
|
|
Sales
|
|
|
|
326
|
|
|
|
|
327
|
|
|
|
928
|
|
|
|
|
923
|
|
Average realized price per pound
|
|
|
|
$
|
2.80
|
|
|
|
|
$
|
2.95
|
|
|
|
$
|
2.93
|
|
|
|
|
$
|
2.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Productiona |
|
|
|
7
|
|
|
|
|
8
|
|
|
|
20
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit net cash costs per pound of copper
b
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
|
|
$
|
1.84
|
|
|
c
|
|
$
|
1.60
|
|
|
|
$
|
1.80
|
|
|
c
|
|
$
|
1.55
|
|
By-product credits
|
|
|
|
(0.23
|
)
|
|
|
|
(0.19
|
)
|
|
|
(0.24
|
)
|
|
|
|
(0.17
|
)
|
Treatment charges
|
|
|
|
0.20
|
|
|
|
|
0.22
|
|
|
|
0.20
|
|
|
|
|
0.22
|
|
Royalty on metals
|
|
|
|
—
|
|
|
|
|
0.01
|
|
|
|
—
|
|
|
|
|
0.01
|
|
Unit net cash costs
|
|
|
|
$
|
1.81
|
|
|
|
|
$
|
1.64
|
|
|
|
$
|
1.76
|
|
|
|
|
$
|
1.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 XII, which are available on FCX's website,
"fcx.com."
|
|
c.
Includes $0.21 per pound of copper in
third-quarter 2018 and $0.07 per pound of copper for the first
nine months of 2018 associated with nonrecurring charges for Cerro
Verde's new three-year CLA. Refer to the supplemental schedule,
“Adjusted Net Income,” on page VII, which is available on FCX’s
website, “fcx.com,” for a summary of these charges.
|
|
South America's consolidated copper sales volumes totaled 326 million
pounds in third-quarter 2018 and 327 million pounds in third-quarter
2017. 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 $1.81 per pound of copper in third-quarter 2018 were
higher than unit net cash costs of $1.64 per pound in third-quarter
2017, primarily reflecting nonrecurring charges associated with Cerro
Verde's new three-year CLA. Excluding this charge, South America's
average unit site production and delivery costs of $1.63 per pound of
copper would have approximated third-quarter 2017.
Average unit net cash costs (net of by-product credits) for South
America mining are expected to approximate $1.73 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
fourth-quarter 2018.
Indonesia Mining. Through its 90.64 percent owned and
consolidated subsidiary 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. On September 27, 2018, FCX, PT-FI, PT
Indocopper Investama (PT-II) and PT Inalum entered into a Divestment
Agreement on previously agreed economic terms in connection with PT
Inalum’s acquisition of shares of PT-FI. Under the Divestment Agreement,
PT Inalum will acquire, for cash consideration of $350 million, 100
percent of FCX's interests in PT-II, which owns 9.36 percent of PT-FI
(equates to a 5.6 percent interest after 2022). PT Inalum also entered
into a definitive agreement with Rio Tinto to acquire for cash
consideration of $3.5 billion, all of Rio Tinto's interests (40 percent
interest after 2022) associated with its joint venture with PT-FI (the
Joint Venture).
The arrangements provide for FCX and existing PT-FI shareholders to
retain the economics of the revenue and cost sharing arrangements under
the Joint Venture and for FCX to continue to manage PT-FI's operations.
Following completion of the transaction, which includes Rio Tinto's
interest being merged into PT-FI, PT-FI will have an expanded asset base
and PT Inalum's share ownership will be 51.2 percent of PT-FI (subject
to a dividend assignment mechanism to replicate the Joint Venture
economics), and FCX's ownership will be 48.8 percent.
Concurrent with the closing of the divestment transaction, PT-FI will be
granted an IUPK providing long-term mining rights with assured legal and
fiscal terms and legal enforceability through 2041. PT-FI has agreed to
construct a smelter within five years of the closing with economics
shared pro rata by FCX and PT Inalum according to their respective
equity ownership in PT-FI.
The transaction, which is expected to close in late 2018 or early 2019,
is subject to certain conditions, including the issuance of the IUPK in
a form acceptable to FCX and PT Inalum; resolution of environmental
regulatory matters satisfactory to the Indonesian government, FCX and PT
Inalum; various other Indonesian regulatory actions and approvals; and
receipt of customary approvals from international competition
authorities.
PT-FI's export license is effective through February 15, 2019, and
PT-FI's temporary IUPK is effective through October 31, 2018. PT-FI will
continue to seek extensions to its temporary IUPK until closing of the
pending transaction. Until the pending transaction is completed, PT-FI
has reserved all rights under its Contract of Work (COW).
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. Following results of an economic analysis in the first
half of 2018, PT-FI revised its mine plans to continue to mine ore from
the open pit until transitioning to the Grasberg Block Cave (GBC)
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 GBC underground mine. First undercut blasting occurred in
September 2018, and cave production is scheduled for the first half of
2019. All underground mining levels and the ore flow system are being
commissioned. Production rates over the next five years are expected to
ramp up to 130,000 metric tons of ore per day.
During second-quarter 2018, PT-FI initiated plans to conduct hydraulic
fracturing activities to manage rock stresses and pre-condition the Deep
Mill Level Zone (DMLZ) underground mine for large-scale production
following mining induced seismic activity experienced in 2017 and 2018.
Hydraulic fracturing activities designed to safely manage production
commenced in third-quarter 2018 and to date have accomplished expected
results. PT-FI's revised mine plans for the DMLZ underground mine, which
continue to be reviewed, currently project block cave mining activities
in the DMLZ underground mine to commence in mid-2019. PT-FI expects the
DMLZ to reach full production rates of 80,000 metric tons per day in
2022. Estimates of timing of future production continue to be reviewed
and may be modified as additional information becomes available.
PT-FI's estimated annual capital spending on underground mine
development projects is expected to 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.
PT-FI is also evaluating plans for the development of a new copper
smelter in Indonesia, including site selection, engineering, joint
venture and financing arrangements.
Operating Data. Following is summary consolidated operating data
for the Indonesia mining operations for the third quarters and first
nine months of 2018 and 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
2018
|
|
|
2017
|
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
332
|
|
|
|
293
|
|
|
|
|
990
|
|
|
|
647
|
|
|
|
Sales
|
|
|
|
368
|
|
|
|
258
|
|
|
|
|
1,003
|
|
|
|
630
|
|
|
|
Average realized price per pound
|
|
|
|
$
|
2.81
|
|
|
|
$
|
2.95
|
|
|
|
|
$
|
2.93
|
|
|
|
$
|
2.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
754
|
|
|
|
412
|
|
|
|
|
2,089
|
|
|
|
992
|
|
|
|
Sales
|
|
|
|
831
|
|
|
|
352
|
|
|
|
|
2,105
|
|
|
|
956
|
|
|
|
Average realized price per ounce
|
|
|
|
$
|
1,191
|
|
|
|
$
|
1,290
|
|
|
|
|
$
|
1,248
|
|
|
|
$
|
1,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit net cash (credits) costs per pound of copper
a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
|
|
$
|
1.40
|
|
|
|
$
|
1.41
|
|
|
b
|
|
$
|
1.36
|
|
|
|
$
|
1.70
|
|
|
b
|
Gold and silver credits
|
|
|
|
(2.72
|
)
|
|
|
(1.80
|
)
|
|
|
|
(2.69
|
)
|
|
|
(1.98
|
)
|
|
|
Treatment charges
|
|
|
|
0.26
|
|
|
|
0.27
|
|
|
|
|
0.26
|
|
|
|
0.27
|
|
|
|
Export duties
|
|
|
|
0.14
|
|
|
|
0.08
|
|
|
|
|
0.15
|
|
|
|
0.10
|
|
|
|
Royalty on metals
|
|
|
|
0.20
|
|
|
|
0.17
|
|
|
|
|
0.21
|
|
|
|
0.16
|
|
|
|
Unit net cash (credits) costs
|
|
|
|
$
|
(0.72
|
)
|
|
|
$
|
0.13
|
|
|
|
|
$
|
(0.71
|
)
|
|
|
$
|
0.25
|
|
|
|
|
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 XII, which are available on FCX's
website, "fcx.com."
|
|
b.
Excludes fixed costs charged directly to
production and delivery costs totaling $0.03 per pound of copper
in third-quarter 2017 and $0.18 per pound of copper for the first
nine months of 2017 associated with workforce reductions. Refer to
the supplemental schedule, “Adjusted Net Income,” on page VII,
which is available on FCX’s website, “fcx.com,” for a summary of
these charges.
|
|
Indonesia's consolidated sales of 368 million pounds of copper and 831
thousand ounces of gold in third-quarter 2018 were higher than
third-quarter 2017 sales of 258 million pounds of copper and 352
thousand ounces of gold, primarily reflecting higher operating rates and
ore grades.
Assuming achievement of planned operating rates for fourth-quarter 2018,
consolidated sales volumes from Indonesia mining are expected to
approximate 1.16 billion pounds of copper and 2.45 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.
As PT-FI transitions mining from the open pit to underground, its
production is expected to be significantly lower in 2019 and 2020,
compared to 2018. Metal production is expected to improve significantly
by 2021 following a ramp-up period.
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 $0.72 per pound of copper
in third-quarter 2018, compared with unit net cash costs of $0.13 per
pound in third-quarter 2017.
Assuming an average gold price of $1,200 per ounce for fourth-quarter
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 $0.54 per pound of copper for the
year 2018 (including unit net cash costs of $0.48 per pound of copper in
fourth-quarter 2018). Indonesia mining's unit net cash credits for the
year 2018 would change by approximately $0.03 per pound for each $50 per
ounce change in the average price of gold for fourth-quarter 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 extension of PT-FI's
long-term mining rights or an extension of PT-FI's temporary IUPK after
October 31, 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 8 million pounds of molybdenum in both
third-quarter 2018 and third-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 $9.02 per pound of
molybdenum in third-quarter 2018 and $7.82 per pound in third-quarter
2017. Based on current sales volume and cost estimates, average unit net
cash costs for the Molybdenum mines are expected to approximate $8.80
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 XII, 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 significant
additional mineralization in this district, with higher ore grades than
FCX's other North America copper mines. Exploration results continue to
indicate opportunities for significant future potential reserve
additions in North America and South America. Exploration spending is
expected to approximate $85 million for the year 2018.
CASH FLOWS, CASH and DEBT
Operating Cash Flows. FCX generated operating cash flows of $1.25
billion in third-quarter 2018 and $3.9 billion for the first nine months
of 2018.
Based on current sales volume and cost estimates, and assuming average
prices of $2.85 per pound of copper, $1,200 per ounce of gold and $12.00
per pound of molybdenum for fourth-quarter 2018, FCX's consolidated
operating cash flows are estimated to approximate $4.2 billion for the
year 2018 (net of $0.5 billion in working capital uses and timing of
other tax payments). The impact of price changes during fourth-quarter
2018 on operating cash flows would approximate $105 million for each
$0.10 per pound change in the average price of copper, $15 million for
each $50 per ounce change in the average price of gold and $15 million
for each $2 per pound change in the average price of molybdenum.
Capital Expenditures. Capital expenditures totaled $0.5 billion
in third-quarter 2018 (including approximately $0.4 billion for major
mining projects) and $1.4 billion for the first nine months of 2018
(including approximately $0.9 billion for major mining projects).
Capital expenditures are expected to approximate $2.0 billion for the
year 2018, including $1.2 billion for major mining projects primarily
associated with underground development activities in the Grasberg
minerals district and development of the Lone Star oxide project.
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 September 30, 2018 (in billions):
|
|
|
|
|
|
Cash at domestic companies
|
|
|
|
$
|
2.7
|
|
Cash at international operations
|
|
|
|
1.9
|
|
Total consolidated cash and cash equivalents
|
|
|
|
4.6
|
|
Noncontrolling interests' share
|
|
|
|
(0.5
|
)
|
Cash, net of noncontrolling interests' share
|
|
|
|
4.1
|
|
Withholding taxes and other
|
|
|
|
(0.1
|
)
|
Net cash available
|
|
|
|
$
|
4.0
|
|
|
|
|
|
|
|
Debt. Following is a summary of total debt and the related
weighted-average interest rates at September 30, 2018 (in billions,
except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Interest Rate
|
Senior Notes
|
|
|
|
$
|
9.9
|
|
|
4.6
|
%
|
Cerro Verde credit facility
|
|
|
|
1.2
|
|
|
4.1
|
%
|
Total debt
|
|
|
|
$
|
11.1
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
At September 30, 2018, FCX had no borrowings, $13 million in letters of
credit issued and $3.5 billion available under its revolving credit
facility.
FINANCIAL POLICY
In February 2018, the FCX Board of Directors (Board) reinstated a cash
dividend on FCX common stock. On September 26, 2018, FCX declared a
quarterly cash dividend of $0.05 per share on its common stock, which
will be paid on November 1, 2018, to shareholders of record as of
October 15, 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
third-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, November 23, 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, expectations related to the pending transaction
between FCX, PT-FI, PT-II, and PT Inalum, including, but not limited to,
replication of the economics of the revenue and cost sharing
arrangements under the Joint Venture pursuant to a dividend assignment
mechanism, FCX's continued management of PT-FI's operations, the
expected timing of completion of the pending transaction, 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, expected, 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, but are not limited to, 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 ability to satisfy
conditions to close the pending transaction, including, but not limited
to, the documentation and issuance of an IUPK providing for the
extension and stability of PT-FI's long-term mining rights with assured
legal and fiscal terms and legal enforceability through 2041 in a form
acceptable to FCX and PT Inalum, resolution of environmental regulatory
matters that include amendments to the decrees imposing unattainable
environmental standards on PT-FI pending before Indonesia’s Ministry of
Environment and Forestry satisfactory to the Indonesian government, FCX
and PT Inalum, various other Indonesian regulatory actions and
approvals, including modification or revocation of current regulations
and implementation of new regulations by the Indonesian government and
assurances or approvals by Indonesian tax authorities with respect to
the pending transaction, including confirmation of withholding tax
treatment, and obtaining customary approvals from international
competition authorities; obtaining an extension of PT-FI's temporary
IUPK after October 31, 2018; 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; litigation results
(including 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.
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 September 30,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
|
2017
|
|
|
MINING OPERATIONS:
|
|
|
|
Production
|
|
|
Sales
|
|
|
COPPER
(millions of
recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Morenci (72%)a |
|
|
|
170
|
|
|
186
|
|
|
174
|
|
|
|
169
|
|
|
Bagdad (100%)
|
|
|
|
45
|
|
|
45
|
|
|
47
|
|
|
|
41
|
|
|
Safford (100%)
|
|
|
|
32
|
|
|
37
|
|
|
31
|
|
|
|
35
|
|
|
Sierrita (100%)
|
|
|
|
36
|
|
|
40
|
|
|
36
|
|
|
|
37
|
|
|
Miami (100%)
|
|
|
|
4
|
|
|
4
|
|
|
3
|
|
|
|
4
|
|
|
Chino (100%)
|
|
|
|
46
|
|
|
48
|
|
|
45
|
|
|
|
47
|
|
|
Tyrone (100%)
|
|
|
|
15
|
|
|
13
|
|
|
14
|
|
|
|
12
|
|
|
Other (100%)
|
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
|
2
|
|
|
Total North America
|
|
|
|
349
|
|
|
375
|
|
|
350
|
|
|
|
347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South America
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cerro Verde (53.56%)
|
|
|
|
275
|
|
|
284
|
|
|
280
|
|
|
|
291
|
|
|
El Abra (51%)
|
|
|
|
50
|
|
|
44
|
|
|
46
|
|
|
|
36
|
|
|
Total South America
|
|
|
|
325
|
|
|
328
|
|
|
326
|
|
|
|
327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indonesia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grasberg (90.64%)b |
|
|
|
332
|
|
|
293
|
|
|
368
|
|
|
|
258
|
|
|
Total
|
|
|
|
1,006
|
|
|
996
|
|
|
1,044
|
|
c
|
|
932
|
|
c
|
Less noncontrolling interests
|
|
|
|
183
|
|
|
181
|
|
|
186
|
|
|
|
177
|
|
|
Net
|
|
|
|
823
|
|
|
815
|
|
|
858
|
|
|
|
755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
|
|
|
|
$
|
2.80
|
|
|
|
$
|
2.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GOLD
(thousands of recoverable
ounces)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America (100%)
|
|
|
|
6
|
|
|
6
|
|
|
6
|
|
|
|
3
|
|
|
Indonesia (90.64%)b |
|
|
|
754
|
|
|
412
|
|
|
831
|
|
|
|
352
|
|
|
Consolidated
|
|
|
|
760
|
|
|
418
|
|
|
837
|
|
|
|
355
|
|
|
Less noncontrolling interests
|
|
|
|
70
|
|
|
39
|
|
|
77
|
|
|
|
32
|
|
|
Net
|
|
|
|
690
|
|
|
379
|
|
|
760
|
|
|
|
323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per ounce
|
|
|
|
|
|
|
|
|
|
$
|
1,191
|
|
|
|
$
|
1,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOLYBDENUM
(millions of
recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henderson (100%)
|
|
|
|
3
|
|
|
3
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Climax (100%)
|
|
|
|
5
|
|
|
5
|
|
|
N/A
|
|
|
|
N/A
|
|
|
North America copper mines (100%)a |
|
|
|
8
|
|
|
8
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Cerro Verde (53.56%)
|
|
|
|
7
|
|
|
8
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Consolidated
|
|
|
|
23
|
|
|
24
|
|
|
22
|
|
|
|
22
|
|
|
Less noncontrolling interests
|
|
|
|
3
|
|
|
4
|
|
|
2
|
|
|
|
3
|
|
|
Net
|
|
|
|
20
|
|
|
20
|
|
|
20
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
|
|
|
|
$
|
12.40
|
|
|
|
$
|
9.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
93 million pounds in third-quarter 2018 and 75 million pounds in
third-quarter 2017.
|
|
|
FREEPORT-McMoRan INC.
|
SELECTED OPERATING DATA (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
|
2017
|
|
|
MINING OPERATIONS:
|
|
|
|
Production
|
|
|
Sales
|
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Morenci (72%)a |
|
|
|
521
|
|
|
554
|
|
|
544
|
|
|
|
537
|
|
|
Bagdad (100%)
|
|
|
|
142
|
|
|
128
|
|
|
146
|
|
|
|
122
|
|
|
Safford (100%)
|
|
|
|
94
|
|
|
116
|
|
|
99
|
|
|
|
120
|
|
|
Sierrita (100%)
|
|
|
|
113
|
|
|
121
|
|
|
118
|
|
|
|
117
|
|
|
Miami (100%)
|
|
|
|
12
|
|
|
14
|
|
|
12
|
|
|
|
14
|
|
|
Chino (100%)
|
|
|
|
126
|
|
|
168
|
|
|
133
|
|
|
|
170
|
|
|
Tyrone (100%)
|
|
|
|
41
|
|
|
47
|
|
|
42
|
|
|
|
47
|
|
|
Other (100%)
|
|
|
|
2
|
|
|
3
|
|
|
1
|
|
|
|
3
|
|
|
Total North America
|
|
|
|
1,051
|
|
|
1,151
|
|
|
1,095
|
|
|
|
1,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South America
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cerro Verde (53.56%)
|
|
|
|
780
|
|
|
806
|
|
|
780
|
|
|
|
803
|
|
|
El Abra (51%)
|
|
|
|
151
|
|
|
126
|
|
|
148
|
|
|
|
120
|
|
|
Total South America
|
|
|
|
931
|
|
|
932
|
|
|
928
|
|
|
|
923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indonesia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grasberg (90.64%)b |
|
|
|
990
|
|
|
647
|
|
|
1,003
|
|
|
|
630
|
|
|
Total
|
|
|
|
2,972
|
|
|
2,730
|
|
|
3,026
|
|
c
|
|
2,683
|
|
c
|
Less noncontrolling interests
|
|
|
|
529
|
|
|
497
|
|
|
528
|
|
|
|
491
|
|
|
Net
|
|
|
|
2,443
|
|
|
2,233
|
|
|
2,498
|
|
|
|
2,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
|
|
|
|
$
|
2.96
|
|
|
|
$
|
2.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America (100%)
|
|
|
|
16
|
|
|
18
|
|
|
18
|
|
|
|
13
|
|
|
Indonesia (90.64%)b |
|
|
|
2,089
|
|
|
992
|
|
|
2,105
|
|
|
|
956
|
|
|
Consolidated
|
|
|
|
2,105
|
|
|
1,010
|
|
|
2,123
|
|
|
|
969
|
|
|
Less noncontrolling interests
|
|
|
|
195
|
|
|
93
|
|
|
197
|
|
|
|
89
|
|
|
Net
|
|
|
|
1,910
|
|
|
917
|
|
|
1,926
|
|
|
|
880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per ounce
|
|
|
|
|
|
|
|
|
|
$
|
1,249
|
|
|
|
$
|
1,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henderson (100%)
|
|
|
|
10
|
|
|
9
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Climax (100%)
|
|
|
|
16
|
|
|
15
|
|
|
N/A
|
|
|
|
N/A
|
|
|
North America (100%)a |
|
|
|
23
|
|
|
25
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Cerro Verde (53.56%)
|
|
|
|
20
|
|
|
21
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Consolidated
|
|
|
|
69
|
|
|
70
|
|
|
70
|
|
|
|
71
|
|
|
Less noncontrolling interests
|
|
|
|
9
|
|
|
10
|
|
|
9
|
|
|
|
9
|
|
|
Net
|
|
|
|
60
|
|
|
60
|
|
|
61
|
|
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
|
|
|
|
$
|
12.41
|
|
|
|
$
|
9.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
257 million pounds for the first nine months of 2018 and 195
million pounds for the first nine months of 2017.
|
|
|
FREEPORT-McMoRan INC.
|
SELECTED OPERATING DATA (continued)
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
100% North America Copper Mines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leach Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
|
|
657,600
|
|
|
657,200
|
|
|
673,800
|
|
|
683,700
|
Average copper ore grade (percent)
|
|
|
|
0.22
|
|
|
0.27
|
|
|
0.25
|
|
|
0.28
|
Copper production (millions of recoverable pounds)
|
|
|
|
242
|
|
|
252
|
|
|
723
|
|
|
763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
|
|
297,800
|
|
|
297,200
|
|
|
297,900
|
|
|
300,000
|
Average ore grades (percent):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper
|
|
|
|
0.34
|
|
|
0.38
|
|
|
0.35
|
|
|
0.40
|
Molybdenum
|
|
|
|
0.03
|
|
|
0.03
|
|
|
0.02
|
|
|
0.03
|
Copper recovery rate (percent)
|
|
|
|
87.4
|
|
|
86.6
|
|
|
88.1
|
|
|
86.6
|
Production (millions of recoverable pounds):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper
|
|
|
|
173
|
|
|
195
|
|
|
531
|
|
|
603
|
Molybdenum
|
|
|
|
8
|
|
|
9
|
|
|
24
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100% South America Mining
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leach Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
|
|
194,400
|
|
|
164,000
|
|
|
203,100
|
|
|
136,900
|
Average copper ore grade (percent)
|
|
|
|
0.34
|
|
|
0.36
|
|
|
0.32
|
|
|
0.37
|
Copper production (millions of recoverable pounds)
|
|
|
|
72
|
|
|
65
|
|
|
214
|
|
|
190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
|
|
383,900
|
|
|
379,200
|
|
|
384,800
|
|
|
355,400
|
Average ore grades (percent):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper
|
|
|
|
0.39
|
|
|
0.44
|
|
|
0.39
|
|
|
0.44
|
Molybdenum
|
|
|
|
0.02
|
|
|
0.02
|
|
|
0.01
|
|
|
0.02
|
Copper recovery rate (percent)
|
|
|
|
86.1
|
|
|
80.9
|
|
|
83.2
|
|
|
82.7
|
Production (millions of recoverable pounds):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper
|
|
|
|
253
|
|
|
263
|
|
|
717
|
|
|
742
|
Molybdenum
|
|
|
|
7
|
|
|
8
|
|
|
20
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100% Indonesia Mining
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day):a |
|
|
|
|
|
|
|
|
|
|
|
|
|
Grasberg open pit
|
|
|
|
149,500
|
|
|
130,500
|
|
|
141,100
|
|
|
91,200
|
Deep Ore Zone underground mine
|
|
|
|
31,000
|
|
|
34,500
|
|
|
33,200
|
|
|
29,400
|
Deep Mill Level Zone underground mine
|
|
|
|
2,500
|
|
|
2,400
|
|
|
2,600
|
|
|
3,100
|
Grasberg Block Cave underground mine
|
|
|
|
3,700
|
|
|
4,200
|
|
|
3,800
|
|
|
3,600
|
Big Gossan underground mine
|
|
|
|
3,900
|
|
|
—
|
|
|
3,400
|
|
|
500
|
Total
|
|
|
|
190,600
|
|
|
171,600
|
|
|
184,100
|
|
|
127,800
|
Average ore grades:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper (percent)
|
|
|
|
1.00
|
|
|
0.91
|
|
|
1.06
|
|
|
1.00
|
Gold (grams per metric ton)
|
|
|
|
1.77
|
|
|
0.98
|
|
|
1.73
|
|
|
1.08
|
Recovery rates (percent):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper
|
|
|
|
92.4
|
|
|
91.1
|
|
|
92.4
|
|
|
91.6
|
Gold
|
|
|
|
85.7
|
|
|
84.7
|
|
|
85.5
|
|
|
84.9
|
Production (recoverable):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper (millions of pounds)
|
|
|
|
337
|
|
|
277
|
|
|
1,030
|
|
|
670
|
Gold (thousands of ounces)
|
|
|
|
817
|
|
|
405
|
|
|
2,306
|
|
|
993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100% Molybdenum Mines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
|
|
29,400
|
|
|
24,200
|
|
|
27,100
|
|
|
22,600
|
Average molybdenum ore grade (percent)
|
|
|
|
0.17
|
|
|
0.18
|
|
|
0.18
|
|
|
0.20
|
Molybdenum production (millions of recoverable pounds)
|
|
|
|
8
|
|
|
8
|
|
|
26
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
FREEPORT-McMoRan INC.
|
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
|
|
|
2018
|
|
|
2017a |
|
|
|
2018
|
|
|
|
2017a |
|
|
|
|
|
|
(In Millions, Except Per Share Amounts)
|
|
|
Revenuesb |
|
|
|
$
|
4,908
|
|
|
|
$
|
4,310
|
|
|
|
|
$
|
14,944
|
|
|
|
|
$
|
11,362
|
|
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production and deliveryc |
|
|
|
3,069
|
|
|
|
2,794
|
|
|
d
|
|
8,792
|
|
|
|
|
7,462
|
|
|
d
|
Depreciation, depletion and amortization
|
|
|
|
458
|
|
|
|
418
|
|
|
|
|
1,351
|
|
|
|
|
1,257
|
|
|
|
Total cost of sales
|
|
|
|
3,527
|
|
|
|
3,212
|
|
|
|
|
10,143
|
|
|
|
|
8,719
|
|
|
|
Selling, general and administrative expensesc |
|
|
|
101
|
|
|
|
104
|
|
|
|
|
341
|
|
|
|
|
362
|
|
|
|
Mining exploration and research expenses
|
|
|
|
27
|
|
|
|
27
|
|
|
|
|
72
|
|
|
|
|
60
|
|
|
|
Environmental obligations and shutdown costs
|
|
|
|
8
|
|
|
|
72
|
|
|
|
|
76
|
|
|
|
|
76
|
|
|
|
Net gain on sales of assets
|
|
|
|
(70
|
)
|
|
|
(33
|
)
|
|
|
|
(126
|
)
|
|
|
|
(66
|
)
|
|
|
Total costs and expenses
|
|
|
|
3,593
|
|
|
|
3,382
|
|
|
|
|
10,506
|
|
|
|
|
9,151
|
|
|
|
Operating income
|
|
|
|
1,315
|
|
|
|
928
|
|
|
|
|
4,438
|
|
|
|
|
2,211
|
|
|
|
Interest expense, netd,e |
|
|
|
(143
|
)
|
|
|
(304
|
)
|
|
|
|
(436
|
)
|
|
|
|
(633
|
)
|
|
|
Net gain on early extinguishment of debt
|
|
|
|
—
|
|
|
|
11
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
Other income (expense), net
|
|
|
|
14
|
|
|
|
(9
|
)
|
|
|
|
63
|
|
|
f
|
|
(9
|
)
|
|
|
Income from continuing operations before income taxes and equity in
affiliated companies' net earnings
|
|
|
|
1,186
|
|
|
|
626
|
|
|
|
|
4,073
|
|
|
|
|
1,577
|
|
|
|
Provision for income taxesd,g |
|
|
|
(522
|
)
|
|
|
(387
|
)
|
|
|
|
(1,543
|
)
|
|
|
|
(747
|
)
|
|
|
Equity in affiliated companies' net earnings
|
|
|
|
4
|
|
|
|
3
|
|
|
|
|
5
|
|
|
|
|
6
|
|
|
|
Net income from continuing operations
|
|
|
|
668
|
|
|
|
242
|
|
|
|
|
2,535
|
|
|
|
|
836
|
|
|
|
Net (loss) income from discontinued operationsh |
|
|
|
(4
|
)
|
|
|
3
|
|
|
|
|
(19
|
)
|
|
|
|
50
|
|
|
|
Net income
|
|
|
|
664
|
|
|
|
245
|
|
|
|
|
2,516
|
|
|
|
|
886
|
|
|
|
Net (income) loss attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operationsd |
|
|
|
(108
|
)
|
|
|
35
|
|
|
|
|
(399
|
)
|
|
|
|
(106
|
)
|
|
|
Discontinued operations
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(4
|
)
|
|
|
Net income attributable to FCX common stocki |
|
|
|
$
|
556
|
|
|
|
$
|
280
|
|
|
|
|
$
|
2,117
|
|
|
|
|
$
|
776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share attributable to common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
$
|
0.38
|
|
|
|
$
|
0.19
|
|
|
|
|
$
|
1.47
|
|
|
|
|
$
|
0.50
|
|
|
|
Discontinued operations
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(0.01
|
)
|
|
|
|
0.03
|
|
|
|
|
|
|
|
$
|
0.38
|
|
|
|
$
|
0.19
|
|
|
|
|
$
|
1.46
|
|
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share attributable to common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
$
|
0.38
|
|
|
|
$
|
0.19
|
|
|
|
|
$
|
1.46
|
|
|
|
|
$
|
0.50
|
|
|
|
Discontinued operations
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(0.01
|
)
|
|
|
|
0.03
|
|
|
|
|
|
|
|
$
|
0.38
|
|
|
|
$
|
0.19
|
|
|
|
|
$
|
1.45
|
|
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
1,450
|
|
|
|
1,448
|
|
|
|
|
1,449
|
|
|
|
|
1,447
|
|
|
|
Diluted
|
|
|
|
1,458
|
|
|
|
1,454
|
|
|
|
|
1,458
|
|
|
|
|
1,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
|
|
$
|
0.05
|
|
|
|
$
|
—
|
|
|
|
|
$
|
0.15
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 (expense), net.
|
|
b.
Includes 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," beginning on page VIII.
|
|
c.
Includes net mining and oil and gas (credits)
charges that are summarized in the supplemental schedule,
"Adjusted Net Income," on page VII.
|
|
d.
Includes charges associated with disputed Cerro
Verde royalties for prior years, which are summarized in the
supplemental schedule, "Adjusted Net Income," on page VII.
|
|
e.
Consolidated interest costs (before
capitalization and excluding interest expense associated with
disputed Cerro Verde royalties) totaled $166 million in
third-quarter 2018, $196 million in third-quarter 2017, $501
million for the first nine months of 2018 and $583 million for the
first nine months of 2017.
|
|
f.
Includes $30 million of interest received on tax
refunds, mostly associated with the refund of PT-FI's prior years'
tax receivables. Refer to the supplemental schedule, "Adjusted Net
Income," on page VII.
|
|
g.
For a summary of FCX's provision for income
taxes, refer to the supplemental schedule, "Income Taxes," on page
VIII.
|
|
h.
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.
|
|
i.
FCX defers recognizing profits on intercompany
sales until final sales to third parties occur. Refer to the
supplemental schedule, "Deferred Profits," on page IX for a
summary of net impacts from changes in these deferrals.
|
|
|
FREEPORT-McMoRan INC.
|
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(In Millions)
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
4,556
|
|
|
|
$
|
4,447
|
|
Trade accounts receivable
|
|
|
|
1,064
|
|
|
|
1,246
|
|
Income and other tax receivables
|
|
|
|
226
|
|
|
|
325
|
|
Inventories:
|
|
|
|
|
|
|
|
Materials and supplies, net
|
|
|
|
1,439
|
|
|
|
1,305
|
|
Mill and leach stockpiles
|
|
|
|
1,439
|
|
|
|
1,422
|
|
Product
|
|
|
|
1,169
|
|
|
|
1,166
|
|
Other current assets
|
|
|
|
402
|
|
|
|
270
|
|
Held for sale
|
|
|
|
626
|
|
|
|
508
|
|
Total current assets
|
|
|
|
10,921
|
|
|
|
10,689
|
|
Property, plant, equipment and mine development costs, net
|
|
|
|
23,013
|
|
|
|
22,934
|
|
Long-term mill and leach stockpiles
|
|
|
|
1,355
|
|
|
|
1,409
|
|
Other assets
|
|
|
|
2,460
|
|
|
|
2,270
|
|
Total assets
|
|
|
|
$
|
37,749
|
|
|
|
$
|
37,302
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
$
|
2,396
|
|
|
|
$
|
2,321
|
|
Accrued income taxes
|
|
|
|
645
|
|
|
|
565
|
|
Current portion of environmental and asset retirement obligations
|
|
|
|
460
|
|
|
|
388
|
|
Dividends payable
|
|
|
|
73
|
|
|
|
—
|
|
Current portion of debt
|
|
|
|
4
|
|
|
|
1,414
|
|
Held for sale
|
|
|
|
273
|
|
|
|
323
|
|
Total current liabilities
|
|
|
|
3,851
|
|
|
|
5,011
|
|
Long-term debt, less current portion
|
|
|
|
11,123
|
|
|
|
11,703
|
|
Deferred income taxes
|
|
|
|
3,839
|
|
|
|
3,649
|
|
Environmental and asset retirement obligations, less current portion
|
|
|
|
3,564
|
|
|
|
3,631
|
|
Other liabilities
|
|
|
|
1,918
|
|
|
|
2,012
|
|
Total liabilities
|
|
|
|
24,295
|
|
|
|
26,006
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
158
|
|
|
|
158
|
|
Capital in excess of par value
|
|
|
|
26,603
|
|
|
|
26,751
|
|
Accumulated deficit
|
|
|
|
(12,526
|
)
|
|
|
(14,722
|
)
|
Accumulated other comprehensive loss
|
|
|
|
(532
|
)
|
|
|
(487
|
)
|
Common stock held in treasury
|
|
|
|
(3,726
|
)
|
|
|
(3,723
|
)
|
Total stockholders' equity
|
|
|
|
9,977
|
|
|
|
7,977
|
|
Noncontrolling interests
|
|
|
|
3,477
|
|
|
|
3,319
|
|
Total equity
|
|
|
|
13,454
|
|
|
|
11,296
|
|
Total liabilities and equity
|
|
|
|
$
|
37,749
|
|
|
|
$
|
37,302
|
|
|
|
|
|
|
|
|
|
|
|
|
FREEPORT-McMoRan INC.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(In Millions)
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
2,516
|
|
|
|
$
|
886
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
|
1,351
|
|
|
|
1,257
|
|
Net gain on sales of assets
|
|
|
|
(126
|
)
|
|
|
(66
|
)
|
Stock-based compensation
|
|
|
|
70
|
|
|
|
58
|
|
Net charges for Cerro Verde royalty dispute
|
|
|
|
—
|
|
|
|
359
|
|
Payments for Cerro Verde royalty dispute
|
|
|
|
(32
|
)
|
|
|
(32
|
)
|
Net charges for environmental and asset retirement obligations,
including accretion
|
|
|
|
206
|
|
|
|
196
|
|
Payments for environmental and asset retirement obligations
|
|
|
|
(179
|
)
|
|
|
(85
|
)
|
Net charges for defined pension and postretirement plans
|
|
|
|
59
|
|
|
|
95
|
|
Pension plan contributions
|
|
|
|
(60
|
)
|
|
|
(152
|
)
|
Net gain on early extinguishment of debt
|
|
|
|
(8
|
)
|
|
|
(8
|
)
|
Deferred income taxes
|
|
|
|
202
|
|
|
|
77
|
|
Loss (gain) on disposal of discontinued operations
|
|
|
|
19
|
|
|
|
(41
|
)
|
Decrease in long-term mill and leach stockpiles
|
|
|
|
54
|
|
|
|
181
|
|
Non-cash drillship settlements/idle rig costs and other oil and gas
adjustments
|
|
|
|
—
|
|
|
|
(33
|
)
|
Oil and gas contract settlement payments
|
|
|
|
—
|
|
|
|
(70
|
)
|
Other, net
|
|
|
|
7
|
|
|
|
1
|
|
Changes in working capital and other tax payments:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
321
|
|
|
|
420
|
|
Inventories
|
|
|
|
(326
|
)
|
|
|
(314
|
)
|
Other current assets
|
|
|
|
(16
|
)
|
|
|
(17
|
)
|
Accounts payable and accrued liabilities
|
|
|
|
(2
|
)
|
|
|
(93
|
)
|
Accrued income taxes and timing of other tax payments
|
|
|
|
(131
|
)
|
|
|
393
|
|
Net cash provided by operating activities
|
|
|
|
3,925
|
|
|
|
3,012
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
North America copper mines
|
|
|
|
(413
|
)
|
|
|
(106
|
)
|
South America
|
|
|
|
(188
|
)
|
|
|
(65
|
)
|
Indonesia
|
|
|
|
(695
|
)
|
|
|
(663
|
)
|
Molybdenum mines
|
|
|
|
(6
|
)
|
|
|
(4
|
)
|
Other
|
|
|
|
(89
|
)
|
|
|
(182
|
)
|
Proceeds from sales of assets
|
|
|
|
10
|
|
|
|
68
|
|
Intangible water rights and other, net
|
|
|
|
(91
|
)
|
|
|
(2
|
)
|
Net cash used in investing activities
|
|
|
|
(1,472
|
)
|
|
|
(954
|
)
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
Proceeds from debt
|
|
|
|
475
|
|
|
|
795
|
|
Repayments of debt
|
|
|
|
(2,410
|
)
|
|
|
(1,991
|
)
|
Cash dividends paid:
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
(145
|
)
|
|
|
(2
|
)
|
Noncontrolling interests
|
|
|
|
(241
|
)
|
|
|
(67
|
)
|
Stock-based awards net proceeds (payments)
|
|
|
|
4
|
|
|
|
(10
|
)
|
Debt financing costs and other, net
|
|
|
|
(23
|
)
|
|
|
(12
|
)
|
Net cash used in financing activities
|
|
|
|
(2,340
|
)
|
|
|
(1,287
|
)
|
|
|
|
|
|
|
|
|
Net increase in cash, cash equivalents, restricted cash and
restricted cash equivalents
|
|
|
|
113
|
|
|
|
771
|
|
Decrease (increase) in cash and cash equivalents in assets held for
sale
|
|
|
|
55
|
|
|
|
(45
|
)
|
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
|
|
|
|
$
|
4,799
|
|
|
|
$
|
5,129
|
|
|
|
|
|
|
|
|
|
|
|
a.
Includes restricted cash and restricted cash
equivalents of $243 million at September 30, 2018, and $172
million at September 30, 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 September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Pre-tax
|
|
|
|
After-taxa |
|
|
Per Share
|
|
|
Pre-tax
|
|
|
|
After-taxa |
|
|
Per Share
|
Net income attributable to common stock
|
|
|
|
N/A
|
|
|
|
|
$
|
556
|
|
|
|
$
|
0.38
|
|
|
|
N/A
|
|
|
|
|
$
|
280
|
|
|
|
$
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cerro Verde royalty disputeb |
|
|
|
$
|
(1
|
)
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
(357
|
)
|
|
|
|
$
|
(188
|
)
|
|
|
$
|
(0.13
|
)
|
Cerro Verde labor agreement
|
|
|
|
(69
|
)
|
|
|
|
(22
|
)
|
|
|
(0.02
|
)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
PT-FI net charges for workforce reductions
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9
|
)
|
|
|
|
(5
|
)
|
|
|
—
|
|
Other net mining credits
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
—
|
|
Net oil and gas credits
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
—
|
|
Net adjustments to environmental obligations and related litigation
reserves
|
|
|
|
(2
|
)
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(64
|
)
|
|
|
|
(64
|
)
|
|
|
(0.04
|
)
|
Net gain on sales of assets
|
|
|
|
70
|
|
|
c
|
|
70
|
|
|
|
0.05
|
|
|
|
33
|
|
|
|
|
33
|
|
|
|
0.02
|
|
Net gain on early extinguishment of debt
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11
|
|
|
|
|
11
|
|
|
|
0.01
|
|
Net tax chargesd |
|
|
|
N/A
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
|
(10
|
)
|
|
|
(0.01
|
)
|
(Loss) gain on discontinued operationse |
|
|
|
(4
|
)
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
—
|
|
|
|
|
|
$
|
(6
|
)
|
|
|
|
$
|
42
|
|
|
|
$
|
0.03
|
|
|
|
$
|
(375
|
)
|
|
|
|
$
|
(212
|
)
|
|
|
$
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to common stock
|
|
|
|
N/A
|
|
|
|
|
$
|
514
|
|
|
|
$
|
0.35
|
|
|
|
N/A
|
|
|
|
|
$
|
492
|
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Pre-tax
|
|
|
|
After-taxa |
|
|
Per Share
|
|
|
Pre-tax
|
|
|
|
After-taxa |
|
|
Per Share
|
Net income attributable to common stock
|
|
|
|
N/A
|
|
|
|
|
$
|
2,117
|
|
|
|
$
|
1.45
|
|
|
|
N/A
|
|
|
|
|
$
|
776
|
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cerro Verde royalty disputeb |
|
|
|
$
|
(7
|
)
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
(357
|
)
|
|
|
|
|
$
|
(188
|
)
|
|
|
$
|
(0.13
|
)
|
Cerro Verde labor agreement
|
|
|
|
(69
|
)
|
|
|
|
(22
|
)
|
|
|
(0.02
|
)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
PT-FI charges for workforce reductions
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(117
|
)
|
|
|
f
|
|
(62
|
)
|
|
|
(0.04
|
)
|
Other net mining credits (charges)
|
|
|
|
10
|
|
|
|
|
4
|
|
|
|
—
|
|
|
|
(24
|
)
|
|
|
|
|
(24
|
)
|
|
|
(0.02
|
)
|
Net oil and gas credits
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
g
|
|
8
|
|
|
|
0.01
|
|
Net adjustments to environmental obligations and related
litigation reserves
|
|
|
|
(52
|
)
|
|
|
|
(52
|
)
|
|
|
(0.04
|
)
|
|
|
(53
|
)
|
|
|
|
|
(53
|
)
|
|
|
(0.04
|
)
|
Net gain on sales of assets
|
|
|
|
126
|
|
|
c
|
|
126
|
|
|
|
0.09
|
|
|
|
66
|
|
|
|
|
66
|
|
|
|
0.05
|
|
Net gain on early extinguishment of debt
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
0.01
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
0.01
|
|
Interest on tax refunds
|
|
|
|
30
|
|
|
|
|
19
|
|
|
|
0.01
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
Net tax creditsd |
|
|
|
N/A
|
|
|
|
|
5
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
|
21
|
|
|
|
0.01
|
|
(Loss) gain on discontinued operationse |
|
|
|
(19
|
)
|
|
|
|
(19
|
)
|
|
|
(0.01
|
)
|
|
|
54
|
|
|
|
|
46
|
|
|
|
0.03
|
|
|
|
|
|
$
|
27
|
|
|
|
|
$
|
69
|
|
|
|
$
|
0.04
|
|
|
|
$
|
(415
|
)
|
|
|
|
|
$
|
(178
|
)
|
|
|
$
|
(0.12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to common stock
|
|
|
|
N/A
|
|
|
|
|
$
|
2,048
|
|
|
|
$
|
1.41
|
|
|
|
N/A
|
|
|
|
|
$
|
954
|
|
|
|
$
|
0.65
|
|
|
a.
Reflects impact to FCX net income attributable
to common stock (i.e., net of any taxes and noncontrolling
interests).
|
|
b.
The 2017 periods include net charges of $188
million associated with disputed Cerro Verde royalties for prior
years, consisting of $216 million to production and delivery
costs, $141 million to interest expense and $2 million to
provision for income taxes, net of $171 million to noncontrolling
interests. The 2018 periods include net charges to interest
expense, offset by provision for income taxes and noncontrolling
interests.
|
|
c.
Reflects adjustments to assets held for sale and
fair value adjustments associated with potential contingent
consideration related to the 2016 sale of onshore California oil
and gas properties. FCX would receive contingent consideration
related to this transaction consisting of $50 million per year for
2018, 2019 and 2020 if the price of Brent crude oil averages over
$70 per barrel in each of these calendar years. The average Brent
crude oil price for the first nine months of 2018 is above $70 per
barrel.
|
|
d.
Refer to "Income Taxes" on page VIII, for
further discussion of net tax (charges) credits.
|
|
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.
|
|
f.
Includes net charges in selling, general and
administrative expenses totaling $5 million.
|
|
g.
Includes adjustments totaling $25 million in
production and delivery costs primarily related to the 2016
drillship settlements, partly offset by charges totaling $17
million in selling, general and administrative expenses for
contract termination costs.
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181024005446/en/
Freeport-McMoRan Inc.
Financial Contacts:
Kathleen L. Quirk,
602-366-8016
or
David P. Joint, 504-582-4203
or
Media
Contact:
Linda S. Hayes, 602-366-7824
Source: Freeport-McMoRan Inc.