Annual Report 2009 Annual Report 2009 Copper & Gold INC. Copper & Gold INC.

-McMoRan -McMoRan

SHINING FUTURE MANCE PROVEN PERFOR Freeport

SHINING FUTURE MANCE PROVEN PERFOR Freeport

PROVEN PERFORMANCE SHINING FUTURE Freeport-McMoRan Copper & Gold INC. Annual Report 2009 www.fcx.com 602.366.8100 Phoenix, AZ 85004 One North Central Ave.

FREEPORT-McMoRan COPPER & GOLD INC.

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

FCX’s portfolio of assets includes the Grasberg minerals district, the world’s largest copper and gold mine in terms of recoverable reserves; significant mining operations in the Americas, including the large-scale Morenci and Safford minerals districts in North America and the Cerro Verde and El Abra operations in South America; and the Tenke Fungurume minerals district in the Democratic Republic of Congo. Additional information about FCX is available on FCX’s web site at www.fcx.com.

SUMMARY FINANCIAL HIGHLIGHTS

Years Ended December 31, 2009 2008 2007 2006 2005 (In Millions, Except Per Share Amounts) Revenues $ 15,040 $ 17,796 $ 16,939 $ 5,791 $ 4,179 Operating income (loss) 6,503 (12,710)+ 6,555 2,869 2,177 Operating cash flows 4,397 3,370 6,225 1,866 1,552 Capital expenditures 1,587 2,708 1,755 251 143 Net income (loss) attributable to FCX common stockholders 2,527 (11,341)+ 2,769 1,396 935 Diluted net income (loss) per common share 5.86 (29.72)+ 7.50 6.63 4.67 Dividends paid per common share — 1.81 1.25 4.75 2.50

At December 31: Cash and cash equivalents 2,656 872 1,626 907 764 Total assets 25,996 23,353 40,661 5,390 5,550 Total debt, including current portion and short-term borrowings 6,346 7,351 7,211 680 1,256 Total FCX stockholders’ equity 9,119 5,773 18,234 2,445 1,843

+* Includes charges totaling $17.7 billion ($13.2 billion to net loss attributable to FCX common stockholders or $34.47 per share) associated with asset impairment, lower of cost or market inventory adjustments, restructuring and other charges. See page 14 for further discussion.

Operating Cash Flows Capital Expenditures Cash Balance Total Debt $ in billions $ in billions $ in billions $ in billions

4.5 3.0 3.0 8.0 2.5 2.5 3.5 6.0 2.0 2.0 2.5 1.5 1.5 4.0 1.5 1.0 1.0 2.0 0.5 0.5 0.5

2008 2009 2008 2009 2008 2009 2008 2009 The theme of this year’s annual report, “Proven Performance – Shining Future,” captures the demonstrated performance of our team and the optimism we have for the long-term future of our business and the values of our assets.

Table of Contents 2 Major Mine Operations & Development Projects 3 Letter to Shareholders 6 Operational Overview 12 Board of Directors and Management 13 Financial & Operating Information 104 Performance Graph 105 Stockholder Information

MAJOR MINE OPERATIONS & DEVELOPMENT PROJECTS

3

Locations

Copper (Cu)

Gold (Au)

Molybdenum (Mo)

Cobalt (Co)

1 Morenci, Arizona 3 Tyrone, New Mexico 7 Tenke Fungurume, Sierrita, Arizona Democratic Republic of Congo 4 Cerro Verde, Peru Bagdad, Arizona 8 Grasberg, Indonesia Safford, Arizona 5 El Abra, Chile Miami, Arizona 6 Candelaria / 2 Henderson, Colorado Ojos del Salado, Chile

North America Indonesia Consolidated Totals Reserves 2009 Sales Reserves 2009 Sales Reserves at 12/31/09 at 12/31/09 at 12/31/09 Cu 27.7 billion lbs Cu 1.2 billion lbs Cu 34.1 billion lbs Cu 1.4 billion lbs Cu 104.2 billion lbs Mo 2.1 billion lbs Mo 58.1 million lbs+ Au 35.5 million ozs Au 2.5 million ozs Au 37.2 million ozs Mo 2.6 billion lbs Co 0.8 billion lbs South America Africa

Reserves 2009 Sales Reserves 2009 Sales 2009 Sales at 12/31/09 at 12/31/09 Cu 4.1 billion lbs Cu 34.0 billion lbs Cu 1.4 billion lbs Cu 8.4 billion lbs Cu 0.1 billion lbs Au 2.6 million ozs Au 1.5 million ozs Au 0.1 million ozs Co 0.8 billion lbs Mo 58.1 million lbs+ Mo 0.5 billion lbs

2 FREEPORT-McMoRan COPPER & GOLD INC. + Includes sales of molybdenum produced as a by-product at FCX’s North and South America copper mines. 2009 Annual Report TO OUR SHAREHOLDERS

The year 2009 was one of extraordinary accomplishments for our Company. In the face of the worst economic crisis since the 1930s, our global team responded in an aggressive fashion to offset the impact of low copper and molybdenum prices, to strengthen our financial position and to preserve our future growth options.

Weak market conditions, which began in late 2008, required us to make difficult but necessary decisions to enable us to manage volatile conditions We have always recognized that the Grasberg and position us for a bright future for our Company. The theme of this mine (pictured above) would be our cornerstone asset during times of low commodity prices. year’s annual report, “Proven Performance — Shining Future,” captures the demonstrated performance of our team and the optimism we have for the We are pleased to report the long-term future of our business and the values of our assets. successful execution of our operating plans during 2009. We are pleased to report the successful execution of our operating plans We exceeded our production during 2009. We exceeded our production targets for both copper and gold targets for both copper and gold, and achieved significant reductions in our cost structure. Our Grasberg achieved significant reductions in operations in Indonesia, one of the world’s largest and best performing our cost structure and enhanced copper and gold mines, once again demonstrated its strength — achieving our financial flexibility. multiple operating and financial records. Our North America operations Consolidated Site successfully executed major initiatives to reduce costs to maintain profitability Production & Delivery Costs $ per lb. of copper under weak market conditions. Our teams in South America were successful in implementing a number of cost reduction initiatives and efficiency 1.75 improvements. In Africa, we completed construction of one of the world’s 1.25 most modern copper and cobalt mining facilities, which is expected to be a source of high-grade ore and low-cost production for decades to come. 0.75

We were also successful in adding to our reserves, continuing an 0.25 important accomplishment of our team over an extended period of time.

At December 31, 2009, our estimated total proven and probable reserves 2008 2009 approximated 104 billion pounds of copper, 37 million ounces of gold and Consolidated 2.6 billion pounds of molybdenum. At current production levels, we have Unit Net Cash Costs+ more than a 25-year reserve life and are optimistic that we will continue to $ per lb. of copper be successful in adding to our reserves in the future. Exploration will continue 1.25 to be a key feature of our Company and a driver of our future plans. 1.00

Mining revenues from copper sales approximated 75 percent of our total 0.75 2009 revenues. During 2009, copper was one of the best performing metals, 0.50 with its price rising over 150 percent, as strong demand from China and 0.25 limited supply offset weak conditions in the developed economies of the United States, Europe and Japan. The future of copper is bright, 2008 2009

+ Net of by-product credits and excluding Africa mining

 FREEPORT-McMoRan COPPER & GOLD INC. 3 2009 Annual Report During 2009, copper was LME Copper Price $ per lb. one of the best performing metals, with its price rising 3.503.5 over 150 percent, as strong 3.003.0 2.502.5 demand from China and 2.002.0 limited supply offset weak 1.501.5 conditions in the developed Copper Price 1.001.0 economies of the United 0.500.5 0.0 DEC APR SEP DEC FEB States, Europe and Japan. 2008 2009 2009 2009 2010

-- 2009 Average Price of Copper

Total Debt underpinned by limited new supply, the depletion of currently producing $ in billions mines, the important role of copper in the development of emerging

20 economies’ infrastructure and the fundamental requirements in the world’s developed economies. We are in a strong position as one of 15 the world’s largest copper producers to benefit from the very favorable 10 fundamentals of the copper marketplace.

5 We generated strong financial results in 2009, which enabled us to strengthen our financial position and enhance our liquidity. We repaid

2007+ Year End $1 billion in debt during the year, reducing our $17.6 billion of debt at 2009 our 2007 acquisition of Phelps Dodge by a cumulative $11 billion. + At time of the Phelps Dodge acquisition (March 2007) As we progress, we are preparing for eventual improvement in conditions in the world’s developed economies, which will be highly favorable to the demand for our products. We have an attractive portfolio of potential investment opportunities within our existing asset base and are prepared to move forward as market conditions warrant.

With current copper prices above $3 per pound, gold prices above $1,000 per ounce and molybdenum prices over $15 per pound, we would generate significant cash flows. We will continue to invest in attractive growth projects and maintain our strong balance sheet.

Our environmental management and community development programs are important to our success. We will continue to invest in the communities where we operate and aggressively manage to In 2009, we resumed construction activities mitigate the environmental impacts of our operations. associated with the development of the sulfide ore deposit at El Abra (pictured above) in Chile. This project will extend the The safety of our workforce is our highest priority. Our programs mine life by over 10 years. are designed to achieve a safe environment for all our workers. Our comprehensive Working Toward Sustainable Development report,

4 FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report which is available on our web site, reflects a strong commitment to our sustainability programs.

We congratulate and express our appreciation to our entire organization for their extraordinary accomplishments during the year. Their enthusiasm and perseverance during challenging times is a testament to their dedication and positive spirit. We appreciate the wise counsel of our Board of Directors, whose support has guided us through challenging market conditions. All of us working together have achieved the “Proven Performance” reflected in our annual report and have made possible the “Shining Future” for our Company and our shareholders.

Copper cathode production at Morenci, Arizona

At current copper prices above $3 per pound, gold prices above $1,000 per ounce and molybdenum prices over $15 per pound, we would generate James R. Moffett Richard C. Adkerson significant cash flows. We will Chairman of the Board President and continue to invest in attractive Chief Executive Officer growth projects and maintain March 19, 2010 our strong balance sheet.

The Tenke Fungurume Mining processing plant in the Democratic Republic of Congo was completed in the first half of 2009.

 FREEPORT-McMoRan COPPER & GOLD INC. 5 2009 Annual Report OPERATIONAL OVERVIEW North America Freeport-McMoRan Copper & Gold Inc. (FCX) leads the metals industry in North America in the production of copper and molybdenum. FCX operates six open-pit copper mines in the United States (Morenci, Sierrita, Bagdad, Safford and Miami in Arizona and Tyrone in New Mexico). FCX conducts molybdenum mining operations at the Henderson underground mine in Colorado, in addition to sales of by-product molybdenum from Sierrita and Bagdad. Consolidated copper sales in North America totaled 1.2 billion pounds at an average realized price of $2.38 per pound in 2009, compared to 1.4 billion pounds at an average realized price of $3.07 per pound in 2008. Consolidated molybdenum sales from the Henderson primary molybdenum mine and by-product molybdenum from copper mines totaled 58 million pounds at an average realized price of $12.36 per pound in 2009, compared to 71 million pounds at an average realized price of $30.55 per pound in 2008. FCX operated at reduced rates at certain of its North America copper mines and its molybdenum mine in 2009 in response to market conditions and reduced demand in the Western world.

FCX expects 2010 sales from North America copper mines to approximate 1.0 billion pounds of copper, reflecting the impact of reduced 2009 mining activities on 2010 leaching operations, and molybdenum sales from its mines to approximate 60 million pounds in 2010.

North America unit net cash costs, including molybdenum credits, averaged $1.11 per pound in 2009, compared with $1.33 per pound in 2008. North America unit net cash costs were lower in 2009 primarily because of cost reduction and efficiency efforts, including the impact of lower operating rates and reduced input costs, primarily for energy. Additionally, molybdenum by-product credits were significantly lower because of lower molybdenum prices and lower sales volumes during 2009. Based on current operating plans and assuming achievement of current sales estimates, an average molybdenum price of $12 per pound for 2010 and estimates for commodity-based input costs, FCX estimates that average unit net cash costs, including molybdenum credits, for its North America copper mines would approximate $1.23 per pound of copper in 2010.

In October 2009, FCX announced initiatives to resume limited mining activities at the Miami mine in Arizona. FCX is also initiating activities to restart the Morenci mill, which was shut down in February 2009, to process available sulfide material currently being mined. In December 2009, FCX purchased property adjacent to its Sierrita operations, which includes the Twin Buttes copper mine that ceased operations in 1994. The purchase provides significant synergies in the Sierrita minerals district, including the potential for expanded mining activities and access to material that can be used for Sierrita tailings and stockpile reclamation purposes.

South America FCX operates four copper mines in South America – Cerro Verde in Peru and Candelaria, Ojos del Salado and El Abra in Chile. South America consolidated copper sales totaled 1.4 billion pounds at an average realized price of $2.70 per pound in 2009, compared to 1.5 billion pounds at an average realized price of $2.57 per pound in 2008.

6 FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report Morenci Mine, Arizona (above) Cerro Verde Concentrating Facilities, Peru (left)

North America Unit Net Cash Costs $ per lb. of copper

1.50 1.25 1.00 0.75 0.50 0.25

2008 2009

South America Unit Net Cash Costs $ per lb. of copper

1.25

1.00

0.75

0.50

0.25

2008 2009

 FREEPORT-McMoRan COPPER & GOLD INC. 7 2009 Annual Report PT Freeport Indonesia is pursuing several capital projects in the Grasberg minerals district, including development of the large-scale, high-grade underground ore bodies located beneath and adjacent to the Grasberg open pit. These projects include continued development of the Common Infrastructure project, the Grasberg Block Cave and the Big Gossan underground mines, and future development of the Deep Mill Level Zone underground mine.

Indonesia Unit Net Cash Costs $ per lb. of copper

1.00

0.75

0.50

0.25

-0.25

-0.50

2008 2009

Grasberg Mine, Indonesia

8 FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report For 2010, FCX expects South America sales to approximate 1.3 billion pounds of copper and 100,000 ounces of gold. South America unit net cash costs, including by-product credits (gold and molybdenum) averaged $1.12 per pound in 2009 and $1.14 per pound in 2008. South America unit net cash costs were slightly lower in 2009 because of lower input costs, primarily for energy.

Assuming achievement of current sales estimates and estimates for commodity-based input costs, FCX estimates that average unit net cash costs, including gold and molybdenum credits, for its South America copper mines would approximate $1.20 per pound of copper in 2010.

FCX has resumed construction activities associated with the development of a large sulfide ore deposit at El Abra. The project, which was deferred in late 2008 as a result of market conditions, will extend El Abra’s mine life by over 10 years. FCX has also commenced a project to optimize throughput at the existing Cerro Verde concentrator, which is designed to add 30 million pounds of additional copper production per year by increasing mill throughput from 108,000 metric tons of ore per day to 120,000 metric tons of ore per day.

Indonesia FCX operates the world’s largest single reserve of both copper and gold through its subsidiary, PT Freeport Indonesia, in the Grasberg minerals district in Papua, Indonesia. For 2009, consolidated sales from FCX’s Indonesia operations totaled 1.4 billion pounds of copper at an average realized price of $2.65 per pound and 2.5 million ounces of gold at an average realized price of $994 per ounce. For 2008, consolidated sales totaled 1.1 billion pounds of copper at an average realized price of $2.36 per pound and 1.2 million ounces of gold at an average realized price of $861 per ounce. Production and sales volumes were significantly higher in 2009 because of sequencing in mining areas with varying ore grades, which resulted in mining higher grade sections of the Grasberg open pit during 2009. FCX expects Indonesia sales to approximate 1.2 billion pounds of copper and 1.7 million ounces of gold in 2010, as production transitions to a lower grade section of the Grasberg open pit.

PT Freeport Indonesia unit net cash costs, including gold and silver credits, averaged a net credit of $0.49 per pound of copper in 2009, compared with a net cost of $0.96 per pound in 2008. The lower unit net cash costs in 2009 primarily reflected higher gold credits resulting from higher gold sales volumes and prices, as well as significantly higher copper sales volumes and lower commodity-based input costs. Assuming achievement of current 2010 sales volumes estimates, average gold prices of $1,100 per ounce in 2010 and current estimates for energy costs, currency exchange rates and other cost factors, FCX estimates that average unit net costs for PT Freeport Indonesia would approximate $0.21 per pound of copper in 2010. Unit net cash costs are expected to be higher in 2010 than the prior year primarily because of lower projected sales volumes and higher commodity-based input costs.

PT Freeport Indonesia is pursuing several capital projects in the Grasberg minerals district, including development of the large-scale, high-grade underground ore bodies located beneath and adjacent to the Grasberg open pit. These projects include continued development of the Common Infrastructure project, the Grasberg Block Cave and the Big Gossan underground mines, and future development of the Deep Mill Level Zone underground mine.

 FREEPORT-McMoRan COPPER & GOLD INC. 9 2009 Annual Report The Tenke Fungurume mining operations in the Democratic Republic of Congo achieved targeted copper production rates in September 2009. The Tenke Fungurume minerals district in the highly prospective African copper belt offers exciting exploration potential.

Copper Reserve Breakdown

33% Indonesia 33% South America 26% North America 8% Africa

Tenke Fungurume Mining Processing Plant, Democratic Republic of Congo

Africa FCX holds concessions in the Katanga province The initial development project was designed and of the Democratic Republic of Congo (DRC) and is constructed in world-class fashion, using leading- the operator of the project. Construction activities edge technology and following international best on the approximately $2 billion initial development practice standards for environmental management, project at Tenke Fungurume are complete, and occupational safety and social responsibility. production of copper has commenced. Start-up FCX commenced a feasibility study in late 2009 issues continue to be addressed in the cobalt to evaluate a second phase of the project, circuit, and sustained targeted production rates which would include optimizing the current are expected to be reached during 2010. Current plant and potentially increasing capacity. operations are designed to produce approximately 250 million pounds of copper and 18 million FCX is engaged in drilling activities, exploration pounds of cobalt per year. Copper cathodes were analyses and metallurgical testing to evaluate first produced in March 2009, and the operation the potential of this highly prospective district at achieved targeted copper production rates in Tenke Fungurume and expects its ore reserves September 2009. Copper sales totaled 130 million to increase significantly over time. These pounds in 2009 at an average realized price of $2.85 analyses are being incorporated in future plans per pound. FCX expects Tenke Fungurume sales to evaluate opportunities for expansion. to approximate 240 million pounds of copper and more than 20 million pounds of cobalt in 2010.

10 FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report Reserves As of December 31, 2009, FCX’s estimate of the importance of providing these metals in a consolidated recoverable proven and probable responsible manner. FCX has a long-standing reserves totaled 104.2 billion pounds of copper, history of addressing complex social, economic 37.2 million ounces of gold and 2.6 billion and environmental challenges proactively. FCX pounds of molybdenum. Net reserve additions has established company-wide performance of 6.3 billion pounds of copper and 0.16 billion targets to address sustainability issues identified pounds of molybdenum replaced approximately by internal and external stakeholders. As a 150 percent of 2009 copper production and founding member of the International Council on approximately 300 percent of 2009 molybdenum Mining and Metals (ICMM), FCX endorses the production. Estimated recoverable reserves were ICMM’s Sustainable Development Framework determined using long-term average prices of and 10 Sustainable Development Principles. $1.60 per pound for copper, $550 per ounce FCX reports its performance according to the for gold and $8 per pound for molybdenum. Global Reporting Initiative (GRI) Sustainability Reporting Guidelines, version 3.0 (G3). Sustainable Development The world depends on the metals FCX produces FCX’s 2009 Working Toward Sustainable to sustain and expand economic opportunity and Development report will be available growth. As one of the world’s major producers of on FCX’s web site at www.fcx.com upon copper, gold and molybdenum, FCX recognizes completion of third-party assurance.

 FREEPORT-McMoRan COPPER & GOLD INC. 11 2009 Annual Report

BOARD OF DIRECTORS AND MANAGEMENT STOCKHOLDER

James R. Moffett J. Bennett Johnston+ (4) B. M. Rankin, Jr. (4) Investor Inquiries Common Stock Dividends Chairman of the Board Chairman Vice Chairman of the Board The Investor Relations Department will be pleased to receive There were no cash dividends paid on our common stock Freeport-McMoRan Copper & Gold Inc. Johnston & Associates, LLC and Freeport-McMoRan Copper & Gold Inc. any inquiries about the company. A link to our Annual Report on during 2009. In October 2009, the Board of Directors reinstated Johnston Development Co. LLC Private Investor Richard C. Adkerson Form 10-K filed with the Securities and Exchange Commission, an annual cash dividend on our common stock of $0.60 per Former United States Senator President and Chief Executive Officer J. Stapleton Roy+ (4) which includes certifications of our Chief Executive Officer and share, payable quarterly at a rate of $0.15 per share beginning Freeport-McMoRan Copper & Gold Inc. General Charles C. Krulak (2, 4) Director Chief Financial Officer and the company’s Principles of Business February 1, 2010. Former Commandant Kissinger Institute on China and Robert J. Allison, Jr. (2, 3, 4) Conduct, is available on our web site. Additionally, copies will United States Marine Corps the United States Below is a summary of the common stock cash dividends Director and Chairman Emeritus be furnished, without charge, to any stockholder of the company Retired Executive Vice Chairman and Former United States Ambassador Anadarko Petroleum Corporation entitled to vote at its annual meeting, upon written request. The declared and paid for the quarterly periods of 2008: to Indonesia Chief Administration Officer, MBNA Corp. Investor Relations Department can be contacted as follows: Robert A. Day (1, 3) Bobby Lee Lackey (2, 4) Stephen H. Siegele (1, 4) 2008 Chairman of the Board and Consultant Private Investor Freeport-McMoRan Copper & Gold Inc. Chief Executive Officer Amount + Investor Relations Department per Share Record Date Payment Date Trust Company of the West Jon C. Madonna (1) Dr. J. Taylor Wharton (4) One North Central Ave. Retired Chairman and Retired Special Assistant to the First Quarter $ 0.4375 Jan. 15, 2008 Feb. 1, 2008 Gerald J. Ford (1, 3) Phoenix, AZ 85004 Chief Executive Officer, KPMG LLP President for Patient Affairs Chairman of the Board Second Quarter 0.4375 Apr. 15, 2008 May 1, 2008 Retired Professor, Gynecologic Oncology Telephone (602) 366-8400 Diamond-A Ford Corp. Dustan E. McCoy (4) The University of Texas www.fcx.com Third Quarter 0.4375 July 15, 2008 Aug. 1, 2008 Chairman and Chief Executive Officer H. Devon Graham, Jr. (1, 2) M.D. Anderson Cancer Center Fourth Quarter 0.5000 Oct. 15, 2008 Nov. 1, 2008 Brunswick Corporation President Transfer Agent Director Emeritus R.E. Smith Interests + Questions about lost certificates, lost or missing dividend checks, Gabrielle K. McDonald (4) Dr. Henry A. Kissinger or notifications of change of address should be directed to the Judge, Iran-United States Claims Tribunal Chairman Freeport-McMoRan Copper & Gold Inc. transfer agent, registrar Special Counsel on Human Rights to Kissinger Associates, Inc. Tax Withholding – Nonresident Alien Stockholders Freeport-McMoRan Copper & Gold Inc. and dividend disbursement agent: Nonresident aliens who own stock in a United States corporation are generally subject to a federal withholding tax on 100 percent BNY Mellon Shareowner Services of the dividends paid on preferred and/or common stock. + 480 Washington Boulevard Will become an Advisory Director effective June 9, 2010, the date of the 2010 Annual Meeting of Stockholders. However, when 80 percent or more of a corporation’s income is Jersey City, New Jersey 07310-8015 generated outside the United States, the withholding percentage BOARD COMMITTEES: Telephone (800) 953-2493 1) The Audit Committee is not calculated on 100 percent of the dividend, but rather on that 2) The Corporate Personnel Committee www.bnymellon.com/shareowner/isd 3) The Nominating and Corporate Governance Committee portion of the dividend attributable to income generated in the 4) The Public Policy Committee Notice of Annual Meeting United States. We have determined that, for quarterly dividends The annual meeting of stockholders will be held on June 9, 2010. paid in 2009 to nonresident alien stockholders, 100 percent of the dividend amount was subject to federal withholding tax. Management Operations Finance and Administration Notice of the annual meeting will be sent to stockholders. A post-meeting report summarizing the proceedings of the meeting James R. Moffett Harry M. “Red” Conger L. Richards McMillan, II For quarterly dividends paid in 2010, we estimate that 100 percent will be available on our web site (www.fcx.com) within 10 days Chairman of the Board President – Freeport-McMoRan Americas Senior Vice President and of the total dividend amount is subject to federal withholding tax General Counsel following the meeting. A copy of the report will be mailed at no Richard C. Adkerson Mark J. Johnson unless exempted by tax treaty. The withholding tax rate may also charge to any stockholder requesting it. President and Chief Executive Officer President – Freeport-McMoRan Indonesia W. Russell King be reduced by tax treaty. Michael J. Arnold Armando Mahler Senior Vice President – FCX Common Stock If you have any questions, please contact the Investor Executive Vice President and President Director – PT Freeport Indonesia International Relations and Our common stock trades on the New York Stock Exchange Federal Government Affairs Relations Department. Chief Administrative Officer (NYSE) under the symbol “FCX.” The FCX common stock price Richard E. Coleman Kathleen L. Quirk President – Freeport-McMoRan C. Donald Whitmire, Jr. is reported daily in the financial press under “FMCG” in most FCX Beneficial Owner Executive Vice President, Mining Company Vice President and listings of NYSE securities. At year-end 2009, the number of The beneficial owner of more than five percent of our Chief Financial Officer and Treasurer Controller – Financial Reporting holders of record of our common stock was 18,347. outstanding common stock as of December 31, 2009, Phillip S. Brumit is BlackRock, Inc. (7.6 percent). President – Freeport-McMoRan Africa Internal Auditors NYSE composite tape common stock price ranges during 2009 Deloitte & Touche LLP David H. Thornton and 2008 were: President – Climax Molybdenum Co. 2009 2008 Marketing High Low High Low Javier Targhetta President – Atlantic Copper, S.A. First Quarter $ 43.45 $ 21.16 $ 107.37 $ 68.96 Senior Vice President – FCX (Concentrates) Second Quarter 61.55 36.60 127.24 93.00 Stephen T. Higgins President – Freeport-McMoRan Third Quarter 73.43 43.19 117.11 51.21 Sales Company Inc. Fourth Quarter 87.35 63.00 56.75 15.70 Vice President – FCX (Cathode and Rod)

12 FREEPORT-McMoRan COPPER & GOLD INC.  FREEPORT-McMoRan COPPER & GOLD INC. 105 2009 Annual Report 2009 Annual Report FINANCIAL & OPERATING INFORMATION

PROVEN PERFORMANCE

Table of Contents   :LSLJ[LK-PUHUJPHSHUK 6WLYH[PUN+H[H   4HUHNLTLU[»Z+PZJ\ZZPVU HUK(UHS`ZPZ   9LWVY[VM0UKLWLUKLU[ 9LNPZ[LYLK7\ISPJ (JJV\U[PUN-PYT    4HUHNLTLU[»Z9LWVY[VU 0U[LYUHS*VU[YVS6]LY -PUHUJPHS9LWVY[PUN    9LWVY[VM0UKLWLUKLU[ 9LNPZ[LYLK7\ISPJ (JJV\U[PUN-PYT   *VUZVSPKH[LK:[H[LTLU[Z VM6WLYH[PVUZ   *VUZVSPKH[LK:[H[LTLU[Z VM*HZO-SV^Z   *VUZVSPKH[LK )HSHUJL:OLL[Z   *VUZVSPKH[LK:[H[LTLU[Z VM,X\P[`   5V[LZ[V*VUZVSPKH[LK -PUHUJPHS:[H[LTLU[Z

  -9,,769;4J4V9HU*677,9 .63+05* 13    (UU\HS9LWVY[

B)LQDQFLDOVLQGG $0 SELECTED FINANCIAL AND OPERATING DATA

Years Ended December 31, 2009 2008 2007a 2006 2005 (In Millions, Except Per Share Amounts)

FCX CONSOLIDATED FINANCIAL DATA Revenues $15,040 $ 17,796 $ 16,939b $ 5,791 $ 4,179 Operating income (loss) 6,503c,d (12,710)c,d,e 6,555b,e 2,869 2,177 Income (loss) from continuing operations 3,534 (10,450) 3,733 1,625 1,122 Net income (loss) 3,534 (10,450) 3,779 1,625 1,122 Net income attributable to noncontrolling interests 785 617 802 168 127 Net income (loss) attributable to FCX common stockholders 2,527c,d,f (11,341)c,d,e,f 2,769b,e,f 1,396f,g 935f Basic net income (loss) per share attributable to FCX common stockholders: Continuing operations $ 6.10 $ (29.72) $ 8.02 $ 7.32 $ 5.18 Discontinued operations — — 0.10 — — Basic net income (loss) $ 6.10 $ (29.72) $ 8.12 $ 7.32 $ 5.18

Basic weighted-average common shares outstanding 414 382 341 191 180 Diluted net income (loss) per share attributable to FCX common stockholders: Continuing operations $ 5.86 $ (29.72) $ 7.41 $ 6.63 $ 4.67 Discontinued operations — — 0.09 — — Diluted net income (loss) $ 5.86c,d,f $ (29.72)c,d,e,f $ 7.50b,e,f $ 6.63f,g $ 4.67f

Diluted weighted-average common shares outstanding 469 382 397 221 220 Dividends declared per share of common stock $ 0.15 $ 1.375 $ 1.375 $ 5.0625 $ 2.50 At December 31: Cash and cash equivalents $ 2,656 $ 872 $ 1,626 $ 907 $ 764 Property, plant, equipment and development costs, net 16,195 16,002 25,715 3,099 3,089 Goodwill — — 6,105 — — Total assets 25,996 23,353 40,661 5,390g 5,550 Total debt, including current portion and short-term borrowings 6,346 7,351 7,211 680 1,256 Total FCX stockholders’ equity 9,119 5,773 18,234 2,445g 1,843

;OL ZLSLJ[LK JVUZVSPKH[LK ÄUHUJPHS KH[H ZOV^U HIV]L PZ KLYP]LK MYVT V\Y H\KP[LK JVUZVSPKH[LK ÄUHUJPHS Z[H[LTLU[Z ;OLZL OPZ[VYPJHS YLZ\S[Z HYL UV[ ULJLZZHYPS` PUKPJH[P]LVM YLZ\S[Z [OH[ `V\ JHU L_WLJ[ MVY HU` M\[\YL WLYPVK @V\ ZOV\SK YLHK [OPZ KH[H PU JVUQ\UJ[PVU ^P[O 4HUHNLTLU[»Z +PZJ\ZZPVU HUK (UHS`ZPZ VM -PUHUJPHS *VUKP[PVU HUK 9LZ\S[Z VM 6WLYH[PVUZ HUK V\Y M\SS JVUZVSPKH[LK ÄUHUJPHS Z[H[LTLU[Z HUK UV[LZ [OLYL[V JVU[HPULK PU [OPZ HUU\HS YLWVY[

a. Includes the results of Phelps Dodge Corporation (Phelps Dodge) beginning March 20, 2007. b. Includes charges totaling $175 million ($106 million to net income attributable to FCX common stockholders or $0.27 per share) for mark-to-market accounting adjustments on the 2007 copper price protection program assumed in the acquisition of Phelps Dodge. c. Includes charges totaling $77 million ($61 million to net income attributable to FCX common stockholders or $0.13 per share) in 2009 and $17.0 billion ($12.7 billion to net loss attributable to FCX common stockholders or $33.21 per share) in 2008 associated with impairment, restructuring and other charges. d. Includes charges for lower of cost or market inventory adjustments totaling $19 million ($15 million to net income attributable to FCX common stockholders or $0.03 per share) in 2009 and $782 million ($479 million to net loss attributable to FCX common stockholders or $1.26 per share) in 2008. e. Includes purchase accounting impacts related to the acquisition of Phelps Dodge totaling $1.1 billion, including $1.0 billion to operating loss and $93 million for non-operating income and expenses ($679 million to net loss attributable to FCX common stockholders or $1.78 per share) in 2008 and $1.3 billion to operating income ($793 million to net income attributable to FCX common stockholders or $2.00 per share) in 2007. f. Includes net losses on early extinguishment and conversion of debt totaling $43 million ($0.09 per share) in 2009, $5 million ($0.01 per share) in 2008, $132 million ($0.33 per share) in 2007, $30 million ($0.14 per share) in 2006 and $40 million ($0.18 per share) in 2005; 2008 also includes charges totaling $22 million ($0.06 per share) associated with privately negotiated transactions to induce conversion of a portion of our 5½% Convertible Perpetual Preferred Stock into FCX common stock. Also includes a favorable adjustment to income tax expense totaling $43 million ($0.09 per share) in 2009, resulting from completion of a review of U.S. deferred income tax accounts. g. Effective January 1, 2006, we adopted guidance associated with accounting for stripping costs incurred during production in the mining industry, and recorded a cumulative effect adjustment ($149 million) to reduce beginning retained earnings for our deferred mining costs asset ($285 million) as of December 31, 2005, net of taxes, noncontrolling interests and inventory effects ($136 million). As a result, income from continuing operations before income taxes and noncontrolling interests was $35 million lower and net income was $19 million ($0.08 per share) lower than if we had not adopted this guidance. Effective January 1, 2006, we also adopted accounting guidance on share-based payments. As a result, income from continuing operations before income taxes and noncontrolling interests was $28 million lower and net income was $16 million ($0.07 per share) lower than if we had not adopted this guidance. Results for prior years have not been restated.

14 FREEPORT- McMoRan COPPER & GOLD INC. 2009 Annual Report SELECTED FINANCIAL AND OPERATING DATA

-VYJVTWHYH[P]LW\YWVZLZVWLYH[PUNKH[HZOV^UILSV^MVY[OL`LHYZLUKLK+LJLTILYHUKJVTIPULZV\YOPZ[VYPJHSKH[H^P[O7OLSWZ +VKNLWYLHJX\PZP[PVUKH[H(Z[OLWYLHJX\PZP[PVUVWLYH[PUNKH[HYLWYLZLU[[OLYLZ\S[ZVM[OLZLVWLYH[PVUZ\UKLY7OLSWZ+VKNLTHUHNLTLU[Z\JOJVTIPULK KH[HPZUV[ULJLZZHYPS`PUKPJH[P]LVM^OH[WHZ[YLZ\S[Z^V\SKOH]LILLU\UKLY-*?THUHNLTLU[VYVMM\[\YLVWLYH[PUNYLZ\S[Z

@LHYZ,UKLK+LJLTILY 2009   H H H

FCX CONSOLIDATED MINING OPERATING DATA *VWWLYYLJV]LYHISL  7YVK\J[PVUTPSSPVUZVMWV\UKZ 4,103             7YVK\J[PVU[OV\ZHUKZVMTL[YPJ[VUZ  1,861            :HSLZL_JS\KPUNW\YJOHZLZTPSSPVUZVMWV\UKZ 4,111            :HSLZL_JS\KPUNW\YJOHZLZ[OV\ZHUKZVMTL[YPJ[VUZ 1,865            (]LYHNLYLHSPaLKWYPJLWLYWV\UK $ 2.60     I   I  I .VSK[OV\ZHUKZVMYLJV]LYHISLV\UJLZ  7YVK\J[PVU 2,664              :HSLZL_JS\KPUNW\YJOHZLZ 2,639            (]LYHNLYLHSPaLKWYPJLWLYV\UJL $ 993       J   4VS`IKLU\TTPSSPVUZVMYLJV]LYHISLWV\UKZ  7YVK\J[PVU  54           :HSLZL_JS\KPUNW\YJOHZLZ  58            (]LYHNLYLHSPaLKWYPJLWLYWV\UK $ 12.36           NORTH AMERICA COPPER MINES Operating Data, Net of Joint Venture Interest *VWWLYYLJV]LYHISL  7YVK\J[PVUTPSSPVUZVMWV\UKZ 1,147          7YVK\J[PVU[OV\ZHUKZVMTL[YPJ[VUZ 520             :HSLZL_JS\KPUNW\YJOHZLZTPSSPVUZVMWV\UKZ 1,187           :HSLZL_JS\KPUNW\YJOHZLZ[OV\ZHUKZVMTL[YPJ[VUZ 538           (]LYHNLYLHSPaLKWYPJLWLYWV\UK $ 2.38    K   K   K 4VS`IKLU\TTPSSPVUZVMYLJV]LYHISLWV\UKZ  7YVK\J[PVU  25         100% Operating Data :VS\[PVUL_[YHJ[PVULSLJ[YV^PUUPUN:?,>VWLYH[PVUZ  3LHJOVYLWSHJLKPUZ[VJRWPSLZTL[YPJ[VUZWLYKH` 589,400          (]LYHNLJVWWLYVYLNYHKLWLYJLU[  0.29          *VWWLYWYVK\J[PVUTPSSPVUZVMYLJV]LYHISLWV\UKZ 859         4PSSVWLYH[PVUZ  6YLTPSSLKTL[YPJ[VUZWLYKH` 169,900            (]LYHNLVYLNYHKLWLYJLU[!   *VWWLY 0.33           4VS`IKLU\T 0.02          *VWWLYYLJV]LY`YH[LWLYJLU[  86.0           7YVK\J[PVUTPSSPVUZVMYLJV]LYHISLWV\UKZ!   *VWWLY 364            4VS`IKLU\T 25         SOUTH AMERICA COPPER MINES *VWWLYYLJV]LYHISL  7YVK\J[PVUTPSSPVUZVMWV\UKZ 1,390           7YVK\J[PVU[OV\ZHUKZVMTL[YPJ[VUZ 631            :HSLZTPSSPVUZVMWV\UKZ 1,394            :HSLZ[OV\ZHUKZVMTL[YPJ[VUZ 632            (]LYHNLYLHSPaLKWYPJLWLYWV\UK $ 2.70        L .VSK[OV\ZHUKZVMYLJV]LYHISLV\UJLZ  7YVK\J[PVU  92          :HSLZ   90          (]LYHNLYLHSPaLKWYPJLWLYV\UJL $ 982          4VS`IKLU\TTPSSPVUZVMYLJV]LYHISLWV\UKZ  7YVK\J[PVU  2      ·  · :?,>VWLYH[PVUZ  3LHJOVYLWSHJLKPUZ[VJRWPSLZTL[YPJ[VUZWLYKH`           (]LYHNLJVWWLYVYLNYHKLWLYJLU[            *VWWLYWYVK\J[PVUTPSSPVUZVMYLJV]LYHISLWV\UKZ            

  -9,,769;4J4V9HU*677,9 .63+05* 15    (UU\HS9LWVY[ SELECTED FINANCIAL AND OPERATING DATA

@LHYZ,UKLK+LJLTILY 2009   H H H

SOUTH AMERICA COPPER MINES (continued) 4PSSVWLYH[PVUZ  6YLTPSSLKTL[YPJ[VUZWLYKH` 181,300             (]LYHNLVYLNYHKLWLYJLU[!M   *VWWLY  0.66             4VS`IKLU\T  0.02      ·  ·  *VWWLYYLJV]LY`YH[LWLYJLU[  88.9           7YVK\J[PVUYLJV]LYHISL!   *VWWLYTPSSPVUZVMWV\UKZ  825            .VSK[OV\ZHUKZVMV\UJLZ  92           4VS`IKLU\TTPSSPVUZVMWV\UKZ  2      ·  · INDONESIA MINING Operating Data, Net of Joint Venture Interest *VWWLYYLJV]LYHISL  7YVK\J[PVUTPSSPVUZVMWV\UKZ  1,412           7YVK\J[PVU[OV\ZHUKZVMTL[YPJ[VUZ  640           :HSLZTPSSPVUZVMWV\UKZ  1,400          :HSLZ[OV\ZHUKZVMTL[YPJ[VUZ  635          (]LYHNLYLHSPaLKWYPJLWLYWV\UK $ 2.65          .VSK[OV\ZHUKZVMYLJV]LYHISLV\UJLZ  7YVK\J[PVU  2,568           :HSLZ   2,543             (]LYHNLYLHSPaLKWYPJLWLYV\UJL $ 994       J   100% Operating Data 6YLTPSSLKTL[YPJ[VUZWLYKH` 238,300         (]LYHNLVYLNYHKL!  *VWWLYWLYJLU[ 0.98             .VSKNYHTZWLYTL[YPJ[VU  1.30          9LJV]LY`YH[LZWLYJLU[!  *VWWLY  90.6          .VSK   83.7            7YVK\J[PVUYLJV]LYHISL!  *VWWLYTPSSPVUZVMWV\UKZ  1,641           .VSK[OV\ZHUKZVMV\UJLZ  2,984           AFRICA MINING *VWWLYTPSSPVUZVMYLJV]LYHISLWV\UKZ  7YVK\J[PVU 154N  ·  ·  ·  ·  :HSLZ   130N  ·  ·  ·  ·  (]LYHNLYLHSPaLKWYPJLWLYWV\UK $ 2.85N  ·  ·  ·  · 6YLTPSSLKTL[YPJ[VUZWLYKH` 7,300N  ·  ·  ·  · (]LYHNLJVWWLYVYLNYHKLWLYJLU[  3.69N  ·  ·  ·  · *VWWLYYLJV]LY`YH[LWLYJLU[  92.1N  ·  ·  ·  · MOLYBDENUM OPERATIONS 4VS`IKLU\TZHSLZL_JS\KPUNW\YJOHZLZTPSSPVUZVMWV\UKZO  58           (]LYHNLYLHSPaLKWYPJLWLYWV\UK $ 12.36           Henderson molybdenum mine  6YLTPSSLKTL[YPJ[VUZWLYKH` 14,900          (]LYHNLTVS`IKLU\TVYLNYHKLWLYJLU[  0.25          4VS`IKLU\TWYVK\J[PVUTPSSPVUZVMYLJV]LYHISLWV\UKZ  27         

H -VYJVTWHYH[P]LW\YWVZLZVWLYH[PUNKH[HMVY[OL`LHYZLUKLK+LJLTILYHUKJVTIPULZV\YOPZ[VYPJHSKH[H^P[O7OLSWZ+VKNLWYLHJX\PZP[PVUKH[H (Z[OLWYLHJX\PZP[PVUKH[HYLWYLZLU[Z[OLYLZ\S[ZVM[OLZLVWLYH[PVUZ\UKLY7OLSWZ+VKNLTHUHNLTLU[Z\JOJVTIPULKKH[HPZUV[ULJLZZHYPS`PUKPJH[P]LVM^OH[WHZ[YLZ\S[Z ^V\SKOH]LILLU\UKLY-*?THUHNLTLU[VYVMM\[\YLVWLYH[PUNYLZ\S[Z I )LMVYLJOHYNLZMVYOLKNPUNSVZZLZYLSH[LK[VJVWWLYWYPJLWYV[LJ[PVUWYVNYHTZHTV\U[Z^LYL WLYWV\UKMVY  WLYWV\UKMVYHUK WLYWV\UKMVY J (TV\U[^HZHWWYV_PTH[LS` WLYV\UJLILMVYLHSVZZYLZ\S[PUNMYVT[OLYLKLTW[PVUVM-*?»Z.VSK+LUVTPUH[LK7YLMLYYLK:[VJR:LYPLZ00 K )LMVYLJOHYNLZMVYOLKNPUNSVZZLZYLSH[LK[VJVWWLYWYPJLWYV[LJ[PVUWYVNYHTZHTV\U[Z^LYL WLYWV\UKMVY WLYWV\UKMVYHUK  WLYWV\UKMVY L (TV\U[^HZ WLYWV\UKILMVYLJOHYNLZMVYOLKNPUNSVZZLZYLSH[LK[VJVWWLYWYPJLWYV[LJ[PVUWYVNYHTZ M (]LYHNLVYLNYHKLZVMNVSKWYVK\JLKH[V\Y:V\[O(TLYPJHJVWWLYTPULZYV\UKZ[VSLZZ[OHUNYHTZWLYTL[YPJ[VU N 9LZ\S[ZMVY YLWYLZLU[TPUPUNVWLYH[PVUZ[OH[ILNHUWYVK\J[PVUPU4HYJO  O 0UJS\KLZZHSLZVMTVS`IKLU\TWYVK\JLKHZHI`WYVK\J[H[V\Y5VY[OHUK:V\[O(TLYPJHJVWWLYTPULZ

16 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

OVERVIEW and OUTLOOK RXUIXWXUHJURZWKRSSRUWXQLWLHV,QDGGLWLRQZHKDYHDQQRXQFHG 0U4HUHNLTLU[»Z+PZJ\ZZPVUHUK(UHS`ZPZVM-PUHUJPHS*VUKP[PVUHUK LQLWLDWLYHVWRUHVXPHFHUWDLQSURMHFWGHYHORSPHQWDFWLYLWLHVWKDWZHUH 9LZ\S[ZVM6WLYH[PVUZ¸^L¹¸\Z¹HUK¸V\Y¹YLMLY[V-YLLWVY[ GHIHUUHGLQODWH UHIHUWR´&XUUHQW'HYHORSPHQW3URMHFWVµIRU 4J4V9HU*VWWLY .VSK0UJ-*?HUKP[ZJVUZVSPKH[LKZ\IZPKPHYPLZ IXUWKHUGLVFXVVLRQ  ;OLYLZ\S[ZVMVWLYH[PVUZYLWVY[LKHUKZ\TTHYPaLKILSV^HYLUV[ $W'HFHPEHUZHKDGELOOLRQLQFRQVROLGDWHGFDVK ULJLZZHYPS`PUKPJH[P]LVMM\[\YLVWLYH[PUNYLZ\S[ZYLMLY[V¸*H\[PVUHY` ELOOLRQRIZKLFKZDVDYDLODEOHWRRXUSDUHQWFRPSDQ\ :HKDG :[H[LTLU[¹MVYM\Y[OLYKPZJ\ZZPVU0UWHY[PJ\SHY[OLÄUHUJPHSYLZ\S[Z QRERUURZLQJVDQGPLOOLRQRIOHWWHUVRIFUHGLWLVVXHGXQGHURXU MVYPUJS\KL[OLVWLYH[PVUZVM7OLSWZ+VKNL*VYWVYH[PVU ELOOLRQUHYROYLQJFUHGLWIDFLOLWLHVUHVXOWLQJLQDYDLODELOLW\RI 7OLSWZ+VKNLMYVT4HYJO[OYV\NO+LJLTILY DSSUR[LPDWHO\ELOOLRQ PLOOLRQRIZKLFKFRXOGEHXVHGIRU UV[[OLM\SS[^LS]LTVU[OWLYPVKILJH\ZLVM[OLHJJV\U[PUN[YLH[TLU[ DGGLWLRQDOOHWWHUVRIFUHGLW 2XUORQJWHUPGHEWDW'HFHPEHU MVY[OLHJX\PZP[PVU9LMLYLUJLZ[V¸5V[LZ¹HYL5V[LZPUJS\KLKPU ZDVELOOLRQ$OWKRXJKZHKDYHQRVLJQLÀFDQWGHEWPDWXULWLHVLQ V\Y¸5V[LZ[V*VUZVSPKH[LK-PUHUJPHS:[H[LTLU[Z¹;OYV\NOV\[ WKHQHDUWHUP UHIHUWR´&DSLWDO5HVRXUFHVDQG/LTXLGLW\µ GXULQJ 4HUHNLTLU[»Z+PZJ\ZZPVUHUK(UHS`ZPZVM-PUHUJPHS*VUKP[PVUHUK ZHUHSDLGELOOLRQLQGHEWLQDGYDQFHRIVFKHGXOHGPDWXULWLHV UHIHU 9LZ\S[ZVM6WLYH[PVUZHSSYLMLYLUJLZ[VLHYUPUNZVYSVZZLZWLYZOHYL WR1RWH )URP-DQXDU\WR)HEUXDU\ZHKDYH HYLVUHKPS\[LKIHZPZ\USLZZV[OLY^PZLUV[LK PDGHDGGLWLRQDORSHQPDUNHWGHEWSXUFKDVHVWRWDOLQJPLOOLRQIRU PLOOLRQ UHIHUWR1RWH :HPD\FRQVLGHUDGGLWLRQDO :HDUHRQHRIWKHZRUOGҋ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ҋVHFRQRP\DQGZLOOFRQWLQXHWRDGMXVWRXURSHUDWLQJ ODWHVWDYDLODEOHUHVHUYHGDWDSURYLGHGE\WKLUGSDUW\LQGXVWU\ VWUDWHJ\DVPDUNHWFRQGLWLRQVFKDQJH5HIHUWR´&RQVROLGDWHG5HVXOWVµ FRQVXOWDQWVVLJQLÀFDQWPLQLQJRSHUDWLRQVLQ1RUWKDQG6RXWK IRUIXUWKHUGLVFXVVLRQRIRXUFRQVROLGDWHGÀQDQFLDOUHVXOWVIRUWKH\HDUV $PHULFDDQGWKH7HQNH)XQJXUXPHPLQHUDOVGLVWULFWLQWKH HQGHG'HFHPEHUDQG 'HPRFUDWLF5HSXEOLFRI&RQJR '5& :HDOVRRSHUDWH$WODQWLF &RSSHURXUZKROO\RZQHGFRSSHUVPHOWLQJDQGUHÀQLQJXQLWLQ6SDLQ Outlook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´2SHUDWLRQVµIRUIXUWKHUGLVFXVVLRQRI    2.6   RXUPLQLQJRSHUDWLRQV 0RO\EGHQXP PLOOLRQVRIUHFRYHUDEOHSRXQGV E  58   7KHGUDPDWLFGHFOLQHVLQFRSSHUDQGPRO\EGHQXPSULFHVLQODWH H 9LWYLZLU[Z[OLZ\TVMWYVQLJ[LKJVWWLYZHSLZ]VS\TLZILMVYLYV\UKPUN DQGWKHGHWHULRUDWLRQRIWKHHFRQRPLFDQGFUHGLWHQYLURQPHQW I 0UJS\KLZZHSLZVMTVS`IKLU\TWYVK\JLKHZHI`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ÁHFWLQJWKHLPSDFWRIUHGXFHG HQDEOHGXVWRHQKDQFHRXUÀQDQFLDODQGOLTXLGLW\SRVLWLRQGXULQJ PLQLQJDFWLYLWLHVRQOHDFKLQJRSHUDWLRQV(VWLPDWHGVDOHV DOORZLQJXVWRPDQDJHYRODWLOHFRQGLWLRQVHIIHFWLYHO\UHGXFH YROXPHVRIDSSUR[LPDWHO\PLOOLRQRXQFHVRIJROGIRUDUH GHEWDQGUHLQVWDWHFDVKGLYLGHQGVWRVKDUHKROGHUVZKLOHPDLQWDLQLQJ ORZHUWKDQVDOHVRIPLOOLRQRXQFHVDVDUHVXOWRIWUDQVLWLRQLQJ

  -9,,769;4J4V9HU*677,9 .63+05* 17    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

WRDORZHUJUDGHVHFWLRQRIWKH*UDVEHUJRSHQSLWGXULQJ 0RO\EGHQXP'HDOHU2[LGHZHHNO\DYHUDJHSULFHUDQJHGIURPDORZ (VWLPDWHGVDOHVYROXPHVRIDSSUR[LPDWHO\PLOOLRQSRXQGVRI RISHUSRXQGLQWRDKLJK RISHUSRXQGLQ PRO\EGHQXPIRUDSSUR[LPDWHVDOHVRIPLOOLRQSRXQGV &RSSHUJROGDQGPRO\EGHQXPSULFHVDUHDIIHFWHGE\QXPHURXV 2XUSURMHFWHGVDOHVYROXPHVIRUGHSHQGRQWKHDFKLHYHPHQWRI IDFWRUVEH\RQGRXUFRQWURODVGHVFULEHGIXUWKHULQRXU´5LVN)DFWRUVµ WDUJHWHGPLQLQJUDWHVWKHVXFFHVVIXORSHUDWLRQRISURGXFWLRQIDFLOLWLHV FRQWDLQHGLQ3DUW,,WHP$ RIRXU)RUP.IRUWKH\HDUHQGHG WKHLPSDFWRIZHDWKHUFRQGLWLRQVDQGRWKHUIDFWRUV 'HFHPEHU $VVXPLQJDYHUDJHSULFHVRISHUSRXQGRIFRSSHU Historical LME Copper Prices SHURXQFHRIJROGDQGSHUSRXQGRIPRO\EGHQXPIRUZH Through January 29, 2010 HVWLPDWHRXUFRQVROLGDWHGXQLWQHWFDVKFRVWV QHWRIE\SURGXFW

FUHGLWVDQGH[FOXGLQJ$IULFDPLQLQJ IRURXUFRSSHUPLQLQJRSHUDWLRQV 1,600 $4.00

ZRXOGDYHUDJHDSSUR[LPDWHO\SHUSRXQGLQFRPSDUHG $3.50

ZLWKSHUSRXQGLQ$YHUDJHXQLWQHWFDVKFRVWVIRU 1,200 $3.00 Dollars per pound DUHHVWLPDWHGWREHKLJKHUWKDQDVDUHVXOWRIORZHUSURMHFWHG $2.50 FRSSHUDQGJROGVDOHVYROXPHVIURP*UDVEHUJFRPELQHGZLWK 800 $2.00 LQFUHDVHVLQFRPPRGLW\EDVHGLQSXWFRVWVDQGIRUHLJQFXUUHQF\ $1.50 H[FKDQJHUDWHV&RQVROLGDWHGXQLWQHWFDVKFRVWVZRXOGEHLPSDFWHG 000s of metric tons 400 $1.00 E\DSSUR[LPDWHO\SHUSRXQGIRUHDFKSHURXQFHFKDQJH $0.50 LQJROG SULFHVDQGDSSUR[LPDWHO\SHUSRXQGIRUHDFKSHU 2000 2002 2004 2006 2008 2010 SRXQGFKDQJHLQPRO\EGHQXPSULFHV &RQVROLGDWHGUHYHQXHVRSHUDWLQJFDVKÁRZVDQGQHWLQFRPHYDU\ LME Copper Prices LME & COMEX Exchange Stocks* VLJQLÀFDQWO\ZLWKÁXFWXDWLRQVLQWKHPDUNHWSULFHVRIFRSSHUJROGDQG  ,_JS\KLZ:OHUNOHPZ[VJRZWYVK\JLYJVUZ\TLYHUKTLYJOHU[Z[VJRZ PRO\EGHQXPVDOHVYROXPHVDQGRWKHUIDFWRUV%DVHGRQWKHDERYH SURMHFWHGFRQVROLGDWHGVDOHVYROXPHVDQGDVVXPLQJDYHUDJHSULFHV 7KHJUDSKDERYHSUHVHQWV/0(VSRWFRSSHUSULFHVDQGUHSRUWHG RISHUSRXQGRIFRSSHUSHURXQFHRIJROGDQGSHU VWRFNVRIFRSSHUDWWKH/0(DQGWKH1HZ

18 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

GHYHORSPHQWRIQHZVXSSOLHVRIFRSSHUDQGSURGXFWLRQOHYHOVRI CRITICAL ACCOUNTING ESTIMATES PLQHVDQGFRSSHUVPHOWHUV7KH/0(VSRWFRSSHUSULFHFORVHGDW 0DQDJHPHQWҋV'LVFXVVLRQDQG$QDO\VLVRI)LQDQFLDO&RQGLWLRQDQG SHUSRXQGRQ-DQXDU\ 5HVXOWVRI2SHUDWLRQVLVEDVHGRQRXUFRQVROLGDWHGÀQDQFLDO VWDWHPHQWVZKLFKKDYHEHHQSUHSDUHGLQFRQIRUPLW\ZLWKJHQHUDOO\ London Gold Prices DFFHSWHGDFFRXQWLQJSULQFLSOHV *$$3 LQWKH867KHSUHSDUDWLRQRI Through January 29, 2010 WKHVHVWDWHPHQWVUHTXLUHVWKDWZHPDNHHVWLPDWHVDQGDVVXPSWLRQV

$1,250 WKDWDIIHFWWKHUHSRUWHGDPRXQWVRIDVVHWVOLDELOLWLHVUHYHQXHVDQG $1,150 H[SHQVHV:HEDVHWKHVHHVWLPDWHVRQKLVWRULFDOH[SHULHQFHDQGRQ $1,050 DVVXPSWLRQVWKDWZHFRQVLGHUUHDVRQDEOHXQGHUWKHFLUFXPVWDQFHV Dolla $950 KRZHYHUUHSRUWHGUHVXOWVFRXOGGLIIHUIURPWKRVHEDVHGRQWKHFXUUHQW $850 rs pe HVWLPDWHVXQGHUGLIIHUHQWDVVXPSWLRQVRUFRQGLWLRQV7KHDUHDV $750 r o unce $650 UHTXLULQJWKHXVHRIPDQDJHPHQWҋVHVWLPDWHVDUHDOVRGLVFXVVHGLQ

$550 1RWHXQGHUWKHVXEKHDGLQJ´8VH RI(VWLPDWHVµ0DQDJHPHQWKDV $450 UHYLHZHGWKHIROORZLQJGLVFXVVLRQRILWVGHYHORSPHQWDQGVHOHFWLRQRI $350 FULWLFDODFFRXQWLQJHVWLPDWHVZLWKWKH$XGLW&RPPLWWHHRIRXU %RDUG 2000 2002 2004 2006 2008 2010 RI'LUHFWRUV Mineral Reserves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

Metals Week Molybdenum Dealer Oxide Prices JHRORJ\RIRXUPLQHVDVVXPSWLRQVDUHUHTXLUHGWRGHWHUPLQHWKH Through January 29, 2010 HFRQRPLFIHDVLELOLW\RIPLQLQJWKHVHUHVHUYHVLQFOXGLQJHVWLPDWHVRI IXWXUHFRPPRGLW\SULFHVDQGGHPDQGWKHPLQLQJPHWKRGVZHXVH $40 DQGWKHUHODWHGFRVWVLQFXUUHGWRGHYHORSDQGPLQHRXUUHVHUYHV2XU $35 HVWLPDWHVRIUHFRYHUDEOHSURYHQDQGSUREDEOHUHVHUYHVDUHWKH

$30 Dolla UHVSRQVLELOLW\RI RXUHPSOR\HHVDQGDPDMRULW\RIWKHVHHVWLPDWHV

$25 rs KDYHEHHQUHYLHZHGDQGYHULÀHGE\LQGHSHQGHQWH[SHUWVLQPLQLQJ pe

$20 r po JHRORJ\DQGUHVHUYHGHWHUPLQDWLRQ und $15

$10

$5

2000 2002 2004 2006 2008 2010

7KHJUDSKDERYHSUHVHQWVMetals Week 0RO\EGHQXP'HDOHU2[LGH ZHHNO\DYHUDJHSULFHVIURP-DQXDU\ WKURXJK-DQXDU\ ,QODWHPRO\EGHQXPSULFHVGHFOLQHGVLJQLÀFDQWO\DVDUHVXOWRI WKHÀQDQFLDOPDUNHWWXUPRLODQGDGHFOLQHLQGHPDQGKRZHYHU PRO\EGHQXPSULFHVLPSURYHGGXULQJVXSSRUWHGE\&KLQHVH LPSRUWVDQGVXSSO\UHGXFWLRQV'XULQJWKHZHHNO\DYHUDJH SULFHRIPRO\EGHQXPUDQJHGIURPSHUSRXQGWRSHU SRXQGDYHUDJHGSHUSRXQGDQGZDVSHUSRXQGRQ 'HFHPEHU7KH Metals Week 0RO\EGHQXP'HDOHU2[LGH ZHHNO\DYHUDJHSULFHZDVSHUSRXQGRQ-DQXDU\

  -9,,769;4J4V9HU*677,9 .63+05* 19    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

7KHIROORZLQJWDEOHVXPPDUL]HVFKDQJHVLQRXUHVWLPDWHG VWRFNKROGHUV :HSHUIRUPDQQXDODVVHVVPHQWVRIRXUH[LVWLQJDVVHWV FRQVROLGDWHGUHFRYHUDEOHSURYHQDQGSUREDEOHFRSSHUJROGDQG LQFRQQHFWLRQ ZLWKWKHUHYLHZRIPLQH RSHUDWLQJDQGGHYHORSPHQW PRO\EGHQXPUHVHUYHVGXULQJDQG SODQV,ILWLVGHWHUPLQHGWKDWDVVLJQHGDVVHWOLYHVGRQRWUHÁHFWWKH

  Copper Gold Molybdenum H[SHFWHGUHPDLQLQJSHULRGRIEHQHÀ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mpairment of Assets. :HHYDOXDWHRXUORQJOLYHGDVVHWV WREH KHOGDQGXVHG IRULPSDLUPHQWZKHQHYHQWVRUFKDQJHVLQ 1HWDGGLWLRQVWRUHFRYHUDEOHSURYHQDQGSUREDEOHFRSSHUUHVHUYHV FLUFXPVWDQFHVLQGLFDWHWKDWWKHUHODWHGFDUU\LQJDPRXQWRIVXFKDVVHWV GXULQJLQFOXGHGDGGLWLRQVRIELOOLRQSRXQGVDWWKH&HUUR PD\QRW EHUHFRYHUDEOH,QHYDOXDWLQJRXUORQJOLYHGDVVHWVIRU 9HUGHPLQHLQ6RXWK$PHULFDELOOLRQSRXQGVDWRXU1RUWK$PHULFD UHFRYHUDELOLW\HVWLPDWHVRIDIWHUWD[XQGLVFRXQWHGIXWXUHFDVKÁRZVRI FRSSHUPLQHVDQGELOOLRQSRXQGVDWWKH7HQNH)XQJXUXPHPLQH RXULQGLYLGXDOPLQLQJRSHUDWLRQVDUHXVHGZLWKLPSDLUPHQWORVVHV SDUWLDOO\RIIVHWE\UHYLVLRQVDWRWKHUPLQHV1HWDGGLWLRQVIRU PHDVXUHGE\UHIHUHQFHWRIDLUYDOXH$VTXRWHGPDUNHWSULFHVDUH UHSODFHGRYHUSHUFHQWRIRXUFRSSHUSURGXFWLRQ1HW XQDYDLODEOHIRURXULQGLYLGXDOPLQLQJRSHUDWLRQVIDLUYDOXHLV DGGLWLRQVWRUHFRYHUDEOHFRSSHUUHVHUYHVGXULQJLQFOXGHDGGLWLRQV GHWHUPLQHGWKURXJKWKHXVHRIGLVFRXQWHGHVWLPDWHGIXWXUHFDVKÁRZV RIELOOLRQSRXQGVDWRXU1RUWK$PHULFDFRSSHUPLQHVELOOLRQ 7KHHVWLPDWHGFDVKÁRZVXVHGWRDVVHVVUHFRYHUDELOLW\RIRXUORQJ SRXQGVDWRXU&HUUR9HUGHPLQHLQ6RXWK$PHULFDDQG ELOOLRQ OLYHGDVVHWVDQGPHDVXUHIDLUYDOXHRIRXUPLQLQJRSHUDWLRQVDUH SRXQGVDWWKH7HQNH)XQJXUXPHPLQHSDUWLDOO\RIIVHWE\UHYLVLRQVDW GHULYHGIURPFXUUHQWEXVLQHVVSODQVZKLFKDUHGHYHORSHGXVLQJQHDU RWKHUPLQHV1HWDGGLWLRQVIRUUHSODFHGDSSUR[LPDWHO\ WHUPSULFHIRUHFDVWVUHÁHFWLYHRIWKHFXUUHQWSULFHHQYLURQPHQWDQG SHUFHQWRIFXUUHQW\HDUFRSSHUSURGXFWLRQ1HWDGGLWLRQVWRUHFRYHUDEOH PDQDJHPHQWҋVSURMHFWLRQVIRUORQJWHUPDYHUDJHPHWDOSULFHV,Q FRSSHUUHVHUYHVUHÁ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Á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ÀFDQW HVWLPDWHGUHFRYHUDEOHSURYHQDQGSUREDEOHUHVHUYHVDQG LLL DQ\ LPSDFWRQRXUUHVXOWVRIRSHUDWLRQVLQFOXGLQJFKDQJHVWRSURVSHFWLYH HYHQWWKDWPLJKWRWKHUZLVHKDYHDPDWHULDODGYHUVHHIIHFWRQPLQH GHSUHFLDWLRQUDWHVDQGDVVHWFDUU\LQJYDOXHV%DVHGRQSURMHFWHG VLWHSURGXFWLRQOHYHOVRUFRVWV FRSSHUVDOHVYROXPHVIRU UHIHUWR´2YHUYLHZDQG2XWORRNµ LI 'XULQJIRXUWKTXDUWHUZHFRQFOXGHG WKDWWKHWKHQFXUUHQW HVWLPDWHGFRSSHUUHVHUYHVDWRXUPLQHVZHUHSHUFHQWKLJKHUDW HFRQRPLFHQYLURQPHQWDQGVLJQLÀFDQWGHFOLQHVLQFRSSHUDQG 'HFHPEHUZHHVWLPDWHWKDWRXUDQQXDOGHSUHFLDWLRQ PRO\EGHQXPSULFHVUHSUHVHQWHGVLJQLÀFDQWDGYHUVHFKDQJHVLQRXU GHSOHWLRQDQGDPRUWL]DWLRQH[SHQVHIRUZRXOGGHFUHDVHE\ EXVLQHVVDQGWKHUHIRUHHYDOXDWHGRXUORQJOLYHGDVVHWVIRU PLOOLRQ PLOOLRQWRQHWLQFRPH DWWULEXWDEOHWR)&;FRPPRQ LPSDLUPHQW3URMHFWHGPHWDOSULFHVUHSUHVHQWHGWKHPRVWVLJQLÀFDQW VWRFNKROGHUV DQGDSHUFHQWGHFUHDVHLQFRSSHUUHVHUYHVZRXOG DVVXPSWLRQXVHGLQWKHFDVKÁRZHVWLPDWHVWRDVVHVVUHFRYHUDELOLW\ LQFUHDVHGHSUHFLDWLRQGHSOHWLRQ DQGDPRUWL]DWLRQH[SHQVHE\ DQGPHDVXUHIDLUYDOXHRIRXULQGLYLGXDOPLQLQJRSHUDWLRQV$WWKH PLOOLRQ PLOOLRQWRQHWLQFRPHDWWULEXWDEOHWR)&;FRPPRQ

20 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

WLPHRIWKH0DUFKDFTXLVLWLRQRI3KHOSV'RGJHPHWDOSULFH KLVWRULFDOWUHQGVDQGRWKHUIDFWRUVLQFOXGLQJPLQHUDORJ\RIWKHRUH SURMHFWLRQVXVHGWRYDOXHWKHQHWDVVHWVDFTXLUHGUDQJHGIURPQHDU DQGURFNW\SH8OWLPDWHUHFRYHU\RIFRSSHUFRQWDLQHGLQOHDFK WHUPSULFHVRISHUSRXQGIRUFRSSHUGHFOLQLQJRYHUDQHLJKW VWRFNSLOHVFDQYDU\VLJQLÀFDQWO\IURPDORZSHUFHQWDJHWRPRUHWKDQ \HDUSHULRGWRSHUSRXQGDQGSHUSRXQGIRU SHUFHQWGHSHQGLQJRQVHYHUDOYDULDEOHVLQFOXGLQJW\SHRIFRSSHU PRO\EGHQXPGHFOLQLQJRYHUDÀYH\HDUSHULRGWRSHUSRXQGRXU UHFRYHU\PLQHUDORJ\DQGSDUWLFOHVL]HRIWKHURFN)RUQHZO\SODFHG 'HFHPEHULPSDLUPHQWHYDOXDWLRQVZHUHEDVHGRQSULFH PDWHULDORQDFWLYHVWRFNSLOHVDVPXFKDVSHUFHQWRIWKHFRSSHU DVVXPSWLRQVUHÁHFWLQJSUHYDLOLQJFRSSHUIXWXUHVSULFHVIRUWKUHH XOWLPDWHO\UHFRYHUDEOHPD\EHH[WUDFWHGGXULQJWKHÀ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eclamation and Closure Costs. 5HFODPDWLRQLVDQRQJRLQJDFWLYLW\ DFTXLVLWLRQRI3KHOSV'RGJHDQGZDVDVVLJQHGWRWKHUHSRUWLQJ WKDWRFFXUVWKURXJKRXWWKHOLIHRIDPLQH:HUHFRUGWKHIDLUYDOXHRIRXU XQLWVRULQGLYLGXDOPLQHVWKDWZHUHH[SHFWHGWREHQHÀWIURPWKH HVWLPDWHGDVVHWUHWLUHPHQWREOLJDWLRQV $52V DVVRFLDWHGZLWKWDQJLEOH EXVLQHVVFRPELQDWLRQ*RRGZLOOLVUHTXLUHGWREHHYDOXDWHGDWOHDVW ORQJOLYHGDVVHWVLQWKHSHULRGLQFXUUHG)DLUYDOXHLVPHDVXUHGDVWKH DQQXDOO\DQGDWDQ\RWKHUWLPHLIDQHYHQWRUFKDQJHLQFLUFXPVWDQFHV SUHVHQWYDOXHRIFDVKÁRZHVWLPDWHVDIWHUFRQVLGHULQJLQÁDWLRQDQG LQGLFDWHVWKDWWKHIDLUYDOXHRIDUHSRUWLQJXQLWLVEHORZLWVFDUU\LQJ WKHQDSSO\LQJDPDUNHWULVNSUHPLXP2XUFRVWHVWLPDWHVDUHUHÁHFWHG DPRXQW2XUDQQXDOJRRGZLOOLPSDLUPHQWWHVWZDVSHUIRUPHGLQ RQDWKLUGSDUW\FRVWEDVLVDQGFRPSO\ZLWKRXUOHJDOREOLJDWLRQWRUHWLUH IRXUWKTXDUWHUZKLFKUHVXOWHGLQWKHIXOOLPSDLUPHQWRIJRRGZLOO WDQJLEOHORQJOLYHGDVVHWVLQWKHSHULRGLQFXUUHG7KHVH FRVWHVWLPDWHV DQGWKHUHFRJQLWLRQRIFKDUJHVWRWDOLQJELOOLRQ ELOOLRQWRQHW PD\GLIIHUIURPÀQDQFLDODVVXUDQFHFRVWHVWLPDWHVIRUUHFODPDWLRQ ORVVDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHUVKDUH  DFWLYLWLHVEHFDXVHRIDYDULHW\RIIDFWRUVLQFOXGLQJREWDLQLQJXSGDWHG 5HIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ FRVWHVWLPDWHVIRUUHFODPDWLRQDFWLYLWLHVWKHWLPLQJRIUHFODPDWLRQ Recoverable Copper. :HUHFRUGDVLQYHQWRU\DSSOLFDEOHFRVWVIRU DFWLYLWLHVFKDQJHVLQVFRSHDQGWKHH[FOXVLRQRIFHUWDLQFRVWVQRW FRSSHUFRQWDLQHGLQPLOODQGOHDFKVWRFNSLOHVWKDWDUHH[SHFWHGWREH FRQVLGHUHGUHFODPDWLRQDQGFORVXUHFRVWV5HIHUWR1RWHIRUIXUWKHU SURFHVVHGLQWKHIXWXUHEDVHGRQSURYHQSURFHVVLQJWHFKQRORJLHV GLVFXVVLRQRIRXUDFFRXQWLQJSROLF\IRUUHFODPDWLRQDQGFORVXUHFRVWV 0LOODQGOHDFKVWRFNSLOHVDUHHYDOXDWHGSHULRGLFDOO\WRHQVXUHWKDW *HQHUDOO\$52DFWLYLWLHVDUHVSHFLÀ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ÀFDQW VLJQLÀFDQWO\7KHTXDQWLW\RIPDWHULDOGHOLYHUHGWRPLOODQGOHDFK FKDQJHVWRRXUFXUUHQWSODQV LLL FDOFXODWLQJWKHIDLUYDOXHRIRXU$52V VWRFNSLOHVLVEDVHGRQVXUYH\HGYROXPHVRIPLQHGPDWHULDODQGGDLO\ UHTXLUHVPDQDJHPHQWWRHVWLPDWHSURMHFWHGFDVKÁRZVPDNHORQJ SURGXFWLRQUHFRUGV6DPSOLQJDQGDVVD\LQJRIEODVWKROHFXWWLQJV WHUPDVVXPSWLRQVDERXWLQÁDWLRQUDWHVGHWHUPLQHRXUFUHGLWDGMXVWHG GHWHUPLQHWKHHVWLPDWHGFRSSHUJUDGHFRQWDLQHGLQWKHPDWHULDO ULVNIUHHLQWHUHVWUDWHVDQGGHWHUPLQHPDUNHWULVNSUHPLXPVWKDWDUH GHOLYHUHGWRWKHPLOODQGOHDFKVWRFNSLOHV DSSURSULDWHIRURXURSHUDWLRQVDQG LY JLYHQWKHPDJQLWXGHRIRXU ([SHFWHGFRSSHUUHFRYHU\UDWHVIRUPLOOVWRFNSLOHVDUHGHWHUPLQHG HVWLPDWHGUHFODPDWLRQDQGFORVXUHFRVWVFKDQJHVLQDQ\RUDOORIWKHVH E\PHWDOOXUJLFDOWHVWLQJ7KHUHFRYHUDEOHFRSSHULQPLOOVWRFNSLOHV HVWLPDWHVFRXOGKDYHDVLJQLÀ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

  -9,,769;4J4V9HU*677,9 .63+05* 21    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

  2009    /LDELOLW\$FW &(5&/$ RUDQDORJRXVVWDWHSURJUDPVDQGIRU %DODQFHDWEHJLQQLQJRI\HDU $ 712    HVWLPDWHGIXWXUHFRVWVDVVRFLDWHGZLWKHQYLURQPHQWDOPDWWHUVDW /LDELOLWLHVDVVXPHGLQWKHDFTXLVLWLRQ FORVHGIDFLOLWLHVDQGFORVHGSRUWLRQVRIFHUWDLQRSHUDWLQJIDFLOLWLHV  RI3KHOSV'RGJH  —  ³ D )ROORZLQJLVDVXPPDU\RIFKDQJHVLQRXUHVWLPDWHGHQYLURQPHQWDO /LDELOLWLHVLQFXUUHG  12     5HYLVLRQVWRFDVKÁRZHVWLPDWHV (17)   E REOLJDWLRQVIRUWKH\HDUVHQGHG'HFHPEHUDQG $FFUHWLRQH[SHQVH  52     LQPLOOLRQV  6SHQGLQJ (28)        2009    )RUHLJQFXUUHQF\WUDQVODWLRQDGMXVWPHQW  —     ³ %DODQFHDWHQGRI\HDU $ 731   %DODQFHDWEHJLQQLQJRI\HDU   $ 1,401   ³ /LDELOLWLHVDVVXPHGLQWKHDFTXLVLWLRQ H ;OLMHPY]HS\LVM(96ZHZZ\TLKPU[OLHJX\PZP[PVUVM7OLSWZ+VKNL^HZLZ[PTH[LK — IHZLKVUWYVQLJ[LKJHZOÅV^ZHULZ[PTH[LKSVUN[LYTHUU\HSPUÅH[PVUYH[LVM  RI3KHOSV'RGJH        WLYJLU[HKPZJV\U[YH[LIHZLKVU-*?»ZLZ[PTH[LKJYLKP[HKQ\Z[LKYPZRMYLLPU[LYLZ[YH[L $FFUHWLRQH[SHQVHD    102    ³ VM WLYJLU[HUKHTHYRL[YPZRWYLTP\TVMWLYJLU[[VYLÅLJ[^OH[H[OPYKWHY[` $GGLWLRQV    40     TPNO[YLX\PYL[VHZZ\TL[OLZL(96Z (3) I +\YPUN*OPUVHUK;`YVULLHJOZ\ITP[[LK\WKH[LK[OPYKWHY[`JSVZ\YLJVZ[ 5HGXFWLRQV          LZ[PTH[LZ[V[OLZ[H[LVM5L^4L_PJVHZWHY[VM[OLWLYTP[YLUL^HSWYVJLZZ(ZHYLZ\S[ 6SHQGLQJ   (76)      ^LYL]PZLKV\YJHZOÅV^LZ[PTH[LZHUKPUJYLHZLKV\Y(96I` TPSSPVUMVY*OPUVHUK %DODQFHDWHQGRI\HDU   $ 1,464   TPSSPVUMVY;`YVUL+\YPUN ;`YVULÄSLKHUHWWLHSYLNHYKPUN[OLWVPU[VM NYV\UK^H[LY^P[OKYH^HS-PUHSPaLKJSVZ\YLWSHUYLX\PYLTLU[ZPUJS\KPUN[OVZLYLZ\S[PUN H 9LWYLZLU[ZHJJYL[PVUVM[OLMHPY]HS\LZVMLU]PYVUTLU[HSVISPNH[PVUZHZZ\TLKPU[OL MYVTYLZVS\[PVUVM[OLHWWLHSTH`YLZ\S[PUHKKP[PVUHSHKQ\Z[TLU[Z(KKP[PVUHSS` HJX\PZP[PVUVM7OLSWZ+VKNL^OPJO^LYLKL[LYTPULKVUHKPZJV\U[LKJHZOÅV^IHZPZ 7;-YLLWVY[0UKVULZPH\WKH[LKP[ZJVZ[LZ[PTH[LZWYPTHYPS`MVYJOHUNLZ[VP[ZWSHUZMVY [OL[YLH[TLU[VMHJPKPJ^H[LYYLZ\S[PUNPUHUPUJYLHZLVM TPSSPVU 5HIHUWR1RWHIRUIXUWKHUGLVFXVVLRQRIHQYLURQPHQWDOREOLJDWLRQV 5HIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ RIUHFODPDWLRQDQGFORVXUHFRVWV Deferred Taxes.,QSUHSDULQJRXUDQQXDOFRQVROLGDWHGÀQDQFLDO Environmental Obligations. 2XUPLQLQJH[SORUDWLRQSURGXFWLRQ VWDWHPHQWVZHHVWLPDWHWKHDFWXDODPRXQWRIWD[HVFXUUHQWO\SD\DEOH DQGKLVWRULFDORSHUDWLQJDFWLYLWLHVDUHVXEMHFWWRVWULQJHQWODZV RUUHFHLYDEOHDVZHOODVGHIHUUHGWD[DVVHWVDQGOLDELOLWLHVDWWULEXWDEOH DQGUHJXODWLRQVJRYHUQLQJWKHSURWHFWLRQRIWKHHQYLURQPHQWDQG WRWHPSRUDU\GLIIHUHQFHVEHWZHHQWKHÀQDQFLDOVWDWHPHQWFDUU\LQJ FRPSOLDQFHZLWKWKRVHODZVUHTXLUHVVLJQLÀFDQWH[SHQGLWXUHV DPRXQWVRIH[LVWLQJDVVHWVDQGOLDELOLWLHVDQGWKHLUUHVSHFWLYHWD[ (QYLURQPHQWDOH[SHQGLWXUHVIRUFORVHGIDFLOLWLHVDQGFORVHGSRUWLRQV EDVHV'HIHUUHGLQFRPHWD[DVVHWVDQGOLDELOLWLHVDUHPHDVXUHGXVLQJ RIRSHUDWLQJIDFLOLWLHVDUHH[SHQVHGRUFDSLWDOL]HGGHSHQGLQJXSRQ HQDFWHGWD[UDWHVH[SHFWHGWRDSSO\WRWD[DEOHLQFRPHLQWKH\HDUVLQ WKHLUIXWXUHHFRQRPLFEHQHÀ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ÀWVZLOOQRWEH DFFRXQWLQJHVWLPDWHEHFDXVHFKDQJHVWRHQYLURQPHQWDOODZVDQG UHDOL]HG,QGHWHUPLQLQJWKHDPRXQWRIWKHYDOXDWLRQDOORZDQFHZH UHJXODWLRQVDQGRUFLUFXPVWDQFHVDIIHFWLQJRXURSHUDWLRQVFRXOG FRQVLGHUHVWLPDWHGIXWXUHWD[DEOHLQFRPHDVZHOODVIHDVLEOHWD[ UHVXOWLQVLJQLÀFDQWFKDQJHVWRRXUHVWLPDWHVZKLFKFRXOGKDYHD SODQQLQJVWUDWHJLHVLQHDFKMXULVGLFWLRQ,IZHGHWHUPLQHWKDWZHZLOO VLJQLÀFDQWLPSDFWRQRXUUHVXOWVRIRSHUDWLRQV:HUHYLHZFKDQJHVLQ QRWUHDOL]HDOORUDSRUWLRQRIRXUGHIHUUHGWD[DVVHWVZHZLOOLQFUHDVH IDFWVDQGFLUFXPVWDQFHVDVVRFLDWHGZLWKWKHHQYLURQPHQWDO RXUYDOXDWLRQDOORZDQFH&RQYHUVHO\LIZHGHWHUPLQHWKDWZHZLOO REOLJDWLRQVRQDTXDUWHUO\EDVLV-XGJPHQWVDQGHVWLPDWHVDUHEDVHG XOWLPDWHO\EHDEOHWRUHDOL]HDOORUDSRUWLRQRIWKHUHODWHGEHQHÀ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ÀWVWKDWLIUHFRJQL]HGZRXOGEHFUHGLWHGGLUHFWO\WR $W'HFHPEHUHQYLURQPHQWDOREOLJDWLRQVUHFRUGHGLQ FRQWULEXWHGFDSLWDO$W'HFHPEHURXUYDOXDWLRQDOORZDQFHV RXUFRQVROLGDWHGEDODQFHVKHHWVWRWDOHGDSSUR[LPDWHO\ELOOLRQ WRWDOHGELOOLRQDQGFRYHUHGDOORIRXU86IRUHLJQWD[FUHGLW ZKLFKUHÁHFWREOLJDWLRQVIRUHQYLURQPHQWDOOLDELOLWLHVDWWULEXWHGWR FDUU\IRUZDUGV86PLQLPXPWD[FUHGLWFDUU\IRUZDUGVIRUHLJQQHW WKH&RPSUHKHQVLYH(QYLURQPHQWDO5HVSRQVH&RPSHQVDWLRQDQG RSHUDWLQJORVVFDUU\IRUZDUGVDQG86VWDWHQHWRSHUDWLQJORVV

22 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

FDUU\IRUZDUGVDQGDOVRFRYHUHGDSRUWLRQRIRXUQHW86GHIHUUHGWD[ ZDVSULPDULO\WKHUHVXOWRIDQLQFUHDVHWRWKHIRUHLJQWD[FUHGLW DVVHWV7KHPLOOLRQLQFUHDVHLQWKHYDOXDWLRQDOORZDQFHGXULQJ FDUU\IRUZDUGV5HIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ

CONSOLIDATED RESULTS @LHYZ,UKLK+LJLTILY   2009    0UTPSSPVUZL_JLW[WLYZOHYLHTV\U[Z

Financial Data  9L]LU\LZH    $15,040I   I   IJ  6WLYH[PUNPUJVTLSVZZ      6,503I IKL  IJL  0UJVTLSVZZMYVT JVU[PU\PUNVWLYH[PVUZ     3,534     5L[PUJVTL SVZZ      3,534     5L[PUJVTL H[[YPI\[HISL[VUVUJVU[YVSSPUNPU[LYLZ[Z     785      5L[PUJVTL SVZZH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZM    2,527NO KLO   JLO  +PS\[LKUL[PUJVTLSVZZWLYZOHYLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZ!   *VU[PU\PUNVWLYH[PVUZ    $ 5.86        +PZJVU[PU\LKVWLYH[PVUZ      —  ·     +PS\[LKUL[PUJVTLSVZZ     $ 5.86NO   KLO  JLO  +PS\[LK^LPNO[LKH]LYHNLJVTTVUZOHYLZV\[Z[HUKPUNP     469       Mining Operating Data Copper YLJV]LYHISL   7YVK\J[PVUTPSSPVUZVMWV\UKZ      4,103       :HSLZL_JS\KPUNW\YJOHZLZTPSSPVUZVMWV\UKZ      4,111       (]LYHNLYLHSPaLKWYPJLWLYWV\UK     $ 2.60      J   :P[LWYVK\J[PVUHUKKLSP]LY`JVZ[ZWLYWV\UK Q    $ 1.12      

H 0UJS\KLZ[OLPTWHJ[VMHKQ\Z[TLU[Z[VWYV]PZPVUHSS`WYPJLKJVUJLU[YH[LHUKJH[OVKLZHSLZYLJVNUPaLKPUWYPVYWLYPVKZ9LMLY[V¸9L]LU\LZ¹HUK¸+PZJSVZ\YLZ(IV\[4HYRL[9PZRZ¶ *VTTVKP[`7YPJL9PZR¹MVYM\Y[OLYKPZJ\ZZPVU I -VSSV^PUN PZHZ\TTHY`VM YL]LU\LZI`VWLYH[PUNKP]PZPVUPUTPSSPVUZ! @LHYZ,UKLK+LJLTILY   2009    5VY[O(TLYPJHJVWWLYTPULZ     $ 3,235      :V\[O(TLYPJHJVWWLYTPULZ      3,839      0UKVULZPHTPUPUN     5,908      (MYPJHTPUPUN      389  ·  · 4VS`IKLU\T      847      9VK 9LÄUPUN     3,356     ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN     1,892     *VYWVYH[L V[OLY LSPTPUH[PVUZ     (4,426)     ;V[HS-*?YL]LU\LZ     $15,040     

 -VSSV^PUN PZHZ\TTHY`VM VWLYH[PUNPUJVTLSVZZI`VWLYH[PUNKP]PZPVUPUTPSSPVUZ! @LHYZ,UKLK+LJLTILY   2009    5VY[O(TLYPJHJVWWLYTPULZ     $ 1,020    :V\[O(TLYPJHJVWWLYTPULZ     2,001      0UKVULZPHTPUPUN     4,034     (MYPJHTPUPUN      8     4VS`IKLU\T      126     9VK 9LÄUPUN      14     ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN      (56)     *VYWVYH[L V[OLY LSPTPUH[PVUZ     (644)       ;V[HS-*?VWLYH[PUNPUJVTLSVZZ     $ 6,503   

 9LMLY[V5V[LMVYM\Y[OLYKPZJ\ZZPVUVMV\YVWLYH[PUNKP]PZPVUZHUKI\ZPULZZZLNTLU[Z

  -9,,769;4J4V9HU*677,9 .63+05* 23    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

c. Includes charges to revenues for mark-to-market accounting adjustments on the 2007 2009 2008 copper price protection program totaling $175 million ($106 million to net income attributable to FCX common stockholders or $0.27 per share) and a reduction in 2007 Consolidated revenues – prior year $17,796 $16,939 average realized copper prices of $0.05 per pound. Higher (lower) sales volumes from mining operations: d. Includes long-lived asset impairments and other charges totaling $11.0 billion ($6.7 121 billion to net loss attributable to FCX common stockholders or $17.52 per share), Copper 2,367 goodwill impairment charges totaling $6.0 billion ($6.0 billion to net loss attributable to Gold 1,141 (671) FCX common stockholders or $15.69 per share), and charges for LCM inventory Molybdenum (395) 505 adjustments totaling $782 million ($479 million to net loss attributable to FCX common stockholders or $1.26 per share). Refer to Notes 2 and 6 and “Critical Accounting Higher (lower) price realizations from mining operations: Estimates – Impairment of Assets” for further discussion. Copper (288) (2,631) e. Includes the impacts of purchase accounting fair value adjustments associated with the Gold 349 235 acquisition of Phelps Dodge, which were primarily because of increased carrying values (1,056) of acquired property, plant and equipment and metal inventories, including mill and Molybdenum 266 leach stockpiles, and also includes amounts for non-operating income and expense Lower purchased copper and molybdenum (1,414) (5) mostly related to accretion of the fair values of assumed environmental obligations (Lower) higher adjustments, primarily for prior year KL[LYTPULK VU H KPZJV\U[LK JHZO ÅV^ IHZPZ ;OLZL PTWHJ[Z [V[HSLK  IPSSPVU (239) including $1.0 billion to operating loss and $93 million for non-operating income and provisionally priced sales 309 expenses, ($679 million to net loss attributable to FCX common stockholders or $1.78 Lower Atlantic Copper revenues (449) (47) per share) in 2008 and $1.3 billion to operating income ($793 million to net income Impact of the 2007 copper price protection program — 175 attributable to FCX common stockholders or $2.00 per share) in 2007. Refer to Note 20 (526) for a summary of the impacts of purchase accounting fair value adjustments on our Other, including intercompany eliminations 354 business segments for the years ended December 31, 2008 and 2007. Consolidated revenues – current year $15,040 $17,796 f. After noncontrolling interests and preferred dividends. g. Includes charges of $43 million ($0.09 per share) for the partial settlement of the City of  *VTWHYLK ^P[O  Blackwell lawsuit (see Note 14), and also includes a favorable adjustment to income tax expense totaling $43 million ($0.09 per share), resulting from the completion of a review Consolidated sales volumes totaled 4.1 billion pounds of copper, 2.6 of U.S. deferred income tax accounts. h. Includes net losses on early extinguishment and conversions of debt totaling $43 million million ounces of gold and 58 million pounds of molybdenum in 2009, ($0.09 per share) in 2009 associated with the redemption of our $340 million of 67/8% Senior Notes and open-market purchases of our 8.25% Senior Notes, our 8.375% compared with 4.1 billion pounds of copper, 1.3 million ounces of gold Senior Notes and our 8¾% Senior Notes, $5 million ($0.01 per share) in 2008 and 71 million pounds of molybdenum in 2008. Higher copper sales associated with an open-market purchase of our 9½% Senior Notes and $132 million ($0.33 per share) in 2007 primarily related to premiums paid and the accelerated volumes in 2009, when compared with 2008 (45 million pounds), YLJVNUP[PVU VM KLMLYYLK ÄUHUJPUN JVZ[Z HZZVJPH[LK ^P[O LHYS` YLWH`TLU[Z VM KLI[ 9LMLY to Note 10 for further discussion. primarily resulted from mining in a higher grade section of the P (Z HWWSPJHISL YLÅLJ[Z HZZ\TLK JVU]LYZPVU VM V\Y ñ *VU]LY[PISL 7LYWL[\HS 7YLMLYYLK Stock (which converted into 17.9 million shares of FCX common stock in September Grasberg open pit and the contribution of 2009 sales volumes from 2009) and 6¾% Mandatory Convertible Preferred Stock (refer to Note 12). In addition, the Tenke Fungurume mine, partly offset by lower sales volumes as a the 2009 period includes the effects of the 26.8 million shares of common stock we sold in February 2009. Common shares outstanding on December 31, 2009, totaled 430 million. result of production curtailments at the North America copper mines Q 9LÅLJ[Z WLY WV\UK ^LPNO[LK H]LYHNL WYVK\J[PVU HUK KLSP]LY` JVZ[Z HUK \UP[ UL[ JHZO costs (net of by-product credits) for all copper mines, excluding net noncash and and lower ore grades at Candelaria. Mining in a higher grade section nonrecurring costs and Africa mining. For reconciliations of the per pound costs by of the Grasberg open pit also resulted in substantially higher gold operating division to production and delivery costs applicable to sales reported in our JVUZVSPKH[LKÄUHUJPHS Z[H[LTLU[Z YLMLY [V ¸6WLYH[PVUZ ¶

24 FREEPORT- McMoRan COPPER & GOLD INC. 2009 Annual Report MANAGEMENT’S DISCUSSION AND ANALYSIS

SULPDULO\RQTXRWHG/0(SULFHV UHIHUWR´'LVFORVXUHV$ERXW0DUNHW Production and Delivery Costs 5LVNV²&RPPRGLW\3ULFH5LVNµIRUIXUWKHUGLVFXVVLRQ $GMXVWPHQWVWR  *VTWHYLK^P[O WKH'HFHPEHUSURYLVLRQDOO\SULFHGFRSSHUVDOHVUHVXOWHGLQ &RQVROLGDWHGSURGXFWLRQDQGGHOLYHU\FRVWVWRWDOHGELOOLRQLQ DQHWLQFUHDVHWRFRQVROLGDWHGUHYHQXHVRIPLOOLRQ PLOOLRQ FRPSDUHGZLWKELOOLRQLQ/RZHUSURGXFWLRQDQG WRQHWLQFRPHDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHU GHOLYHU\FRVWVIRUSULPDULO\UHÁHFWWKHHIIHFWVRIORZHURSHUDWLQJ VKDUH LQFRPSDUHGZLWKDQLQFUHDVHRIPLOOLRQ  UDWHVDWRXU1RUWK$PHULFDFRSSHUPLQHVORZHUFRPPRGLW\EDVHG PLOOLRQWRQHWORVVDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRU LQSXWFRVWVDQGORZHUSXUFKDVHVRIFRSSHU SHUVKDUH LQ 2XUFRSSHUPLQLQJRSHUDWLRQVUHTXLUHVLJQLÀFDQWHQHUJ\SULQFLSDOO\ HOHFWULFLW\GLHVHOFRDODQGQDWXUDOJDV&RPPRGLW\EDVHGLQSXWFRVWV  *VTWHYLK^P[O EHJDQGHFOLQLQJLQODWHDQGZHUHDOL]HGWKHEHQHÀWVRIWKHVH &RQVROLGDWHGVDOHVYROXPHVLQWRWDOHGELOOLRQSRXQGVRI GHFOLQHVLQ([FOXGLQJ$IULFDPLQLQJHQHUJ\FRVWVDSSUR[LPDWHG FRSSHUPLOOLRQRXQFHVRIJROGDQGPLOOLRQSRXQGVRI SHUFHQWRIRXUFRQVROLGDWHGFRSSHUSURGXFWLRQFRVWVLQ PRO\EGHQXPFRPSDUHGZLWKELOOLRQSRXQGVRI FRSSHUPLOOLRQ FRPSDUHGZLWKDSSUR[LPDWHO\SHUFHQWLQDQGLQFOXGHG RXQFHVRIJROGDQGPLOOLRQSRXQGVRIPRO\EGHQXPLQ+LJKHU SXUFKDVHVRIDSSUR[LPDWHO\PLOOLRQJDOORQVRIGLHVHOIXHO FRSSHUDQGPRO\EGHQXPVDOHVYROXPHVLQUHÁHFWHGDIXOOWZHOYH JLJDZDWWKRXUVRIHOHFWULFLW\DWRXU1RUWKDQG6RXWK$PHULFDPLQHV PRQWKVRIVDOHVDWRXU1RUWKDQG6RXWK$PHULFDFRSSHUPLQHVDQG ZHJHQHUDWHDOORIRXUSRZHUDWRXU,QGRQHVLDPLQLQJRSHUDWLRQ  0RO\EGHQXPRSHUDWLRQV FRPSDUHGZLWKZKLFKLQFOXGHGVDOHV WKRXVDQGPHWULFWRQVRIFRDOIRURXUFRDOSRZHUSODQWLQ,QGRQHVLD IURPWKHVHRSHUDWLRQVEHJLQQLQJ0DUFK+LJKHUFRSSHU DQGPLOOLRQ00%78 PLOOLRQ%ULWLVKWKHUPDOXQLWV RIQDWXUDOJDVDW VDOHVYROXPHVLQDOVRUHÁ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ÀUVWQLQHPRQWKVRIZKLFK $IULFDPLQLQJDYHUDJHGSHUSRXQGRIFRSSHULQ UHVXOWHGLQORZHUJUDGHVDQGUHFRYHU\UDWHV5HIHUWR´2SHUDWLRQVµ IRU FRPSDUHGZLWKSHUSRXQGRIFRSSHULQ/RZHUVLWH IXUWKHUGLVFXVVLRQRIVDOHVYROXPHVDWRXURSHUDWLQJGLYLVLRQV SURGXFWLRQDQGGHOLYHU\FRVWVLQUHÁHFWHGKLJKHUFRSSHURUH 5HDOL]HGFRSSHUSULFHVGHFUHDVHGLQWRDQDYHUDJH RI JUDGHVDW*UDVEHUJUHGXFHGRSHUDWLQJUDWHVDWRXU1RUWK$PHULFD SHUSRXQGFRPSDUHGZLWKSHUSRXQG H[FOXGLQJWKHLPSDFW FRSSHUPLQHVWRVXVSHQGSURGXFWLRQRIKLJKFRVWLQFUHPHQWDO IURPWKHFRSSHUSULFHSURWHFWLRQSURJUDP LQ5HDOL]HG YROXPHVDFKLHYHPHQWRIFRVWVDYLQJVLQLWLDWLYHVDQGRSHUDWLQJ JROGDQGPRO\EGHQXPSULFHVLQFUHDVHGLQWRDQDYHUDJHRI HIÀFLHQFLHVDQGORZHUHQHUJ\DQGRWKHUFRPPRGLW\EDVHGLQSXW SHURXQFHIRUJROGDQGSHUSRXQGIRUPRO\EGHQXP FRVWV5HIHUWR´2SHUDWLRQV²8QLW1HW&DVK&RVWVµIRUIXUWKHU FRPSDUHGZLWKSHURXQFHIRUJROGDQGSHUSRXQGIRU GLVFXVVLRQRIXQLWQHWFDVKFRVWVDVVRFLDWHGZLWKRXURSHUDWLQJ PRO\EGHQXPLQ GLYLVLRQVDQGWR´3URGXFW5HYHQXHVDQG3URGXFWLRQ&RVWVµIRU $GMXVWPHQWVWRWKH'HFHPEHUSURYLVLRQDOO\SULFHGFRSSHU UHFRQFLOLDWLRQVRI SHUSRXQGFRVWVE\RSHUDWLQJGLYLVLRQWRSURGXFWLRQ VDOHVLQFUHDVHGFRQVROLGDWHGUHYHQXHVE\PLOOLRQ PLOOLRQ DQGGHOLYHU\FRVWVDSSOLFDEOHWRVDOHVUHSRUWHGLQRXUFRQVROLGDWHG WRQHWORVVDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHU À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ÁXFWXDWLRQV$OVRLQFRQQHFWLRQZLWKWKH3KHOSV'RGJH GHOLYHU\FRVWVIRUUHÁ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

  -9,,769;4J4V9HU*677,9 .63+05* 25    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

Depreciation, Depletion and Amortization ORZHULQFHQWLYHFRPSHQVDWLRQFRVWVLQEHFDXVHRIZHDNHU  *VTWHYLK^P[O ÀQDQFLDOUHVXOWV &RQVROLGDWHGGHSUHFLDWLRQGHSOHWLRQDQGDPRUWL]DWLRQH[SHQVH Exploration and Research Expenses WRWDOHGELOOLRQLQFRPSDUHGZLWKELOOLRQLQ7KH ([SORUDWLRQDFWLYLWLHVDUHEHLQJFRQGXFWHGQHDURXUH[LVWLQJPLQHV GHFUHDVHLQGHSUHFLDWLRQGHSOHWLRQDQGDPRUWL]DWLRQH[SHQVH ZLWKDIRFXVRQRSSRUWXQLWLHVWRH[SDQGUHVHUYHVWKDWZLOOVXSSRUW UHÁHFWHGWKHLPSDFWRIORQJOLYHGDVVHWLPSDLUPHQWVUHFRJQL]HGDW DGGLWLRQDOIXWXUHSURGXFWLRQFDSDFLW\LQWKHODUJHPLQHUDOGLVWULFWV 'HFHPEHU UHIHUWR´&ULWLFDO$FFRXQWLQJ(VWLPDWHV² ZKHUHZHFXUUHQWO\RSHUDWH6LJQLÀFDQWO\H[SDQGHGGULOOLQJDFWLYLWLHV ,PSDLUPHQWRI$VVHWVµIRUIXUWKHUGLVFXVVLRQ  GXULQJDQGZHUHVXFFHVVIXOLQSURYLGLQJUHVHUYHDGGLWLRQV  *VTWHYLK^P[O DQGLQLGHQWLI\LQJSRWHQWLDODGGLWLRQDORUHDGMDFHQWWRH[LVWLQJRUH &RQVROLGDWHGGHSUHFLDWLRQGHSOHWLRQDQGDPRUWL]DWLRQH[SHQVH ERGLHV5HVXOWVLQGLFDWHRSSRUWXQLWLHVIRUIXWXUHSRWHQWLDOUHVHUYH WRWDOHGELOOLRQLQFRPSDUHGZLWKELOOLRQLQ DGGLWLRQVDW0RUHQFL6LHUULWDDQG%DJGDGLQ1RUWK$PHULFDDW&HUUR 7KHLQFUHDVHLQGHSUHFLDWLRQGHSOHWLRQDQGDPRUWL]DWLRQH[SHQVH 9HUGHLQ6RXWK$PHULFDDQGLQWKH7HQNH)XQJXUXPHGLVWULFW UHÁHFWHGKLJKHUSXUFKDVHDFFRXQWLQJLPSDFWVRIPLOOLRQ &RQVROLGDWHGH[SORUDWLRQDQGUHVHDUFKH[SHQVHVWRWDOHG SULPDULO\UHODWHGWRDIXOOWZHOYHPRQWKVLQDQGDOVRUHÁHFWHG PLOOLRQLQPLOOLRQLQDQGPLOOLRQLQ KLJKHUGHSUHFLDWLRQH[SHQVHXQGHUWKHXQLWRISURGXFWLRQPHWKRG 7KURXJKRXWPRVWRIH[SHQGLWXUHVSULPDULO\UHÁHFWHGLQFUHDVHG UHVXOWLQJIURPDIXOO\HDURISURGXFWLRQIURPRXU1RUWKDQG6RXWK H[SORUDWLRQHIIRUWVLQ1RUWK$PHULFDDQGDOVRLQ$IULFDLQFOXGLQJ $PHULFDFRSSHUPLQHVLQ WDUJHWVRXWVLGHWKHDUHDRILQLWLDOGHYHORSPHQWDW7HQNH)XQJXUXPH

LCM Inventory Adjustments +RZHYHULQUHVSRQVHWRZHDNPDUNHWFRQGLWLRQVDWWKHHQGRI ZHUHYLVHGRSHUDWLQJSODQVWRVLJQLÀFDQWO\UHGXFHH[SORUDWLRQFRVWVLQ ,QYHQWRULHVDUHUHTXLUHGWREHUHFRUGHGDWWKHORZHURIFRVWRUPDUNHW 'XULQJZHIRFXVHGRQDQDO\]LQJH[SORUDWLRQGDWDJDLQHG ,QÀUVWTXDUWHUZHUHFRJQL]HGFKDUJHVRIPLOOLRQ  WKURXJKWKHFRUHGULOOLQJSUHYLRXVO\XQGHUWDNHQLQDGGLWLRQWR PLOOLRQWRQHWLQFRPHDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRU FRQGXFWLQJQHZDFWLYLWLHV)RUH[SORUDWLRQH[SHQGLWXUHVDUH SHUVKDUH IRUORZHURIFRVWRUPDUNHW /&0 PRO\EGHQXP H[SHFWHGWRDSSUR[LPDWHPLOOLRQ([SORUDWLRQDFWLYLWLHVZLOO LQYHQWRU\DGMXVWPHQWV7KHUHZHUHQRIXUWKHU/&0LQYHQWRU\ FRQWLQXHWRIRFXVRQWKHSRWHQWLDOLQRXUH[LVWLQJPLQHUDOGLVWULFWV DGMXVWPHQWVUHFRUGHGVXEVHTXHQWWRÀUVWTXDUWHU ,QZHUHFRUGHG/&0LQYHQWRU\DGMXVWPHQWVWRWDOLQJ Long-Lived Asset Impairments and Other Charges PLOOLRQ PLOOLRQWRQHWORVVDWWULEXWDEOHWR)&;FRPPRQ 'XULQJQHWUHVWUXFWXULQJDQGRWKHUFKDUJHVWRWDOHGPLOOLRQ VWRFNKROGHUVRUSHUVKDUH ,QYHQWRULHVDFTXLUHGLQFRQQHFWLRQ PLOOLRQWRQHWLQFRPHDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUV ZLWKWKHDFTXLVLWLRQRI3KHOSV'RGJH LQFOXGLQJORQJWHUPPLOODQGOHDFK RUSHUVKDUH ZKLFKLQFOXGHGFKDUJHVRIPLOOLRQ VWRFNSLOHV ZHUHUHFRUGHGDWIDLUYDOXHXVLQJQHDUWHUPSULFHIRUHFDVWV PLOOLRQWRQHWLQFRPHRUSHUVKDUH DVVRFLDWHGZLWKWKH UHÁHFWLQJWKHWKHQFXUUHQWSULFHHQYLURQPHQWDQGPDQDJHPHQWҋ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

Selling, General and Administrative Expenses HQYLURQPHQWUHSUHVHQWHGVLJQLÀFDQWDGYHUVHFKDQJHVLQWKHEXVLQHVV  *VTWHYLK^P[O DQGWKHUHIRUHHYDOXDWHGRXUORQJOLYHGDVVHWVIRULPSDLUPHQWDVRI 'HFHPEHUZKLFKUHVXOWHGLQWKHUHFRJQLWLRQRIDVVHW &RQVROLGDWHGVHOOLQJJHQHUDODQGDGPLQLVWUDWLYHH[SHQVHVWRWDOHG LPSDLUPHQWFKDUJHVWRWDOLQJELOOLRQ ELOOLRQWRQHWORVV PLOOLRQLQFRPSDUHGZLWKPLOOLRQLQ+LJKHU DWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHUVKDUH ,Q VHOOLQJJHQHUDODQGDGPLQLVWUDWLYHH[SHQVHVSULPDULO\UHÁ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ÀWVDQGVSHFLDOUHWLUHPHQWEHQHÀWVDQG VHOOLQJJHQHUDODQGDGPLQLVWUDWLYHH[SHQVHVSULPDULO\UHÁHFWHG FXUWDLOPHQWV 5HIHUWR1RWHIRUIXUWKHUGLVFXVVLRQRIWKHVHFKDUJHV

26 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

Goodwill Impairment Gains on Sales of Assets Our annual impairment test of goodwill at December 31, 2008, Gains on sales of assets totaled $13 million ($8 million to net loss resulted in the recognition of goodwill impairment charges attributable to FCX common stockholders or $0.02 per share) in 2008 totaling $6.0 billion ($6.0 billion to net loss attributable to FCX and $85 million ($52 million to net income attributable to FCX common stockholders or $15.69 per share). Refer to Note 6 for common stockholders or $0.13 per share) in 2007 primarily further discussion. associated with sales of marketable securities.

Interest Expense, Net Other (Expense) Income, Net Consolidated interest expense (before capitalization) totaled $664 Other (expense) income, net, totaled $(53) million in 2009, $(22) million in 2009, $706 million in 2008 and $660 million in 2007. Lower million in 2008 and $157 million in 2007. The decrease in 2009, LQWHUHVWH[SHQVH LQ  FRPSDUHG ZLWK  SULPDULO\ UHÁHFWHG QHW compared with 2008, primarily related to lower interest income ($46 repayments of debt and lower interest rates on our variable-rate debt million). The decrease in 2008, compared with 2007, primarily related during 2009. Higher interest expense in 2008, compared with 2007, to lower interest income ($82 million) and higher foreign currency SULPDULO\ UHÁHFWHG WKH LPSDFWV DVVRFLDWHG ZLWK DFFUHWLRQ RI WKH IDLU exchange losses ($64 million) mostly associated with estimated values of environmental obligations (determined on a discounted Chilean tax payments. FDVKÁRZ EDVLV DVVXPHG LQ WKH DFTXLVLWLRQ RI 3KHOSV 'RGJH SDUWO\ (Provision for) Benefit from Income Taxes offset by lower interest expense associated with net repayments of Our income tax provision for 2009 resulted from taxes on international debt during 2007. Refer to “Capital Resources and Liquidity – operations ($2.3 billion) and U.S. operations ($35 million). Our effective Financing Activities” for discussion of debt repayments. tax rate is sensitive to changes in commodity prices and the mix of Capitalized interest is primarily related to our development projects income between U.S. and international operations. The difference and totaled $78 million in 2009, $122 million in 2008 and $147 million between our consolidated effective income tax rate of 40 percent in in 2007. The decrease in capitalized interest in 2009 primarily 2009 and the U.S. federal statutory rate of 35 percent primarily was UHÁHFWV WKH VXEVWDQWLDO FRPSOHWLRQ RI GHYHORSPHQW DFWLYLWLHV DW RXU attributable to the high proportion of income earned in Indonesia, which Tenke Fungurume mine. Refer to “Current Development Projects” for was taxed at an effective tax rate of 42 percent. further discussion. 2XU EHQHÀW IURP LQFRPH WD[HV LQ  UHVXOWHG IURP 86 RSHUDWLRQV Losses on Early Extinguishment of Debt ($3.4 billion), partly offset by taxes on international operations During 2009, we recorded losses on early extinguishment of debt ($604 million). The difference between our consolidated effective totaling $48 million ($43 million to net income attributable to FCX income tax rate of 21 percent in 2008 and the U.S. federal statutory common stockholders or $0.09 per share), including $14 million rate of 35 percent primarily was attributable to goodwill impairment ($13 million to net income attributable to FCX common stockholders) charges, which were non-deductible for tax purposes, and the associated with the redemption of our $340 million of 6 7/8% Senior recognition of a valuation allowance against U.S. federal alternative Notes and $34 million ($30 million to net income attributable to FCX PLQLPXPWD[ FUHGLWV SDUWO\ RIIVHW E\ EHQHÀWV IRU SHUFHQWDJH GHSOHWLRQ common stockholders) for open-market purchases of our 8.25% and U.S. state income taxes. Senior Notes, 8.375% Senior Notes and 8¾% Senior Notes. A summary of the approximate amounts in the calculation of our During 2008, we recorded net losses on early extinguishment of FRQVROLGDWHG SURYLVLRQ IRU EHQHÀW IURP LQFRPH WD[HV IRU  DQG debt totaling $6 million ($5 million to net loss attributable to FCX 2008 follows (in millions, except percentages): common stockholders or $0.01 per share) associated with an open- market purchase of $33 million of our 9½% Senior Notes. During 2007, we recorded net losses on early extinguishment of debt totaling $173 million ($132 million to net income attributable to FCX common stockholders or $0.33 per share) primarily related to WKH DFFHOHUDWHG UHFRJQLWLRQ RI GHIHUUHG ÀQDQFLQJ FRVWV DVVRFLDWHG with early repayment of amounts under the $11.5 billion senior credit IDFLOLW\LQFOXGLQJ WKH UHÀQDQFLQJ RI WKH 7UDQFKH % WHUP ORDQ $OVR included was $17 million ($10 million to net income attributable to FCX common stockholders or $0.02 per share) related to premiums SDLG DQG WKH DFFHOHUDWHG UHFRJQLWLRQ RI GHIHUUHG ÀQDQFLQJ FRVWV associated with the May 2007 redemption of our 10 1/8% Senior Notes. Refer to Note 10 for further discussion of these transactions.

FREEPORT- McMoRan COPPER & GOLD INC. 27 2009 Annual Report MANAGEMENT’S DISCUSSION AND ANALYSIS

Year Ended December 31, 2009 @LHY,UKLK+LJLTILY    0UJVTL ;H_   0UJVTL ;H_  0UJVTL ,MMLJ[P]L 7YV]PZPVU 0UJVTL ,MMLJ[P]L 7YV]PZPVU  3VZZH ;H_9H[L )LULÄ[ 3VZZH ;H_9H[L )LULÄ[ <:   $ 117 70% $ (82)          :V\[O(TLYPJH 2,010 32% (650)        0UKVULZPH 4,000 42% (1,697)        (MYPJH  (60) 25% 15         (ZZL[PTWHPYTLU[JOHYNLZ — N/A —       .VVK^PSSPTWHPYTLU[JOHYNLZ — N/A —     5(  · 3*4PU]LU[VY`HKQ\Z[TLU[Z (19) 20% 4         ,SPTPUH[PVUZHUKV[OLY (232) N/A 60    5(    (KQ\Z[TLU[Z  N/A N/A  43I  5(  5(   J *VUZVSPKH[LK-*? $ 5,816 40% $ (2,307)       

H 9LWYLZLU[ZPUJVTLSVZZMYVTJVU[PU\PUNVWLYH[PVUZI`NLVNYHWOPJSVJH[PVUILMVYLPUJVTL[H_LZHUKLX\P[`PUHMÄSPH[LKJVTWHUPLZ»UL[LHYUPUNZ I 0UJS\KLZHMH]VYHISLHKQ\Z[TLU[[V[HSPUN TPSSPVUYLZ\S[PUNMYVTJVTWSL[PVUVMHYL]PL^VM<:KLMLYYLKPUJVTL[H_HJJV\U[Z J 9LWYLZLU[ZHUHKQ\Z[TLU[[VLZ[HISPZOH]HS\H[PVUHSSV^HUJLHNHPUZ[<:MLKLYHSHS[LYUH[P]LTPUPT\T[H_JYLKP[Z

2XUHVWLPDWHGFRQVROLGDWHGHIIHFWLYHWD[UDWHIRUZLOOYDU\ZLWK 5HIHUWR1RWHIRUIXUWKHUGLVFXVVLRQRILQFRPHWD[HV FRPPRGLW\SULFHFKDQJHVDQGWKHPL[RILQFRPHIURPLQWHUQDWLRQDO OPERATIONS DQG86RSHUDWLRQV$VVXPLQJDYHUDJHSULFHVRISHUSRXQGIRU -VYJVTWHYH[P]LW\YWVZLZJLY[HPUVM[OLVWLYH[PUNKH[HPUJS\KLKPU FRSSHUSHURXQFHIRUJROGSHUSRXQGIRUPRO\EGHQXP [OPZZLJ[PVUMVYV\Y5VY[O(TLYPJHJVWWLYTPULZ:V\[O(TLYPJH DQGFXUUHQWVDOHVHVWLPDWHVZHHVWLPDWHRXUDQQXDOFRQVROLGDWHG JVWWLYTPULZHUK4VS`IKLU\TVWLYH[PVUZMVY[OL`LHY HIIHFWLYHWD[UDWHZLOODSSUR[LPDWHSHUFHQWKRZHYHUWKHUDWH JVTIPULZV\YOPZ[VYPJHSKH[HILNPUUPUN4HYJO^P[O7OLSWZ ZRXOGUDQJHIURPDSSUR[LPDWHO\SHUFHQWDWSHUSRXQGIRU +VKNLWYLHJX\PZP[PVUKH[H[OYV\NO4HYJO (Z[OL WYLHJX\PZP[PVUKH[HYLWYLZLU[Z[OLYLZ\S[ZVM[OLZLVWLYH[PVUZ FRSSHUWRDSSUR[LPDWHO\SHUFHQWDWSHUSRXQGIRUFRSSHU \UKLY7OLSWZ+VKNLTHUHNLTLU[Z\JOJVTIPULKKH[HPZUV[ 2XULQFRPHWD[SURYLVLRQIURPFRQWLQXLQJRSHUDWLRQVLQ ULJLZZHYPS`PUKPJH[P]LVM^OH[WHZ[YLZ\S[Z^V\SKOH]LILLU\UKLY UHVXOWHGIURPWD[HVRQLQWHUQDWLRQDORSHUDWLRQV ELOOLRQ DQG86 -*?THUHNLTLU[VYVMM\[\YLVWLYH[PUNYLZ\S[Z RSHUDWLRQV PLOOLRQ 7KHGLIIHUHQFHEHWZHHQRXUFRQVROLGDWHG HIIHFWLYHLQFRPHWD[UDWHRISHUFHQWIRUDQGWKH86IHGHUDO North America Copper Mines VWDWXWRU\UDWHRISHUFHQWSULPDULO\ZDVDWWULEXWDEOHWR L ZLWKKROGLQJ :HFXUUHQWO\KDYHVL[RSHUDWLQJFRSSHUPLQHVLQ1RUWK$PHULFD² WD[HVUHODWHGWRHDUQLQJVIURP,QGRQHVLDDQG6RXWK$PHULFDPLQLQJ 0RUHQFL 6LHUULWD%DJGDG6DIIRUGDQG0LDPLLQ$UL]RQDDQG7\URQH RSHUDWLRQV LL D86IRUHLJQWD[FUHGLWOLPLWDWLRQDQG LLL DQ LQ1HZ0H[LFR$OORIWKHVHPLQLQJRSHUDWLRQVDUH ZKROO\RZQHG DGMXVWPHQWDVVRFLDWHGZLWKWKHUHYHUVDORIWKH3KHOSV'RGJHLQGHÀQLWH H[FHSWIRU0RUHQFLDQXQLQFRUSRUDWHGMRLQWYHQWXUHLQZKLFKZHRZQ UHLQYHVWPHQWDVVHUWLRQRQFHUWDLQHDUQLQJVLQ6RXWK$PHULFDSDUWO\ DQSHUFHQWXQGLYLGHGLQWHUHVW RIIVHWE\D86EHQHÀWIRUSHUFHQWDJHGHSOHWLRQDQGDQLQWHUQDWLRQDO 7KH1RUWK$PHULFDFRSSHUPLQHVLQFOXGHRSHQSLWPLQLQJVXOÀGH WD[UDWHGLIIHUHQWLDO RUHFRQFHQWUDWLQJOHDFKLQJDQGVROXWLRQH[WUDFWLRQHOHFWURZLQQLQJ $ VXPPDU\RIWKHDSSUR[LPDWHDPRXQWVLQWKHFDOFXODWLRQRIRXU 6;(: RSHUDWLRQV,QDGGLWLRQWRFRSSHUWKH0RUHQFL6LHUULWDDQG FRQVROLGDWHGSURYLVLRQIRULQFRPHWD[HVIRUIROORZV LQPLOOLRQV %DJGDGPLQHVSURGXFHPRO\EGHQXPDVDE\SURGXFW$ PDMRULW\RI H[FHSWSHUFHQWDJHV  WKHFRSSHUSURGXFHGDWRXU1RUWK$PHULFDFRSSHUPLQHVLVFDVWLQWR    @LHY,UKLK+LJLTILY FRSSHUURGE\RXU5RG 5HÀQLQJRSHUDWLRQV5RGDQGZLUHVDOHVWR    0UJVTL ,MMLJ[P]L 0UJVTL ;H_    3VZZH ;H_9H[L 7YV]PZPVU RXWVLGHZLUHDQGFDEOHPDQXIDFWXUHUVUHSUHVHQWHGDSSUR[LPDWHO\

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ÁHFWFXUWDLOHGSURGXFWLRQUDWHVFDSLWDOFRVW H 9LWYLZLU[ZPUJVTLMYVTJVU[PU\PUNVWLYH[PVUZI`NLVNYHWOPJSVJH[PVUILMVYLPUJVTL [H_LZHUKLX\P[`PUHMÄSPH[LKJVTWHUPLZ»UL[LHYUPUNZ UHGXFWLRQVDQGWKHLQFRUSRUDWLRQRIUHGXFHGLQSXWFRVWV UHIHUWR I 9LWYLZLU[ZHUHKQ\Z[TLU[MVYHVUL[PTLJOHYNLHZZVJPH[LK^P[O[OLYL]LYZHSVM[OL 1RWHIRUIXUWKHUGLVFXVVLRQ ,Q2FWREHUZHDQQRXQFHG 7OLSWZ+VKNLPUKLÄUP[LYLPU]LZ[TLU[HZZLY[PVUVUJLY[HPULHYUPUNZPU:V\[O(TLYPJH;OPZ HKQ\Z[TLU[^HZM\SS`VMMZL[I`HYLK\J[PVUPUUVUJVU[YVSSPUNPU[LYLZ[Z»ZOHYLVMUL[PUJVTL

28 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

LQLWLDWLYHVWRUHVXPHOLPLWHGPLQLQJ DFWLYLWLHVDWWKH0LDPLPLQHLQ  *VTWHYLK^P[O  $UL]RQD7KLVSURMHFWZKLFKZDVGHIHUUHGLQODWHZLOOLPSURYH &RSSHUVDOHVYROXPHVIURPRXU1RUWK$PHULFDFRSSHUPLQHV HIÀFLHQFLHVRIRQJRLQJUHFODPDWLRQSURMHFWVDVVRFLDWHGZLWKKLVWRULFDO GHFUHDVHGWRELOOLRQSRXQGVLQFRPSDUHGZLWKELOOLRQ PLQLQJRSHUDWLRQVDWWKHVLWH,QDGGLWLRQZHDUHLQLWLDWLQJDFWLYLWLHVWR SRXQGVLQ&HUWDLQRIRXU1RUWK$PHULFDFRSSHUPLQHVFRQWLQXH UHVWDUWWKH0RUHQFLPLOOZKLFKZDVWHPSRUDULO\LGOHGLQ)HEUXDU\ WRRSHUDWHDWUHGXFHGUDWHVLQUHVSRQVHWRUHGXFHGGHPDQGIRU WRSURFHVVDYDLODEOHVXOÀGHPDWHULDOFXUUHQWO\EHLQJPLQHG FRSSHULQWKH:HVWHUQZRUOG&RSSHUVDOHVYROXPHVIURPRXU1RUWK 5HIHUWR´&XUUHQW'HYHORSPHQW3URMHFWVµIRUIXUWKHUGLVFXVVLRQRI $PHULFDFRSSHUPLQHVDUHH[SHFWHGWRDSSUR[LPDWHELOOLRQ WKHVHGHYHORSPHQWSURMHFWV2SHUDWLQJSODQVDWRXU1RUWK$PHULFD SRXQGVLQZKLFKUHÁHFWVWKHLPSDFWVRIUHGXFHGPLQLQJ FRSSHUPLQHVFRQWLQXHWREHUHYLHZHGDQGDGGLWLRQDODGMXVWPHQWVZLOO DFWLYLWLHVRQOHDFKLQJRSHUDWLRQV%\SURGXFWPRO\EGHQXP EHPDGHLQUHVSRQVHWRFKDQJHVLQPDUNHWFRQGLWLRQV SURGXFWLRQIURPRXU1RUWK$PHULFDFRSSHUPLQHVLVH[SHFWHGWR ,Q'HFHPEHUZHSXUFKDVHGSURSHUW\DGMDFHQWWRRXU6LHUULWD DSSUR[LPDWHPLOOLRQSRXQGVLQ RSHUDWLRQVZKLFKLQFOXGHVWKH7ZLQ%XWWHVFRSSHUPLQHWKDWFHDVHG  *VTWHYLK^P[O RSHUDWLRQVLQ UHIHUWR´&XUUHQW'HYHORSPHQW3URMHFWVµIRU &RSSHUVDOHVIURPWKH1RUWK$PHULFDFRSSHUPLQHVLQFUHDVHGWR IXUWKHUGLVFXVVLRQ  ELOOLRQSRXQGVLQFRPSDUHGZLWKELOOLRQSRXQGVIRUWKH Operating Data.)ROORZLQJLVVXPPDU\RSHUDWLQJGDWDIRUWKH1RUWK FRPELQHG\HDUSULPDULO\UHÁHFWLQJDGGLWLRQDOFRSSHUSURGXFWLRQ $PHULFDFRSSHUPLQHVIRUWKH\HDUVHQGHG'HFHPEHU IURPWKH6DIIRUGPLQHZKLFKEHJDQSURGXFWLRQLQ'HFHPEHU DQG7KHRSHUDWLQJGDWDIRUFRPELQHVRXUKLVWRULFDOGDWD DQGZDVUDPSLQJXSWRGHVLJQFDSDFLW\GXULQJEHIRUHRSHUDWLQJ EHJLQQLQJ0DUFKZLWK3KHOSV'RGJHSUHDFTXLVLWLRQGDWD SODQVZHUHUHYLVHGLQIRXUWKTXDUWHUWRFXUWDLOSURGXFWLRQ WKURXJK0DUFK$VWKHSUHDFTXLVLWLRQGDWDUHSUHVHQWVWKH Unit Net Cash Costs. 8QLWQHWFDVKFRVWVSHUSRXQGRIFRSSHULVD UHVXOWVRI WKHVHRSHUDWLRQVXQGHU3KHOSV'RGJHPDQDJHPHQWVXFK PHDVXUHLQWHQGHGWRSURYLGHLQYHVWRUVZLWKLQIRUPDWLRQDERXWWKH FRPELQHGGDWDLVQRWQHFHVVDULO\LQGLFDWLYHRIZKDWSDVWUHVXOWVZRXOG FDVKJHQHUDWLQJFDSDFLW\RIRXUPLQLQJRSHUDWLRQVH[SUHVVHGRQD KDYHEHHQXQGHU)&;PDQDJHPHQWRURIIXWXUHRSHUDWLQJUHVXOWV EDVLVUHODWLQJWRWKHSULPDU\PHWDOSURGXFWIRURXUUHVSHFWLYH      H 2009 RSHUDWLRQV:HXVHWKLVPHDVXUHIRUWKHVDPHSXUSRVHDQGIRU Operating Data, Net of Joint Venture Interest PRQLWRULQJRSHUDWLQJSHUIRUPDQFHE\RXUPLQLQJRSHUDWLRQV7KLV Copper PLOOLRQVRIUHFRYHUDEOHSRXQGV LQIRUPDWLRQ GLIIHUVIURPPHDVXUHVRISHUIRUPDQFHGHWHUPLQHGLQ  3URGXFWLRQ   1,147      6DOHVH[FOXGLQJSXUFKDVHV    1,187     DFFRUGDQFHZLWK86*$$3 DQGVKRXOGQRWEHFRQVLGHUHGLQ  $YHUDJHUHDOL]HGSULFHSHUSRXQG $ 2.38    E LVRODWLRQRUDVDVXEVWLWXWHIRU PHDVXUHVRI SHUIRUPDQFHGHWHUPLQHG Molybdenum PLOOLRQVRIUHFRYHUDEOHSRXQGV LQDFFRUGDQFHZLWK86*$$37KLVPHDVXUHLVSUHVHQWHGE\RWKHU F  3URGXFWLRQ    25     PLQLQJFRPSDQLHVDOWKRXJKRXUPHDVXUHPD\QRWEHFRPSDUDEOHWR 100% Operating Data VLPLODUO\WLWOHGPHDVXUHVUHSRUWHGE\RWKHUFRPSDQLHV :?,>VWLYH[PVUZ  /HDFKRUHSODFHGLQVWRFNSLOHV Gross Profit per Pound of Copper and Molybdenum 589,400   PHWULFWRQVSHUGD\       7KHIROORZLQJWDEOHVVXPPDUL]HXQLWQHWFDVKFRVWVDQGJURVVSURÀW  $YHUDJHFRSSHURUHJUDGH SHUFHQW   0.29      &RSSHUSURGXFWLRQ PLOOLRQVRI SHUSRXQGDWWKH1RUWK$PHULFDFRSSHUPLQHVIRUWKH\HDUVHQGHG   UHFRYHUDEOHSRXQGV     859     'HFHPEHUDQGDQGIRUWKHSHULRG0DUFK 4PSSVWLYH[PVUZ WKURXJK'HFHPEHU5HIHUWR´3URGXFW5HYHQXHVDQG  2UHPLOOHG PHWULFWRQVSHU GD\  169,900    3URGXFWLRQ&RVWVµIRUDQH[SODQDWLRQRIWKH´E\SURGXFWµDQG  $YHUDJHRUHJUDGH SHUFHQW  ´FRSURGXFWµPHWKRGVDQGDUHFRQFLOLDWLRQRIXQLWQHW FDVKFRVWVSHU   &RSSHU    0.33       0RO\EGHQXP    0.02     SRXQGWRSURGXFWLRQDQGGHOLYHU\FRVWVDSSOLFDEOHWRVDOHVUHSRUWHGLQ  &RSSHUUHFRYHU\UDWH SHUFHQW    86.0     RXUFRQVROLGDWHGÀQDQFLDOVWDWHPHQWV  3URGXFWLRQ PLOOLRQVRIUHFRYHUDEOHSRXQGV    &RSSHU    364       0RO\EGHQXP   25    

H ;OL5VY[O(TLYPJHJVWWLYTPULZ»VWLYH[PUNKH[HMVYJVTIPULZV\YOPZ[VYPJHSKH[H ILNPUUPUN4HYJO^P[O7OLSWZ+VKNLWYLHJX\PZP[PVUKH[H[OYV\NO4HYJO  (Z[OLWYLHJX\PZP[PVUKH[HYLWYLZLU[Z[OLYLZ\S[ZVM[OLZLVWLYH[PVUZ\UKLY 7OLSWZ+VKNLTHUHNLTLU[Z\JOJVTIPULKKH[HPZUV[ULJLZZHYPS`PUKPJH[P]LVM^OH[ WHZ[YLZ\S[Z^V\SKOH]LILLU\UKLY-*?THUHNLTLU[VYVMM\[\YLVWLYH[PUNYLZ\S[Z I (TV\U[^HZ WLYWV\UKVMJVWWLYILMVYLJOHYNLZMVYTHYR[VTHYRL[HJJV\U[PUN HKQ\Z[TLU[ZVU[OLJVWWLYWYPJLWYV[LJ[PVUWYVNYHT J 9LÅLJ[ZI`WYVK\J[TVS`IKLU\TWYVK\J[PVUMYVT[OL5VY[O(TLYPJHJVWWLYTPULZ :HSLZVMI`WYVK\J[TVS`IKLU\THYLYLÅLJ[LKPU[OL4VS`IKLU\TZLNTLU[

  -9,,769;4J4V9HU*677,9 .63+05* 29    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

  2009 

 )`7YVK\J[  *V7YVK\J[4L[OVK  )`7YVK\J[  *V7YVK\J[4L[OVK &RPSDUHGZLWK 4L[OVK *VWWLY 4VS`IKLU\TH 4L[OVK *VWWLY 4VS`IKLU\TH 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^ $ 2.38 $ 2.38 $10.96      :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^  1.25 1.15 5.67        )`WYVK\J[JYLKP[ZH (0.23) — —    ·  · ;YLH[TLU[JOHYNLZ 0.09 0.09 —        · 

*VWWLYZHSLZTPSSPVUZVMYLJV]LYHISLWV\UKZ  1,185 1,185      4VS`IKLU\TZHSLZTPSSPVUZVMYLJV]LYHISLWV\UKZI     25    

H 4VS`IKLU\TI`WYVK\J[JYLKP[ZHUKYL]LU\LZYLÅLJ[]VS\TLZWYVK\JLKH[THYRL[IHZLKWYPJPUNHUKHSZVPUJS\KL[VSSPUNYL]LU\LZH[:PLYYP[H I 9LÅLJ[ZTVS`IKLU\TWYVK\JLKI`[OL5VY[O(TLYPJHJVWWLYTPULZ

8QLWQHWFDVKFRVWV QHWRIE\SURGXFWFUHGLWV IRURXU1RUWK$PHULFD SULPDULO\EHFDXVHRIKLJKHULQSXWFRVWVDQGORZHUYROXPHVSDUWO\ FRSSHUPLQHVGHFUHDVHGWRSHUSRXQGRIFRSSHULQ RIIVHWE\KLJKHUPRO\EGHQXPFUHGLWV(DFKSHUSRXQGFKDQJHLQWKH FRPSDUHGZLWKSHUSRXQGLQSULPDULO\UHÁHFWLQJDQHW DYHUDJHPRO\EGHQXPSULFHGXULQJWKH\HDUZRXOGKDYHDQDSSUR[LPDWH GHFUHDVHLQVLWHSURGXFWLRQDQGGHOLYHU\FRVWV SHUSRXQG  SHUSRXQGLPSDFWRQWKH1RUWK$PHULFDFRSSHUPLQHVҋXQLW DVVRFLDWHGZLWKFRVWUHGXFWLRQDQGHIÀFLHQF\HIIRUWVLQFOXGLQJWKH QHWFDVKFRVWV LPSDFWRIORZHURSHUDWLQJUDWHVDQGUHGXFHGLQSXWFRVWV SULQFLSDOO\ 7KHGHFUHDVHLQGHSUHFLDWLRQGHSOHWLRQDQGDPRUWL]DWLRQLQ IRUHQHUJ\ SDUWO\RIIVHWE\FKDQJHVLQLQYHQWRU\ZKLFKUHÁHFWVWKH FRPSDUHGZLWKSULPDULO\UHÁHFWHGWKHLPSDFWRIWKHORQJOLYHG LPSDFWRIKLVWRULFDOKLJKHUFRVWSURGXFWLRQRQLQYHQWRU\FDUU\LQJ DVVHWLPSDLUPHQWFKDUJHVUHFRJQL]HGLQIRXUWKTXDUWHU UHIHUWR YDOXHV7KHGHFUHDVHLQVLWHSURGXFWLRQDQGGHOLYHU\FRVWVZDVSDUWO\ 1RWHIRUIXUWKHUGLVFXVVLRQ  RIIVHWE\ORZHUPRO\EGHQXPFUHGLWV SHUSRXQG SULPDULO\ 1RQFDVK DQGQRQUHFXUULQJFRVWVFRQVLVWRILWHPVVXFKDV/&0 UHVXOWLQJIURPORZHUPRO\EGHQXPSULFHVDQGVDOHVYROXPHV LQYHQWRU\DGMXVWPHQWVDQGRWKHUXQXVXDOFKDUJHV1RQFDVKDQG 2XURSHUDWLQJ1RUWK$PHULFDFRSSHUPLQHVKDYHYDU\LQJFRVW QRQUHFXUULQJFRVWVIRULQFOXGHFKDUJHVIRU/&0LQYHQWRU\ VWUXFWXUHVEHFDXVHRIGLIIHUHQFHVLQRUHJUDGHVDQGRUHFKDUDFWHULVWLFV DGMXVWPHQWVZKLFKWRWDOHGPLOOLRQRUSHUSRXQGLQ SURFHVVLQJFRVWVE\SURGXFWVDQGRWKHUIDFWRUV'XULQJXQLWQHW WKHUHZHUHQR/&0FRSSHULQYHQWRU\DGMXVWPHQWVUHFRUGHGDWWKH FDVKFRVWVIRUWKH1RUWK$PHULFDFRSSHUPLQHVUDQJHGIURPDQHWFRVW 1RUWK$PHULFDPLQHVLQ RISHUSRXQGWRSHUSRXQGDWWKHLQGLYLGXDOPLQHVDQG 5HYHQXHDGMXVWPHQWVSULPDULO\UHÁHFWXQUHDOL]HGJDLQV ORVVHV RQ DYHUDJHGSHUSRXQG%DVHGRQFXUUHQWRSHUDWLQJSODQVDQG FRSSHUGHULYDWLYHFRQWUDFWVHQWHUHGLQWRZLWKRXU86FRSSHUURG DVVXPLQJDFKLHYHPHQWRIFXUUHQWVDOHVHVWLPDWHVDQGDYHUDJHSULFHV FXVWRPHUVZKLFKDOORZXVWRUHFHLYHPDUNHWSULFHVLQWKHPRQWKRI RISHUSRXQGRIPRO\EGHQXPIRUZHHVWLPDWHWKDWDYHUDJH VKLSPHQWZKLOHWKHFXVWRPHUSD\VWKHÀ[HGSULFHWKH\UHTXHVWHG XQLWQHWFDVKFRVWV QHWRIE\SURGXFWFUHGLWV IRURXU1RUWK$PHULFD UHIHUWR1RWHIRU IXUWKHUGLVFXVVLRQ  FRSSHUPLQHVZRXOGDSSUR[LPDWHSHUSRXQGRIFRSSHULQ 8QLWQHWFDVKFRVWVIRUDUHH[SHFWHGWREHKLJKHUFRPSDUHGZLWK

30 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

    H

 )`7YVK\J[  *V7YVK\J[4L[OVK  )`7YVK\J[  *V7YVK\J[4L[OVK &RPSDUHGZLWK 4L[OVK *VWWLY 4VS`IKLU\TI 4L[OVK *VWWLY 4VS`IKLU\TI 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^           :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^               )`WYVK\J[JYLKP[ZI    ·  ·     ·  · ;YLH[TLU[JOHYNLZ        ·      · 

*VWWLYZHSLZTPSSPVUZVMYLJV]LYHISLWV\UKZ            4VS`IKLU\TZHSLZTPSSPVUZVMYLJV]LYHISLWV\UKZJ            

H 9LÅLJ[Z[OLWLYPVKMYVT4HYJO[OYV\NO+LJLTILY I 4VS`IKLU\TI`WYVK\J[JYLKP[ZHUKYL]LU\LZYLÅLJ[]VS\TLZWYVK\JLKH[THYRL[IHZLKWYPJPUNHUKHSZVPUJS\KL[VSSPUNYL]LU\LZH[:PLYYP[H J 9LÅLJ[ZTVS`IKLU\TWYVK\JLKI`[OL5VY[O(TLYPJHJVWWLYTPULZ

8QLWQHWFDVKFRVWV QHWRIE\SURGXFWFUHGLWV IRURXU1RUWK$PHULFD 3URGXFWLRQIURPRXU6RXWK$PHULFDFRSSHUPLQHVLVVROG DVFRSSHU FRSSHUPLQHVLQFUHDVHGWRSHUSRXQGRIFRSSHULQ FRQFHQWUDWHRUFRSSHUFDWKRGHXQGHUORQJWHUPFRQWUDFWV%HJLQQLQJ FRPSDUHGZLWKSHUSRXQGRIFRSSHUIRUWKHSHULRG0DUFK LQRXU6RXWK$PHULFDFRSSHUPLQHVEHJDQ VHOOLQJDSRUWLRQRI WKURXJK'HFHPEHUSULPDULO\UHÁHFWLQJSURGXFWLRQFRVW WKHLUFRSSHUFRQFHQWUDWHDQGFDWKRGHLQYHQWRULHVWR$WODQWLF&RSSHU LQFUHDVHVDVVRFLDWHGZLWKKLJKHUPLQLQJFRVWVDQGPLOOLQJUDWHVKLJKHU DQDIÀOLDWHGVPHOWHU5HIHUWR1RWHIRUIXUWKHUGLVFXVVLRQRIRXU HQHUJ\FRVWVDQGFRVWVRIRWKHUFRQVXPDEOHVDQGKLJKHUFRVWV UHSRUWDEOHVHJPHQWLQWKH6RXWK$PHULFDFRSSHUPLQHVGLYLVLRQ DVVRFLDWHGZLWK6DIIRUGDVWKHPLQHUDPSHGXSWRIXOOSURGXFWLRQUDWHV ,QUHVSRQVHWRZHDNPDUNHWFRQGLWLRQVRSHUDWLQJSODQVDWRXU 7KHLQFUHDVHLQQRQFDVKDQGQRQUHFXUULQJFRVWVIRUSULPDULO\ 6RXWK$PHULFDFRSSHUPLQHVZHUHUHYLVHGDWWKHHQGRI UHÁHFWHGFKDUJHVIRU/&0LQYHQWRU\DGMXVWPHQWVLQWRWDOLQJ SULPDULO\WRUHÁHFWWKHLQFRUSRUDWLRQRIUHGXFHGLQSXWFRVWVDQGD PLOOLRQ SHUSRXQG SDUWO\RIIVHWE\ORZHUSXUFKDVH UHGXFWLRQLQFDSLWDOVSHQGLQJSODQV:HDOVRWHPSRUDULO\FXUWDLOHGWKH DFFRXQWLQJLPSDFWVUHODWHGWRLQFUHDVHGFDUU\LQJYDOXHVRIDFTXLUHG PRO\EGHQXPFLUFXLWDW&HUUR9HUGH ZKLFKUHVXPHGLQ6HSWHPEHU LQYHQWRU\ZKLFKWRWDOHGPLOOLRQ SHUSRXQG LQDQG  ,Q2FWREHUZHDQQRXQFHGLQLWLDWLYHVWRUHVXPHFHUWDLQ PLOOLRQ SHUSRXQG LQ SURMHFWGHYHORSPHQWDFWLYLWLHVLQFOXGLQJGHYHORSPHQWRIVXOÀGHRUHV 5HYHQXHDGMXVWPHQWVSULPDULO\UHÁHFWXQUHDOL]HGORVVHVRQFRSSHU DW(O$EUDDQGDQH[SDQVLRQRIWKH&HUUR9HUGHFRQFHQWUDWRU UHIHUWR GHULYDWLYHFRQWUDFWVHQWHUHGLQWRZLWKRXU86FRSSHUURGFXVWRPHUV ´&XUUHQW'HYHORSPHQW3URMHFWVµIRUIXUWKHUGLVFXVVLRQ  ,QUHYHQXHDGMXVWPHQWVDOVRUHÁHFWHGPDUNWRPDUNHW 5HIHUWR1RWHIRULQIRUPDWLRQRQFRQWLQJHQFLHVDWRXU6RXWK DFFRXQWLQJDGMXVWPHQWVRQWKHFRSSHUSULFHSURWHFWLRQSURJUDP $PHULFDFRSSHUPLQHV WRWDOLQJPLOOLRQ SHUSRXQG  Operating Data. )ROORZLQJLVVXPPDU\RSHUDWLQJGDWDIRUWKH 6RXWK$PHULFDFRSSHUPLQHVIRUWKH\HDUVHQGHG'HFHPEHU South America Copper Mines DQG7KHEHORZRSHUDWLQJGDWDIRUFRPELQHV :HKDYHIRXURSHUDWLQJFRSSHUPLQHVLQ6RXWK$PHULFD²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ÀGHRUHFRQFHQWUDWLQJOHDFKLQJDQG6;(: RSHUDWLRQV,QDGGLWLRQWRFRSSHUWKH&HUUR9HUGHPLQHSURGXFHV PRO\EGHQXPFRQFHQWUDWHVDVDE\SURGXFWDQGWKH&DQGHODULDDQG 2MRVGHO6DODGRPLQHVSURGXFHJROGDQGVLOYHUDVE\SURGXFWV

  -9,,769;4J4V9HU*677,9 .63+05* 31    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

  2009   H ELOOLRQSRXQGVRIFRSSHUDQGWKRXVDQGRXQFHVRIJROGLQ

Copper PLOOLRQVRIUHFRYHUDEOHSRXQGV 3URMHFWHGFRSSHUVDOHVYROXPHVIRUDUHORZHUWKDQSULPDULO\  3URGXFWLRQ    1,390     EHFDXVHRIWKHLPSDFWRIDQWLFLSDWHGORZHURUHJUDGHVDW(O$EUD  6DOHV   1,394      $YHUDJHUHDOL]HGSULFHSHUSRXQG  $ 2.70      *VTWHYLK^P[O Gold WKRXVDQGVRIUHFRYHUDEOHRXQFHV &RSSHUVDOHVYROXPHVIURPWKH 6RXWK$PHULFDFRSSHUPLQHV 92  3URGXFWLRQ         LQFUHDVHGWRELOOLRQSRXQGVLQFRPSDUHGZLWKELOOLRQ  6DOHV    90     SRXQGVIRUWKHFRPELQHG\HDUSULPDULO\UHÁHFWLQJKLJKHU  $YHUDJHUHDOL]HGSULFHSHURXQFH  $ 982     SURGXFWLRQIURPWKH&HUUR9HUGHFRQFHQWUDWRUZKLFKUHDFKHGGHVLJQ Molybdenum PLOOLRQVRIUHFRYHUDEOHSRXQGV  3URGXFWLRQE    2     FDSDFLW\LQPLG SX/EW operations Unit Net Cash Costs. 8QLWQHWFDVKFRVWVSHUSRXQGRIFRSSHULVD  /HDFKRUHSODFHGLQVWRFNSLOHV PHDVXUHLQWHQGHGWRSURYLGHLQYHVWRUVZLWKLQIRUPDWLRQDERXWWKH 258,200   PHWULFWRQVSHUGD\       FDVKJHQHUDWLQJFDSDFLW\RIRXUPLQLQJRSHUDWLRQVH[SUHVVHGRQD  $YHUDJHFRSSHURUHJUDGH SHUFHQW   0.45     EDVLVUHODWLQJWRWKHSULPDU\PHWDOSURGXFWIRURXUUHVSHFWLYH  &RSSHUSURGXFWLRQ PLOOLRQVRI   UHFRYHUDEOHSRXQGV     565     RSHUDWLRQV:HXVHWKLVPHDVXUHIRUWKHVDPHSXUSRVHDQGIRU Mill operations PRQLWRULQJRSHUDWLQJSHUIRUPDQFHE\RXUPLQLQJRSHUDWLRQV7KLV  2UHPLOOHG PHWULFWRQVSHU GD\   181,300   LQIRUPDWLRQ GLIIHUVIURPPHDVXUHVRISHUIRUPDQFHGHWHUPLQHGLQ F  $YHUDJHRUHJUDGH DFFRUGDQFHZLWK86*$$3 DQGVKRXOGQRWEHFRQVLGHUHGLQ   &RSSHU SHUFHQW     0.66       0RO\EGHQXP SHUFHQW     0.02     LVRODWLRQRUDVDVXEVWLWXWHIRU PHDVXUHVRI SHUIRUPDQFHGHWHUPLQHG  &RSSHUUHFRYHU\UDWH SHUFHQW    88.9     LQDFFRUGDQFHZLWK86*$$37KLVPHDVXUHLVSUHVHQWHGE\RWKHU  3URGXFWLRQ UHFRYHUDEOH  PLQLQJFRPSDQLHVDOWKRXJKRXUPHDVXUHPD\QRWEHFRPSDUDEOHWR   &RSSHU PLOOLRQVRISRXQGV     825     VLPLODUO\WLWOHGPHDVXUHVUHSRUWHGE\RWKHUFRPSDQLHV   *ROG WKRXVDQGVRIRXQFHV     92       0RO\EGHQXP PLOOLRQVRISRXQGV    2     Gross Profit per Pound of Copper H ;OL:V\[O(TLYPJHJVWWLYTPULZ»VWLYH[PUNKH[HMVYJVTIPULZV\YOPZ[VYPJHSKH[H 7KHIROORZLQJWDEOHVVXPPDUL]HXQLWQHWFDVKFRVWVDQGJURVVSURÀW ILNPUUPUN4HYJO^P[O7OLSWZ+VKNLWYLHJX\PZP[PVUKH[H[OYV\NO4HYJO  (Z[OLWYLHJX\PZP[PVUKH[HYLWYLZLU[Z[OLYLZ\S[ZVM[OLZLVWLYH[PVUZ\UKLY SHUSRXQGDWWKH6RXWK$PHULFDFRSSHUPLQHVIRUWKH\HDUVHQGHG 7OLSWZ+VKNLTHUHNLTLU[Z\JOJVTIPULKKH[HPZUV[ULJLZZHYPS`PUKPJH[P]LVM^OH[ WHZ[YLZ\S[Z^V\SKOH]LILLU\UKLY-*?THUHNLTLU[VYVMM\[\YLVWLYH[PUNYLZ\S[Z 'HFHPEHUDQGDQGIRUWKHSHULRG0DUFK I 9LÅLJ[ZI`WYVK\J[TVS`IKLU\TWYVK\J[PVUMYVTV\Y*LYYV=LYKLJVWWLYTPUL:HSLZ WKURXJK'HFHPEHU7KHEHORZWDEOHVUHÁHFWXQLWQHWFDVK VMI`WYVK\J[TVS`IKLU\THYLYLÅLJ[LKPU[OL4VS`IKLU\TZLNTLU[ J (]LYHNLVYLNYHKLZVMNVSKWYVK\JLKH[V\Y:V\[O(TLYPJHTPULZYV\UKZ[VSLZZ[OHU FRVWVSHUSRXQGRIFRSSHUXQGHUWKHE\SURGXFWDQGFRSURGXFW NYHTZWLYTL[YPJ[VU PHWKRGVDVWKH6RXWK$PHULFDFRSSHUPLQHVDOVR KDGVPDOODPRXQWV  *VTWHYLK^P[O  RIPRO\EGHQXPJROGDQGVLOYHUVDOHV5HIHUWR´3URGXFW5HYHQXHV &RSSHUVDOHVYROXPHVIURPWKH6RXWK$PHULFDFRSSHUPLQHVGHFUHDVHG DQG3URGXFWLRQ&RVWVµIRUDQH[SODQDWLRQRIWKH´E\SURGXFWµDQG WRELOOLRQSRXQGVLQFRPSDUHGZLWKELOOLRQIRUWKH\HDU ´FRSURGXFWµPHWKRGVDQGDUHFRQFLOLDWLRQRIXQLWQHW FDVKFRVWVSHU SULPDULO\UHÁHFWLQJORZHURUHJUDGHVDW&DQGHODULDDQGGRZQWLPH SRXQGWRSURGXFWLRQDQGGHOLYHU\FRVWVDSSOLFDEOHWRVDOHVUHSRUWHGLQ IRUPLOOPDLQWHQDQFHDW&HUUR9HUGH&RQVROLGDWHGVDOHVYROXPHV RXUFRQVROLGDWHGÀQDQFLDOVWDWHPHQWV  IURPRXU6RXWK$PHULFDFRSSHUPLQHVDUHH[SHFWHGWRDSSUR[LPDWH   2009   )`7YVK\J[ *V7YVK\J[ )`7YVK\J[ *V7YVK\J[ &RPSDUHGZLWK 4L[OVK 4L[OVK 4L[OVK 4L[OVK 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^     $ 2.70 $ 2.70     :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^      1.08 1.02     )`WYVK\J[JYLKP[Z      (0.11) —    · ;YLH[TLU[JOHYNLZ      0.15 0.15     

*VWWLYZHSLZTPSSPVUZVMYLJV]LYHISLWV\UKZ      1,394 1,394    

32 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

8QLWQHWFDVKFRVWV QHWRIE\SURGXFWFUHGLWV IRURXU6RXWK$PHULFD HVWLPDWHVDQGHVWLPDWHVIRUFRPPRGLW\EDVHGLQSXWVZHHVWLPDWH FRSSHUPLQHVGHFUHDVHGWRSHUSRXQGRIFRSSHULQ WKDWDYHUDJHXQLWQHWFDVKFRVWV QHWRIE\SURGXFWFUHGLWV IRURXU FRPSDUHGZLWKSHUSRXQGLQSULPDULO\UHÁHFWLQJORZHUVLWH 6RXWK$PHULFDFRSSHUPLQHVZRXOGDSSUR[LPDWHSHUSRXQGRI SURGXFWLRQDQGGHOLYHU\FRVWV SHUSRXQG DVVRFLDWHGZLWK FRSSHULQ8QLWQHWFDVKFRVWVIRUDUHH[SHFWHGWREH ORZHULQSXWFRVWV SULPDULO\IRUHQHUJ\  KLJKHUWKDQLQSULPDULO\EHFDXVHRIORZHUYROXPHVDQGWKH 2XU6RXWK$PHULFDFRSSHUPLQHVKDYHYDU\LQJFRVWVWUXFWXUHV LPSDFWRIIRUHLJQFXUUHQF\H[FKDQJHUDWHVSDUWO\RIIVHWE\ORZHU EHFDXVHRIGLIIHUHQFHVLQRUHJUDGHVDQGRUHFKDUDFWHULVWLFV VXOSKXULFDFLGFRVWV SURFHVVLQJFRVWVE\SURGXFWVDQGRWKHUIDFWRUV'XULQJXQLWQHW 7KHGHFUHDVHLQGHSUHFLDWLRQGHSOHWLRQDQGDPRUWL]DWLRQLQ FDVKFRVWVIRUWKH6RXWK$PHULFDFRSSHUPLQHVUDQJHGIURP FRPSDUHGZLWKSULPDULO\UHÁHFWHGWKHLPSDFWRIWKHORQJOLYHG SHUSRXQGWRSHUSRXQGDWWKHLQGLYLGXDOPLQHVDQGDYHUDJHG DVVHWLPSDLUPHQWFKDUJHVUHFRJQL]HGLQIRXUWKTXDUWHU UHIHUWR SHUSRXQG$VVXPLQJDFKLHYHPHQWRIFXUUHQWVDOHVYROXPHV 1RWHIRUIXUWKHUGLVFXVVLRQRIWKHVH LPSDLUPHQWFKDUJHV      H  )`7YVK\J[ *V7YVK\J[ )`7YVK\J[ *V7YVK\J[ &RPSDUHGZLWK 4L[OVK 4L[OVK 4L[OVK 4L[OVK 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^             :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^              )`WYVK\J[JYLKP[Z        ·     · ;YLH[TLU[JOHYNLZ             

*VWWLYZHSLZTPSSPVUZVMYLJV]LYHISLWV\UKZ            

H 9LÅLJ[Z[OLWLYPVKMYVT4HYJO[OYV\NO+LJLTILY

8QLWQHWFDVKFRVWV QHWRIE\SURGXFWFUHGLWV LQFUHDVHGWRSHU VROGWRDIÀOLDWHGVPHOWHUV$WODQWLF&RSSHUDQG376PHOWLQJ  SRXQGRIFRSSHULQFRPSDUHGZLWKSHUSRXQGIRUWKH 37 )UHHSRUW,QGRQHVLDҋVSHUFHQWRZQHGFRSSHUVPHOWHUDQG SHULRG0DUFKWKURXJK'HFHPEHUUHÁHFWLQJ UHÀQHU\LQ,QGRQHVLD²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ÁHFWVORZHUSXUFKDVHDFFRXQWLQJLPSDFWVUHODWHGWRLQFUHDVHG DOVRFRQGXFWVH[SORUDWLRQDFWLYLWLHVLQDQDSSUR[LPDWHDFUH FDUU\LQJYDOXHVRIDFTXLUHGLQYHQWRU\ZKLFKWRWDOHGPLOOLRQ  DUHDFDOOHG%ORFN%LQ3DSXD$OORI37)UHHSRUW,QGRQHVLDҋVSURYHQ SHUSRXQG LQDQGPLOOLRQ SHUSRXQG LQ DQGSUREDEOHPLQHUDOUHVHUYHVDQGFXUUHQWPLQLQJRSHUDWLRQVLQFOXGLQJ WKH*UDVEHUJPLQHUDOVGLVWULFWDUHORFDWHGLQ%ORFN$ Indonesia Mining :HKDYHHVWDEOLVKHGFHUWDLQXQLQFRUSRUDWHGMRLQWYHQWXUHVZLWK ,QGRQHVLDPLQLQJLQFOXGHV37 )UHHSRUW,QGRQHVLDҋV*UDVEHUJ 5LR7LQWRSOF 5LR7LQWR DQLQWHUQDWLRQDOPLQLQJFRPSDQ\ZLWK PLQHUDOVGLVWULFW:HRZQSHUFHQWRI37)UHHSRUW,QGRQHVLD KHDGTXDUWHUVLQ/RQGRQ(QJODQG3XUVXDQWWRWKHMRLQWYHQWXUH LQFOXGLQJSHUFHQWRZQHG WKURXJKRXUZKROO\RZQHGVXEVLGLDU\ DJUHHPHQW5LR7LQWRKDVDSHUFHQWLQWHUHVWLQFHUWDLQDVVHWVDQG 37 ,QGRFRSSHU,QYHVWDPD IXWXUHSURGXFWLRQH[FHHGLQJVSHFLÀHGDQQXDODPRXQWVRIFRSSHUJROG 37 )UHHSRUW,QGRQHVLDSURGXFHVFRSSHUFRQFHQWUDWHVZKLFK DQGVLOYHUWKURXJKLQ%ORFN$ RI37 )UHHSRUW,QGRQHVLDҋV FRQWDLQVLJQLÀFDQWTXDQWLWLHVRIJROGDQGVLOYHU6XEVWDQWLDOO\DOORI &RQWUDFWRI:RUNDQGDIWHUDSHUFHQWLQWHUHVWLQDOO 37 )UHHSRUW,QGRQHVLDҋVFRSSHUFRQFHQWUDWHVDUHVROGXQGHUORQJ SURGXFWLRQIURP%ORFN$5HIHUWR1RWHIRUIXUWKHUGLVFXVVLRQRIMRLQW WHUPFRQWUDFWV$SSUR[LPDWHO\RQHKDOIRILWVFRQFHQWUDWHSURGXFWLRQ LV YHQWXUHVZLWK5LR7LQWR

  -9,,769;4J4V9HU*677,9 .63+05* 33    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

$VRULJLQDOO\UHSRUWHGLQ-DQXDU\ZHUHFHLYHGDQGUHVSRQGHG  *VTWHYLK^P[O WRUHTXHVWVIURP86JRYHUQPHQWDODXWKRULWLHVUHODWHGWR37 )UHHSRUW $WWKH*UDVEHUJPLQHWKHVHTXHQFLQJLQPLQLQJ DUHDVZLWKYDU\LQJ ,QGRQHVLDҋVVXSSRUWRI,QGRQHVLDQVHFXULW\LQVWLWXWLRQV,Q0D\ RUHJUDGHVFDXVHVÁXFWXDWLRQVLQWKHWLPLQJRIRUHSURGXFWLRQ ZHZHUHQRWLÀHGE\WKH6(&WKDWWKH86JRYHUQPHQWҋVLQYHVWLJDWLRQ UHVXOWLQJLQYDU\LQJTXDUWHUO\DQGDQQXDOVDOHVRIFRSSHUDQGJROG KDVEHHQFRPSOHWHGDQGQRDFWLRQKDVEHHQUHFRPPHQGHG 37)UHHSRUW,QGRQHVLDҋ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ҋ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ҋVFRSSHUDQGJROGSURGXFWLRQLVH[SHFWHGLQWKHVHFRQG OLPLWDWLRQVRQDFFHVVWRWKHURDGFRXOGDGYHUVHO\DIIHFWRSHUDWLRQVDW KDOIRI WKHPLQH6HH´5LVN)DFWRUVµFRQWDLQHGLQ3DUW,,WHP$ RIRXU)RUP  *VTWHYLK^P[O .IRUWKH\HDUHQGHG'HFHPEHUIRUIXUWKHUGLVFXVVLRQRI 37 )UHHSRUW,QGRQHVLDҋVVKDUHRIVDOHVWRWDOHGELOOLRQSRXQGVRI WKHVHPDWWHUV FRSSHUDQGPLOOLRQRXQFHVRIJROGLQFRPSDUHGZLWK 5HIHUWR1RWHIRULQIRUPDWLRQ RQFRQWLQJHQFLHVDWRXU,QGRQHVLD ELOOLRQSRXQGVRIFRSSHUDQGPLOOLRQRXQFHVRIJROGLQ/RZHU PLQLQJRSHUDWLRQV JROGVDOHVYROXPHVLQUHVXOWHGIURPPLQLQJLQDORZHUJUDGH Operating Data. )ROORZLQJLVVXPPDU\RSHUDWLQJGDWDIRURXU VHFWLRQRIWKH*UDVEHUJRSHQSLWGXULQJWKHÀUVWQLQHPRQWKVRI ,QGRQHVLDPLQLQJRSHUDWLRQVIRUWKH\HDUVHQGHG'HFHPEHU Unit Net Cash Costs. 8QLWQHWFDVKFRVWVSHUSRXQGRIFRSSHULVD DQG PHDVXUHLQWHQGHGWRSURYLGHLQYHVWRUVZLWKLQIRUPDWLRQDERXWWKH   2009    FDVKJHQHUDWLQJFDSDFLW\RIRXUPLQLQJRSHUDWLRQVH[SUHVVHGRQD Consolidated Operating Data, Net of Joint Venture Interest EDVLVUHODWLQJWRWKHSULPDU\PHWDOSURGXFWIRURXUUHVSHFWLYH Copper PLOOLRQVRIUHFRYHUDEOHSRXQGV RSHUDWLRQV:HXVHWKLVPHDVXUHIRUWKHVDPHSXUSRVHDQGIRU  3URGXFWLRQ    1,412      6DOHV    1,400     PRQLWRULQJRSHUDWLQJSHUIRUPDQFHE\RXUPLQLQJRSHUDWLRQV7KLV  $YHUDJHUHDOL]HGSULFHSHUSRXQG  $ 2.65     LQIRUPDWLRQ GLIIHUVIURPPHDVXUHVRISHUIRUPDQFHGHWHUPLQHGLQ Gold WKRXVDQGVRIUHFRYHUDEOHRXQFHV DFFRUGDQFHZLWK86*$$3 DQGVKRXOGQRWEHFRQVLGHUHGLQ  3URGXFWLRQ    2,568     LVRODWLRQRUDVDVXEVWLWXWHIRUPHDVXUHVRI SHUIRUPDQFHGHWHUPLQHG  6DOHV    2,543     LQDFFRUGDQFHZLWK86*$$37KLVPHDVXUHLVSUHVHQWHGE\RWKHU  $YHUDJHUHDOL]HGSULFHSHURXQFH  $ 994     100% Operating Data PLQLQJFRPSDQLHVDOWKRXJKRXUPHDVXUHPD\QRWEHFRPSDUDEOHWR 2UHPLOOHG PHWULFWRQVSHU GD\  VLPLODUO\WLWOHGPHDVXUHVUHSRUWHGE\RWKHUFRPSDQLHV  *UDVEHUJRSHQSLWD  166,300   Gross Profit per Pound of Copper/per Ounce of Gold  'HHS2UH=RQH '2=    XQGHUJURXQGPLQHD    72,000     7KHIROORZLQJWDEOHVVXPPDUL]HWKHXQLWQHWFDVK FUHGLWV FRVWVDQG 238,300   7RWDO      JURVVSURÀWSHUSRXQGRIFRSSHUDQGSHURXQFHRIJROGDWRXU $YHUDJHRUHJUDGH ,QGRQHVLDPLQLQJRSHUDWLRQVIRUWKH\HDUVHQGHG'HFHPEHU  &RSSHU SHUFHQW     0.98      *ROG JUDPVSHUPHWULFWRQ     1.30     DQG5HIHUWR´3URGXFWLRQ5HYHQXHVDQG3URGXFWLRQ 5HFRYHU\UDWHV SHUFHQW  &RVWVµIRUDQH[SODQDWLRQRI´E\SURGXFWµDQG´FRSURGXFWµPHWKRGV 90.6  &RSSHU         DQGDUHFRQFLOLDWLRQRIXQLWQHWFDVKFRVWVSHUSRXQGWRSURGXFWLRQ  *ROG    83.7     3URGXFWLRQ UHFRYHUDEOH  DQGGHOLYHU\FRVWVDSSOLFDEOHWRVDOHVUHSRUWHGLQRXUFRQVROLGDWHG  &RSSHU PLOOLRQVRISRXQGV     1,641     ÀQDQFLDOVWDWHPHQWV  *ROG WKRXVDQGVRIRXQFHV    2,984    

H (TV\U[ZYLWYLZLU[[OLHWWYV_PTH[LH]LYHNLKHPS`[OYV\NOW\[WYVJLZZLKH[7;-YLLWVY[ 0UKVULZPH»ZTPSSMHJPSP[PLZMYVTLHJOWYVK\JPUNTPUL

34 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

 2009 

 )`7YVK\J[  *V7YVK\J[4L[OVK  )`7YVK\J[  *V7YVK\J[4L[OVK &RPSDUHGZLWK 4L[OVK *VWWLY .VSK 4L[OVK *VWWLY .VSK 9L]LU\LZHM[LYHKQ\Z[TLU[ZZOV^UILSV^ $ 2.65 $ 2.65 $ 993.72       :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^  1.05 0.62 231.57        .VSKHUKZPS]LYJYLKP[Z  (1.86) — —    ·  · ;YLH[TLU[JOHYNLZ 0.22 0.13 49.18       9V`HS[`VUTL[HSZ 0.10 0.06 23.18       

*VWWLYZHSLZ TPSSPVUZVMYLJV]LYHISLWV\UKZ 1,400 1,400     .VSKZHSLZ [OV\ZHUKZVMYLJV]LYHISLV\UJLZ     2,543       

%HFDXVHRIWKHÀ[HGQDWXUHRIDODUJHSRUWLRQRI37)UHHSRUW %HFDXVHWKHPDMRULW\RI37)UHHSRUW,QGRQHVLDҋVFRVWVDUHÀ[HG ,QGRQHVLDҋVFRVWVXQLWFRVWVYDU\VLJQLÀFDQWO\IURPSHULRGWRSHULRG XQLWFRVWVYDU\ZLWKYROXPHVVROGDQGWKHSULFHRIJROG$VVXPLQJ GHSHQGLQJRQYROXPHVRIFRSSHUDQGJROGVROGGXULQJWKHSHULRG8QLW DFKLHYHPHQWRIFXUUHQWVDOHVYROXPHHVWLPDWHVDYHUDJHJROGSULFHV QHWFDVKFRVWV QHWRIJROGDQGVLOYHUFUHGLWV GHFUHDVHGWRDQHW RISHURXQFHLQDQGHVWLPDWHVIRUHQHUJ\FRVWV FUHGLWRISHUSRXQGRIFRSSHULQFRPSDUHGZLWKDQHWFRVW FXUUHQF\H[FKDQJHUDWHVDQGRWKHUFRVWIDFWRUVZHHVWLPDWHWKDW RISHUSRXQGLQUHÁ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ҋV WKHSULFHVRIFRSSHUDQGJROG XQLWQHWFDVKFRVWV

   

 )`7YVK\J[  *V7YVK\J[4L[OVK  )`7YVK\J[  *V7YVK\J[4L[OVK &RPSDUHGZLWK 4L[OVK *VWWLY .VSK 4L[OVK *VWWLY .VSK 9L]LU\LZHM[LYHKQ\Z[TLU[ZZOV^UILSV^             :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^                .VSKHUKZPS]LYJYLKP[Z     ·  ·   ·  · ;YLH[TLU[JOHYNLZ               9V`HS[`VUTL[HSZ              

*VWWLYZHSLZTPSSPVUZVMYLJV]LYHISLWV\UKZ         .VSKZHSLZ[OV\ZHUKZVMYLJV]LYHISLV\UJLZ              

  -9,,769;4J4V9HU*677,9 .63+05* 35    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

8QLWQHWFDVKFRVWV QHWRIJROGDQGVLOYHUFUHGLWV LQFUHDVHGWR RSHUDWLRQUHDFKHVGHVLJQFDSDFLW\8SRQUHDFKLQJGHVLJQFDSDFLW\LQ SHUSRXQGRIFRSSHULQFRPSDUHGZLWKSHUSRXQGLQ WKHFRSSHUDQGFREDOWFLUFXLWVDQGDVVXPLQJDYHUDJHFREDOWSULFHVRI UHÁHFWLQJORZHUJROGDQGVLOYHUFUHGLWVDVVRFLDWHGZLWKORZHU SHUSRXQGDYHUDJHXQLWQHWFDVKFRVWVIRU7HQNHDUHWDUJHWHGWR JROGYROXPHVLQKLJKHULQSXWFRVWVLQFOXGLQJKLJKHUPLQLQJ EHSHUSRXQGRIFRSSHU(DFKSHUSRXQGFKDQJHLQDYHUDJH UDWHVDQGHQHUJ\FRVWVDQGDOVRUHÁHFWHGWKHLPSDFWRIFKDQJHVLQ FREDOWSULFHVZRXOGKDYHDQDSSUR[LPDWHSHUSRXQGLPSDFWRQ FRVWVKDULQJZLWKRXUMRLQWYHQWXUHSDUWQHU3DUWO\RIIVHWWLQJWKHVH 7HQNHҋVXQLWQHWFDVKFRVWV:HZLOOLQFRUSRUDWH7HQNHLQRXU LQFUHDVHVZHUHORZHUWUHDWPHQWFKDUJHVZKLFKYDU\ZLWKWKHYROXPH FRQVROLGDWHGXQLWQHWFDVKFRVWGLVFORVXUHXSRQFRPSOHWLRQRIUDPS RIPHWDOVVROGDQGWKHSULFHRIFRSSHU XSDFWLYLWLHVH[SHFWHGGXULQJ 3XUVXDQWWRRXUDJUHHPHQWZLWK/XQGLQ0LQLQJ&RUSRUDWLRQ Africa Mining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ÁRZXQWLOWKHFRVWRYHUUXQÀQDQFLQJDQGDGYDQFHVDUHUHSDLG FRSSHUFDWKRGH,QDGGLWLRQWRFRSSHUWKH7HQNHPLQHSURGXFHV FREDOWK\GUR[LGH Molybdenum &RQVWUXFWLRQDFWLYLWLHVIRUWKHLQLWLDOGHYHORSPHQWSURMHFWDUH 2XU0RO\EGHQXPRSHUDWLRQLVDQLQWHJUDWHGSURGXFHURIPRO\EGHQXP FRPSOHWH&RSSHUSURGXFWLRQFRPPHQFHGLQ0DUFKDQG7HQNH ZLWKPLQLQJVXOÀ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´&XUUHQW'HYHORSPHQW3URMHFWVµIRUIXUWKHUGLVFXVVLRQRIWKH FKHPLFDOJUDGHPRO\EGHQXPFRQFHQWUDWHVZKLFKDUHW\SLFDOO\IXUWKHU 7HQNH)XQJXUXPHSURMHFW SURFHVVHGLQWRYDOXHDGGHGPRO\EGHQXPFKHPLFDOSURGXFWV7KH :HDUHFRQWLQXLQJWRZRUNFRRSHUDWLYHO\ZLWKWKH'5&JRYHUQPHQW 0RO\EGHQXPRSHUDWLRQDOVRLQFOXGHVWKHZKROO\RZQHG&OLPD[ WRUHVROYHWKHRQJRLQJFRQWUDFWUHYLHZEXWFDQQRWSUHGLFWWKHWLPLQJRU PRO\EGHQXPPLQHLQ&RORUDGRZKLFKKDVEHHQRQFDUHDQG WKHRXWFRPHRIWKLVSURFHVV7KHFRQWUDFWUHYLHZSURFHVVKDVQRW PDLQWHQDQFHVWDWXVVLQFHDVDOHVFRPSDQ\WKDWSXUFKDVHVDQG DIIHFWHGRXUGHYHORSPHQWVFKHGXOHDQGZHDUHFRQWLQXLQJWRRSHUDWH VHOOVPRO\EGHQXPIURPRXU+HQGHUVRQPLQHDQGIURPRXU1RUWKDQG SXUVXDQWWRWKHWHUPVRIRXUFRQWUDFW:HEHOLHYHWKDWWKHFRQWUDFWLVIDLU 6RXWK$PHULFDFRSSHUPLQHVWKDWSURGXFHPRO\EGHQXPDVDE\ DQGHTXLWDEOHFRPSOLHVZLWK&RQJROHVHODZDQGLVHQIRUFHDEOHZLWKRXW SURGXFWDQGUHODWHGFRQYHUVLRQIDFLOLWLHVWKDWDWWLPHVURDVWDQGRU PRGLÀFDWLRQV5HIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ6HH´5LVN SURFHVVPDWHULDORQDWROOEDVLV7ROODUUDQJHPHQWVUHTXLUHWKHWROOLQJ )DFWRUVµFRQWDLQHGLQ3DUW,,WHP$RIRXU)RUP.IRUWKH\HDU FXVWRPHUWRGHOLYHUDSSURSULDWHPRO\EGHQXPEHDULQJPDWHULDOWRRXU HQGHG'HFHPEHUIRUIXUWKHUGLVFXVVLRQRIWKHVHPDWWHUV IDFLOLWLHVIRUSURFHVVLQJLQWRDSURGXFWWKDWLVUHWXUQHGWRWKHFXVWRPHU Operating Data. )ROORZLQJLVVXPPDU\RSHUDWLQJGDWDIRURXU ZKRSD\VXVIRUSURFHVVLQJWKHLUPDWHULDOLQWRWKHVSHFLÀHGSURGXFWV $IULFDPLQLQJRSHUDWLRQVIRUWKH\HDUHQGHG'HFHPEHU ,QUHVSRQVHWRPDUNHWFRQGLWLRQVGXULQJIRXUWKTXDUWHUZH

   2009H VXVSHQGHGFRQVWUXFWLRQDFWLYLWLHVDVVRFLDWHGZLWKWKHSURMHFWWR UHVWDUWWKH&OLPD[PRO\EGHQXPPLQHZKLFKZRXOGKDYHDQDQQXDO Copper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perating Data. )ROORZLQJLVVXPPDU\RSHUDWLQJGDWDIRUWKH 7HQNHҋVVDOHVYROXPHVDUHH[SHFWHGWRDSSUR[LPDWHPLOOLRQ 0RO\EGHQXPRSHUDWLRQVIRUWKH\HDUVHQGHG'HFHPEHU SRXQGVRIFRSSHUDQGRYHUPLOOLRQSRXQGVRIFREDOWIRUWKH\HDU DQG7KHRSHUDWLQJGDWDIRUFRPELQHVRXUKLVWRULFDOGDWD 7KHKLJKJUDGHVRIFRSSHUDQGFREDOWLQWKHRUHDWWKH7HQNH EHJLQQLQJ0DUFKZLWK3KHOSV'RGJHSUHDFTXLVLWLRQGDWD PLQHDUHH[SHFWHGWRUHVXOW LQDQDWWUDFWLYHFRVWVWUXFWXUH RQFHWKHIXOO WKURXJK0DUFK$VWKHSUHDFTXLVLWLRQGDWDUHSUHVHQWVWKH

36 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

UHVXOWVRI WKHVHRSHUDWLRQVXQGHU3KHOSV'RGJHPDQDJHPHQWVXFK   2009   H

FRPELQHGGDWDLVQRWQHFHVVDULO\LQGLFDWLYHRIZKDWSDVWUHVXOWVZRXOG 5HYHQXHV   $11.69   KDYHEHHQXQGHU)&;PDQDJHPHQWRURIIXWXUHRSHUDWLQJUHVXOWV 6LWHSURGXFWLRQDQGGHOLYHU\EHIRUH QHW  QRQFDVKDQGQRQUHFXUULQJFRVWV   2009   H  VKRZQEHORZ   5.44     Molybdenum PLOOLRQVRIUHFRYHUDEOHSRXQGV  8QLWQHWFDVKFRVWV   5.44      3URGXFWLRQE    27     'HSUHFLDWLRQGHSOHWLRQDQGDPRUWL]DWLRQ 0.98      6DOHVH[FOXGLQJSXUFKDVHVF   58     1RQFDVKDQGQRQUHFXUULQJFRVWVQHW  0.03  E    $YHUDJHUHDOL]HGSULFHSHUSRXQG  $ 12.36      7RWDOXQLWFRVWV  6.45     F $ 5.24 Henderson molybdenum mine *URVVSURÀWSHUSRXQG        2UHPLOOHG PHWULFWRQVSHU GD\   14,900   0RO\EGHQXPVDOHV PLOOLRQVRIUHFRYHUDEOH  $YHUDJHPRO\EGHQXPRUHJUDGH SHUFHQW   0.25      SRXQGV G    27      0RO\EGHQXPSURGXFWLRQ PLOOLRQVRI H 9LÅLJ[Z[OLWLYPVKMYVT4HYJO[OYV\NO+LJLTILY   UHFRYHUDEOHSRXQGV     27     I 0UJS\KLZJOHYNLZVM WLYWV\UKPU HZZVJPH[LK^P[O3*4PU]LU[VY` HKQ\Z[TLU[Z H ;OL4VS`IKLU\TVWLYH[PUNKH[HMVYJVTIPULZV\YOPZ[VYPJHSKH[HILNPUUPUN J .YVZZWYVÄ[YLÅLJ[ZZHSLZVM/LUKLYZVUWYVK\J[ZIHZLKVU]VS\TLZWYVK\JLKH[ 4HYJO^P[O7OLSWZ+VKNLWYLHJX\PZP[PVUKH[H[OYV\NO4HYJO (Z THYRL[IHZLKWYPJPUN6UHJVUZVSPKH[LKIHZPZ[OL4VS`IKLU\TZLNTLU[PUJS\KLZ [OLWYLHJX\PZP[PVUKH[HYLWYLZLU[Z[OLYLZ\S[ZVM[OLZLVWLYH[PVUZ\UKLY7OLSWZ+VKNL WYVÄ[ZVUZHSLZHZ[OL`HYLTHKL[V[OPYKWHY[PLZHUKYLHSPaH[PVUZIHZLKVUHJ[\HS THUHNLTLU[Z\JOJVTIPULKKH[HPZUV[ULJLZZHYPS`PUKPJH[P]LVM^OH[WHZ[YLZ\S[Z JVU[YHJ[[LYTZ(ZHYLZ\S[[OLHJ[\HSNYVZZWYVÄ[YLHSPaLK^PSSKPMMLYMYVT[OLHTV\U[Z ^V\SKOH]LILLU\UKLY-*?THUHNLTLU[VYVMM\[\YLVWLYH[PUNYLZ\S[Z YLWVY[LKPU[OPZ[HISL I 9LÅLJ[ZWYVK\J[PVUH[[OL/LUKLYZVUTVS`IKLU\TTPUL K 9LÅLJ[ZTVS`IKLU\TWYVK\JLKI`[OL/LUKLYZVUTVS`IKLU\TTPUL J 0UJS\KLZZHSLZVMTVS`IKLU\TWYVK\JLKHZHI`WYVK\J[H[V\Y5VY[OHUK:V\[O (TLYPJHJVWWLYTPULZ +HQGHUVRQҋVXQLWQHWFDVKFRVWVZHUHSHUSRXQGRI %HJLQQLQJLQIRXUWKTXDUWHUPRO\EGHQXPPDUNHWVZHUH PRO\EGHQXPLQSHUSRXQGLQDQGSHUSRXQG VLJQLÀFDQWO\DIIHFWHGE\WKHGRZQWXUQLQHFRQRPLFFRQGLWLRQVZKLFK LQ+HQGHUVRQҋVXQLWQHWFDVKFRVWVZHUHXQIDYRUDEO\LPSDFWHG UHTXLUHGXVWRRSHUDWHWKH+HQGHUVRQPRO\EGHQXPPLQHDW UHGXFHG LQE\ORZHUSURGXFWLRQYROXPHVSDUWO\RIIVHWE\WKHLPSDFWRI UDWHVGXULQJ+RZHYHUFRQGLWLRQVKDYHEHJXQWRLPSURYHDQG FRVWUHGXFWLRQHIIRUWV+LJKHUFRVWVLQFRPSDUHGZLWK DVDUHVXOW+HQGHUVRQZDVRSHUDWLQJDWSHUFHQWFDSDFLW\DW SULPDULO\UHÁHFWHGKLJKHULQSXWFRVWVLQFOXGLQJRXWVLGHVHUYLFHV 'HFHPEHUFRPSDUHGZLWKSHUFHQWFDSDFLW\GXULQJPRVW VXSSOLHVDQGHQHUJ\ RI0RO\EGHQXPVDOHVYROXPHVGHFUHDVHGWRPLOOLRQSRXQGV $VVXPLQJDFKLHYHPHQWRIFXUUHQWVDOHVHVWLPDWHVZH LQFRPSDUHGZLWK PLOOLRQSRXQGVLQEHFDXVHRIORZHU HVWLPDWHWKDWWKHDYHUDJHXQLWQHWFDVKFRVWVIRU+HQGHUVRQ GHPDQG)RUPRO\EGHQXPVDOHVYROXPHVDUHH[SHFWHGWR ZRXOGDSSUR[LPDWHSHUSRXQGRIPRO\EGHQXP DSSUR[LPDWHPLOOLRQSRXQGV:HZLOOFRQWLQXHWRUHYLHZRSHUDWLQJ 7KHGHFUHDVHLQ+HQGHUVRQҋVGHSUHFLDWLRQGHSOHWLRQDQG SODQVDQGDGMXVWRSHUDWLQJUDWHVWRUHÁHFWPDUNHWFRQGLWLRQV DPRUWL]DWLRQLQFRPSDUHGZLWKUHÁHFWVWKHLPSDFWRIORQJ Unit Net Cash Costs. 8QLWQHWFDVKFRVWVSHUSRXQGRI OLYHGDVVHWLPSDLUPHQWFKDUJHVUHFRJQL]HGLQIRXUWKTXDUWHU PRO\EGHQXPLVDPHDVXUHLQWHQGHGWRSURYLGHLQYHVWRUVZLWK UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ  LQIRUPDWLRQ DERXWWKHFDVKJHQHUDWLQJFDSDFLW\RIRXUPLQLQJ 7KHLQFUHDVHLQ+HQGHUVRQҋVGHSUHFLDWLRQGHSOHWLRQDQG RSHUDWLRQVH[SUHVVHGRQDEDVLVUHODWLQJWRWKHSULPDU\PHWDOSURGXFW DPRUWL]DWLRQLQFRPSDUHGZLWKSULPDULO\UHÁHFWHGFKDQJHV IRURXUUHVSHFWLYHRSHUDWLRQV:HXVHWKLVPHDVXUHIRUWKHVDPH LQSXUFKDVHDFFRXQWLQJLPSDFWVDVVRFLDWHGZLWKDGMXVWPHQWVWRWKH SXUSRVHDQGIRUPRQLWRULQJRSHUDWLQJSHUIRUPDQFHE\RXUPLQLQJ HVWLPDWHGIDLUYDOXHVRIDFTXLUHGSURSHUW\SODQWDQGHTXLSPHQW RSHUDWLRQV7KLVLQIRUPDWLRQGLIIHUVIURPPHDVXUHVRISHUIRUPDQFH ZKLFKZHUHEDVHGRQSUHOLPLQDU\HVWLPDWHVLQDQGÀQDOL]HGLQ GHWHUPLQHGLQDFFRUGDQFHZLWK86*$$3 DQGVKRXOGQRWEH ÀUVWTXDUWHU FRQVLGHUHGLQLVRODWLRQRUDVDVXEVWLWXWHIRUPHDVXUHVRISHUIRUPDQFH Atlantic Copper Smelting & Refining GHWHUPLQHGLQDFFRUGDQFHZLWK86*$$37KLVPHDVXUHLVSUHVHQWHG $WODQWLF&RSSHURXUZKROO\RZQHGVXEVLGLDU\ORFDWHGLQ6SDLQ E\RWKHUPLQLQJFRPSDQLHVDOWKRXJKRXUPHDVXUHPD\QRWEH VPHOWVDQGUHÀQHVFRSSHUFRQFHQWUDWHVDQGPDUNHWVUHÀQHGFRSSHU FRPSDUDEOHWRVLPLODUO\WLWOHGPHDVXUHVUHSRUWHGE\RWKHUFRPSDQLHV DQGSUHFLRXVPHWDOVLQVOLPHV37 )UHHSRUW,QGRQHVLDVHOOVFRSSHU Gross Profit per Pound of Molybdenum FRQFHQWUDWHDQGWKH6RXWK$PHULFDFRSSHUPLQHVVHOO FRSSHU 7KHIROORZLQJWDEOHVXPPDUL]HVWKHXQLWQHWFDVKFRVWVDQGJURVV FRQFHQWUDWHDQGFRSSHUFDWKRGHWR$WODQWLF&RSSHU7KURXJK SURÀWSHUSRXQGRIPRO\EGHQXPDWRXU+HQGHUVRQPRO\EGHQXPPLQH GRZQVWUHDPLQWHJUDWLRQZHDUHDVVXUHGSODFHPHQWRIDVLJQLÀFDQW IRUWKH\HDUVHQGHG'HFHPEHUDQGDQGIRUWKHSHULRG SRUWLRQRIRXUFRQFHQWUDWHSURGXFWLRQ'XULQJ$WODQWLF&RSSHU 0DUFKWKURXJK'HFHPEHU 5HIHUWR´3URGXFW SXUFKDVHGDSSUR[LPDWHO\SHUFHQWRILWVFRQFHQWUDWHUHTXLUHPHQWV 5HYHQXHVDQG3URGXFWLRQ&RVWVµIRUDUHFRQFLOLDWLRQRIXQLWQHWFDVK IURP37 )UHHSRUW,QGRQHVLDDQGDSSUR[LPDWHO\SHUFHQWIURPRXU FRVWVSHUSRXQGWRSURGXFWLRQDQGGHOLYHU\FRVWVDSSOLFDEOHWRVDOHV 6RXWK$PHULFDPLQHV UHSRUWHGLQRXUFRQVROLGDWHGÀQDQFLDOVWDWHPHQWV

  -9,,769;4J4V9HU*677,9 .63+05* 37    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

6PHOWLQJDQGUHÀQLQJFKDUJHVFRQVLVWRIDEDVHUDWHDQGLQFHUWDLQ KDOIRI7KHFDSLWDOLQYHVWPHQWIRUWKLVSURMHFWLVH[SHFWHGWR FRQWUDFWVSULFHSDUWLFLSDWLRQEDVHGRQFRSSHUSULFHV7UHDWPHQW DSSUR[LPDWHPLOOLRQZKLFKLVORZHUWKDQWKHLQLWLDOHVWLPDWHRI FKDUJHVIRUVPHOWLQJDQGUHÀQLQJFRSSHUFRQFHQWUDWHVUHSUHVHQWD PLOOLRQEHFDXVHZHLQWHQGWRWUDQVIHUH[LVWLQJPLQLQJHTXLSPHQWIURP FRVWWR37 )UHHSRUW,QGRQHVLDDQGRXU6RXWK$PHULFDFRSSHUPLQHV RWKHU1RUWK$PHULFDVLWHVUDWKHUWKDQSXUFKDVLQJQHZHTXLSPHQW DQGLQFRPHWR$WODQWLF&RSSHUDQG37 6PHOWLQJRXUSHUFHQW Morenci Mill Restart. :HDUHLQLWLDWLQJDFWLYLWLHVWRUHVWDUWWKH RZQHGVPHOWHUDQGUHÀQHU\LQ*UHVLN,QGRQHVLD7KXVKLJKHU 0RUHQFLPLOOLQ$UL]RQDZKLFKZDVWHPSRUDULO\LGOHGLQ)HEUXDU\ WUHDWPHQWDQGUHÀQLQJFKDUJHVEHQHÀWRXUVPHOWHURSHUDWLRQVDW LQUHVSRQVHWRPDUNHWFRQGLWLRQVWRSURFHVVDYDLODEOHVXOÀGHPDWHULDO $WODQWLF&RSSHUDQGDGYHUVHO\DIIHFWRXUPLQLQJRSHUDWLRQVLQ FXUUHQWO\EHLQJPLQHG&RSSHUFRQFHQWUDWHSURGXFWLRQLVH[SHFWHGWR ,QGRQHVLDDQG6RXWK$PHULFD2XU1RUWK$PHULFDFRSSHUPLQHVDUH EHJLQLQVHFRQGTXDUWHUZLWKPLOOWKURXJKSXWLQLWLDOO\H[SHFWHG QRWVLJQLÀFDQWO\DIIHFWHGE\FKDQJHVLQWUHDWPHQWDQGUHÀQLQJ WRDSSUR[LPDWHPHWULFWRQVSHUGD\RUDSSUR[LPDWHO\ FKDUJHVEHFDXVHWKHVHRSHUDWLRQVDUHIXOO\LQWHJUDWHGZLWKRXU0LDPL SHUFHQWRIWRWDOPLOOFDSDFLW\ VPHOWHUORFDWHGLQ$UL]RQD Twin Buttes. ,Q'HFHPEHUZHSXUFKDVHGSURSHUW\DGMDFHQW $WODQWLF&RSSHUKDGDQRSHUDWLQJORVVRIPLOOLRQLQ WRRXU6LHUULWDRSHUDWLRQVSULPDULO\IURP7ZLQ%XWWHV3URSHUWLHV,QF FRPSDUHGWRRSHUDWLQJLQFRPHRIPLOOLRQLQDQGPLOOLRQLQ IRUPLOOLRQ7KHSURSHUW\LQFOXGHVWKH7ZLQ%XWWHVFRSSHUPLQH 7KHGHFUHDVHLQ$WODQWLF&RSSHUҋVRSHUDWLQJUHVXOWVGXULQJ ZKLFKFHDVHGRSHUDWLRQVLQDQGFRQWDLQVPLQHUDOL]HGPDWHULDO SULPDULO\UHÁHFWHGORZHUVXOSKXULFDFLGUHYHQXHVUHVXOWLQJIURP RIDSSUR[LPDWHO\ELOOLRQPHWULFWRQVZLWKDYHUDJHJUDGHVRI ORZHUSULFHV SHUFHQWIRUFRSSHUDQGSHUFHQWIRUPRO\EGHQXP7KHSXUFKDVH :HGHIHUUHFRJQL]LQJSURÀWVRQ37)UHHSRUW,QGRQHVLDҋVDQGRXU SURYLGHVVLJQLÀFDQWV\QHUJLHVLQWKH6LHUULWDGLVWULFWLQFOXGLQJWKH 6RXWK$PHULFDFRSSHUPLQHVҋ VDOHVWR$WODQWLF&RSSHUDQGRQ SRWHQWLDOIRUH[SDQGHGPLQLQJDFWLYLWLHVDQGDFFHVVWRPDWHULDOWKDW SHUFHQWRI37)UHHSRUW,QGRQHVLDҋVVDOHVWR376PHOWLQJXQWLOÀQDO FDQEHXVHGIRU6LHUULWDWDLOLQJVDQGVWRFNSLOHUHFODPDWLRQSXUSRVHV VDOHVWRWKLUGSDUWLHVRFFXU&KDQJHVLQWKHVHQHWGHIHUUDOV :HSODQWRFRQGXFWVWXGLHVWRLQFRUSRUDWHWKH7ZLQ%XWWHVUHVRXUFHV UHVXOWHGLQQHWUHGXFWLRQVWRQHWLQFRPHDWWULEXWDEOHWR)&;FRPPRQ LQRXUIXWXUHSODQVWRGHWHUPLQHWKHRSWLPXPGHYHORSPHQWSODQVIRU VWRFNKROGHUVWRWDOLQJPLOOLRQ SHUVKDUH LQ WKHGLVWULFW FRPSDUHGZLWKQHWDGGLWLRQVRIPLOOLRQ SHUVKDUH LQ South America Copper Mines DQGPLOOLRQ SHUVKDUH LQ$W'HFHPEHU El Abra Sulfide Ore. :HKDYHUHVXPHGFRQVWUXFWLRQDFWLYLWLHV RXUQHWGHIHUUHGSURÀWVRQ37)UHHSRUW,QGRQHVLDҋVDQGWKH6RXWK DVVRFLDWHGZLWKWKHGHYHORSPHQWRIDODUJHVXOÀGHGHSRVLWDW(O$EUD $PHULFDFRSSHUPLQHVҋLQYHQWRULHVDW$WODQWLF&RSSHUDQG376PHOWLQJ WKDWZLOOH[WHQGWKHPLQHOLIHE\RYHUWHQ\HDUV3URGXFWLRQIURPWKH WREHUHFRJQL]HGLQIXWXUHSHULRGVҋQHWLQFRPHDIWHUWD[HVDQG VXOÀGHRUHZKLFKZLOOUDPSXSWRDSSUR[LPDWHO\PLOOLRQSRXQGVRI QRQFRQWUROOLQJLQWHUHVWVWRWDOHGPLOOLRQ FRSSHUSHU\HDULVH[SHFWHGWREHJLQLQDQGZLOOUHSODFHWKH CURRENT DEVELOPMENT PROJECTS FXUUHQWR[LGHRUHFRSSHUSURGXFWLRQWKDWLVH[SHFWHGWRGHFOLQHRYHU :HKDYHVHYHUDOSURMHFWVDQGSRWHQWLDORSSRUWXQLWLHVWRH[SDQGRXU WKHQH[WVHYHUDO\HDUV7KHSURMHFWZLOOXVHDSRUWLRQRIWKHH[LVWLQJ SURGXFWLRQYROXPHVH[WHQGPLQHOLYHVDQGGHYHORSODUJHVFDOHRUH IDFLOLWLHVWRSURFHVVWKHDGGLWLRQDOVXOÀGHRUH7KHWRWDODJJUHJDWH ERGLHV'XULQJIRXUWKTXDUWHUZHGHIHUUHGVHYHUDOSURMHFW FDSLWDOLQYHVWPHQWIRUWKLVSURMHFW ZKLFKKDVEHHQXSGDWHGWR GHYHORSPHQWDFWLYLWLHVEHFDXVHRIWKHGRZQWXUQLQJOREDOHFRQRPLF LQFRUSRUDWHUHFHQWIRUHLJQFXUUHQF\H[FKDQJHUDWHVDQGRWKHUFRVW FRQGLWLRQV0DMRUGHYHORSPHQWSURMHFWVIRUFRQVLVWHGRI LQFUHDVHV LVH[SHFWHGWRWRWDOPLOOLRQWKURXJKRIZKLFK XQGHUJURXQGGHYHORSPHQWLQWKH*UDVEHUJPLQHUDOVGLVWULFWDQGWKH DSSUR[LPDWHO\PLOOLRQLVIRUWKHLQLWLDOSKDVHRIWKHSURMHFWWKDWLV 7HQNH)XQJXUXPHSURMHFW IRUZKLFKFRQVWUXFWLRQDFWLYLWLHVRQWKH H[SHFWHGWREHFRPSOHWHGLQ$JJUHJDWHSURMHFWFRVWVRI LQLWLDOSURMHFWDUHFRPSOHWH 'XULQJIRXUWKTXDUWHUZH PLOOLRQKDYHEHHQLQFXUUHGDVRI'HFHPEHU PRVWRIZKLFK DQQRXQFHGWKDWZHDUHUHVXPLQJFHUWDLQSURMHFWGHYHORSPHQW ZHUHLQFXUUHG SULRUWRWKHHQGRI  DFWLYLWLHV&DSLWDOVSHQGLQJSODQVZLOOFRQWLQXHWREHUHYLHZHGDQG Cerro Verde Expansion. :HKDYHFRPPHQFHGDSURMHFWWR DGMXVWHGLQUHVSRQVHWRFKDQJHVLQPDUNHWFRQGLWLRQV RSWLPL]HWKURXJKSXWDWWKHH[LVWLQJ&HUUR9HUGHFRQFHQWUDWRU7KLV SURMHFWZKLFKLVH[SHFWHGWREHFRPSOHWHGE\WKHHQGRILV North America Copper Mines GHVLJQHGWRDGGPLOOLRQSRXQGVRIDGGLWLRQDOFRSSHUSURGXFWLRQSHU Miami Restart. 'XULQJIRXUWKTXDUWHUZHLQLWLDWHGSODQVWR \HDUE\LQFUHDVLQJPLOOWKURXJKSXWIURPPHWULFWRQVRIRUH UHVWDUWOLPLWHGPLQLQJDFWLYLWLHVDWWKH0LDPLFRSSHUPLQHLQ$UL]RQD SHUGD\WRPHWULFWRQVRIRUHSHUGD\7KHDJJUHJDWHFDSLWDO ZKLFKZLOOLPSURYHHIÀFLHQFLHVRIRQJRLQJUHFODPDWLRQSURMHFWV LQYHVWPHQWIRUWKLVSURMHFWLVH[SHFWHGWRWRWDODSSUR[LPDWHO\ DVVRFLDWHGZLWKKLVWRULFDOPLQLQJRSHUDWLRQVDWWKHVLWH'XULQJWKH PLOOLRQ:HFRQWLQXHWRVWXG\WKHSRWHQWLDOIRUDPDMRUH[SDQVLRQ DSSUR[LPDWHÀYH\HDUPLQHOLIHZHH[SHFWWRUDPSXSSURGXFWLRQWR DW&HUUR9HUGH DSSUR[LPDWHO\PLOOLRQSRXQGVRIFRSSHUSHU\HDUE\WKHVHFRQG

38 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

Indonesia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ig Gossan. 7KH%LJ*RVVDQXQGHUJURXQGPLQHLVDKLJKJUDGH &RQVLGHULQJWKHORQJWHUPQDWXUHDQGODUJHVL]HRIWKHVHSURMHFWV GHSRVLWORFDWHGQHDU37 )UHHSRUW,QGRQHVLDҋVH[LVWLQJPLOOLQJ DFWXDOFRVWVFRXOGGLIIHUPDWHULDOO\IURPWKHVHHVWLPDWHV FRPSOH[7KH%LJ*RVVDQPLQHLVEHLQJGHYHORSHGDVDQRSHQVWRSH ,QDGGLWLRQWRWKHPLQHGHYHORSPHQWFRVWVDERYHRXUFXUUHQWPLQH PLQHZLWKEDFNÀ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xpansion. ,Q PLG37 )UHHSRUW,QGRQHVLDFRPSOHWHGDQ PLQHDQGGHYHORSPHQWRI WKH'0/=RUHERG\ H[SDQVLRQRIWKH'2=XQGHUJURXQGRSHUDWLRQWRDOORZDVXVWDLQHG Common Infrastructure and Grasberg Block Cave. ,Q  UDWHRIPHWULFWRQVRIRUHSHUGD\37 )UHHSRUW,QGRQHVLDҋV 37 )UHHSRUW,QGRQHVLDFRPPHQFHGLWV&RPPRQ,QIUDVWUXFWXUHSURMHFW IXUWKHUH[SDQVLRQRIWKH'2=PLQHWRPHWULFWRQVRIRUHSHU WRSURYLGHDFFHVVWRLWVODUJHXQGHYHORSHGXQGHUJURXQGRUHERGLHV GD\LVVXEVWDQWLDOO\FRPSOHWH7KHFDSLWDO FRVWIRUWKLVH[SDQVLRQ ORFDWHGLQWKH*UDVEHUJPLQHUDOVGLVWULFWWKURXJK DWXQQHOV\VWHP DSSUR[LPDWHGPLOOLRQZLWK37 )UHHSRUW,QGRQHVLDҋVSHUFHQW ORFDWHGDSSUR[LPDWHO\PHWHUVGHHSHUWKDQLWVH[LVWLQJ VKDUHWRWDOLQJDSSUR[LPDWHO\PLOOLRQ7KHVXFFHVVRIWKH XQGHUJURXQGWXQQHOV\VWHP,QDGGLWLRQWRSURYLGLQJDFFHVVWRRXU GHYHORSPHQWRIWKH'2=PLQHRQHRIWKHZRUOGҋVODUJHVWXQGHUJURXQG XQGHUJURXQGRUHERGLHVWKHWXQQHOV\VWHPZLOOHQDEOH37 )UHHSRUW PLQHVSURYLGHVFRQÀGHQFHLQWKHIXWXUHGHYHORSPHQWRI37)UHHSRUW ,QGRQHVLDWRFRQGXFWIXWXUHH[SORUDWLRQLQSURVSHFWLYHDUHDV ,QGRQHVLDҋVODUJHVFDOHXQGHYHORSHGXQGHUJURXQGRUHERGLHV DVVRFLDWHGZLWKFXUUHQWO\LGHQWLÀ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ҋ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ҋVVKDUHWRWDOLQJ

  -9,,769;4J4V9HU*677,9 .63+05* 39    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

Africa Mining SRVLWLRQGXULQJDOORZLQJXVWRPDQDJHYRODWLOHFRQGLWLRQV Tenke Fungurume. &RQVWUXFWLRQDFWLYLWLHVIRUWKHDSSUR[LPDWH HIIHFWLYHO\UHGXFHGHEWDQGUHLQVWDWHFDVKGLYLGHQGVWRVKDUHKROGHUV ELOOLRQLQLWLDOSURMHFWDUH FRPSOHWH &RSSHUSURGXFWLRQFRPPHQFHG ZKLOHPDLQWDLQLQJRXUIXWXUHJURZWKRSSRUWXQLWLHV,Q DGGLWLRQZH LQ0DUFKDQGDFKLHYHGWDUJHWHGFRSSHUSURGXFWLRQUDWHVLQ KDYHDQQRXQFHGLQLWLDWLYHVWRUHVXPHFHUWDLQSURMHFWGHYHORSPHQW 6HSWHPEHU6WDUWXSDQGTXDOLW\LVVXHVFRQWLQXHWREH DFWLYLWLHVWKDWZHUHGHIHUUHGLQODWH UHIHUWR´&XUUHQW DGGUHVVHGLQWKHFREDOWFLUFXLWDQGVXVWDLQHGWDUJHWHGSURGXFWLRQ 'HYHORSPHQW3URMHFWVµIRUIXUWKHUGLVFXVVLRQ :HYLHZWKHORQJWHUP UDWHVDUHH[SHFWHGWREHUHDFKHGGXULQJ&XUUHQWRSHUDWLRQVDUH RXWORRNIRURXUEXVLQHVVSRVLWLYHO\VXSSRUWHGE\OLPLWDWLRQVRQ GHVLJQHGWRSURGXFHDSSUR[LPDWHO\PLOOLRQSRXQGVRIFRSSHUDQG VXSSOLHVRIFRSSHUDQGE\WKHUHTXLUHPHQWIRUFRSSHULQWKHZRUOGҋV PLOOLRQSRXQGVRIFREDOWSHU\HDU HFRQRP\DQGZLOOFRQWLQXHWRDGMXVWRXURSHUDWLQJVWUDWHJ\DVPDUNHW 7KHLQLWLDO7HQNH)XQJXUXPHSURMHFWZDVGHVLJQHGDQGFRQVWUXFWHG FRQGLWLRQVFKDQJH LQDZRUOGFODVVIDVKLRQXVLQJPRGHUQWHFKQRORJ\DQGIROORZLQJ %DVHGRQFXUUHQWPLQHSODQVDQGVXEMHFWWRIXWXUHFRSSHUJROG LQWHUQDWLRQDOVWDQGDUGVIRUHQYLURQPHQWDOPDQDJHPHQWRFFXSDWLRQDO DQGPRO\EGHQXPSULFHVZHH[SHFWHVWLPDWHGRSHUDWLQJFDVK VDIHW\DQGVRFLDOUHVSRQVLELOLW\7KHIDFLOLWLHVLQFOXGHLPSHUPHDEOH ÁRZVWREHJUHDWHUWKDQRXUEXGJHWHGFDSLWDOH[SHQGLWXUHVH[SHFWHG OLQHGWDLOLQJVWRUDJHDQGZDVWHZDWHUWUHDWPHQWSRQGVDQGZHKDYH GHEWSD\PHQWVGLYLGHQGVQRQFRQWUROOLQJLQWHUHVWGLVWULEXWLRQVDQG PDGHVLJQLÀFDQWLQYHVWPHQWVLQLQIUDVWUXFWXUHLQWKHUHJLRQLQFOXGLQJ RWKHUFDVKUHTXLUHPHQWV DQDWLRQDOURDGDQGLPSURYHPHQWVLQSRZHUJHQHUDWLRQDQG Cash and Cash Equivalents WUDQVPLVVLRQV\VWHPV2XUVRFLDOSURJUDPVLQFOXGHORFDOPLFUR $W'HFHPEHUZHKDGFRQVROLGDWHGFDVKDQGFDVK HQWHUSULVHEXVLQHVVHVDJULFXOWXUDOFDSDFLW\EXLOGLQJLQLWLDWLYHV HTXLYDOHQWVRIELOOLRQ7KHIROORZLQJWDEOHUHÁHFWVWKH86DQG PDODULDDEDWHPHQWSRWDEOHGULQNLQJZDWHUZHOOVQHZPHGLFDO LQWHUQDWLRQDOFRPSRQHQWVRIFRQVROLGDWHGFDVKDQGFDVKHTXLYDOHQWV IDFLOLWLHVDQGVHYHUDOQHZVFKRROV7KHSURMHFWZLOOFRQWLQXHWR SURYLGH DW'HFHPEHUDQG LQPLOOLRQV  LPSRUWDQWEHQHÀWVWRWKH&RQJROHVHWKURXJKHPSOR\PHQWDQGWKH SURYLVLRQRIORFDOVHUYLFHVDQGWRWKH'5&JRYHUQPHQWWKURXJK    2009  VXEVWDQWLDOWD[UR\DOW\DQGGLYLGHQGSD\PHQWV &DVKDWGRPHVWLFFRPSDQLHVD     $ 1,522   1,134 :HFRQWLQXHWRHQJDJHLQGULOOLQJDFWLYLWLHVH[SORUDWLRQDQDO\VHV &DVKDWLQWHUQDWLRQDORSHUDWLRQV        7RWDOFRQVROLGDWHGFDVKDQGFDVKHTXLYDOHQWV  2,656  DQGPHWDOOXUJLFDOWHVWLQJWRHYDOXDWHWKHSRWHQWLDORIWKLVKLJKO\ /HVV1RQFRQWUROOLQJLQWHUHVWVҋVKDUH    (300)   SURVSHFWLYHGLVWULFW7KHVH DQDO\VHVDUHEHLQJLQFRUSRUDWHGLQIXWXUH  &DVKQHWRIQRQFRQWUROOLQJLQWHUHVWVҋVKDUH   2,356  SODQVWRHYDOXDWHRSSRUWXQLWLHVIRUH[SDQVLRQ,QRXUUHFRYHUDEOH /HVV:LWKKROGLQJWD[HVDQGRWKHU     (171)    1HWFDVKDYDLODEOHWR)&;     $ 2,185  SURYHQDQGSUREDEOHUHVHUYHHVWLPDWHVIRUZHZHUHVXFFHVVIXO H 0UJS\KLZJHZOH[V\YWHYLU[JVTWHU`HUK5VY[O(TLYPJHVWLYH[PVUZ LQDGGLQJELOOLRQSRXQGVRIFRSSHUUHVHUYHVDQGELOOLRQ SRXQGVRIFREDOWUHVHUYHV5HFRYHUDEOHSURYHQDQGSUREDEOH Operating Activities UHVHUYHVDW'HFHPEHUDSSUR[LPDWHPLOOLRQPHWULFWRQV 'XULQJZHJHQHUDWHGRSHUDWLQJFDVKÁRZVWRWDOLQJELOOLRQ RIRUHZLWKDYHUDJHJUDGHVRISHUFHQWIRUFRSSHUDQG QHWRIPLOOLRQXVHGIRUZRUNLQJFDSLWDOUHTXLUHPHQWVZKLFK SHUFHQWIRUFREDOWZKLFKHTXDWHVWRUHFRYHUDEOHUHVHUYHVRI LQFOXGHGDSSUR[LPDWHO\PLOOLRQUHODWHGWRVHWWOHPHQWRIÀQDO ELOOLRQSRXQGVRIFRSSHUDQGELOOLRQSRXQGVRIFREDOW SULFLQJZLWKFXVWRPHUVRQSURYLVLRQDOO\SULFHGFRSSHUVDOHV :HFRPPHQFHGDIHDVLELOLW\VWXG\LQIRXUWKTXDUWHUWR 2SHUDWLQJFDVKÁRZVLQWRWDOHGELOOLRQQHWRIPLOOLRQ HYDOXDWHDVHFRQGSKDVHRIWKHSURMHFWZKLFKZRXOGLQFOXGH XVHGIRUZRUNLQJFDSLWDOUHTXLUHPHQWVZKLFKLQFOXGHGPLOOLRQ RSWLPL]LQJWKHFXUUHQWSODQWDQGSRWHQWLDOO\LQFUHDVLQJFDSDFLW\E\ WRVHWWOHWKHFRSSHUSULFHSURWHFWLRQSURJUDPFRQWUDFWDQG DSSUR[LPDWHO\SHUFHQW7KHIHDVLELOLW\VWXG\LVH[SHFWHGWREH RSHUDWLQJFDVKÁRZVLQWRWDOHGELOOLRQLQFOXGLQJELOOLRQ FRPSOHWHGE\PLG\HDU IURPZRUNLQJFDSLWDOVRXUFHV CAPITAL RESOURCES AND LIQUIDITY 2SHUDWLQJFDVKÁRZVIRUZHUHKLJKHUWKDQLQSULPDULO\ EHFDXVHRIORZHURSHUDWLQJFRVWVDQGKLJKHUJROGSULFHVDQGVDOHV 2XURSHUDWLQJFDVKÁRZVYDU\ZLWKSULFHVUHDOL]HGIURPFRSSHUJROG YROXPHV2SHUDWLQJFDVKÁRZVIRUZHUHORZHUWKDQLQ DQGPRO\EGHQXPVDOHVRXUSURGXFWLRQOHYHOVSURGXFWLRQFRVWVFDVK SULPDULO\EHFDXVHRIKLJKHURSHUDWLQJFRVWVDQGKLJKHUZRUNLQJ SD\PHQWVIRULQFRPHWD[HVDQGLQWHUHVWRWKHUZRUNLQJFDSLWDO FDSLWDOUHTXLUHPHQWV FKDQJHVDQGRWKHUIDFWRUV$VDUHVXOWRIZHDNHFRQRPLFFRQGLWLRQV &RQVROLGDWHGUHYHQXHVRSHUDWLQJFDVKÁRZVDQGQHWLQFRPH ZHUHYLVHGRXURSHUDWLQJSODQVDWWKHHQGRIDQGLQHDUO\ YDU\VLJQLÀFDQWO\ZLWKÁXFWXDWLRQVLQWKHPDUNHWSULFHVRIFRSSHU WRSURWHFWOLTXLGLW\ZKLOHSUHVHUYLQJRXUODUJHPLQHUDOUHVRXUFHVDQG JROGDQGPRO\EGHQXPVDOHVYROXPHVDQGRWKHUIDFWRUV5HIHUWR JURZWKRSWLRQVIRUWKHORQJHUWHUP UHIHUWR1RWHIRUIXUWKHU ´2YHUYLHZDQG2XWORRNµIRUIXUWKHUGLVFXVVLRQRISURMHFWHG GLVFXVVLRQ +RZHYHUVWURQJRSHUDWLQJSHUIRUPDQFHDQGULVLQJ RSHUDWLQJFDVKÁRZV FRSSHUSULFHVKDYHHQDEOHGXVWRHQKDQFHRXUÀQDQFLDODQGOLTXLGLW\

40 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

Investing Activities In July 2008, our Board of Directors (the Board) approved an Capital Expenditures. Capital expenditures, including capitalized increase in the open-market share purchase program for up to interest, totaled $1.6 billion in 2009 (including $1.0 billion for major 30 million shares. During third-quarter 2008, we purchased 6.3 million projects and a property acquisition), $2.7 billion in 2008 (including shares of our common stock for $500 million ($79.15 per share $1.6 billion for major projects) and $1.8 billion in 2007 (including DYHUDJH XQGHU WKLV SURJUDP KRZHYHU EHFDXVH RI ÀQDQFLDO PDUNHW $0.8 billion for major projects). The decrease in capital expenditures turmoil and the declines in copper and molybdenum prices, in LQ FRPSDUHG ZLWK  SULPDULO\ UHÁHFWHG WKH HIIHFWV RI WKH September 2008, we suspended purchases of our common stock decision to defer capital spending for several projects, lower capital under the program. There are 23.7 million shares remaining under this spending for the initial Tenke Fungurume development project (for program, and the timing of future purchases of our common stock is which construction activities are complete) and reduced spending for GHSHQGHQWRQ PDQ\ IDFWRUV LQFOXGLQJ RXU RSHUDWLQJ UHVXOWV FDVK ÁRZV sustaining capital. The increase in capital expenditures in 2008, DQG ÀQDQFLDO SRVLWLRQ FRSSHU JROG DQG PRO\EGHQXP SULFHV WKH SULFH FRPSDUHGZLWK  SULPDULO\ UHÁHFWHG KLJKHU FRVWV DVVRFLDWHG ZLWK of our common shares; and general economic and market conditions. our major development projects. At December 31, 2009, we had 430 million common shares During fourth-quarter 2009, we announced initiatives to resume outstanding; assuming conversion of our 6¾% Mandatory Convertible certain project development activities that were deferred in late 2008 Preferred Stock, which automatically converts on May 1, 2010, we (refer to “Current Development Projects” for further discussion of would have between 469 and 477 million common shares these projects). Capital spending plans will continue to be reviewed outstanding, depending on the applicable average market price of our and adjusted in response to changes in market conditions and other common stock (refer to Note 12 for further discussion). factors. Refer to “Overview and Outlook” for further discussion of Total debt approximated $6.3 billion at December 31, 2009, $7.4 projected 2010 capital expenditures. billion at December 31, 2008, and $7.2 billion at December 31, 2007. Other Investing Activities. During 2008, our global reclamation and We have revolving credit facilities available through March 2012, remediation trusts decreased by $430 million resulting primarily from which are composed of (i) a $1.0 billion revolving credit facility reimbursement of previously incurred costs for reclamation and available to FCX and (ii) a $0.5 billion revolving credit facility available environmental activities. to both FCX and PT Freeport Indonesia. Interest on the revolving On March 19, 2007, we issued 136.9 million shares of common credit facilities accrues at the London Interbank Offered Rate (LIBOR) stock and paid $13.9 billion (net of cash acquired) to acquire Phelps plus 1.00 percent, subject to an increase or decrease in the interest Dodge (refer to Note 18 for further discussion). rate margin based on the credit ratings assigned by Standard & During 2007, we received net proceeds of $597 million associated Poor’s Rating Services and Moody’s Investor Services. At with the sale of Phelps Dodge International Corporation (PDIC) (refer December 31, 2009, we had no borrowings and $39 million of letters to Note 19 for further discussion), and also received proceeds totaling of credit issued under the facilities, resulting in availability of $260 million primarily related to sales of marketable securities. approximately $1.5 billion ($961 million of which could be used for additional letters of credit). The revolving credit facilities contain Financing Activities restrictions on the amount available for dividend payments, Equity and Debt Transactions. In February 2009, we completed a purchases of our common stock and certain debt prepayments (refer public offering of 26.8 million shares of our common stock at an to Note 10 for further discussion). However, these restrictions do not average price of $28.00 per share, which generated gross proceeds apply as long as availability under the revolvers plus domestic cash of $750 million (net proceeds of approximately $740 million). Net exceeds $750 million. At December 31, 2009, we had availability proceeds were used for general corporate purposes, including the XQGHUWKH UHYROYHUV SOXV DYDLODEOH GRPHVWLF FDVK DV GHÀQHG E\ WKH repayment of amounts outstanding under our revolving credit revolving credit facility) totaling approximately $3.4 billion. facilities, working capital and capital expenditures. In addition, the indenture governing our senior notes used to In December 2008, through privately negotiated transactions, we ÀQDQFHWKH 3KHOSV 'RGJH DFTXLVLWLRQ FRQWDLQV UHVWULFWLRQV RQ induced conversion of 0.3 million shares of our 5½% Convertible incurring debt, making restricted payments and selling assets (refer to Perpetual Preferred Stock into 5.8 million shares of FCX common Note 10 for further discussion). In April 2008, Standard & Poor’s stock. To induce conversion of these shares, we issued to the holders Rating Services and Fitch Ratings raised our corporate credit rating an additional 1.0 million shares of FCX common stock valued at $22 and the ratings on our unsecured debt to BBB- (investment grade). million. In September 2009, we called for the redemption of the As a result of the upgrade of our unsecured debt to investment grade, remaining 0.8 million shares of our 5½% Convertible Perpetual these covenants are currently suspended. However, to the extent the Preferred Stock, which converted into 17.9 million shares of FCX rating is downgraded below investment grade, the covenants would common stock; the remaining 1,025 shares were redeemed for again become effective. approximately $1 million in cash. Refer to Note 12 for further discussion of these transactions. FREEPORT- McMoRan COPPER & GOLD INC. 41 2009 Annual Report MANAGEMENT’S DISCUSSION AND ANALYSIS

During 2009, we repaid $1.0 billion in debt, including $727 million Senior Notes through open-market purchases at a cost of $293 of senior debt at a cost of $768 million, consisting of the August 2009 million. Losses on early extinguishment of debt are expected to total redemption of 6 7/8% Senior Notes and the open-market purchases of  PLOOLRQ LQ ÀUVWTXDUWHU  IRU WKHVH  WUDQVDFWLRQV our 8.25% Senior Notes, our 8.375% Senior Notes and our 8¾% In February 2008, we purchased, in an open-market transaction, Senior Notes (refer to Note 10 for further discussion of these $33 million of our 9½% Senior Notes for $46 million. transactions). These transactions will result in annual interest cost $V VKRZQ LQ WKH IROORZLQJ VXPPDU\ WDEOH ZH KDYH QR VLJQLÀFDQW savings of approximately $56 million. Losses on early extinguishment debt maturities in the near term; however, we may consider of debt totaled $48 million ($43 million to net income attributable to additional opportunities to prepay debt in advance of scheduled FCX common stockholders or $0.09 per share) for 2009. maturities or redeem our currently redeemable Senior Floating Rate From January 1, 2010, through February 25, 2010, we repaid an Notes (in millions). additional $269 million of our 8.25% Senior Notes and our 8.375%

2010 2011 2012 2013 2014 Thereafter Senior notes $ — $ 89 $ — $ — $ — $ 6,064 Equipment loans and other 16 4 14 1 1 157 $ 16 $ 93 $14 $ 1 $ 1 $ 6,221

March 2007 Acquisition of Phelps Dodge.,Q FRQQHFWLRQ ZLWK ÀQDQFLQJ of business on January 15, 2010. The Board will continue to review the acquisition of Phelps Dodge, we used $2.5 billion of available RXUÀQDQFLDO SROLF\ RQ DQ RQJRLQJ EDVLV cash (including acquired cash) and funded the remainder with term Preferred stock dividends paid totaled $229 million in 2009, $255 loan borrowings totaling $10.0 billion under a new $11.5 billion senior million in 2008 and $175 million in 2007 representing dividends on credit facility and from the offering of $6.0 billion in senior notes our 5½% Convertible Perpetual Preferred Stock and 6¾% Mandatory (which generated net proceeds of $5.9 billion). Following the close of Convertible Preferred Stock (refer to Note 12 for further discussion). the acquisition of Phelps Dodge and in accordance with our plan to On December 30, 2009, FCX declared a regular quarterly dividend of reduce debt, during 2007, we fully repaid the $10.0 billion in term $1.6785 per share on our 6¾% Mandatory Convertible Preferred loans (including incremental borrowings and payments of Stock, which was paid on February 1, 2010, to shareholders of record approximately $2.5 billion) using a combination of equity proceeds at the close of business on January 15, 2010. On May 1, 2010, DQG LQWHUQDOO\ JHQHUDWHG FDVK ÁRZV 7KH HTXLW\ WUDQVDFWLRQV LQFOXGHG our 6¾% Mandatory Convertible Preferred Stock will automatically the sale of 47.15 million shares of common stock at $61.25 per share convert into between 39 million and 47 million shares of FCX for net proceeds of $2.8 billion and 28.75 million shares of 6¾% common stock, depending on the applicable average market price of Mandatory Convertible Preferred Stock for net proceeds of $2.8 our common stock (refer to Note 12 for further discussion). billion. In addition to repaying the term loans, we had net repayments Cash dividends and distributions paid to noncontrolling interests of other debt totaling $325 million in 2007. totaled $535 million in 2009, $730 million in 2008 and $967 million in Cash Dividends. The declaration and payment of dividends is at  UHÁHFWLQJ GLYLGHQGV DQG GLVWULEXWLRQV SDLG WR WKH QRQFRQWUROOLQJ the discretion of the Board. The amount of our cash dividend on our interest owners of PT Freeport Indonesia and our South America FRPPRQ VWRFN LV GHSHQGHQW XSRQ RXU ÀQDQFLDO UHVXOWV FDVK copper mines. requirements, future prospects and other factors deemed relevant by OTHER CONTRACTUAL OBLIGATIONS the Board. In December 2007, the Board increased the annual cash In addition to debt maturities, we have other contractual obligations, dividend on our common stock from $1.25 per share to $1.75 per ZKLFKZH H[SHFW WR IXQG ZLWK SURMHFWHG RSHUDWLQJ FDVK ÁRZV share, and again in July 2008 to $2.00 per share. Because of the DYDLODELOLW\ XQGHU RXU UHYROYLQJ FUHGLW IDFLOLWLHV RU IXWXUH ÀQDQFLQJ deterioration in copper and molybdenum prices and in general transactions, if necessary. A summary of these various obligations at economic conditions, in December 2008, the Board suspended the December 31, 2009, follows (in millions): cash dividend on our common stock; accordingly, there were no common stock dividends paid in 2009, compared with $693 million ($1.8125 per share) in 2008 and $421 million ($1.25 per share) in 2007. In October 2009, the Board reinstated an annual cash dividend on our common stock of $0.60 per share. On December 30, 2009, FCX declared a quarterly dividend of $0.15 per share, which was paid on February 1, 2010, to common shareholders of record at the close

42 FREEPORT- McMoRan COPPER & GOLD INC. 2009 Annual Report MANAGEMENT’S DISCUSSION AND ANALYSIS

  ;V[HS  [V [V ;OLYLHM[LY :JOLK\SLKPU[LYLZ[WH`TLU[VISPNH[PVUZH             9LJSHTH[PVUHUKLU]PYVUTLU[HSVISPNH[PVUZI                ;HRLVYWH`JVU[YHJ[ZJ             6WLYH[PUNSLHZLVISPNH[PVUZ             ([SHU[PJ*VWWLYVISPNH[PVU[VPUZ\YHUJLJVTWHU`K             7;-YLLWVY[0UKVULZPHTPULJSVZ\YLHUKYLJSHTH[PVUM\UKL              ;V[HSJVU[YHJ[\HSJHZOVISPNH[PVUZM        

H :JOLK\SLKPU[LYLZ[WH`TLU[VISPNH[PVUZ^LYLJHSJ\SH[LK\ZPUNZ[H[LKJV\WVUYH[LZMVYÄ_LKYH[LKLI[HUKPU[LYLZ[YH[LZHWWSPJHISLH[+LJLTILY MVY]HYPHISLYH[LKLI[ I 9LWYLZLU[ZLZ[PTH[LKJHZOWH`TLU[ZVUHU\UKPZJV\U[LKHUK\ULZJHSH[LKIHZPZHZZVJPH[LK^P[OYLJSHTH[PVUHUKLU]PYVUTLU[HSHJ[P]P[PLZ;OL[PTPUNHUK[OLHTV\U[VM[OLZL WH`TLU[ZJV\SKJOHUNLHZHYLZ\S[VMJOHUNLZPUYLN\SH[VY`YLX\PYLTLU[ZJOHUNLZPUZJVWLHUKJVZ[ZVMYLJSHTH[PVUHJ[P]P[PLZHUKHZHJ[\HSZWLUKPUNVJJ\YZ9LMLY[V5V[LMVY HKKP[PVUHSKPZJ\ZZPVUVMLU]PYVUTLU[HSHUKYLJSHTH[PVUTH[[LYZ J 9LWYLZLU[ZJVU[YHJ[\HSVISPNH[PVUZMVYW\YJOHZLZVMNVVKZVYZLY]PJLZ[OH[HYLKLÄULKI`\ZHZHNYLLTLU[Z[OH[HYLLUMVYJLHISLHUKSLNHSS`IPUKPUNHUK[OH[ZWLJPM`HSSZPNUPÄJHU[[LYTZ ;HRLVYWH`JVU[YHJ[ZWYPTHYPS`JVTWYPZL[OLWYVJ\YLTLU[VMJVWWLYJVUJLU[YH[LZHUKJH[OVKLZ IPSSPVU[YHUZWVY[H[PVU TPSSPVUHUKV_`NLU  TPSSPVU:VTLVMV\Y [HRLVYWH`JVU[YHJ[ZHYLZL[[SLKIHZLKVU[OLWYL]HPSPUNTHYRL[YH[LMVY[OLZLY]PJLVYJVTTVKP[`W\YJOHZLKHUKPUZVTLJHZLZ[OLHTV\U[VM[OLHJ[\HSVISPNH[PVUTH`JOHUNLV]LY [PTLILJH\ZLVMTHYRL[JVUKP[PVUZ6ISPNH[PVUZMVYJVWWLYJVUJLU[YH[LZHUKJH[OVKLZWYV]PKLMVYKLSP]LYPLZVMZWLJPÄLK]VS\TLZH[THYRL[IHZLKWYPJLZWYPTHYPS`[V([SHU[PJ*VWWLYHUK [OL5VY[O(TLYPJHJVWWLYTPULZ;YHUZWVY[H[PVUVISPNH[PVUZHYLWYPTHYPS`MVY:V\[O(TLYPJHJVU[YHJ[LKVJLHUMYLPNO[YH[LZHUKMVY5VY[O(TLYPJHUH[\YHSNHZ[YHUZWVY[H[PVU6_`NLU VISPNH[PVUZWYV]PKLMVYKLSP]LYPLZVMZWLJPÄLK]VS\TLZH[Ä_LKWYPJLZWYPTHYPS`[V([SHU[PJ*VWWLY K 0U(\N\Z[([SHU[PJ*VWWLYJVTWSPLK^P[O:WHUPZOSLNPZSH[PVUI`HNYLLPUN[VM\UKTPSSPVUL\YVZHUU\HSS`MVY`LHYZ[VHUHWWYV]LKPUZ\YHUJLJVTWHU`MVYHULZ[PTH[LK TPSSPVUL\YVJVU[YHJ[\HSVISPNH[PVU[VZ\WWSLTLU[HTV\U[ZWHPK[VJLY[HPUYL[PYLKLTWSV`LLZ([SHU[PJ*VWWLYOHK  TPSSPVUYLJVYKLKMVY[OPZVISPNH[PVUH[+LJLTILY  L 9LWYLZLU[Z7;-YLLWVY[0UKVULZPH»ZJVTTP[TLU[Z[VJVU[YPI\[LHTV\U[Z[VHJHZOM\UKKLZPNULK[VHJJ\T\SH[LH[SLHZ[ TPSSPVUPUJS\KPUNPU[LYLZ[I`[OLLUKVMV\Y0UKVULZPHU TPUPUNHJ[P]P[PLZ[VWH`MVYTPULJSVZ\YLHUKYLJSHTH[PVU M ;OPZ[HISLL_JS\KLZJLY[HPUV[OLYVISPNH[PVUZPUV\YJVUZVSPKH[LKIHSHUJLZOLL[ZPUJS\KPUNLZ[PTH[LKM\UKPUNMVYWLUZPVUVISPNH[PVUZHZ[OLM\UKPUNTH`]HY`MYVT`LHY[V`LHYIHZLK VUJOHUNLZPU[OLMHPY]HS\LVMWSHUHZZL[ZHUKHJ[\HYPHSHZZ\TW[PVUZHUKHJJY\LKSPHIPSP[PLZ[V[HSPUN TPSSPVU[OH[YLSH[L[V\UYLJVNUPaLK[H_ILULÄ[Z^OLYL[OL[PTPUNVMZL[[SLTLU[ PZUV[KL[LYTPUHISL;OPZ[HISLHSZVL_JS\KLZW\YJOHZLVYKLYZMVY[OLW\YJOHZLVMPU]LU[VY`HUKV[OLYNVVKZHUKZLY]PJLZHZW\YJOHZLVYKLYZ[`WPJHSS`YLWYLZLU[H\[OVYPaH[PVUZ[V W\YJOHZLYH[OLY[OHUIPUKPUNHNYLLTLU[Z

,QDGGLWLRQWRRXUGHEWPDWXULWLHVDQGRWKHUFRQWUDFWXDOREOLJDWLRQVZH 'HFHPEHUUHODWHGWRWKHDFTXLUHG3KHOSV'RGJHRSHUDWLRQV  KDYHRWKHUFRPPLWPHQWVZKLFKZHH[SHFWWRIXQGZLWKSURMHFWHG 7KHGHFUHDVHLQHQYLURQPHQWDOFDSLWDOVSHQGLQJIRUFRPSDUHG RSHUDWLQJFDVKÁRZVDYDLODEOHFUHGLWIDFLOLWLHVRUIXWXUHÀQDQFLQJ ZLWKSULPDULO\UHODWHGWRFRPSOHWLRQRIODUJHSURMHFWVLQ WUDQVDFWLRQVLIQHFHVVDU\7KHVH LQFOXGH L 37 )UHHSRUW,QGRQHVLDҋV FRPELQHGZLWKUHGXFHGGLVFUHWLRQDU\VSHQGLQJDQGH[WHQGHGSURMHFW FRPPLWPHQWWRSURYLGHRQHSHUFHQWRILWVDQQXDOUHYHQXHIRUWKH WLPHOLQHV7KHLQFUHDVHLQHQYLURQPHQWDOFDSLWDOVSHQGLQJIRU GHYHORSPHQWRIWKHORFDOSHRSOHLQLWVDUHDRIRSHUDWLRQVWKURXJKWKH FRPSDUHGZLWKSULPDULO\UHODWHGWRDIXOOWZHOYHPRQWKV )UHHSRUW3DUWQHUVKLS)XQG IRU&RPPXQLW\'HYHORSPHQW LL &HUUR RI3KHOSV'RGJHH[SHQGLWXUHVLQFRPELQHGZLWKLQFUHDVHG 9HUGHҋVORFDOPLQLQJIXQGFRQWULEXWLRQVHTXDOWRSHUFHQWRIDIWHU H[SHQGLWXUHVIRUDFFHOHUDWHGUHPHGLDWLRQHIIRUWV)RUZHH[SHFW WD[SURÀWV LLL 7HQNH)XQJXUXPHҋ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nvironmental 7KHFRVWRIFRPSO\LQJZLWKHQYLURQPHQWDOODZVLVDIXQGDPHQWDO Asset Retirement Obligations DQGVXEVWDQWLDOFRVWRIRXUEXVLQHVV:HKDGELOOLRQDW :HUHFRJQL]H$52VDVOLDELOLWLHVZKHQLQFXUUHGZLWKWKHLQLWLDO 'HFHPEHUDQGELOOLRQDW'HFHPEHU PHDVXUHPHQWDWIDLUYDOXH7KHVH OLDELOLWLHVZKLFKDUHLQLWLDOO\ UHFRUGHGLQRXUFRQVROLGDWHGEDODQFHVKHHWVIRUHQYLURQPHQWDO HVWLPDWHGEDVHGRQGLVFRXQWHGFDVKÁRZHVWLPDWHVDUHDFFUHWHGWR REOLJDWLRQVDWWULEXWHGWR&(5&/$RUDQDORJRXVVWDWHSURJUDPVDQG IXOOYDOXHRYHUWLPHWKURXJKFKDUJHVWRLQFRPH5HFODPDWLRQFRVWVIRU IRUHVWLPDWHGIXWXUHFRVWVDVVRFLDWHGZLWKHQYLURQPHQWDOPDWWHUV IXWXUHGLVWXUEDQFHVDUHUHFRUGHGDVDQ$52LQWKHSHULRGRI DWFORVHGIDFLOLWLHVDQGFORVHGSRUWLRQVRIFHUWDLQRSHUDWLQJIDFLOLWLHV GLVWXUEDQFH2XUFRVWHVWLPDWHVDUHUHÁHFWHGRQDWKLUGSDUW\FRVW 5HIHUWR1RWHIRUIXUWKHULQIRUPDWLRQDERXWHQYLURQPHQWDO EDVLVDQGFRPSO\ZLWKRXUOHJDOREOLJDWLRQWRUHWLUHWDQJLEOHORQJOLYHG UHJXODWLRQLQFOXGLQJVLJQLÀFDQWHQYLURQPHQWDOPDWWHUV DVVHWV:HKDGUHFRUGHG$52VWRWDOLQJPLOOLRQDW'HFHPEHU 'XULQJZHLQFXUUHGHQYLURQPHQWDOFDSLWDOH[SHQGLWXUHVDQG DQGPLOOLRQDW'HFHPEHULQFXUUHQWDQGORQJ RWKHUHQYLURQPHQWDOFRVWV LQFOXGLQJRXUMRLQWYHQWXUHSDUWQHUVҋ WHUPOLDELOLWLHVRQWKHFRQVROLGDWHGEDODQFHVKHHWV6SHQGLQJRQ VKDUHV RIPLOOLRQIRUSURJUDPVWRFRPSO\ZLWKDSSOLFDEOH $52VWRWDOHGPLOOLRQLQ PLOOLRQLQDQGPLOOLRQ HQYLURQPHQWDOODZVDQGUHJXODWLRQVWKDWDIIHFWRXURSHUDWLRQV LQ7KHGHFUHDVHLQ$52VSHQGLQJIRUFRPSDUHGZLWK FRPSDUHGWRPLOOLRQLQDQGPLOOLRQLQ ZKLFK SULPDULO\UHODWHGWRH[WHQGHGSURMHFWWLPHOLQHVZKLFKUHVXOWHG LQFOXGHGPLOOLRQ LQFXUUHGIURP0DUFK WKURXJK LQUHGXFHGUHTXLUHGH[SHQGLWXUHVIRU7KHLQFUHDVHLQ$52

  -9,,769;4J4V9HU*677,9 .63+05* 43    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

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ommodity Price Risk FRPPRQVWRFNKROGHUVRUSHUVKDUH LQDQGDGHFUHDVHRI 2XUFRQVROLGDWHGUHYHQXHVLQFOXGHWKHVDOHRIFRSSHUFRQFHQWUDWHV PLOOLRQ PLOOLRQWRQHWLQFRPHDWWULEXWDEOHWR)&;FRPPRQ FRSSHUFDWKRGHVFRSSHUURGPRO\EGHQXPJROGDQGRWKHUPHWDOVE\ VWRFNKROGHUVRUSHUVKDUH LQ RXU1RUWKDQG6RXWK$PHULFDFRSSHUPLQHVWKHVDOHRIFRSSHU $W'HFHPEHUZHKDGSURYLVLRQDOO\SULFHGFRSSHUVDOHV FRQFHQWUDWHV ZKLFKDOVRFRQWDLQVLJQLÀFDQWTXDQWLWLHVRIJROGDQG WRWDOLQJPLOOLRQSRXQGVRIFRSSHUDWRXUFRSSHUPLQLQJRSHUDWLRQV VLOYHU E\RXU,QGRQHVLDPLQLQJRSHUDWLRQWKHVDOHRIFRSSHUFDWKRGHV QHW RILQWHUFRPSDQ\VDOHVDQGQRQFRQWUROOLQJLQWHUHVWV UHFRUGHG DQGFREDOWK\GUR[LGHE\RXU$IULFDPLQLQJRSHUDWLRQVWKHVDOHRI DWDQDYHUDJHSULFHRISHUSRXQGVXEMHFWWRÀQDOSULFLQJRYHU PRO\EGHQXPLQYDULRXVIRUPVE\RXU0RO\EGHQXPRSHUDWLRQVDQG WKHQH[WVHYHUDOPRQWKV:HHVWLPDWHWKDWHDFKFKDQJHLQWKH WKHVDOHRIFRSSHUFDWKRGHVFRSSHUDQRGHVDQGJROGLQDQRGHVDQG SULFHUHDOL]HGIURPWKH'HFHPEHUSURYLVLRQDOSULFH VOLPHVE\$WODQWLF&RSSHU&RQVROLGDWHGUHYHQXHVRSHUDWLQJFDVK UHFRUGHGZRXOGKDYHDQHWLPSDFWRQRXUFRQVROLGDWHGUHYHQXHV ÁRZVDQGQHWLQFRPHYDU\VLJQLÀFDQWO\ZLWKÁXFWXDWLRQVLQWKHPDUNHW RIDSSUR[LPDWHO\PLOOLRQ PLOOLRQWRQHWLQFRPHDWWULEXWDEOHWR SULFHVRIFRSSHUJROGDQGPRO\EGHQXPVDOHVYROXPHVDQGRWKHU )&;FRPPRQVWRFNKROGHUV 7KH/0(VSRWFRSSHUSULFHFORVHG DW IDFWRUV%DVHGRQSURMHFWHGFRQVROLGDWHGVDOHVYROXPHVDQG SHUSRXQGRQ-DQXDU\ DVVXPLQJDYHUDJHSULFHVRISHUSRXQGRIFRSSHUSHU 2QOLPLWHGSDVWRFFDVLRQVLQUHVSRQVHWRPDUNHWFRQGLWLRQVZH RXQFHRIJROGDQGSHUSRXQGRIPRO\EGHQXPIRUWKH\HDURXU KDYHHQWHUHGLQWRFRSSHUDQGJROGSULFHSURWHFWLRQFRQWUDFWVIRUD FRQVROLGDWHGRSHUDWLQJFDVKÁRZVIRUZRXOGDSSUR[LPDWH SRUWLRQRIRXUH[SHFWHGIXWXUHPLQHSURGXFWLRQWRPLWLJDWHWKHULVNRI ELOOLRQQHWRIDQHVWLPDWHGELOOLRQRIZRUNLQJFDSLWDOUHTXLUHPHQWV DGYHUVHSULFHÁXFWXDWLRQV:HGRQRWFXUUHQWO\LQWHQGWRHQWHULQWR 2SHUDWLQJFDVKÁRZVZRXOGEHLPSDFWHGE\DSSUR[LPDWHO\PLOOLRQ VLPLODUKHGJLQJSURJUDPVLQWKHIXWXUH IRUHDFKSHUSRXQGFKDQJHLQFRSSHUSULFHVPLOOLRQIRUHDFK SHURXQFHFKDQJHLQJROGSULFHVDQGPLOOLRQIRUHDFKSHU Foreign Currency Exchange Risk SRXQGFKDQJHLQPRO\EGHQXPSULFHV 7KHIXQFWLRQDO FXUUHQF\IRUPRVWRIRXURSHUDWLRQVLVWKH86GROODU )RUPRUHWKDQ KDOIRIRXUPLQHGFRSSHUZDVVROGLQ $OORIRXUUHYHQXHVDQGDVLJQLÀFDQWSRUWLRQRIRXUFRVWVDUH FRQFHQWUDWHDSSUR[LPDWHO\SHUFHQWDVFDWKRGHVDQGDSSUR[LPDWHO\ GHQRPLQDWHGLQ86GROODUVKRZHYHUVRPHFRVWVDQGFHUWDLQDVVHWV SHUFHQWDVURG SULQFLSDOO\IURPRXU1RUWK$PHULFDRSHUDWLRQV  DQGOLDELOLW\DFFRXQWVDUHGHQRPLQDWHGLQORFDOFXUUHQFLHVLQFOXGLQJ 6XEVWDQWLDOO\DOOFRQFHQWUDWHDQGFDWKRGHVDOHVFRQWUDFWVSURYLGHÀQDO WKH,QGRQHVLDQUXSLDK$XVWUDOLDQ GROODU&KLOHDQSHVR3HUXYLDQ FRSSHUSULFLQJLQDVSHFLÀHGIXWXUHSHULRG JHQHUDOO\RQHWRIRXU QXHYRVRODQGHXUR*HQHUDOO\RXUUHVXOWVDUHSRVLWLYHO\DIIHFWHG PRQWKVIURPWKHVKLSPHQWGDWH EDVHGSULPDULO\RQTXRWHG/0( ZKHQWKH86GROODUVWUHQJWKHQVLQUHODWLRQWRWKRVHIRUHLJQ SULFHV:HUHFHLYHPDUNHWSULFHVEDVHGRQSULFHVLQWKHVSHFLÀHG FXUUHQFLHVDQGDGYHUVHO\DIIHFWHGZKHQWKH86GROODUZHDNHQVLQ IXWXUHSHULRGZKLFKUHVXOWVLQSULFHÁXFWXDWLRQVUHFRUGHGWKURXJK UHODWLRQWRWKRVHIRUHLJQFXUUHQFLHV )ROORZLQJLVDVXPPDU\RI UHYHQXHVXQWLOWKHGDWHRIVHWWOHPHQW:HUHFRUGUHYHQXHVDQG HVWLPDWHGDQQXDOSD\PHQWVDQGWKHLPSDFWRIFKDQJHVLQIRUHLJQ LQYRLFHFXVWRPHUVDWWKHWLPHRIVKLSPHQWEDVHGRQWKHQFXUUHQW/0( FXUUHQF\UDWHVRQRXUDQQXDORSHUDWLQJFRVWV SULFHVZKLFKUHVXOWVLQDQHPEHGGHGGHULYDWLYHRQRXUSURYLVLRQDO  SULFHGFRQFHQWUDWHDQGFDWKRGHVDOHVWKDWLVDGMXVWHGWRIDLUYDOXH WKURXJKHDUQLQJVHDFKSHULRGXVLQJWKHSHULRGHQGIRUZDUGSULFHV XQWLOWKHGDWHRIÀQDOSULFLQJ7RWKHH[WHQWÀQDOSULFHVDUHKLJKHURU ORZHUWKDQZKDWZDVUHFRUGHGRQDSURYLVLRQDOEDVLVDQLQFUHDVHRU GHFUHDVHWRUHYHQXHVLVUHFRUGHGHDFKUHSRUWLQJSHULRGXQWLOWKHGDWH RIÀQDOSULFLQJ$FFRUGLQJO\LQWLPHVRIULVLQJFRSSHUSULFHVRXU UHYHQXHVEHQHÀWIURPKLJKHUSULFHVUHFHLYHGIRUFRQWUDFWVSULFHGDW FXUUHQWPDUNHWUDWHVDQGDOVRIURPDQLQFUHDVHUHODWHGWRWKHÀQDO SULFLQJRISURYLVLRQDOO\SULFHGVDOHVSXUVXDQWWRFRQWUDFWVHQWHUHGLQWR LQSULRU\HDUVLQWLPHVRIIDOOLQJFRSSHUSULFHVWKHRSSRVLWHRFFXUV

44 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

    *OHUNLPU  ,_JOHUNL9H[LWLY   ,_JOHUNL9H[L  H[+LJLTILY ,Z[PTH[LK(UU\HS7H`TLU[Z PUTPSSPVUZI  2009    PUSVJHSJ\YYLUJ` PUTPSSPVUZH 0UJYLHZL +LJYLHZL Indonesia  9\WPHO  9,420       [YPSSPVU     (\Z[YHSPHUKVSSHY  1.12     TPSSPVU     South America  *OPSLHUWLZV  506       IPSSPVU      7LY\]PHUU\L]VZVS  2.89     TPSSPVU       Atlantic Copper  ,\YV   0.69      TPSSPVU   

H )HZLKVU+LJLTILY L_JOHUNLYH[LZ I 9LÅLJ[Z[OLLZ[PTH[LKPTWHJ[VUHUU\HSVWLYH[PUNJVZ[ZHZZ\TPUNHWLYJLU[PUJYLHZLVYKLJYLHZLPU[OLL_JOHUNLYH[LYLWVY[LKH[+LJLTILY 

Interest Rate Risk 7KHWDEOHEHORZSUHVHQWVDYHUDJHLQWHUHVWUDWHVIRURXUVFKHGXOHG $W'HFHPEHUZHKDGWRWDOGHEWRIELOOLRQRIZKLFK PDWXULWLHVRISULQFLSDOIRURXURXWVWDQGLQJGHEWDQGWKHUHODWHGIDLU DSSUR[LPDWHO\SHUFHQWZDVYDULDEOHUDWHGHEWZLWKLQWHUHVWUDWHV YDOXHVDW'HFHPEHU LQPLOOLRQVH[FHSWSHUFHQWDJHV  EDVHGRQ/,%25RUWKH(XUR,QWHUEDQN2IIHUHG5DWH (85,%25  

      ;OLYLHM[LY -HPY=HS\L -P_LKYH[LKLI[  ·           (]LYHNLPU[LYLZ[YH[L  ·               =HYPHISLYH[LKLI[        ·  ·    (]LYHNLPU[LYLZ[YH[L        ·  ·     

NEW ACCOUNTING STANDARDS UHYHQXHVIURPWKHFRSSHUJROGPRO\EGHQXPDQGRWKHUPHWDOVZH :HGRQRWH[SHFWWKHLPSDFWRIUHFHQWO\LVVXHGDFFRXQWLQJVWDQGDUGV SURGXFH LY LWLVWKHPHWKRGXVHGWRFRPSDUHPLQLQJRSHUDWLRQVLQ WRKDYHDVLJQLÀFDQWLPSDFWRQRXUIXWXUHÀQDQFLDOVWDWHPHQWVDQG FHUWDLQLQGXVWU\SXEOLFDWLRQVDQG Y LWLVWKHPHWKRGXVHGE\RXU GLVFORVXUHV PDQDJHPHQWDQG%RDUGRI'LUHFWRUVWRPRQLWRURSHUDWLRQV,QWKH FRSURGXFWPHWKRGSUHVHQWDWLRQEHORZFRVWVDUHDOORFDWHGWR OFF-BALANCE SHEET ARRANGEMENTS WKHGLIIHUHQWSURGXFWVEDVHGRQWKHLUUHODWLYHUHYHQXHYDOXHVZKLFK 5HIHUWR1RWHIRULQIRUPDWLRQ RQRIIEDODQFHVKHHWDUUDQJHPHQWV ZLOOYDU\WRWKHH[WHQWRXUPHWDOVVDOHVYROXPHVDQGUHDOL]HG PRODUCT REVENUES AND PRODUCTION COSTS SULFHVFKDQJH ,QERWKWKHE\SURGXFWDQGWKHFRSURGXFWPHWKRGFDOFXODWLRQVZH 8QLWQHWFDVKFRVWVSHUSRXQGRIFRSSHUDQGPRO\EGHQXPDUH VKRZDGMXVWPHQWVWRFRSSHUUHYHQXHVIRUSULRUSHULRGRSHQVDOHVDV PHDVXUHVLQWHQGHGWRSURYLGHLQYHVWRUVZLWKLQIRUPDWLRQDERXWWKH VHSDUDWHOLQHLWHPV%HFDXVHWKHFRSSHUSULFLQJDGMXVWPHQWVGRQRW FDVKJHQHUDWLQJFDSDFLW\RIRXUPLQLQJRSHUDWLRQVH[SUHVVHGRQD UHVXOWIURPFXUUHQWSHULRGVDOHVZHKDYHUHÁ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ÁHFWHGDVFUHGLWVDJDLQVWVLWH LQDFFRUGDQFHZLWK86*$$37KLVPHDVXUHLVSUHVHQWHGE\RWKHU SURGXFWLRQDQGGHOLYHU\FRVWVLQWKHE\SURGXFWPHWKRG PLQLQJFRPSDQLHVDOWKRXJKRXUPHDVXUHPD\QRWEHFRPSDUDEOHWR 3UHVHQWDWLRQVXQGHUERWKWKHE\SURGXFWDQGFRSURGXFWPHWKRGVDUH VLPLODUO\WLWOHGPHDVXUHVUHSRUWHGE\RWKHUFRPSDQLHV VKRZQEHORZWRJHWKHUZLWKUHFRQFLOLDWLRQVWRDPRXQWVUHSRUWHGLQRXU :HSUHVHQWJURVVSURÀWSHUSRXQGRIFRSSHUXVLQJERWKD´E\ FRQVROLGDWHGÀQDQFLDOVWDWHPHQWV SURGXFWµPHWKRGDQGD´FRSURGXFWµPHWKRG:HXVHWKHE\SURGXFW  PHWKRGLQRXUSUHVHQWDWLRQRIJURVVSURÀWSHUSRXQGRIFRSSHU EHFDXVH L WKHPDMRULW\RIRXUUHYHQXHVDUHFRSSHUUHYHQXHV LL ZH PLQHRUHZKLFKFRQWDLQVFRSSHUJROGPRO\EGHQXPDQGRWKHU PHWDOV LLL LWLVQRWSRVVLEOHWRVSHFLÀFDOO\DVVLJQDOORIRXUFRVWVWR

  -9,,769;4J4V9HU*677,9 .63+05* 45    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

North America Copper Mines Product Revenues and Production Costs

 )`7YVK\J[  *V7YVK\J[4L[OVK Year Ended December 31, 2009 4L[OVK *VWWLY 4VS`IKLU\TH 6[OLYI ;V[HS 0UTPSSPVUZ 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^ $2,823 $2,823 $274 $45 $ 3,142 :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^ 1,483 1,364 142 22 1,528 )`WYVK\J[JYLKP[ZH  (274) — —— — ;YLH[TLU[JOHYNLZ  102 100 — 2 102  5L[JHZOJVZ[Z 1,311 1,464 142 24 1,630 +LWYLJPH[PVUKLWSL[PVUHUKHTVY[PaH[PVU  264 251 10 3 264 5VUJHZOHUKUVUYLJ\YYPUNJVZ[ZUL[  129 127 2 — 129  ;V[HSJVZ[Z 1,704 1,842 154 27 2,023 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZHUKOLKNPUN 92 92 —— 92 0KSLMHJPSP[`HUKV[OLYUVUPU]LU[VYPHISLJVZ[Z  (100) (100) —— (100) .YVZZWYVÄ[ $1,111 $ 973 $120 $18 $ 1,111

9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LK      +LWYLJPH[PVU     7YVK\J[PVU +LWSL[PVUHUK    9L]LU\LZ HUK+LSP]LY` (TVY[PaH[PVU 0UTPSSPVUZ ;V[HSZWYLZLU[LKHIV]L     $ 3,142 $ 1,528 $ 264 5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L      N/A 129 N/A ;YLH[TLU[JOHYNLZWLYHIV]L      N/A 102 N/A 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZHUKOLKNPUNWLYHIV]L      92 N/A N/A ,SPTPUH[PVUZHUKV[OLY     1 152 16 5VY[O(TLYPJHJVWWLYTPULZ      3,235 1,911 280 :V\[O(TLYPJHJVWWLYTPULZ      3,839 1,563 275 0UKVULZPHTPUPUN     5,908 1,505 275 (MYPJHTPUPUN     389 315 66 4VS`IKLU\T      847 660J 49 9VK 9LÄUPUN     3,356 3,336 8 ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN      1,892 1,895 36 *VYWVYH[L V[OLY LSPTPUH[PVUZ     (4,426) (4,150) 25 (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z     $15,040 $ 7,035J $ 1,014

H 4VS`IKLU\TI`WYVK\J[JYLKP[ZHUKYL]LU\LZYLÅLJ[]VS\TLZWYVK\JLKH[THYRL[IHZLKWYPJPUNHUKHSZVPUJS\KL[VSSPUNYL]LU\LZH[:PLYYP[H I 0UJS\KLZNVSKHUKZPS]LYWYVK\J[YL]LU\LZHUKWYVK\J[PVUJVZ[Z J 0UJS\KLZ3*4TVS`IKLU\TPU]LU[VY`HKQ\Z[TLU[ZVM  TPSSPVU

46 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

North America Copper Mines Product Revenues and Production Costs (continued)

 )`7YVK\J[  *V7YVK\J[4L[OVK @LHY,UKLK+LJLTILY  4L[OVK *VWWLY 4VS`IKLU\TH 6[OLYI ;V[HS 0UTPSSPVUZ 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^         :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^       )`WYVK\J[JYLKP[ZH     ·  · ·  · ;YLH[TLU[JOHYNLZ      ·      5L[JHZOJVZ[Z         +LWYLJPH[PVUKLWSL[PVUHUKHTVY[PaH[PVU           5VUJHZOHUKUVUYLJ\YYPUNJVZ[ZUL[  J           ;V[HSJVZ[Z         9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZHUKOLKNPUN      · ·   0KSLMHJPSP[`HUKV[OLYUVUPU]LU[VYPHISLJVZ[Z         ·    .YVZZWYVÄ[         

9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LK      +LWYLJPH[PVU     7YVK\J[PVU +LWSL[PVUHUK    9L]LU\LZ HUK+LSP]LY` (TVY[PaH[PVU 0UTPSSPVUZ ;V[HSZWYLZLU[LKHIV]L           5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L      5(  J  5( ;YLH[TLU[JOHYNLZWLYHIV]L      5(    5( 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZHUKOLKNPUNWLYHIV]L        5(  5( ,SPTPUH[PVUZHUKV[OLY           5VY[O(TLYPJHJVWWLYTPULZ            :V\[O(TLYPJHJVWWLYTPULZ            0UKVULZPHTPUPUN            (MYPJHTPUPUN      ·     4VS`IKLU\T              9VK 9LÄUPUN          ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN           *VYWVYH[L V[OLY LSPTPUH[PVUZ         (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z        K  

H 4VS`IKLU\TI`WYVK\J[JYLKP[ZHUKYL]LU\LZYLÅLJ[]VS\TLZWYVK\JLKH[THYRL[IHZLKWYPJPUNHUKHSZVPUJS\KL[VSSPUNYL]LU\LZH[:PLYYP[H I 0UJS\KLZNVSKHUKZPS]LYWYVK\J[YL]LU\LZHUKWYVK\J[PVUJVZ[Z J 0UJS\KLZJOHYNLZ[V[HSPUN TPSSPVUMVY3*4PU]LU[VY`HKQ\Z[TLU[Z K 0UJS\KLZ3*4PU]LU[VY`HKQ\Z[TLU[ZVM  TPSSPVU

  -9,,769;4J4V9HU*677,9 .63+05* 47    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

North America Copper Mines Product Revenues and Production Costs (continued)

 )`7YVK\J[  *V7YVK\J[4L[OVK 4HYJO [OYV\NO+LJLTILYH 4L[OVK *VWWLY 4VS`IKLU\TI 6[OLYJ ;V[HS 0UTPSSPVUZ 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^       :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^        )`WYVK\J[JYLKP[ZI    ·  · ·  · ;YLH[TLU[JOHYNLZ      ·      5L[JHZOJVZ[Z        +LWYLJPH[PVUKLWSL[PVUHUKHTVY[PaH[PVU              5VUJHZOHUKUVUYLJ\YYPUNJVZ[ZUL[           ;V[HSJVZ[Z       9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZHUKOLKNPUN      · ·   0KSLMHJPSP[`HUKV[OLYUVUPU]LU[VYPHISLJVZ[Z       ·   .YVZZWYVÄ[       

9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LKMVY[OL@LHY,UKLK+LJLTILY      +LWYLJPH[PVU     7YVK\J[PVU +LWSL[PVUHUK    9L]LU\LZ HUK+LSP]LY` (TVY[PaH[PVU 0UTPSSPVUZ ;V[HSZWYLZLU[LKHIV]L             5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L      5(    5( ;YLH[TLU[JOHYNLZWLYHIV]L      5(    5( 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZHUKOLKNPUNWLYHIV]L        5(  5( ,SPTPUH[PVUZHUKV[OLY            5VY[O(TLYPJHJVWWLYTPULZ            :V\[O(TLYPJHJVWWLYTPULZ             0UKVULZPHTPUPUN              (MYPJHTPUPUN      ·     4VS`IKLU\T            9VK 9LÄUPUN            ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN             *VYWVYH[L V[OLY LSPTPUH[PVUZ          (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z          

H 9LÅLJ[Z[OLYLZ\S[ZVM[OL5VY[O(TLYPJHJVWWLYTPULZ\UKLY-*?THUHNLTLU[ I 4VS`IKLU\TI`WYVK\J[JYLKP[ZHUKYL]LU\LZYLÅLJ[]VS\TLZWYVK\JLKH[THYRL[IHZLKWYPJPUNHUKHSZVPUJS\KL[VSSPUNYL]LU\LZH[:PLYYP[H J 0UJS\KLZNVSKHUKZPS]LYWYVK\J[YL]LU\LZHUKWYVK\J[PVUJVZ[Z

48 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

South America Copper Mines Product Revenues and Production Costs

 )`7YVK\J[  *V7YVK\J[4L[OVK Year Ended December 31, 2009  4L[OVK *VWWLY 6[OLYH ;V[HS 0UTPSSPVUZ 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^   $ 3,768 $3,768 $167 $ 3,935 :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^   1,512 1,429 91 1,520 )`WYVK\J[JYLKP[Z   (159) —— — ;YLH[TLU[JOHYNLZ    206 206 — 206  5L[JHZOJVZ[Z   1,559 1,635 91 1,726 +LWYLJPH[PVUKLWSL[PVUHUKHTVY[PaH[PVU    275 267 8 275 5VUJHZOHUKUVUYLJ\YYPUNJVZ[ZUL[    28 28 — 28  ;V[HSJVZ[Z   1,862 1,930 99 2,029 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZ    109 109 — 109 6[OLYUVUPU]LU[VYPHISLJVZ[Z    (31) (26) (5) (31) .YVZZWYVÄ[   $ 1,984 $1,921 $ 63 $ 1,984

9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LK      +LWYLJPH[PVU     7YVK\J[PVU +LWSL[PVUHUK    9L]LU\LZ HUK+LSP]LY` (TVY[PaH[PVU 0UTPSSPVUZ ;V[HSZWYLZLU[LKHIV]L     $ 3,935 $ 1,520 $ 275 5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L      N/A 28 N/A 3LZZ!;YLH[TLU[JOHYNLZWLYHIV]L      (206) N/A N/A 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZWLYHIV]L      109 N/A N/A ,SPTPUH[PVUZHUKV[OLY      1 15 — :V\[O(TLYPJHJVWWLYTPULZ      3,839 1,563 275 5VY[O(TLYPJHJVWWLYTPULZ      3,235 1,911 280 0UKVULZPHTPUPUN      5,908 1,505 275 (MYPJHTPUPUN      389 315 66 4VS`IKLU\T      847 660I  49 9VK 9LÄUPUN     3,356 3,336 8 ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN      1,892 1,895 36 *VYWVYH[L V[OLY LSPTPUH[PVUZ     (4,426) (4,150) 25 (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z     $15,040 $ 7,035I $ 1,014

H 0UJS\KLZNVSKZPS]LYHUKTVS`IKLU\TWYVK\J[YL]LU\LZHUKWYVK\J[PVUJVZ[Z I 0UJS\KLZ3*4TVS`IKLU\TPU]LU[VY`HKQ\Z[TLU[ZVM  TPSSPVU

  -9,,769;4J4V9HU*677,9 .63+05* 49    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

South America Copper Mines Product Revenues and Production Costs (continued)

 )`7YVK\J[  *V7YVK\J[4L[OVK @LHY,UKLK+LJLTILY   4L[OVK *VWWLY 6[OLYH ;V[HS 0UTPSSPVUZ 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^         :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^       )`WYVK\J[JYLKP[Z       ·  ·  · ;YLH[TLU[JOHYNLZ        ·    5L[JHZOJVZ[Z          +LWYLJPH[PVUKLWSL[PVUHUKHTVY[PaH[PVU             5VUJHZOHUKUVUYLJ\YYPUNJVZ[ZUL[    I        ;V[HSJVZ[Z        9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZ        ·   6[OLYUVUPU]LU[VYPHISLJVZ[Z           .YVZZWYVÄ[        

9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LK      +LWYLJPH[PVU     7YVK\J[PVU +LWSL[PVUHUK    9L]LU\LZ HUK+LSP]LY` (TVY[PaH[PVU 0UTPSSPVUZ ;V[HSZWYLZLU[LKHIV]L           5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L      5(  I  5( 3LZZ!;YLH[TLU[JOHYNLZWLYHIV]L        5(  5( 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZWLYHIV]L        5(  5( ,SPTPUH[PVUZHUKV[OLY            :V\[O(TLYPJHJVWWLYTPULZ            5VY[O(TLYPJHJVWWLYTPULZ            0UKVULZPHTPUPUN            (MYPJHTPUPUN      ·     4VS`IKLU\T              9VK 9LÄUPUN          ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN           *VYWVYH[L V[OLY LSPTPUH[PVUZ         (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z        J  

H 0UJS\KLZNVSKZPS]LYHUKTVS`IKLU\TWYVK\J[YL]LU\LZHUKWYVK\J[PVUJVZ[Z I 0UJS\KLZJOHYNLZ[V[HSPUN TPSSPVUMVY3*4PU]LU[VY`HKQ\Z[TLU[Z J 0UJS\KLZ3*4PU]LU[VY`HKQ\Z[TLU[ZVM  TPSSPVU

50 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

South America Copper Mines Product Revenues and Production Costs (continued)

 )`7YVK\J[  *V7YVK\J[4L[OVK 4HYJO [OYV\NO+LJLTILYH  4L[OVK *VWWLY 6[OLYI ;V[HS 0UTPSSPVUZ 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^         :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^          )`WYVK\J[JYLKP[Z       ·  ·  · ;YLH[TLU[JOHYNLZ             5L[JHZOJVZ[Z          +LWYLJPH[PVUKLWSL[PVUHUKHTVY[PaH[PVU           5VUJHZOHUKUVUYLJ\YYPUNJVZ[ZUL[            ;V[HSJVZ[Z          9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZ        ·   6[OLYUVUPU]LU[VYPHISLJVZ[Z             .YVZZWYVÄ[       

9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LKMVY[OL@LHY,UKLK+LJLTILY      +LWYLJPH[PVU     7YVK\J[PVU +LWSL[PVUHUK    9L]LU\LZ HUK+LSP]LY` (TVY[PaH[PVU 0UTPSSPVUZ ;V[HSZWYLZLU[LKHIV]L            5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L      5(    5( 3LZZ!;YLH[TLU[JOHYNLZWLYHIV]L        5(  5( 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZWLYHIV]L        5(  5( ,SPTPUH[PVUZHUKV[OLY            :V\[O(TLYPJHJVWWLYTPULZ             5VY[O(TLYPJHJVWWLYTPULZ            0UKVULZPHTPUPUN              (MYPJHTPUPUN      ·     4VS`IKLU\T            9VK 9LÄUPUN            ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN             *VYWVYH[L V[OLY LSPTPUH[PVUZ          (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z          

H 9LÅLJ[Z[OLYLZ\S[ZVM[OL:V\[O(TLYPJHJVWWLYTPULZ\UKLY-*?THUHNLTLU[ I 0UJS\KLZNVSKZPS]LYHUKTVS`IKLU\TWYVK\J[YL]LU\LZHUKWYVK\J[PVUJVZ[Z

  -9,,769;4J4V9HU*677,9 .63+05* 51    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

Indonesia Mining Product Revenues and Production Costs

 )`7YVK\J[  *V7YVK\J[4L[OVK Year Ended December 31, 2009 4L[OVK *VWWLY .VSK :PS]LY ;V[HS 0UTPSSPVUZ 9L]LU\LZHM[LYHKQ\Z[TLU[ZZOV^UILSV^ $ 3,708 $3,708 $2,532 $74 $ 6,314 :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^ 1,468 862 589 17 1,468 .VSKHUKZPS]LYJYLKP[Z (2,606) — —— — ;YLH[TLU[JOHYNLZ 312 183 125 4 312 9V`HS[`VUTL[HSZ  147 86 59 2 147  5L[JHZOJVZ[Z  (679) 1,131 773 23 1,927 +LWYLJPH[PVUHUKHTVY[PaH[PVU 275 162 110 3 275 5VUJHZOHUKUVUYLJ\YYPUNJVZ[ZUL[  37 22 15 — 37  ;V[HSJVZ[Z (367) 1,315 898 26 2,239 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZ  53 53 —— 53 7;:TLS[PUNPU[LYJVTWHU`WYVÄ[ (54) (32) (21) (1) (54) .YVZZWYVÄ[ $ 4,074 $2,414 $1,613 $47 $ 4,074

9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LK      +LWYLJPH[PVU     7YVK\J[PVU +LWSL[PVUHUK    9L]LU\LZ HUK+LSP]LY` (TVY[PaH[PVU 0UTPSSPVUZ ;V[HSZWYLZLU[LKHIV]L     $ 6,314 $ 1,468 $ 275 5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L     N/A 37 N/A 3LZZ!;YLH[TLU[JOHYNLZWLYHIV]L      (312) N/A N/A 3LZZ!9V`HS[`WLYHIV]L      (147) N/A N/A 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZWLYHIV]L      53 N/A N/A 0UKVULZPHTPUPUN      5,908 1,505 275 5VY[O(TLYPJHJVWWLYTPULZ      3,235 1,911 280 :V\[O(TLYPJHJVWWLYTPULZ      3,839 1,563 275 (MYPJHTPUPUN      389 315 66 4VS`IKLU\T      847 660H  49 9VK 9LÄUPUN     3,356 3,336 8 ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN      1,892 1,895 36 *VYWVYH[L V[OLY LSPTPUH[PVUZ     (4,426) (4,150) 25 (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z     $15,040 $ 7,035H $1,014

H 0UJS\KLZ3*4TVS`IKLU\TPU]LU[VY`HKQ\Z[TLU[ZVM  TPSSPVU

52 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

Indonesia Mining Product Revenues and Production Costs (continued)

 )`7YVK\J[  *V7YVK\J[4L[OVK @LHY,UKLK+LJLTILY  4L[OVK *VWWLY .VSK :PS]LY ;V[HS 0UTPSSPVUZ 9L]LU\LZHM[LYHKQ\Z[TLU[ZZOV^UILSV^        :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^        .VSKHUKZPS]LYJYLKP[Z   ·  · ·  · ;YLH[TLU[JOHYNLZ             9V`HS[`VUTL[HSZ            5L[JHZOJVZ[Z          +LWYLJPH[PVUHUKHTVY[PaH[PVU            5VUJHZOHUKUVUYLJ\YYPUNJVZ[ZUL[       ·    ;V[HSJVZ[Z        9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZ      · ·   7;:TLS[PUNPU[LYJVTWHU`WYVÄ[       ·   .YVZZWYVÄ[         

9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LK      +LWYLJPH[PVU     7YVK\J[PVU +LWSL[PVUHUK    9L]LU\LZ HUK+LSP]LY` (TVY[PaH[PVU 0UTPSSPVUZ ;V[HSZWYLZLU[LKHIV]L           5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L      5(    5( 3LZZ!;YLH[TLU[JOHYNLZWLYHIV]L         5(  5( 3LZZ!9V`HS[`WLYHIV]L        5(  5( 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZWLYHIV]L        5(  5( 0UKVULZPHTPUPUN            5VY[O(TLYPJHJVWWLYTPULZ            :V\[O(TLYPJHJVWWLYTPULZ            (MYPJHTPUPUN      ·     4VS`IKLU\T              9VK 9LÄUPUN          ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN           *VYWVYH[L V[OLY LSPTPUH[PVUZ          (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z        H  

H 0UJS\KLZ3*4PU]LU[VY`HKQ\Z[TLU[ZVM  TPSSPVU

  -9,,769;4J4V9HU*677,9 .63+05* 53    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

Indonesia Mining Product Revenues and Production Costs (continued)

 )`7YVK\J[  *V7YVK\J[4L[OVK @LHY,UKLK+LJLTILY 4L[OVK *VWWLY .VSK :PS]LY ;V[HS 0UTPSSPVUZ 9L]LU\LZHM[LYHKQ\Z[TLU[ZZOV^UILSV^        :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^        .VSKHUKZPS]LYJYLKP[Z    ·  · ·  · ;YLH[TLU[JOHYNLZ              9V`HS[`VUTL[HSZ             5L[JHZOJVZ[Z         +LWYLJPH[PVUHUKHTVY[PaH[PVU            5VUJHZOHUKUVUYLJ\YYPUNJVZ[ZUL[            ;V[HSJVZ[Z           9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZ      · ·   7;:TLS[PUNPU[LYJVTWHU`WYVÄ[       ·   .YVZZWYVÄ[       

9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LK      +LWYLJPH[PVU     7YVK\J[PVU +LWSL[PVUHUK    9L]LU\LZ HUK+LSP]LY` (TVY[PaH[PVU 0UTPSSPVUZ ;V[HSZWYLZLU[LKHIV]L           5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L      5(    5( 3LZZ!;YLH[TLU[JOHYNLZWLYHIV]L         5(  5( 3LZZ!9V`HS[`WLYHIV]L        5(  5( 9L]LU\LHKQ\Z[TLU[ZWYPTHYPS`MVYWYPJPUNVUWYPVY  WLYPVKVWLUZHSLZWLYHIV]L        5(  5( 0UKVULZPHTPUPUN              5VY[O(TLYPJHJVWWLYTPULZ            :V\[O(TLYPJHJVWWLYTPULZ             (MYPJHTPUPUN      ·     4VS`IKLU\T            9VK 9LÄUPUN            ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN             *VYWVYH[L V[OLY LSPTPUH[PVUZ          (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z          

54 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

Henderson Molybdenum Mine Product Revenues and Production Costs

@LHYZ,UKLK+LJLTILY   2009   H 0UTPSSPVUZ 9L]LU\LZ     $ 317      :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^      148      5L[JHZOJVZ[Z      148     +LWYLJPH[PVUKLWSL[PVUHUKHTVY[PaH[PVU      26     5VUJHZOHUKUVUYLJ\YYPUNJVZ[ZUL[      1  I    ;V[HSJVZ[Z     175      .YVZZWYVÄ[J   $ 142     

9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LK      +LWYLJPH[PVU     7YVK\J[PVU +LWSL[PVUHUK    9L]LU\LZ HUK+LSP]LY` (TVY[PaH[PVU 0UTPSSPVUZ Year Ended December 31, 2009 ;V[HSZWYLZLU[LKHIV]L     $ 317 $ 148 $ 26 5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L      N/A 1 N/A /LUKLYZVUTPUL      317 149 26 6[OLYTVS`IKLU\TVWLYH[PVUZHUKLSPTPUH[PVUZK    530 511L  23 4VS`IKLU\T      847 660 49 5VY[O(TLYPJHJVWWLYTPULZ     3,235 1,911 280 :V\[O(TLYPJHJVWWLYTPULZ      3,839 1,563 275 0UKVULZPHTPUPUN      5,908 1,505 275 (MYPJHTPUPUN      389 315 66 9VK 9LÄUPUN      3,356 3,336 8 ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN      1,892 1,895 36 *VYWVYH[L V[OLY LSPTPUH[PVUZ      (4,426) (4,150) 25 (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z     $ 15,040 $ 7,035L $1,014

@LHY,UKLK+LJLTILY ;V[HSZWYLZLU[LKHIV]L            5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L      5(  I  5( /LUKLYZVUTPUL            6[OLYTVS`IKLU\TVWLYH[PVUZHUKLSPTPUH[PVUZK        L   4VS`IKLU\T              5VY[O(TLYPJHJVWWLYTPULZ            :V\[O(TLYPJHJVWWLYTPULZ            0UKVULZPHTPUPUN            (MYPJHTPUPUN      ·     9VK 9LÄUPUN          ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN           *VYWVYH[L V[OLY LSPTPUH[PVUZ          (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z        M  

  -9,,769;4J4V9HU*677,9 .63+05* 55    (UU\HS9LWVY[ MANAGEMENT’S DISCUSSION AND ANALYSIS

Henderson Molybdenum Mine Product Revenues and Production Costs (continued)

9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LK      +LWYLJPH[PVU     7YVK\J[PVU +LWSL[PVUHUK    9L]LU\LZ HUK+LSP]LY` (TVY[PaH[PVU 0UTPSSPVUZ

@LHY,UKLK+LJLTILY ;V[HSZWYLZLU[LKHIV]L           5L[UVUJHZOHUKUVUYLJ\YYPUNJVZ[ZWLYHIV]L      5(    5( /LUKLYZVUTPUL            6[OLYTVS`IKLU\TVWLYH[PVUZHUKLSPTPUH[PVUZK            4VS`IKLU\T            5VY[O(TLYPJHJVWWLYTPULZ            :V\[O(TLYPJHJVWWLYTPULZ             0UKVULZPHTPUPUN              (MYPJHTPUPUN      ·     9VK 9LÄUPUN            ([SHU[PJ*VWWLY:TLS[PUN 9LÄUPUN             *VYWVYH[L V[OLY LSPTPUH[PVUZ           (ZYLWVY[LKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[Z          

H 9LÅLJ[Z[OLWLYPVKMYVT4HYJO[OYV\NO+LJLTILY^OPJOYLWYLZLU[Z[OLYLZ\S[ZVM[OL/LUKLYZVUTVS`IKLU\TTPUL\UKLY-*?THUHNLTLU[ I 0UJS\KLZJOHYNLZ[V[HSPUN TPSSPVUMVY3*4PU]LU[VY`HKQ\Z[TLU[Z J .YVZZWYVÄ[YLÅLJ[ZZHSLZVM/LUKLYZVUWYVK\J[ZIHZLKVU]VS\TLZWYVK\JLKH[THYRL[IHZLKWYPJPUN6UHJVUZVSPKH[LKIHZPZ[OL4VS`IKLU\TZLNTLU[PUJS\KLZWYVÄ[ZVUZHSLZHZ[OL` HYLTHKL[V[OPYKWHY[PLZHUKYLHSPaH[PVUZIHZLKVUHJ[\HSJVU[YHJ[[LYTZ(ZHYLZ\S[[OLHJ[\HSNYVZZWYVÄ[YLHSPaLK^PSSKPMMLYMYVT[OLHTV\U[ZYLWVY[LKPU[OPZ[HISL K 7YPTHYPS`PUJS\KLZHTV\U[ZHZZVJPH[LK^P[O[OLTVS`IKLU\TZHSLZJVTWHU`^OPJOPUJS\KLZZHSLZVMTVS`IKLU\TWYVK\JLKHZHI`WYVK\J[H[V\Y5VY[OHUK:V\[O(TLYPJHJVWWLYTPULZ L 0UJS\KLZ3*4TVS`IKLU\TPU]LU[VY`HKQ\Z[TLU[ZVM  TPSSPVUPU HUK TPSSPVUPU  M 0UJS\KLZ3*4PU]LU[VY`HKQ\Z[TLU[ZVM  TPSSPVU

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Á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ÀWVRQHDUQLQJVOLTXLGLW\RWKHUÀQDQFLDO ´5LVN)DFWRUVµ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

56 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF DQGWKHFRQVROLGDWHGUHVXOWVRILWVRSHUDWLRQVDQGLWVFDVKÁRZV FREEPORT-McMoRan COPPER & GOLD INC. IRUHDFKRIWKHWKUHH\HDUVLQWKHSHULRGHQGHG'HFHPEHU :HKDYHDXGLWHGWKHDFFRPSDQ\LQJFRQVROLGDWHGEDODQFHVKHHWVRI LQFRQIRUPLW\ZLWK86JHQHUDOO\DFFHSWHGDFFRXQWLQJSULQFLSOHV )UHHSRUW0F0R5DQ&RSSHU *ROG,QFDVRI'HFHPEHU $VGLVFXVVHGLQ1RWHWRWKHFRQVROLGDWHGÀQDQFLDOVWDWHPHQWV DQGDQGWKHUHODWHGFRQVROLGDWHGVWDWHPHQWVRIRSHUDWLRQV WKH&RPSDQ\FKDQJHGLWVPHWKRGRIDFFRXQWLQJIRUQRQFRQWUROOLQJ HTXLW\DQGFDVKÁRZVIRUHDFKRIWKHWKUHH\HDUVLQWKHSHULRG LQWHUHVWVZLWKWKHDGRSWLRQRIWKHJXLGDQFHRULJLQDOO\LVVXHGLQ)$6% HQGHG'HFHPEHU7KHVHÀQDQFLDOVWDWHPHQWVDUHWKH 6WDWHPHQW1RNoncontrolling Interests in Consolidated Financial UHVSRQVLELOLW\RIWKH&RPSDQ\ҋVPDQDJHPHQW2XUUHVSRQVLELOLW\LV Statements FRGLÀHGLQ)$6%$6&7RSLFConsolidation HIIHFWLYH WRH[SUHVVDQRSLQLRQRQWKHVHÀQDQFLDOVWDWHPHQWVEDVHGRQRXU -DQXDU\ DXGLWV :HDOVRKDYHDXGLWHGLQDFFRUGDQFHZLWKWKHVWDQGDUGVRIWKH :HFRQGXFWHGRXUDXGLWVLQDFFRUGDQFHZLWKWKHVWDQGDUGVRIWKH 3XEOLF&RPSDQ\$FFRXQWLQJ2YHUVLJKW%RDUG 8QLWHG6WDWHV  3XEOLF&RPSDQ\$FFRXQWLQJ2YHUVLJKW%RDUG 8QLWHG6WDWHV 7KRVH )UHHSRUW0F0R5DQ&RSSHU *ROG,QFҋVLQWHUQDOFRQWURORYHU VWDQGDUGVUHTXLUHWKDWZHSODQDQGSHUIRUPWKHDXGLWWRREWDLQ ÀQDQFLDOUHSRUWLQJDVRI'HFHPEHUEDVHGRQFULWHULD UHDVRQDEOHDVVXUDQFHDERXWZKHWKHUWKHÀQDQFLDOVWDWHPHQWVDUH HVWDEOLVKHGLQ,QWHUQDO&RQWURO,QWHJUDWHG)UDPHZRUNLVVXHGE\WKH IUHHRIPDWHULDOPLVVWDWHPHQW$QDXGLWLQFOXGHVH[DPLQLQJRQDWHVW &RPPLWWHHRI6SRQVRULQJ2UJDQL]DWLRQVRIWKH7UHDGZD\ EDVLVHYLGHQFHVXSSRUWLQJWKHDPRXQWVDQGGLVFORVXUHVLQWKH &RPPLVVLRQDQGRXUUHSRUWGDWHG)HEUXDU\ H[SUHVVHGDQ ÀQDQFLDOVWDWHPHQWV$QDXGLWDOVRLQFOXGHVDVVHVVLQJWKHDFFRXQWLQJ XQTXDOLÀHGRSLQLRQWKHUHRQ SULQFLSOHVXVHGDQGVLJQLÀFDQWHVWLPDWHVPDGHE\PDQDJHPHQW DVZHOODVHYDOXDWLQJWKHRYHUDOOÀQDQFLDOVWDWHPHQWSUHVHQWDWLRQ:H ERNST & YOUNG LLP EHOLHYHWKDWRXUDXGLWVSURYLGHDUHDVRQDEOHEDVLVIRURXURSLQLRQ ,QRXURSLQLRQWKHÀQDQFLDOVWDWHPHQWVUHIHUUHGWRDERYHSUHVHQW 3KRHQL[$UL]RQD IDLUO\LQDOOPDWHULDOUHVSHFWVWKHFRQVROLGDWHGÀQDQFLDOSRVLWLRQRI )HEUXDU\ )UHHSRUW0F0R5DQ&RSSHU *ROG,QFDW'HFHPEHUDQG

  -9,,769;4J4V9HU*677,9 .63+05* 57    (UU\HS9LWVY[ MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

)UHHSRUW0F0R5DQ&RSSHU *ROG,QFҋV WKH&RPSDQ\ҋV  %HFDXVHRILWVLQKHUHQWOLPLWDWLRQVLQWHUQDOFRQWURORYHUÀQDQFLDO PDQDJHPHQWLVUHVSRQVLEOHIRUHVWDEOLVKLQJDQGPDLQWDLQLQJDGHTXDWH UHSRUWLQJPD\QRWSUHYHQWRUGHWHFWPLVVWDWHPHQWV 3URMHFWLRQVRIDQ\ LQWHUQDOFRQWURORYHUÀQDQFLDOUHSRUWLQJ,QWHUQDOFRQWURORYHUÀQDQFLDO HYDOXDWLRQRIHIIHFWLYHQHVVWRIXWXUHSHULRGVDUHVXEMHFWWRWKHULVN UHSRUWLQJLVGHÀQHGLQ5XOHD I RUG I XQGHUWKH WKDWFRQWUROVPD\EHFRPHLQDGHTXDWHEHFDXVHRIFKDQJHVLQ 6HFXULWLHV([FKDQJH$FWRIDVDSURFHVVGHVLJQHGE\RUXQGHU FRQGLWLRQVRUWKDWWKHGHJUHHRIFRPSOLDQFHZLWKWKHSROLFLHVRU WKHVXSHUYLVLRQRIWKH&RPSDQ\ҋVSULQFLSDOH[HFXWLYHDQGSULQFLSDO SURFHGXUHVPD\GHWHULRUDWH ÀQDQFLDORIÀFHUVDQGHIIHFWHGE\WKH&RPSDQ\ҋV%RDUGRI'LUHFWRUV 2XUPDQDJHPHQWLQFOXGLQJRXUSULQFLSDOH[HFXWLYHRIÀFHUDQG PDQDJHPHQW DQGRWKHUSHUVRQQHOWRSURYLGHUHDVRQDEOHDVVXUDQFH SULQFLSDOÀQDQFLDORIÀFHUDVVHVVHGWKHHIIHFWLYHQHVVRIRXULQWHUQDO UHJDUGLQJWKHUHOLDELOLW\RIÀQDQFLDOUHSRUWLQJDQGWKHSUHSDUDWLRQRI FRQWURORYHUÀQDQFLDOUHSRUWLQJDVRIWKHHQGRIWKHÀVFDO\HDUFRYHUHG ÀQDQFLDOVWDWHPHQWVIRUH[WHUQDOSXUSRVHVLQDFFRUGDQFHZLWK E\WKLVDQQXDOUHSRUWRQ)RUP.,QPDNLQJWKLVDVVHVVPHQWRXU JHQHUDOO\DFFHSWHGDFFRXQWLQJSULQFLSOHVDQGLQFOXGHVWKRVHSROLFLHV PDQDJHPHQW XVHGWKHFULWHULDVHWIRUWKLQ,QWHUQDO&RQWURO,QWHJUDWHG DQGSURFHGXUHVWKDW )UDPHZRUNLVVXHGE\WKH&RPPLWWHHRI6SRQVRULQJ2UJDQL]DWLRQVRI ‡ 3HUWDLQWRWKHPDLQWHQDQFHRIUHFRUGVWKDWLQUHDVRQDEOHGHWDLO WKH7UHDGZD\&RPPLVVLRQ &262 %DVHGRQRXUPDQDJHPHQWҋV DFFXUDWHO\DQGIDLUO\UHÁHFWWKHWUDQVDFWLRQVDQGGLVSRVLWLRQVRIWKH DVVHVVPHQWPDQDJHPHQWFRQFOXGHGWKDWDVRI'HFHPEHU &RPSDQ\ҋVDVVHWV RXU&RPSDQ\ҋVLQWHUQDOFRQWURORYHUÀQDQFLDOUHSRUWLQJLVHIIHFWLYH ‡ 3URYLGHUHDVRQDEOHDVVXUDQFHWKDWWUDQVDFWLRQVDUHUHFRUGHGDV EDVHGRQWKH&262FULWHULD QHFHVVDU\WRSHUPLWSUHSDUDWLRQRIÀQDQFLDOVWDWHPHQWVLQ (UQVW 

58 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF FRPSDQ\  SURYLGHUHDVRQDEOHDVVXUDQFHWKDWWUDQVDFWLRQVDUH FREEPORT-McMoRan COPPER & GOLD INC. UHFRUGHGDVQHFHVVDU\WRSHUPLWSUHSDUDWLRQRIÀQDQFLDOVWDWHPHQWV :HKDYHDXGLWHG)UHHSRUW0F0R5DQ&RSSHU *ROG,QFҋVLQWHUQDO LQDFFRUGDQFHZLWKJHQHUDOO\DFFHSWHGDFFRXQWLQJ SULQFLSOHVDQGWKDW FRQWURORYHUÀQDQFLDOUHSRUWLQJDVRI'HFHPEHUEDVHGRQ UHFHLSWVDQGH[SHQGLWXUHVRIWKHFRPSDQ\DUHEHLQJPDGHRQO\LQ FULWHULDHVWDEOLVKHGLQ,QWHUQDO&RQWURO,QWHJUDWHG)UDPHZRUNLVVXHG DFFRUGDQFHZLWKDXWKRUL]DWLRQVRIPDQDJHPHQWDQGGLUHFWRUVRIWKH E\WKH&RPPLWWHHRI6SRQVRULQJ2UJDQL]DWLRQVRIWKH7UHDGZD\ FRPSDQ\DQG  SURYLGHUHDVRQDEOHDVVXUDQFHUHJDUGLQJ &RPPLVVLRQ WKH&262FULWHULD )UHHSRUW0F0R5DQ &RSSHU *ROG SUHYHQWLRQRUWLPHO\GHWHFWLRQRIXQDXWKRUL]HGDFTXLVLWLRQXVHRU ,QFҋVPDQDJHPHQWLVUHVSRQVLEOHIRUPDLQWDLQLQJHIIHFWLYHLQWHUQDO GLVSRVLWLRQRIWKHFRPSDQ\ҋVDVVHWVWKDWFRXOGKDYHDPDWHULDOHIIHFW FRQWURORYHUÀQDQFLDOUHSRUWLQJDQGIRULWVDVVHVVPHQWRIWKH RQWKHÀQDQFLDOVWDWHPHQWV HIIHFWLYHQHVVRILQWHUQDOFRQWURORYHUÀQDQFLDOUHSRUWLQJLQFOXGHGLQ %HFDXVHRILWVLQKHUHQWOLPLWDWLRQVLQWHUQDOFRQWURORYHUÀQDQFLDO WKHDFFRPSDQ\LQJ0DQDJHPHQWҋV5HSRUWRQ,QWHUQDO&RQWURO2YHU UHSRUWLQJPD\QRWSUHYHQWRUGHWHFWPLVVWDWHPHQWV$OVRSURMHFWLRQV )LQDQFLDO5HSRUWLQJ2XUUHVSRQVLELOLW\LVWRH[SUHVVDQRSLQLRQRQWKH RIDQ\HYDOXDWLRQRIHIIHFWLYHQHVVWRIXWXUHSHULRGVDUHVXEMHFWWRWKH FRPSDQ\ҋVLQWHUQDOFRQWURORYHUÀQDQFLDOUHSRUWLQJEDVHGRQRXUDXGLW ULVNWKDWFRQWUROVPD\EHFRPHLQDGHTXDWHEHFDXVHRIFKDQJHVLQ :HFRQGXFWHGRXUDXGLWLQDFFRUGDQFHZLWKWKHVWDQGDUGVRIWKH FRQGLWLRQVRUWKDWWKHGHJUHHRIFRPSOLDQFHZLWKWKHSROLFLHVRU 3XEOLF&RPSDQ\$FFRXQWLQJ2YHUVLJKW%RDUG 8QLWHG6WDWHV 7KRVH SURFHGXUHVPD\GHWHULRUDWH VWDQGDUGVUHTXLUHWKDWZHSODQDQGSHUIRUPWKHDXGLWWRREWDLQ ,QRXURSLQLRQ)UHHSRUW0F0R5DQ&RSSHU *ROG,QFPDLQWDLQHG UHDVRQDEOHDVVXUDQFHDERXWZKHWKHUHIIHFWLYHLQWHUQDOFRQWURORYHU LQDOOPDWHULDOUHVSHFWVHIIHFWLYHLQWHUQDOFRQWURORYHUÀQDQFLDO ÀQDQFLDOUHSRUWLQJZDVPDLQWDLQHGLQDOOPDWHULDOUHVSHFWV2XUDXGLW UHSRUWLQJDVRI'HFHPEHUEDVHGRQWKH&262FULWHULD LQFOXGHGREWDLQLQJDQXQGHUVWDQGLQJRILQWHUQDOFRQWURORYHUÀQDQFLDO :HDOVRKDYHDXGLWHGLQDFFRUGDQFHZLWKWKHVWDQGDUGVRIWKH UHSRUWLQJ DVVHVVLQJWKHULVNWKDWDPDWHULDOZHDNQHVVH[LVWVWHVWLQJ 3XEOLF&RPSDQ\$FFRXQWLQJ2YHUVLJKW%RDUG 8QLWHG6WDWHV WKH DQGHYDOXDWLQJWKHGHVLJQDQGRSHUDWLQJHIIHFWLYHQHVVRILQWHUQDO FRQVROLGDWHGEDODQFHVKHHWVRI)UHHSRUW0F0R5DQ&RSSHU *ROG FRQWUROEDVHGRQWKHDVVHVVHGULVNDQGSHUIRUPLQJVXFKRWKHU ,QFDVRI'HFHPEHUDQGDQGWKHUHODWHGFRQVROLGDWHG SURFHGXUHVDVZHFRQVLGHUHGQHFHVVDU\LQWKHFLUFXPVWDQFHV:H VWDWHPHQWVRIRSHUDWLRQVHTXLW\DQGFDVKÁRZVIRUHDFKRIWKHWKUHH EHOLHYHWKDWRXUDXGLWSURYLGHVDUHDVRQDEOHEDVLVIRURXURSLQLRQ \HDUVLQWKHSHULRGHQGHG'HFHPEHUDQGRXUUHSRUWGDWHG $FRPSDQ\ҋVLQWHUQDOFRQWURORYHUÀQDQFLDOUHSRUWLQJLVDSURFHVV )HEUXDU\H[SUHVVHGDQXQTXDOLÀHGRSLQLRQWKHUHRQ GHVLJQHGWRSURYLGHUHDVRQDEOHDVVXUDQFHUHJDUGLQJWKHUHOLDELOLW\RI ÀQDQFLDOUHSRUWLQJDQGWKHSUHSDUDWLRQRIÀQDQFLDOVWDWHPHQWVIRU ERNST & YOUNG LLP H[WHUQDOSXUSRVHVLQDFFRUGDQFHZLWKJHQHUDOO\DFFHSWHGDFFRXQWLQJ SULQFLSOHV$FRPSDQ\ҋVLQWHUQDOFRQWURORYHUÀQDQFLDOUHSRUWLQJ 3KRHQL[$UL]RQD LQFOXGHVWKRVH SROLFLHVDQGSURFHGXUHVWKDW  SHUWDLQWRWKH )HEUXDU\ PDLQWHQDQFHRIUHFRUGVWKDWLQUHDVRQDEOHGHWDLODFFXUDWHO\DQG IDLUO\UHÁHFWWKHWUDQVDFWLRQVDQGGLVSRVLWLRQVRIWKHDVVHWVRIWKH

  -9,,769;4J4V9HU*677,9 .63+05* 59    (UU\HS9LWVY[ CONSOLIDATED STATEMENTS OF OPERATIONS

@LHYZ,UKLK+LJLTILY   2009    0U4PSSPVUZ,_JLW[7LY:OHYL(TV\U[Z 9L]LU\LZ     $15,040      *VZ[VMZHSLZ!  7YVK\J[PVUHUKKLSP]LY`     7,016      +LWYLJPH[PVUKLWSL[PVUHUKHTVY[PaH[PVU     1,014       3V^LYVMJVZ[VYTHYRL[PU]LU[VY`HKQ\Z[TLU[Z      19     ·   ;V[HSJVZ[VMZHSLZ     8,049      :LSSPUNNLULYHSHUKHKTPUPZ[YH[P]LL_WLUZLZ      321      ,_WSVYH[PVUHUKYLZLHYJOL_WLUZLZ      90      3VUNSP]LKHZZL[PTWHPYTLU[ZHUKV[OLYJOHYNLZ      77      · .VVK^PSSPTWHPYTLU[      —     ·   ;V[HSJVZ[ZHUKL_WLUZLZ      8,537     6WLYH[PUNPUJVTLSVZZ     6,503    0U[LYLZ[L_WLUZLUL[      (586)      3VZZLZVULHYS`L_[PUN\PZOTLU[VMKLI[      (48)     .HPUZ VUZHSLZVMHZZL[Z      —     6[OLYL_WLUZLPUJVTLUL[     (53)     0UJVTLSVZZMYVT JVU[PU\PUNVWLYH[PVUZILMVYLPUJVTL[H_LZHUKLX\P[`  PUHMÄSPH[LKJVTWHUPLZ»UL[LHYUPUNZ     5,816     7YV]PZPVUMVYILULÄ[MYVTPUJVTL[H_LZ     (2,307)     ,X\P[`PUHMÄSPH[LKJVTWHUPLZ»UL[LHYUPUNZ      25     0UJVTLSVZZMYVT JVU[PU\PUNVWLYH[PVUZ      3,534    0UJVTLMYVT KPZJVU[PU\LKVWLYH[PVUZUL[VM[H_LZ      —  ·   5L[PUJVTL SVZZ      3,534    5L[PUJVTL H[[YPI\[HISL[VUVUJVU[YVSSPUNPU[LYLZ[Z      (785)      7YLMLYYLKKP]PKLUKZHUKSVZZLZVUPUK\JLKJVU]LYZPVUZ     (222)      5L[PUJVTL SVZZH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZ     $ 2,527   

)HZPJUL[PUJVTLSVZZWLYZOHYLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZ!  *VU[PU\PUNVWLYH[PVUZ     $ 6.10       +PZJVU[PU\LKVWLYH[PVUZ      —  ·    )HZPJUL[PUJVTLSVZZ     $ 6.10     

+PS\[LKUL[PUJVTLSVZZWLYZOHYLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZ!  *VU[PU\PUNVWLYH[PVUZ     $ 5.86       +PZJVU[PU\LKVWLYH[PVUZ      —  ·    +PS\[LKUL[PUJVTLSVZZ     $ 5.86     

>LPNO[LKH]LYHNLJVTTVUZOHYLZV\[Z[HUKPUN!  )HZPJ       414     

 +PS\[LK       469      

+P]PKLUKZKLJSHYLKWLYZOHYLVMJVTTVUZ[VJR     $ 0.15    

;OLHJJVTWHU`PUN5V[LZ[V*VUZVSPKH[LK-PUHUJPHS:[H[LTLU[ZHYLHUPU[LNYHSWHY[VM[OLZLÄUHUJPHSZ[H[LTLU[Z

60 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2009 2008 2007 (In Millions) *HZO ÅV^ MYVT VWLYH[PUN HJ[P]P[PLZ! Net income (loss) $ 3,534 $ (10,450) $ 3,779 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, depletion and amortization 1,014 1,782 1,264 Asset impairments, including goodwill — 16,854 — Lower of cost or market inventory adjustments 19 782 — Stock-based compensation 102 98 144 Charges for reclamation and environmental obligations, including accretion 191 181 32 Payments of reclamation and environmental obligations (104) (205) (111) Unrealized losses on copper price protection program — — 175 Losses on early extinguishment of debt 48 6 173 Deferred income taxes 135 (4,653) (288) Gains on sales of assets — (13) (85) Increase in long-term mill and leach stockpiles (96) (225) (48) Changes in other assets and liabilities 201 89 78 Amortization of intangible assets/liabilities and other, net 123 89 (33) (Increases) decreases in working capital, excluding amounts acquired from Phelps Dodge Corporation: Accounts receivable (962) 542 428 Inventories (159) (478) 272 Other current assets 87 (91) 21 Accounts payable and accrued liabilities (438) (171) 400 Accrued income and other taxes 702 (767) 24 Net cash provided by operating activities 4,397 3,370 6,225

*HZO ÅV^ MYVT PU]LZ[PUN HJ[P]P[PLZ! Capital expenditures: North America copper mines (345) (609) (856) South America copper mines (164) (323) (123) Indonesia (266) (444) (368) Africa (659) (1,058) (266) Other (153) (274) (142) Acquisition of Phelps Dodge, net of cash acquired — (1) (13,910) Net proceeds from the sale of Phelps Dodge International Corporation — — 597 Proceeds from sales of assets 25 47 260 Decrease in global reclamation and remediation trust assets — 430 — Other, net (39) (86) (53) Net cash used in investing activities (1,601) (2,318) (14,861)

*HZOÅV^ MYVT ÄUHUJPUN HJ[P]P[PLZ! Proceeds from term loans under bank credit facility — — 12,450 Repayments of term loans under bank credit facility — — (12,450) Net proceeds from sales of senior notes — — 5,880 Net proceeds from sale of 6¾% Mandatory Convertible Preferred Stock — — 2,803 Net proceeds from sale of common stock 740 — 2,816 Proceeds from revolving credit facility and other debt 330 890 744 Repayments of revolving credit facility and other debt (1,380) (766) (1,069) Purchases of FCX common stock — (500) — Cash dividends and distributions paid: Common stock — (693) (421) Preferred stock (229) (255) (175) Noncontrolling interests (535) (730) (967) Contributions from noncontrolling interests 57 201 4 Net proceeds from (payments for) stock-based awards 6 22 (14) ,_JLZZ [H_ ILULÄ[ MYVT Z[VJRIHZLK H^HYKZ 3 25 16 Bank credit facilities fees and other, net (4) — (262) 5L[ JHZO \ZLK PU WYV]PKLK I` ÄUHUJPUN HJ[P]P[PLZ (1,012) (1,806) 9,355 Net increase (decrease) in cash and cash equivalents 1,784 (754) 719 Cash and cash equivalents at beginning of year 872 1,626 907 Cash and cash equivalents at end of year $ 2,656 $ 872 $ 1,626

;OL HJJVTWHU`PUN 5V[LZ [V *VUZVSPKH[LK -PUHUJPHS :[H[LTLU[Z HYL HU PU[LNYHS WHY[ VM [OLZL ÄUHUJPHS Z[H[LTLU[Z

FREEPORT- McMoRan COPPER & GOLD INC. 61 2009 Annual Report CONSOLIDATED BALANCE SHEETS

Years Ended December 31, 2009 2008 0U 4PSSPVUZ ,_JLW[ 7HY =HS\LZ

ASSETS Current assets: Cash and cash equivalents $ 2,656 $ 872 Trade accounts receivable 1,517 374 Income tax receivables 139 611 Other accounts receivable 147 227 Inventories: Product 1,110 1,028 Materials and supplies, net 1,093 1,124 Mill and leach stockpiles 667 611 Other current assets 104 386 Total current assets 7,433 5,233 Property, plant, equipment and development costs, net 16,195 16,002 Long-term mill and leach stockpiles 1,321 1,145 Intangible assets, net 347 364 Other assets 700 609 Total assets $ 25,996 $ 23,353 LIABILITIES AND EQUITY Current liabilities: Accounts payable and accrued liabilities $ 2,038 $ 2,722 Accrued income taxes 474 163 Current portion of reclamation and environmental obligations 214 162 9PV ;PU[V ZOHYL VM QVPU[ ]LU[\YL JHZO ÅV^Z 161 — Dividends payable 99 44 Current portion of long-term debt and short-term borrowings 16 67 Total current liabilities 3,002 3,158 Long-term debt, less current portion 6,330 7,284 Deferred income taxes 2,503 2,339 Reclamation and environmental obligations, less current portion 1,981 1,951 Other liabilities 1,423 1,520 Total liabilities 15,239 16,252

Equity: FCX stockholders’ equity: 5½% Convertible Perpetual Preferred Stock, 1 shares issued and outstanding at December 31, 2008 — 832 6¾% Mandatory Convertible Preferred Stock, 29 shares issued and outstanding 2,875 2,875 Common stock, par value $0.10, 552 shares and 505 shares issued, respectively 55 51 Capital in excess of par value 15,680 13,989 (JJ\T\SH[LK KLÄJP[ (5,805) (8,267) Accumulated other comprehensive loss (273) (305) Common stock held in treasury – 122 shares and 121 shares, at cost, respectively (3,413) (3,402) Total FCX stockholders’ equity 9,119 5,773 Noncontrolling interests 1,638 1,328 Total equity 10,757 7,101 Total liabilities and equity $ 25,996 $ 23,353

;OLHJJVTWHU`PUN 5V[LZ [V *VUZVSPKH[LK -PUHUJPHS :[H[LTLU[Z HYL HU PU[LNYHS WHY[ VM [OLZL ÄUHUJPHS Z[H[LTLU[Z

62 FREEPORT- McMoRan COPPER & GOLD INC. 2009 Annual Report CONSOLIDATED STATEMENTS OF EQUITY

FCX Stockholders’ Equity Accumulated Convertible Perpetual Mandatory Convertible Common Stock Retained Other Preferred Stock Preferred Stock Common Stock Held in Treasury Capital in Earnings Comprehensive Total FCX Number of At Par Number of At Par Number of At Par Excess of (Accumulated Income Number Stockholders’ Noncontrolling Total Shares Value Shares Value Shares Value Par Value Deficit) (Loss) of Shares At Cost Equity Interests Equity (In Millions) Balance at January 1,2007 1 $1,100 — $ — 310 $31 $ 2,668 $ 1,415 $ (20) 113 $(2,749) $ 2,445 $ 213 $ 2,658 Sale of 6¾% Mandatory Convertible Preferred Stock —— 29 2,875 —— (72) ———— 2,803 — 2,803 Acquisition of Phelps Dodge ———— 137 14 7,767 ———— 7,781 1,233 9,014 Sale of common stock ———— 47 5 2,811 — — — — 2,816 — 2,816 Conversions of 7% Convertible Senior Notes —————— 6———— 6— 6 Exercised and issued stock-based awards — — — — 3 — 131 ———— 131 — 131 Stock-based compensation —————— 86 ———— 86 — 86 Tax benefit for stock-based awards —————— 10 ———— 10 — 10 Tender of shares for stock-based awards — — — — — — — — — 1 (92) (92) — (92) Cumulative effect adjustment to initially apply new accounting guidance associated with income taxes ——————— 4——— 41 5 Purchase of additional interest in subsidiaries ———————————— (11) (11) Dividends on common stock ——————— (587) ——— (587) — (587) Dividends on preferred stock ——————— (208) ——— (208) — (208) Distributions to noncontrolling interests ———————————— (967) (967) Contributions from noncontrolling interests ——————————— — 4 4 Sale of Phelps Dodge International Corporation ———————————— (38) (38) Comprehensive income: Net income ——————— 2,977 ——— 2,977 802 3,779 Other comprehensive income (loss), net of taxes: Unrealized gains on securities ————————2—— 2— 2 Translation adjustment ———————— (3)—— (3) 1 (2) Change in unrealized derivatives’ fair value ———————— (3)—— (3) (1) (4) Reclassification to earnings ————————7—— 71 8 Defined benefit plans: Net gain during period, net of taxes of $34 million ———————— 53 —— 53 1 54 Amortization of unrecognized amounts ————————6—— 6— 6 Other comprehensive income ———————— 62 —— 62 2 64 Total comprehensive income ——————————— 3,039 804 3,843

Balance at December31, 2007 1 $1,100 29 $ 2,875 497 $50 $13,407 $ 3,601 $ 42 114 $(2,841) $18,234 $1,239 $19,473 Conversions of 5½% Convertible Perpetual Preferred Stock — (268) — — 7 1 290 ———— 23 — 23 Exercised and issued stock-based awards — — — — 1 — 179 ———— 179 — 179 Stock-based compensation —————— 100 ———— 100 — 100 Tax benefit for stock-based awards —————— 13 ———— 13 — 13 Tender of shares for stock-based awards — — — — — — — — — 1 (61) (61) — (61) Common stock purchased — — — — — — — — — 6 (500) (500) — (500) Dividends on common stock ——————— (527) ——— (527) — (527) Dividends on preferred stock ——————— (274) ——— (274) — (274) Distributions to noncontrolling interests ———————————— (730) (730) Contributions from noncontrolling interests ———————————— 201 201 Comprehensive income (loss): Net income (loss) ——————— (11,067) ——— (11,067) 617 (10,450) Other comprehensive income (loss), net of taxes: Unrealized losses on securities ———————— (9)—— (9)— (9) Translation adjustment ———————— (4)—— (4)— (4) Defined benefit plans: Net gain (loss) during period, net of taxes of $190 million ———————— (341) —— (341) 1 (340) Amortization of unrecognized amounts ————————7—— 7— 7 Other comprehensive income (loss) ———————— (347)—— (347) 1 (346) Total comprehensive income (loss) ——————————— (11,414) 618 (10,796) Balance at December31, 2008 1 $ 832 29 $ 2,875 505 $51 $13,989 $(8,267) $ (305) 121 $ (3,402) $ 5,773 $1,328 $ 7,101 Conversions and redemptions of 5½% Convertible Perpetual Preferred Stock (1) (832) —— 18 2 829 ———— (1) — (1) Sale of common stock ———— 27 2 738 ———— 740 — 740 Exercised and issued stock-based awards — — — — 2 — 18 ———— 18 — 18 Stock-based compensation —————— 100 ———— 100 — 100 Tax benefit for stock-based awards ——— ——— 6 ——— — 6 — 6 Tender of shares for stock-based awards — — — — — — — — — 1 (11) (11) — (11) Dividends on common stock ——————— (65) ——— (65) — (65) Dividends on preferred stock ——————— (222) ——— (222) — (222) Distributions to noncontrolling interests ———————————— (535) (535) Contributions from noncontrolling interests ———————————— 59 59 Comprehensive income: Net income ——————— 2,749 ——— 2,749 785 3,534 Other comprehensive income, net of taxes: Unrealized gains on securities ——— ——— — —3— — 3 — 3 Translation adjustment ——— ——— — —3— — 3 — 3 Defined benefit plans: Net gain during period, net of taxes of $51 million ——— ——— — —8— — 8 1 9 Amortization of unrecognized amounts ———————— 18 —— 18 — 18 Other comprehensive income ———————— 32 —— 32 1 33 Total comprehensive income ——————————— 2,781 786 3,567 Balance at December31, 2009 — $ — 29 $ 2,875 552 $55 $15,680 $ (5,805) $ (273) 122 $ (3,413) $ 9,119 $ 1,638 $ 10,757

;OL HJJVTWHU`PUN 5V[LZ [V *VUZVSPKH[LK -PUHUJPHS :[H[LTLU[Z HYL HU PU[LNYHS WHY[ VM [OLZL ÄUHUJPHS Z[H[LTLU[Z

FREEPORT- McMoRan COPPER & GOLD INC. 63 2009 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Summary of Significant Accounting Policies UDWHV ZKLOHUHYHQXHVDQGH[SHQVHVDUHWUDQVODWHGDWDYHUDJH Basis of Presentation.7KHFRQVROLGDWHGÀQDQFLDOVWDWHPHQWVRI UDWHVLQHIIHFWIRUWKHSHULRG7KHUHODWHGWUDQVODWLRQJDLQVDQGORVVHV )UHHSRUW0F0R5DQ&RSSHU *ROG,QF )&; LQFOXGHWKHDFFRXQWV DUHLQFOXGHGLQDFFXPXODWHGRWKHUFRPSUHKHQVLYHLQFRPH ORVV  RIWKRVHVXEVLGLDULHVZKHUH)&;GLUHFWO\RULQGLUHFWO\KDVPRUHWKDQ ZLWKLQHTXLW\ SHUFHQWRIWKHYRWLQJULJKWVDQGKDVWKHULJKWWRFRQWUROVLJQLÀFDQW Cash Equivalents. +LJKO\OLTXLGLQYHVWPHQWVSXUFKDVHGZLWK PDQDJHPHQWGHFLVLRQV7KHPRVWVLJQLÀFDQWHQWLWLHVWKDW)&; PDWXULWLHVRIWKUHHPRQWKVRUOHVVDUHFRQVLGHUHGFDVKHTXLYDOHQWV FRQVROLGDWHVLQFOXGHLWVSHUFHQWRZQHGVXEVLGLDU\37 )UHHSRUW Inventories. 7KHODUJHVWFRPSRQHQWVRILQYHQWRULHVLQFOXGHÀQLVKHG ,QGRQHVLDDQGLWVZKROO\RZQHGVXEVLGLDULHV)UHHSRUW0F0R5DQ JRRGV SULPDULO\FRQFHQWUDWHV DQGFDWKRGHV DWPLQLQJRSHUDWLRQV &RUSRUDWLRQDQG$WODQWLF&RSSHU6$ $WODQWLF&RSSHU )&; FRQFHQWUDWHVDQGZRUNLQSURFHVVDW$WODQWLF&RSSHUҋVVPHOWLQJDQG DFTXLUHG3KHOSV'RGJH&RUSRUDWLRQ 3KHOSV'RGJH RQ0DUFK UHÀQLQJRSHUDWLRQVDQGPDWHULDOVDQGVXSSOLHVLQYHQWRULHV UHIHUWR )&;ҋVUHVXOWVRIRSHUDWLRQVLQFOXGH3KHOSV'RGJHҋVUHVXOWV 1RWHIRUIXUWKHUGLVFXVVLRQ ,QYHQWRULHVRIPDWHULDOVDQGVXSSOLHV EHJLQQLQJ0DUFK UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ  DVZHOODVVDODEOHSURGXFWVDUHVWDWHGDWWKHORZHURIZHLJKWHG )&;FKDQJHG3KHOSV'RGJHҋVOHJDOQDPHWR)UHHSRUW0F0R5DQ DYHUDJHFRVWRUPDUNHW&RVWVRIÀQLVKHGJRRGVDQGZRUNLQSURFHVV &RUSRUDWLRQ )0& LQWKHUHIRUHUHIHUHQFHVWR)0&DQG3KHOSV i.e.QRWPDWHULDOVDQGVXSSOLHV LQYHQWRULHVLQFOXGHODERUDQG 'RGJHLQWKHVHQRWHVUHSUHVHQWWKHVDPHHQWLW\)&;ҋVXQLQFRUSRUDWHG EHQHÀWVVXSSOLHVHQHUJ\GHSUHFLDWLRQGHSOHWLRQDPRUWL]DWLRQVLWH MRLQWYHQWXUHVZLWK5LR7LQWRSOF 5LR7LQWR DQG6XPLWRPR0HWDO0LQLQJ RYHUKHDGFRVWVDQGRWKHUQHFHVVDU\FRVWVDVVRFLDWHGZLWKWKH $UL]RQD,QF 6XPLWRPR DUHUHÁHFWHGXVLQJWKHSURSRUWLRQDWH H[WUDFWLRQDQGSURFHVVLQJRIRUHLQFOXGLQJGHSHQGLQJRQWKH FRQVROLGDWLRQPHWKRG UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ $OO SURFHVVPLQLQJKDXODJHPLOOLQJFRQFHQWUDWLQJVPHOWLQJOHDFKLQJ VLJQLÀFDQWLQWHUFRPSDQ\WUDQVDFWLRQVKDYHEHHQHOLPLQDWHG'ROODU VROXWLRQH[WUDFWLRQUHÀQLQJURDVWLQJDQGFKHPLFDOSURFHVVLQJ DPRXQWVLQWDEOHVDUHVWDWHGLQPLOOLRQVH[FHSWSHUVKDUHDPRXQWV &RUSRUDWHJHQHUDODQGDGPLQLVWUDWLYHFRVWVDUHQRWLQFOXGHGLQ ,QYHVWPHQWVLQXQFRQVROLGDWHGFRPSDQLHVRZQHGSHUFHQWRU LQYHQWRU\FRVWV PRUHDUHUHFRUGHGXVLQJWKHHTXLW\PHWKRG,QYHVWPHQWVLQ Work-in-Process. ,QSURFHVVLQYHQWRULHVUHSUHVHQWPDWHULDOVWKDW FRPSDQLHVRZQHGOHVVWKDQSHUFHQWDQGIRUZKLFK)&;GRHVQRW DUHFXUUHQWO\LQWKHSURFHVVRIEHLQJFRQYHUWHGWRDVDODEOHSURGXFW H[HUFLVHVLJQLÀFDQWLQÁXHQFHDUHFDUULHGDWFRVW &RQYHUVLRQSURFHVVHVIRUPLQLQJRSHUDWLRQVYDU\GHSHQGLQJRQWKH Use of Estimates.7KHSUHSDUDWLRQRI)&;ҋVÀQDQFLDOVWDWHPHQWV QDWXUHRIWKHFRSSHURUHDQGWKHVSHFLÀFPLQLQJRSHUDWLRQ)RU LQFRQIRUPLW\ZLWKDFFRXQWLQJ SULQFLSOHVJHQHUDOO\DFFHSWHGLQWKH VXOÀGHRUHVSURFHVVLQJLQFOXGHVPLOOLQJDQGFRQFHQWUDWLQJDQG 8QLWHG6WDWHV 86 UHTXLUHVPDQDJHPHQWWR PDNHHVWLPDWHVDQG UHVXOWVLQWKHSURGXFWLRQRIFRSSHUDQGPRO\EGHQXPFRQFHQWUDWHV DVVXPSWLRQVWKDWDIIHFWWKHDPRXQWVUHSRUWHGLQWKHVHÀQDQFLDO RUDOWHUQDWLYHO\FRSSHUFDWKRGHE\FRQFHQWUDWHOHDFKLQJ)RUR[LGH VWDWHPHQWVDQGDFFRPSDQ\LQJQRWHV7KHPRUHVLJQLÀFDQWDUHDV RUHVDQGFHUWDLQVHFRQGDU\VXOÀ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ÀWVGHIHUUHGWD[HVDQGYDOXDWLRQDOORZDQFHV $WODQWLF&RSSHULQSURFHVVLQYHQWRULHVUHSUHVHQWFRSSHU UHVHUYHVIRUFRQWLQJHQFLHVDQGOLWLJDWLRQ DQGDVVHWLPSDLUPHQW FRQFHQWUDWHVDWYDULRXVVWDJHVRIFRQYHUVLRQLQWRDQRGHVDQG LQFOXGLQJHVWLPDWHVXVHGWRGHULYHIXWXUHFDVKÁRZVDVVRFLDWHGZLWK FDWKRGHV$WODQWLF&RSSHUҋVLQSURFHVVLQYHQWRULHVDUHYDOXHGDWWKH WKRVHDVVHWV$FWXDO UHVXOWVFRXOGGLIIHUIURPWKRVHHVWLPDWHV ZHLJKWHGDYHUDJHFRVWRIWKHPDWHULDOIHGWRWKHVPHOWLQJDQG Foreign Currencies. )RUIRUHLJQVXEVLGLDULHVZKRVHIXQFWLRQDO UHÀQLQJSURFHVVSOXVLQSURFHVVFRQYHUVLRQFRVWV FXUUHQF\LVWKH86GROODUPRQHWDU\DVVHWVDQGOLDELOLWLHVGHQRPLQDWHG Finished Goods. )LQLVKHGJRRGVLQFOXGHVDODEOHSURGXFWV e.g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ill and Leach Stockpiles. 0LOODQGOHDFKVWRFNSLOHVDUHVWDWHGDW FXUUHQF\DVVHWVDQGOLDELOLWLHVDUHWUDQVODWHGDWFXUUHQWH[FKDQJH WKHORZHURIZHLJKWHGDYHUDJHFRVWRUPDUNHW%RWKPLOODQGOHDFK VWRFNSLOHVJHQHUDOO\FRQWDLQORZHUJUDGHRUHVWKDWKDYHEHHQH[WUDFWHG

64 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

IURPWKHRUHERG\DQGDUHDYDLODEOHIRUFRSSHUUHFRYHU\)RUPLOO PLQHDVVHWV LQIUDVWUXFWXUHDQGRWKHUFRPPRQFRVWVLVGHWHUPLQHG VWRFNSLOHVUHFRYHU\LVWKURXJKPLOOLQJFRQFHQWUDWLQJVPHOWLQJDQG XVLQJWKHXQLWRISURGXFWLRQPHWKRGEDVHGRQWRWDOHVWLPDWHG UHÀQLQJRUDOWHUQDWLYHO\E\FRQFHQWUDWHOHDFKLQJ)RUOHDFKVWRFNSLOHV UHFRYHUDEOHSURYHQDQGSUREDEOHFRSSHUUHVHUYHV IRUSULPDU\FRSSHU UHFRYHU\LVWKURXJKH[SRVXUHWRDFLGLFVROXWLRQVWKDWGLVVROYHFRQWDLQHG PLQHV DQGSURYHQDQGSUREDEOHPRO\EGHQXPUHVHUYHV IRUWKH FRSSHUDQGGHOLYHULWLQVROXWLRQWRH[WUDFWLRQSURFHVVLQJIDFLOLWLHV7KH SULPDU\PRO\EGHQXPPLQH 'HYHORSPHQWFRVWVDQGDFTXLVLWLRQFRVWV UHFRUGHGFRVWRIPLOODQGOHDFKVWRFNSLOHVLQFOXGHVPLQLQJDQGKDXODJH IRUSURYHQDQGSUREDEOHUHVHUYHVWKDWUHODWHWRDVSHFLÀFRUHERG\ FRVWVLQFXUUHGWRGHOLYHURUHWRVWRFNSLOHVGHSUHFLDWLRQGHSOHWLRQ DUHGHSUHFLDWHGXVLQJWKHXQLWRISURGXFWLRQPHWKRGEDVHGRQ DPRUWL]DWLRQDQGVLWHRYHUKHDGFRVWV HVWLPDWHGUHFRYHUDEOHSURYHQDQGSUREDEOHUHVHUYHVIRUWKHRUHERG\ %HFDXVHLWLVJHQHUDOO\LPSUDFWLFDEOH WR GHWHUPLQHFRSSHU EHQHÀ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ҋVDFTXLVLWLRQRI3KHOSV'RGJH7KHFRQFHSWRI FRSSHUFRQFHQWUDWHDOPRVWLPPHGLDWHO\ 9%33 KDVEHHQLQWHUSUHWHGGLIIHUHQWO\E\GLIIHUHQWPLQLQJFRPSDQLHV ([SHFWHGFRSSHUUHFRYHU\UDWHVIRUOHDFKVWRFNSLOHVDUH )&;ҋV9%33 LVDWWULEXWDEOHWR L PLQHUDOL]HGPDWHULDOZKLFKLQFOXGHV GHWHUPLQHGXVLQJVPDOOVFDOHODERUDWRU\WHVWVVPDOOWRODUJHVFDOH PHDVXUHGDQGLQGLFDWHGDPRXQWVWKDW)&;EHOLHYHVFRXOGEH FROXPQWHVWLQJ ZKLFKVLPXODWHVWKHSURGXFWLRQVFDOHSURFHVV  EURXJKWLQWRSURGXFWLRQZLWKWKHHVWDEOLVKPHQWRUPRGLÀFDWLRQRI KLVWRULFDOWUHQGVDQGRWKHUIDFWRUVLQFOXGLQJPLQHUDORJ\RIWKHRUH UHTXLUHGSHUPLWVDQGVKRXOGPDUNHWFRQGLWLRQVDQGWHFKQLFDO DQGURFNW\SH8OWLPDWHUHFRYHU\RIFRSSHUFRQWDLQHGLQOHDFK DVVHVVPHQWVZDUUDQW LL LQIHUUHGPLQHUDOUHVRXUFHVDQG LLL H[SORUDWLRQ VWRFNSLOHVFDQYDU\VLJQLÀFDQWO\IURPDORZSHUFHQWDJHWRPRUHWKDQ SRWHQWLDODVIXUWKHUGHÀQHGEHORZ SHUFHQWGHSHQGLQJRQVHYHUDOYDULDEOHVLQFOXGLQJW\SHRIFRSSHU 0LQHUDOL]HGPDWHULDOLVDPLQHUDOL]HGERG\WKDWKDVEHHQ UHFRYHU\PLQHUDORJ\DQGSDUWLFOHVL]HRIWKHURFN)RUQHZO\SODFHG GHOLQHDWHGE\DSSURSULDWHO\VSDFHGGULOOLQJDQGRUXQGHUJURXQG PDWHULDORQDFWLYHVWRFNSLOHVDVPXFKDVSHUFHQWRIWKHFRSSHU VDPSOLQJWRVXSSRUWUHSRUWHGWRQQDJHDQGDYHUDJHJUDGHRIPLQHUDOV XOWLPDWHO\UHFRYHUDEOHPD\EHH[WUDFWHGGXULQJWKHÀUVW\HDUDQGWKH 6XFK DGHSRVLWGRHVQRWTXDOLI\DVSURYHQDQGSUREDEOHUHVHUYHV UHPDLQLQJFRSSHUPD\EHUHFRYHUHGRYHUPDQ\\HDUV XQWLOOHJDODQGHFRQRPLFIHDVLELOLW\DUHFRQÀUPHGEDVHGXSRQD 3URFHVVHVDQGUHFRYHU\UDWHVDUHPRQLWRUHGUHJXODUO\DQG FRPSUHKHQVLYHHYDOXDWLRQRIGHYHORSPHQWFRVWVXQLWFRVWVJUDGHV UHFRYHU\UDWHHVWLPDWHVDUHDGMXVWHGSHULRGLFDOO\DVDGGLWLRQDO UHFRYHULHVDQGRWKHUPDWHULDOIDFWRUV,QIHUUHGPLQHUDOUHVRXUFHVDUH LQIRUPDWLRQ EHFRPHVDYDLODEOHDQGDVUHODWHGWHFKQRORJ\FKDQJHV WKDWSDUWRIDPLQHUDOUHVRXUFHIRUZKLFKWKHRYHUDOOWRQQDJHVJUDGHV Property,Plant, Equipment and Development Costs. 3URSHUW\ DQGPLQHUDOFRQWHQWVFDQEHHVWLPDWHGZLWKDUHDVRQDEOHOHYHORI SODQWHTXLSPHQWDQGGHYHORSPHQWFRVWVDUHFDUULHGDWFRVW0LQHUDO FRQÀGHQFHEDVHGRQJHRORJLFDOHYLGHQFHDQGDSSDUHQWJHRORJLFDO H[SORUDWLRQFRVWVDVZHOODVGULOOLQJDQGRWKHUFRVWVLQFXUUHGIRUWKH DQGJUDGHFRQWLQXLW\DIWHUDSSO\LQJHFRQRPLFSDUDPHWHUV$QLQIHUUHG SXUSRVHRIFRQYHUWLQJPLQHUDOUHVRXUFHVWRSURYHQDQGSUREDEOH PLQHUDOUHVRXUFHKDVDORZHUOHYHORIFRQÀ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i.e., WXUQDURXQGV  DWWKHGDWHDFTXLUHGOHVVDQ\LPSDLUPHQWDPRXQWV DUHH[SHQVHGDVLQFXUUHG'HSUHFLDWLRQIRUPLQLQJDQGPLOOLQJOLIHRI

  -9,,769;4J4V9HU*677,9 .63+05* 65    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill. )&;UHFRUGHGJRRGZLOODVDUHVXOWRIWKHDFTXLVLWLRQRI (VWLPDWHVRIIXWXUHFDVKÁRZVLQFOXGHQHDUDQGORQJWHUPPHWDOSULFH 3KHOSV'RGJH*RRGZLOOKDGDQLQGHÀQLWHXVHIXOOLIHDQGZDVQRW DVVXPSWLRQVHVWLPDWHVRIFRPPRGLW\EDVHGDQGRWKHULQSXWFRVWV DPRUWL]HGEXWUDWKHUZDVWHVWHGIRULPSDLUPHQWDWOHDVWDQQXDOO\ SURYHQDQGSUREDEOHUHVHUYHHVWLPDWHVLQFOXGLQJDQ\FRVWVWR XQOHVVHYHQWVRFFXUUHGRUFLUFXPVWDQFHVFKDQJHGEHWZHHQDQQXDO GHYHORSWKHUHVHUYHVDQGWKHWLPLQJRISURGXFLQJWKHUHVHUYHVDQG WHVWVWKDWZRXOGPRUHOLNHO\WKDQQRWUHGXFHWKHIDLUYDOXHRIDUHODWHG WKHXVHRIDSSURSULDWHFXUUHQWHVFDODWLRQDQGGLVFRXQWUDWHV UHSRUWLQJXQLW EHORZLWVFDUU\LQJDPRXQW)&;XVHGGLVFRXQWHGFDVK Deferred Mining Costs. 6WULSSLQJFRVWV i.e., WKHFRVWVRIUHPRYLQJ ÁRZPRGHOVWRGHWHUPLQHLIWKHFDUU\LQJYDOXHRIWKHUHSRUWLQJXQLW RYHUEXUGHQDQGZDVWHPDWHULDOWRDFFHVVPLQHUDOGHSRVLWV LQFXUUHG ZDVOHVVWKDQWKHIDLUYDOXHRIWKHUHSRUWLQJXQLW )&;ҋVDQQXDO GXULQJWKHSURGXFWLRQSKDVHRIDPLQHDUHFRQVLGHUHGYDULDEOH LPSDLUPHQWWHVWLQWKHIRXUWKTXDUWHURIUHVXOWHGLQWKHIXOO SURGXFWLRQFRVWVDQGDUHLQFOXGHGDVDFRPSRQHQWRILQYHQWRU\ LPSDLUPHQWRIJRRGZLOO UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ  SURGXFHGGXULQJWKHSHULRGLQZKLFKVWULSSLQJFRVWVDUHLQFXUUHG Intangible Assets and Liabilities. )&;UHFRUGHGLQWDQJLEOHDVVHWV 0DMRUGHYHORSPHQW H[SHQGLWXUHVLQFOXGLQJVWULSSLQJFRVWVWRSUHSDUH DQGOLDELOLWLHVDVDUHVXOWRIWKHDFTXLVLWLRQRI3KHOSV'RGJH XQLTXHDQGLGHQWLÀDEOHDUHDVRXWVLGHWKHFXUUHQWPLQLQJDUHDIRU ,QGHÀQLWHOLYHGLQWDQJLEOHVSULPDULO\LQFOXGHZDWHUULJKWV'HÀQLWHOLYHG IXWXUHSURGXFWLRQWKDWDUHFRQVLGHUHGWREHSUHSURGXFWLRQPLQH LQWDQJLEOHVLQFOXGH IDYRUDEOHDQGXQIDYRUDEOHFRQWUDFWV SULPDULO\ GHYHORSPHQWDUHFDSLWDOL]HGDQGDPRUWL]HGRQWKHXQLWRISURGXFWLRQ UHODWHGWRPRO\EGHQXPVDOHVFRQWUDFWVWUHDWPHQWDQGUHÀQLQJ PHWKRGEDVHGRQHVWLPDWHGUHFRYHUDEOHSURYHQDQGSUREDEOH FRQWUDFWUDWHVSRZHUFRQWUDFWVDQGWLUHFRQWUDFWV UR\DOW\SD\PHQWV UHVHUYHVIRUWKHRUHERG\EHQHÀWHG+RZHYHUZKHUHDVHFRQGRU SDWHQWVDQGSURFHVVWHFKQRORJ\7KHIDLUYDOXHRILGHQWLÀDEOH VXEVHTXHQWSLWRUPDMRUH[SDQVLRQLVFRQVLGHUHGWREHDFRQWLQXDWLRQ LQWDQJLEOHDVVHWVZDVHVWLPDWHGEDVHGSULQFLSDOO\XSRQFRPSDUDEOH RIH[LVWLQJPLQLQJDFWLYLWLHVVWULSSLQJFRVWVDUHDFFRXQWHGIRUDVD PDUNHWWUDQVDFWLRQVDQGGLVFRXQWHGIXWXUHFDVKÁRZSURMHFWLRQV7KH FXUUHQWSURGXFWLRQFRVWDQGDFRPSRQHQWRIWKHDVVRFLDWHGLQYHQWRU\ UDQJHVIRUHVWLPDWHGXVHIXOOLYHVDUHRQHWR\HDUVIRUPRO\EGHQXP Environmental Expenditures. (QYLURQPHQWDOH[SHQGLWXUHVDUH VDOHVWUHDWPHQWDQGUHÀQLQJSRZHUDQGWLUHFRQWUDFWVRQHWR H[SHQVHGRUFDSLWDOL]HGGHSHQGLQJXSRQWKHLUIXWXUHHFRQRPLF \HDUVIRUUR\DOW\SD\PHQWVDQGSULQFLSDOO\WR\HDUVIRUSDWHQWV EHQHÀWV$FFUXDOVIRUVXFKH[SHQGLWXUHVDUHUHFRUGHGZKHQLWLV DQGSURFHVVWHFKQRORJ\$OOLQGHÀQLWHOLYHGLQWDQJLEOHDVVHWVDUH SUREDEOHWKDWREOLJDWLRQVKDYHEHHQLQFXUUHGDQGWKHFRVWVFDQEH VXEMHFWWRLPSDLUPHQWWHVWLQJDWOHDVWDQQXDOO\XQOHVVHYHQWVRFFXURU UHDVRQDEO\HVWLPDWHG )RUFORVHGIDFLOLWLHVDQGFORVHGSRUWLRQVRI FLUFXPVWDQFHVFKDQJHEHWZHHQDQQXDOWHVWVWKDWZRXOGPRUHOLNHO\ RSHUDWLQJIDFLOLWLHVZLWKHQYLURQPHQWDOREOLJDWLRQVDQHQYLURQPHQWDO WKDQQRWUHGXFHWKHLQGHÀQLWHOLYHGLQWDQJLEOHDVVHWҋVIDLUYDOXHEHORZ REOLJDWLRQLVDFFUXHGZKHQDGHFLVLRQWRFORVHDIDFLOLW\RUDSRUWLRQRI LWVFDUU\LQJYDOXH DIDFLOLW\LVPDGHE\PDQDJHPHQWDQGWKHHQYLURQPHQWDOREOLJDWLRQLV Asset Impairment. )&;UHYLHZVDQGHYDOXDWHVLWVORQJOLYHG FRQVLGHUHGWREHSUREDEOH(QYLURQPHQWDOREOLJDWLRQVDWWULEXWHGWRWKH DVVHWVIRULPSDLUPHQWZKHQHYHQWVRUFKDQJHVLQFLUFXPVWDQFHV &RPSUHKHQVLYH(QYLURQPHQWDO5HVSRQVH&RPSHQVDWLRQDQG LQGLFDWHWKDWWKHUHODWHGFDUU\LQJDPRXQWVPD\QRWEHUHFRYHUDEOH /LDELOLW\$FW &(5&/$ RUDQDORJRXVVWDWHSURJUDPVDUHFRQVLGHUHG /RQJOLYHGDVVHWVRWKHUWKDQJRRGZLOODQGLQGHÀQLWHOLYHGLQWDQJLEOH SUREDEOHZKHQDFODLPLVDVVHUWHGRULVSUREDEOHRIDVVHUWLRQDQG DVVHWVDUHHYDOXDWHGIRULPSDLUPHQWXQGHUWKHWZRVWHSPRGHO$Q )&;RUDQ\RILWVVXEVLGLDULHVKDYH EHHQDVVRFLDWHGZLWKWKHVLWH LPSDLUPHQWLVFRQVLGHUHGWRH[LVWLIWRWDOHVWLPDWHGIXWXUHFDVKÁRZV 2WKHUHQYLURQPHQWDOUHPHGLDWLRQREOLJDWLRQVDUHFRQVLGHUHGSUREDEOH RQDQXQGLVFRXQWHGEDVLVDUHOHVVWKDQWKHFDUU\LQJDPRXQWRIWKH EDVHGRQVSHFLÀFIDFWVDQGFLUFXPVWDQFHV)&;ҋVHVWLPDWHVRIWKHVH DVVHW2QFHLWLVGHWHUPLQHGWKDWDQLPSDLUPHQWH[LVWVDQLPSDLUPHQW FRVWVDUHEDVHGRQDQHYDOXDWLRQRIYDULRXVIDFWRUVLQFOXGLQJ ORVVLVPHDVXUHGDVWKHDPRXQWE\ZKLFKWKHDVVHWFDUU\LQJYDOXH FXUUHQWO\DYDLODEOHIDFWVH[LVWLQJWHFKQRORJ\SUHVHQWO\HQDFWHGODZV H[FHHGVLWVIDLUYDOXH)DLUYDOXHLVJHQHUDOO\GHWHUPLQHGXVLQJ DQGUHJXODWLRQVUHPHGLDWLRQH[SHULHQFHZKHWKHURUQRW)&;LVD YDOXDWLRQWHFKQLTXHVVXFKDVHVWLPDWHGIXWXUHFDVKÁRZV SRWHQWLDOO\UHVSRQVLEOHSDUW\ 353 DQGWKHDELOLW\RIRWKHU353VWR ,QHYDOXDWLQJPLQLQJRSHUDWLRQVҋORQJOLYHGDVVHWVIRUUHFRYHUDELOLW\ SD\WKHLUDOORFDWHGSRUWLRQV:LWKWKHH[FHSWLRQRIWKRVHREOLJDWLRQV HVWLPDWHVRIDIWHUWD[XQGLVFRXQWHGIXWXUHFDVKÁRZVRI)&;ҋV DVVXPHGLQWKHDFTXLVLWLRQRI3KHOSV'RGJHWKDWZHUHUHFRUGHGDW LQGLYLGXDOPLQLQJ RSHUDWLRQVDUHXVHGZLWKLPSDLUPHQWORVVHV HVWLPDWHGIDLUYDOXHV UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ  PHDVXUHGE\UHIHUHQFHWRIDLUYDOXH$VTXRWHGPDUNHWSULFHVDUH HQYLURQPHQWDOREOLJDWLRQVDUHUHFRUGHGRQDQXQGLVFRXQWHGEDVLV XQDYDLODEOHIRU)&;ҋVLQGLYLGXDOPLQLQJRSHUDWLRQVIDLUYDOXHLV :KHUHWKHDYDLODEOHLQIRUPDWLRQLVVXIÀFLHQWWRHVWLPDWHWKHDPRXQWRI GHWHUPLQHGWKURXJKWKHXVHRIGLVFRXQWHGHVWLPDWHGIXWXUHFDVK WKHREOLJDWLRQWKDWHVWLPDWHKDVEHHQXVHG:KHUHWKHLQIRUPDWLRQLV ÁRZV(VWLPDWHGFDVKÁRZVXVHGWRDVVHVVUHFRYHUDELOLW\RIORQJ RQO\VXIÀFLHQWWRHVWDEOLVKDUDQJHRISUREDEOHOLDELOLW\DQGQRSRLQW OLYHGDVVHWVDQGPHDVXUHWKHIDLUYDOXHRI)&;ҋVPLQLQJRSHUDWLRQV ZLWKLQWKHUDQJHLVPRUHOLNHO\WKDQDQ\RWKHUWKHORZHUHQGRIWKH DUHGHULYHGIURPFXUUHQWEXVLQHVVSODQVGHYHORSHGXVLQJQHDUWHUP UDQJHKDVEHHQXVHG3RVVLEOHUHFRYHULHVRI VRPHRIWKHVHFRVWV SULFHIRUHFDVWVUHÁHFWLYHRIWKHFXUUHQWSULFHHQYLURQPHQWDQG IURPRWKHUSDUWLHVDUHQRWUHFRJQL]HGLQWKHFRQVROLGDWHGÀQDQFLDO PDQDJHPHQWҋVSURMHFWLRQVIRUORQJWHUPDYHUDJHPHWDOSULFHV VWDWHPHQWVXQWLOWKH\EHFRPHSUREDEOH/HJDOFRVWVDVVRFLDWHGZLWK HQYLURQPHQWDOUHPHGLDWLRQ VXFKDVIHHVWRRXWVLGHODZÀUPVIRUZRUN

66 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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ҋVRXWVWDQGLQJ RSHUDWLQJLQFRPH GHULYDWLYHLQVWUXPHQWVDW'HFHPEHUDQGDGLVFXVVLRQRI Asset Retirement Obligations. )&;UHFRUGVWKHIDLUYDOXHRI )&;ҋVULVNPDQDJHPHQWVWUDWHJLHVIRUWKRVHGHVLJQDWHGDVKHGJHV HVWLPDWHGDVVHWUHWLUHPHQWREOLJDWLRQV $52V DVVRFLDWHGZLWK Revenue Recognition. )&;VHOOVLWVSURGXFWVSXUVXDQWWRVDOHV WDQJLEOHORQJOLYHGDVVHWVLQWKHSHULRGLQFXUUHG5HWLUHPHQW FRQWUDFWVHQWHUHGLQWRZLWKLWVFXVWRPHUV5HYHQXHIRUDOO)&;ҋV REOLJDWLRQVDVVRFLDWHGZLWKORQJOLYHGDVVHWVDUHWKRVHIRUZKLFK SURGXFWVLVUHFRJQL]HGZKHQWLWOHDQGULVNRIORVVSDVVWRWKH WKHUHLVDOHJDOREOLJDWLRQWRVHWWOHXQGHUH[LVWLQJRUHQDFWHGODZ FXVWRPHUDQGZKHQFROOHFWLELOLW\LVUHDVRQDEO\DVVXUHG7KHSDVVLQJ VWDWXWHZULWWHQRURUDOFRQWUDFWRUE\OHJDOFRQVWUXFWLRQ7KHVH RIWLWOHDQGULVNRIORVVWRWKHFXVWRPHULVEDVHGRQWHUPVRIWKHVDOHV REOLJDWLRQVZKLFKDUHLQLWLDOO\HVWLPDWHGEDVHGRQGLVFRXQWHGFDVK FRQWUDFWJHQHUDOO\XSRQVKLSPHQWRUGHOLYHU\RISURGXFW ÁRZHVWLPDWHVDUHDFFUHWHGWRIXOOYDOXHRYHUWLPHWKURXJKFKDUJHVWR 5HYHQXHVIURP)&;ҋVFRQFHQWUDWHDQGFDWKRGHVVDOHVDUHUHFRUGHG FRVWRIVDOHV,QDGGLWLRQDVVHWUHWLUHPHQWFRVWV $5&V DUH EDVHGRQHLWKHUSHUFHQWRIDSURYLVLRQDOVDOHVSULFHRUDÀQDOVDOHV FDSLWDOL]HGDVSDUWRIWKHUHODWHGDVVHWҋVFDUU\LQJYDOXHDQGDUH SULFHFDOFXODWHGLQDFFRUGDQFHZLWKWKHWHUPVVSHFLÀHGLQWKHUHOHYDQW GHSUHFLDWHG SULPDULO\RQDXQLWRISURGXFWLRQEDVLV RYHUWKHDVVHWҋV VDOHVFRQWUDFW5HYHQXHVIURPFRQFHQWUDWHVDOHVDUHUHFRUGHGQHWRI UHVSHFWLYHXVHIXOOLIH5HFODPDWLRQFRVWVIRUIXWXUHGLVWXUEDQFHVDUH WUHDWPHQWDQGDOOUHÀQLQJFKDUJHV LQFOXGLQJSULFHSDUWLFLSDWLRQLI UHFRJQL]HGDVDQ$52DQGDVDUHODWHG$5&LQWKHSHULRGRIWKH DSSOLFDEOHDVGLVFXVVHGEHORZ DQGWKHLPSDFWRIGHULYDWLYHFRQWUDFWV GLVWXUEDQFH)&;ҋV$52VFRQVLVWSULPDULO\RIFRVWVDVVRFLDWHGZLWK LQFOXGLQJWKHLPSDFWRIWKHFRSSHUFROODUVDFTXLUHGIURP3KHOSV'RGJH PLQHUHFODPDWLRQDQGFORVXUHDFWLYLWLHV7KHVH DFWLYLWLHVZKLFKDUH UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ 0RUHRYHUEHFDXVHDSRUWLRQRI VLWHVSHFLÀFJHQHUDOO\LQFOXGHFRVWVIRUHDUWKZRUNUHYHJHWDWLRQ WKHPHWDOVFRQWDLQHGLQFRSSHUFRQFHQWUDWHVLVXQUHFRYHUDEOHDVD ZDWHUWUHDWPHQWDQGGHPROLWLRQ UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ  UHVXOWRIWKHVPHOWLQJSURFHVV)&;ҋVUHYHQXHVIURPFRQFHQWUDWHVDOHV Income Taxes.)&;DFFRXQWVIRUGHIHUUHGLQFRPHWD[HVXWLOL]LQJDQ DUHDOVRUHFRUGHGQHWRIDOORZDQFHVEDVHGRQWKHTXDQWLW\DQGYDOXHRI DVVHWDQGOLDELOLW\PHWKRGZKHUHE\GHIHUUHGWD[DVVHWVDQGOLDELOLWLHV WKHVHXQUHFRYHUDEOHPHWDOV7KHVHDOORZDQFHVDUHDQHJRWLDWHGWHUP DUHUHFRJQL]HGEDVHGRQWKHWD[HIIHFWVRIWHPSRUDU\GLIIHUHQFHV RI)&;ҋVFRQWUDFWVDQGYDU\E\FXVWRPHU7UHDWPHQWDQGUHÀQLQJ EHWZHHQWKHÀQDQFLDOVWDWHPHQWVDQGWKHWD[EDVLVRIDVVHWVDQG FKDUJHVUHSUHVHQWSD\PHQWVRUSULFHDGMXVWPHQWVWRVPHOWHUVDQG OLDELOLWLHVDVPHDVXUHGE\FXUUHQWHQDFWHGWD[UDWHV UHIHUWR1RWH UHÀQHUVDQGDUHHLWKHUÀ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ÀQDOL]HGLQDVSHFLÀHGIXWXUHSHULRG JHQHUDOO\RQHWRIRXU 2Q-DQXDU\)&;DGRSWHGQHZDFFRXQWLQJJXLGDQFH PRQWKVIURPWKHVKLSPHQWGDWH EDVHGRQWKHTXRWHG/RQGRQ0HWDO DVVRFLDWHGZLWKDFFRXQWLQJIRUXQFHUWDLQW\LQLQFRPHWD[HVZKLFK ([FKDQJH /0( RUWKH1HZ

  -9,,769;4J4V9HU*677,9 .63+05* 67    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

not qualify for hedge accounting. At December 31, 2009, consolidated payments to employees, including stock options, are measured at fair revenues for outstanding provisionally priced copper sales totaled value and expensed over the requisite service period for awards that $1.6 billion. At December 31, 2009, FCX had outstanding provisionally are expected to vest. Effective January 1, 2006, FCX applied the priced copper sales at its copper mining operations of 378 million PRGLÀHGSURVSHFWLYH WUDQVLWLRQ PHWKRG WR DOO SDVW DZDUGV RXWVWDQGLQJ pounds of copper (net of noncontrolling interests), priced at an average and unvested as of January 1, 2006, and is recognizing the RI  SHU SRXQG VXEMHFW WR ÀQDO SULFLQJ RYHU WKH ÀUVW VHYHUDO PRQWKV associated expense over the remaining vesting period of such of 2010 pursuant to the terms of the sales contracts. awards based on the fair values previously determined in accordance Gold sales are priced according to individual contract terms, with the original accounting guidance for stock-based compensation. generally the average London Bullion Market Association price for a The fair value of stock options is determined using the Black-Scholes- VSHFLÀHG PRQWK QHDU WKH PRQWK RI VKLSPHQW Merton option valuation model. In addition, for other stock-based Approximately 90 percent of FCX’s 2009 molybdenum sales were awards under the plans, compensation costs are recognized based priced based on prices published in Platts Metals Week, Ryan’s on the fair value on the date of grant for restricted stock units and the Notes or Metal Bulletin, plus conversion premiums for products that intrinsic value on the reporting or exercise date for cash-settled stock undergo additional processing, such as ferromolybdenum and appreciation rights (SARs). FCX includes estimated forfeitures at the molybdenum chemical products. The majority of these sales use the time of grant and revises those estimates in subsequent periods if average of the previous month. FCX’s remaining molybdenum sales DFWXDO IRUIHLWXUHV GLIIHU IURP WKRVH HVWLPDWHV WKURXJK WKH ÀQDO YHVWLQJ JHQHUDOO\ KDYH SULFLQJ WKDW LV HLWKHU EDVHG RQ D À[HG SULFH RU DGMXVWV date of the awards. Refer to Note 12 for further discussion. within certain price ranges. Earnings Per Share. FCX’s basic net income (loss) per share of PT Freeport Indonesia concentrate sales and Tenke Fungurume common stock was calculated by dividing net income (loss) attributable metal sales are subject to certain royalties, which are recorded as a to common stockholders by the weighted-average shares of common reduction to revenues (refer to Note 15 for further discussion). stock outstanding during the year. A reconciliation of net income Stock-Based Compensation. As of December 31, 2009, FCX has (loss) and weighted-average shares of common stock outstanding for four stock-based employee compensation plans and one stock-based purposes of calculating diluted net income (loss) per share for the director compensation plan. Compensation costs for share-based years ended December 31, 2009, 2008 and 2007, follows:

2009 2008 2007 Income (loss) from continuing operations $3,534 $(10,450) $3,733 Income from continuing operations attributable to noncontrolling interests (785) (617) (791)a Preferred dividends and losses on induced conversions (222) (274) (208) Income from continuing operations attributable to FCX common stockholders 2,527 (11,341) 2,734 Plus income impact of assumed conversion of: 6¾% Mandatory Convertible Preferred Stock 194 —b 147 5½% Convertible Perpetual Preferred Stock 28 —c 61 Diluted net income (loss) from continuing operations attributable to FCX common stockholders 2,749 (11,341) 2,942 Income from discontinued operations attributable to FCX common stockholders — — 35a Diluted net income (loss) attributable to FCX common stockholders $2,749 $(11,341) $2,977

Weighted-average shares of common stock outstanding 414 382 341 Add stock issuable upon conversion, exercise or vesting of (refer to Note 12): 6¾% Mandatory Convertible Preferred Stock 39 —b 30 5½% Convertible Perpetual Preferred Stock 13 —c 23 Dilutive stock options 2 —d 2 Restricted stock 1 —e 1 Weighted-average shares of common stock outstanding for purposes of calculating diluted net income (loss) per share 469 382 397

Diluted net income (loss) per share attributable to FCX common stockholders: Continuing operations $ 5.86 $ (29.72) $ 7.41 Discontinued operations — — 0.09 Diluted net income (loss) per share $ 5.86 $ (29.72) $ 7.50

a. Income from discontinued operations attributable to noncontrolling interests was $11 million. b. Potential income impact of $146 million and additional shares of common stock of approximately 39 million shares were excluded because they were anti-dilutive. c. Potential income impact of $45 million and additional shares of common stock of approximately 23 million shares were excluded because they were anti-dilutive. d. Potential additional shares of common stock of approximately 2 million were anti-dilutive. e. Potential additional shares of common stock of approximately 1 million were anti-dilutive.

68 FREEPORT- McMoRan COPPER & GOLD INC. 2009 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

)&;ҋVFRQYHUWLEOHLQVWUXPHQWVDUHH[FOXGHGIURPWKHFRPSXWDWLRQ HDUOLHUSHULRGVWKDWDUHSUHVHQWHGIRUFRPSDUDWLYHSXUSRVHV)&; RIGLOXWHGQHWLQFRPH ORVV SHUVKDUHRIFRPPRQVWRFNZKHQ DGRSWHGWKLVJXLGDQFHIRUWKH\HDUHQGHG'HFHPEHU LQFOXGLQJWKHFRQYHUVLRQRIWKHVHLQVWUXPHQWVUHVXOWVLQ DQDQWL Subsequent Events. ,Q 0D\)$6%LVVXHGDFFRXQWLQJ GLOXWLYHHIIHFWRQHDUQLQJVSHUVKDUH UHIHUWRIRRWQRWHVEDQGFLQWKH JXLGDQFHWKDWUHTXLUHVGLVFORVXUHRIWKHGDWHWKURXJKZKLFKDQHQWLW\ WDEOHDERYH  KDVHYDOXDWHGVXEVHTXHQWHYHQWVDQGZKHWKHUWKDWUHSUHVHQWVWKH 2XWVWDQGLQJVWRFNRSWLRQVZLWKH[HUFLVHSULFHVJUHDWHUWKDQWKH GDWHWKHÀQDQFLDOVWDWHPHQWVZHUHLVVXHGRUZHUHDYDLODEOHWREH DYHUDJHPDUNHWSULFHRI)&;ҋVFRPPRQVWRFNGXULQJWKHSHULRGDUH LVVXHG7KLVJXLGDQFHVHWVIRUWK L WKHSHULRGDIWHUWKHEDODQFHVKHHW H[FOXGHGIURPWKHFRPSXWDWLRQRIGLOXWHGQHWLQFRPH ORVV SHUVKDUH GXULQJZKLFKPDQDJHPHQWRIDUHSRUWLQJHQWLW\VKDOOHYDOXDWHHYHQWV RIFRPPRQVWRFN7KHUHZHUHDSSUR[LPDWHO\VL[PLOOLRQVWRFNRSWLRQV RUWUDQVDFWLRQVWKDWPD\RFFXUIRUSRWHQWLDOUHFRJQLWLRQRUGLVFORVXUHLQ ZLWKDZHLJKWHGDYHUDJHH[HUFLVHSULFHRIH[FOXGHGLQ WKHÀQDQFLDOVWDWHPHQWV LL WKHFLUFXPVWDQFHVXQGHUZKLFKDQHQWLW\ DSSUR[LPDWHO\WZRPLOOLRQVWRFNRSWLRQVZLWKDZHLJKWHGDYHUDJH VKDOOUHFRJQL]HHYHQWVRUWUDQVDFWLRQVRFFXUULQJDIWHUWKHEDODQFHVKHHW H[HUFLVHSULFHRILQDQGQRQHLQ GDWHLQLWVÀQDQFLDOVWDWHPHQWVDQG LLL WKHGLVFORVXUHVWKDWDQHQWLW\ New Accounting Standards.Noncontrolling Interests in VKDOOPDNHDERXWHYHQWVRUWUDQVDFWLRQVWKDWRFFXUUHGDIWHUWKHEDODQFH Consolidated Financial Statements. ,Q'HFHPEHUWKH)LQDQFLDO VKHHWGDWH7KLVJXLGDQFHLVHIIHFWLYHIRULQWHULPDQGÀVFDO\HDUV $FFRXQWLQJ6WDQGDUGV%RDUG )$6% LVVXHGDFFRXQWLQJJXLGDQFH HQGLQJDIWHU-XQHDQGVKDOOEHDSSOLHGSURVSHFWLYHO\)&; DVVRFLDWHGZLWKQRQFRQWUROOLQJLQWHUHVWVLQFRQVROLGDWHGÀQDQFLDO DGRSWHGWKLVJXLGDQFHHIIHFWLYHVHFRQGTXDUWHU VWDWHPHQWVZKLFKFODULÀHVWKDWQRQFRQWUROOLQJLQWHUHVWV PLQRULW\ Reclassifications. )RUFRPSDUDWLYHSXUSRVHVSULPDULO\WKH LQWHUHVWV DUHWREHWUHDWHGDVDVHSDUDWHFRPSRQHQWRIHTXLW\DQGDQ\ DGRSWLRQRIQHZDFFRXQWLQJJXLGDQFHIRUQRQFRQWUROOLQJLQWHUHVWVDQG FKDQJHVLQWKHRZQHUVKLSLQWHUHVW LQZKLFKFRQWUROLVUHWDLQHG DUHWREH WKHUHYLVLRQWR)&;ҋVSUHVHQWDWLRQRILWVEXVLQHVVVHJPHQWVFHUWDLQ DFFRXQWHGIRUDVFDSLWDOWUDQVDFWLRQV+RZHYHUDFKDQJHLQRZQHUVKLS SULRU\HDUDPRXQWVKDYHEHHQUHFODVVLÀHGWRFRQIRUPZLWKWKHFXUUHQW RIDFRQVROLGDWHGVXEVLGLDU\WKDWUHVXOWVLQDORVVRIFRQWUROLVFRQVLGHUHG \HDUSUHVHQWDWLRQ DVLJQLÀFDQWHYHQWWKDWWULJJHUVJDLQRUORVVUHFRJQLWLRQZLWKWKH NOTE 2. Asset Impairments and Other Charges HVWDEOLVKPHQWRIDQHZIDLUYDOXHEDVLVLQDQ\UHPDLQLQJRZQHUVKLS $ VXPPDU\RIORQJOLYHGDVVHWLPSDLUPHQWVRWKHUWKDQJRRGZLOODQG LQWHUHVWV7KLVJXLGDQFHDOVRSURYLGHVDGGLWLRQDOGLVFORVXUH RWKHUFKDUJHVUHFRUGHGGXULQJWKH\HDUVHQGHG'HFHPEHU UHTXLUHPHQWVIRUHDFKUHSRUWLQJSHULRG7KLVJXLGDQFHDSSOLHVWRÀVFDO DQGIROORZV UHIHUWR1RWHIRUORQJOLYHGDVVHWLPSDLUPHQWV \HDUVEHJLQQLQJRQRUDIWHU'HFHPEHUZLWKHDUO\DGRSWLRQ DQGRWKHUFKDUJHVE\)&;ҋVUHSRUWDEOHVHJPHQWV  SURKLELWHG7KLVJXLGDQFHLVUHTXLUHGWREHDGRSWHGSURVSHFWLYHO\ H[FHSWIRUWKHIROORZLQJSURYLVLRQVZKLFKDUHH[SHFWHGWREHDSSOLHG    2009  UHWURVSHFWLYHO\ L WKHUHFODVVLÀFDWLRQRIQRQFRQWUROOLQJLQWHUHVWVWR &LW\RI%ODFNZHOOSDUWLDOOLWLJDWLRQVHWWOHPHQW   $54  ³ HTXLW\LQWKHFRQVROLGDWHGEDODQFHVKHHWVDQG LL WKHDGMXVWPHQWWR 5HVWUXFWXULQJFRVWV   32   3HQVLRQDQGSRVWUHWLUHPHQWVSHFLDOEHQHÀWV FRQVROLGDWHGQHWLQFRPHWRLQFOXGHQHWLQFRPHDWWULEXWDEOHWRERWKWKH  DQGFXUWDLOPHQWV   (9)   FRQWUROOLQJDQGQRQFRQWUROOLQJLQWHUHVWV)&;DGRSWHGWKLVJXLGDQFH /RQJOLYHGDVVHWLPSDLUPHQWV   —  HIIHFWLYH-DQXDU\DQGDGMXVWHGLWV'HFHPEHU  7RWDOORQJOLYHGDVVHWLPSDLUPHQWVDQGRWKHUFKDUJHV $77  FRQVROLGDWHGEDODQFHVKHHWWRUHÁHFWQRQFRQWUROOLQJLQWHUHVWVLQWKH DPRXQWRIPLOOLRQDVDFRPSRQHQWRIHTXLW\)&;DOVRDGMXVWHG ,Q)&;UHFRJQL]HGDFKDUJHRIPLOOLRQ PLOOLRQWRQHW LWVFRQVROLGDWHGVWDWHPHQWVRIHTXLW\IRUWKH\HDUVHQGHG'HFHPEHU LQFRPHDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHUGLOXWHG DQGWRUHÁHFWQRQFRQWUROOLQJLQWHUHVWVDVDFRPSRQHQW VKDUH IRUWKHSDUWLDOVHWWOHPHQWRIWKH&LW\RI%ODFNZHOOODZVXLW RIHTXLW\,QDGGLWLRQ)&;UHYLVHGLWVFRQVROLGDWHGVWDWHPHQWVRI UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ  RSHUDWLRQVIRUWKH\HDUVHQGHG'HFHPEHUDQGWR $OVRLQ)&;UHFRJQL]HGFKDUJHVUHODWLQJWRLWVUHYLVHG LQFOXGHQHWLQFRPHDWWULEXWDEOHWRERWKWKHFRQWUROOLQJDQG RSHUDWLQJSODQVLQWKHIRXUWKTXDUWHURIDQG-DQXDU\ DV QRQFRQWUROOLQJLQWHUHVWV GLVFXVVHGEHORZ IRU L UHVWUXFWXULQJFRVWVWRWDOLQJPLOOLRQ  Employers’ Disclosures about Postretirement Benefit Plan Assets. PLOOLRQWRQHWLQFRPHDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRU ,Q'HFHPEHU)$6%LVVXHGHQKDQFHGJXLGDQFHIRUDQ SHUGLOXWHGVKDUH IRUFRQWUDFWWHUPLQDWLRQFRVWVRWKHUSURMHFW HPSOR\HUҋVGLVFORVXUHVDERXWSODQDVVHWVRIDGHÀQHGEHQHÀWSHQVLRQ FDQFHOODWLRQFRVWVDQGHPSOR\HHVHYHUDQFHDQGEHQHÀWFRVWVDQG LL  RURWKHUSRVWUHWLUHPHQWSODQ7KLVJXLGDQFHUHYLVHVGLVFORVXUH JDLQVRIPLOOLRQ PLOOLRQWRQHWLQFRPHDWWULEXWDEOHWR)&; UHTXLUHPHQWVRQSHQVLRQDQGSRVWUHWLUHPHQWSODQDVVHWV7KH FRPPRQVWRFNKROGHUVRUSHUGLOXWHGVKDUH IRUSHQVLRQDQG GLVFORVXUHVDERXWSODQDVVHWVUHTXLUHGE\WKLVJXLGDQFHDUHHIIHFWLYH SRVWUHWLUHPHQWVSHFLDOUHWLUHPHQWEHQHÀWVDQGFXUWDLOPHQWV IRUÀVFDO\HDUVHQGLQJDIWHU'HFHPEHUZLWKHDUO\DSSOLFDWLRQ SHUPLWWHG8SRQLQLWLDODSSOLFDWLRQGLVFORVXUHVDUHQRWUHTXLUHGIRU

  -9,,769;4J4V9HU*677,9 .63+05* 69    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

'XULQJWKHIRXUWKTXDUWHURIWKHUHZDVDGUDPDWLFGHFOLQHLQ IURPQHDUWHUPSULFHVRISHUSRXQGIRUFRSSHUGHFOLQLQJRYHUDQ FRSSHUDQGPRO\EGHQXPSULFHV$IWHUDYHUDJLQJSHUSRXQGLQ HLJKW\HDUSHULRGWRSHUSRXQGDQGSHUSRXQGIRU DQGSHUSRXQGIRUWKHÀUVWQLQHPRQWKVRI/0(VSRW PRO\EGHQXPGHFOLQLQJRYHUDÀYH\HDUSHULRGWRSHUSRXQG FRSSHUSULFHVGHFOLQHGWRDIRXU\HDUORZRISHUSRXQGLQ UHÁHFWLQJSULFHH[SHFWDWLRQVDWWKDWWLPH)&;ҋVLPSDLUPHQW 'HFHPEHUDYHUDJHGSHUSRXQGLQWKHIRXUWKTXDUWHURI HYDOXDWLRQVDW'HFHPEHUZHUHEDVHGRQSULFHDVVXPSWLRQV DQGFORVHGDWSHUSRXQGRQ'HFHPEHU UHÁHFWLQJSUHYDLOLQJFRSSHUIXWXUHVSULFHVIRUWKUHH\HDUVZKLFK $GGLWLRQDOO\ZKLOHPRO\EGHQXPPDUNHWVKDGEHHQVWURQJLQUHFHQW UDQJHGIURPDSSUR[LPDWHO\SHUSRXQGWRSHUSRXQG DQG \HDUVZLWKSULFHVDYHUDJLQJDSSUR[LPDWHO\SHUSRXQGLQDQG DORQJWHUPDYHUDJHSULFHRISHUSRXQG0RO\EGHQXPSULFHV SHUSRXQGIRUWKHÀUVWQLQHPRQWKVRIPRO\EGHQXPSULFHV ZHUHDVVXPHGWRDYHUDJHSHUSRXQG GHFOLQHGVLJQLÀFDQWO\WRDIRXU\HDUORZRISHUSRXQGLQ )&;ҋVHYDOXDWLRQRIORQJOLYHGDVVHWV RWKHUWKDQJRRGZLOO IRU 1RYHPEHUDYHUDJHGDSSUR[LPDWHO\SHUSRXQGLQWKHIRXUWK LPSDLUPHQWUHVXOWHGLQWKHUHFRJQLWLRQRIDVVHWLPSDLUPHQWFKDUJHV TXDUWHURIDQGFORVHGDWSHUSRXQGRQ'HFHPEHU WRWDOLQJELOOLRQ ELOOLRQWRQHWORVVDWWULEXWDEOHWR)&; :KLOH)&;ҋVORQJWHUPVWUDWHJ\RIGHYHORSLQJLWVUHVRXUFHVWRWKHLU FRPPRQVWRFNKROGHUVRUSHUGLOXWHGVKDUH IRU5HIHUWR IXOOSRWHQWLDOUHPDLQVLQSODFHWKHGHFOLQHLQFRSSHUDQGPRO\EGHQXP 1RWHIRUGLVFXVVLRQRILPSDLUPHQWFKDUJHVUHODWHGWRJRRGZLOO SULFHVLQWKHIRXUWKTXDUWHURIDQGWKHGHWHULRUDWLRQRIWKH ,Q)&;UHFRJQL]HGFKDUJHVUHODWLQJWRLWVUHYLVHGRSHUDWLQJ HFRQRPLFDQGFUHGLWHQYLURQPHQWOLPLWHG)&;ҋVDELOLW\WRLQYHVWLQ SODQVLQWKHIRXUWKTXDUWHURIIRUVSHFLDOSHQVLRQDQG JURZWKSURMHFWVDQGUHTXLUHG)&;WRPDNHDGMXVWPHQWVWRLWVQHDU SRVWUHWLUHPHQWEHQHÀWVDQGFXUWDLOPHQWVWRWDOLQJPLOOLRQ  WHUPRSHUDWLQJSODQV)&;UHVSRQGHGWRWKHVXGGHQGRZQWXUQDQG PLOOLRQWRQHWORVVDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRU XQFHUWDLQQHDUWHUPRXWORRNE\UHYLVLQJLWVQHDUWHUPVWUDWHJ\WR SHUGLOXWHGVKDUH DQGUHVWUXFWXULQJFRVWVRIPLOOLRQ PLOOLRQWR SURWHFWOLTXLGLW\ZKLOHSUHVHUYLQJLWVPLQHUDOUHVRXUFHVDQGJURZWK QHWORVVDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHU RSWLRQVIRUWKHORQJHUWHUP$FFRUGLQJO\RSHUDWLQJSODQVZHUHUHYLVHG GLOXWHGVKDUH IRUHPSOR\HHVHYHUDQFHDQGEHQHÀWFRVWVFRQWUDFW LQWKHIRXUWKTXDUWHURIDQG-DQXDU\WRUHÁHFW WHUPLQDWLRQFRVWVDQGRWKHUSURMHFWFDQFHOODWLRQFRVWV7KH L FXUWDLOPHQWRIFRSSHUSURGXFWLRQDWKLJKFRVW1RUWK$PHULFD UHVWUXFWXULQJFKDUJHVUHÁHFWZRUNIRUFHUHGXFWLRQV DSSUR[LPDWHO\ RSHUDWLRQVDQGRIPRO\EGHQXPSURGXFWLRQDWWKH+HQGHUVRQ HPSOR\HHVUHODWHGWRIRXUWKTXDUWHUUHYLVHGRSHUDWLQJ PRO\EGHQXPPLQH LL FDSLWDOFRVWUHGXFWLRQV LLL DJJUHVVLYHFRVW SODQVDQGDSSUR[LPDWHO\HPSOR\HHVUHODWHGWR-DQXDU\ FRQWUROLQFOXGLQJZRUNIRUFHUHGXFWLRQVUHGXFHGHTXLSPHQW UHYLVHGRSHUDWLQJSODQV DQGRWKHUFKDUJHVWKDWUHÁHFWDQ SXUFKDVHVWKDWZHUHSODQQHGWRVXSSRUWH[SDQVLRQSURMHFWVD DSSUR[LPDWHSHUFHQWWRWDOUHGXFWLRQLQPLQLQJDQGFUXVKHGOHDFK UHGXFWLRQLQPDWHULDODQGVXSSOLHVLQYHQWRU\DQGUHGXFWLRQVLQ UDWHVDWWKH0RUHQFLPLQHLQ$UL]RQDDQDSSUR[LPDWH SHUFHQW H[SORUDWLRQUHVHDUFKDQGDGPLQLVWUDWLYHFRVWVDQG LY VXVSHQVLRQRI UHGXFWLRQLQPLQLQJDQGVWDFNLQJUDWHVDWWKH6DIIRUGPLQHLQ$UL]RQD )&;ҋVDQQXDO FRPPRQVWRFNGLYLGHQG DQDSSUR[LPDWHSHUFHQWUHGXFWLRQLQWKHPLQLQJUDWHDWWKH7\URQH ,QFRQQHFWLRQZLWKWKHVHVLJQLÀFDQWDGYHUVHFKDQJHVGXULQJWKH PLQHLQ1HZ0H[LFRVXVSHQVLRQRIPLQLQJDQGPLOOLQJDFWLYLWLHVDWWKH IRXUWKTXDUWHURI)&;HYDOXDWHGLWVORQJOLYHGDVVHWVRWKHUWKDQ &KLQRPLQH LQ1HZ0H[LFR ZLWKOLPLWHGUHVLGXDOFRSSHUSURGXFWLRQ JRRGZLOODQGLQGHÀQLWHOLYHGLQWDQJLEOHDVVHWVIRULPSDLUPHQWDVRI IURPOHDFKRSHUDWLRQV DQGDQDSSUR[LPDWHSHUFHQWUHGXFWLRQLQ 'HFHPEHU*RRGZLOODQGLQGHÀQLWHOLYHGLQWDQJLEOHDVVHWV DQQXDOSURGXFWLRQ DQDSSUR[LPDWHSHUFHQWUHGXFWLRQEHJDQLQWKH DUHHYDOXDWHGIRULPSDLUPHQWDQQXDOO\DVRI'HFHPEHU IRXUWKTXDUWHURI DWWKH+HQGHUVRQPRO\EGHQXPPLQHLQ )&;ҋVDVVHWLPSDLUPHQWHYDOXDWLRQVLQFOXGLQJLWVDQQXDOJRRGZLOO &RORUDGR,QDGGLWLRQWKH UHYLVHGRSHUDWLQJSODQVLQFOXGHGGHFLVLRQV LPSDLUPHQWWHVWUHTXLUHG)&;WRPDNHVHYHUDODVVXPSWLRQVLQ DWWKDWWLPHWRGHIHUFHUWDLQFDSLWDOSURMHFWVLQFOXGLQJ L WKH GHWHUPLQLQJHVWLPDWHVRIIXWXUHFDVKÁRZVWRGHWHUPLQHIDLUYDOXHRI LQFUHPHQWDOH[SDQVLRQSURMHFWVDWWKH6LHUULWDDQG%DJGDGPLQHVLQ LWVLQGLYLGXDOPLQLQJRSHUDWLRQVLQFOXGLQJQHDUDQGORQJWHUPPHWDO $UL]RQDWKH&HUUR9HUGHPLQHLQ3HUXDQGWKHVXOÀGHSURMHFWDWWKH SULFHDVVXPSWLRQVHVWLPDWHVRIFRPPRGLW\EDVHGDQGRWKHULQSXW (O$EUDPLQHLQ&KLOH LL WKHUHVWDUWRIWKH0LDPLPLQHLQ$UL]RQDDQG FRVWVSURYHQDQGSUREDEOHUHVHUYHHVWLPDWHVLQFOXGLQJDQ\FRVWVWR LLL WKHUHVWDUWRIWKH&OLPD[PRO\EGHQXPPLQHLQ&RORUDGR GHYHORSWKHUHVHUYHVDQGWKHWLPLQJRISURGXFLQJWKHUHVHUYHVDQG WKHXVHRIDSSURSULDWHFXUUHQWHVFDODWLRQDQGGLVFRXQWUDWHV 3URMHFWHGORQJWHUPDYHUDJHPHWDOSULFHVUHSUHVHQWHGWKHPRVW VLJQLÀFDQWDVVXPSWLRQXVHGLQWKHFDVKÁRZHVWLPDWHV,QFRQQHFWLRQ ZLWKWKH0DUFKDFTXLVLWLRQRI3KHOSV'RGJH)&;DOORFDWHGWKH ELOOLRQSXUFKDVHSULFHWRWKHHVWLPDWHGIDLUYDOXHVRIQHWDVVHWV DFTXLUHGLQFOXGLQJELOOLRQIRUJRRGZLOO0HWDOSULFHSURMHFWLRQV XVHGWRYDOXHWKHQHWDVVHWVDFTXLUHGDWWKHDFTXLVLWLRQGDWHUDQJHG

70 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7KHIROORZLQJWDEOHVXPPDUL]HVWKHOLDELOLWLHV LQFOXGHGLQDFFRXQWV SHUFHQWRI37 )UHHSRUW,QGRQHVLDDQG)&;RZQVSHUFHQWRI SD\DEOHDQGDFFUXHGOLDELOLWLHV LQFXUUHGLQFRQQHFWLRQZLWKWKHIRXUWK 37 ,QGRFRSSHU,QYHVWDPD$W'HFHPEHU37 )UHHSRUW TXDUWHUDQG-DQXDU\UHVWUXFWXULQJDFWLYLWLHV ,QGRQHVLDҋVQHWDVVHWVWRWDOHGELOOLRQDQGLWVUHWDLQHGHDUQLQJV    ,TWSV`LL *VU[YHJ[ WRWDOHGELOOLRQ$VRI'HFHPEHU)&;KDG QR    :L]LYHUJL *HUJLSSH[PVU ;V[HS    HUK)LULÄ[ HUK6[OLY 9LZ[Y\J[\YPUN RXWVWDQGLQJORDQVWR37 )UHHSRUW,QGRQHVLD    *VZ[Z *VZ[Z *VZ[Z )&;RZQVSHUFHQWRIWKHRXWVWDQGLQJ$WODQWLF&RSSHUFRPPRQ %DODQFHDW-DQXDU\  ³  ³  ³ VWRFN$W'HFHPEHU$WODQWLF&RSSHUҋVQHWDVVHWVWRWDOHG  )RXUWKTXDUWHUSURJUDP PLOOLRQDQGLWVDFFXPXODWHGGHÀFLWWRWDOHGPLOOLRQ)&;KDG   $GGLWLRQV      PLOOLRQLQORDQVRXWVWDQGLQJWR$WODQWLF&RSSHUDQG$WODQWLF   3D\PHQWV         %DODQFHDW'HFHPEHU      &RSSHUҋVGHEWXQGHUÀQDQFLQJDUUDQJHPHQWVWKDWDUHJXDUDQWHHGE\  )RXUWKTXDUWHUSURJUDP )&;WRWDOHGPLOOLRQDW'HFHPEHU (4) 16D 12D   $GGLWLRQVDQGDGMXVWPHQWV   ,Q)&;DFTXLUHGWKHSHUFHQWRZQHUVKLSLQWHUHVWLQ   3D\PHQWV (29) (21) (50) 373XQFDNMD\D3RZHU 3XQFDNMD\D3RZHU RZQHGE\DIÀOLDWHVRI  -DQXDU\SURJUDP   $GGLWLRQV 13 4 17 'XNH(QHUJ\&RUSRUDWLRQIRUPLOOLRQFDVKQHWRIPLOOLRQRI   3D\PHQWV (12) (4) (16) FDVKDFTXLUHG3XQFDNMD\D3RZHULVWKHRZQHURIDVVHWVVXSSO\LQJ Balance at December 31, 2009 $ 1 $ — $ 1  SRZHUWR37 )UHHSRUW,QGRQHVLDҋVRSHUDWLRQVLQFOXGLQJWKH[ H ,_JS\KLZ TPSSPVUMVY[OL^YP[LVMMVMV[OLYJ\YYLU[HZZL[ZPUJVUULJ[PVU^P[OHSLHZL PHJDZDWWFRDOÀUHGSRZHUIDFLOLWLHV37)UHHSRUW,QGRQHVLDSXUFKDVHV JHUJLSSH[PVU SRZHUIURP3XQFDNMD\D3RZHUXQGHULQIUDVWUXFWXUHDVVHWÀQDQFLQJ NOTE 3. Ownership in Subsidiaries, Joint Ventures and DUUDQJHPHQWV,Q)&;SUHSDLGPLOOLRQRI EDQNGHEW Investment in PT Smelting DVVRFLDWHGZLWK3XQFDNMD\D3RZHUҋVRSHUDWLRQV$W'HFHPEHU Ownership in Subsidiaries. 2Q 0DUFK )0&EHFDPHD )&;GLGQRWKDYHDQ\ORDQRXWVWDQGLQJWR3XQFDNMD\D3RZHU ZKROO\RZQHGVXEVLGLDU\RI)&;)0&LVDIXOO\LQWHJUDWHGSURGXFHURI 37)UHHSRUW,QGRQHVLDKDGLQIUDVWUXFWXUHDVVHWÀQDQFLQJREOLJDWLRQV FRSSHUDQGPRO\EGHQXPZLWKPLQHVLQ1RUWK$PHULFD6RXWK SD\DEOHWR3XQFDNMD\D3RZHUWRWDOLQJPLOOLRQDQG3XQFDNMD\D $PHULFDDQGWKH7HQNH)XQJXUXPHPLQHUDOVGLVWULFWLQWKH'HPRFUDWLF 3RZHUKDGDUHFHLYDEOHIURP37 )UHHSRUW,QGRQHVLDIRUPLOOLRQ 5HSXEOLFRI&RQJR '5& FRSSHUDQGPRO\EGHQXPFRQYHUVLRQ LQFOXGLQJ5LR7LQWRҋVVKDUH)&;FRQVROLGDWHV37 )UHHSRUW,QGRQHVLD IDFLOLWLHVDQGVHYHUDOGHYHORSPHQWSURMHFWV$W'HFHPEHU DQG3XQFDNMD\D3RZHU)&;ҋVFRQVROLGDWHGEDODQFHVKHHWVUHÁHFW )0&ҋVPDMRURSHUDWLQJFRSSHUPLQHVLQ1RUWK$PHULFDZHUH0RUHQFL UHFHLYDEOHVRIPLOOLRQ PLOOLRQLQRWKHUDFFRXQWVUHFHLYDEOHDQG 6LHUULWD%DJGDG6DIIRUGDQG0LDPLORFDWHGLQ$UL]RQDDQG7\URQH PLOOLRQLQORQJWHUPDVVHWV DW'HFHPEHUDQG ORFDWHGLQ1HZ0H[LFR)&;KDVDQSHUFHQWLQWHUHVWLQ0RUHQFL PLOOLRQ PLOOLRQLQRWKHU DFFRXQWVUHFHLYDEOHDQGPLOOLRQLQ UHIHUWR´-RLQW9HQWXUHV³6XPLWRPRµ DQGRZQVSHUFHQWRIWKH ORQJWHUPDVVHWV DW'HFHPEHUIRU5LR7LQWRҋVVKDUHRI RWKHU1RUWK$PHULFDPLQHV)0&DOVRRZQVWKH+HQGHUVRQ 3XQFDNMD\D3RZHUҋVUHFHLYDEOHDVSURYLGHGIRULQ)&;ҋVMRLQWYHQWXUH PRO\EGHQXPPLQHDQGWKH&OLPD[PRO\EGHQXPPLQH RQFDUHDQG DJUHHPHQWZLWK5LR7LQWR PDLQWHQDQFHVWDWXV ZKLFKDUHORFDWHGLQ&RORUDGR$W'HFHPEHU Joint Ventures. )&;KDVWKHIROORZLQJXQLQFRUSRUDWHGMRLQW RSHUDWLQJFRSSHUPLQHVLQ6RXWK$PHULFDZHUH&HUUR9HUGH YHQWXUHVZLWKWKLUGSDUWLHV SHUFHQWRZQHG ORFDWHGLQ3HUXDQG&DQGHODULD SHUFHQW Rio Tinto. )&;DQG5LR7LQWRKDYHHVWDEOLVKHGFHUWDLQXQLQFRUSRUDWHG RZQHG 2MRVGHO6DODGR SHUFHQWRZQHG DQG(O$EUD SHUFHQW MRLQWYHQWXUHV8QGHUWKHMRLQWYHQWXUH DUUDQJHPHQWV5LR7LQWRKDVD RZQHG ORFDWHGLQ&KLOH,QDGGLWLRQWRFRSSHUDQGPRO\EGHQXP SHUFHQWLQWHUHVWLQ37 )UHHSRUW,QGRQHVLDҋV&RQWUDFWRI:RUNDQG FHUWDLQPLQHVSURGXFHRWKHUPLQHUDOVDVE\SURGXFWVVXFKDVJROG WKHRSWLRQWRSDUWLFLSDWHLQSHUFHQWRIDQ\RWKHUIXWXUHH[SORUDWLRQ VLOYHUDQGUKHQLXP$W'HFHPEHU)0&RZQVDQHIIHFWLYH SURMHFWVLQ3DSXD,QGRQHVLD SHUFHQWLQWHUHVWLQWKH7HQNH)XQJXUXPHPLQHUDOVGLVWULFWLQWKH 3XUVXDQWWRWKHMRLQWYHQWXUHDJUHHPHQW5LR7LQWRKDVDSHUFHQW '5&ZKLFKFRPPHQFHGFRSSHUSURGXFWLRQLQ0DUFKDQG LQWHUHVWLQFHUWDLQDVVHWVDQGIXWXUHSURGXFWLRQH[FHHGLQJVSHFLÀHG DFKLHYHGWDUJHWHGUDWHVLQ6HSWHPEHU7KH7HQNH)XQJXUXPH DQQXDODPRXQWVRIFRSSHUJROGDQGVLOYHUWKURXJKLQ%ORFN$ RI PLQHUDOVGLVWULFW DOVRSURGXFHVFREDOWK\GUR[LGHZLWKWKHFREDOWDQG 37 )UHHSRUW,QGRQHVLDҋV&RQWUDFWRI:RUNDQGDIWHUD VXOSKXULFDFLGSODQWVFRPPLVVLRQHGLQWKLUGTXDUWHU$W SHUFHQWLQWHUHVWLQDOOSURGXFWLRQIURP%ORFN$$OORI37)UHHSRUW 'HFHPEHU)0&ҋVQHWDVVHWVWRWDOHGELOOLRQDQGLWV ,QGRQHVLDҋVSURYHQDQGSUREDEOHUHVHUYHVDQGLWVPLQLQJRSHUDWLRQV DFFXPXODWHGGHÀFLWWRWDOHGELOOLRQ$VRI'HFHPEHU DUHORFDWHGLQWKH%ORFN$ DUHD2SHUDWLQJQRQH[SDQVLRQFDSLWDODQG )&;KDGQRORDQVRXWVWDQGLQJWR)0& DGPLQLVWUDWLYHFRVWVDUHVKDUHGSURSRUWLRQDWHO\EHWZHHQ37 )UHHSRUW )&;ҋVGLUHFWRZQHUVKLSLQ37 )UHHSRUW,QGRQHVLDWRWDOV ,QGRQHVLDDQG5LR7LQWREDVHGRQWKHUDWLRRI L WKHLQFUHPHQWDO SHUFHQW37 ,QGRFRSSHU,QYHVWDPDDQ,QGRQHVLDQFRPSDQ\RZQV UHYHQXHVIURPSURGXFWLRQIURP37 )UHHSRUW,QGRQHVLDҋVPRVWUHFHQW

  -9,,769;4J4V9HU*677,9 .63+05* 71    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

H[SDQVLRQFRPSOHWHGLQWR LL WRWDOUHYHQXHVIURPSURGXFWLRQ RSHUDWLRQVEHJLQQLQJ'HFHPEHU37 )UHHSRUW,QGRQHVLDDJUHHG IURP%ORFN$LQFOXGLQJSURGXFWLRQIURP37 )UHHSRUW,QGRQHVLDҋV WKDWWKHFRPELQHGWUHDWPHQWDQGUHÀQLQJFKDUJHV IHHVSDLGWR SUHYLRXVO\H[LVWLQJUHVHUYHV37 )UHHSRUW,QGRQHVLDZLOOFRQWLQXHWR VPHOWHUVE\PLQHUV ZRXOGDSSUR[LPDWHPDUNHWUDWHVEXWZLOOQRWIDOO UHFHLYHSHUFHQWRIWKHFDVKÁRZIURPVSHFLÀHGDQQXDODPRXQWV EHORZVSHFLÀHGPLQLPXPUDWHV7KHPLQLPXPUDWHDSSOLFDEOHWRWKH RIFRSSHUJROGDQGVLOYHUWKURXJKFDOFXODWHGE\UHIHUHQFHWRLWV SHULRG$SULO WR$SULO LVWREHGHWHUPLQHGDQQXDOO\ SURYHQDQGSUREDEOHUHVHUYHVDVRI'HFHPEHUDQG DQGEHVXIÀFLHQWWRFRYHU376PHOWLQJҋVDQQXDOFDVKRSHUDWLQJFRVWV SHUFHQWRIDOOUHPDLQLQJFDVKÁRZ7KHSD\DEOHWR5LR7LQWRIRULWV QHWRIFUHGLWVDQGLQFOXGLQJFRVWVRIGHEWVHUYLFH IRU VKDUHRIMRLQWYHQWXUHFDVKÁ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ҋVLQYHVWPHQWLQ376PHOWLQJWRWDOHGPLOOLRQDW 0LQLQJDQG37 ,UMD(DVWHUQ0LQHUDOV&RQWUDFWRI:RUNDUHDVLQ 'HFHPEHUDQGPLOOLRQDW'HFHPEHU ,QGRQHVLD$VDUHVXOWDVORQJDV5LR7LQWRFRQWLQXHVQRWWRIXQG 376PHOWLQJKDGSURMHFWVSHFLÀFGHEWQRQUHFRXUVHWR37)UHHSRUW WKHVHH[SORUDWLRQSURMHFWV)&;KDVWKHRSWLRQWRIXQGSHUFHQWRI ,QGRQHVLDWRWDOLQJPLOOLRQDW'HFHPEHUDQG IXWXUHH[SORUDWLRQFRVWVLQWKHVHDUHDVDQG5LR7LQWRҋVLQWHUHVWLQ PLOOLRQDW 'HFHPEHU37 )UHHSRUW,QGRQHVLDKDGD WKHVHDUHDVZLOOGHFOLQHRYHUWLPHLQDFFRUGDQFHZLWKWKHMRLQWYHQWXUH WUDGHUHFHLYDEOHIURP376PHOWLQJWRWDOLQJPLOOLRQDW DJUHHPHQW5LR7LQWRKDVWKHRSWLRQWRUHVXPHSDUWLFLSDWLRQLQ37 ,UMD 'HFHPEHUDQGPLOOLRQDW'HFHPEHU (DVWHUQ0LQHUDOVRQDPRQWKO\EDVLVDQGLQ37 1DELUH%DNWL0LQLQJ NOTE 4. Inventories, and Mill and Leach Stockpiles RQDQDQQXDOEDVLV5LR7LQWRFRQWLQXHVWRSDUWLFLSDWHLQH[SORUDWLRQ 7KHFRPSRQHQWVRILQYHQWRULHVIROORZ MRLQWYHQWXUHVLQ37 )UHHSRUW,QGRQHVLDҋV&RQWUDFWRI:RUNDUHDV Sumitomo. )&;RZQVDQSHUFHQWXQGLYLGHGLQWHUHVWLQ0RUHQFL +LJLTILY    2009  YLDDQXQLQFRUSRUDWHGMRLQWYHQWXUH7KHUHPDLQLQJSHUFHQWLV 0LQLQJ2SHUDWLRQV RZQHGE\6XPLWRPRDMRLQWO\RZQHGVXEVLGLDU\RI6XPLWRPR0HWDO  5DZPDWHULDOV   $ 1    :RUNLQSURFHVV    108   0LQLQJ&R/WG DQG6XPLWRPR&RUSRUDWLRQ(DFKSDUWQHUWDNHVLQ  )LQLVKHGJRRGVD   588   NLQGLWVVKDUHRI0RUHQFLҋVSURGXFWLRQ)0&SXUFKDVHGPLOOLRQ $WODQWLF&RSSHU SRXQGVRI0RUHQFLҋVFRSSHUFDWKRGHIURP6XPLWRPRIRUPLOOLRQ  5DZPDWHULDOV FRQFHQWUDWHV     171   227 GXULQJPLOOLRQSRXQGVIRUPLOOLRQGXULQJDQG  :RUNLQSURFHVV        )LQLVKHGJRRGV    15   PLOOLRQSRXQGVIRUPLOOLRQGXULQJWKHSHULRG0DUFK 7RWDOSURGXFWLQYHQWRULHV   1,110  WR'HFHPEHU)&;KDGDQHWUHFHLYDEOHIURP 7RWDOPDWHULDOVDQGVXSSOLHVQHWE  1,093  6XPLWRPRRIPLOOLRQDW'HFHPEHUDQGPLOOLRQDW   7RWDOLQYHQWRULHV  $ 2,203 

'HFHPEHU H 7YPTHYPS`PUJS\KLZJVWWLYJVUJLU[YH[LZHUVKLZJH[OVKLZHUKYVKHUKTVS`IKLU\T Investment in PT Smelting. I 4H[LYPHSZHUKZ\WWSPLZPU]LU[VY`PZUL[VMVIZVSLZJLUJLYLZLY]LZ[V[HSPUN TPSSPVUH[ 37 6PHOWLQJDQ,QGRQHVLDQFRPSDQ\ +LJLTILY HUK TPSSPVUH[+LJLTILY  RSHUDWHVDVPHOWHUDQGUHÀQHU\LQ*UHVLN,QGRQHVLD'XULQJ 37 6PHOWLQJFRPSOHWHGDQH[SDQVLRQRILWVSURGXFWLRQFDSDFLW\WR $ VXPPDU\RIPLOODQGOHDFKVWRFNSLOHVIROORZV  PHWULFWRQVRIFRSSHUSHU\HDUIURPPHWULFWRQV   5VY[O :V\[O 37)UHHSRUW,QGRQHVLD0LWVXELVKL0DWHULDOV&RUSRUDWLRQ 0LWVXELVKL December 31, 2009  (TLYPJH (TLYPJH 0UKVULZPH (MYPJH ;V[HS 0DWHULDOV 0LWVXELVKL&RUSRUDWLRQ 0LWVXELVKL DQG1LSSRQ0LQLQJ  &XUUHQW $ — $ 7 $39 $ — $ 46 0HWDOV&R/WG 1LSSRQ RZQSHUFHQWSHUFHQWSHUFHQW  0LOOVWRFNSLOHV  /HDFKVWRFNSLOHV 547 74 —— 621 DQGSHUFHQWUHVSHFWLYHO\RIWKHRXWVWDQGLQJ376PHOWLQJ   7RWDOFXUUHQWPLOODQGOHDFK FRPPRQVWRFN    VWRFNSLOHV $ 547 $ 81 $39 $ — $ 667 37 )UHHSRUW,QGRQHVLDҋVFRQWUDFWZLWK37 6PHOWLQJSURYLGHVIRUWKH /RQJWHUPD VXSSO\RISHUFHQWRIWKHFRSSHUFRQFHQWUDWHUHTXLUHPHQWV  0LOOVWRFNSLOHV $ 15 $427 $ — $ — $ 442  /HDFKVWRFNSLOHV 637 220 — 22 879 QHFHVVDU\IRU37 6PHOWLQJWRSURGXFHPHWULFWRQVRIFRSSHU   7RWDOORQJWHUPPLOODQG DQQXDOO\ HVVHQWLDOO\WKHVPHOWHUҋVRULJLQDOGHVLJQFDSDFLW\ RQD    OHDFKVWRFNSLOHV $ 652 $647 $ — $ 22 $ 1,321 SULRULW\EDVLV)RUWKHÀUVW\HDUVRI376PHOWLQJҋVFRPPHUFLDO

72 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  5VY[O :V\[O ,QFRQQHFWLRQZLWKWKHGHFOLQHLQFRSSHUDQGPRO\EGHQXPSULFHV +LJLTILY   (TLYPJH (TLYPJH 0UKVULZPH (MYPJH ;V[HS DQGWKHGHWHULRUDWLRQRIWKHHFRQRPLFHQYLURQPHQWGXULQJWKHIRXUWK &XUUHQW TXDUWHURI)&;HYDOXDWHGLWVORQJOLYHGDVVHWVIRULPSDLUPHQW  0LOOVWRFNSLOHV  ³    ³    /HDFKVWRFNSLOHV     ³ ³   DVRI'HFHPEHU)&;ҋVHYDOXDWLRQVZHUHEDVHGRQFXUUHQW   7RWDOFXUUHQWPLOODQGOHDFK EXVLQHVVSODQVGHYHORSHGXVLQJQHDUWHUPSULFHIRUHFDVWVUHÁHFWLYH    VWRFNSLOHV      ³   RIWKHFXUUHQWSULFHHQYLURQPHQWDQGPDQDJHPHQWҋVSURMHFWLRQVIRU /RQJWHUPD ORQJWHUPDYHUDJHPHWDOSULFHV7KHVH HYDOXDWLRQVUHVXOWHGLQWKH  0LOOVWRFNSLOHV    ³      /HDFKVWRFNSLOHV    ³ ³   UHFRJQLWLRQRIDVVHW LPSDLUPHQWFKDUJHVRI ELOOLRQ ELOOLRQ   7RWDOORQJWHUPPLOODQG WRQHWORVVDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHU    OHDFKVWRFNSLOHV    ³    GLOXWHGVKDUH FRQVLVWLQJRIPLOOLRQWRUHGXFHWKHFDUU\LQJ H 4H[LYPHSZPUZ[VJRWPSLZUV[L_WLJ[LK[VILYLJV]LYLK^P[OPU[OLUL_[TVU[OZ YDOXHVRISURSHUW\SODQWHTXLSPHQWDQGGHYHORSPHQWFRVWVDQG PLOOLRQWRUHGXFHWKHFDUU\LQJYDOXHVRIGHÀQLWHOLYHGLQWDQJLEOHDVVHWV )&;UHFRUGHGFKDUJHVIRUORZHURIFRVWRUPDUNHW /&0 PRO\EGHQXP UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ  LQYHQWRU\DGMXVWPHQWVRIPLOOLRQ PLOOLRQWRQHWLQFRPH DWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHUGLOXWHGVKDUH  NOTE 6. Goodwill, and Intangible Assets and Liabilities GXULQJÀUVWTXDUWHUUHVXOWLQJIURPORZHUPRO\EGHQXPSULFHV Goodwill. &KDQJHVLQWKHFDUU\LQJ DPRXQWRIJRRGZLOOIRUWKH\HDU ,Q)&;UHFRUGHGFKDUJHVRIPLOOLRQ PLOOLRQWRQHW HQGHG'HFHPEHUIROORZ

ORVVDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHUGLOXWHG %DODQFHDW'HFHPEHU      VKDUH IRU/&0LQYHQWRU\DGMXVWPHQWVDVDUHVXOWRIWKHGHFOLQHVLQ  3XUFKDVHDFFRXQWLQJDGMXVWPHQW       FRSSHUDQGPRO\EGHQXPSULFHVLQWKHIRXUWKTXDUWHURIDQGWKH  'HIHUUHGWD[OLDELOLW\DGMXVWPHQWDVVRFLDWHGZLWKWKH   SXUFKDVHRI3KHOSV'RGJHD       LPSDFWRIKLJKHURSHUDWLQJFRVWVRQLQYHQWRU\EDODQFHV  ,PSDLUPHQWORVVHV       NOTE 5. Property, Plant, Equipment and %DODQFHDW'HFHPEHU      ³ Development Costs, Net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ҋVUHSRUWLQJXQLWVWKDWDUHH[SHFWHGWREHQHÀWIURPWKHEXVLQHVV 0DFKLQHU\DQGHTXLSPHQW   7,282     0RELOHHTXLSPHQW   2,136     FRPELQDWLRQ7KHDOORFDWLRQRIJRRGZLOOWRWKHUHSRUWLQJXQLWVZKLFK &RQVWUXFWLRQLQSURJUHVV   1,084     )&;GHWHUPLQHGLQFOXGHGLWVLQGLYLGXDOPLQHVZDVFRPSOHWHGLQWKH  3URSHUW\SODQWHTXLSPHQWDQG ÀUVWTXDUWHURI   GHYHORSPHQWFRVWV  21,788   $FFXPXODWHGGHSUHFLDWLRQGHSOHWLRQ *RRGZLOOKDGDQLQGHÀQLWHXVHIXOOLIHDQGZDVQRWDPRUWL]HGEXW  DQGDPRUWL]DWLRQ  (5,593)      UDWKHUZDVWHVWHGIRULPSDLUPHQWDWOHDVWDQQXDOO\XQOHVVHYHQWV  3URSHUW\SODQWHTXLSPHQWDQG RFFXUUHGRUFLUFXPVWDQFHVFKDQJHGEHWZHHQDQQXDOWHVWVWKDWZRXOG   GHYHORSPHQWFRVWVQHW  $16,195   PRUHOLNHO\WKDQQRWUHGXFHWKHIDLUYDOXHRIDUHODWHGUHSRUWLQJXQLW )&;UHFRUGHGELOOLRQIRU9%33 LQFRQQHFWLRQZLWKWKH3KHOSV EHORZLWVFDUU\LQJDPRXQW)&;SHUIRUPHGLWVDQQXDOJRRGZLOO 'RGJH DFTXLVLWLRQLQDQGWUDQVIHUUHGPLOOLRQGXULQJ LPSDLUPHQWWHVWLQJLQWKHIRXUWKTXDUWHURI)&;ҋVHYDOXDWLRQV PLOOLRQGXULQJDQGPLOOLRQGXULQJWRSURYHQDQG ZHUHEDVHGRQFXUUHQWEXVLQHVVSODQVGHYHORSHGXVLQJQHDUWHUP SUREDEOHUHVHUYHV SULFHIRUHFDVWVUHÁHFWLYHRIWKHFXUUHQWSULFHHQYLURQPHQWDQG 'XULQJWKHIRXUWKTXDUWHURI)&;SXUFKDVHGSURSHUW\ PDQDJHPHQWҋ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

  -9,,769;4J4V9HU*677,9 .63+05* 73    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible Assets and Liabilities7KHFRPSRQHQWVRILQWDQJLEOH NOTE 7. Other Assets DVVHWVDQGLQWDQJLEOHOLDELOLWLHV LQFOXGHGLQRWKHUOLDELOLWLHV IROORZ 7KHFRPSRQHQWVRIRWKHUDVVHWVIROORZ

 .YVZZ  5L[ +LJLTILY    2009   *HYY`PUN (JJ\T\SH[LK )VVR December 31, 2009 =HS\L (TVY[PaH[PVU =HS\L 1RWHVDQGRWKHUUHFHLYDEOHV   $168  DE 140 ,QGHÀQLWHOLYHGZDWHUULJKWV $253 $ — $253 7UXVWDVVHWV      126 3DWHQWVDQGSURFHVVWHFKQRORJ\ 48 (8) 40 'HIHUUHGWD[DVVHWV      ³ 95 5R\DOW\SD\PHQWV  38 (15) 23 'HEWLVVXHFRVWV      62 3RZHUFRQWUDFWV 25 (14) 11 $YDLODEOHIRUVDOHVHFXULWLHV       2WKHULQWDQJLEOHV  25 (5) 20 (TXLW\EDVLVLQYHVWPHQWV  7RWDOLQWDQJLEOHDVVHWV $389 $ (42) $347  37 6PHOWLQJ    55    2WKHU    39   7RWDOLQWDQJLEOHOLDELOLWLHV 2WKHU     15    7UHDWPHQWDQGUHÀQLQJWHUPV  7RWDORWKHU DVVHWV   $700    LQVDOHVFRQWUDFWV $ 52 $ (21) $ 31 H 0UJS\KLZ  TPSSPVUPU HUK TPSSPVUPU VM SLNHSS`YLZ[YPJ[LKM\UKZMVY  .YVZZ  5L[ (96ZH[[OL*OPUV;`YVULHUK*VIYLTPULZYLMLY[V5V[LMVYM\Y[OLYKPZJ\ZZPVU I ;OLJ\YYLU[WVY[PVU^OPJOPZPUJS\KLKPUV[OLYJ\YYLU[HZZL[Z^HZ TPSSPVUH[  *HYY`PUN (JJ\T\SH[LK )VVR +LJLTILY HUK  TPSSPVUH[+LJLTILY  +LJLTILY  =HS\LH (TVY[PaH[PVUH =HS\L ,QGHÀQLWHOLYHGZDWHUULJKWV   ³  NOTE 8. Accounts Payable and Accrued Liabilities 3DWHQWVDQGSURFHVVWHFKQRORJ\        5R\DOW\SD\PHQWV        $GGLWLRQDOLQIRUPDWLRQUHJDUGLQJDFFRXQWVSD\DEOHDQGDFFUXHG 3RZHUFRQWUDFWV        OLDELOLWLHVIROORZV 2WKHULQWDQJLEOHV         7RWDOLQWDQJLEOHDVVHWV      +LJLTILY    2009  $FFRXQWVSD\DEOH  $ 890  7UHDWPHQWDQGUHÀQLQJWHUPV &XUUHQWGHIHUUHGWD[OLDELOLW\    201    LQVDOHVFRQWUDFWV        188 0RO\EGHQXPVDOHVFRQWUDFWV      ³ 6DODULHVZDJHVDQGRWKHUFRPSHQVDWLRQ       148  7RWDOLQWDQJLEOHOLDELOLWLHV       &RPPXQLW\GHYHORSPHQWSURJUDPV       3HQVLRQSRVWUHWLUHPHQWSRVWHPSOR\PHQWDQGRWKHU H (M[LYPTWHPYTLU[ZYLJVYKLKPU   HPSOR\HHEHQHÀWVE    127   $FFUXHGLQWHUHVWF    113   ,QFRQQHFWLRQZLWKWKHGHFOLQHLQFRSSHUDQGPRO\EGHQXPSULFHVDQG 3URYLVLRQDOO\SULFHGVDOHVDGMXVWPHQWVD    54   WKHGHWHULRUDWLRQRIWKHHFRQRPLFHQYLURQPHQWGXULQJWKHIRXUWK 2WKHU     317   TXDUWHURI)&;HYDOXDWHGLWVORQJOLYHGDVVHWVIRULPSDLUPHQW  7RWDODFFRXQWVSD\DEOHDQGDFFUXHGOLDELOLWLHV   $ 2,038 

DVRI'HFHPEHU)&;ҋVHYDOXDWLRQVZHUHEDVHGRQFXUUHQW H 9LWYLZLU[ZWH`HISLZ[VJ\Z[VTLYZHZHYLZ\S[VMHKQ\Z[PUNLTILKKLKKLYP]H[P]LZPU EXVLQHVVSODQVGHYHORSHGXVLQJQHDUWHUPSULFHIRUHFDVWVUHÁHFWLYH WYV]PZPVUHSS`WYPJLKZHSLZ[VTHYRL[WYPJLZYLMLY[V¸9L]LU\L9LJVNUP[PVU¹PU5V[LMVY M\Y[OLYKPZJ\ZZPVU RIWKHFXUUHQWSULFHHQYLURQPHQWDQGPDQDJHPHQWҋVSURMHFWLRQVIRU I 9LMLY[V5V[L MVYSVUN[LYTWVY[PVUHUK5V[LMVYM\Y[OLYKPZJ\ZZPVU J ;OPYKWHY[`PU[LYLZ[WHPKI`-*?^HZ TPSSPVUPU  TPSSPVUPU HUK ORQJWHUPDYHUDJHPHWDOSULFHV7KHVH HYDOXDWLRQVUHVXOWHGLQWKH TPSSPVUPU UHFRJQLWLRQRIDVVHW LPSDLUPHQWFKDUJHVRIPLOOLRQ PLOOLRQ NOTE 9. Other Liabilities WRQHWORVVDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHU GLOXWHGVKDUH WRUHGXFHWKHFDUU\LQJYDOXHVRIGHÀQLWHOLYHGLQWDQJLEOH $GGLWLRQDOLQIRUPDWLRQUHJDUGLQJRWKHUOLDELOLWLHVIROORZV

DVVHWV UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ  +LJLTILY    2009 

,QGHÀQLWHOLYHGLQWDQJLEOHDVVHWVDUHWHVWHGIRULPSDLUPHQWDWOHDVW 3HQVLRQSRVWUHWLUHPHQWSRVWHPSOR\PHQWDQGRWKHU DQQXDOO\XQOHVVHYHQWVRFFXURUFLUFXPVWDQFHVFKDQJHEHWZHHQ  HPSOR\PHQWEHQHÀWVD  $ 950   DQQXDOWHVWVWKDWZRXOGPRUHOLNHO\WKDQQRWUHGXFHWKHLQGHÀQLWHOLYHG 5HVHUYHIRUXQFHUWDLQWD[EHQHÀWV    157   $WODQWLF&RSSHUFRQWUDFWXDOREOLJDWLRQWR LQWDQJLEOHDVVHWҋVIDLUYDOXH EHORZLWVFDUU\LQJYDOXH)&;SHUIRUPHG  LQVXUDQFHFRPSDQ\ UHIHUWR1RWH     58   LWVDQQXDOLPSDLUPHQWWHVWLQJRILQGHÀQLWHOLYHGLQWDQJLEOHDVVHWVLQ ,QVXUDQFHFODLPUHVHUYH    50   WKHIRXUWKTXDUWHUVRIDQGDQGFRQFOXGHGWKDWWKHUHZHUH 2WKHU     208   $ 1,423 QRLPSDLUPHQWV  7RWDORWKHU OLDELOLWLHV    $PRUWL]DWLRQRILQWDQJLEOHDVVHWVUHFRJQL]HGLQSURGXFWLRQDQG H 9LMLY[V5V[L MVYZOVY[[LYTWVY[PVUHUK5V[LMVYM\Y[OLYKPZJ\ZZPVU GHOLYHU\FRVWVZDVPLOOLRQLQPLOOLRQLQDQG PLOOLRQLQ$PRUWL]DWLRQRILQWDQJLEOHOLDELOLWLHVUHFRJQL]HGLQ UHYHQXHVZDVPLOOLRQLQ PLOOLRQLQDQGPLOOLRQ LQ7KHHVWLPDWHGQHWDPRUWL]DWLRQH[SHQVHIRUWKHQH[WÀYH \HDUVWRWDOVPLOOLRQLQPLOOLRQLQPLOOLRQLQ PLOOLRQLQDQGPLOOLRQLQ

74 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. Debt During 2007, FCX recorded net charges totaling $154 million ($120 The components of debt follow: million to net income attributable to FCX common stockholders or $0.30 per diluted share) for early extinguishment of debt related to December 31, 2009 2008 WKH DFFHOHUDWHG UHFRJQLWLRQ RI GHIHUUHG ÀQDQFLQJ FRVWV DVVRFLDWHG Senior Credit Facility $ — $ 150 with the repayment of amounts under the senior credit facility. Senior Notes: 8.375% Senior Notes due 2017 3,340 3,500 Senior Notes.,Q 0DUFK  LQ FRQQHFWLRQ ZLWK ÀQDQFLQJ )&;ҋV 8.25% Senior Notes due 2015 1,297 1,500 acquisition of Phelps Dodge, FCX sold $3.5 billion of 8.375% Senior Senior Floating Rate Notes due 2015 1,000 1,000 Notes due April 2017, $1.5 billion of 8.25%Senior Notes due April 9½% Senior Notes due 2031 198 198 1 6 /8% Senior Notes due 2034 115 115 2015 and $1.0 billion of Senior Floating Rate Notes due April 2015 for 1 7 /8% Debentures due 2027 115 115 total net proceeds of $5.9 billion. Interest on the senior notes is 8¾% Senior Notes due 2011 87 115 payable semiannually on April 1 and October 1. Interest on the Senior 7% Convertible Senior Notes due 2011 1 1 7 Floating Rate Notes accrues at six-month LIBOR plus 3.25 percent. 6 /8% Senior Notes due 2014 — 340 Other (including equipment capital leases The interest rate on the Senior Floating Rate Notes was 3.88 percent and short-term borrowings) 193 317 at December 31, 2009. These notes are redeemable in whole or in 6,346 Total debt 7,351 part, at the option of FCX, at make-whole redemption prices prior to Less current portion of long-term debt and the redemption dates, and afterwards at stated redemption prices. short-term borrowings (16) (67) Long-term debt $ 6,330 $7,284 The terms of the agreements allow for optional make-whole redemptions prior to April 1, 2011, for the 8.25% Senior Notes; and Senior Credit Facility. ,Q FRQQHFWLRQ ZLWK ÀQDQFLQJ )&;ҋV DFTXLVLWLRQ April 1, 2012, for the 8.375% Senior Notes. The Senior Floating Rate of Phelps Dodge, FCX used proceeds from its borrowings under its Notes are redeemable at stated redemption prices. During 2009, FCX $11.5 billion senior credit facility. At the close of the Phelps Dodge purchased in open-market transactions $203 million of the 8.25% acquisition, the senior credit facility consisted of a $2.5 billion senior Senior Notes for $218 million and $160 million of the 8.375% Senior term loan due March 2012, a $7.5 billion Tranche B term loan due Notes for $172 million. These open-market purchases resulted in March 2014 and $1.5 billion in revolving credit facilities due March losses on early extinguishment of debt totaling $33 million ($29 2012, with no amounts drawn on the revolving credit facilities. The million to net income attributable to FCX common stockholders or revolving credit facilities are composed of (i) a $1.0 billion revolving $0.06 per diluted share). credit facility available to FCX and (ii) a $0.5 billion revolving credit The 9½% Senior Notes due June 2031 and the 8¾% Senior Notes facility available to both FCX and PT Freeport Indonesia. FCX used due June 2011 bear interest payable semiannually on June 1 and SURFHHGV IURP HTXLW\ RIIHULQJV RSHUDWLQJ FDVK ÁRZV DQG DVVHW VDOHV December 1. These notes are redeemable in whole or in part, at the to prepay the $10 billion of term loans by December 31, 2007. At option of FCX, at a make-whole redemption price. In March 2007, in December 31, 2009, FCX had no borrowings and $39 million of connection with the acquisition of Phelps Dodge, FCX assumed these letters of credit issued under the revolving credit facilities, resulting in senior notes with a stated value of $306 million, which was increased availability of approximately $1.5 billion, of which $961 million could E\  PLOOLRQ WR UHÁHFW WKH IDLU PDUNHW YDOXH RI WKHVH REOLJDWLRQV DW be used for additional letters of credit. the acquisition date. The increase in value is being amortized over Interest on the revolving credit facilities is based on the London the term of the notes and recorded as a reduction of interest Interbank Offered Rate (LIBOR) plus 1.00 percent, subject to an expense. In 2008, FCX purchased in an open-market transaction $33 increase or decrease in the interest rate margin based on the credit million of the 9½% Senior Notes for $46 million and recorded losses ratings assigned by Standard & Poor’s Rating Services and Moody’s on early extinguishment of debt of $6 million ($5 million to net loss Investor Services. attributable to FCX common stockholders or $0.01 per diluted share). The senior credit facility is guaranteed by certain wholly owned In fourth-quarter 2009, FCX purchased in an open-market transaction subsidiaries of FCX and is secured by the pledge of equity in $24 million of the 8¾% Senior Notes for $26 million and recorded substantially all of these subsidiary guarantors and certain other non- losses on early extinguishment of debt of $1 million ($1 million to net guarantor subsidiaries of FCX, and intercompany indebtedness owed income attributable to FCX common stockholders or less than $0.01 to FCX. Borrowings by FCX and PT Freeport Indonesia under the per diluted share). At December 31, 2009, the outstanding principal $0.5 billion revolver are also secured with a pledge of 50.1 percent of amount of the 9½% Senior Notes was $161 million and the 8¾% the outstanding stock of PT Freeport Indonesia, over 90 percent of Senior Notes was $84 million. the assets of PT Freeport Indonesia and, with respect to borrowings by PT Freeport Indonesia, a pledge of the Contract of Work.

FREEPORT- McMoRan COPPER & GOLD INC. 75 2009 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7KH 186HQLRU1RWHVGXH0DUFKEHDULQWHUHVWSD\DEOH 6WDQGDUG 3RRUҋV5DWLQJ6HUYLFHV 6 3 DQG)LWFK5DWLQJVUDLVHG VHPLDQQXDOO\RQ0DUFKDQG6HSWHPEHU7KHVH QRWHVDUH )&;ҋVFRUSRUDWHFUHGLWUDWLQJDQGWKHUDWLQJVRQ)&;ҋVXQVHFXUHG UHGHHPDEOHLQZKROHRULQSDUWDWWKHRSWLRQRI)&;DWDPDNHZKROH GHEWWR%%% LQYHVWPHQWJUDGH $VDUHVXOWRIWKHXSJUDGHRI)&;ҋV UHGHPSWLRQSULFH,Q0DUFKLQFRQQHFWLRQZLWKWKHDFTXLVLWLRQRI XQVHFXUHGQRWHVWRLQYHVWPHQWJUDGHE\6 3WKHUHVWULFWLRQV 3KHOSV'RGJH)&;DVVXPHGWKHVHVHQLRUQRWHVZLWKDVWDWHGYDOXH FRQWDLQHGLQ)&;ҋVDQGWKHÁRDWLQJUDWHVHQLRU RIPLOOLRQZKLFKZDVUHGXFHGE\PLOOLRQWRUHÁ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aturities. 0DWXULWLHVRIGHEWLQVWUXPHQWVEDVHGRQWKHDPRXQWV OHVVWKDQSHUGLOXWHGVKDUH $W'HFHPEHUWKH DQGWHUPVRXWVWDQGLQJDW'HFHPEHUWRWDOPLOOLRQLQ RXWVWDQGLQJSULQFLSDODPRXQWRIWKHVHVHQLRUQRWHVZDVPLOOLRQ PLOOLRQLQPLOOLRQLQPLOOLRQLQ 7KH18'HEHQWXUHVGXH1RYHPEHUEHDULQWHUHVWSD\DEOH PLOOLRQLQDQGPLOOLRQWKHUHDIWHU VHPLDQQXDOO\RQ0D\DQG1RYHPEHU7KHGHEHQWXUHVDUH NOTE 11. Employee Benefits UHGHHPDEOHLQZKROHRULQSDUWDWWKHRSWLRQRI)&;DWDPDNHZKROH Pension Plans. )ROORZLQJLVDGLVFXVVLRQRI)&;ҋVSHQVLRQSODQV UHGHPSWLRQSULFH,Q0DUFKLQFRQQHFWLRQZLWKWKHDFTXLVLWLRQRI FMC Plans. )&;KDVWUXVWHHGQRQFRQWULEXWRU\SHQVLRQSODQV 3KHOSV'RGJH)&;DVVXPHGWKHVHGHEHQWXUHVZLWKDVWDWHGDQGIDLU FRYHULQJVXEVWDQWLDOO\DOORI)0&ҋV86HPSOR\HHVDQGVRPH YDOXHRIPLOOLRQ$W'HFHPEHUWKHRXWVWDQGLQJ HPSOR\HHVRILWVLQWHUQDWLRQDOVXEVLGLDULHV7KHDSSOLFDEOH)0&SODQ SULQFLSDODPRXQWRIWKHVHGHEHQWXUHVZDVPLOOLRQ 7 GHVLJQGHWHUPLQHVWKHPDQQHULQZKLFKEHQHÀWVDUHFDOFXODWHGIRU ,Q)HEUXDU\)&;VROGPLOOLRQRI 86HQLRU1RWHVGXH DQ\SDUWLFXODUJURXSRIHPSOR\HHV)RUFHUWDLQRIWKHVHSODQV )HEUXDU\IRUQHWSURFHHGVRIPLOOLRQ,QWHUHVW RQWKHQRWHV EHQHÀWVDUHFDOFXODWHGEDVHGRQÀQDODYHUDJHPRQWKO\FRPSHQVDWLRQ ZDVSD\DEOHVHPLDQQXDOO\RQ)HEUXDU\DQG$XJXVW'XULQJ 7 DQG\HDUVRIVHUYLFH,QWKHFDVHRIRWKHUSODQVEHQHÀWVDUH )&;SXUFKDVHGLQRSHQPDUNHWWUDQVDFWLRQVPLOOLRQRILWV 8 FDOFXODWHGEDVHGRQDÀ[HGDPRXQWIRUHDFK\HDURIVHUYLFH 6HQLRU1RWHV2Q$XJXVW)&;UHGHHPHGWKHUHPDLQLQJ 3DUWLFLSDQWVLQWKH)0&SODQVJHQHUDOO\YHVWLQWKHLUDFFUXHGEHQHÀWV PLOOLRQRIWKHVHQRWHVIRUPLOOLRQRUDUHGHPSWLRQSULFHRI DIWHUÀYH\HDUVRIVHUYLFH1RQEDUJDLQHG)0&HPSOR\HHVKLUHGDIWHU SHUFHQWRIWKHSULQFLSDODPRXQW SOXVDFFUXHGDQGXQSDLG 'HFHPEHUDUHQRWHOLJLEOHWRSDUWLFLSDWHLQWKH)0&86 LQWHUHVW )&;UHFRUGHGORVVHVRQHDUO\H[WLQJXLVKPHQWRIGHEWRI SHQVLRQSODQ PLOOLRQ PLOOLRQWRQHWLQFRPHDWWULEXWDEOHWR)&;FRPPRQ )&;ҋ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ҋVSROLF\IRUGHWHUPLQLQJDVVHWPL[WDUJHWVIRUWKH)UHHSRUW UHPDLQLQJPLOOLRQRI WKHVHQRWHVDQGUHFRUGHGORVVHVRQHDUO\ 0F0R5DQ&RUSRUDWLRQ'HÀQHG%HQHÀW0DVWHU7UXVW 0DVWHU7UXVW  H[WLQJXLVKPHQWRIGHEWRIPLOOLRQ PLOOLRQWRQHWLQFRPH LQFOXGHVWKHSHULRGLFGHYHORSPHQWRIDVVHWOLDELOLW\VWXGLHVWR DWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHUGLOXWHGVKDUH  GHWHUPLQHH[SHFWHGORQJWHUPUDWHVRIUHWXUQDQGH[SHFWHGULVNIRU $OORI)&;ҋVVHQLRUQRWHVDUHXQVHFXUHG YDULRXVLQYHVWPHQWSRUWIROLRV0DQDJHPHQW FRQVLGHUVWKHVHVWXGLHVLQ Restrictive Covenants.7KHVHQLRUFUHGLWIDFLOLW\DQGWKHVHQLRU WKHIRUPDOHVWDEOLVKPHQWRIDVVHWPL[WDUJHWVWKDWDUHUHYLHZHGE\ QRWHVXVHGWRÀQDQFHWKHDFTXLVLWLRQRI3KHOSV'RGJHFRQWDLQ )&;ҋVUHWLUHPHQWSODQDGPLQLVWUDWLRQDQGLQYHVWPHQWFRPPLWWHH FRYHQDQWVWKDWOLPLW)&;ҋVDELOLW\WRPDNHFHUWDLQSD\PHQWV7KHVH )&;ҋVLQYHVWPHQWREMHFWLYHHPSKDVL]HVWKHQHHGWRPDLQWDLQDZHOO UHVWULFWLRQVYDU\DPRQJWKHLQVWUXPHQWVEXW JHQHUDOO\OLPLW)&;ҋV GLYHUVLÀHGLQYHVWPHQWSURJUDPWKURXJKERWKWKHDOORFDWLRQRIWKH DELOLW\WRSD\FHUWDLQGLYLGHQGVRQFRPPRQDQGSUHIHUUHGVWRFN 0DVWHU7UXVW DVVHWVDPRQJDVVHWFODVVHVDQGWKHVHOHFWLRQRI UHSXUFKDVHRUUHGHHPFRPPRQDQGSUHIHUUHGHTXLW\SUHSD\ LQYHVWPHQWPDQDJHUVZKRVHYDULRXVVW\OHVDUHIXQGDPHQWDOO\ VXERUGLQDWHGGHEWDQGPDNHFHUWDLQLQYHVWPHQWV,Q$SULO 

76 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FRPSOHPHQWDU\WRRQHDQRWKHUDQGVHUYHWRDFKLHYHVDWLVIDFWRU\ GXULQJWKHÀYH\HDUVLPPHGLDWHO\SUHFHGLQJWKHHDUOLHURIWKH UDWHVRIUHWXUQ'LYHUVLÀFDWLRQE\DVVHWFODVVDQGE\LQYHVWPHQW H[HFXWLYHҋVUHWLUHPHQWRUFRPSOHWLRQRI\HDUVRIFUHGLWHGVHUYLFH PDQDJHULV)&;ҋVSULQFLSDOPHDQVRIUHGXFLQJYRODWLOLW\DQG 7KH6(53EHQHÀWZLOOEHUHGXFHGE\WKHYDOXHRIDOOEHQHÀWVSDLGRU H[HUFLVLQJSUXGHQWLQYHVWPHQWMXGJPHQW)&;ҋVSUHVHQWWDUJHWDVVHW GXHXQGHUDQ\GHÀQHGEHQHÀWRUGHÀQHGFRQWULEXWLRQSODQVSRQVRUHG DOORFDWLRQLVDERXWSHUFHQWHTXLW\LQYHVWPHQWV SHUFHQW86 E\)06HUYLFHV&RPSDQ\)&;ҋVZKROO\RZQHGVXEVLGLDU\)&;RULWV HTXLWLHVSHUFHQWLQWHUQDWLRQDOHTXLWLHVDQGSHUFHQWHPHUJLQJ SUHGHFHVVRUEXWQRWLQFOXGLQJDFFRXQWVIXQGHGH[FOXVLYHO\E\ PDUNHWVHTXLWLHV SHUFHQWÀ[HGLQFRPH SHUFHQW86À[HG GHGXFWLRQVIURPSDUWLFLSDQWҋVSD\)&;DOVRKDVDQXQIXQGHGSHQVLRQ LQFRPHSHUFHQWLQWHUQDWLRQDOÀ[HGLQFRPHSHUFHQWKLJK\LHOG SODQIRULWVGLUHFWRUVDQGDQH[FHVVEHQHÀWVSODQIRULWVH[HFXWLYHV SHUFHQWWUHDVXU\LQÁDWLRQSURWHFWLRQVHFXULWLHVDQGSHUFHQW PT Freeport Indonesia Plan.37)UHHSRUW,QGRQHVLDKDVDGHÀQHG HPHUJLQJPDUNHWVÀ[HGLQFRPH DQGSHUFHQWDOWHUQDWLYH EHQHÀ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ÀWVWRHPSOR\HHVXSRQHPSOR\PHQW H[SHFWHGIXWXUHSHUIRUPDQFHRIWKHSODQDVVHWPL[DQGDFWLYHSODQ WHUPLQDWLRQEDVHGRQWKHUHDVRQIRUWHUPLQDWLRQDQGWKHHPSOR\HHҋV DVVHWPDQDJHPHQW%DVHGRQWKHVHIDFWRUV)&;H[SHFWVWKH \HDUVRIVHUYLFH37)UHHSRUW,QGRQHVLDҋVSHQVLRQEHQHÀWGLVFORVXUHV SHQVLRQDVVHWVZLOOHDUQDQDYHUDJHRISHUFHQWSHUDQQXPGXULQJ LQFOXGHEHQHÀWVUHODWHGWRWKLVODZ37)UHHSRUW,QGRQHVLDҋVH[SHFWHG WKH\HDUVEHJLQQLQJ-DQXDU\7KHSHUFHQWHVWLPDWLRQ UDWHRIUHWXUQRQSODQDVVHWVLVHYDOXDWHGDWOHDVWDQQXDOO\WDNLQJLQWR ZDVEDVHGRQDSDVVLYHUHWXUQRQDFRPSRXQGEDVLVRISHUFHQW FRQVLGHUDWLRQLWVKLVWRULFDO\LHOGDQGWKHORQJUDQJHHVWLPDWHGUHWXUQ DQGDSUHPLXPIRUDFWLYHPDQDJHPHQWRISHUFHQWUHÁHFWLQJWKH IRUWKHSODQEDVHGRQWKHDVVHWPL[ WDUJHWDVVHWDOORFDWLRQDQGFXUUHQWLQYHVWPHQWDUUD\ Atlantic Copper Plan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ÀWREOLJDWLRQLVD FRQWURORYHUWKHVHLQYHVWPHQWV GLVFRXQWUDWHXVHGWRFDOFXODWHWKHSUHVHQWYDOXHRIH[SHFWHGIXWXUH Plan Information. )&;XVHVDPHDVXUHPHQWGDWHRI'HFHPEHU EHQHÀWSD\PHQWVIRUVHUYLFHWRGDWH7KHGLVFRXQWUDWHDVVXPSWLRQ IRULWVSODQV,QVRPHSODQVWKHSODQDVVHWVH[FHHGWKHDFFXPXODWHG IRU)&;ҋV86SODQVLVGHVLJQHGWRUHÁHFW\LHOGVRQKLJKTXDOLW\ EHQHÀWREOLJDWLRQVZKLOHLQWKHUHPDLQGHUWKHDFFXPXODWHGEHQHÀW À[HGLQFRPHLQYHVWPHQWVIRUDJLYHQGXUDWLRQ7KHGHWHUPLQDWLRQRI REOLJDWLRQVH[FHHGWKHSODQDVVHWV,QIRUPDWLRQDVRI'HFHPEHU WKHGLVFRXQWUDWHIRUWKHVHSODQVLVEDVHGRQH[SHFWHGIXWXUHEHQHÀW DQGIRUWKRVHSODQVZKHUHWKHDFFXPXODWHGEHQHÀW SD\PHQWVIRUVHUYLFHWRGDWHWRJHWKHUZLWKWKH&LWLEDQN3HQVLRQ REOLJDWLRQVH[FHHGWKHSODQDVVHWVIROORZV

'LVFRXQW&XUYH&KDQJHVLQWKLVDVVXPSWLRQDUHUHÁHFWHGLQ)&;ҋV +LJLTILY    2009  EHQHÀWREOLJDWLRQDQGWKHUHIRUHLQWKHOLDELOLWLHVDQGLQFRPHRU 3URMHFWHGEHQHÀWREOLJDWLRQ   $ 1,544  H[SHQVHWKDWDUHUHFRUGHG $FFXPXODWHGEHQHÀWREOLJDWLRQ   1,450  Other FCX Plans. ,Q)HEUXDU\)&;HVWDEOLVKHGDQXQIXQGHG )DLUYDOXHRISODQDVVHWV   1,076   6XSSOHPHQWDO([HFXWLYH5HWLUHPHQW3ODQ 6(53 IRULWVWZRPRVW VHQLRUH[HFXWLYHRIÀFHUV7KH6(53SURYLGHVIRUUHWLUHPHQWEHQHÀWV ,QIRUPDWLRQDVRI'HFHPEHUDQGRQWKH)&; LQFOXGLQJ SD\DEOHLQWKHIRUPRIDMRLQWDQGVXUYLYRUDQQXLW\RUDQHTXLYDOHQW )0&ҋVSODQVDQG)&;ҋV6(53GLUHFWRUDQGH[FHVVEHQHÀWVSODQV  OXPSVXP7KHDQQXLW\ZLOOHTXDODSHUFHQWDJHRIWKHH[HFXWLYHҋV 37 )UHHSRUW,QGRQHVLDDQG$WODQWLF&RSSHUSODQVIROORZV  KLJKHVWDYHUDJHFRPSHQVDWLRQIRUDQ\FRQVHFXWLYHWKUHH\HDUSHULRG 

  -9,,769;4J4V9HU*677,9 .63+05* 77    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  -*?   7;-YLLWVY[0UKVULZPH   ([SHU[PJ*VWWLY  2009   2009   2009  *OHUNLPUILULÄ[VISPNH[PVU!  )LULÄ[VISPNH[PVUH[ILNPUUPUNVM`LHY $1,412  $ 59   $ 81    :LY]PJLJVZ[  26     5    —  ·  0U[LYLZ[JVZ[  85    7    4    (TLUKTLU[Z  —    —  ·  —  ·  (J[\HYPHSSVZZLZNHPUZ  64    4    —    -VYLPNUL_JOHUNLSVZZLZNHPUZ  1    10     2    *\Y[HPSTLU[ZH  (5)     —  ·  —  ·  :WLJPHSYL[PYLTLU[ILULÄ[ZH  (3)     —  ·  —  ·  )LULÄ[ZWHPK (108)    (5)    (8)     )LULÄ[VISPNH[PVUH[LUKVM`LHY 1,472   80     79  

*OHUNLPUWSHUHZZL[Z!  -HPY]HS\LVMWSHUHZZL[ZH[ILNPUUPUNVM`LHY 959  42     19    (J[\HSYL[\YUVUWSHUHZZL[Z 209     13    —  ·  ,TWSV`LYJVU[YPI\[PVUZI  6    19    10    -VYLPNUL_JOHUNLNHPUZSVZZLZ  1    9    —  ·  )LULÄ[ZWHPK (108)    (5)    (8)     -HPY]HS\LVMWSHUHZZL[ZH[LUKVM`LHY 1,067    78    21  

-\UKLKZ[H[\Z $ (405)   $ (2)   $ (58)  

(JJ\T\SH[LKILULÄ[VISPNH[PVU $1,378   $ 48   $ 79  

>LPNO[LKH]LYHNLHZZ\TW[PVUZ\ZLK[VKL[LYTPULILULÄ[VISPNH[PVUZ!  +PZJV\U[YH[LJ 5.80%    10.50%   6.77%   9H[LVMJVTWLUZH[PVUPUJYLHZLK  4.25%     8.00%    N/A 5(

)HSHUJLZOLL[JSHZZPÄJH[PVUVMM\UKLKZ[H[\Z!  6[OLYHZZL[Z $ 5   $ —  · $ —  ·  (JJV\U[ZWH`HISLHUKHJJY\LKSPHIPSP[PLZ  (4)    —  ·  —  ·  6[OLYSPHIPSP[PLZ (406)    (2)    (58)     ;V[HS $ (405)   $ (2)   $ (58)  

H 9LZ\S[LKMYVTYL]PZLKTPULVWLYH[PUNWSHUZHUKYLK\J[PVUZPU[OL^VYRMVYJLYLMLY[V5V[LMVYM\Y[OLYKPZJ\ZZPVU I ,TWSV`LYJVU[YPI\[PVUZMVYHYLL_WLJ[LK[VHWWYV_PTH[L TPSSPVUMVY[OL-*?WSHUZ TPSSPVUMVY[OL7;-YLLWVY[0UKVULZPHWSHUIHZLKVUH+LJLTILY L_JOHUNLYH[LVM 0UKVULZPHUY\WPHO[VVUL<:KVSSHYHUK TPSSPVUMVY [OL([SHU[PJ*VWWLYWSHUIHZLKVUH+LJLTILY L_JOHUNL YH[LVM WLYL\YV J ;OLKPZJV\U[YH[LZOV^UPU HUK MVY[OL-*?WSHUZYLSH[LZ[VHSSWSHUZL_JLW[[OL:,97WSHU;OL:,97WSHU»ZKPZJV\U[YH[LPU HUK ^HZWLYJLU[ K ;OLYH[LVMJVTWLUZH[PVUPUJYLHZLZOV^UMVY[OL-*?WSHUZVUS`YLSH[LZ[V[OL-4*WSHUZ

7KHZHLJKWHGDYHUDJHDVVXPSWLRQVXVHGWRGHWHUPLQHQHWSHULRGLF   2009    EHQHÀWFRVWDQGWKHFRPSRQHQWVRIQHWSHULRGLFEHQHÀWFRVWIRU)&;ҋV :HLJKWHGDYHUDJHDVVXPSWLRQV SHQVLRQSODQV )0&ҋVSODQVDQG)&;ҋV6(53GLUHFWRUDQGH[FHVV  'LVFRXQWUDWH   )&;6(53 4.00%   EHQHÀWVSODQV IRUWKH\HDUVHQGHG'HFHPEHUDQG   )0&SODQV 6.10%    )0&ҋVSODQVIRUWKH\HDUHQGHG'HFHPEHULQFOXGHV  ([SHFWHGUHWXUQRQSODQDVVHWVD 8.50%   WKHSHULRG0DUFKWKURXJK'HFHPEHU IROORZ  5DWHRIFRPSHQVDWLRQLQFUHDVHD 4.25%  

6HUYLFHFRVW $ 26     ,QWHUHVWFRVW  85     ([SHFWHGUHWXUQRQSODQDVVHWV (73)      $PRUWL]DWLRQRISULRUVHUYLFHFRVW  —     $PRUWL]DWLRQRIQHWDFWXDULDOORVVHV  26  ³  ³ &XUWDLOPHQWVE  (1)  ³  ³ 6SHFLDOUHWLUHPHQWEHQHÀWVE  (3)    ³  1HWSHULRGLFEHQHÀWFRVW $ 60    ³

H ;OLHZZ\TW[PVUZZOV^UVUS`YLSH[L[V[OL-4*WSHUZ I 9LZ\S[LKMYVTYL]PZLKTPULVWLYH[PUNWSHUZHUKYLK\J[PVUZPU[OL^VYRMVYJLYLMLY[V 5V[LMVYM\Y[OLYKPZJ\ZZPVU

78 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7KHZHLJKWHGDYHUDJHDVVXPSWLRQVXVHGWRGHWHUPLQHQHWSHULRGLF Fair Value at December 31, 2009 EHQHÀWFRVWDQGWKHFRPSRQHQWVRIQHWSHULRGLFEHQHÀWFRVWIRU  ;V[HS 3L]LS 3L]LS 3L]LS 37 )UHHSRUW,QGRQHVLDҋVDQG$WODQWLF&RSSHUҋVSHQVLRQSODQVIRUWKH &DVKDQGFDVKHTXLYDOHQWV $ 41 $ 41 $ — $ — (TXLW\VHFXULWLHV        \HDUVHQGHG'HFHPEHUDQGIROORZ  86ODUJHFDSFRUH 270 141 129 —   7;-YLLWVY[0UKVULZPH  (PHUJLQJPDUNHWVHTXLW\FRUH 90 90 ——  86VPDOOFDSFRUH 83 51 32 —   2009     ,QWHUQDWLRQDOHTXLW\FRUH 64 — 64 — :HLJKWHGDYHUDJHDVVXPSWLRQV  ,QWHUQDWLRQDOHTXLW\YDOXH 54 54 ——  'LVFRXQWUDWH 12.00%    2WKHU 7 7 — —  ([SHFWHGUHWXUQRQSODQDVVHWV 10.00%    )L[HGLQFRPHVHFXULWLHV  5DWHRIFRPSHQVDWLRQLQFUHDVH 8.00%      &RUSRUDWHERQGV 258 3 255 —  *RYHUQPHQWERQGV 35 — 35 — 6HUYLFHFRVW $ 5      *RYHUQPHQWPRUWJDJHEDFNHG ,QWHUHVWFRVW  7       VHFXULWLHV 29 — 29 — ([SHFWHGUHWXUQRQSODQDVVHWV  (5)       &RPPHUFLDOPRUWJDJHGEDFNHG $PRUWL]DWLRQRISULRUVHUYLFHFRVW  1       VHFXULWLHV 12 — 12 — $PRUWL]DWLRQRIQHWDFWXDULDOORVV  1      $VVHWEDFNHGVHFXULWLHV  10 — 10 —  1HWSHULRGLFEHQHÀWFRVW $ 9      2WKHU 12 1 11 —

  ([SHU[PJ*VWWLY 2WKHUW\SHVRILQYHVWPHQWV  3ULYDWHHTXLW\IXQGV 40 —— 40   2009    5HDOHVWDWH 62 37 — 25 :HLJKWHGDYHUDJHDVVXPSWLRQ  7RWDO $1,067 $425 $577 $65  'LVFRXQWUDWH 6.77%     )ROORZLQJLVDGHVFULSWLRQRIWKHYDOXDWLRQWHFKQLTXHVXVHGIRU ,QWHUHVWFRVW $ 4     $PRUWL]DWLRQRIQHWDFWXDULDOORVV  1    ³ SHQVLRQSODQDVVHWVPHDVXUHGDWIDLUYDOXHDVVRFLDWHGZLWKWKH)&;  1HWSHULRGLFEHQHÀWFRVW $ 5     SODQV7KHUHKDYHEHHQQRFKDQJHVLQWKHWHFKQLTXHVXVHGDW 'HFHPEHU ,QFOXGHGLQDFFXPXODWHGRWKHUFRPSUHKHQVLYHLQFRPH ORVV DUH &RPPRQVWRFNVDUHYDOXHGDWWKHFORVLQJSULFHUHSRUWHGRQWKH WKHIROORZLQJDPRXQWVWKDWKDYHQRWEHHQUHFRJQL]HGLQQHWSHULRGLF DFWLYHPDUNHWRQZKLFKWKHLQGLYLGXDOVHFXULWLHVDUHWUDGHG SHQVLRQFRVWXQUHFRJQL]HGSULRUVHUYLFHFUHGLWVRIPLOOLRQ &RPPLQJOHGIXQGVDUH YDOXHGEDVHGRQWKHXQGHUO\LQJ PLOOLRQQHWRI WD[DQGQRQFRQWUROOLQJLQWHUHVWV DQGXQUHFRJQL]HG LQYHVWPHQWVZKLFKLQFOXGHFRPPRQDQGSUHIHUUHGVWRFNVDQGÀ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ÀHGZLWKLQDIDLUYDOXHKLHUDUFK\WKDW 3ULYDWHHTXLW\IXQGVDUHYDOXHGDWQHWUHDOL]DEOHYDOXHXVLQJ SULRULWL]HVWKHLQSXWVWRYDOXDWLRQWHFKQLTXHVXVHGWRPHDVXUHIDLU LQIRUPDWLRQ IURPJHQHUDOSDUWQHUVRUDWWKHFORVLQJSULFHUHSRUWHGRQ YDOXH7KHKLHUDUFK\JLYHVWKHKLJKHVWSULRULW\WRXQDGMXVWHGTXRWHG WKHDFWLYHPDUNHWRQZKLFKWKHLQYHVWPHQWVDUHWUDGHG SULFHVLQDFWLYHPDUNHWVIRULGHQWLFDODVVHWVRUOLDELOLWLHV /HYHO  5HDOHVWDWHLQWHUHVWVLQFOXGHUHDOHVWDWHLQYHVWPHQWWUXVWVDQG WKHQWRVLJQLÀFDQWREVHUYDEOHLQSXWV /HYHO DQGWKHORZHVWSULRULW\ SURSHUW\IXQGV5HDOHVWDWHLQYHVWPHQWVDUHYDOXHGXVLQJTXRWHG WRVLJQLÀFDQWXQREVHUYDEOHLQSXWV /HYHO )RUIXUWKHUGLVFXVVLRQRI PDUNHWSULFHVRQWKHDFWLYHPDUNHWRQZKLFKWKHLQYHVWPHQWVDUH WKHGLIIHUHQWOHYHOVRIWKHIDLUYDOXHKLHUDUFK\UHIHUWR1RWH WUDGHGLIDYDLODEOHRUEDVHGDWQHWUHDOL]DEOHYDOXHXVLQJLQIRUPDWLRQ $ VXPPDU\RIWKHIDLUYDOXHKLHUDUFK\IRUSHQVLRQSODQDVVHWV IURPLQGHSHQGHQWDSSUDLVDOÀUPVZKRKDYHNQRZOHGJHDQGH[SHUWLVH DVVRFLDWHGZLWKWKH)&;SODQVIROORZV LQWKHFXUUHQWPDUNHWYDOXHVRIUHDOSURSHUW\LQWKHVDPHYLFLQLW\DV WKHLQYHVWPHQWV

  -9,,769;4J4V9HU*677,9 .63+05* 79    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ VXPPDU\RIWKHIDLUYDOXHKLHUDUFK\IRUSHQVLRQSODQDVVHWV Postretirement and Other Benefits. )&;DOVRSURYLGHV DVVRFLDWHGZLWKWKH37 )UHHSRUW,QGRQHVLDSODQIROORZV SRVWUHWLUHPHQWPHGLFDODQGOLIHLQVXUDQFHEHQHÀWVIRUFHUWDLQ86

Fair Value at December 31, 2009 HPSOR\HHVDQGLQVRPHFDVHVHPSOR\HHVRIFHUWDLQLQWHUQDWLRQDO  ;V[HS 3L]LS 3L]LS 3L]LS VXEVLGLDULHV7KHVHSRVWUHWLUHPHQWEHQHÀWVYDU\DPRQJSODQVDQG

&DVKDQGFDVKHTXLYDOHQWV $44 $ 44 $ — $ — PDQ\SODQVUHTXLUHFRQWULEXWLRQVIURPUHWLUHHV7KHH[SHFWHGFRVWRI *RYHUQPHQWERQGV 18 18 —— SURYLGLQJVXFKSRVWUHWLUHPHQWEHQHÀWVLVDFFUXHGGXULQJWKH\HDUV &RPPRQVWRFNV 16 16 —— HPSOR\HHVUHQGHUVHUYLFH  7RWDO $78 $ 78 $ — $ — $VDUHVXOWRIWKHDFTXLVLWLRQ RI3KHOSV'RGJH)&;DFTXLUHG SRVWUHWLUHPHQWREOLJDWLRQVWKDWKDGSODQDVVHWVFRQVLVWLQJRIWZR )ROORZLQJLVDGHVFULSWLRQRIWKHYDOXDWLRQWHFKQLTXHVXVHGIRU 9ROXQWDU\(PSOR\HHVҋ%HQHÀFLDU\$VVRFLDWLRQ 9(%$ WUXVWV2QH SHQVLRQSODQDVVHWVPHDVXUHGDWIDLUYDOXHDVVRFLDWHGZLWKWKH WUXVWZDVGHGLFDWHGWRIXQGLQJSRVWUHWLUHPHQWPHGLFDOREOLJDWLRQVDQG 37 )UHHSRUW,QGRQHVLDSODQ7KHUHKDYHEHHQQRFKDQJHVLQWKH WKHRWKHUWRIXQGLQJSRVWUHWLUHPHQWOLIHLQVXUDQFHREOLJDWLRQVIRU WHFKQLTXHVXVHGDW'HFHPEHU HOLJLEOH86UHWLUHHVRI)0&'XULQJWKH9(%$ WUXVWVZHUH &DVKHTXLYDOHQWVZKLFKSULPDULO\FRQVLVWRIWLPHGHSRVLWVDUH DPHQGHGWRDOORZ)&;WRSD\EHQHÀWVIRUERWKDFWLYHHPSOR\HHV YDOXHGDWWKHQHWUHDOL]DEOHYDOXHRIVKDUHVKHOGDW\HDUHQG DQGUHWLUHHVIURPWKHWUXVWV$VDUHVXOWLQDFFRUGDQFHZLWK *RYHUQPHQWERQGVDQGFRPPRQVWRFNVDUHYDOXHGDWWKHFORVLQJ DFFRXQWLQJJXLGDQFHWKH9(%$WUXVWVQRORQJHUTXDOLÀHGDVSODQ SULFHUHSRUWHGRQWKHDFWLYHPDUNHWRQZKLFKWKHLQGLYLGXDOVHFXULWLHV DVVHWVIRUSXUSRVHVRI)&;ҋVSRVWUHWLUHPHQWPHGLFDODQGOLIH DUHWUDGHG LQVXUDQFHEHQHÀWREOLJDWLRQV 7KHWHFKQLTXHVGHVFULEHGDERYHPD\SURGXFHDIDLUYDOXH 7KHGLVFRXQWUDWHIRU)&;ҋVSRVWUHWLUHPHQWPHGLFDODQGOLIH FDOFXODWLRQWKDWPD\QRWEHLQGLFDWLYHRIQHWUHDOL]DEOHYDOXHRU LQVXUDQFHEHQHÀWSODQVZDVGHWHUPLQHGRQWKHVDPHEDVLVDV)&;ҋV UHÁHFWLYHRIIXWXUHIDLUYDOXHV)XUWKHUPRUHZKLOH)&;EHOLHYHVLWV SHQVLRQSODQV YDOXDWLRQWHFKQLTXHVDUHDSSURSULDWHDQGFRQVLVWHQWZLWKRWKHUPDUNHW ,QIRUPDWLRQDVRI'HFHPEHUDQGRQWKH SDUWLFLSDQWVWKHXVHRIGLIIHUHQWWHFKQLTXHVRUDVVXPSWLRQVWR SRVWUHWLUHPHQWEHQHÀWSODQVIROORZV GHWHUPLQHWKHIDLUYDOXHRIFHUWDLQÀQDQFLDOLQVWUXPHQWVFRXOGUHVXOWLQ DGLIIHUHQWIDLUYDOXHPHDVXUHPHQWDWWKHUHSRUWLQJGDWH    2009  $ VXPPDU\RIFKDQJHVLQWKHIDLUYDOXHRI)&;ҋVOHYHOSHQVLRQ &KDQJHLQEHQHÀWREOLJDWLRQ $ 257 SODQDVVHWVIRUWKH\HDUHQGHG'HFHPEHUIROORZV  %HQHÀWREOLJDWLRQDWEHJLQQLQJRI\HDU      6HUYLFHFRVW    1     9LHS 7YP]H[L,X\P[`  ,QWHUHVWFRVW    15      ,Z[H[L -\UKZ ;V[HS  $FWXDULDOORVVHV JDLQV   20   D (3) %DODQFHDW-DQXDU\   $ 45 $42 $ 87  &XUWDLOPHQWV       D 2  $FWXDOUHWXUQRQSODQVDVVHWV  6SHFLDOUHWLUHPHQWEHQHÀWV      ³   5HDOL]HGJDLQV ORVVHV    — 2 2  %HQHÀWVSDLGQHWRIHPSOR\HHDQGSDUWQHU (27)     8QUHDOL]HGJDLQV ORVVHV UHODWHGWR   FRQWULEXWLRQVDQG0HGLFDUH3DUW'VXEVLG\    %HQHÀWREOLJDWLRQDWHQGRI\HDU   265     DVVHWVVWLOOKHOGDWWKHHQGRIWKH\HDU  (20) (6) (26) — 2 2  3XUFKDVHVVDOHVDQGVHWWOHPHQWVQHW    &KDQJHLQSODQDVVHWV Balance at December 31, 2009  $ 25 $40 $ 65  )DLUYDOXHRISODQDVVHWVDWEHJLQQLQJRI\HDU    —   $FWXDOUHWXUQRQSODQVDVVHWV    —   $WODQWLF&RSSHUҋVSODQLVDGPLQLVWHUHGE\DWKLUGSDUW\LQVXUDQFH  (PSOR\HUDQGSDUWQHUFRQWULEXWLRQV    30   9 FRPSDQ\DQG$WODQWLF&RSSHULVQRWSURYLGHGDVVHWDOORFDWLRQV  (PSOR\HHFRQWULEXWLRQV      ³  %HQHÀWVSDLG   (39)   7KHH[SHFWHGEHQHÀWSD\PHQWVIRU)&;ҋV LQFOXGLQJ)0&ҋVSODQV  7UDQVIHURISODQDVVHWVE   —   DQG)&;ҋV6(53GLUHFWRUDQGH[FHVVEHQHÀWVSODQV 37)UHHSRUW  )DLUYDOXHRISODQDVVHWVDWHQGRI\HDU    —  ³

,QGRQHVLDҋVDQG$WODQWLF&RSSHUҋVSHQVLRQSODQVIROORZ )XQGHGVWDWXV  $(265)        7;-YLLWVY[ ([SHU[PJ 'LVFRXQWUDWHDVVXPSWLRQ   5.20%     -*? 0UKVULZPHH *VWWLYI 

        %DODQFHVKHHWFODVVLÀFDWLRQRIIXQGHGVWDWXV  $FFRXQWVSD\DEOHDQGDFFUXHGOLDELOLWLHV   $ (29)            2WKHUOLDELOLWLHV   (236)            7RWDO  $(265)                   H 9LZ\S[LKMYVTYL]PZLKTPULVWLYH[PUNWSHUZHUKYLK\J[PVUZPU[OL^VYRMVYJLYLMLY[V WKURXJK    5V[LMVYM\Y[OLYKPZJ\ZZPVU I +\YPUN [OL=,)([Y\Z[Z^LYLHTLUKLK[VHSSV^ILULÄ[WH`TLU[ZMVYIV[OHJ[P]L H )HZLKVUH+LJLTILY L_JOHUNLYH[LVM 0UKVULZPHUY\WPHO[VVUL LTWSV`LLZHUKYL[PYLLZ"[OLYLMVYL[OL=,)([Y\Z[ZUVSVUNLYX\HSPÄLKHZWSHUHZZL[Z <:KVSSHY I )HZLKVUH+LJLTILY L_JOHUNLYH[LVM WLYL\YV

80 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

,QFOXGHGLQDFFXPXODWHGRWKHUFRPSUHKHQVLYHLQFRPH ORVV DUHWKH )&;KDVDQXPEHURISRVWHPSOR\PHQWSODQVFRYHULQJVHYHUDQFH IROORZLQJDPRXQWVWKDWKDYHQRWEHHQUHFRJQL]HGLQQHWSHULRGLF ORQJWHUPGLVDELOLW\LQFRPHFRQWLQXDWLRQRIKHDOWKDQGOLIHLQVXUDQFH EHQHÀWFRVWXQUHFRJQL]HGSULRUVHUYLFHFUHGLWVRIOHVVWKDQPLOOLRQ FRYHUDJHIRUGLVDEOHGHPSOR\HHVRURWKHUZHOIDUHEHQHÀWV7KH DQGXQUHFRJQL]HGDFWXDULDOORVVHVRIPLOOLRQ PLOOLRQQHWRI DFFXPXODWHGSRVWHPSOR\PHQWEHQHÀWFRQVLVWHGRIDFXUUHQWSRUWLRQRI WD[DQGQRQFRQWUROOLQJLQWHUHVWV DW'HFHPEHUDQG PLOOLRQ LQFOXGHGLQDFFRXQWVSD\DEOHDQGDFFUXHGOLDELOLWLHV DQGD XQUHFRJQL]HGSULRUVHUYLFHFUHGLWVRIOHVVWKDQPLOOLRQDQG ORQJWHUPSRUWLRQRIPLOOLRQ LQFOXGHGLQRWKHUOLDELOLWLHV DW XQUHFRJQL]HGDFWXDULDOJDLQVRIPLOOLRQ PLOOLRQQHWRIWD[DQG 'HFHPEHUDQGDFXUUHQWSRUWLRQRIPLOOLRQDQGDORQJ QRQFRQWUROOLQJLQWHUHVWV DW'HFHPEHU7KHDPRXQW WHUPSRUWLRQRIPLOOLRQDW'HFHPEHU H[SHFWHGWREHUHFRJQL]HGLQQHWSHULRGLFEHQHÀWFRVWIRULVOHVV )&;DOVRVSRQVRUVVDYLQJVSODQVIRUWKHPDMRULW\RILWV86 WKDQPLOOLRQIRUSULRUVHUYLFHFUHGLWV HPSOR\HHV7KHSODQVDOORZHPSOR\HHVWRFRQWULEXWHDSRUWLRQRIWKHLU ([SHFWHGEHQHÀWSD\PHQWVIRUWKHVHSODQVWRWDOPLOOLRQIRU SUHWD[DQGRUDIWHUWD[LQFRPHLQDFFRUGDQFHZLWKVSHFLÀHG PLOOLRQIRUPLOOLRQIRUPLOOLRQIRU JXLGHOLQHV7KHVHVDYLQJVSODQVDUHSULQFLSDOO\TXDOLÀHG N SODQV PLOOLRQIRUDQGPLOOLRQIRUWKURXJK IRUDOO86VDODULHGDQGQRQEDUJDLQHGKRXUO\HPSOR\HHV,QWKHVH 7KHZHLJKWHGDYHUDJHDVVXPSWLRQVXVHGWRGHWHUPLQHQHWSHULRGLF SODQVSDUWLFLSDQWVH[HUFLVHFRQWURODQGGLUHFWWKHLQYHVWPHQWRIWKHLU EHQHÀWFRVWDQGWKHFRPSRQHQWVRIQHWSHULRGLFEHQHÀWFRVWIRU)&;ҋV FRQWULEXWLRQVDQGDFFRXQWEDODQFHVDPRQJYDULRXVLQYHVWPHQW SRVWUHWLUHPHQWEHQHÀWVIRUWKH\HDUVHQGHG'HFHPEHU RSWLRQV)&;PDWFKHVDSHUFHQWDJHRIHPSOR\HHSUHWD[GHIHUUDO DQG )0&ҋVSODQVIRUWKH\HDUHQGHG'HFHPEHU FRQWULEXWLRQVXSWRFHUWDLQOLPLWVZKLFKYDULHVE\SODQ,QDGGLWLRQ LQFOXGHVWKHSHULRG0DUFKWKURXJK'HFHPEHU SULRUWR-DQXDU\WKH)0&SULQFLSDOVDYLQJVSODQLQFOXGHGD EHFDXVHRIWKH3KHOSV'RGJHDFTXLVLWLRQ IROORZ SURÀWVKDULQJIHDWXUHIRULWVQRQEDUJDLQHGHPSOR\HHV(IIHFWLYH

  2009    -DQXDU\WKH)0&SULQFLSDOVDYLQJVSODQZDVPHUJHGLQWRWKH )&;VDYLQJVSODQZKLFKGRHVQRWLQFOXGHDSURÀWVKDULQJIHDWXUH :HLJKWHGDYHUDJHDVVXPSWLRQVD  'LVFRXQWUDWH³PHGLFDOUHWLUHH 6.30%   'XULQJ)&;DQG)06HUYLFHV&RPSDQ\HQKDQFHGWKHLU  'LVFRXQWUDWH³OLIHUHWLUHH 6.30%   SULPDU\VDYLQJVSODQIRUVXEVWDQWLDOO\DOOWKHLUHPSOR\HHVIROORZLQJ  ([SHFWHGUHWXUQRQSODQDVVHWV³ WKHLUGHFLVLRQWRWHUPLQDWHWKHLUGHÀQHGEHQHÀWSHQVLRQSODQV   PHGLFDOUHWLUHH N/A   6XEVHTXHQWWRWKHHQKDQFHPHQW)&;DQG)06HUYLFHV&RPSDQ\  ([SHFWHGUHWXUQRQSODQDVVHWV³   OLIHUHWLUHH N/A   FRQWULEXWHDPRXQWVWRLQGLYLGXDODFFRXQWVWRWDOLQJHLWKHUSHUFHQWRU SHUFHQWRIHDFKHPSOR\HHҋVSD\GHSHQGLQJRQDFRPELQDWLRQRI 6HUYLFHFRVW $ 1     ,QWHUHVWFRVW  15     HDFKHPSOR\HHҋVDJHDQG\HDUVRIVHUYLFHDVRI-XQH)RU ([SHFWHGUHWXUQRQSODQDVVHWV  —      HPSOR\HHVZKRVHHOLJLEOHFRPSHQVDWLRQH[FHHGVFHUWDLQOHYHOV)&; E (3) &XUWDLOPHQWV      ³ SURYLGHVDQXQIXQGHGGHÀQHGFRQWULEXWLRQSODQ7KHEDODQFHRIWKLV 6SHFLDOUHWLUHPHQWEHQHÀWVE  2  ³  ³ OLDELOLW\WRWDOHGPLOOLRQ RQ'HFHPEHUDQG  1HWSHULRGLFEHQHÀWFRVW $ 15     3ULRUWR-DQXDU\)0&KDGDGHÀQHGFRQWULEXWLRQSODQIRU H ;OLHZZ\TW[PVUZZOV^UVUS`YLSH[L[V[OL-4*WSHUZ I 9LZ\S[LKMYVTYL]PZLKTPULVWLYH[PUNWSHUZHUKYLK\J[PVUZPU[OL^VYRMVYJLYLMLY[V LWVHOLJLEOHHPSOR\HHVKLUHGRQRUDIWHU-DQXDU\8QGHUWKLV 5V[LMVYM\Y[OLYKPZJ\ZZPVU SODQ)0&FRQWULEXWHGDPRXQWVWRLQGLYLGXDODFFRXQWVUDQJLQJIURP SHUFHQWWRSHUFHQWRIHDFKHOLJLEOHHPSOR\HHҋVHDUQLQJVGHSHQGLQJ 7KHDVVXPHGPHGLFDOFDUHWUHQGUDWHVDW'HFHPEHUDQG RQ\HDUVRIVHUYLFH(IIHFWLYH-DQXDU\WKLVSODQZDVPHUJHG IROORZ LQWRWKH)&;VDYLQJVSODQ6XEVHTXHQWWR-DQXDU\)0&    2009  FRQWULEXWHVHQKDQFHGDPRXQWVIRULWVHOLJLEOHHPSOR\HHVKLUHGRQRU 0HGLFDOFDUHFRVWWUHQGUDWHDVVXPHGIRUWKHQH[W\HDU  8.5%   DIWHU-DQXDU\WRWDOLQJSHUFHQWRIHDFKHOLJLEOHHPSOR\HHҋV 5DWHWRZKLFKWKHFRVWWUHQGUDWHLVDVVXPHGWRGHFOLQH HDUQLQJVUHJDUGOHVVRI\HDUVRIVHUYLFH+RZHYHUPRVWHOLJLEOH)0&  WKHXOWLPDWHWUHQGUDWH     5.0%  

  -9,,769;4J4V9HU*677,9 .63+05* 81    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. Stockholders’ Equity and Stock-Based Compensation the FCX common stock price is at or below $60.75 and 1.3716 when Common Stock. At the 2008 annual stockholder meeting, FCX’s the FCX common stock price is at or above $72.91. For FCX stockholders approved an increase in FCX’s authorized shares of common stock prices between these levels, the conversion rate will capital stock to 1.85 billion shares, consisting of 1.8 billion shares of be equal to $100 divided by FCX’s common stock price. Holders may common stock and 50 million shares of preferred stock. elect to convert at any time prior to May 1, 2010, at a conversion rate In July 2008, FCX’s Board of Directors approved an increase in the equal to 1.3716 shares of FCX common stock, or an aggregate of open-market share purchase program for up to 30 million shares, approximately 39 million shares. Dividends are payable quarterly on which replaced FCX’s previous program. During 2008, FCX acquired February 1, May 1, August 1 and November 1. 6.3 million shares for $500 million ($79.15 per share average) and In March 2004, FCX sold 1.1 million shares of 5½% Convertible 23.7 million shares remain available under this program. The timing Perpetual Preferred Stock for net proceeds of $1.1 billion. The of future purchases of FCX’s common stock is dependent on many conversion rate was adjustable upon the occurrence of certain IDFWRUV LQFOXGLQJ )&;ҋV RSHUDWLQJ UHVXOWV FDVK ÁRZV DQG ÀQDQFLDO events, including the payment in any quarter of common stock position; copper, molybdenum and gold prices; the price of FCX’s dividends exceeding $0.20 per share. As a result of the quarterly and common stock; and general economic and market conditions. During supplemental common stock dividends paid through August 31, 2009, 6HSWHPEHU  EHFDXVH RI WKH ÀQDQFLDO WXUPRLO DQG WKH GHFOLQH LQ each share of preferred stock was convertible into 21.5305 shares of copper and molybdenum prices, FCX suspended its purchases of FCX common stock, equivalent to a conversion price of shares under its open-market share purchase program. approximately $46.45 per common share. In December 2008, In February 2009, FCX completed a public offering of 26.8 million through privately negotiated transactions, FCX induced conversion of shares of FCX common stock at an average price of $28.00 per 268,331 shares of its 5½% Convertible Perpetual Preferred Stock share, which generated gross proceeds of $750 million (net proceeds with a liquidation preference of $268 million into 5.8 million shares of of approximately $740 million). FCX common stock. To induce conversion of these shares, FCX In December 2008, FCX’s Board of Directors suspended the cash issued to the holders an additional 1.0 million shares of FCX common dividend on FCX’s common stock; accordingly, there were no stock valued at $22 million, which was recorded as losses on induced common stock dividends paid in 2009. In October 2009, the Board of conversions in the consolidated statements of operations. In Directors reinstated an annual cash dividend on FCX’s common stock September 2009, FCX called for redemption the remaining of $0.60 per share. On December 30, 2009, FCX declared a quarterly outstanding shares of its 5½% Convertible Perpetual Preferred Stock. dividend of $0.15 per share, which was paid on February 1, 2010, Of the 831,554 shares outstanding at the time of the call, 830,529 to common shareholders of record at the close of business on shares were converted into 17.9 million shares of FCX common January 15, 2010. The Board of Directors will continue to review stock, and the remaining 1,025 shares were redeemed for )&;ҋVÀQDQFLDO SROLF\ RQ DQ RQJRLQJ EDVLV approximately $1 million in cash. Preferred Stock. On March 28, 2007, FCX sold 28.75 million Stock Award Plans.)&; FXUUHQWO\ KDV ÀYH VWRFNEDVHG shares of 6¾% Mandatory Convertible Preferred Stock, with a compensation plans, including two Phelps Dodge plans resulting from liquidation preference of $100 per share, for net proceeds of $2.8 the acquisition. As of December 31, 2009, only three of the plans, all billion. The 6¾% Mandatory Convertible Preferred Stock will of which are stockholder approved (which are discussed below), have automatically convert on May 1, 2010, into shares of FCX common awards available for grant. stock. The conversion rate is adjustable upon the occurrence of The 2003 Stock Incentive Plan (the 2003 Plan) provides for the certain events, including the payment in any quarter of common stock issuance of stock options, SARs, restricted stock, restricted stock dividends exceeding $0.3125 per share; however, adjustments units and other stock-based awards. The 2003 Plan allows FCX to required as a result of dividends that do not exceed one percent are grant awards for up to 8 million common shares to eligible carried forward and must be made no later than August 1 of each participants. In 2004, FCX’s stockholders approved the 2004 Director year. As a result of the quarterly common stock dividends paid Compensation Plan (the 2004 Plan). The 2004 Plan authorizes through December 31, 2009, each share of preferred stock is now awards of options and restricted stock units for up to 1 million shares convertible on May 1, 2010, into between 1.3716 and 1.6460 shares of common stock and the one-time grant of 66,882 SARs. In 2006, of FCX common stock, for a total of between 39 million and 47 million FCX’s stockholders approved the 2006 Stock Incentive Plan (the shares, depending on the applicable market value of FCX’s common 2006 Plan), and in 2007, FCX’s stockholders approved amendments stock. The conversion rate depends on the applicable average to the plan primarily to increase the number of shares. The 2006 Plan market price of FCX’s common stock over the 20 trading day period provides for the issuance of stock options, SARs, restricted stock, ending on the third trading day prior to May 1, 2010. The conversion restricted stock units and other stock-based awards for up to rate per $100 face amount of the preferred stock will be 1.6460 when 37 million common shares. As of December 31, 2009, shares

82 FREEPORT- McMoRan COPPER & GOLD INC. 2009 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DYDLODEOHIRUJUDQWWRWDOHGPLOOLRQVKDUHVXQGHUWKH3ODQ     >LPNO[LK    (]LYHNL  DQGOHVVWKDQVKDUHVXQGHUWKHDQG3ODQV   >LPNO[LK 9LTHPUPUN (NNYLNH[L ,QFRQQHFWLRQZLWKWKH3KHOSV'RGJHDFTXLVLWLRQIRUPHU3KHOSV  5\TILYVM (]LYHNL *VU[YHJ[\HS 0U[YPUZPJ  6W[PVUZ 6W[PVU7YPJL ;LYT`LHYZ =HS\L 'RGJH VWRFNRSWLRQVDQGUHVWULFWHGVWRFNDZDUGVZHUHFRQYHUWHGLQWR %DODQFHDW-DQXDU\  9,852,947 $ 64.98 )&;VWRFNRSWLRQVDQG)&;UHVWULFWHGVWRFNDZDUGV  *UDQWHG  3,651,000 25.89 ZKLFKUHWDLQWKHWHUPVE\ZKLFKWKH\ZHUHRULJLQDOO\JUDQWHGXQGHU  ([HUFLVHG  (785,937) 40.30 3KHOSV'RGJHҋVSODQV7KHVWRFNRSWLRQVFDUU\DPD[LPXPWHUPRI  ([SLUHG)RUIHLWHG (257,213) 60.58 Balance at December 31 12,460,797 55.17 7.5 $ 328 \HDUVZLWKVWRFNRSWLRQVYHVWHGXSRQWKHDFTXLVLWLRQRI 9HVWHGDQGH[HUFLVDEOHDW 3KHOSV'RGJHDQGVWRFNRSWLRQVWKDWYHVWUDWDEO\RYHUD  'HFHPEHU 4,554,967 59.71 6.4 $ 98 WKUHH\HDUSHULRGRUWKHSHULRGXQWLOWKHSDUWLFLSDQWEHFRPHV UHWLUHPHQWHOLJLEOHZKLFKHYHULVVKRUWHU5HVWULFWHGVWRFNDZDUGV 6XPPDULHVRIRSWLRQVRXWVWDQGLQJLQFOXGLQJ6$5VDQGFKDQJHV JHQHUDOO\EHFRPHIXOO\YHVWHGLQÀYH\HDUVZLWKDPDMRULW\RIWKHVH GXULQJWKH\HDUVHQGHG'HFHPEHUDQGIROORZ VKDUHVKDYLQJJUDGHGYHVWLQJIHDWXUHVLQZKLFKSHUFHQWRIWKH        VKDUHVZLOOYHVWRQWKHWKLUGDQGIRXUWKDQQLYHUVDULHVRIWKHDZDUGDQG   >LPNO[LK  >LPNO[LK WKHUHPDLQLQJSHUFHQWLQWKHÀIWK\HDU7KHIDLUYDOXHRIWKH  5\TILYVM (]LYHNL 5\TILYVM (]LYHNL  6W[PVUZ 6W[PVU7YPJL 6W[PVUZ 6W[PVU7YPJL UHVWULFWHGVWRFNDZDUGVZDVGHWHUPLQHGEDVHGRQWKHTXRWHGPDUNHW %DODQFHDW-DQXDU\      SULFHDWWKHWLPHRIWKHDFTXLVLWLRQ  *UDQWHG         Stock-Based Compensation Cost. &RPSHQVDWLRQFRVWFKDUJHG  &RQYHUVLRQRI DJDLQVWHDUQLQJVIRUVWRFNEDVHGDZDUGVLVVKRZQEHORZIRUWKH\HDUV   3KHOSV'RGJHRSWLRQV  ³  ³     HQGHG'HFHPEHUDQG)&;GLGQRWFDSLWDOL]H  ([HUFLVHG            ([SLUHG)RUIHLWHG           DQ\VWRFNEDVHGFRPSHQVDWLRQFRVWVGXULQJWKH\HDUVHQGHG %DODQFHDW'HFHPEHU        'HFHPEHUDQG

  2009    7KHIDLUYDOXHRIHDFKRSWLRQDZDUGLVHVWLPDWHGRQWKHGDWHRIJUDQW XVLQJWKH%ODFN6FKROHV0HUWRQRSWLRQYDOXDWLRQPRGHO([SHFWHG 6WRFNRSWLRQVDZDUGHGWRHPSOR\HHV  LQFOXGLQJGLUHFWRUV  $ 67     YRODWLOLW\LVEDVHGRQLPSOLHGYRODWLOLWLHVIURPWUDGHGRSWLRQVRQ)&;ҋV 6WRFNRSWLRQVDZDUGHGWRQRQHPSOR\HHV  5     VWRFNDQGKLVWRULFDOYRODWLOLW\RI)&;ҋVVWRFN)&;XVHVKLVWRULFDOGDWD 28 5HVWULFWHGVWRFNXQLWVDZDUGHGWRHPSOR\HHV      ³ WRHVWLPDWHIXWXUHRSWLRQH[HUFLVHVIRUIHLWXUHVDQGH[SHFWHGOLIHRIWKH 5HVWULFWHGVWRFNXQLWVLQOLHXRIFDVKDZDUGV  —   D   RSWLRQV:KHQDSSURSULDWHVHSDUDWHJURXSVRIHPSOR\HHVWKDWKDYH 5HVWULFWHGVWRFNDZDUGVWRHPSOR\HHV  2     5HVWULFWHGVWRFNXQLWVDZDUGHGWRGLUHFWRUV  1     VLPLODUKLVWRULFDOH[HUFLVHEHKDYLRUDUHFRQVLGHUHGVHSDUDWHO\IRU 6WRFNDSSUHFLDWLRQULJKWV  4      YDOXDWLRQSXUSRVHV7KHH[SHFWHGGLYLGHQGUDWHLVFDOFXODWHGDVWKH E 107  7RWDOVWRFNEDVHGFRPSHQVDWLRQFRVW       DQQXDOGLYLGHQG H[FOXGHVVXSSOHPHQWDOGLYLGHQGV DWWKHGDWHRI 7D[EHQHÀW  (41)      1RQFRQWUROOLQJLQWHUHVWVҋVKDUH (3)      JUDQWGLYLGHGE\WKHDYHUDJHVWRFNSULFHIRUWKHRQH\HDUSHULRG  ,PSDFWRQQHWLQFRPH ORVV  $ 63     SUHFHGLQJWKHJUDQWGDWH7KHULVNIUHHLQWHUHVWUDWHLVEDVHGRQ

H 9LÅLJ[ZHUHKQ\Z[TLU[YLSH[LK[VH^HYKZ )HGHUDO5HVHUYHUDWHVLQHIIHFWIRUERQGVZLWKPDWXULW\GDWHVHTXDOWR I (TV\U[ZHYLILMVYL9PV;PU[V»ZZOHYLVM[OLJVZ[VMLTWSV`LLL_LYJPZLZVMPU[OLTVUL` WKHH[SHFWHGWHUPRIWKHRSWLRQDWWKHJUDQWGDWH7KHZHLJKWHG Z[VJRVW[PVUZ^OPJOKLJYLHZLKJVUZVSPKH[LKZLSSPUNNLULYHSHUKHKTPUPZ[YH[P]L L_WLUZLZI` TPSSPVUPU  TPSSPVUPU HUK TPSSPVUPU DYHUDJHDVVXPSWLRQVXVHGWRYDOXHVWRFNRSWLRQDZDUGVGXULQJWKH \HDUVHQGHG'HFHPEHUDQGIROORZ Options and SARs.6WRFNRSWLRQVDQG6$5VJUDQWHGXQGHUWKHSODQV   2009    JHQHUDOO\H[SLUH\HDUVDIWHUWKHGDWHRIJUDQWDQGYHVWLQSHUFHQW ([SHFWHGYRODWLOLW\  70.6%     DQQXDOLQFUHPHQWVEHJLQQLQJRQH\HDUIURPWKHGDWHRIJUDQW7KH ([SHFWHGOLIHRIRSWLRQV LQ\HDUV  4.37     SODQVDQGDZDUGDJUHHPHQWVSURYLGHWKDWSDUWLFLSDQWVZLOOUHFHLYHWKH ([SHFWHGGLYLGHQGUDWH  —%     IROORZLQJ\HDUҋVYHVWLQJDIWHUUHWLUHPHQWDQGSURYLGHIRUDFFHOHUDWHG 5LVNIUHHLQWHUHVWUDWH  1.5%     YHVWLQJLIWKHUHLVDFKDQJHLQFRQWURO DVGHÀ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

  -9,,769;4J4V9HU*677,9 .63+05* 83    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

XQUHFRJQL]HGFRPSHQVDWLRQFRVWUHODWHGWRXQYHVWHGVWRFN YDOXHRIUHVWULFWHGVWRFNXQLWVLVUHFRJQL]HGRQWKHGDWHRIJUDQW RSWLRQVH[SHFWHGWREHUHFRJQL]HGRYHUDZHLJKWHGDYHUDJHSHULRG $VXPPDU\RIRXWVWDQGLQJUHVWULFWHGVWRFNXQLWVDVRI'HFHPEHU RI\HDUV DQGDFWLYLW\GXULQJWKH\HDUHQGHG'HFHPEHUIROORZV

7KHIROORZLQJWDEOHLQFOXGHVDPRXQWVUHODWHGWRH[HUFLVHVRIVWRFN     >LPNO[LK RSWLRQVDQG6$5VDQGYHVWLQJRIUHVWULFWHGVWRFNXQLWVDQG    (]LYHNL    5\TILYVM 9LTHPUPUN (NNYLNH[L UHVWULFWHGVWRFNDZDUGVGXULQJWKH\HDUVHQGHG'HFHPEHU   9LZ[YPJ[LK *VU[YHJ[\HS 0U[YPUZPJ DQG   :[VJR

84 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       2009    *\YYLU[PUJVTL[H_LZ!  -LKLYHS     $ 19      :[H[L       7      -VYLPNU     1,971       ;V[HSJ\YYLU[     1,997   

+LMLYYLKPUJVTL[H_LZILULÄ[Z!  -LKLYHS     (70)      :[H[L       79       -VYLPNU     301        ;V[HSKLMLYYLK     310    

=HS\H[PVUHSSV^HUJLVUWYPVY`LHYKLMLYYLK[H_HZZL[      —    · 7YV]PZPVUMVYILULÄ[MYVTPUJVTL[H_LZ     $2,307   

$ UHFRQFLOLDWLRQRIWKH86IHGHUDOVWDWXWRU\WD[UDWHWR)&;ҋV HIIHFWLYHLQFRPHWD[UDWHIRUWKH\HDUVHQGHG'HFHPEHU DQGIROORZV   2009         (TV\U[ 7LYJLU[ (TV\U[ 7LYJLU[ (TV\U[ 7LYJLU[ <:MLKLYHSZ[H[\[VY`[H_YH[L $ 2,036 35%          -VYLPNU^P[OOVSKPUN[H_ 375 6         -VYLPNU[H_JYLKP[SPTP[H[PVU 112 2         9L]LYZHSVMPUKLÄUP[LYLPU]LZ[TLU[HZZLY[PVU  ——  ·  ·     7LYJLU[HNLKLWSL[PVU (168) (3)          0U[LYUH[PVUHS[H_YH[LKPMMLYLU[PHS (147) (2)           =HS\H[PVUHSSV^HUJLVUTPUPT\T[H_JYLKP[Z  104 2       ·  · .VVK^PSSPTWHPYTLU[ ——      ·  · :[H[LPUJVTL[H_LZ (2) —      ·  · 6[OLYP[LTZUL[  (3) —    ·     7YV]PZPVUMVYILULÄ[MYVTPUJVTL[H_LZ $ 2,307 40%        

)&;SDLGIHGHUDOVWDWHORFDODQGIRUHLJQ LQFRPHWD[HVWRWDOLQJ 7KHFRPSRQHQWVRIGHIHUUHGWD[HVIROORZ

PLOOLRQLQPLOOLRQLQDQGPLOOLRQLQ +LJLTILY    2009  )&;UHFHLYHGUHIXQGVRIIHGHUDOVWDWHORFDODQGIRUHLJQLQFRPHWD[HV 'HIHUUHGWD[DVVHWV RIPLOOLRQLQDQGPLOOLRQLQDQG  )RUHLJQWD[FUHGLWV   $ 1,664  )&;ҋVLQFRPHWD[UHFHLYDEOHGHFUHDVHGE\PLOOLRQSULPDULO\  1HWRSHUDWLQJORVVFDUU\IRUZDUGV    184   509 DVDUHVXOWRI,QGRQHVLDQHVWLPDWHGWD[RYHUSD\PHQWVPDGHLQ  0LQLPXPWD[FUHGLWV        $FFUXHGH[SHQVHV    882   WKDWZHUHDSSOLHGDJDLQVWWKHWD[OLDELOLW\  (PSOR\HHEHQHÀWSODQV    234    ,QYHQWRU\    74    2WKHU    136     'HIHUUHGWD[DVVHWV    3,683   9DOXDWLRQDOORZDQFHV   (2,157)     1HWGHIHUUHGWD[DVVHWV   1,526 

'HIHUUHGWD[OLDELOLWLHV  3URSHUW\SODQWHTXLSPHQWDQGGHYHORSPHQWFRVWV (3,272)    8QGLVWULEXWHGHDUQLQJV    (766)    2WKHU    (66)     7RWDOGHIHUUHGWD[OLDELOLWLHV   (4,104)  

1HWGHIHUUHGWD[OLDELOLWLHV   $ (2,578)  

$W'HFHPEHU)&;KDG86IRUHLJQWD[FUHGLWFDUU\IRUZDUGV IURPFRQWLQXLQJRSHUDWLRQVRIELOOLRQWKDWZLOOH[SLUHEHWZHHQ DQG,QDGGLWLRQ)&;KDG86PLQLPXPWD[FUHGLWVFDUU\IRUZDUGV IURPFRQWLQXLQJRSHUDWLRQVRIPLOOLRQ7KHVHFUHGLWVFDQEH

  -9,,769;4J4V9HU*677,9 .63+05* 85    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FDUULHGIRUZDUGLQGHÀQLWHO\EXWPD\EHXVHGRQO\WRWKHH[WHQWWKDW 7KHUHVHUYHIRUXQUHFRJQL]HGWD[EHQHÀWVRIPLOOLRQDW UHJXODUWD[H[FHHGVWKHDOWHUQDWLYHPLQLPXPWD[LQDQ\JLYHQ\HDU 'HFHPEHULQFOXGHVPLOOLRQ PLOOLRQQHWRILQFRPH $W'HFHPEHU)&; KDG6SDQLVKQHWRSHUDWLQJORVV WD[EHQHÀWV WKDWLIUHFRJQL]HGZRXOGUHGXFH)&;ҋVSURYLVLRQIRU FDUU\IRUZDUGVIURPFRQWLQXLQJRSHUDWLRQVRIPLOOLRQWKDWH[SLUH LQFRPHWD[HV EHWZHHQDQG,QDGGLWLRQ)&;KDG86VWDWHQHW &KDQJHVLQWKHUHVHUYHIRUXQUHFRJQL]HGWD[EHQHÀWVDVVRFLDWHG RSHUDWLQJORVVFDUU\IRUZDUGVIURPFRQWLQXLQJRSHUDWLRQVRIPLOOLRQ ZLWKFXUUHQW\HDUWD[SRVLWLRQVZHUHSULPDULO\UHODWHGWRXQFHUWDLQWLHV WKDWH[SLUHEHWZHHQDQG DVVRFLDWHGZLWK)&;ҋVFRVWUHFRYHU\PHWKRGV&KDQJHVLQWKH 2QWKHEDVLVRIDYDLODEOHLQIRUPDWLRQDW'HFHPEHU)&; UHVHUYHIRUXQUHFRJQL]HGWD[EHQHÀWVDVVRFLDWHGZLWKSULRU\HDUWD[ KDVSURYLGHGYDOXDWLRQDOORZDQFHVIRUFHUWDLQRILWVGHIHUUHGWD[DVVHWV SRVLWLRQVZHUHSULPDULO\UHODWHGWRWKHUHÀQHPHQWRIHVWLPDWHG ZKHUH)&;EHOLHYHVLWLVOLNHO\WKDWWKHUHODWHGWD[EHQHÀWVZLOOQRWEH LQIRUPDWLRQ WRDFWXDODQGWKHH[SLUDWLRQRIVWDWXWHRIOLPLWDWLRQVLQD UHDOL]HG$W'HFHPEHUYDOXDWLRQDOORZDQFHVWRWDOHG IRUHLJQMXULVGLFWLRQ ELOOLRQDQGFRYHUHGDOORI)&;ҋV86IRUHLJQWD[FUHGLWFDUU\IRUZDUGVDQG ,WLVUHDVRQDEO\SRVVLEOHWKDW)&;ZLOOH[SHULHQFHDPLOOLRQWR 86VWDWHQHWRSHUDWLQJORVVFDUU\IRUZDUGVDQGDSRUWLRQRILWVIRUHLJQ PLOOLRQGHFUHDVHLQLWVUHVHUYHIRUXQUHFRJQL]HGWD[EHQHÀWV QHWRSHUDWLQJORVVFDUU\IRUZDUGVDQG86PLQLPXPWD[FUHGLW ZLWKLQWKHQH[WWZHOYHPRQWKV)&; ZRXOGH[SHULHQFHWKLVGHFUHDVH FDUU\IRUZDUGV7KLVYDOXDWLRQDOORZDQFHLQFOXGHVPLOOLRQUHODWLQJWR LQUHODWLRQWRXQFHUWDLQWLHVDVVRFLDWHGZLWKLWVFRVWUHFRYHU\PHWKRGV WD[EHQHÀWVWKDWLIUHFRJQL]HGZRXOGEHFUHGLWHGGLUHFWO\WRFRQWULEXWHG LIDVHWWOHPHQWLVUHDFKHGZLWKWD[LQJDXWKRULWLHV FDSLWDO$W'HFHPEHUYDOXDWLRQDOORZDQFHVWRWDOHG )&;RULWVVXEVLGLDULHVÀOHLQFRPHWD[UHWXUQVLQWKH86IHGHUDO ELOOLRQDQGFRYHUHGDOORI)&;ҋV86IRUHLJQWD[FUHGLWFDUU\IRUZDUGV MXULVGLFWLRQDQGYDULRXVVWDWHDQGIRUHLJQMXULVGLFWLRQV7KHWD[\HDUV 86PLQLPXPWD[FUHGLWFDUU\IRUZDUGVIRUHLJQQHWRSHUDWLQJORVV IRU)&;DQGLWVVLJQLÀFDQWVXEVLGLDULHVWKDWUHPDLQVXEMHFWWR FDUU\IRUZDUGVDQG86VWDWHQHWRSHUDWLQJORVVFDUU\IRUZDUGVDQG H[DPLQDWLRQDUHDVIROORZV

DOVRDSRUWLRQRILWVQHW86GHIHUUHGWD[DVVHWV7KH PLOOLRQ -XULVGLFWLRQ

86 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PHDQLQJWKDWHDFKRZQHURURSHUDWRURI WKHSURSHUW\LVIXOO\ RQJRLQJUHYLHZDQGPRQLWRULQJRIHQYLURQPHQWDOUHPHGLDWLRQVLWHV$W UHVSRQVLEOHIRUWKHFOHDQXS DOWKRXJKLQPDQ\FDVHVVRPHRUDOORI WKHDFTXLVLWLRQGDWHWKHODUJHVWHQYLURQPHQWDOUHPHGLDWLRQVLWHVZHUH WKHRWKHUKLVWRULFDORZQHUVRURSHUDWRUVQRORQJHUH[LVWGRQRWKDYH XQGHUJRLQJVWXGLHVWRHYDOXDWHWKHH[WHQWRIWKHHQYLURQPHQWDOGDPDJH WKHÀQDQFLDODELOLW\WRUHVSRQGRUFDQQRWEHIRXQG$VDUHVXOW DQGWKHDYDLODEOHUHPHGLHV$GYDQFHPHQWRIWKHVHVWXGLHVDQG EHFDXVHRI)&;ҋVDFTXLVLWLRQRI3KHOSV'RGJHLQPDQ\RIWKH FRQVLGHUDWLRQRIDOWHUQDWLYHUHPHGLHVDQGFRVWVKDULQJDUUDQJHPHQWV VXEVLGLDU\FRPSDQLHV)&;QRZRZQVDUHUHVSRQVLEOHIRUDZLGH UHVXOWHGLQ)&;ҋVFDOFXODWLRQRIWKHHVWLPDWHGIDLUYDOXHVEHLQJ YDULHW\RIHQYLURQPHQWDOUHPHGLDWLRQSURMHFWVWKURXJKRXWWKH86 DSSUR[LPDWHO\ELOOLRQJUHDWHUWKDQWKHKLVWRULFDO3KHOSV'RGJH )&;H[SHFWVWRVSHQGVXEVWDQWLDOVXPVDQQXDOO\IRUPDQ\\HDUVWR HVWLPDWHV)&;ÀQDOL]HGWKHDOORFDWLRQRIWKHSXUFKDVHSULFH DGGUHVVWKRVHUHPHGLDWLRQLVVXHV&HUWDLQ)&;VXEVLGLDULHVKDYH DVVRFLDWHGZLWKWKH3KHOSV'RGJHDFTXLVLWLRQLQWKHÀUVWTXDUWHURI EHHQDGYLVHGE\WKH86(QYLURQPHQWDO3URWHFWLRQ$JHQF\ (3$  $VDUHVXOWWKHIDLUYDOXHRIWKHHQYLURQPHQWDOREOLJDWLRQV WKH'HSDUWPHQWRIWKH,QWHULRUWKH'HSDUWPHQWRI$JULFXOWXUHDQG ZDVHVWLPDWHGDWDSSUR[LPDWHO\ELOOLRQ6LJQLÀFDQWDGMXVWPHQWV VHYHUDOVWDWHDJHQFLHVWKDWXQGHU&(5&/$ RUVLPLODUVWDWHODZVDQG WRWKHVHREOLJDWLRQVFRXOGRFFXULQWKHIXWXUH1HZHQYLURQPHQWDO UHJXODWLRQVWKH\PD\EHOLDEOHIRUFRVWVRIUHVSRQGLQJWR REOLJDWLRQVZLOOEHUHFRUGHGDVGHVFULEHGLQ1RWHXQGHU HQYLURQPHQWDOFRQGLWLRQVDWDQXPEHURIVLWHVWKDWKDYHEHHQRUDUH ´(QYLURQPHQWDO([SHQGLWXUHVµ EHLQJLQYHVWLJDWHGWRGHWHUPLQHZKHWKHUUHOHDVHVRIKD]DUGRXV )&;EHOLHYHVWKDWWKHUHPD\EHRWKHUSRWHQWLDOFODLPVIRU VXEVWDQFHVKDYHRFFXUUHGDQGLIVRWRGHYHORSDQGLPSOHPHQW UHFRYHU\IURPRWKHUWKLUGSDUWLHVLQFOXGLQJWKH86JRYHUQPHQWDQG UHPHGLDODFWLRQVWRDGGUHVVHQYLURQPHQWDOFRQFHUQV$VRI RWKHU353V7KHVH SRWHQWLDOUHFRYHULHVDUHQRWUHFRJQL]HGXQOHVV 'HFHPEHU)&;KDGPRUHWKDQDFWLYHUHPHGLDWLRQ UHDOL]DWLRQLVFRQVLGHUHGSUREDEOH SURMHFWVLQWKH86LQDSSUR[LPDWHO\VWDWHV)&;LVDOVRVXEMHFWWR $W'HFHPEHUWKHPRVWVLJQLÀFDQWHQYLURQPHQWDO FODLPVZKHUHWKHUHOHDVHRIKD]DUGRXVVXEVWDQFHVLVDOOHJHGWRKDYH REOLJDWLRQVDUHDVVRFLDWHGZLWKWKH3LQDO&UHHNVLWHWKH1HZWRZQ GDPDJHGQDWXUDOUHVRXUFHV &UHHNSURSRVHG6XSHUIXQGVLWHVHYHUDOKLVWRULFDOVPHOWHUVLWHV $ VXPPDU\RIFKDQJHVLQHQYLURQPHQWDOREOLJDWLRQVIRUWKH\HDUV SULQFLSDOO\ORFDWHGLQ$UL]RQD.DQVDVDQG2NODKRPDDQGXUDQLXP HQGHG'HFHPEHUDQGIROORZV PLQLQJVLWHVLQWKHZHVWHUQ867KHUHFRUGHGHQYLURQPHQWDO

  2009    REOLJDWLRQVIRUWKHVHVLWHVWRWDOHGELOOLRQDW'HFHPEHU $ GLVFXVVLRQRIWKHVHVLWHVIROORZV %DODQFHDWEHJLQQLQJRI\HDU $ 1,401   ³ Pinal Creek. /LDELOLWLHVDVVXPHGLQWKHDFTXLVLWLRQ 7KH3LQDO&UHHNVLWHORFDWHGQHDU0LDPL$UL]RQDZDV  RI3KHOSV'RGJH  —    OLVWHGXQGHUWKH$UL]RQD'HSDUWPHQWRI(QYLURQPHQWDO4XDOLW\ҋV D 102 $FFUHWLRQH[SHQVH      ³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Å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ҋVHQYLURQPHQWDOREOLJDWLRQVDWIDLUYDOXHRQWKH )&;LVDSDUW\WR OLWLJDWLRQHQWLWOHG3LQDO&UHHN*URXSHWDOY DFTXLVLWLRQGDWHLQDFFRUGDQFHZLWKEXVLQHVVFRPELQDWLRQDFFRXQWLQJ 1HZPRQW0LQLQJ&RUSRUDWLRQHWDO8QLWHG6WDWHV'LVWULFW&RXUW JXLGDQFH$WWKHDFTXLVLWLRQGDWH3KHOSV'RGJHҋVKLVWRULFDO 'LVWULFWRI$UL]RQD&DVH1R&,93+;'$( /2$ ÀOHGRQ HQYLURQPHQWDOREOLJDWLRQVRIPLOOLRQEHIRUHSXUFKDVHDFFRXQWLQJ 0D\5HPHGLDWLRQFRVWVKDYHEHHQSDLGSXUVXDQWWRDQLQWHULP DGMXVWPHQWVWRIDLUYDOXHZHUHEDVHGRQDFFRXQWLQJJXLGDQFHWKDW FRVWVKDULQJDOORFDWLRQDPRQJWKHPHPEHUVRIWKH3&*ZLWK0LDPLҋV UHTXLUHVDQHVWLPDWHGORVVEHUHFRUGHGIRUDORVVFRQWLQJHQF\LISULRU LQWHULPDOORFDWLRQEHLQJDSSUR[LPDWHO\WZRWKLUGV+RZHYHUWKHUHKDYH WRWKHLVVXDQFHRIWKHÀQDQFLDOVWDWHPHQWVLWLVSUREDEOHWKDWDOLDELOLW\ EHHQVLJQLÀFDQWGLVDJUHHPHQWVDPRQJWKHPHPEHUVRIWKH3&* KDGEHHQLQFXUUHGDQGWKHORVVFDQEHUHDVRQDEO\HVWLPDWHG$PRXQWV UHJDUGLQJWKHFRVWDOORFDWLRQZLWKRWKHUPHPEHUVDOOHJLQJLQWKHIHGHUDO UHFRUGHGXQGHUWKLVDFFRXQWLQJJXLGDQFHDUHJHQHUDOO\QRWFRQVLGHUHG FRXUWSURFHHGLQJWKDW0LDPLVKRXOGEHUHVSRQVLEOHIRUVXEVWDQWLDOO\DOO IDLUYDOXH)&;KDVDQHQYLURQPHQWDODQGOHJDOJURXSGHGLFDWHGWRWKH

  -9,,769;4J4V9HU*677,9 .63+05* 87    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RIWKHFRVWV,Q)HEUXDU\)&;VHWWOHGWKRVHGLVDJUHHPHQWVDQG VDPSOLQJUHSUHVHQWLQJDSSUR[LPDWHO\SHUFHQWRIDOOHOLJLEOH WKHDVVRFLDWHGOLWLJDWLRQ UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ 7KH SURSHUWLHV%DVHGRQVDPSOLQJUHVXOWVIURPDSSUR[LPDWHO\SHUFHQW VHWWOHPHQWGLGQRWUHVXOWLQDFKDQJHWRWKHREOLJDWLRQZKLFKZDV RIWKHSURSHUWLHVUHTXHVWLQJVDPSOLQJDERXWSHUFHQWRIVDPSOHG HVWLPDWHGDWIDLUYDOXHZKHQDVVXPHGLQWKH3KHOSV'RGJHDFTXLVLWLRQ \DUGVDQGSHUFHQWRIDOOH\ZD\VUHTXLUHVRPHOHYHORIFOHDQXS Newtown Creek. )URPWKHVXQWLO3KHOSV'RGJH 5HVLGHQWLDO\DUGFOHDQXSVVWDUWHGLQ2FWREHU$OORIWKHVHVRLO 5HÀQLQJ&RUSRUDWLRQ 3'5& RSHUDWHGDVPHOWHUDQGRUUHÀQHU\RQWKH VDPSOLQJDQGUHPHGLDWLRQDFWLYLWLHVDUHEHLQJFRRUGLQDWHGZLWKDQG EDQNVRI1HZWRZQ&UHHNZKLFKLVDZDWHUZD\WKDWIRUPVSDUWRIWKH VXSHUYLVHGE\WKH6WDWH ERXQGDU\EHWZHHQ%URRNO\QDQG4XHHQVLQ1HZ

88 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUHVHQFHRIVPHOWHUDQGPLQHUHODWHGPHWDOV)0&DOVRKDVRIIHUHG $52FRVWVPD\LQFUHDVHRUGHFUHDVHVLJQLÀFDQWO\LQWKHIXWXUHDVD WRSURSHUW\RZQHUVZKRVHVRLOVDUHIRXQGWRKDYHPHWDOFRQFHQWUDWLRQV UHVXOWRI FKDQJHVLQUHJXODWLRQVHQJLQHHULQJGHVLJQVDQGWHFKQRORJ\ DERYH$'(4HVWDEOLVKHGFOHDQXS VWDQGDUGVWRUHPRYHWKHLPSDFWHG SHUPLWPRGLÀFDWLRQVRUXSGDWHVPLQHSODQVFRVWRILQÁ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ÀFLDO FKDUJHGRSHUDWLQJLQFRPHDQGLQFUHDVHGLWVHQYLURQPHQWDOREOLJDWLRQ 7KHPRVWVLJQLÀFDQWUHYLVLRQVWRFDVKÁRZHVWLPDWHVLQZHUH IRU%LVEHHVRLOFOHDQXSE\PLOOLRQLQ UHODWHGWRFKDQJHVDW&KLQR7\URQHDQG37 )UHHSRUW,QGRQHVLD Uranium Mining Sites. 'XULQJDSHULRGEHWZHHQDQGWKHHDUO\ 'XULQJ&KLQRDQG7\URQHHDFKVXEPLWWHGXSGDWHGWKLUGSDUW\ VFHUWDLQ)0&SUHGHFHVVRUHQWLWLHVZHUHLQYROYHGLQXUDQLXP FORVXUHFRVWHVWLPDWHVWRWKHVWDWHRI1HZ0H[LFRDVSDUWRIWKHFORVXUH H[SORUDWLRQDQGPLQLQJLQWKHZHVWHUQ866LPLODUH[SORUDWLRQDQG SHUPLWUHQHZDOSURFHVV$VDUHVXOW)&;UHYLVHGLWVFDVKÁRZHVWLPDWHV PLQLQJDFWLYLWLHVE\RWKHUFRPSDQLHVKDYHFDXVHGHQYLURQPHQWDO DQGLQFUHDVHGLWV$52E\PLOOLRQIRU&KLQRDQGPLOOLRQIRU LPSDFWVWKDWKDYHZDUUDQWHGUHPHGLDWLRQDQG(3$DQGORFDO 7\URQH$GGLWLRQDODGMXVWPHQWVPD\EHUHTXLUHGEDVHGXSRQWKHVWDWHҋV DXWKRULWLHVDUHFXUUHQWO\HYDOXDWLQJWKHQHHGIRUVLJQLÀ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ÀQDQFLDODVVXUDQFHWREHSURYLGHGIRUWKHHVWLPDWHGFRVWVRI RQJRLQJDQGLQIRUPDWLRQJDWKHUHGXQGHUWKLVLQLWLDWLYHZDVVXEPLWWHG UHFODPDWLRQDQGFORVXUH LQFOXGLQJJURXQGZDWHUTXDOLW\SURWHFWLRQ WR(3$5HJLRQGXULQJWKHVHFRQGDQGWKLUGTXDUWHUVRIDQGWKH SURJUDPV)&;KDVVDWLVÀHGÀQDQFLDODVVXUDQFHUHTXLUHPHQWVE\ IRXUWKTXDUWHURILQUHVSRQVHWRDQLQIRUPDWLRQUHTXHVWE\(3$ XVLQJDYDULHW\RIPHFKDQLVPVVXFKDVWKLUGSDUW\SHUIRUPDQFH UHJDUGLQJXUDQLXPPLQLQJDFWLYLWLHVRQ1DYDMR1DWLRQSURSHUWLHV)&; JXDUDQWHHVÀQDQFLDOFDSDELOLW\GHPRQVWUDWLRQVWUXVWIXQGVVXUHW\ XWLOL]HGWKHUHVXOWVRI)0&ҋVUHPHGLDWLRQH[SHULHQFHLQFRPELQDWLRQ ERQGVOHWWHUVRIFUHGLWDQGFROODWHUDO7KHDSSOLFDEOHUHJXODWRU\ ZLWKKLVWRULFDODQGXSGDWHGLQIRUPDWLRQJDWKHUHGWRGDWHWRLQLWLDOO\ UHTXLUHPHQWVSURYLGHÀQDQFLDOVWUHQJWKWHVWVWRVXSSRUWSHUIRUPDQFH HVWLPDWHLWVIDLUYDOXHRIXUDQLXPUHODWHGOLDELOLWLHVDVVXPHGLQWKH JXDUDQWHHVDQGÀQDQFLDOFDSDELOLW\GHPRQVWUDWLRQVZKLFKDUH 3KHOSV'RGJHDFTXLVLWLRQ1RQHZLQIRUPDWLRQZDVGHYHORSHGLQ GHVLJQHGWRFRQÀUPDFRPSDQ\ҋVRUJXDUDQWRUҋVÀQDQFLDOFDSDELOLW\WR WKDWUHTXLUHGDQDGMXVWPHQWWRWKHLQLWLDOIDLUYDOXHHVWLPDWHRI)&;ҋV IXQGIXWXUHHVWLPDWHGUHFODPDWLRQDQGFORVXUHFRVWV7KHDPRXQWRI HQYLURQPHQWDOREOLJDWLRQV ÀQDQFLDODVVXUDQFH)&;LVUHTXLUHGWRSURYLGHZLOOYDU\ZLWKFKDQJHV Asset Retirement Obligations (AROs). )&;ҋV$52FRVWHVWLPDWHV LQODZVUHJXODWLRQVDQGUHFODPDWLRQDQGFORVXUHFRVWHVWLPDWHV$VRI DUHUHÁHFWHGRQDWKLUGSDUW\FRVWEDVLVDQGFRPSO\ZLWK)&;ҋVOHJDO 'HFHPEHU)&;ҋVÀQDQFLDODVVXUDQFHREOLJDWLRQV REOLJDWLRQWRUHWLUHWDQJLEOHORQJOLYHGDVVHWV DVVRFLDWHGZLWKFORVXUHDQGUHFODPDWLRQFRVWVWRWDOHGPLOOLRQRI $ VXPPDU\RIFKDQJHVLQ)&;ҋV$52VIRU WKH\HDUVHQGHG ZKLFKDSSUR[LPDWHO\PLOOLRQZDVLQWKHIRUPRISDUHQWFRPSDQ\ 'HFHPEHUDQGIROORZV JXDUDQWHHVDQGÀQDQFLDOFDSDELOLW\GHPRQVWUDWLRQV$W'HFHPEHU

  2009    )&;KDGWUXVWDVVHWVWRWDOLQJPLOOLRQZKLFKDUHOHJDOO\ UHVWULFWHGWRIXQGDSRUWLRQRI LWV$52VIRU &KLQR7\URQHDQG&REUH %DODQFHDWEHJLQQLQJRI\HDU $712    /LDELOLWLHVDVVXPHGLQWKHDFTXLVLWLRQRI DVUHTXLUHGE\1HZ0H[LFRUHJXODWRU\DXWKRULWLHV  3KHOSV'RGJH  —  ³ D New Mexico Environmental and Reclamation Programs. )&;ҋV 12 /LDELOLWLHVLQFXUUHG       1HZ0H[LFRRSHUDWLRQVDUHVXEMHFWWRUHJXODWLRQXQGHUWKH1HZ 5HYLVLRQVWRFDVKÁRZHVWLPDWHV (17)    0H[LFR:DWHU4XDOLW\$FWDQGWKH:DWHU4XDOLW\&RQWURO&RPPLVVLRQ $FFUHWLRQH[SHQVH  52     6SHQGLQJ (28)      :4&& UHJXODWLRQVDGRSWHGXQGHUWKDW$FW7KH1HZ0H[LFR )RUHLJQFXUUHQF\WUDQVODWLRQDGMXVWPHQW  —     ³ (QYLURQPHQW'HSDUWPHQW 10(' KDVUHTXLUHGHDFKRIWKHVH 731 %DODQFHDWHQGRI\HDU     RSHUDWLRQVWRVXEPLWFORVXUHSODQVIRU10('ҋVDSSURYDO7KHFORVXUH /HVVFXUUHQWSRUWLRQ (46)      /RQJWHUPSRUWLRQ $685   SODQVPXVWLQFOXGHPHDVXUHVWRDVVXUHPHHWLQJJURXQGZDWHUTXDOLW\ VWDQGDUGVIROORZLQJWKHFORVXUHRIGLVFKDUJLQJIDFLOLWLHVDQGWRDEDWH H ;OLMHPY]HS\LVM(96ZHZZ\TLKPU[OLHJX\PZP[PVUVM7OLSWZ+VKNL^HZLZ[PTH[LK IHZLKVUWYVQLJ[LKJHZOÅV^ZHULZ[PTH[LKSVUN[LYTHUU\HSPUÅH[PVUYH[LVM DQ\JURXQGZDWHURUVXUIDFHZDWHUFRQWDPLQDWLRQ'XULQJWKH WLYJLU[HKPZJV\U[YH[LIHZLKVU-*?»ZLZ[PTH[LKJYLKP[HKQ\Z[LKYPZRMYLLPU[LYLZ[YH[L VM WLYJLU[HUKHTHYRL[YPZRWYLTP\TVMWLYJLU[[VYLÅLJ[^OH[H[OPYKWHY[` 7\URQHRSHUDWLRQDSSHDOHGD:4&&GHFLVLRQUHJDUGLQJWKHSRLQWRI TPNO[YLX\PYL[VHZZ\TL[OLZL(96Z

  -9,,769;4J4V9HU*677,9 .63+05* 89    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JURXQGZDWHUZLWKGUDZDOZKLFKSURYLGHVWKHEDVLVIRUGHWHUPLQLQJ DGGLWLRQDODGMXVWPHQWVWR)&;ҋV$52OLDELOLWLHV$W'HFHPEHU ZKHUHJURXQGZDWHUTXDOLW\VWDQGDUGVPXVWEHPHWDW)&;ҋV1HZ )&;KDGDFFUXHGUHFODPDWLRQDQGFORVXUHFRVWVRIPLOOLRQ 0H[LFRPLQLQJVLWHV)LQDOL]HGFORVXUHSODQUHTXLUHPHQWVLQFOXGLQJ IRULWV$UL]RQDRSHUDWLRQV WKRVHUHVXOWLQJIURPUHVROXWLRQRIWKHDSSHDOFRXOGUHVXOWLQLQFUHDVHV PT Freeport Indonesia Reclamation and Closure Programs. 7KH WRWKH7\URQH&KLQRDQG&REUHFORVXUHFRVWV XOWLPDWHDPRXQWRIUHFODPDWLRQDQGFORVXUHFRVWVWREHLQFXUUHGDW )&;ҋV1HZ 0H[LFRRSHUDWLRQVDOVRDUHVXEMHFWWRUHJXODWLRQXQGHU 37)UHHSRUW,QGRQHVLDҋVRSHUDWLRQVZLOOEHGHWHUPLQHGEDVHGRQ WKH1HZ0H[LFR0LQLQJ$FW WKH0LQLQJ$FW ZKLFKZDVHQDFWHGLQ DSSOLFDEOHODZVDQGUHJXODWLRQVDQG37 )UHHSRUW,QGRQHVLDҋV DQGWKH0LQLQJ$FWUXOHVZKLFKDUH DGPLQLVWHUHGE\WKH0LQLQJ DVVHVVPHQWRIDSSURSULDWHUHPHGLDODFWLYLWLHVLQWKHFLUFXPVWDQFHV 0LQHUDOV'LYLVLRQ 00' 8QGHUWKH0LQLQJ$FWPLQHVDUHUHTXLUHGWR DIWHUFRQVXOWDWLRQZLWKJRYHUQPHQWDODXWKRULWLHVDIIHFWHGORFDO VXEPLWDQGREWDLQDSSURYDORIFORVHRXWSODQVGHVFULELQJWKH UHVLGHQWVDQGRWKHUDIIHFWHGSDUWLHVDQGFDQQRWFXUUHQWO\EHSURMHFWHG UHFODPDWLRQWREHSHUIRUPHGIROORZLQJFHVVDWLRQRIPLQLQJRSHUDWLRQV ZLWKSUHFLVLRQ(VWLPDWHVRIWKHXOWLPDWHUHFODPDWLRQDQGFORVXUH DWDOORUDSRUWLRQRIWKHPLQHV$W'HFHPEHU)&; KDG FRVWV37 )UHHSRUW,QGRQHVLDZLOOLQFXULQWKHIXWXUHLQYROYHFRPSOH[ DFFUXHGUHFODPDWLRQDQGFORVXUHFRVWVRIPLOOLRQIRULWV1HZ LVVXHVUHTXLULQJLQWHJUDWHGDVVHVVPHQWVRYHUDSHULRGRIPDQ\ 0H[LFRRSHUDWLRQV$VVWDWHGDERYHDGGLWLRQDODFFUXDOVPD\EH \HDUVDQGDUHVXEMHFWWRUHYLVLRQRYHUWLPHDVPRUHFRPSOHWHVWXGLHV UHTXLUHGEDVHGRQWKHVWDWHҋVUHYLHZRI)&;ҋVXSGDWHGFORVXUHSODQV DUHSHUIRUPHG6RPHUHFODPDWLRQFRVWVZLOOEHLQFXUUHGGXULQJ DQGDQ\UHVXOWLQJSHUPLWFRQGLWLRQV LQFOXGLQJFRQGLWLRQVDVVRFLDWHG PLQLQJDFWLYLWLHVZKLOHPRVWFORVXUHFRVWVDQGWKHUHPDLQLQJ ZLWK10('ҋVUHTXLUHPHQWVDVQRWHGDERYH DQGWKHDPRXQWRIWKRVH UHFODPDWLRQFRVWVZLOOEHLQFXUUHGDWWKHHQGRIPLQLQJDFWLYLWLHV DFFUXDOVFRXOGEHPDWHULDO ZKLFKDUHFXUUHQWO\HVWLPDWHGWRFRQWLQXHIRUPRUHWKDQ\HDUV$W Arizona Environmental and Reclamation Programs. )&;ҋ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Á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ÀHV$'(4RILWVLQWHQWWRFHDVHRSHUDWLRQV$ FORVXUHJXDUDQWHH,Q2FWREHU37 )UHHSRUW,QGRQHVLDZDV SHUPLWDSSOLFDQWPXVWGHPRQVWUDWHLWVÀQDQFLDOFDSDELOLW\WRPHHWWKH LQYLWHGWRSUHVHQWLWVXSGDWHGFORVXUHSODQWRWKH'HSDUWPHQWRI FORVXUHFRVWVUHTXLUHGXQGHUWKH$33 (QHUJ\DQG0LQHUDO5HVRXUFHV 3RUWLRQVRIWKH$UL]RQDPLQLQJIDFLOLWLHVWKDWRSHUDWHGDIWHU-DQXDU\ Litigation. )&;LVLQYROYHG LQYDULRXVOHJDOSURFHHGLQJVWKDWDULVH DOVRDUHVXEMHFWWRWKH$UL]RQD0LQHG/DQG5HFODPDWLRQ$FW LQWKHRUGLQDU\FRXUVHRIEXVLQHVVRUDUHDVVRFLDWHGZLWK $0/5$ $0/5$ UHTXLUHVUHFODPDWLRQWRDFKLHYHVWDELOLW\DQGVDIHW\ HQYLURQPHQWDOLVVXHVDULVLQJIURPOHJDF\RSHUDWLRQVFRQGXFWHGRYHU FRQVLVWHQWZLWKSRVWPLQLQJODQGXVHREMHFWLYHVVSHFLÀHGLQD WKH\HDUVE\3KHOSV'RGJHDQGLWVDIÀOLDWHV)&;GRHVQRWEHOLHYH UHFODPDWLRQSODQ5HFODPDWLRQSODQVUHTXLUHDSSURYDOE\WKH6WDWH WKDWLWVSRWHQWLDOOLDELOLW\LQDQ\VXFKSURFHHGLQJVKRXOGKDYHD 0LQH,QVSHFWRU DQGPXVWLQFOXGHDFRVWHVWLPDWHWRSHUIRUPWKH PDWHULDODGYHUVHHIIHFWRQLWVEXVLQHVVÀQDQFLDOFRQGLWLRQRUUHVXOWV UHFODPDWLRQPHDVXUHVVSHFLÀHGLQWKHSODQ'XULQJDQG RIRSHUDWLRQV )&;XSGDWHGLWVFORVXUHDSSURDFKDW6LHUULWD7RKRQRDQG%DJGDGWR 6LQFHDSSUR[LPDWHO\)0&RULWVVXEVLGLDULHVKDYHEHHQ DGGUHVVVLWHVSHFLÀFUHJXODWRU\REOLJDWLRQVDQGZLOOFRQWLQXHWR QDPHGDVDGHIHQGDQWLQSURGXFWOLDELOLW\RUSUHPLVHVODZVXLWV HYDOXDWHRSWLRQVIRUIXWXUHUHFODPDWLRQDQGFORVXUHDFWLYLWLHVDWLWV FODLPLQJLQMXU\IURPH[SRVXUHWRDVEHVWRVIRXQGLQHOHFWULFDOZLUH RWKHURSHUDWLQJDQGQRQRSHUDWLQJVLWHVZKLFKDUHOLNHO\WRUHVXOWLQ SURGXFWVSURGXFHGRUPDUNHWHGPDQ\\HDUVDJRRUIURPDVEHVWRVDW FHUWDLQ)0&SURSHUWLHV)&;EHOLHYHVLWVOLDELOLW\LIDQ\LQWKHVH

90 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PDWWHUVZLOOQRWKDYHDPDWHULDODGYHUVHHIIHFWHLWKHULQGLYLGXDOO\RULQ NOTE 15. Commitments and Guarantees WKHDJJUHJDWHXSRQLWVEXVLQHVVÀQDQFLDOFRQGLWLRQOLTXLGLW\UHVXOWV Operating Leases. )&;OHDVHVYDULRXVW\SHVRISURSHUWLHVLQFOXGLQJ RIRSHUDWLRQVRUFDVKÁRZ7KHUHFDQEHQRDVVXUDQFHKRZHYHUWKDW RIÀFHVDQGHTXLSPHQW$VXPPDU\RIIXWXUHPLQLPXPUHQWDOVXQGHU IXWXUHGHYHORSPHQWVZLOOQRWDOWHUWKLVFRQFOXVLRQ WKHVHQRQFDQFHODEOHOHDVHVDW'HFHPEHUIROORZV Letters of Credit and Surety Bonds. 6WDQGE\OHWWHUVRIFUHGLW         WRWDOHGPLOOLRQDW'HFHPEHUSULPDULO\IRUUHFODPDWLRQ         DQGHQYLURQPHQWDOREOLJDWLRQVDQGZRUNHUVҋFRPSHQVDWLRQLQVXUDQFH         SURJUDPV,QDGGLWLRQ)&;KDGVXUHW\ERQGVWRWDOLQJPLOOLRQ         DW'HFHPEHUDVVRFLDWHGZLWKUHFODPDWLRQDQGFORVXUH         $IWHU       PLOOLRQ³VHHGLVFXVVLRQDERYH VHOILQVXUDQFHERQGVSULPDULO\  7RWDOSD\PHQWV      IRUZRUNHUVҋFRPSHQVDWLRQ PLOOLRQ DQGRWKHUERQGV PLOOLRQ  Insurance. )&;SXUFKDVHVDYDULHW\RILQVXUDQFHSURGXFWVWR 0LQLPXPSD\PHQWVXQGHURSHUDWLQJOHDVHVKDYHQRWEHHQUHGXFHG PLWLJDWHSRWHQWLDOORVVHV7KHYDULRXVLQVXUDQFHSURGXFWVW\SLFDOO\ E\DJJUHJDWHPLQLPXPVXEOHDVHUHQWDOVZKLFKDUHPLQLPDO7RWDO KDYHVSHFLÀHGGHGXFWLEOHDPRXQWVRUVHOILQVXUHGUHWHQWLRQVDQG DJJUHJDWHUHQWDOH[SHQVHXQGHURSHUDWLQJOHDVHVZDVPLOOLRQLQ SROLF\OLPLWV)&;JHQHUDOO\LVVHOILQVXUHGIRU86ZRUNHUVҋ PLOOLRQLQDQGPLOOLRQLQ FRPSHQVDWLRQEXWSXUFKDVHVH[FHVVLQVXUDQFHXSWRVWDWXWRU\OLPLWV Contractual Obligations. %DVHGRQDSSOLFDEOHSULFHVDW $QDFWXDULDODQDO\VLVLVSHUIRUPHGWZLFHD\HDUIRUYDULRXV)&; 'HFHPEHU)&;KDVXQFRQGLWLRQDOSXUFKDVHREOLJDWLRQVRI FDVXDOW\SURJUDPVLQFOXGLQJZRUNHUVҋFRPSHQVDWLRQWRHVWLPDWH ELOOLRQSULPDULO\FRPSULVLQJWKHSURFXUHPHQWRIFRSSHU UHTXLUHGLQVXUDQFHUHVHUYHV,QVXUDQFHUHVHUYHVWRWDOHGPLOOLRQ FRQFHQWUDWHVDQGFDWKRGHV ELOOLRQ WUDQVSRUWDWLRQ PLOOLRQ  DW'HFHPEHUZKLFKFRQVLVWHGRIDFXUUHQWSRUWLRQRI DQGR[\JHQ PLOOLRQ WKDWDUHHVVHQWLDOWRLWVRSHUDWLRQV PLOOLRQ LQFOXGHGLQDFFRXQWVSD\DEOHDQGDFFUXHGOLDELOLWLHV DQGD ZRUOGZLGH6RPHRI)&;ҋVXQFRQGLWLRQDOSXUFKDVHREOLJDWLRQVDUH ORQJWHUPSRUWLRQRIPLOOLRQ LQFOXGHGLQRWKHUOLDELOLWLHV  VHWWOHGEDVHGRQWKHSUHYDLOLQJPDUNHWUDWHIRUWKHVHUYLFHRUFRPPRGLW\ Other.,Q'HFHPEHU37)UHHSRUW,QGRQHVLDZDVQRWLÀHGE\ SXUFKDVHG,QVRPHFDVHVWKHDPRXQWRIWKHDFWXDOREOLJDWLRQPD\ WKH/DUJH7D[SD\HUҋV2IÀFHRIWKH*RYHUQPHQWRI,QGRQHVLDWKDW FKDQJHRYHUWLPHEHFDXVHRIPDUNHWFRQGLWLRQV2EOLJDWLRQVIRUFRSSHU 37)UHHSRUW,QGRQHVLDLVREOLJDWHGWRSD\YDOXHDGGHGWD[HVRQFHUWDLQ FRQFHQWUDWHVDQGFDWKRGHVSURYLGHIRUGHOLYHULHVRIVSHFLÀHG JRRGVLPSRUWHGDIWHUWKH\HDU7KHDPRXQWRIWD[HVDQGSHQDOWLHV YROXPHVDWPDUNHWEDVHGSULFHVWR$WODQWLF&RSSHUDQGWKH1RUWK ZRXOGEHVLJQLÀFDQW37)UHHSRUW,QGRQHVLDEHOLHYHVWKDWSXUVXDQWWR $PHULFDFRSSHUPLQHV7UDQVSRUWDWLRQREOLJDWLRQVDUHIRU6RXWK WKHWHUPVRILWV&RQWUDFWRI:RUNLWLVRQO\UHTXLUHGWRSD\YDOXHDGGHG $PHULFDFRQWUDFWHGRFHDQIUHLJKWUDWHVDQGIRU1RUWK$PHULFDQDWXUDO WD[HVRQWKHVHW\SHVRIJRRGVLPSRUWHGDIWHU'HFHPEHU JDVWUDQVSRUWDWLRQ2[\JHQREOLJDWLRQVSURYLGHIRUGHOLYHULHVRI 37 )UHHSRUW,QGRQHVLDLVZRUNLQJFRRSHUDWLYHO\ZLWKWKHDSSOLFDEOH VSHFLÀHGYROXPHVDWÀ[HGSULFHVSULPDULO\WR$WODQWLF&RSSHU JRYHUQPHQWDXWKRULWLHVWRUHVROYHWKLVPDWWHU )&;ҋVIXWXUHFRPPLWPHQWVDVVRFLDWHGZLWKXQFRQGLWLRQDOSXUFKDVH ,Q'HFHPEHU&HUUR9HUGHZDVQRWLÀHGE\3HUXYLDQUHYHQXH REOLJDWLRQVWRWDOELOOLRQLQPLOOLRQLQPLOOLRQ DXWKRULWLHVRIWKHLULQWHQWWRDVVHVVPLQLQJUR\DOWLHVUHODWHGWRWKH LQPLOOLRQLQ PLOOLRQLQDQGPLOOLRQ PLQHUDOVSURFHVVHGE\WKH&HUUR9HUGHFRQFHQWUDWRU,Q$XJXVW WKHUHDIWHU'XULQJDQG)&;IXOÀOOHGLWVPLQLPXP &HUUR9HUGHUHFHLYHGDIRUPDODVVHVVPHQWLQWKHDPRXQWRI FRQWUDFWXDOSXUFKDVHREOLJDWLRQVRUQHJRWLDWHGVHWWOHPHQWVLQWKRVH DSSUR[LPDWHO\PLOOLRQLQFRQQHFWLRQZLWKLWVDOOHJHGREOLJDWLRQVIRU VLWXDWLRQVLQZKLFKLWWHUPLQDWHGDQDJUHHPHQWFRQWDLQLQJDQ PLQLQJUR\DOWLHVDQGÀQHVIRUWKHSHULRGIURP2FWREHUWR XQFRQGLWLRQDOREOLJDWLRQ 'HFHPEHU&HUUR9HUGHLVFKDOOHQJLQJWKLVDVVHVVPHQWDVLW Mining Contracts. Indonesia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ҋV DSSUR[LPDWHO\\HDUVRIZRUNLQJZLWKWKH,QGRQHVLDQJRYHUQPHQW ZKLFKLQFOXGHGHQWHULQJLQWRWKH&RQWUDFWRI :RUNLQZHOOEHIRUH WKHH[SLUDWLRQRIWKH&RQWUDFWRI:RUN37 )UHHSRUW,QGRQHVLD

  -9,,769;4J4V9HU*677,9 .63+05* 91    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

IXOO\H[SHFWVWKDWWKHJRYHUQPHQWZLOODSSURYHWKHH[WHQVLRQVDVORQJ EHKRQRUHGXQWLOWKHLUH[SLUDWLRQ+RZHYHUWKHUHJXODWLRQVDWWHPSWWR DVLWFRQWLQXHVWRFRPSO\ZLWKWKHWHUPVRIWKH&RQWUDFWRI:RUN DSSO\FHUWDLQSURYLVLRQVRIWKHQHZODZWRDQ\H[WHQVLRQSHULRGVRI ,Q-XO\)&;UHFHLYHGDUHTXHVWIURPWKH,QGRQHVLDQ FRQWUDFWVRIZRUNHYHQWKRXJK37 )UHHSRUW,QGRQHVLDҋV&RQWUDFWRI 'HSDUWPHQWRI(QHUJ\DQG0LQHUDO5HVRXUFHVWKDWLWRIIHUWRVHOO :RUNSURYLGHVIRUWZR\HDUH[WHQVLRQSHULRGVXQGHUWKHH[LVWLQJ VKDUHVLQ37 ,QGRFRSSHU,QYHVWDPDWR,QGRQHVLDQQDWLRQDOVDWIDLU WHUPVRILWV&RQWUDFWRI:RUN PDUNHWYDOXH,QUHVSRQVHWRWKLVUHTXHVWDQGLQYLHZRIWKHSRWHQWLDO Africa. )&;LVHQWLWOHGWRPLQHLQWKH'5& XQGHUWKH´$PHQGHGDQG EHQHÀWVRIKDYLQJDGGLWLRQDO,QGRQHVLDQRZQHUVKLSLQWKHRSHUDWLRQV 5HVWDWHG0LQLQJ&RQYHQWLRQµ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ÀFDWLRQVWR &RQWUDFWRI:RUNYDULHVIURPSHUFHQWRIFRSSHUQHWUHYHQXHDWD WKHPLQLQJFRQWUDFWVIRUWKH7HQNH)XQJXUXPHFRQFHVVLRQLQFOXGLQJ FRSSHUSULFHRIRUOHVVSHUSRXQGWRSHUFHQWDWDFRSSHU WKHDPRXQWRIWUDQVIHUSD\PHQWVSD\DEOHWRWKHJRYHUQPHQWWKH SULFHRIRUPRUHSHUSRXQG7KH&RQWUDFWRI:RUNUR\DOW\UDWH JRYHUQPHQWҋ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ÀFDWLRQV)&;LVFRQWLQXLQJWRZRUNFRRSHUDWLYHO\ZLWK ORFDOJRYHUQPHQWVDQGWKHSHRSOHRIWKH,QGRQHVLDQSURYLQFHRI WKH'5&JRYHUQPHQWWRUHVROYHWKHVHPDWWHUVEXWFDQQRWSUHGLFWWKH 3DSXD7KHDGGLWLRQDOUR\DOWLHVDUHSDLGRQSURGXFWLRQH[FHHGLQJ WLPLQJRUWKHRXWFRPHRIWKLVSURFHVV7KHFRQWUDFWUHYLHZ SURFHVV VSHFLÀHGDQQXDODPRXQWVRIFRSSHUJROGDQGVLOYHUH[SHFWHGWREH KDVQRWDIIHFWHG)&;ҋVGHYHORSPHQWVFKHGXOHDQG)&;LVFRQWLQXLQJ JHQHUDWHGZKHQ37 )UHHSRUW,QGRQHVLDҋVPLOOLQJIDFLOLWLHVRSHUDWH WRRSHUDWHSXUVXDQWWRWKHWHUPVRILWVFRQWUDFW DERYHPHWULFWRQVRIRUHSHUGD\7KHDGGLWLRQDOUR\DOW\IRU Community Development Programs. )&;KDVDGRSWHGSROLFLHV FRSSHUHTXDOVWKH&RQWUDFWRI:RUNUR\DOW\UDWHDQGIRUJROGDQG WKDWJRYHUQLWVZRUNLQJUHODWLRQVKLSVZLWKWKHFRPPXQLWLHVZKHUHLW VLOYHUHTXDOVWZLFHWKH&RQWUDFWRI:RUNUR\DOW\UDWHV7KHUHIRUH RSHUDWHVWKDWDUHGHVLJQHGWRJXLGHLWVSUDFWLFHVDQGSURJUDPVLQD 37 )UHHSRUW,QGRQHVLDҋVUR\DOW\UDWHRQFRSSHUQHWUHYHQXHVIURP PDQQHUWKDWUHVSHFWVEDVLFKXPDQULJKWVDQGWKHFXOWXUHRIWKHORFDO SURGXFWLRQDERYHWKHDJUHHGOHYHOVLVGRXEOHWKH&RQWUDFWRI:RUN SHRSOHLPSDFWHGE\)&;ҋVRSHUDWLRQV)&;FRQWLQXHVWRPDNH UR\DOW\UDWHDQGWKHUR\DOW\UDWHVRQJROGDQGVLOYHUVDOHVIURP VLJQLÀ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

92 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

)&;ҋV&HUUR9HUGHFRSSHUPLQHKDVSURYLGHGDYDULHW\RI WKHWUDQVDFWLRQIURPDQGDJDLQVWFHUWDLQOLDELOLWLHVDVVRFLDWHGZLWK FRPPXQLW\VXSSRUWSURMHFWVRYHUWKH\HDUV'XULQJDVDUHVXOW FRQGLWLRQVLQH[LVWHQFH RUFODLPVDVVRFLDWHGZLWKDFWLRQVWDNHQ SULRU RIGLVFXVVLRQVZLWKORFDOPD\RUVLQWKH$UHTXLSDUHJLRQ&HUUR9HUGH WRWKHFORVLQJGDWHRIWKHWUDQVDFWLRQ$VSDUWRIWKHVHWUDQVDFWLRQV DJUHHGWRFRQWULEXWHWRWKHGHVLJQDQGFRQVWUXFWLRQRIGRPHVWLFZDWHU )0&LQGHPQLÀHGWKHFRXQWHUSDUW\IURPDQGDJDLQVWFHUWDLQH[FOXGHGRU DQGVHZDJHWUHDWPHQWSODQWVIRUWKHEHQHÀ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ÀFDWLRQV  WKDWZLOOEHXVHGIRUÀQDQFLQJ&HUUR9HUGHҋVVKDUHRIWKH LQFOXGHHQYLURQPHQWDOWD[DQGFHUWDLQRSHUDWLQJOLDELOLWLHVFODLPVRU FRQVWUXFWLRQFRVWVRIWKHVHIDFLOLWLHV OLWLJDWLRQH[LVWLQJDWFORVLQJDQGYDULRXVH[FOXGHGOLDELOLWLHVRU 'XULQJWKH3HUXYLDQJRYHUQPHQWDQQRXQFHG WKDWDOOPLQLQJ REOLJDWLRQV0RVWRIWKHVHLQGHPQLW\REOLJDWLRQVDULVHIURPWUDQVDFWLRQV FRPSDQLHVRSHUDWLQJLQ3HUXZLOOPDNHDQQXDOFRQWULEXWLRQVWRORFDO WKDWFORVHGPDQ\\HDUVDJRDQGJLYHQWKHQDWXUHRIWKHVHLQGHPQLW\ GHYHORSPHQWIXQGVIRUDÀYH\HDUSHULRGZKHQFRSSHUSULFHVH[FHHG REOLJDWLRQVLWLVLPSRVVLEOHWRHVWLPDWHWKHPD[LPXPSRWHQWLDO FHUWDLQOHYHOVWKDWDUHDGMXVWHGDQQXDOO\7KHFRQWULEXWLRQLVHTXDO WR H[SRVXUH([FHSWDVGHVFULEHGLQWKHIROORZLQJVHQWHQFH)&;GRHV SHUFHQWRIDIWHUWD[SURÀWVRIZKLFKSHUFHQWLVFRQWULEXWHG QRWFRQVLGHUDQ\RIVXFKREOLJDWLRQVDVKDYLQJDSUREDEOHOLNHOLKRRGRI WRDORFDOPLQLQJIXQGDQGSHUFHQWWRDUHJLRQDOPLQLQJIXQG7KH SD\PHQWWKDWLVUHDVRQDEO\HVWLPDEOHDQGDFFRUGLQJO\KDVQRW FKDUJHWRFRVWRIVDOHVIRUWKHVHORFDOPLQLQJIXQGFRQWULEXWLRQV UHFRUGHGDQ\REOLJDWLRQVDVVRFLDWHGZLWKWKHVHLQGHPQLWLHV:LWK WRWDOHGPLOOLRQLQDQGDQGPLOOLRQLQ UHVSHFWWR)&;ҋVHQYLURQPHQWDOLQGHPQLW\REOLJDWLRQVDQ\H[SHFWHG 7HQNH)XQJXUXPHKDVFRPPLWWHGWRDVVLVWWKHFRPPXQLWLHVOLYLQJ FRVWVIURPWKHVHJXDUDQWHHVDUHDFFUXHGZKHQSRWHQWLDOHQYLURQPHQWDO ZLWKLQLWVFRQFHVVLRQLQWKH.DWDQJDSURYLQFHRIWKH'5&7HQNH REOLJDWLRQVDUHFRQVLGHUHGE\PDQDJHPHQWWREHSUREDEOHDQGWKH )XQJXUXPHZLOOFRQWULEXWHSHUFHQWRIQHWVDOHVUHYHQXHIURP FRVWVFDQEHUHDVRQDEO\HVWLPDWHG SURGXFWLRQWRDFRPPXQLW\GHYHORSPHQWIXQGWRDVVLVWWKHORFDO NOTE 16. Financial Instruments FRPPXQLWLHVZLWKGHYHORSPHQWRIORFDOLQIUDVWUXFWXUHDQGUHODWHG )&;GRHVQRWSXUFKDVHKROGRUVHOOGHULYDWLYHÀQDQFLDOLQVWUXPHQWV VHUYLFHVVXFKDVWKRVHSHUWDLQLQJWRKHDOWKHGXFDWLRQDQGHFRQRPLF XQOHVVWKHUHLVDQH[LVWLQJDVVHWRUREOLJDWLRQRULILWDQWLFLSDWHVD GHYHORSPHQW7HQNH)XQJXUXPHFKDUJHGPLOOLRQLQWRFRVWRI IXWXUHDFWLYLW\WKDWLVOLNHO\WRRFFXUDQGZLOOUHVXOWLQH[SRVXUHWR VDOHVIRUWKLVFRPPLWPHQW PDUNHWULVNVDQG)&;LQWHQGVWRRIIVHWRUPLWLJDWHVXFKULVNV)&; Guarantees. )&;SURYLGHVFHUWDLQÀQDQFLDOJXDUDQWHHV LQFOXGLQJ GRHVQRWHQWHULQWRDQ\GHULYDWLYHÀQDQFLDOLQVWUXPHQWVIRUVSHFXODWLYH LQGLUHFWJXDUDQWHHVRIWKHLQGHEWHGQHVVRIRWKHUV DQGLQGHPQLWLHV SXUSRVHVEXWKDVHQWHUHGLQWRGHULYDWLYHÀQDQFLDOLQVWUXPHQWVLQ $WLWV0RUHQFLPLQHLQ$UL]RQD)&;KDVDYHQWXUHDJUHHPHQW OLPLWHGLQVWDQFHVWRDFKLHYHVSHFLÀFREMHFWLYHV7KHVHREMHFWLYHV GDWHG)HEUXDU\ZLWK6XPLWRPRZKLFKLQFOXGHVDSXWDQGFDOO SULQFLSDOO\UHODWHWRPDQDJLQJULVNVDVVRFLDWHGZLWKFRPPRGLW\SULFH RSWLRQJXDUDQWHHFODXVH)&;KROGVDQSHUFHQWXQGLYLGHGLQWHUHVW IRUHLJQFXUUHQF\DQGLQWHUHVWUDWHULVNV7KHIDLUYDOXHVRI)&;ҋV LQWKH0RUHQFLFRPSOH[8QGHUFHUWDLQFRQGLWLRQVGHÀQHGLQWKH ÀQDQFLDOGHULYDWLYHLQVWUXPHQWVDUHEDVHGRQGHULYDWLYHSULFLQJ YHQWXUHDJUHHPHQW6XPLWRPRKDVWKHULJKWWRVHOOLWVSHUFHQW PRGHOVRUZLGHO\SXEOLVKHGPDUNHWFORVLQJSULFHV VKDUHWR)&;/LNHZLVHXQGHUFHUWDLQFRQGLWLRQV)&;KDVWKHULJKW $ VXPPDU\RIXQUHDOL]HGJDLQVUHFRJQL]HGLQLQFRPH ORVV IURP WRSXUFKDVH6XPLWRPRҋVVKDUHRIWKHYHQWXUH$W'HFHPEHU FRQWLQXLQJRSHUDWLRQVEHIRUHLQFRPHWD[HVDQGHTXLW\LQDIÀOLDWHG WKHPD[LPXPSRWHQWLDOSD\PHQW)&;LVREOLJDWHGWRPDNHWR FRPSDQLHVҋQHWHDUQLQJVIRUGHULYDWLYHÀQDQFLDOLQVWUXPHQWVWKDWDUH 6XPLWRPRXSRQH[HUFLVHRIWKHSXWRSWLRQ RU)&;ҋVH[HUFLVHRILWV GHVLJQDWHGDQGTXDOLI\DVIDLUYDOXHKHGJHWUDQVDFWLRQVDORQJZLWK FDOORSWLRQ WRWDOHGDSSUR[LPDWHO\PLOOLRQEDVHGRQFDOFXODWLRQV WKHXQUHDOL]HGORVVHVRQWKHUHODWHGKHGJHGLWHP ÀUPVDOHV GHÀQHGLQWKHYHQWXUHDJUHHPHQW$W'HFHPEHU)&;KDG FRPPLWPHQWV IRUWKH\HDUHQGHG'HFHPEHUIROORZV QRWUHFRUGHGDQ\OLDELOLW\LQLWVFRQVROLGDWHGÀQDQFLDOVWDWHPHQWVLQ FRQQHFWLRQZLWKWKLVJXDUDQWHHDV)&;GRHVQRWEHOLHYHEDVHGRQ      /LKNLK     +LYP]H[P]L 0[LT LQIRUPDWLRQ DYDLODEOHWKDWLWLVSUREDEOHWKDWDQ\DPRXQWVZLOOEHSDLG XQGHUWKLVJXDUDQWHHDVWKHIDLUYDOXHRI6XPLWRPRҋVSHUFHQW &RPPRGLW\FRQWUDFWV  )0&ҋVFRSSHUIXWXUHVDQGVZDSFRQWUDFWVD  $11 $(11) VKDUHLVZHOOLQH[FHVVRIWKHH[HUFLVHSULFH H (TV\U[ZHYLYLJVYKLKPUYL]LU\LZ 3ULRUWRLWVDFTXLVLWLRQE\)&;)0&DQGLWVVXEVLGLDULHVKDYHDV SDUWRIPHUJHUDFTXLVLWLRQGLYHVWLWXUHDQGRWKHUWUDQVDFWLRQVIURPWLPH WRWLPHLQGHPQLÀHGFHUWDLQVHOOHUVEX\HUVRURWKHUSDUWLHVUHODWHGWR

  -9,,769;4J4V9HU*677,9 .63+05* 93    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

)&;UHDOL]HGJDLQVZKLFK DUHUHFRUGHGLQUHYHQXHVRIPLOOLRQ DYHUDJHFRSSHUSULFHLQWKHPRQWKRIVKLSPHQW)&;KHGJHVWKLV GXULQJIURPPDWXUHGGHULYDWLYHÀQDQFLDOLQVWUXPHQWVWKDW SULFHH[SRVXUHLQDPDQQHUWKDWDOORZVLWWRUHFHLYHWKH&20(; TXDOLÀHGIRUKHGJHDFFRXQWLQJ DYHUDJHSULFHLQWKHPRQWKRIVKLSPHQWZKLOHWKHFXVWRPHUVSD\WKH $ VXPPDU\RIWKHUHDOL]HGDQGXQUHDOL]HGJDLQV ORVVHV  À[HGSULFHWKH\UHTXHVWHG)&;DFFRPSOLVKHVWKLVE\HQWHULQJLQWR UHFRJQL]HGLQLQFRPH ORVV IURPFRQWLQXLQJRSHUDWLRQVEHIRUHLQFRPH FRSSHUIXWXUHVDQGVZDSFRQWUDFWVDQGWKHQOLTXLGDWLQJWKHFRSSHU WD[HVDQGHTXLW\LQDIÀOLDWHGFRPSDQLHVҋQHWHDUQLQJVIRUGHULYDWLYH IXWXUHVFRQWUDFWVDQGVHWWOLQJWKHFRSSHUVZDSFRQWUDFWVGXULQJWKH ÀQDQFLDOLQVWUXPHQWVLQFOXGLQJHPEHGGHGGHULYDWLYHVZKLFKGRQRW PRQWKRIVKLSPHQWZKLFKJHQHUDOO\UHVXOWVLQ)&;UHFHLYLQJWKH TXDOLI\DVKHGJHWUDQVDFWLRQVIRUWKH\HDUVHQGHG'HFHPEHU &20(;DYHUDJHFRSSHUSULFH LQWKHPRQWKRIVKLSPHQW+HGJHJDLQV DQGIROORZV RUORVVHVIURPWKHVHFRSSHUIXWXUHVDQGVZDSFRQWUDFWVDUHUHFRUGHG

  2009    LQUHYHQXHV)&;GLGQRWKDYHDQ\VLJQLÀFDQWJDLQVRUORVVHVGXULQJ WKH\HDUHQGHG'HFHPEHUUHVXOWLQJIURPKHGJH &RPPRGLW\FRQWUDFWV  (PEHGGHGGHULYDWLYHVLQSURYLVLRQDO LQHIIHFWLYHQHVV$W'HFHPEHU)&; KHOGFRSSHUIXWXUHVDQG   VDOHVFRQWUDFWVD $ 1,393     VZDSFRQWUDFWVWKDWTXDOLÀHGIRUKHGJHDFFRXQWLQJIRUPLOOLRQ  (PEHGGHGGHULYDWLYHVLQSURYLVLRQDO SRXQGVDWDQDYHUDJHSULFHRISHUSRXQGZLWKPDWXULWLHV   SXUFKDVHFRQWUDFWVE  (3)     WKURXJK1RYHPEHU  37 )UHHSRUW,QGRQHVLDҋVFRSSHUIRUZDUG D (104)   FRQWUDFWV    ³  ³ Derivatives Not Designated as Hedging Instruments  $WODQWLF&RSSHUҋVFRSSHUIRUZDUGFRQWUDFWVE  2       )0&ҋVFRSSHUIXWXUHVDQGVZDSFRQWUDFWVD  64      (PEHGGHGGHULYDWLYHVDQGGHULYDWLYHÀQDQFLDOLQVWUXPHQWVWKDWGRQRW  )0&ҋV]HURSUHPLXPFRSSHUFROODUVD  —  ³   PHHW WKHFULWHULDWRTXDOLI\IRUKHGJHDFFRXQWLQJDUHGLVFXVVHGEHORZ

H (TV\U[ZYLJVYKLKPUYL]LU\LZ Embedded Derivatives. $VGHVFULEHGLQ1RWHXQGHU ´5HYHQXH I (TV\U[ZYLJVYKLKPUJVZ[VMZHSLZHZWYVK\J[PVUHUKKLSP]LY`JVZ[Z 5HFRJQLWLRQµFHUWDLQ)&;FRSSHUFRQFHQWUDWHFRSSHUFDWKRGHDQG JROGVDOHVFRQWUDFWVSURYLGHIRUSURYLVLRQDOSULFLQJSULPDULO\EDVHGRQ $VXPPDU\RIWKHIDLUYDOXHVRIXQVHWWOHGGHULYDWLYHÀQDQFLDO /0(RU&20(;SULFHV FRSSHU DQGWKH/RQGRQ%XOOLRQ0DUNHW LQVWUXPHQWVUHFRUGHG RQWKHFRQVROLGDWHGEDODQFHVKHHWDVRI $VVRFLDWLRQSULFH JROG DWWKHWLPHRIVKLSPHQWDVVSHFLÀHGLQWKH 'HFHPEHUIROORZV FRQWUDFW6LPLODUO\)&;SXUFKDVHVFRSSHUDQGPRO\EGHQXPXQGHU    5V[     +LZPNUH[LK +LZPNUH[LK FRQWUDFWVWKDWSURYLGHIRUSURYLVLRQDOSULFLQJ PRO\EGHQXPSXUFKDVHV     HZ/LKNLZ HZ/LKNLZ DUHEDVHGRQDQDYHUDJHMetals Week 0RO\EGHQXP2[LGHSULFH  &RPPRGLW\FRQWUDFWV )&;DSSOLHVWKHQRUPDOSXUFKDVHVDQGQRUPDOVDOHVVFRSHH[FHSWLRQ  )0&ҋVFRSSHUIXWXUHVDQGVZDSFRQWUDFWV LQDFFRUGDQFHZLWKGHULYDWLYHVDQGKHGJHDFFRXQWLQJJXLGDQFHWRWKH   $VVHWSRVLWLRQDE  $11 $ 2  (PEHGGHGGHULYDWLYHVLQSURYLVLRQDOVDOHV KRVWVDOHVDJUHHPHQWVVLQFHWKHFRQWUDFWVGRQRWDOORZIRUQHW   SXUFKDVHVFRQWUDFWVF VHWWOHPHQWDQGDOZD\VUHVXOWLQSK\VLFDOGHOLYHU\6DOHVDQG — 235   $VVHWSRVLWLRQ   SXUFKDVHVZLWKDSURYLVLRQDOVDOHVSULFHFRQWDLQDQHPEHGGHG   /LDELOLW\SRVLWLRQ  — (70) GHULYDWLYH i.e., WKHSULFHVHWWOHPHQWPHFKDQLVPWKDWLVVHWWOHGDIWHU  $WODQWLF&RSSHUҋVFRSSHUIRUZDUGFRQWUDFWV   $VVHWSRVLWLRQD  — 1 WKHWLPHRIGHOLYHU\ WKDWLVUHTXLUHGWREHELIXUFDWHGIURPWKHKRVW FRQWUDFW7KHKRVWFRQWUDFWLVWKHVDOHRUSXUFKDVHRIWKHPHWDOV H (TV\U[ZYLJVYKLKPUV[OLYJ\YYLU[HZZL[Z I ([+LJLTILY -*?OHKYLJLP]LK TPSSPVUMYVTIYVRLYZHZZVJPH[LK^P[O FRQWDLQHGLQWKHFRQFHQWUDWHVRUFDWKRGHVDWWKHWKHQFXUUHQW/0(RU THYNPUYLX\PYLTLU[ZYLJVYKLKPUHJJV\U[ZWH`HISLHUKHJJY\LKSPHIPSP[PLZ J (TV\U[ZYLJVYKLKLP[OLYHZHUL[HJJV\U[ZYLJLP]HISLVYHUL[HJJV\U[ZWH`HISL &20(;SULFH FRSSHU WKH/RQGRQ%XOOLRQ0DUNHW$VVRFLDWLRQSULFH JROG RUWKHDYHUDJHMetals Week 0RO\EGHQXP2[LGHSULFHDV Commodity Contracts. )URPWLPHWRWLPH)&;KDVHQWHUHGLQWR GHÀQHGLQWKHFRQWUDFW PRO\EGHQXP 0DUNWRPDUNHWSULFH IRUZDUGIXWXUHVDQGVZDSFRQWUDFWVWRKHGJHWKHPDUNHWULVN ÁXFWXDWLRQVUHFRUGHGWKURXJKWKHVHWWOHPHQWGDWHDUHUHÁHFWHGLQ DVVRFLDWHGZLWKÁXFWXDWLRQVLQWKHSULFHVRIFRPPRGLWLHVLWSXUFKDVHV UHYHQXHVIRU VDOHVFRQWUDFWVDQGLQFRVWRIVDOHVDVSURGXFWLRQDQG DQGVHOOV'HULYDWLYHÀQDQFLDOLQVWUXPHQWVXVHGE\)&;WRPDQDJHLWV GHOLYHU\FRVWVIRUSXUFKDVHFRQWUDFWV$W'HFHPEHU)&; ULVNVGRQRW FRQWDLQFUHGLWULVNUHODWHGFRQWLQJHQWSURYLVLRQV$VRI KDGHPEHGGHGGHULYDWLYHVRQPLOOLRQSRXQGVRIFRSSHUVDOHVDW 'HFHPEHUDQG)&;KDGQRSULFHSURWHFWLRQFRQWUDFWV DQDYHUDJHSULFHRISHUSRXQGZLWKPDWXULWLHVWKURXJK0D\ UHODWLQJWRLWVPLQHSURGXFWLRQ$ VXPPDU\RI)&;ҋVGHULYDWLYH WKRXVDQGRXQFHVRIJROGVDOHVDWDQDYHUDJHSULFHRI FRQWUDFWVDQGSURJUDPVIROORZV SHURXQFHZLWKPDWXULWLHVWKURXJK0DUFKPLOOLRQ SRXQGVRIFRSSHUSXUFKDVHVDWDQDYHUDJHSULFHRISHUSRXQG Derivatives Designated as Hedging Instruments – Fair Value Hedges ZLWKPDWXULWLHVWKURXJK$SULO DQGWKRXVDQGSRXQGVRI Copper Futures and Swap Contracts. 6RPHRI)0&ҋV86FRSSHU PRO\EGHQXPSXUFKDVHVDWDQDYHUDJHSULFHRISHUSRXQG URGFXVWRPHUVUHTXHVWDÀ[HGPDUNHWSULFHLQVWHDGRIWKH&20(; ZLWKPDWXULWLHVWKURXJK-DQXDU\

94 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Copper Forward Contracts. ,Q$SULO )&;HQWHUHGLQWRFRSSHU DUHVHWWOHG)&;PD\KHGJHRUSURWHFWLWVLQWHUQDWLRQDOVXEVLGLDULHVҋ IRUZDUGVDOHVFRQWUDFWVWRORFNLQSULFHVDWDQDYHUDJHRISHU IRUHLJQFXUUHQF\WUDQVDFWLRQVIURPWLPHWRWLPHE\HQWHULQJLQWR SRXQGRQPLOOLRQSRXQGVRI37 )UHHSRUW,QGRQHVLDҋVSURYLVLRQDOO\ IRUZDUGH[FKDQJHFRQWUDFWVWRORFNLQRUPLQLPL]HWKHHIIHFWVRI SULFHGFRSSHUVDOHVDW0DUFKZKLFKÀQDOSULFHGIURP$SULO ÁXFWXDWLRQVLQH[FKDQJHUDWHV)&;KDGQRRXWVWDQGLQJIRUHLJQ WKURXJK-XO\7KHVH HFRQRPLFKHGJHWUDQVDFWLRQVZHUH FXUUHQF\H[FKDQJHFRQWUDFWVDW'HFHPEHU LQWHQGHGWRUHGXFHVKRUWWHUPSULFHYRODWLOLW\LQHDUQLQJVDQGFDVK Interest Rate Swap Contracts. )URPWLPHWRWLPH)&;RULWV ÁRZV*DLQVDQGORVVHVIRUWKHVHHFRQRPLFKHGJHWUDQVDFWLRQVZHUH VXEVLGLDULHVPD\HQWHULQWRLQWHUHVWUDWHVZDSVWRPDQDJHLWV UHFRUGHGLQUHYHQXHV)&;KDVQRW HQWHUHGLQWRDGGLWLRQDOIRUZDUG H[SRVXUHWRLQWHUHVWUDWHFKDQJHVDQGWRDFKLHYHDGHVLUHGSURSRUWLRQ VDOHVFRQWUDFWVVLQFH$SULO IRULWVSURYLVLRQDOO\SULFHGFRSSHU RIÀ[HGUDWHYHUVXVÁRDWLQJUDWHGHEWEDVHGRQFXUUHQWDQGSURMHFWHG VDOHVEXWPD\HQWHULQWRIXWXUHWUDQVDFWLRQVWRORFNLQSULFLQJRQ PDUNHWFRQGLWLRQV)&;PD\HQWHULQWRLQWHUHVWUDWHVZDSFRQWUDFWVWR SURYLVLRQDOO\SULFHGVDOHVIURPWLPHWRWLPH+RZHYHU)&;GRHVQRW ORFNLQDQLQWHUHVWUDWHFRQVLGHUHGWREHIDYRUDEOHLQRUGHUWRSURWHFW FXUUHQWO\LQWHQGWRFKDQJHLWVORQJVWDQGLQJSROLF\RIQRWKHGJLQJ DJDLQVWLWVH[SRVXUHWRYDULDELOLW\LQIXWXUHLQWHUHVWSD\PHQWV IXWXUHFRSSHUSURGXFWLRQ DWWULEXWDEOHWRLQFUHDVHVLQLQWHUHVWUDWHVRIWKHGHVLJQDWHGÁRDWLQJ $WODQWLF&RSSHUHQWHUVLQWRIRUZDUGFRSSHUFRQWUDFWVGHVLJQHGWR UDWHGHEW,QVRPHVLWXDWLRQV)&;PD\HQWHULQWRÀ[HGWRÁRDWLQJ KHGJHLWVFRSSHUSULFHULVNZKHQHYHULWVSK\VLFDOSXUFKDVHVDQG LQWHUHVWUDWHVZDSFRQWUDFWVWR SURWHFWDJDLQVWFKDQJHVLQWKHIDLU VDOHVSULFLQJSHULRGVGRQRWPDWFK7KHVH HFRQRPLFKHGJH YDOXHRIWKHXQGHUO\LQJÀ[HGUDWHGHEWWKDWUHVXOWIURPPDUNHWLQWHUHVW WUDQVDFWLRQVDUHLQWHQGHGWRKHGJHDJDLQVWFKDQJHVLQFRSSHUSULFHV UDWHFKDQJHVDQGWRWDNHDGYDQWDJHRIORZHULQWHUHVWUDWHV)&;KDG ZLWKWKHPDUNWRPDUNHWKHGJLQJ JDLQVRUORVVHVUHFRUGHGLQFRVWRI QRRXWVWDQGLQJLQWHUHVWUDWHVZDSFRQWUDFWVDW'HFHPEHU VDOHV$W'HFHPEHU$WODQWLF&RSSHUKHOGQHWIRUZDUG Credit Risk. )&;LVH[SRVHGWRFUHGLWORVVZKHQÀQDQFLDO FRSSHUSXUFKDVHFRQWUDFWVIRUPLOOLRQSRXQGVDWDQDYHUDJHSULFHRI LQVWLWXWLRQVZLWKZKLFK)&;KDVHQWHUHGLQWRGHULYDWLYHWUDQVDFWLRQV SHUSRXQGZLWKPDWXULWLHVWKURXJK-DQXDU\ FRPPRGLW\IRUHLJQH[FKDQJHDQGLQWHUHVWUDWHVZDSV DUHXQDEOH Copper Futures and Swap Contracts. ,Q DGGLWLRQWRWKHFRQWUDFWV WRSD\7RPLQLPL]HWKHULVNRIVXFKORVVHV)&;XVHVKLJKO\UDWHG GLVFXVVHGDERYHWKDWTXDOLI\IRUIDLUYDOXHKHGJHDFFRXQWLQJ)&;DOVR ÀQDQFLDOLQVWLWXWLRQVWKDWPHHWFHUWDLQUHTXLUHPHQWV)&;DOVR KDVVLPLODUFRQWUDFWVZLWK)0&ҋV86FRSSHUURGFXVWRPHUVWKDWGRQRW SHULRGLFDOO\UHYLHZVWKHFUHGLWZRUWKLQHVVRIWKHVHLQVWLWXWLRQVWR TXDOLI\IRUKHGJHDFFRXQWLQJEHFDXVHRIFHUWDLQWHUPVLQWKHVDOHV HQVXUHWKDWWKH\DUHPDLQWDLQLQJWKHLUFUHGLWUDWLQJV)&;GRHV FRQWUDFWV*DLQVDQGORVVHVIRUWKHVHHFRQRPLFKHGJHWUDQVDFWLRQVDUH QRWDQWLFLSDWHWKDWDQ\RIWKHÀQDQFLDOLQVWLWXWLRQV)&;GHDOVZLWK UHFRUGHGLQUHYHQXHV$W'HFHPEHU)&;KHOGFRSSHUIXWXUHV ZLOOGHIDXOWRQWKHLUREOLJDWLRQV$VRI'HFHPEHU)&; DQGVZDSFRQWUDFWVIRUPLOOLRQSRXQGVDWDQDYHUDJHSULFHRI GLGQRWKDYHDQ\VLJQLÀFDQWFUHGLWH[SRVXUHDVVRFLDWHGZLWK SHUSRXQGZLWKPDWXULWLHVWKURXJK'HFHPEHU GHULYDWLYHWUDQVDFWLRQV FMC Copper Collars.$VDUHVXOWRIWKHDFTXLVLWLRQRI3KHOSV'RGJH Other Financial Instruments.2WKHUÀQDQFLDOLQVWUXPHQWVLQFOXGH )&;DVVXPHG3KHOSV'RGJHҋVFRSSHUSULFHSURWHFWLRQSURJUDP FDVKDQGFDVKHTXLYDOHQWVDFFRXQWVUHFHLYDEOHWUXVWDVVHWV PLOOLRQREOLJDWLRQDWDFTXLVLWLRQGDWH ZKLFKFRQVLVWHGRI]HUR DFFRXQWVSD\DEOHDQGDFFUXHGOLDELOLWLHVDQGORQJWHUPGHEW5HIHUWR SUHPLXPFRSSHUFROODUV FRQVLVWLQJRIERWKSXWDQGFDOORSWLRQV IRU 1RWHIRUWKHIDLUYDOXHVRIWKHVHÀQDQFLDOLQVWUXPHQWV PLOOLRQSRXQGVRIFRSSHUFDSSHGDWSHUSRXQGDQGFRSSHUSXW Cash and Cash Equivalents, Accounts Receivable, and Accounts RSWLRQVIRUPLOOLRQSRXQGVZLWKDÁRRUSULFHRISHUSRXQG Payable and Accrued Liabilities.7KHÀQDQFLDOVWDWHPHQWDPRXQWLVD 7KH]HURSUHPLXPFRSSHUFROODUVFRQVLVWHGRIWKHVLPXOWDQHRXV UHDVRQDEOHHVWLPDWHRI WKHIDLUYDOXHEHFDXVHRIWKHVKRUWPDWXULW\RI SXUFKDVHRIDPRQWKO\RUDQQXDOSXWRSWLRQDQGWKHVDOHRIDQDQQXDO WKHVHLQVWUXPHQWVDQGJHQHUDOO\QHJOLJLEOHFUHGLWORVVHV FDOORSWLRQ7KHSXWRSWLRQSRUWLRQRIWKLVHFRQRPLFKHGJHHIIHFWLYHO\ Trust Assets.7KHÀQDQFLDOVWDWHPHQWDPRXQWUHSUHVHQWVWKHIDLU HQVXUHGDPLQLPXPSULFHSHUSRXQGZKLOHWKHFDOORSWLRQSRUWLRQ YDOXHRIWUXVWDVVHWVZKLFKLVEDVHGRQTXRWHGPDUNHWSULFHV HVWDEOLVKHGDPD[LPXPSULFHSHUSRXQG7KHSULPDU\REMHFWLYHRI Long-Term Debt.7KHÀQDQFLDOVWDWHPHQWDPRXQWUHSUHVHQWVFRVW WKHVHFRQWUDFWVZDVWRVHWDPLQLPXPSULFHDQGWKHVHFRQGDU\ H[FHSWIRUORQJWHUPGHEWDFTXLUHGLQWKH3KHOSV'RGJHDFTXLVLWLRQ REMHFWLYHZDVWRUHWDLQPDUNHWXSVLGH$W'HFHPEHUWKH ZKLFKZDVUHFRUGHGDWIDLUYDOXHDWWKHDFTXLVLWLRQGDWH FRSSHUSXWRSWLRQVH[SLUHGZLWKRXWVHWWOHPHQWDQG)&;SDLG NOTE 17. Fair Value Measurement PLOOLRQLQ-DQXDU\WRVHWWOHWKHFRSSHUFDOORSWLRQV)&;GRHVQRW )DLUYDOXHDFFRXQWLQJJXLGDQFHLQFOXGHVDIDLUYDOXHKLHUDUFK\WKDW FXUUHQWO\LQWHQGWRHQWHULQWRVLPLODUKHGJLQJSURJUDPVLQWKHIXWXUH SULRULWL]HVWKHLQSXWVWRYDOXDWLRQWHFKQLTXHVXVHGWRPHDVXUHIDLU Foreign Currency Exchange Contracts.$VDJOREDOFRPSDQ\ YDOXH7KHKLHUDUFK\JLYHVWKHKLJKHVWSULRULW\WRXQDGMXVWHGTXRWHG )&;WUDQVDFWVEXVLQHVVLQPDQ\FRXQWULHVDQGLQPDQ\FXUUHQFLHV SULFHVLQDFWLYHPDUNHWVIRULGHQWLFDODVVHWVRUOLDELOLWLHV /HYHO )RUHLJQFXUUHQF\WUDQVDFWLRQVRI)&;ҋVLQWHUQDWLRQDOVXEVLGLDULHV LQSXWV DQGWKHORZHVWSULRULW\WRXQREVHUYDEOHLQSXWV /HYHOLQSXWV  LQFUHDVHLWVULVNVEHFDXVHH[FKDQJHUDWHVFDQFKDQJHEHWZHHQWKH WLPHDJUHHPHQWVDUHPDGHDQGWKHWLPHIRUHLJQFXUUHQF\WUDQVDFWLRQV

  -9,,769;4J4V9HU*677,9 .63+05* 95    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7KHWKUHHOHYHOVRIWKHIDLUYDOXHKLHUDUFK\DUHGHVFULEHGEHORZ HPEHGGHGGHULYDWLYHVRQSURYLVLRQDOPRO\EGHQXPSXUFKDVHVDUH Metals Week Level 1 8QDGMXVWHGTXRWHGSULFHVLQDFWLYHPDUNHWVWKDW DUH YDOXHGEDVHGRQWKHODWHVWDYHUDJHZHHNO\  DFFHVVLEOHDWWKHPHDVXUHPHQWGDWHIRULGHQWLFDOXQUHVWULFWHG 0RO\EGHQXP'HDOHU2[LGHSULFHVDQGDVVXFKDUHFODVVLÀHGZLWKLQ DVVHWVRUOLDELOLWLHV /HYHORIWKHIDLUYDOXHKLHUDUFK\ Other derivative financial instruments. Level 2 4XRWHGSULFHVLQPDUNHWVWKDWDUHQRWDFWLYHTXRWHGSULFHV )&;ҋVRWKHUGHULYDWLYH IRUVLPLODUDVVHWVRUOLDELOLWLHVLQDFWLYHPDUNHWVLQSXWVRWKHU ÀQDQFLDOLQVWUXPHQWVDUHFODVVLÀHGZLWKLQ/HYHORIWKHIDLUYDOXH WKDQTXRWHGSULFHVWKDWDUHREVHUYDEOHIRUWKHDVVHWRU KLHUDUFK\EHFDXVHWKH\DUHYDOXHGXVLQJTXRWHGPDUNHWSULFHVLQ OLDELOLW\RULQSXWVWKDWDUHGHULYHGSULQFLSDOO\IURPRU DFWLYHPDUNHWV UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ  FRUURERUDWHGE\REVHUYDEOHPDUNHWGDWDE\FRUUHODWLRQRU $VXPPDU\RIWKHFDUU\LQJDPRXQWDQGIDLUYDOXHRI)&;ҋVÀQDQFLDO RWKHUPHDQVDQG LQVWUXPHQWVDW'HFHPEHUDQGIROORZV Level 3 3ULFHVRUYDOXDWLRQWHFKQLTXHVWKDWUHTXLUHLQSXWVWKDWDUH   2009     ERWKVLJQLÀFDQWWRWKHIDLUYDOXHPHDVXUHPHQWDQG  *HYY`PUN -HPY *HYY`PUN -HPY  (TV\U[ =HS\L (TV\U[ =HS\L XQREVHUYDEOH VXSSRUWHGE\OLWWOHRUQRPDUNHWDFWLYLW\  &DVKDQGFDVKHTXLYDOHQWVD $ 2,656 $ 2,656     $VXPPDU\RI)&;ҋVÀQDQFLDODVVHWVDQGOLDELOLWLHVPHDVXUHGDWIDLU $FFRXQWVUHFHLYDEOHEF 1,803 1,803   YDOXHRQDUHFXUULQJEDVLVIROORZV 7UXVWDVVHWV FXUUHQWDQG  ORQJWHUP D  146 146      Fair Value at December 31, 2009 $YDLODEOHIRUVDOHVHFXULWLHV  ;V[HS 3L]LS 3L]LS 3L]LS  FXUUHQWDQGORQJWHUP D 74 74     D 14 14 &DVKHTXLYDOHQWV $ 2,610 $ 2,610 $ — $ — 'HULYDWLYHDVVHWV    ³  ³ 7UXVWDVVHWV FXUUHQWDQGORQJWHUP  146 146 —— $FFRXQWVSD\DEOHDQGDFFUXHG EG (1,837) (1,837) $YDLODEOHIRUVDOHVHFXULWLHV  OLDELOLWLHV         FXUUHQWDQGORQJWHUP   74 74 —— 5LR7LQWRVKDUHRIMRLQWYHQWXUH E (161) (161) (PEHGGHGGHULYDWLYHVLQSURYLVLRQDO  FDVKÁRZV    ³  ³ E (99) (99)  VDOHVSXUFKDVHVFRQWUDFWVQHW  165 165 —— 'LYLGHQGVSD\DEOH        2WKHUGHULYDWLYHÀQDQFLDO 'HEW LQFOXGLQJDPRXQWVGXH H (6,346) (6,735)  LQVWUXPHQWVQHW  14 14 ——  ZLWKLQRQH\HDU        $ 3,009 $ 3,009 $ — $ —   H 9LJVYKLKH[MHPY]HS\L8\V[LKTHYRL[WYPJLZHYL\ZLK[VKL[LYTPULMHPY]HS\L I -HPY]HS\LHWWYV_PTH[LZ[OLJHYY`PUNHTV\U[ZILJH\ZLVM[OLZOVY[TH[\YP[`VM[OLZL Valuation Techniques PUZ[Y\TLU[Z J 0UJS\KLZKLYP]H[P]LHZZL[ZVM TPSSPVUPU HUK TPSSPVUPU ^OPJOHYL Cash Equivalents. 7KHIDLUYDOXHRI)&;ҋVFDVKHTXLYDOHQWVDUH YLJVYKLKH[MHPY]HS\LIHZLKVUX\V[LKTHYRL[WYPJLZ K 0UJS\KLZKLYP]H[P]LSPHIPSP[PLZVM TPSSPVUPU HUK  TPSSPVUPU ^OPJOHYL FODVVLÀHGZLWKLQ/HYHORIWKHIDLUYDOXHKLHUDUFK\EHFDXVHWKH\DUH YLJVYKLKH[MHPY]HS\LIHZLKVUX\V[LKTHYRL[WYPJLZ YDOXHGXVLQJTXRWHGPDUNHWSULFHVLQDFWLYHPDUNHWV)&;ҋVFDVK L .LULYHSS`YLJVYKLKH[JVZ[-HPY]HS\LVMZ\IZ[HU[PHSS`HSSVM-*?»ZSVUN[LYTKLI[PZ LZ[PTH[LKIHZLKVUX\V[LKTHYRL[WYPJLZ HTXLYDOHQWVDUHSULPDULO\PRQH\PDUNHWVHFXULWLHVWLPHGHSRVLWVDQG 86WUHDVXU\VHFXULWLHV NOTE 18. Acquisition of Phelps Dodge Trust Assets. 7KHIDLUYDOXHRI)&;ҋVWUXVWDVVHWVDUHFODVVLÀHG 2Q0DUFK)&;DFTXLUHG3KHOSV'RGJHDIXOO\LQWHJUDWHG ZLWKLQ/HYHORIWKHIDLUYDOXHKLHUDUFK\EHFDXVHWKH\DUHYDOXHG SURGXFHURIFRSSHUDQGPRO\EGHQXPZLWKPLQHVLQ1RUWKDQG6RXWK XVLQJTXRWHGPDUNHWSULFHVLQDFWLYHPDUNHWV)&;ҋVWUXVWDVVHWVDUH $PHULFDDQGSURFHVVLQJFDSDELOLWLHVIRURWKHUE\SURGXFWPLQHUDOV SULPDULO\PRQH\PDUNHWVHFXULWLHVDQGÀ[HGLQFRPHIXQGV VXFKDVJROGVLOYHUDQGUKHQLXPDQGVHYHUDOGHYHORSPHQWSURMHFWV Available-for-sale securities. )&;ҋVDYDLODEOHIRUVDOHVHFXULWLHVDUH LQFOXGLQJ7HQNH)XQJXUXPHLQWKH'5& YDOXHGXVLQJTXRWHGPDUNHWSULFHVLQDFWLYHPDUNHWVDQGDVVXFKDUH ,QWKHDFTXLVLWLRQHDFKVKDUHRI3KHOSV'RGJHFRPPRQVWRFNZDV FODVVLÀHGZLWKLQ/HYHORIWKHIDLUYDOXHKLHUDUFK\7KHIDLUYDOXHRI H[FKDQJHGIRURIDVKDUHRI)&;FRPPRQVWRFNDQGLQ WKHDYDLODEOHIRUVDOHVHFXULWLHVLVFDOFXODWHGDVWKHTXRWHGPDUNHW FDVK$VDUHVXOW)&;LVVXHGPLOOLRQVKDUHVDQGSDLG SULFHRIWKHVHFXULW\PXOWLSOLHGE\WKHTXDQWLW\RIVKDUHVKHOGE\)&; ELOOLRQLQFDVKWR3KHOSV'RGJHVKDUHKROGHUV7KHDFTXLVLWLRQZDV Embedded derivatives in provisional sales/purchases contracts. DFFRXQWHGIRUXQGHUWKHSXUFKDVHPHWKRGZLWK)&;DVWKH )&;ҋVHPEHGGHGGHULYDWLYHVRQSURYLVLRQDOFRSSHUFRQFHQWUDWH DFFRXQWLQJDFTXLUHU FRSSHUFDWKRGHDQGJROGVDOHVDUHYDOXHGXVLQJTXRWHGPDUNHWSULFHV 7KHHVWLPDWHGIDLUYDOXHRIDVVHWVDFTXLUHGDQGOLDELOLWLHVDVVXPHG EDVHGRQWKHIRUZDUG/0(RU&20(;SULFHV FRSSHU DQGWKH DQGWKHUHVXOWVRI3KHOSV'RGJHҋV QRZNQRZQDV)0& RSHUDWLRQV /RQGRQ%XOOLRQ0DUNHW$VVRFLDWLRQSULFH JROG DQGDVVXFKDUH DUHLQFOXGHGLQ)&;ҋVFRQVROLGDWHGÀQDQFLDOVWDWHPHQWVEHJLQQLQJ FODVVLÀHGZLWKLQ/HYHORIWKHIDLUYDOXHKLHUDUFK\)&;ҋVHPEHGGHG 0DUFK GHULYDWLYHVRQSURYLVLRQDOFRSSHUFRQFHQWUDWHSXUFKDVHVDUHYDOXHG XVLQJTXRWHGPDUNHWSULFHVEDVHGRQWKHIRUZDUG/0(SULFHVDQGDV VXFKDUHFODVVLÀHGZLWKLQ/HYHORIWKHIDLUYDOXHKLHUDUFK\)&;ҋV

96 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ VXPPDU\RIWKHELOOLRQSXUFKDVHSULFHZKLFKZDVIXQGHG $VXPPDU\RIWWKKHHÀQDOSXUFKDVHSULFHSULFHDOORFDWLRQDVRI0DUFK WKURXJKDFRPELQDWLRQRIFRPPRQVKDUHVLVVXHGERUURZLQJVXQGHU IROORZV LQELOOLRQV  DQELOOLRQVHQLRUFUHGLWIDFLOLW\SURFHHGVIURPWKHRIIHULQJRI    7OLSWZ+VKNL  7\YJOHZL    /PZ[VYPJHS -HPY=HS\L 7YPJL ELOOLRQRIVHQLRUQRWHV UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ     )HSHUJLZ (KQ\Z[TLU[Z (SSVJH[PVU

DQGDYDLODEOHFDVKUHVRXUFHVIROORZV &DVKDQGFDVKHTXLYDOHQWV    ³   ,QYHQWRULHVLQFOXGLQJPLOODQGOHDFKVWRFNSLOHV       3KHOSV'RGJHFRPPRQVWRFNRXWVWDQGLQJDQGLVVXDEOH 3URSHUW\SODQWDQGHTXLSPHQWD      DW0DUFK LQPLOOLRQV        2WKHUDVVHWV       ([FKDQJHRIIHUUDWLRSHUVKDUHRI)&;FRPPRQVWRFNIRUHDFK $OORFDWLRQWRJRRGZLOOE  ³    F  3KHOSV'RGJHFRPPRQVKDUH       7RWDODVVHWV    6KDUHVRI)&;FRPPRQVWRFNLVVXHG LQPLOOLRQV        'HIHUUHGLQFRPHWD[HV FXUUHQWDQGORQJWHUP G         2WKHUOLDELOLWLHV         &DVKFRQVLGHUDWLRQRIIRUHDFK3KHOSV'RGJH 1RQFRQWUROOLQJLQWHUHVWV     ³    FRPPRQVKDUH     D  7RWDO     )DLUYDOXHRI)&;FRPPRQVWRFNLVVXHG      E 7UDQVDFWLRQDQGFKDQJHRIFRQWUROFRVWVDQGUHODWHG H 0UJS\KLZHTV\U[ZMVYWYV]LUHUKWYVIHISLYLZLY]LZHUK]HS\LZVM=)77YLMLY[V5V[L MVYM\Y[OLYKPZJ\ZZPVU  HPSOR\HHEHQHÀWV       I 5VULVM[OL IPSSPVUVMNVVK^PSS^HZKLK\J[PISLMVY[H_W\YWVZLZ F 5HOHDVHRI)&;GHIHUUHGWD[DVVHWYDOXDWLRQDOORZDQFHV     J 0UJS\KLZ TPSSPVUVMNVVK^PSSHZZVJPH[LK^P[O7OLSWZ+VKNL0U[LYUH[PVUHS*VYWVYH[PVU  7RWDOSXUFKDVHSULFH      ^OPJO^HZZVSKPU[OLMV\Y[OX\HY[LYVMYLMLY[V5V[L MVYM\Y[OLYKPZJ\ZZPVU K +LMLYYLKPUJVTL[H_LZ^LYLYLJVNUPaLKIHZLKVU[OLKPMMLYLUJLIL[^LLU[OL[H_IHZPZ H *HZOJVUZPKLYH[PVUPUJS\KLZJHZOWHPKPUSPL\VMHU`MYHJ[PVUHSZOHYLZVM-*?Z[VJR HUK[OLLZ[PTH[LKMHPY]HS\LZHZZPNULK[VUL[HZZL[Z I 4LHZ\YLTLU[VM[OLJVTTVUZ[VJRJVTWVULU[VM[OLW\YJOHZLWYPJL^HZIHZLKVUH ^LPNO[LKH]LYHNLJSVZPUNWYPJLVM-*?»ZJVTTVUZ[VJRVM  MVY[OL[^VKH`ZWYPVY [V[OYV\NO[^VKH`ZHM[LY[OLW\ISPJHUUV\UJLTLU[VM[OLTLYNLYVU5V]LTILY  Unaudited Pro Forma Financial Information. 7KHIROORZLQJ J -*?KL[LYTPULK[OH[HZHYLZ\S[VM[OLHJX\PZP[PVUVM7OLSWZ+VKNLP[^V\SKILHISL[V YLHSPaLJLY[HPU<:[H_JYLKP[ZMVY^OPJOP[OHKWYL]PV\ZS`UV[YLJVNUPaLKHU`ILULÄ[ XQDXGLWHGSURIIRUPDRUPDÀQDQFLDOLQIRUPDWLRQDVVXPHVDVVXPHVWWKDWKDW))&;&;DFTXLUHG 9LJVNUP[PVUVM[OLZL[H_JYLKP[ZYLZ\S[LKPUH TPSSPVUYLK\J[PVU[V[OLW\YJOHZLWYPJL 3KHOSV3KHOSV'RGJHHIIHIHFWFWLYLYHH-DQXDU\\77KHKHPRVWVLJQLÀ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³ E EF SXUFKDVHGZHUHWREHKHOGVROGRUDEDQGRQHGH[SHFWHGIXWXUH 2SHUDWLQJLQFRPH          FDVKÁRZVFXUUHQWUHSOUHSODFHPHQWDFHPHQWFRVWWIIRURUVLPLODUFDSDFLW\\IIRURUFHUWDLQ H 9LWYLZLU[Z[OLYLZ\S[ZVM7OLSWZ+VKNL»ZVWLYH[PVUZMYVT1HU\HY`[OYV\NO 4HYJO )LNPUUPUN4HYJO[OLYLZ\S[ZVM7OLSWZ+VKNL»ZVWLYH[PVUZ À[HGDVVHWVPDUNHWUDWHDVVXPSWLRQVIIRURUFRQWUDFWUDFWXDOXDOREOLJDWLRQVDQG HYLPUJS\KLKPU-*?»ZJVUZVSPKH[LKÄUHUJPHSPUMVYTH[PVU DSSURSULDWHGLVFRXQWUDWHVDQGJURZWKUDWHV7KHH[FHVVRIWKH I 0UJS\KLZJOHYNLZ[VYL]LU\LZMVYTHYR[VTHYRL[HJJV\U[PUNHKQ\Z[TLU[ZVUJVWWLY WYPJLWYV[LJ[PVUWYVNYHTZ[V[HSPUN  TPSSPVU(SZVPUJS\KLZJYLKP[ZMVYHTVY[PaH[PVUVM SXUFKDVHSULFHRYHUWKHHVWLPDWHGIDLUYDOXHRIWKHQHWDVVHWV HJX\PYLKPU[HUNPISLSPHIPSP[PLZ[V[HSPUN TPSSPVU J 0UJS\KLZJOHYNLZHZZVJPH[LK^P[O[OLPTWHJ[ZVM[OLPUJYLHZLZPU[OLJHYY`PUN]HS\LZVM DFTXLUHGZDVUHFRUGHGDVJRRGZLOO$WWKHGDWHGDWHRIDFTXLVLWLRQRI HJX\PYLKTL[HSPU]LU[VYPLZPUJS\KPUNTPSSHUKSLHJOZ[VJRWPSLZHUKWYVWLY[`WSHU[HUK LX\PWTLU[HUKHSZVPUJS\KLZ[OLHTVY[PaH[PVUVMPU[HUNPISLHZZL[ZHUKSPHIPSP[PLZ 3KHOSV'RGJHFRSSHUSULFHSURMHFWLRQVXVHGWRYDOXHWKHDVVHWV YLZ\S[PUNMYVT[OLHJX\PZP[PVU[V[HSPUN IPSSPVU DFTXLUHGUDQJHGIURPQHDUWHUPSULFHVRISHUSRXQGIRUFRSSHU GHFOLQLQJRYHUDQHLJKW\HDUSHULRGWRSHUSRXQGDQG 77KHKHDERYHXQDXGLWHGSURIIRUPDRUPDFRQVROLGDWHGÀQDQFLDOLQIRUPDWLRQ SHUSRXQGIIRURUPRO\EGHQXPGHFOLQLQJRYHUDÀYH\HDUSHULRGWRWR KDVEHHQSUHSDUHGIRULOOXVWUDWLYHSXUSRVHVRQO\DQGLVQRWLQWHQGHG SHUSRXQGUHÁHFWLQJSULFHH[SHFWDWLRQVDWWWKDWKDWWLWLPHPH WREHLQGLFDWLYHRIWKHUHVXOWVWKDWZRXOGDFWXDOO\KDYHRFFXUUHGRU WWKHKHUHVXOWVH[UHVXOWVH[SHFWHGLQIIXWXXWXUHUHSHULRGVKDGWWKHKHHYHQWVUHÁHFWHGKHUHLQ RFFXUUHGRQWKHGDWHVLQGLFDWHG

NOTE 19. Discontinued Operations 2Q2FWREHU)&;VROGLWVLQWHUQDWLRQDOZLUHDQGFDEOH EXVLQHVV3KHOSV'RGJH,QWHUQDWLRQDO&RUSRUDWLRQ 3',& IRU PLOOLRQZKLFKUHVXOWHGLQDQHWORVVRIPLOOLRQ PLOOLRQWRQHW LQFRPH IRUWUDQVDFWLRQUHODWHGFRVWV7KHWUDQVDFWLRQJHQHUDWHG DIWHUWD[SURFHHGVRIDSSUR[LPDWHO\PLOOLRQ QHWSURFHHGVRI PLOOLRQDIWHUWD[HVWUDQVDFWLRQUHODWHGFRVWVDQG3',&FDVK 

  -9,,769;4J4V9HU*677,9 .63+05* 97    (UU\HS9LWVY[

B)LQDQFLDOVLQGG $0 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$VDUHVXOWRIWKHVDOHWKHRSHUDWLQJUHVXOWVRI3',&KDYHEHHQ South America Copper Mines. )&;KDVIRXURSHUDWLQJFRSSHU UHPRYHGIURPFRQWLQXLQJRSHUDWLRQVDQGUHSRUWHGDVGLVFRQWLQXHG PLQHVLQ6RXWK$PHULFD³&HUUR9HUGHLQ3HUXDQG&DQGHODULD2MRV RSHUDWLRQVLQWKHFRQVROLGDWHGVWDWHPHQWVRIRSHUDWLRQV6HOHFWHG GHO6DODGRDQG(O$EUDLQ&KLOH7KHVH RSHUDWLRQVLQFOXGHRSHQSLW ÀQDQFLDOLQIRUPDWLRQUHODWHGWRGLVFRQWLQXHGRSHUDWLRQVIRUWKH\HDU DQGXQGHUJURXQGPLQLQJVXOÀGHRUHFRQFHQWUDWLQJOHDFKLQJDQG HQGHG'HFHPEHUIROORZV 6;(:RSHUDWLRQV7KH6RXWK$PHULFDFRSSHUPLQHVGLYLVLRQ LQFOXGHV&HUUR9HUGHDVDUHSRUWDEOHVHJPHQW 5HYHQXHV      Cerro Verde. 2SHUDWLQJLQFRPH       7KH&HUUR9HUGHRSHQSLWFRSSHUPLQHORFDWHGQHDU 3URYLVLRQIRULQFRPHWD[HV       $UHTXLSD3HUXSURGXFHVFRSSHUFDWKRGHVDQGFRSSHUFRQFHQWUDWHV D ,QFRPHIURPGLVFRQWLQXHGRSHUDWLRQV       ,QDGGLWLRQWRFRSSHUWKH&HUUR9HUGHPLQHSURGXFHVPRO\EGHQXP H 0UJS\KLZPUJVTLH[[YPI\[HISL[VUVUJVU[YVSSPUNPU[LYLZ[ZVM TPSSPVU FRQFHQWUDWHDVDE\SURGXFW7KH&HUUR9HUGHPLQHSURGXFHG DSSUR[LPDWHO\SHUFHQWRI)&;ҋV6RXWK$PHULFDFRSSHUGXULQJ &DVKÁRZVIURPGLVFRQWLQXHGRSHUDWLRQVIRUWKH\HDUHQGHG Other Mines. 2WKHUPLQHVLQFOXGH)&;ҋV&KLOHDQFRSSHUPLQHV 'HFHPEHUKDYHQRWEHHQVHSDUDWHO\LGHQWLÀHGLQWKH ³&DQGHODULD2MRVGHO6DODGRDQG(O$EUD,QDGGLWLRQWRFRSSHUWKH FRQVROLGDWHGVWDWHPHQWVRIFDVKÁRZV &DQGHODULDDQG2MRVGHO6DODGR PLQHVSURGXFHJROGDQGVLOYHUDV NOTE 20. Business Segments E\SURGXFWV Indonesia. )&;KDVRUJDQL]HGLWVRSHUDWLRQVLQWRÀYHSULPDU\GLYLVLRQV³1RUWK ,QGRQHVLDPLQLQJLQFOXGHV37 )UHHSRUW,QGRQHVLDҋV $PHULFDFRSSHUPLQHV6RXWK$PHULFDFRSSHUPLQHV,QGRQHVLD *UDVEHUJPLQHUDOVGLVWULFW37 )UHHSRUW,QGRQHVLDSURGXFHVFRSSHU PLQLQJ$IULFDPLQLQJDQG0RO\EGHQXPRSHUDWLRQV1RWZLWKVWDQGLQJ FRQFHQWUDWHVZKLFKFRQWDLQVLJQLÀFDQWTXDQWLWLHVRIJROGDQGVLOYHU Africa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ÀUVWFRSSHUFDWKRGHZDVVROGLQVHFRQG WKH\HDUVHQGHG'HFHPEHUDQGWRFRQIRUPZLWKWKH TXDUWHU7KHFREDOWSODQWDQGVXOSKXULFDFLGSODQWZHUH FXUUHQW\HDUSUHVHQWDWLRQ FRPPLVVLRQHGLQWKLUGTXDUWHU Molybdenum. )XUWKHUGLVFXVVLRQRIWKHUHSRUWDEOHVHJPHQWVLQFOXGHGLQ)&;ҋV 7KH0RO\EGHQXPVHJPHQWLVDQLQWHJUDWHGSURGXFHU RSHUDWLQJGLYLVLRQVDVZHOODV)&;ҋVRWKHUUHSRUWDEOHVHJPHQWV³ RIPRO\EGHQXPZLWKPLQLQJVXOÀGHRUHFRQFHQWUDWLQJURDVWLQJDQG 5RG 5HÀQLQJDQG$WODQWLF&RSSHU6PHOWLQJ 5HÀQLQJ³IROORZV SURFHVVLQJIDFLOLWLHVWKDWSURGXFHKLJKSXULW\PRO\EGHQXPEDVHG 5HIHUWR1RWHIRULQIRUPDWLRQRQ)&;ҋVRZQHUVKLSLQWHUHVWV FKHPLFDOVPRO\EGHQXPPHWDOSRZGHUDQGPHWDOOXUJLFDOSURGXFWV North America Copper Mines. )&;KDVVL[RSHUDWLQJFRSSHU ZKLFKDUHVROGWRFXVWRPHUVDURXQGWKHZRUOGDQGLQFOXGHVWKH PLQHVLQ1RUWK$PHULFD³0RUHQFL6LHUULWD%DJGDG6DIIRUGDQG ZKROO\RZQHG+HQGHUVRQPRO\EGHQXPPLQHLQ&RORUDGRDQGUHODWHG 0LDPLLQ$UL]RQDDQG7\URQHLQ1HZ0H[LFR7KH1RUWK$PHULFD FRQYHUVLRQIDFLOLWLHV7KH+HQGHUVRQXQGHUJURXQGPLQHSURGXFHV FRSSHUPLQHVLQFOXGHRSHQSLWPLQLQJVXOÀGHRUHFRQFHQWUDWLQJ KLJKSXULW\FKHPLFDOJUDGHPRO\EGHQXPFRQFHQWUDWHVZKLFKDUH OHDFKLQJDQG6;(:RSHUDWLRQV$ PDMRULW\RIWKHFRSSHUSURGXFHGDW W\SLFDOO\IXUWKHUSURFHVVHGLQWRYDOXHDGGHGPRO\EGHQXPFKHPLFDO WKH1RUWK$PHULFDFRSSHUPLQHVLVFDVWLQWRFRSSHUURGE\)&;ҋV5RG SURGXFWV7KLVVHJPHQWDOVRLQFOXGHVDVDOHVFRPSDQ\WKDW 5HÀQLQJRSHUDWLRQV7KH1RUWK$PHULFDFRSSHUPLQHVGLYLVLRQ SXUFKDVHVDQGVHOOVPRO\EGHQXPIURPWKH+HQGHUVRQPLQHDVZHOO LQFOXGHV0RUHQFLDVDUHSRUWDEOHVHJPHQW DVIURP)&;ҋV1RUWKDQG6RXWK$PHULFDFRSSHUPLQHVWKDWSURGXFH Morenci. 7KH0RUHQFLRSHQSLWPLQHORFDWHGLQVRXWKHDVWHUQ PRO\EGHQXPDVDE\SURGXFW ,QDGGLWLRQDWWLPHVWKLVVHJPHQW $UL]RQDSULPDULO\SURGXFHVFRSSHUFDWKRGHVDQGFRSSHUFRQFHQWUDWHV URDVWVDQGRUSURFHVVHVPDWHULDORQDWROOEDVLV7ROODUUDQJHPHQWV 7KH0RUHQFLPLQHSURGXFHGDSSUR[LPDWHO\SHUFHQWRI)&;ҋV1RUWK UHTXLUHWKHWROOLQJFXVWRPHUWRGHOLYHUDSSURSULDWHPRO\EGHQXP $PHULFDFRSSHUGXULQJ  EHDULQJPDWHULDOWR)&;ҋVIDFLOLWLHVIRUSURFHVVLQJLQWRDSURGXFWWKDW Other Mines. 2WKHU PLQHVLQFOXGH)&;ҋVRWKHURSHUDWLQJ LVUHWXUQHGWRWKHFXVWRPHUZKRSD\V)&;IRUSURFHVVLQJLWVPDWHULDO VRXWKZHVWHUQ86FRSSHUPLQHV³6LHUULWD%DJGDG6DIIRUG0LDPL LQWRWKHVSHFLÀHGSURGXFWV7KH0RO\EGHQXPVHJPHQWDOVRLQFOXGHV DQG7\URQH³DQGLWVVRXWKZHVWHUQ86FRSSHUPLQHVWKDWDUH )&;ҋVZKROO\RZQHG&OLPD[PRO\EGHQXPPLQHLQ&RORUDGRZKLFK FXUUHQWO\RQFDUHDQGPDLQWHQDQFHVWDWXV,QDGGLWLRQWRFRSSHUWKH KDVEHHQRQFDUHDQGPDLQWHQDQFHVWDWXVVLQFH Rod & Refining. 6LHUULWDDQG%DJGDGPLQHVSURGXFHPRO\EGHQXPFRQFHQWUDWHDVD 7KH5RG 5HÀQLQJVHJPHQWFRQVLVWVRIFRSSHU E\SURGXFW FRQYHUVLRQIDFLOLWLHVORFDWHGLQ1RUWK$PHULFDDQGLQFOXGHVDUHÀQHU\ WKUHHURGPLOOVDQGDVSHFLDOW\FRSSHUSURGXFWVIDFLOLW\7KHVH

98 -9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RSHUDWLRQVSURFHVVFRSSHUSURGXFHGDWWKH1RUWK$PHULFDPLQHVDQG Geographic Area SXUFKDVHGFRSSHULQWRFRSSHUFDWKRGHURGDQGFXVWRPFRSSHU ,QIRUPDWLRQFRQFHUQLQJÀQDQFLDOGDWDE\JHRJUDSKLFDUHDIRUWKH VKDSHV$WWLPHVWKHVHRSHUDWLRQVUHÀQHFRSSHUDQGSURGXFHFRSSHU \HDUVHQGHG'HFHPEHUDQGIROORZV

URGDQGVKDSHVIRUFXVWRPHUVRQDWROOEDVLV7ROODUUDQJHPHQWV   2009    UHTXLUHWKHWROOLQJFXVWRPHUWRGHOLYHUDSSURSULDWHFRSSHUEHDULQJ 5HYHQXHVD PDWHULDOWR)&;ҋVIDFLOLWLHVIRUSURFHVVLQJLQWRDSURGXFWWKDWLV  8QLWHG6WDWHV $ 4,890     UHWXUQHGWRWKHFXVWRPHUZKRSD\V)&;IRUSURFHVVLQJLWVPDWHULDO  -DSDQ 3,093     1,937 LQWRWKHVSHFLÀHGSURGXFWV  ,QGRQHVLD        6SDLQ 986     Atlantic Copper Smelting & Refining. $WODQWLF&RSSHU)&;ҋV  ,QGLD  566     ZKROO\RZQHGVPHOWLQJXQLWLQ6SDLQVPHOWVDQGUHÀQHVFRSSHU  &KLOH  563     FRQFHQWUDWHVDQGPDUNHWVUHÀQHGFRSSHUDQGSUHFLRXVPHWDOVLQ  &KLQD  496     475 VOLPHV37)UHHSRUW,QGRQHVLDVHOOVFRSSHUFRQFHQWUDWHDQGWKH6RXWK  .RUHD        2WKHUV  2,034     $PHULFDPLQHVVHOOFRSSHUFRQFHQWUDWHDQGFDWKRGHWR$WODQWLF&RSSHU   7RWDO $15,040   Intersegment sales. ,QWHUVHJPHQWVDOHVEHWZHHQ)&;ҋVRSHUDWLRQV H 9L]LU\LZHYLH[[YPI\[LK[VJV\U[YPLZIHZLKVU[OLSVJH[PVUVM[OLJ\Z[VTLY DUHEDVHGRQVLPLODUDUPVOHQJWKWUDQVDFWLRQVZLWKWKLUGSDUWLHVDWWKH WLPHRIWKHVDOH,QWHUVHJPHQWVDOHVPD\QRWEHUHÁHFWLYHRIWKH   2009    DFWXDOSULFHVXOWLPDWHO\UHDOL]HGEHFDXVHRIDYDULHW\RIIDFWRUV /RQJOLYHGDVVHWVD $ 6,499 LQFOXGLQJDGGLWLRQDOSURFHVVLQJWLPLQJRIVDOHVWRXQDIÀOLDWHG  8QLWHG6WDWHV      ,QGRQHVLD 3,298     FXVWRPHUVDQGWUDQVSRUWDWLRQSUHPLXPV  3HUX 3,240     Allocations. )&;DOORFDWHVFHUWDLQRSHUDWLQJFRVWVH[SHQVHVDQG  'HPRFUDWLF5HSXEOLFRI&RQJR 3,207     FDSLWDOH[SHQGLWXUHVWRWKHRSHUDWLQJGLYLVLRQVDQGLQGLYLGXDO  &KLOH 1,519     277 VHJPHQWV+RZHYHUQRWDOOFRVWVDQGH[SHQVHVDSSOLFDEOHWRDPLQH  6SDLQ        2WKHUV  50     RURSHUDWLRQDUHDOORFDWHG$OO86IHGHUDODQGVWDWHLQFRPHWD[HVDUH   7RWDO $18,090   UHFRUGHGDQGPDQDJHGDWWKHFRUSRUDWHOHYHOZKHUHDVIRUHLJQ H 3VUNSP]LKHZZL[ZL_JS\KLKLMLYYLK[H_HZZL[ZNVVK^PSSHUKPU[HUNPISLHZZL[Z LQFRPHWD[HVDUHUHFRUGHG DQGPDQDJHGDWWKHDSSOLFDEOHPLQHRU RSHUDWLRQ,QDGGLWLRQPRVWH[SORUDWLRQDQGUHVHDUFKDFWLYLWLHVDUH Major Customers PDQDJHGDWWKHFRUSRUDWHOHYHO DQGWKRVHFRVWVDORQJZLWKVRPH 6DOHVWR376PHOWLQJWRWDOHGELOOLRQ SHUFHQWRI)&;ҋV VHOOLQJJHQHUDODQGDGPLQLVWUDWLYHFRVWVDUHQRWDOORFDWHGWRWKH FRQVROLGDWHGUHYHQXHV LQ1RVLQJOHFXVWRPHUDFFRXQWHGIRU RSHUDWLQJGLYLVLRQRUVHJPHQWV$FFRUGLQJO\WKHIROORZLQJVHJPHQW SHUFHQWRUPRUHRI)&;ҋVFRQVROLGDWHGUHYHQXHVLQ6DOHVWR LQIRUPDWLRQUHÁHFWVPDQDJHPHQWGHWHUPLQDWLRQVWKDWPD\QRWEH 376PHOWLQJWRWDOHGELOOLRQ SHUFHQWRI)&;ҋVFRQVROLGDWHG LQGLFDWLYHRIZKDWWKHDFWXDOÀQDQFLDOSHUIRUPDQFHRIHDFKRSHUDWLQJ UHYHQXHV LQ5HIHUWR1RWHIRUIXUWKHUGLVFXVVLRQRI)&;ҋV GLYLVLRQRUVHJPHQWZRXOGEHLILWZDVDQLQGHSHQGHQWHQWLW\ LQYHVWPHQWLQ37 6PHOWLQJ Product Revenue )&;UHYHQXHVDWWULEXWDEOHWRWKHSURGXFWVLWSURGXFHVIRUWKH\HDUV HQGHG'HFHPEHUDQGIROORZ

  2009   

5HÀQHGFRSSHUSURGXFWV $ 6,563     &RSSHULQFRQFHQWUDWHVD 4,763     *ROG  2,591     0RO\EGHQXP  792     2WKHU   331      7RWDO $15,040  

H (TV\U[ZHYLUL[VM[YLH[TLU[HUKYLÄUPUNJOHYNLZ[V[HSPUN  TPSSPVUMVY    TPSSPVUMVY HUK TPSSPVUMVY

  -9,,769;4J4V9HU*677,9 .63+05* 99    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Business Segments %XVLQHVVVHJPHQWVIRUWKH\HDUVHQGHG'HFHPEHU DQGDUHSUHVHQWHGLQWKHIROORZLQJWDEOHV

  1RUWK$PHULFD&RSSHU0LQHV   6RXWK$PHULFD&RSSHU0LQHV  ,QGRQHVLD  $IULFD  $WODQWLF              &RSSHU &RUSRUDWH     2WKHU  &HUUR 2WKHU     5RG  6PHOWLQJ 2WKHU     0RUHQFL 0LQHV 7RWDO 9HUGH 0LQHV 7RWDO *UDVEHUJ 7HQNH 0RO\EGHQXP 5HILQLQJ 5HILQLQJ (OLPLQDWLRQV )&;7RWDO

Year Ended December 31, 2009 5HYHQXHV  8QDIILOLDWHGFXVWRPHUV   $ 68 $ 94 $ 162 $ 1,491 $ 1,950 $ 3,441 $ 4,972D $ 389 $ 847 $ 3,328 $ 1,892 $ 9 $ 15,040  ,QWHUVHJPHQW  1,073 2,000 3,073 286 112 398 936 —— 28 — (4,435) — 3URGXFWLRQDQGGHOLYHU\  622 1,289 1,911 648 915 1,563 1,505 315E 641 3,336 1,895 (4,150) 7,016 'HSUHFLDWLRQGHSOHWLRQDQGDPRUWL]DWLRQ    142 138 280 153 122 275 275 66 49 8 36 25 1,014 /RZHURIFRVWRUPDUNHWLQYHQWRU\DGMXVWPHQWV   ———————— 19 ——— 19 6HOOLQJJHQHUDODQGDGPLQLVWUDWLYHH[SHQVHV   —————— 94 — 11 — 17 199 321 ([SORUDWLRQDQGUHVHDUFKH[SHQVHV    —— ——————2—— 88 90 5HVWUXFWXULQJDQGRWKHUFKDUJHVF   26 (2) 24 ————— (1) (2) — 56 77 2SHUDWLQJLQFRPH ORVV     351 669 1,020 976 1,025 2,001 4,034 8 126 14 (56) (644) 6,503

,QWHUHVWH[SHQVHQHW    3 12 15 — 2 2 (3) 10 — — 5 557 586 3URYLVLRQIRU EHQHILWIURP LQFRPHWD[HV    ——— 313 337 650 1,697 (15)——— (25) 2,307 7RWDODVVHWVDW'HFHPEHU    1,934 4,207 6,141 3,937 2,515 6,452 4,974 3,386 1,731 291 991 2,030 25,996 &DSLWDOH[SHQGLWXUHV    46 299 345 103 61 164 266 659 82 9 31 31 1,587 H 0UJS\KLZ7;-YLLWVY[0UKVULZPH»ZZHSLZ[V7;:TLS[PUN[V[HSPUN  IPSSPVU I 0UJS\KLZJOHYNLZ[V[HSPUN TPSSPVUHZZVJPH[LK^P[O;LURL-\UN\Y\TL»ZWYVQLJ[Z[HY[\WJVZ[Z J ;OLMVSSV^PUN[HISLZ\TTHYPaLZYLZ[Y\J[\YPUNHUKV[OLYJOHYNLZ!  5HVWUXFWXULQJFKDUJHV   $ 25 $ 4 $ 29 $—$—$—$—$—$ 1$—$—$ 2$ 32  &LW\RI%ODFNZHOOODZVXLWVHWWOHPHQW    ——————————— 54 54  6SHFLDOUHWLUHPHQWEHQHILWVDQGFXUWDLOPHQWV   1 (6) (5) ————— (2) (2) —— (9)  5HVWUXFWXULQJDQGRWKHUFKDUJHV   $ 26 $ (2) $ 24 $—$—$—$—$—$ (1) $ (2) $ — $ 56 $ 77

,QWHUHVWH[SHQVHQHW                   ³  ³         3URYLVLRQIRU EHQHILWIURP LQFRPHWD[HV    ³  ³  ³              ³  ³  ³      7RWDODVVHWVDW'HFHPEHU                     &DSLWDOH[SHQGLWXUHV                            H 0UJS\KLZ7;-YLLWVY[0UKVULZPH»ZZHSLZ[V7;:TLS[PUN[V[HSPUN IPSSPVU I ;OLMVSSV^PUN[HISLZ\TTHYPaLZ[OLPTWHJ[VMW\YJOHZLHJJV\U[PUNMHPY]HS\LHKQ\Z[TLU[ZVUVWLYH[PUNSVZZPUJVTLWYPTHYPS`HZZVJPH[LK^P[O[OLPTWHJ[ZVM[OLPUJYLHZLZPU[OLJHYY`PUN ]HS\LZVMHJX\PYLKTL[HSZPU]LU[VYPLZPUJS\KPUNTPSSHUKSLHJOZ[VJRWPSLZHUKWYVWLY[`WSHU[HUKLX\PWTLU[!  5HYHQXHV    ³  ³  ³        1$  ³     ³  1$  ³    3URGXFWLRQDQGGHOLYHU\                 1$  ³    ³  1$      'HSUHFLDWLRQGHSOHWLRQDQGDPRUWL]DWLRQ                1$  ³    ³  1$       ,PSDFWRQRSHUDWLQJ ORVV LQFRPH                      1$  ³     ³  1$     

F 7KHIROORZLQJWDEOHVXPPDUL]HVORQJOLYHGDVVHWLPSDLUPHQWVDQGRWKHUFKDUJHV  /RQJOLYHGDVVHWLPSDLUPHQWV         ³    ³  ³     ³  ³    5HVWUXFWXULQJFKDUJHV                ³        ³      6SHFLDOUHWLUHPHQWEHQHILWVDQGFXUWDLOPHQWV         ³  ³  ³  ³  ³      ³      /RQJOLYHGDVVHWLPSDLUPHQWVDQGRWKHUFKDUJHV          ³       ³    

100-9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  1RUWK$PHULFD&RSSHU0LQHV   6RXWK$PHULFD&RSSHU0LQHV  ,QGRQHVLD  $IULFD  $WODQWLF              &RSSHU &RUSRUDWH     2WKHU  &HUUR 2WKHU     5RG  6PHOWLQJ 2WKHU     0RUHQFL 0LQHV 7RWDO 9HUGH 0LQHV 7RWDO *UDVEHUJ 7HQNH 0RO\EGHQXP 5HILQLQJ 5HILQLQJ (OLPLQDWLRQV )&;7RWDO

,QWHUHVWH[SHQVHQHW    ³  ³  ³           ³  ³         3URYLVLRQIRULQFRPHWD[HV    ³  ³  ³           ³  ³  ³     7RWDODVVHWVDW'HFHPEHU                  F   &DSLWDOH[SHQGLWXUHV                             H 0UJS\KLZ7;-YLLWVY[0UKVULZPH»ZZHSLZ[V7;:TLS[PUN[V[HSPUN  IPSSPVU I ;OLMVSSV^PUN[HISLZ\TTHYPaLZ[OLPTWHJ[VMW\YJOHZLHJJV\U[PUNMHPY]HS\LHKQ\Z[TLU[ZVUVWLYH[PUNPUJVTLSVZZWYPTHYPS`HZZVJPH[LK^P[O[OLPTWHJ[ZVM[OLPUJYLHZLZPU[OLJHYY`PUN ]HS\LZVMHJX\PYLKTL[HSZPU]LU[VYPLZPUJS\KPUNTPSSHUKSLHJOZ[VJRWPSLZHUKWYVWLY[`WSHU[HUKLX\PWTLU[!  5HYHQXHV    ³  ³  ³        1$  ³    ³  1$  ³    3URGXFWLRQDQGGHOLYHU\                1$  ³    ³  1$      'HSUHFLDWLRQGHSOHWLRQDQGDPRUWL]DWLRQ                1$  ³    ³  1$  ³    ,PSDFWRQRSHUDWLQJLQFRPH ORVV                       1$  ³     ³  1$     

J 0UJS\KLZWYLSPTPUHY`NVVK^PSSVM IPSSPVU^OPJOOHKUV[ILLUHSSVJH[LK[VYLWVY[PUN\UP[Z

NOTE 21. Supplementary Mineral Reserve Information PLQHUDOUHVHUYHVDVUHTXLUHGLQDFFRUGDQFHZLWKWKHODWHVWDYDLODEOH (unaudited) VWXGLHV$W'HFHPEHU)&;ҋVHVWLPDWHGFRQVROLGDWHG 5HFRYHUDEOHSURYHQDQGSUREDEOHUHVHUYHVKDYHEHHQFDOFXODWHGDV UHFRYHUDEOHUHVHUYHVLQFOXGHELOOLRQSRXQGVRIFRSSHU RI'HFHPEHULQDFFRUGDQFHZLWK,QGXVWU\*XLGHDV PLOOLRQRXQFHVRI JROGELOOLRQSRXQGVRIPRO\EGHQXP UHTXLUHGE\WKH6HFXULWLHV([FKDQJH$FWRI)&;ҋVSURYHQDQG PLOOLRQRXQFHVRIVLOYHUDQGELOOLRQSRXQGVRIFREDOW$W SUREDEOHUHVHUYHVPD\QRWEHFRPSDUDEOHWRVLPLODULQIRUPDWLRQ 'HFHPEHUUHFRYHUDEOHUHVHUYHVLQFOXGHHVWLPDWHG UHJDUGLQJPLQHUDOUHVHUYHVGLVFORVHGLQDFFRUGDQFHZLWKWKHJXLGDQFH UHFRYHUDEOHFRSSHUWRWDOLQJELOOLRQSRXQGVLQOHDFKVWRFNSLOHVDQG LQRWKHUFRXQWULHV3URYHQDQGSUREDEOHUHVHUYHVZHUHGHWHUPLQHGE\ ELOOLRQSRXQGVLQPLOOVWRFNSLOHVLQFOXGLQJ)&;ҋVMRLQWYHQWXUH WKHXVHRIPDSSLQJGULOOLQJVDPSOLQJDVVD\LQJDQGHYDOXDWLRQ SDUWQHUҋVLQWHUHVWLQWKH0RUHQFLPLQH

PHWKRGVJHQHUDOO\DSSOLHGLQWKHPLQLQJLQGXVWU\DVPRUHIXOO\  9LJV]LYHISL7YV]LUHUK7YVIHISL 9LZLY]LZH GLVFXVVHGEHORZ7KHWHUP´UHVHUYHµDVXVHGLQWKHUHVHUYHGDWD  December 31, 2009  Copper Gold Molybdenum SUHVHQWHGKHUHPHDQVWKDWSDUWRIDPLQHUDOGHSRVLWWKDWFDQEH  IPSSPVUWV\UKZ TPSSPVUV\UJLZ TPSSPVUWV\UKZ HFRQRPLFDOO\DQGOHJDOO\H[WUDFWHGRUSURGXFHGDWWKHWLPHRIWKH 1RUWK$PHULFD  27.7 0.2 2,072 UHVHUYHGHWHUPLQDWLRQ7KHWHUP´SURYHQUHVHUYHVµPHDQVUHVHUYHVIRU 6RXWK$PHULFD  34.0 1.5 519 ZKLFK L TXDQWLW\LVFRPSXWHGIURPGLPHQVLRQVUHYHDOHGLQRXWFURSV ,QGRQHVLD  34.1 35.5 — 8.4 — — WUHQFKHVZRUNLQJVRUGULOOKROHV LL JUDGHDQGRUTXDOLW\DUHFRPSXWHG $IULFD   &RQVROLGDWHGEDVLVE 104.2 37.2 2,591 IURPWKHUHVXOWVRIGHWDLOHGVDPSOLQJDQG LLL WKHVLWHVIRULQVSHFWLRQ F VDPSOLQJDQGPHDVXUHPHQWVDUHVSDFHGVRFORVHO\DQGWKHJHRORJLF 1HWHTXLW\LQWHUHVW  83.0 33.6 2,350 FKDUDFWHULVVXIÀFLHQWO\GHÀQHGWKDWVL]HVKDSHGHSWKDQGPLQHUDO H 9LJV]LYHISLWYV]LUHUKWYVIHISL YLZLY]LZHYLLZ[PTH[LKTL[HSX\HU[P[PLZMYVT^OPJO -*?L_WLJ[Z[VILWHPKHM[LYHWWSPJH[PVUVMLZ[PTH[LKTL[HSS\YNPJHSYLJV]LY`YH[LZHUK FRQWHQWRIUHVHUYHVDUHZHOOHVWDEOLVKHG7KHWHUP´SUREDEOHUHVHUYHVµ ZTLS[LYYLJV]LY`YH[LZ^OLYLHWWSPJHISL9LJV]LYHISLYLZLY]LZHYL[OH[WHY[VMHTPULYHS PHDQVUHVHUYHVIRUZKLFKTXDQWLW\DQGJUDGHDUHFRPSXWHGIURP KLWVZP[[OH[-*?LZ[PTH[LZJHUILLJVUVTPJHSS`HUKSLNHSS`L_[YHJ[LKVYWYVK\JLKH[ [OL[PTLVM[OLYLZLY]LKL[LYTPUH[PVU LQIRUPDWLRQVLPLODUWRWKDWXVHGIRUSURYHQUHVHUYHVEXWWKHVLWHVIRU I *VUZVSPKH[LKIHZPZYLZLY]LZYLWYLZLU[LZ[PTH[LKTL[HSX\HU[P[PLZHM[LYYLK\J[PVUMVY QVPU[]LU[\YLWHY[ULYPU[LYLZ[ZH[[OL4VYLUJPTPULPU5VY[O(TLYPJHHUK[OL.YHZILYN VDPSOLQJDUHIDUWKHUDSDUWRUDUHRWKHUZLVHOHVVDGHTXDWHO\VSDFHG TPULYHSZKPZ[YPJ[PU0UKVULZPH,_JS\KLKMYVT[OL[HISLHIV]LHYL-*?»ZLZ[PTH[LK 7KHGHJUHHRIDVVXUDQFHDOWKRXJKORZHUWKDQWKDWIRUSURYHQUHVHUYHV YLJV]LYHISLWYV]LUHUKWYVIHISL YLZLY]LZMVYJVIHS[HUKZPS]LY[V[HSPUN IPSSPVU WV\UKZVMJVIHS[H[;LURL-\UN\Y\TLHUKTPSSPVUV\UJLZVMZPS]LYH[ LVKLJKHQRXJKWRDVVXPHFRQWLQXLW\EHWZHHQSRLQWVRIREVHUYDWLRQ +LJLTILY  J 5L[LX\P[`PU[LYLZ[YLZLY]LZYLWYLZLU[LZ[PTH[LKJVUZVSPKH[LKIHZPZTL[HSX\HU[P[PLZ )&;ҋVUHVHUYHHVWLPDWHVDUHEDVHGRQWKHODWHVWDYDLODEOH M\Y[OLYYLK\JLKMVYUVUJVU[YVSSPUNPU[LYLZ[V^ULYZOPW,_JS\KLKMYVT[OL[HISLHIV]LHYL -*?»ZLZ[PTH[LKYLJV]LYHISLWYV]LUHUKWYVIHISL YLZLY]LZMVYJVIHS[HUKZPS]LY[V[HSPUN JHRORJLFDODQGJHRWHFKQLFDOVWXGLHV)&;FRQGXFWVRQJRLQJVWXGLHV IPSSPVUWV\UKZVMJVIHS[H[;LURL-\UN\Y\TLHUKTPSSPVUV\UJLZVMZPS]LYH[ RILWVRUHERGLHVWRRSWLPL]HHFRQRPLFYDOXHVDQGWRPDQDJHULVN +LJLTILY  )&;UHYLVHVLWVPLQHSODQVDQGHVWLPDWHVRISURYHQDQGSUREDEOH

  -9,,769;4J4V9HU*677,9 .63+05* 101    (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(VWLPDWHGUHFRYHUDEOHUHVHUYHVZHUHGHWHUPLQHGXVLQJORQJWHUP \HDUVDYHUDJHGSHUSRXQGIRUFRSSHUDQGSHURXQFHIRU DYHUDJHSULFHVRISHUSRXQGIRUFRSSHUSHURXQFHIRU JROGDQGPRO\EGHQXPSULFHVIRUWKHSDVWWKUHH\HDUVDYHUDJHG JROGSHUSRXQGIRUPRO\EGHQXPSHURXQFHIRUVLOYHUDQG DSSUR[LPDWHO\SHUSRXQG SHUSRXQGIRUFREDOW7KH/RQGRQVSRWPHWDOSULFHVIRUWKHSDVWWKUHH

   )HZPZ   (]LYHNL6YL.YHKL   9LJV]LYHISL7YV]LUHUK   7LY4L[YPJ;VU   7YVIHISL9LZLY]LZ      6YL    *VWWLY .VSK 4VS`IKLU\T      TPSSPVU *VWWLY .VSK 4VS`IKLU\T IPSSPVU TPSSPVU TPSSPVU @LHY,UK     TL[YPJ[VUZ   NYHTZ   WV\UKZ V\UJLZ WV\UKZ             5(       5(             5(       5(                                      2009 13,807 0.49 0.17 0.01 120.9 49.8 2,595

By Area at December 31, 2009: North America  +L]LSVWLKHUKWYVK\JPUN!   4VYLUJP 3,166 0.27 — 0.001 11.2 — 27   :PLYYP[H  1,446 0.25 —H 0.028 6.9 0.1 728   )HNKHK  964 0.32 —H 0.017 5.4 0.1 259   :HMMVYK  243 0.44 — — 1.8 — —   ;`YVUL  180 0.30 — — 0.9 — —   /LUKLYZVU  138 — — 0.180 — — 471   *OPUVI  142 0.50 0.01 0.006 2.2 —H  6   4PHTP  91 0.43 — — 0.6 — — 

Indonesia  +L]LSVWLKHUKWYVK\JPUN!   .YHZILYNVWLUWP[  332 0.90 1.03 — 5.5 8.9 —   +LLW6YLAVUL  254 0.60 0.67 — 2.8 4.1 — 

Africa  +L]LSVWLKHUKWYVK\JPUN!   ;LURL-\UN\Y\TL  135 3.13 — — 8.4 — —

;V[HS IHZPZ 13,807 120.9 49.8 2,595

*VUZVSPKH[LKIHZPZJ       104.2 37.2 2,591

-*?»ZLX\P[`ZOHYLK        83.0 33.6 2,350

H (TV\U[ZUV[ZOV^UILJH\ZLVMYV\UKPUN I 4PUPUNVWLYH[PVUZZ\ZWLUKLKHZVM+LJLTILY  J 9LJV]LYHISLWYV]LUHUKWYVIHISL YLZLY]LZHSZVPUJS\KL IPSSPVUWV\UKZVMYLJV]LYHISLJVIHS[PU(MYPJHHUKTPSSPVUV\UJLZVMYLJV]LYHISLZPS]LY[OYV\NOV\[[OL ^VYSK K 9LJV]LYHISLWYV]LUHUKWYVIHISL YLZLY]LZHSZVPUJS\KLIPSSPVUWV\UKZVMYLJV]LYHISLJVIHS[PU(MYPJHHUKTPSSPVUV\UJLZVMYLJV]LYHISLZPS]LY[OYV\NOV\[[OL ^VYSK

102-9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22. Quarterly Financial Information (unaudited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

 9L]LU\LZ         6WLYH[PUNPUJVTLSVZZJK       L L 5L[PUJVTL SVZZ         5L[PUJVTL SVZZH[[YPI\[HISL[VUVUJVU[YVSSPUNPU[LYLZ[Z            5L[PUJVTL SVZZH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZJK       L L )HZPJUL[PUJVTLSVZZWLYZOHYLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZ              +PS\[LKUL[PUJVTLSVZZWLYZOHYLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZJK         L   L

All references to income or losses per share are on a diluted basis, unless otherwise noted.

H 0UJS\KLZJOHYNLZMVY3*4PU]LU[VY`HKQ\Z[TLU[Z[V[HSPUN  TPSSPVU  TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLPU[OLÄYZ[X\HY[LYHUK  TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLMVY[OL`LHY0UJS\KLZYLZ[Y\J[\YPUNJOHYNLZ[V[HSPUN TPSSPVU TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V -*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLPU[OLÄYZ[X\HY[LYHUK TPSSPVU TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLMVY[OL`LHY(SZV PUJS\KLZWLUZPVUHUKWVZ[YL[PYLTLU[NHPUZ[V[HSPUN TPSSPVU TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLPU[OLÄYZ[X\HY[LYHUK TPSSPVU[VUL[ PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLMVY[OL`LHY0UJS\KLZHJOHYNL MVY[OLWHY[PHSZL[[SLTLU[VM[OL*P[`VM)SHJR^LSSSH^Z\P[[V[HSPUN TPSSPVU TPSSPVU [VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY  WLYZOHYLPU[OLMV\Y[OX\HY[LYHUKMVY[OL`LHY I 0UJS\KLZSVZZLZVULHYS`L_[PUN\PZOTLU[VMKLI[[V[HSPUN TPSSPVU  TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLPU[OL[OPYKX\HY[LY TPSSPVU  TPSSPVU[VUL[PUJVTL H[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLPU[OLMV\Y[OX\HY[LYHUK  TPSSPVU TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVU Z[VJROVSKLYZVY  WLYZOHYLMVY[OL`LHY(SZVPUJS\KLZHMH]VYHISLHKQ\Z[TLU[[VPUJVTL[H_L_WLUZL[V[HSPUN TPSSPVU  WLYZOHYLPU[OLMV\Y[OX\HY[LYHUKMVY[OL`LHYYLZ\S[PUN MYVT[OLJVTWSL[PVUVMHYL]PL^VM<:KLMLYYLKPUJVTL[H_HJJV\U[Z J 0UJS\KLZJOHYNLZMVY3*4PU]LU[VY`HKQ\Z[TLU[Z[V[HSPUN TPSSPVU TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVYSLZZ[OHU WLYZOHYLPU[OLÄYZ[X\HY[LY TPSSPVU  TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLPU[OLZLJVUKX\HY[LY TPSSPVU TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZ VY WLYZOHYLPU[OL[OPYKX\HY[LY TPSSPVU TPSSPVU[VUL[SVZZH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLPU[OLMV\Y[OX\HY[LYHUK  TPSSPVU  TPSSPVU [VUL[SVZZH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLMVY[OL`LHY K 0UJS\KLZ[OL W\YJOHZLHJJV\U[PUNPTWHJ[VM[OLPUJYLHZLZPU[OLJHYY`PUN]HS\LZVMHJX\PYLKTL[HSZPU]LU[VYPLZPUJS\KPUNTPSSHUKSLHJOZ[VJRWPSLZHUKWYVWLY[`WSHU[HUKLX\PWTLU["[OL PTWHJ[HZZVJPH[LK^P[O[OLHTVY[PaH[PVUVMPU[HUNPISLHZZL[ZHUKSPHIPSP[PLZYLZ\S[PUNMYVT[OLHJX\PZP[PVUVM7OLSWZ+VKNL"HUKHSZVPUJS\KLZHTV\U[ZMVYUVUVWLYH[PUNPUJVTLHUKL_WLUZL WYPTHYPS`YLSH[LK[V[OLHJJYL[PVUVM[OLMHPY]HS\LZVMHZZ\TLKLU]PYVUTLU[HSVISPNH[PVUZKL[LYTPULKVUHKPZJV\U[LKJHZOÅV^IHZPZ;OLZLPTWHJ[Z[V[HS  TPSSPVU[VVWLYH[PUNPUJVTL HUK TPSSPVU[VUVUVWLYH[PUNPUJVTLHUKL_WLUZL  TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLPU[OLÄYZ[X\HY[LY TPSSPVU[VVWLYH[PUN PUJVTLHUK TPSSPVU[VUVUVWLYH[PUNPUJVTLHUKL_WLUZL TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLPU[OLZLJVUKX\HY[LY TPSSPVU[V VWLYH[PUNPUJVTLHUK TPSSPVU[VUVUVWLYH[PUNPUJVTLHUKL_WLUZL TPSSPVU[VUL[PUJVTLH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY  WLYZOHYLPU[OL[OPYKX\HY[LY   TPSSPVU[VVWLYH[PUNSVZZHUK TPSSPVU[VUVUVWLYH[PUNPUJVTLHUKL_WLUZL TPSSPVU[VUL[SVZZH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLPU[OLMV\Y[OX\HY[LY HUK IPSSPVU[VVWLYH[PUNSVZZHUK TPSSPVU[VUVUVWLYH[PUNPUJVTLHUKL_WLUZL  TPSSPVU[VUL[SVZZH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY  WLYZOHYLMVY[OL`LHY L 0UJS\KLZHZZL[PTWHPYTLU[Z[V[HSPUN  IPSSPVU IPSSPVU[VUL[SVZZH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYLPU[OLMV\Y[OX\HY[LYHUK WLYZOHYLMVY[OL`LHY NVVK^PSSPTWHPYTLU[Z[V[HSPUN IPSSPVU IPSSPVU[VUL[SVZZH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY  WLYZOHYLPU[OLMV\Y[OX\HY[LYHUK  WLYZOHYLMVY[OL`LHY YLZ[Y\J[\YPUNJOHYNLZ[V[HSPUN TPSSPVU TPSSPVU[VUL[SVZZH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY  WLYZOHYLHUKZWLJPHSYL[PYLTLU[ILULÄ[ZHUKJ\Y[HPSTLU[Z[V[HSPUN TPSSPVU TPSSPVU[VUL[SVZZH[[YPI\[HISL[V-*?JVTTVUZ[VJROVSKLYZVY WLYZOHYL

NOTE 23. Subsequent Events ,Q)HEUXDU\)&;UHDFKHGDSDUWLDOVHWWOHPHQWZLWKWKH&LW\RI )URP-DQXDU\WKURXJK)HEUXDU\)&;PDGHRSHQPDUNHW %ODFNZHOODQGWKH%ODFNZHOO0XQLFLSDO$XWKRULW\E\SD\LQJPLOOLRQ SXUFKDVHVRIPLOOLRQRILWV6HQLRU1RWHVIRUPLOOLRQ WRVHWWOHDOORIWKHFODLPVH[FHSWIRUIXWXUHGDPDJHVUHODWLQJWRWKH DQGPLOOLRQRILWV6HQLRU1RWHVIRUPLOOLRQZKLFK SRWHQWLDOIDLOXUHRI)&;ҋVJURXQGZDWHUUHPHGLDWLRQV\VWHP ZKLFKLV DUHLQDGGLWLRQWRWKHSXUFKDVHVGLVFXVVHGLQ1RWH)&;H[SHFWV XQGHUFRQVWUXFWLRQ WRSUHYHQWFRQWDPLQDWLRQIURPHQWHULQJWKH&LW\RI WRUHFRUGDQDSSUR[LPDWHPLOOLRQORVVRQHDUO\H[WLQJXLVKPHQW %ODFNZHOOҋVZDVWHZDWHUWUHDWPHQWV\VWHP UHIHUWR1RWHIRUIXUWKHU RIGHEWLQWKHÀUVWTXDUWHURILQFRQQHFWLRQZLWKWKHVHRSHQ GLVFXVVLRQRIWKHOLWLJDWLRQ  PDUNHWSXUFKDVHV )&;HYDOXDWHGHYHQWVDIWHU'HFHPEHUDQGWKURXJKWKH ,Q)HEUXDU\)&;VHWWOHGGLVDJUHHPHQWVDQGWKHDVVRFLDWHG GDWHWKHÀQDQFLDOVWDWHPHQWVZHUHLVVXHGDQGGHWHUPLQHGDQ\ OLWLJDWLRQDPRQJWKHPHPEHUVRIWKH3&*UHJDUGLQJWKHDOORFDWLRQRI HYHQWVRUWUDQVDFWLRQVRFFXUULQJGXULQJWKLVSHULRGWKDWZRXOGUHTXLUH UHPHGLDWLRQFRVWVIRUWKH3LQDO&UHHNVLWHDVGLVFXVVHGLQ1RWH UHFRJQLWLRQRUGLVFORVXUHDUHDSSURSULDWHO\DGGUHVVHGLQWKHVH 3XUVXDQWWRWKHVHWWOHPHQWDJUHHPHQW0LDPLSDLGPLOOLRQWRFHUWDLQ ÀQDQFLDOVWDWHPHQWV PHPEHUVRIWKH3&*WRVHWWOHWKHDOORFDWLRQRISUHYLRXVO\LQFXUUHG FRVWVDQGDJUHHGWRWDNHIXOOUHVSRQVLELOLW\IRUIXWXUHJURXQGZDWHU UHPHGLDWLRQDW WKH3LQDO&UHHNVLWHZLWKOLPLWHGH[FHSWLRQV

  -9,,769;4J4V9HU*677,9 .63+05* 103    (UU\HS9LWVY[ Performance Graph

;OLMVSSV^PUNNYHWOJVTWHYLZ[OLJOHUNLPU[OLJ\T\SH[P]L[V[HS JSVZLS`TPYYVYZ[OLILUJOTHYRZVMV[OLYSHYNLTL[HSZWYVK\JLYZ Z[VJROVSKLYYL[\YUVUV\YJVTTVUZ[VJR^P[O[OLJ\T\SH[P]L[V[HS ;OPZJVTWHYPZVUHZZ\TLZ PU]LZ[LKVU+LJLTILY YL[\YUVM[OL: 7:[VJR0UKL_HUK[OLJ\T\SH[P]L[V[HSYL[\YU PU H-YLLWVY[4J4V9HU*VWWLY .VSK0UJJVTTVUZ[VJR VM[OL: 74H[LYPHSZ0UKL_MYVT[OYV\NO 6\Y I[OL: 7:[VJR0UKL_HUKJ[OL: 74H[LYPHSZ0UKL_ JVTWHYH[P]LWLLYNYV\WPZ[OL: 74H[LYPHSZ0UKL_^OPJO

COMPARISON OF CUMULATIVE TOTAL RETURN* Freeport-McMoRan Copper & Gold Inc., S&P 500 Stock Index and S&P 500 Materials Index





 KVSSHYZ 







     

+LJLTILY

     

-YLLWVY[4J4V9HU*VWWLY .VSK0UJ         

: 7:[VJR0UKL_               

: 74H[LYPHSZ0UKL_              

*;V[HSYL[\YUHZZ\TLZYLPU]LZ[TLU[VMKP]PKLUKZ

104-9,,769;4J4V9HU*677,9 .63+05*   (UU\HS9LWVY[

STOCKHOLDER INFORMATION

Investor Inquiries Common Stock Dividends The Investor Relations Department will be pleased to receive There were no cash dividends paid on our common stock any inquiries about the company. A link to our Annual Report on during 2009. In October 2009, the Board of Directors reinstated Form 10-K filed with the Securities and Exchange Commission, an annual cash dividend on our common stock of $0.60 per which includes certifications of our Chief Executive Officer and share, payable quarterly at a rate of $0.15 per share beginning Chief Financial Officer and the company’s Principles of Business February 1, 2010. Conduct, is available on our web site. Additionally, copies will be furnished, without charge, to any stockholder of the company Below is a summary of the common stock cash dividends entitled to vote at its annual meeting, upon written request. The declared and paid for the quarterly periods of 2008: Investor Relations Department can be contacted as follows: 2008 Freeport-McMoRan Copper & Gold Inc. Amount Investor Relations Department per Share Record Date Payment Date One North Central Ave. First Quarter $ 0.4375 Jan. 15, 2008 Feb. 1, 2008 Phoenix, AZ 85004 Telephone (602) 366-8400 Second Quarter 0.4375 Apr. 15, 2008 May 1, 2008 www.fcx.com Third Quarter 0.4375 July 15, 2008 Aug. 1, 2008 Fourth Quarter 0.5000 Oct. 15, 2008 Nov. 1, 2008 Transfer Agent Questions about lost certificates, lost or missing dividend checks, or notifications of change of address should be directed to the Freeport-McMoRan Copper & Gold Inc. transfer agent, registrar Tax Withholding – Nonresident Alien Stockholders and dividend disbursement agent: Nonresident aliens who own stock in a United States corporation are generally subject to a federal withholding tax on 100 percent BNY Mellon Shareowner Services of the dividends paid on preferred and/or common stock. 480 Washington Boulevard However, when 80 percent or more of a corporation’s income is Jersey City, New Jersey 07310-8015 generated outside the United States, the withholding percentage Telephone (800) 953-2493 is not calculated on 100 percent of the dividend, but rather on that www.bnymellon.com/shareowner/isd portion of the dividend attributable to income generated in the Notice of Annual Meeting United States. We have determined that, for quarterly dividends The annual meeting of stockholders will be held on June 9, 2010. paid in 2009 to nonresident alien stockholders, 100 percent of the Notice of the annual meeting will be sent to stockholders. A dividend amount was subject to federal withholding tax. post-meeting report summarizing the proceedings of the meeting For quarterly dividends paid in 2010, we estimate that 100 percent will be available on our web site (www.fcx.com) within 10 days of the total dividend amount is subject to federal withholding tax following the meeting. A copy of the report will be mailed at no unless exempted by tax treaty. The withholding tax rate may also charge to any stockholder requesting it. be reduced by tax treaty. FCX Common Stock If you have any questions, please contact the Investor Our common stock trades on the New York Stock Exchange Relations Department. (NYSE) under the symbol “FCX.” The FCX common stock price is reported daily in the financial press under “FMCG” in most FCX Beneficial Owner listings of NYSE securities. At year-end 2009, the number of The beneficial owner of more than five percent of our holders of record of our common stock was 18,347. outstanding common stock as of December 31, 2009, is BlackRock, Inc. (7.6 percent). NYSE composite tape common stock price ranges during 2009 and 2008 were:

2009 2008 High Low High Low First Quarter $ 43.45 $ 21.16 $ 107.37 $ 68.96 Second Quarter 61.55 36.60 127.24 93.00 Third Quarter 73.43 43.19 117.11 51.21 Fourth Quarter 87.35 63.00 56.75 15.70

 FREEPORT-McMoRan COPPER & GOLD INC. 105 2009 Annual Report

Annual Report 2009 Copper & Gold INC. -McMoRan MANCE PROVEN PERFOR SHINING FUTURE Freeport

PROVEN PERFORMANCE SHINING FUTURE Freeport-McMoRan Copper & Gold INC. Annual Report 2009 www.fcx.com 602.366.8100 www.fcx.com 602.366.8100 Phoenix, AZ 85004 Phoenix, AZ 85004 One North Central Ave. One North Central Ave.