FCX Cu
Freeport- McMoRan Copper Au
Gold MM OO RR GG AA NN SS TT AA NN LL EE YY BasicBasic MaterialsMaterials ConferenceConference CrowneCrowne Plaza Plaza TimesTimes SquareSquare NewNew YorkYork CityCity
Richard C. Adkerson President & Chief Executive Officer
February 22, 2007
FREEPORT-MCMORAN COPPER & GOLD INC. www.fcx.com Cautionary Statement Regarding Forward-Looking Statements
ThisThis documentdocument containscontains certaincertain forward-lookingforward-looking statementsstatements abab thethe wordswords “anticipates”,“anticipates”, “may”,“may”, “can”,“can”, “b“b expressionsexpressions andand anyany otherother statementsstatements thatthat arar thethe managementmanagement ofof eithereither suchsuch companycompany oror statements.statements. InIn makingmaking anyany ofof reasonablereasonable assumptions.assumptions. However,However, anyany elieves”,elieves”, “expects”,“expects”, “projects”,“projects”, “intends”,“intends”, andand resultsresults toto bebe materiallymaterially differentdifferent frfr toto numerousnumerous risksrisks andand uncertainties.uncertainties. ThereTheree not areare historical variousvarious outimpofacts,impo FCX in andeach Phelps case as Dodge. Wh thosethose statements,statements,e not thehistoricalthe personperson outfacts, makingmaking FCX in and each themthem Phelps case as Dodge. Wh materiallymaterially fromfrom thosethose inin anyany suchsuch forward-lookingforward-looking thethe transactiontransaction statemenstatemen areare intendintend Dodge,Dodge, includingincluding macroeconomicmacroeconomic conditionsconditions suchsuch statementstatement maymay bebe influencedinfluenced byby fafa miningmining industry,industry, unanticipatedunanticipated mining,mining, mm omom thosethose projectedprojected oror anticipated.anticipated. ThesThes “likely”,“likely”, “will”,“will”, “to“to be”be” and and anyany similarsimilar property damage, persiste ed to identify those asseenen usedused inin thisthis document,document, property damage, persiste ed to identify theythey those relaterelate asse toto FCXFCX oror PhelpsPhelps Dodge,Dodge, wherewhere FCXFCX andand PhelpsPhelps DodgeDodge operate,operate, believesbelieves thatthat itsits expectationsexpectations areare basedbased onon speculativespeculative naturenature ofof mineralmineral exploration,exploration, rtant factors that could caus rtionsrtions asas forward-lookingforward-looking regulatoryregulatory andand litigationlitigationnt nt mattersmatters commoditycommodity andand risk riskpricepriceandand reductions, reductions, generalgeneral industryindustry rtantchangeschanges factors conditionsconditions inin politicpolitic that suchctorssuchcouldctors thatthatcaus couldcould causcaus illing and other processingts, many of problems, which are accide beyond the control of FCX and Phelps transactiontransaction maymay notnot bebe satisfied,satisfied, thethe illing riskrisk and other processingts, many of problems, whichee are forward-lookingforward-looking accide beyond the control statstat of FCX and Phelps obtainedobtained oror isis obtainedobtained subjectsubject toto conditionsconditions thatthat areare notnot anan variancesvariances inin oreore grades,grades, laborlabor relatirelati ee actualactual outcomesoutcomes The actual results or performanc e actual results to differ The actual results or performanc e actual resultsements to differare subject fluctuationsfluctuations inin interestinterest ratesrates andand otot ements are subject fromfrom thosethose expressedexpressed in,in, oror imim as the competitive environment of the s,s, changeschanges inin taxtax andand otherother laws,laws, thethe as riri the competitive environment of the assurancesassurances cancan bebe givengiven thatthat anyany ofof thethe thatthat aa regulatoryregulatory approvalapproval thatthatal,al, maymay socialsocial bebe nts ntsoror economic thateconomicthat leadlead to to personalpersonal injuryinjury oror ifif anyany ofof themthem dodo so,so, whatwhat impactimpact theythey e by FCX or Phelps Dodge, and issuesons, ons,relating adverseadverse weatherweather conditions,conditions, thethe Dodge,Dodge, thethe combinedcombined companycompanye by oror FCXthethe transaortransa Phelps Dodge, and issues relating pliedplied by,by, anyany forward-lookingforward-looking statementsstatements relaherrela adverse financial disclaimdisclaim anyany obligation,obligation, toto update,update, alteralter her adverse financialcircumstancescircumstances inin areasareas www.fcx.com ticipated and other ri maymay bebe mademade fromfrom timetime toto time,time, whetherwhether asas aa resultresult ticipated and othersksk ri thatthat aa conditioncondition ¾ 2 eventsevents anticipatedanticipated byby thethe forward-lookingforward-looking 2 required for the markettransaction conditions, is not willwill havehave onon thethe resultsresults ofof operationsoperations required for the markettransaction conditions, is not skssks toto consummationconsummationtoto closingclosing ofof thethe ction.ction. ExceptExcept asas requiredrequired byby law,law, toto the wethewe transaction,transaction, couldcould differdiffer materiallymaterially oror otherwiseotherwise reviserevise anyany forwforw tingting toto thosethose matters.matters. Accordingly,Accordingly, nono ofof thethe transaction.transaction. or financialstatementsstatements condition willwill transp transpof FCX or Phelps ofof newnew information,information, futufutuor financial condition of FCX or Phelps ard-lookingard-looking statement,statement, whetwhet areare underunder nono obligation,obligation, andand expresslyexpressly ireire oror occur,occur, oror rere eventsevents oror otherwise.otherwise. herher writtenwritten oror oral,oral, thatthat Important Information for Investors and Stockholders
FCXFCX andand PhelpsPhelps DodgeDodge filedfiled aa jointjoint proxyproxy statement/prospectusstatement/prospectus connectionconnection withwith thethe proposedproposed merger.merger. FCXFCX andand PhelpsPhelps DodgeDodge jointjoint proxyproxy statement/prospectusstatement/prospectus andand anan containcontain importantimportant information.information. InvestorsInvestors andand stockholdersstockholders maymay obtainobtain thethe jointjoint proxyproxy statstat freefree ofof chargecharge atat thethe websitewebsite maintainedmaintained byby thethe SECSEC atat www.www. will be available free of char will be available free of char yy otherother relevantrelevant documentsdocuments filedfiled byby eiei withwith thethe SECSEC byby PhelpsPhelps DodgeDodge willwill bebe availableavailable freefree ofof charchar withwith thethe SecuritiesSecurities andand ExchangeExchange CommissionCommission (SEC)(SEC) inin sitesite atat www.phelpsdodge.com.www.phelpsdodge.com. urgeurge investorsinvestors andand stockholdestockholde FCXFCX andand certaincertain ofof itsits directorsdirectorsgege onon theandtheand investor investorexecutiexecuti relationsrelations portionportion ofof thethe of FCX in connection with the merger. of FCX in connection with the merger. ement/prospectusement/prospectus ther therandand party otherpartyother with documentswithdocuments thethe SECSEC filedfiled becausebecause withwith the theythethey SECSEC FCXFCX isis setset forthforth inin thethe preliminarypreliminary jointjoint rsrs toto readread thethe definitivedefinitive sec.gov.sec.gov. InIn addition,addition, documentdocument directorsdirectors andand executiveexecutive officersofficers maymay bebe deemdeem connectionconnection withwith thethe merger.merger. InformationInformation gege onon the the investorinvestorFCX website relationsrelations at www.fcx.c portionportion ofof thethe PhelpsPhelps DodgeDodge webweb PhelpsPhelps DodgeDodge isis setset forthforth inin thethe jointjoint proxproxveve officersofficers areare participantsparticipantsFCX inin websitethethe solicitsolicit at www.fcx.c InformationInformation concerningconcerning thethe interestsinterests ofof s filed with the SEC by FCX OtherOther informationinformation regardingregarding thethe directdirectproxyproxy andand statement/prospectusstatement/prospectus inin filedfiled withwith thethe s filed with the SEC by FCX describeddescribed inin thethe definitivedefinitive jointjoint proxyproxy om.om. DocumentsDocuments filedfiled eded toto bebe participantsparticipants inin thethe solicitatiosolicitatio obtainobtain moremore detaileddetailed informationinformation regardinregardinconcerning the interests of Phelps Dodg concerning the interests of Phelps Dodgation of proxies from the stockholders executiveexecutive officersofficers inin thethe mergermerger y statement/prospectus filed with theation SEC. of proxies from the stockholders y statement/prospectus filed withFCX’s FCX’sthe SEC. directors directors andand executiveexecutive officersofficers inin www.fcx.com SEC. Phelps Dodge and certain of its direct interests, by security holdingsSEC. or Phelps Dodge and ¾certain2 of its statement/prospectusstatement/prospectusdirect interests, relating relatingby security toto thethe holdings meme or 3 nn ofof proxiesproxies fromfrom itsits shareholdersshareholders inin by reading the definitive joint proxy statement/prospectus. by readinggg thethe the directdirect definitive andand indirectjointindirect proxy statement/prospectus.e’se’s directorsdirectors andand executiveexecutive officersofficers inin
interests of FCX’s otherwise, and Phelps of Dodge’s the participants directors willand be interests ofrger.rger. FCX’s otherwise,Investors andInvestors Phelps and andof Dodge’s the stockholdersstockholders participants directors cancan willand be FCX’s Grasberg
World Class Copper and Gold Mine
Long Lived Payable Reserves - Copper – 39 Billion lbs - Gold – 41 Million ozs
High Volume/ Low Cost Production
Future Growth Potential from Exploration
Continuous Operations Since 1972 – 50-Year COW
Responsible Environmental Management
4 GrasbergGrasberg
5 5 2006 Financial Highlights
OperatingOperating 4Q06 4Q06 Data Data 20062006 Copper Volumes (mm lbs) 433 1,201 Realization (per lb) $2.88 $3.13 Gold Volumes (000’s ozs) 508 1,736 Realization (per oz) $628 $606
FinancialFinancial ResultsResults (in(in millions,millions, exceptexcept perper shareshare amounts)amounts) Net Income $426 $1,396 Diluted Earnings Per Share $1.99 $6.63 Operating Cash Flows $798 $1,866
Capital Expenditures $ 73(1) $251
(1) $567/oz. after revenue adjustment (2) Includes losses of $73.9 million ($0. (3) Includes $114 million reduction for working capital uses 6 (2) for Gold Preferred redemption 33/share) on debt reductions and $29.7 milli (2)
(3)
on ($0.13/share) in gains on asset sales FCX Operating Cash Flows and Capital Expenditures
($ in millions, exce
$2,000 Operating Cash Flowspt realized C apitalprices) Expenditures
$1,750
$1,500
$1,250
$1,000
$750
$500
$250
$0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 $1.02/ 94¢/ 73¢/ 75¢/ 82¢/ 69¢/ 71¢/ 82¢/ $1.37/ $1.85/ $3.13/ $391 $346 $291 $277 $276 $269 $312 $367 $412 $456 $606 7 Significant Debt Reduction
($ in billions) FCX Ending Net Debt (Cash) (1)
$3.0 $2.9
$2.5
$2.0
$1.5
$1.0
$0.5 ($0.2) $0.0 2000 2006 ($0.5)
(1) Debt and commodity preferreds net of cash and restrict
in 2000 which was subsequent 8
ly assumed and repaid.
ed investments. Includes $253 million of debt guaranteed FCXFCX Cu
Freeport-Freeport- McMoRanMcMoRan Copper Au Gold TransformingTransforming FCXFCX
AcquisitionAcquisition ofof PhelpsPhelps DodgeDodge
CreatingCreating thethe World’sWorld’s LargestLargest PubliclyPublicly TradedTraded CopperCopper CompanyCompany
FREEPORT-MCMORAN COPPER & GOLD INC. www.fcx.com Transaction Highlights
¾ Creates World’s Premier Publicly Traded Copper Company
¾ Leading North American-based Metals and Mining Investment
¾ World Class, Long-lived, Geographically Diverse Operations
¾ Significant Exploration Potential and Management Track Record of Adding Value Through Exploration
¾ Strong Cash Flows and Pro Forma Financial Strength
¾ Operating and Development Expertise
¾ Attractive Project Pipeline Supports Growing Production Profile
¾ Compelling Value Creation for Freeport-McMoRan Copper & Gold and Phelps Dodge Shareholders
10 Status Report on Pending Acquisition of Phelps Dodge
Announced Transaction on November 19, 2006
Positive Market Response - Size, Scale, Diversity
Transaction Subject to Regulatory and FCX/PD Shareholder Approval - U.S. Authorities Granted Early Termination of the Waiting Period Under the Hart Scott Rodino Act in Late December - Received Regulatory Approval From the EU February 20, 2007
SEC Declared Registration Statement Effective February 12, 2007
Shareholder Votes Set for March 14, 2007
Transition/Integration Planning Under Way
Transaction Expected to Close in March 2007 11 FCX’sFCX’s Grasberg Grasberg
TheThe RightRight TimeTime
12 12 Strong Copper Fundamentals
2,000 400
1,750 350 Cents Per Pound 1,500 300 1,250 LME Copper Price 250 1,000 200
750 150
000’s Metric Tons 500 100 250 LMELME && COMEXCOMEX ExchangeExchange Stocks*Stocks* 50 0 0 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07
*LME and Comex, excluding Shanghai stocks, producer, consumer and merchant stocks.
¾ The Combination of Strong Fundamentals has Created Extremely Attractive Market Conditions for the Copper Industry
¾ Supply is Unlikely to Increase Meaningfully Absence of Mega-development Projects in the Pipeline Potential for Further Supply Disruptions
¾ China Continues to be a Key Consumer 13 Recent Copper Market Drivers
Reasons For Recent Price Decline Positive Outlook
Destocking Led to a Decrease Apparent Demand Remains Strong; in Chinese Imports of Refined Restocking Expected to Support Prices Copper in 2H06
Increase in Global Inventories Stocks Remain Near Historical Lows (~50,000 Tonnes in Last 2 Months)
Slowdown in U.S. Housing Starts Relatively Small Component of Global Impacting Sentiment Market; Fundamental U.S. Economic Outlook Remains Positive
Investor Flows Physical Buyers Remain Active; Fundamentals Remain Positive
14 FCX’sFCX’s Grasberg Grasberg TheThe RightRight AssetsAssets
Grasberg,Grasberg, IndonesiaIndonesia
Morenci,Morenci, NorthNorth AmericaAmerica CerroCerro Verde,Verde, PeruPeru Sierrita,Sierrita, NorthNorth AmericaAmerica 15 15 Geographically Diverse, Long-Lived Asset Base
Major Mine Operations & Development Projects All major assets majority-controlled and operated
NorthNorth AmericaAmerica11 Grasberg (90.64%) Copper Reserves Reserves Cu 25.2 billion lbs Copper/Gold/Silver Cu 36.5 billion lbs Mo 1.7 billion lbs Molybdenum Au 39.8 million ozs Production Ag 115 million ozs Cu 1.6 billion lbs Production Mo 70 million lbs Cerro Verde (53.6%) Cu 1.1 billion lbs Au 1.7 million ozs Reserves Ag 3.3 million ozs Cu 7.7 billion lbs Mine Life 35 years Mo 0.1 billion lbs Cu production 320 million lbs* Mine Life 30 years Candelaria/Ojos del Salado (80%) * expected annual production Cu reserves 4.3 billion lbs Production 335 million lbs Mine Life 13 years
El Abra (51%) Tenke (57.75%) Cu reserves 1.2 billion lbs Feasibility study Production 235 million lbs approved 4Q06 Mine Life 6 years* * before anticipated extension of mine life
Note: Reserves and annual production net to pro forma FCX; Reserves as of December 31, 2005. 1 Cu operations: Morenci (85%), Sierrita (100% Primary Mo: Henderson (100%) and Climax (100%) with 16
), Bagdad (100%), Chino/Cobre (100%), Tyrone
feasibility study expected on Climax in 2007
(100%), and Miami (100%) Cu development:
Safford (100%) Pro Forma Reserves and Production
2006E Production by Geography
Pro forma Indonesia 35% No r t h A m e r ic a Net 42% Reserves 12/31/05 Consolidated interest Copper (billion lbs) 87.6 75.0 Molybdenum (billion lbs) 2.0 1.9 Gold (million ozs) 45.4 41.0 Average Production Volumes (2006-2010) Peru 4% Copper (billion lbs) 4.3 3.6 Chile Molybdenum (million lbs) 78 74 19% Gold (million ozs) 2.0 1.8
Implied Reserve Life (years) 2005 Reserves by Geography Copper 20 21 Molybdenum 26 26 No r t h A m e r ic a Gold 24 24 34%
Mineralized Material* Indonesia Ore (million metric tons) 5,237 4,720 49% average % copper 0.53 0.51 average g/t gold 0.09 0.10 Chile 7% Peru 10% *Geologic resources are not included in reserves. The geologic resources will not qualify
as reserves until comprehensive engineering studies establish their economic feasibility. Accordingly, no assurance ca and mineralization will become proven and probable reserves. 17
n be given that the estimated resources Enhanced Diversification
2006 Mining Revenue by Commodity
FCX Phelps Dodge Pro Forma FCX
Gold Gold Molybdenum 23% 10% 22%
Molybdenum 12% Copper +=Copper Copper 77% 78% 78%
2006 Mining Revenue by Geography FCX Phelps Dodge Pro Forma FCX Peru 8% Indonesia Indonesia North America 38% 100% 35% Chile +=35%
Peru North America 5% 57% Chile 22% Pro forma for the transactio production will come from investment grade countries 18
n, approximately 60% of Proven Technical Expertise
2006 Copper Production by Method FCX Phelps Dodge Pro Forma FCX
Concentrate Concentrate Concentrate 100% 33% 56% +=
SX/EW SX/EW 67% 44% (000 metric tons) Smelting/Refining (1) Pro forma FCX will be a world leader FCX Phelps Dodge ¾ Open pit mining Atlantic Copper, Spain (100%) Anode production: 285 Cathode production: 255 ¾ SX/EW production technology PT Smelting, Indonesia (2) (25%) ¾ Block cave underground mining Anode production: 275 Cathode production: 275
¾ Copper concentrate leaching Miami Smelter, Arizona (3) (100%) Anode production: 208
______El Paso, Texas (100%) (1) Smelting and refining producti (2) FCX’s share approximates 62,000 metric tons per year Cathode production: 408 (3) Miami Refinery permanently shut down 19
on capacity shown on a 100% basis Additional Development Upside
Henderson/Climax (100%) • Henderson production capacity increased Morenci (85%) to 40 MM lbs Mo/year from 32MM lbs Mo Grasberg (90.64%) • DOZ expansions (50K t/d & 80K t/d) • Mill restart and • Possible 2009 restart of Climax at 20- concentrate leach project 30MM lbs Mo/year at $200-250MM capital • Big Gossan development • $210 million capital cost cost • Development of Deep Grasberg & balance • Adds 115MM lbs Cu/year of mineral district reserves and enhances cost profile • Significant exploration potential
Cerro Verde Sulfide (53.6%) Safford (100%) • Major project with conventional concentrator • SX/EW project • $850MM capital cost • $550 million capital cost • Adds 430MM lbs Cu/year • 240MM lbs Cu/year • Substantial district potential
El Abra (51%) Tenke Fungurume (57.75%) • Large sulfide mineral deposit underlying current oxide pit • Believed to be largest Cu/Co project in the world today • Extends mine life through 2021 with sulfide Cu • Oxide leach operation production beginning in 2010 • $650MM capital cost • Adds 325MM lbs Cu/year • 200MM lbs Cu/year; 8 ktpa (initial development) Note: All data reflect aggregate interest in properties • Potential expansions 20 Significant Exploration Potential
Papua, Indonesia Papua, Indonesia ¾ Rights to 2.2 Million Acres Pacific Ocean ¾ Highly Prospective Exploration Areas Provide Opportunities to Continue to Add to Our Long- Grasberg Banda lived Reserves Papua, Sea Indonesia Papua Arafura New Guinea Sea Tenke Fungurume, 0 100 200 300 Km Mineral Districts Exploration Areas ¾ BelievedDemocratic to be Larges tRepublic Undeveloped, of Highthe Congo Grade Copper/Cobalt Project in the World Today Tenke Fungurume ¾ Less Than Half of 600-square-mile Concession Explored; Cumulative Strike Length Greater Than 80 Kilometers
¾ Initial Production Rates Currently Planned = +100 ktpa Copper; +8 ktpa Cobalt
¾ Project Schedule – Feasibility Study: 4Q 06; Start-up: Late 2008 to Early 2009
¾ ~$650 Million Aggregate Capital and Related Project Expenditures
21 Strong Management Track Record
¾ Leader in Safety and Environmental Excellence
¾ World Class Open Pit and Underground Mining Expertise
¾ Established Exploration and Development Expertise
¾ Proven Project Management Expertise
¾ Global Leader in Mining and Processing Technologies
¾ Strong Tradition of Shareholder Value Creation
22 FCX’sFCX’s Grasberg Grasberg
TheThe RightRight CompanyCompany
23 23 Premier North American Mining Company
Enterprise Value (US$ billions) $40 $37.0 $35.9 $35
$30 $28.6
$25.0 $25 $21.9 $20.2 $20
$15 $13.8 $13.6
$10
$5
$0 Alcoa Pro Forma Barrick Alcan Newmont Goldcorp Cameco Teck Cominco FCX ______Source: Public filings, prices Pro forma FCX based on closing share price of $53.96, pro forma 24 and debt incurred through the transaction as of February 7, 2007
358 million diluted shares outstand
ing, net debt and minority i
nterest as of December 31, 2006 World’s Leading Public Copper Company
Top 10 Copper Producers (2006E) (1) (000 t) Pro forma FCX is poised to take advanta 2,000
1,800
1,600
1,400 ge of favorable industry fundamentals
1,200
1,000
800
600
400
200
0 Codelco Pro Forma FCX BHP Billiton Xstrata Rio Tinto Anglo Southern KGHM Polska RAO Norilsk Kazakhmys American Copper Miedz ______Source: Brook Hunt 3Q Report. (1) Xstrata shown pro forma the acquisition of Falconbridge. 25 Combination of FCX and Phelps Dodge
2006 Revenue (US$ billions) 2006 EBITDA (US$ billions)
$20.0 $17.7 $10.0 $7.8 $15.0 $11.9 $4.7 $10.0 $5.0 $5.8 $3.1
$5.0
$0.0 $0.0 FCX Phelps Dodge Combined FCX FCX Phelps Dodge Combined FCX
2006 Consolidated Copper Enterprise Value (US$ billions) (1)
5 $40.0 $35.9
4 3.6 Sales (billion lbs) $30.0 $23.3 3 2.4 $20.0 2 $12.0 1.2 $10.0 1
0 $0.0 FCX Phelps Dodge Combined FCX (2) FCX Phelps Dodge Combined FCX ______(1) As of February 7, 2007 (2) Includes approximately 540 mm lbs for minority interests; excludes purchased copper 26 Pro Forma FCX — Growing Sales Profile
Copper Sales (billion lbs) Gold Sales (million ozs)
5 3 4.6 4.6 4.5 2.2 4.1 2.0 2 1.9 1.9 1.9 4 3.6
1 3 2006 2007E 2008E 2009E 2010E Pro Forma
Molybdenum Sales (million lbs) 2 100 85 80 80 75 80 68
1 60 40
20
0 0 2006 2007E 2008E 2009E 2010E 2006 2007E 2008E 2009E 2010E Pro Pro Forma Forma ______Note: Consolidated copper sales include approxim
750 mm lbs in 2008, 800 mm lbs in 2009 and 740 mm lbs in 2010 for minority interest; excludes purchased copper 27
ately 540 mm lbs in 2006, 700 mm lbs in 2007,
______Note: Consolidated gold sales include approximately 185 k oz in 2006, 180 k oz in 2007, 190 k oz in
2008, 180 k oz in 2009 and 210 k oz in 2010 for minority interest EBITDA and Cash Flow at Various Copper Prices
Average Annual EBITDA 2007-2009 ($500 Gold & $15 Molybdenum)
$12 (US$ billions)
$10
$8
$6
$4
$2
$0 Cu $1.50/lb Cu $2.00/lb Cu $2.50/lb Cu $3.00/lb Average Annual Operating Cash Flow 2007-2009 ($500 Gold & $15 Molybdenum)
$6 (US$ billions) $5
$4
$3
$2
$1
$0 Cu $1.50/lb Cu $2.00/lb Cu $2.50/lb Cu $3.00/lb ______Note: Each $50/oz change in gold approximates $90 million to EB
EBITDA and $80 million to operating cash flow EBITDA equals operating income plus depreciation, depletion, an 28
ITDA and $50 million to operating cash flow; each $2.00/lb of m
d amortization; Operating cash flow shown after merger adjustment
olybdenum equates to $100 million to
s Sensitivity to Commodity Prices
AnnualAnnual FinancialFinancial ImpactImpact ChangeChange Net Net IncomeIncome EPS EPS (in millions) Copper: -/+ $0.20/lb $500 $1.50
Molybdenum: -/+ $2.00/lb $80 $0.24
Gold: -/+ $50/ounce $50 $0.15
______Note: Annual financial impact based on esti
mated average annual production for 2007-2010
29 Significant Debt Reduction
Year-End Net Debt at Varying Copper Prices
(US$ billions) $16 $14.9
$14 $12.7
$12
$10 $9.2
$8 $5.8 $6
$4
$2
$0 2007-2009 Average Copper Price $2.00 $2.50 $3.00 Net Debt/2007-2009 Average EBITDA 2.2x 1.2x 0.6x
Pro Forma Pro Forma YE 2006 YE 2009
______Note: Sensivity assumes $15 Molybdenum and $500 Gold; EBITDA equals
30
operating income plus depreciation, depletion, and amortiza
tion Financial Policy
¾ FCX is Committed to Maintaining a Strong Financial Position Investment in Future Growth Opportunities With High Rates of Return Aggressive Debt Reduction Using the Substantial Cash Flows Generated From the Combined Business
¾ Continuation of Positive Copper Markets is Expected to Provide Substantial Cash Flows That Will Enable the Combined Company to Achieve Significant Near-term Debt Reduction FCX Intends to Consider Opportunities In Near-term to Reduce Debt Further Through Issuances of Equity and Equity-linked Securities and Possibly Through Asset Sales
¾ FCX Anticipates Continuing Regular Annual Common Dividend of $1.25 per Share
¾ Committed to Long-standing Tradition of Maximizing Value for Shareholders
31 Transaction Highlights
¾ Creates World’s Premier Publicly Traded Copper Company
¾ Leading North American-based Metals and Mining Investment
¾ World Class, Long-lived, Geographically Diverse Operations
¾ Significant Exploration Potential and Management Track Record of Adding Value Through Exploration
¾ Strong Cash Flows and Pro Forma Financial Strength
¾ Operating and Development Expertise
¾ Attractive Project Pipeline Supports Growing Production Profile
¾ Compelling Value Creation for Freeport-McMoRan Copper & Gold and Phelps Dodge Shareholders
32