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Freeport-McMoRan
Reports Third-Quarter and Nine-Month 2018 Results
 
 
 
Net income attributable to common stock totaled $556 million, $0.38 per share, in third-quarter 2018. After adjusting for net gains of $42 million, $0.03 per share, third-quarter 2018 adjusted net income attributable to common stock totaled $514 million, $0.35 per share.
Consolidated sales totaled 1.04 billion pounds of copper, 837 thousand ounces of gold and 22 million pounds of molybdenum in third-quarter 2018.
Consolidated sales for the year 2018 are expected to approximate 3.8 billion pounds of copper, 2.45 million ounces of gold and 95 million pounds of molybdenum, including 790 million pounds of copper, 330 thousand ounces of gold and 25 million pounds of molybdenum in fourth-quarter 2018.
Average realized prices in third-quarter 2018 were $2.80 per pound for copper, $1,191 per ounce for gold and $12.40 per pound for molybdenum.
Average unit net cash costs in third-quarter 2018 were $0.93 per pound of copper and are expected to average $1.06 per pound of copper for the year 2018.
Operating cash flows totaled $1.25 billion in third-quarter 2018 and $3.9 billion for the first nine months of 2018. Based on current sales volume and cost estimates, and assuming average prices of $2.85 per pound for copper, $1,200 per ounce for gold and $12.00 per pound for molybdenum for fourth-quarter 2018, operating cash flows are expected to approximate $4.2 billion (net of $0.5 billion in working capital uses and timing of other tax payments) for the year 2018.
Capital expenditures totaled $0.5 billion (including approximately $0.4 billion for major mining projects) in third-quarter 2018 and $1.4 billion (including approximately $0.9 billion for major mining projects) for the first nine months of 2018. Capital expenditures for the year 2018 are expected to approximate $2.0 billion, including $1.2 billion for major mining projects primarily associated with underground development activities in the Grasberg minerals district in Indonesia and development of the Lone Star oxide project in Arizona.
On September 27, 2018, FCX and PT Freeport Indonesia (PT-FI) entered into a definitive agreement with PT Indonesia Asahan Aluminium (Persero) (PT Inalum) consistent with previously agreed economic terms. Closing is expected to occur in late 2018 or early 2019, subject to satisfaction of conditions.
On September 26, 2018, FCX declared a quarterly cash dividend of $0.05 per share on its common stock, which will be paid on November 1, 2018.
At September 30, 2018, consolidated debt totaled $11.1 billion and consolidated cash totaled $4.6 billion. FCX had no borrowings and $3.5 billion available under its revolving credit facility at September 30, 2018.


 
 
 
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PHOENIX, AZ, October 24, 2018 - Freeport-McMoRan Inc. (NYSE: FCX) reported net income attributable to common stock of $556 million ($0.38 per share) in third-quarter 2018 and $2.1 billion ($1.45 per share) for the first nine months of 2018. After adjusting for net gains of $42 million ($0.03 per share), primarily reflecting adjustments to assets held for sale and the fair value of potential contingent consideration, partly offset by nonrecurring charges for Cerro Verde's new three-year collective labor agreement (CLA), adjusted net income attributable to common stock totaled $514 million ($0.35 per share) in third-quarter 2018. Refer to the supplemental schedule, "Adjusted Net Income," on page VII, which is available on FCX's website, "fcx.com," for additional information.

Richard C. Adkerson, President and Chief Executive Officer, said, "Our global team delivered a solid operating quarter and maintained a sharp focus on productivity, cost management, capital discipline and initiatives to build value for shareholders. The pending completion of our new long-term partnership with the Indonesian government will enable us to de-risk a world class asset. Supported by a premier portfolio of geographically diverse long-lived copper assets, a solid balance sheet, a large resource position to support future growth and a positive fundamental outlook for copper, FCX is poised to deliver substantial value to shareholders."

SUMMARY FINANCIAL DATA
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
 
 
(in millions, except per share amounts)
 
Revenuesa,b
$
4,908

 
$
4,310

 
$
14,944

 
$
11,362

 
Operating incomea
$
1,315

 
$
928

 
$
4,438

 
$
2,211

 
Net income from continuing operations
$
668

 
$
242

 
$
2,535

 
$
836

 
Net income attributable to common stockc,d
$
556

 
$
280

 
$
2,117

 
$
776

 
Diluted net income (loss) per share of common stock:
 
 
 
 
 
 
 
 
Continuing operations
$
0.38

 
$
0.19

 
$
1.46

 
$
0.50

 
Discontinued operations

 

 
(0.01
)
 
0.03

 
 
$
0.38

 
$
0.19

 
$
1.45

 
$
0.53

 
Diluted weighted-average common shares outstanding
1,458

 
1,454

 
1,458

 
1,453

 
Operating cash flowse
$
1,247

 
$
1,183

 
$
3,925

 
$
3,012

 
Capital expenditures
$
507

 
$
314

 
$
1,391

 
$
1,020

 
At September 30:
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
4,556

 
$
4,957

 
$
4,556

 
$
4,957

 
Total debt, including current portion
$
11,127

 
$
14,782

 
$
11,127

 
$
14,782

 
 
 
 
 
 
 
 
 
 
a.
For segment financial results, refer to the supplemental schedules, "Business Segments," beginning on page IX, which are available on FCX's website, "fcx.com."
b.
Includes adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $(111) million ($(48) million to net income attributable to common stock or $(0.03) per share) in third-quarter 2018, $95 million ($39 million to net income attributable to common stock or $0.03 per share) in third-quarter 2017, $(70) million ($(31) million to net income attributable to common stock or $(0.02) per share) for the first nine months of 2018 and $81 million ($35 million to net income attributable to common stock or $0.02 per share) for the first nine months of 2017. For further discussion, refer to the supplemental schedule, "Derivative Instruments," beginning on page VIII, which is available on FCX's website, "fcx.com."
c.
Includes net gains (charges) of $42 million ($0.03 per share) in third-quarter 2018, $(212) million ($(0.15) per share) in third-quarter 2017, $69 million ($0.04 per share) for the first nine months of 2018 and $(178) million ($(0.12) per share) for the first nine months of 2017 that are described in the supplemental schedule, "Adjusted Net Income," on page VII, which is available on FCX's website, "fcx.com."
d.
FCX defers recognizing profits on intercompany sales until final sales to third parties occur. For a summary of net impacts from changes in these deferrals, refer to the supplemental schedule, "Deferred Profits," on page IX, which is available on FCX's website, "fcx.com."

 
 
 
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e.
Includes net working capital sources (uses) and timing of other tax payments of $59 million in third-quarter 2018, $46 million in third-quarter 2017, $(154) million for the first nine months of 2018 and $389 million for the first nine months of 2017.
SUMMARY OPERATING DATA
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
2018
 
2017
 
2018
 
2017
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
1,006

 
996

 
2,972

 
2,730

 
Sales, excluding purchases
 
1,044

 
932

 
3,026

 
2,683

 
Average realized price per pound
 
$
2.80

 
$
2.94

 
$
2.96

 
$
2.79

 
Site production and delivery costs per pounda
 
$
1.73

b 
$
1.56

c 
$
1.70

b 
$
1.59

c 
Unit net cash costs per pounda
 
$
0.93

b 
$
1.20

c 
$
0.95

b 
$
1.25

c 
Gold (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
 
Production
 
760

 
418

 
2,105

 
1,010

 
Sales, excluding purchases
 
837

 
355

 
2,123

 
969

 
Average realized price per ounce
 
$
1,191

 
$
1,290

 
$
1,249

 
$
1,261

 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
23

 
24

 
69

 
70

 
Sales, excluding purchases
 
22

 
22

 
70

 
71

 
Average realized price per pound
 
$
12.40

 
$
9.22

 
$
12.41

 
$
9.18

 
a.
Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, before net noncash and other costs. For reconciliations of per pound unit costs by operating division to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XII, which are available on FCX's website, "fcx.com."
b.
Includes $0.07 per pound of copper in third-quarter 2018 and $0.02 per pound of copper for the first nine months of 2018 associated with nonrecurring charges for Cerro Verde's new three-year CLA. Refer to the supplemental schedule, "Adjusted Net Income," on page VII, which is available on FCX's website, "fcx.com," for additional information.
c.
Excludes $0.01 per pound of copper in third-quarter 2017 and $0.04 per pound of copper for the first nine months of 2017 associated with PT-FI workforce reductions. Refer to the supplemental schedule, "Adjusted Net Income," on page VII, which is available on FCX's website, "fcx.com," for additional information.
Consolidated Sales Volumes
Third-quarter 2018 copper sales of 1.04 billion pounds were 8 percent higher than the July 2018 estimate of 970 million pounds and 12 percent higher than third-quarter 2017 sales of 932 million pounds, primarily reflecting higher ore grades and operating rates in Indonesia.
Third-quarter 2018 gold sales of 837 thousand ounces were 20 percent higher than the July 2018 estimate of 700 thousand ounces and more than double third-quarter 2017 sales of 355 thousand ounces, primarily reflecting higher ore grades and operating rates in Indonesia.
Third-quarter 2018 molybdenum sales of 22 million pounds were lower than the July 2018 estimate of 24 million pounds and approximated third-quarter 2017 sales.
Sales volumes for the year 2018 are expected to approximate 3.8 billion pounds of copper, 2.45 million ounces of gold and 95 million pounds of molybdenum, including 790 million pounds of copper, 330 thousand ounces of gold and 25 million pounds of molybdenum in fourth-quarter 2018.
Projections for 2018 and other forward looking statements in this release assume extension of PT-FI’s long-term mining rights or an extension of PT-FI’s temporary special mining license (IUPK) after October 31, 2018. Refer to "Indonesia Mining," beginning on page 7, for further discussion of Indonesia regulatory matters.

 
 
 
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Consolidated Unit Costs
Consolidated average unit net cash costs (net of by-product credits) for FCX's copper mines of $0.93 per pound of copper in third-quarter 2018 were lower than unit net cash costs of $1.20 per pound in third-quarter 2017, primarily reflecting higher by-product credits, partly offset by nonrecurring charges associated with Cerro Verde's new three-year CLA.
Assuming average prices of $1,200 per ounce of gold and $12.00 per pound of molybdenum for fourth-quarter 2018 and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for copper mines are expected to average $1.06 per pound of copper for the year 2018 (including $1.45 per pound of copper in fourth-quarter 2018). The impact of price changes for fourth-quarter 2018 on consolidated unit net cash costs would approximate $0.01 per pound for each $50 per ounce change in the average price of gold and $0.005 per pound for each $2 per pound change in the average price of molybdenum. Quarterly unit net cash costs vary with fluctuations in sales volumes and realized prices, primarily for gold and molybdenum.

MINING OPERATIONS
North America Copper Mines. FCX operates seven open-pit copper mines in North America - Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. In addition to copper, certain of FCX's North America copper mines produce molybdenum concentrate, gold and silver. All of the North America mining operations are wholly owned, except for Morenci. FCX records its 72 percent undivided joint venture interest in Morenci using the proportionate consolidation method.
Operating and Development Activities. FCX has significant undeveloped reserves and resources in North America and a portfolio of potential long-term development projects. Future investments will be undertaken based on the results of economic and technical feasibility studies, and are dependent on market conditions. FCX continues to study opportunities to reduce the capital intensity of its potential long-term development projects.
Through exploration drilling, FCX has identified a significant resource at its wholly owned Lone Star project located near the Safford operation in eastern Arizona. An initial project to develop the Lone Star oxide ores commenced in first-quarter 2018, with first production expected by the end of 2020. Total capital costs, including mine equipment and pre-production stripping, are expected to approximate $850 million and will benefit from the utilization of existing infrastructure at the adjacent Safford operation. As of September 30, 2018, approximately $200 million has been incurred for this project. Production from the Lone Star oxide ores is expected to average approximately 200 million pounds of copper per year with an approximate 20-year mine life. The project also advances exposure to a significant sulfide resource. FCX continues to advance drilling activities to define future large-scale development opportunities in the Lone Star/Safford minerals district. 

 
 
 
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Operating Data. Following is summary consolidated operating data for the North America copper mines for the third quarters and first nine months of 2018 and 2017:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
2018
 
2017
 
2018
 
2017
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
349

 
375

 
1,051

 
1,151

 
Sales, excluding purchases
 
350

 
347

 
1,095

 
1,130

 
Average realized price per pound
 
$
2.77

 
$
2.92

 
$
3.02

 
$
2.74

 
 
 
 
 
 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Productiona
 
8

 
8

 
23

 
25

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copperb
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.98

 
$
1.65

 
$
1.92

 
$
1.57

 
By-product credits
 
(0.26
)
 
(0.17
)
 
(0.23
)
 
(0.16
)
 
Treatment charges
 
0.10

 
0.11

 
0.10

 
0.11

 
Unit net cash costs
 
$
1.82

 
$
1.59

 
$
1.79

 
$
1.52

 
 
 
 
 
 
 
 
 
 
 
a.
Refer to summary operating data on page 3 for FCX's consolidated molybdenum sales, which includes sales of molybdenum produced at the North America copper mines.
b.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XII, which are available on FCX's website, "fcx.com."
North America's consolidated copper sales volumes totaled 350 million pounds in third-quarter 2018 and 347 million pounds in third-quarter 2017. North America copper sales are estimated to approximate 1.4 billion pounds for the year 2018, compared with 1.5 billion pounds in 2017.
Average unit net cash costs (net of by-product credits) for the North America copper mines of $1.82 per pound of copper in third-quarter 2018 were higher than unit net cash costs of $1.59 per pound in third-quarter 2017, primarily reflecting increased mining rates and higher mining and milling costs.
Average unit net cash costs (net of by-product credits) for the North America copper mines are expected to approximate $1.78 per pound of copper for the year 2018, based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of $12.00 per pound for fourth-quarter 2018. North America's average unit net cash costs for the year 2018 would change by approximately $0.01 per pound for each $2 per pound change in the average price of molybdenum.

South America Mining. FCX operates two copper mines in South America - Cerro Verde in Peru (in which FCX owns a 53.56 percent interest) and El Abra in Chile (in which FCX owns a 51 percent interest). These operations are consolidated in FCX's financial statements. In addition to copper, the Cerro Verde mine produces molybdenum concentrate and silver.    
Operating and Development Activities. Cerro Verde's expanded operations benefit from its large-scale, long-lived reserves and cost efficiencies. The Cerro Verde expansion project, which achieved capacity operating rates in early 2016, expanded the concentrator facilities' capacity from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day. During 2018, Cerro Verde received a modified environmental permit allowing it to operate its existing concentrator facilities at rates up to 409,500 metric tons of ore per day. Cerro Verde's concentrator facilities have continued to perform well, with average mill throughput rates of 384,800 metric tons of ore per day for the first nine months of 2018.
FCX continues to evaluate a large-scale expansion at El Abra to process additional sulfide material and to achieve higher recoveries. El Abra's large sulfide resource could potentially support a major mill project similar to

 
 
 
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facilities constructed at Cerro Verde. Technical and economic studies are being advanced to determine the optimal scope and timing for the project.
Operating Data. Following is summary consolidated operating data for the South America mining operations for the third quarters and first nine months of 2018 and 2017:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
2018
 
2017
 
2018
 
2017
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
325

 
328

 
931

 
932

 
Sales
 
326

 
327

 
928

 
923

 
Average realized price per pound
 
$
2.80

 
$
2.95

 
$
2.93

 
$
2.82

 
 
 
 
 
 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Productiona
 
7

 
8

 
20

 
21

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copperb
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.84

c 
$
1.60

 
$
1.80

c 
$
1.55

 
By-product credits
 
(0.23
)
 
(0.19
)
 
(0.24
)
 
(0.17
)
 
Treatment charges
 
0.20

 
0.22

 
0.20

 
0.22

 
Royalty on metals
 

 
0.01

 

 
0.01

 
Unit net cash costs
 
$
1.81

 
$
1.64

 
$
1.76

 
$
1.61

 
 
 
 
 
 
 
 
 
 
 
a.
Refer to summary operating data on page 3 for FCX's consolidated molybdenum sales, which includes sales of        molybdenum produced at Cerro Verde.
b.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XII, which are available on FCX's website, "fcx.com."
c.
Includes $0.21 per pound of copper in third-quarter 2018 and $0.07 per pound of copper for the first nine months of 2018 associated with nonrecurring charges for Cerro Verde's new three-year CLA. Refer to the supplemental schedule, “Adjusted Net Income,” on page VII, which is available on FCX’s website, “fcx.com,” for a summary of these charges.
South America's consolidated copper sales volumes totaled 326 million pounds in third-quarter 2018 and 327 million pounds in third-quarter 2017. Sales from South America mining are expected to approximate 1.2 billion pounds of copper for the year 2018, compared with 1.2 billion pounds of copper in 2017.
Average unit net cash costs (net of by-product credits) for South America mining of $1.81 per pound of copper in third-quarter 2018 were higher than unit net cash costs of $1.64 per pound in third-quarter 2017, primarily reflecting nonrecurring charges associated with Cerro Verde's new three-year CLA. Excluding this charge, South America's average unit site production and delivery costs of $1.63 per pound of copper would have approximated third-quarter 2017.
Average unit net cash costs (net of by-product credits) for South America mining are expected to approximate $1.73 per pound of copper for the year 2018, based on current sales volume and cost estimates and assuming an average price of $12.00 per pound of molybdenum for fourth-quarter 2018.


 
 
 
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Indonesia Mining. Through its 90.64 percent owned and consolidated subsidiary PT-FI, FCX's assets include one of the world's largest copper and gold deposits at the Grasberg minerals district in Papua, Indonesia. PT-FI operates a proportionately consolidated joint venture, which produces copper concentrate that contains significant quantities of gold and silver.
Regulatory Matters. On September 27, 2018, FCX, PT-FI, PT Indocopper Investama (PT-II) and PT Inalum entered into a Divestment Agreement on previously agreed economic terms in connection with PT Inalum’s acquisition of shares of PT-FI. Under the Divestment Agreement, PT Inalum will acquire, for cash consideration of $350 million, 100 percent of FCX's interests in PT-II, which owns 9.36 percent of PT-FI (equates to a 5.6 percent interest after 2022). PT Inalum also entered into a definitive agreement with Rio Tinto to acquire for cash consideration of $3.5 billion, all of Rio Tinto's interests (40 percent interest after 2022) associated with its joint venture with PT-FI (the Joint Venture).
The arrangements provide for FCX and existing PT-FI shareholders to retain the economics of the revenue and cost sharing arrangements under the Joint Venture and for FCX to continue to manage PT-FI's operations. Following completion of the transaction, which includes Rio Tinto's interest being merged into PT-FI, PT-FI will have an expanded asset base and PT Inalum's share ownership will be 51.2 percent of PT-FI (subject to a dividend assignment mechanism to replicate the Joint Venture economics), and FCX's ownership will be 48.8 percent. 
Concurrent with the closing of the divestment transaction, PT-FI will be granted an IUPK providing long-term mining rights with assured legal and fiscal terms and legal enforceability through 2041. PT-FI has agreed to construct a smelter within five years of the closing with economics shared pro rata by FCX and PT Inalum according to their respective equity ownership in PT-FI.
The transaction, which is expected to close in late 2018 or early 2019, is subject to certain conditions, including the issuance of the IUPK in a form acceptable to FCX and PT Inalum; resolution of environmental regulatory matters satisfactory to the Indonesian government, FCX and PT Inalum; various other Indonesian regulatory actions and approvals; and receipt of customary approvals from international competition authorities.
PT-FI's export license is effective through February 15, 2019, and PT-FI's temporary IUPK is effective through October 31, 2018. PT-FI will continue to seek extensions to its temporary IUPK until closing of the pending transaction. Until the pending transaction is completed, PT-FI has reserved all rights under its Contract of Work (COW).
Operating and Development Activities. PT-FI is currently mining the final phase of the Grasberg open pit, which contains high copper and gold ore grades. Following results of an economic analysis in the first half of 2018, PT-FI revised its mine plans to continue to mine ore from the open pit until transitioning to the Grasberg Block Cave (GBC) underground mine in the first half of 2019.
PT-FI has several projects in the Grasberg minerals district related to the development of its large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to produce large-scale quantities of copper and gold following the transition from the Grasberg open pit.
Substantial progress has been made to prepare for the transition to mining of the GBC underground mine. First undercut blasting occurred in September 2018, and cave production is scheduled for the first half of 2019. All underground mining levels and the ore flow system are being commissioned. Production rates over the next five years are expected to ramp up to 130,000 metric tons of ore per day.  
During second-quarter 2018, PT-FI initiated plans to conduct hydraulic fracturing activities to manage rock stresses and pre-condition the Deep Mill Level Zone (DMLZ) underground mine for large-scale production following mining induced seismic activity experienced in 2017 and 2018. Hydraulic fracturing activities designed to safely manage production commenced in third-quarter 2018 and to date have accomplished expected results. PT-FI's revised mine plans for the DMLZ underground mine, which continue to be reviewed, currently project block cave mining activities in the DMLZ underground mine to commence in mid-2019. PT-FI expects the DMLZ to reach full production rates of 80,000 metric tons per day in 2022. Estimates of timing of future production continue to be reviewed and may be modified as additional information becomes available.

 
 
 
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PT-FI's estimated annual capital spending on underground mine development projects is expected to average $0.8 billion per year ($0.7 billion per year net to PT-FI) over the next five years. Considering the long-term nature and size of these projects, actual costs could vary from these estimates.
PT-FI is also evaluating plans for the development of a new copper smelter in Indonesia, including site selection, engineering, joint venture and financing arrangements.
Operating Data. Following is summary consolidated operating data for the Indonesia mining operations for the third quarters and first nine months of 2018 and 2017:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
2018
 
2017
 
2018
 
2017
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
332

 
293

 
990

 
647

 
Sales
 
368

 
258

 
1,003

 
630

 
Average realized price per pound
 
$
2.81

 
$
2.95

 
$
2.93

 
$
2.81

 
 
 
 
 
 
 
 
 
 
 
Gold (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
 
Production
 
754

 
412

 
2,089

 
992

 
Sales
 
831

 
352

 
2,105

 
956

 
Average realized price per ounce
 
$
1,191

 
$
1,290

 
$
1,248

 
$
1,261

 
 
 
 
 
 
 
 
 
 
 
Unit net cash (credits) costs per pound of coppera
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.40

 
$
1.41

b 
$
1.36

 
$
1.70

b 
Gold and silver credits
 
(2.72
)
 
(1.80
)
 
(2.69
)
 
(1.98
)
 
Treatment charges
 
0.26

 
0.27

 
0.26

 
0.27

 
Export duties
 
0.14

 
0.08

 
0.15

 
0.10

 
Royalty on metals
 
0.20

 
0.17

 
0.21

 
0.16

 
Unit net cash (credits) costs
 
$
(0.72
)
 
$
0.13

 
$
(0.71
)
 
$
0.25

 
 
 
 
 
 
 
 
 
 
 
a.
For a reconciliation of unit net cash (credits) costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XII, which are available on FCX's website, "fcx.com."
b.
Excludes fixed costs charged directly to production and delivery costs totaling $0.03 per pound of copper in third-quarter 2017 and $0.18 per pound of copper for the first nine months of 2017 associated with workforce reductions. Refer to the supplemental schedule, “Adjusted Net Income,” on page VII, which is available on FCX’s website, “fcx.com,” for a summary of these charges.
Indonesia's consolidated sales of 368 million pounds of copper and 831 thousand ounces of gold in third-quarter 2018 were higher than third-quarter 2017 sales of 258 million pounds of copper and 352 thousand ounces of gold, primarily reflecting higher operating rates and ore grades.
Assuming achievement of planned operating rates for fourth-quarter 2018, consolidated sales volumes from Indonesia mining are expected to approximate 1.16 billion pounds of copper and 2.45 million ounces of gold for the year 2018, compared with 1.0 billion pounds of copper and 1.5 million ounces of gold for the year 2017.
As PT-FI transitions mining from the open pit to underground, its production is expected to be significantly lower in 2019 and 2020, compared to 2018. Metal production is expected to improve significantly by 2021 following a ramp-up period.
A significant portion of PT-FI's costs are fixed and unit costs vary depending on production volumes and other factors. As a result of higher sales volumes and gold and silver credits, Indonesia had unit net cash credits (including gold and silver credits) of $0.72 per pound of copper in third-quarter 2018, compared with unit net cash costs of $0.13 per pound in third-quarter 2017.     

 
 
 
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Assuming an average gold price of $1,200 per ounce for fourth-quarter 2018 and achievement of current sales volume and cost estimates, unit net cash credits (including gold and silver credits) for Indonesia mining are expected to approximate $0.54 per pound of copper for the year 2018 (including unit net cash costs of $0.48 per pound of copper in fourth-quarter 2018). Indonesia mining's unit net cash credits for the year 2018 would change by approximately $0.03 per pound for each $50 per ounce change in the average price of gold for fourth-quarter 2018. Because of the fixed nature of a large portion of Indonesia's costs, unit net cash credits/costs vary from quarter to quarter depending on copper and gold volumes.
Indonesia mining's projected sales volumes and unit net cash credits for the year 2018 are dependent on a number of factors, including operational performance, workforce productivity, timing of shipments, and Indonesia regulatory matters, including extension of PT-FI's long-term mining rights or an extension of PT-FI's temporary IUPK after October 31, 2018.
Molybdenum Mines. FCX has two wholly owned molybdenum mines - the Henderson underground mine and the Climax open-pit mine - both in Colorado. The Henderson and Climax mines produce high-purity, chemical-grade molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of molybdenum concentrate produced at the Henderson and Climax mines, as well as from FCX's North America and South America copper mines, is processed at FCX's conversion facilities.
Operating and Development Activities. Production from the Molybdenum mines totaled 8 million pounds of molybdenum in both third-quarter 2018 and third-quarter 2017. Refer to summary operating data on page 3 for FCX's consolidated molybdenum sales and average realized prices, which includes sales of molybdenum produced at the Molybdenum mines, and from FCX's North America and South America copper mines.
Unit net cash costs for the Molybdenum mines averaged $9.02 per pound of molybdenum in third-quarter 2018 and $7.82 per pound in third-quarter 2017. Based on current sales volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate $8.80 per pound of molybdenum for the year 2018.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XII, which are available on FCX's website, "fcx.com."
Mining Exploration Activities.     FCX's mining exploration activities are generally associated with its existing mines, focusing on opportunities to expand reserves and resources to support development of additional future production capacity. A drilling program to further delineate the Lone Star resource continues to indicate significant additional mineralization in this district, with higher ore grades than FCX's other North America copper mines. Exploration results continue to indicate opportunities for significant future potential reserve additions in North America and South America. Exploration spending is expected to approximate $85 million for the year 2018.
CASH FLOWS, CASH and DEBT
Operating Cash Flows. FCX generated operating cash flows of $1.25 billion in third-quarter 2018 and $3.9 billion for the first nine months of 2018.
Based on current sales volume and cost estimates, and assuming average prices of $2.85 per pound of copper, $1,200 per ounce of gold and $12.00 per pound of molybdenum for fourth-quarter 2018, FCX's consolidated operating cash flows are estimated to approximate $4.2 billion for the year 2018 (net of $0.5 billion in working capital uses and timing of other tax payments). The impact of price changes during fourth-quarter 2018 on operating cash flows would approximate $105 million for each $0.10 per pound change in the average price of copper, $15 million for each $50 per ounce change in the average price of gold and $15 million for each $2 per pound change in the average price of molybdenum.
Capital Expenditures. Capital expenditures totaled $0.5 billion in third-quarter 2018 (including approximately $0.4 billion for major mining projects) and $1.4 billion for the first nine months of 2018 (including approximately $0.9 billion for major mining projects). Capital expenditures are expected to approximate $2.0 billion for the year 2018, including $1.2 billion for major mining projects primarily associated with underground development activities in the Grasberg minerals district and development of the Lone Star oxide project.

 
 
 
Freeport-McMoRan
 
        9




header2017a10.jpg

Cash. Following is a summary of the U.S. and international components of consolidated cash and cash equivalents available to the parent company, net of noncontrolling interests' share, taxes and other costs at September 30, 2018 (in billions):
Cash at domestic companies
$
2.7

 
Cash at international operations
1.9

 
Total consolidated cash and cash equivalents
4.6

 
Noncontrolling interests' share
(0.5
)
 
Cash, net of noncontrolling interests' share
4.1

 
Withholding taxes and other
(0.1
)
 
Net cash available
$
4.0

 
 
 
 
Debt. Following is a summary of total debt and the related weighted-average interest rates at September 30, 2018 (in billions, except percentages):
 
 
 
Weighted-
 
 
 
 
Average
 
 
 
 
Interest Rate
 
Senior Notes
$
9.9

 
4.6%
 
Cerro Verde credit facility
1.2

 
4.1%
 
Total debt
$
11.1

 
4.5%
 
 
 
 
 
 
At September 30, 2018, FCX had no borrowings, $13 million in letters of credit issued and $3.5 billion available under its revolving credit facility.     
FINANCIAL POLICY
In February 2018, the FCX Board of Directors (Board) reinstated a cash dividend on FCX common stock. On September 26, 2018, FCX declared a quarterly cash dividend of $0.05 per share on its common stock, which will be paid on November 1, 2018, to shareholders of record as of October 15, 2018. The declaration of dividends is at the discretion of the Board and will depend upon FCX’s financial results, cash requirements, future prospects and other factors deemed relevant by the Board.

WEBCAST INFORMATION
A conference call with securities analysts to discuss FCX's third-quarter 2018 results is scheduled for today at 10:00 a.m. Eastern Time. The conference call will be broadcast on the Internet along with slides. Interested parties may listen to the conference call live and view the slides by accessing “fcx.com.” A replay of the webcast will be available through Friday, November 23, 2018.
-----------------------------------------------------------------------------------------------------------
FCX is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. FCX is the world's largest publicly traded copper producer.
FCX’s portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits; and significant mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America. Additional information about FCX is available on FCX's website at "fcx.com."

 
 
 
Freeport-McMoRan
 
        10




header2017a10.jpg

Cautionary Statement and Regulation G Disclosure: This press release contains forward-looking statements in which FCX discusses its potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as projections or expectations relating to ore grades and milling rates, production and sales volumes, unit net cash costs, operating cash flows, capital expenditures, expectations related to the pending transaction between FCX, PT-FI, PT-II, and PT Inalum, including, but not limited to, replication of the economics of the revenue and cost sharing arrangements under the Joint Venture pursuant to a dividend assignment mechanism, FCX's continued management of PT-FI's operations, the expected timing of completion of the pending transaction, exploration efforts and results, development and production activities and costs, liquidity, tax rates, the impact of copper, gold and molybdenum price changes, the impact of deferred intercompany profits on earnings, reserve estimates, future dividend payments, and share purchases and sales. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” "targets," “intends,” “likely,” “will,” “should,” “to be,” ”potential" and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of the Board and will depend on FCX's financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.
    FCX cautions readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Important factors that can cause FCX's actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, supply of and demand for, and prices of, copper, gold and molybdenum; mine sequencing; production rates; potential inventory adjustments; potential impairment of long-lived mining assets; the ability to satisfy conditions to close the pending transaction, including, but not limited to, the documentation and issuance of an IUPK providing for the extension and stability of PT-FI's long-term mining rights with assured legal and fiscal terms and legal enforceability through 2041 in a form acceptable to FCX and PT Inalum, resolution of environmental regulatory matters that include amendments to the decrees imposing unattainable environmental standards on PT-FI pending before Indonesia’s Ministry of Environment and Forestry satisfactory to the Indonesian government, FCX and PT Inalum, various other Indonesian regulatory actions and approvals, including modification or revocation of current regulations and implementation of new regulations by the Indonesian government and assurances or approvals by Indonesian tax authorities with respect to the pending transaction, including confirmation of withholding tax treatment, and obtaining customary approvals from international competition authorities; obtaining an extension of PT-FI's temporary IUPK after October 31, 2018; the potential effects of violence in Indonesia generally and in the province of Papua; industry risks; regulatory changes; political risks; labor relations; weather- and climate-related risks; environmental risks; litigation results (including the outcome of Cerro Verde's royalty dispute with the Peruvian national tax authority); and other factors described in more detail under the heading “Risk Factors” in FCX's Annual Report on Form 10-K for the year ended December 31, 2017, filed with the U.S. Securities and Exchange Commission (SEC) as updated by FCX's subsequent filings with the SEC.
Investors are cautioned that many of the assumptions upon which FCX's forward-looking statements are based are likely to change after the forward-looking statements are made, including for example commodity prices, which FCX cannot control, and production volumes and costs, some aspects of which FCX may not be able to control. Further, FCX may make changes to its business plans that could affect its results. FCX cautions investors that it does not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in its assumptions, changes in business plans, actual experience or other changes, and FCX undertakes no obligation to update any forward-looking statements.
This press release also contains certain financial measures such as unit net cash (credits) costs per pound of copper and molybdenum and adjusted net income, which are not recognized under U.S. generally accepted accounting principles. As required by SEC Regulation G, reconciliations of these measures to amounts reported in FCX's consolidated financial statements are in the supplemental schedules of this press release, which are also available on FCX's website, "fcx.com."


 
 
 
Freeport-McMoRan
 
        11



FREEPORT-McMoRan INC.
SELECTED OPERATING DATA
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
 
MINING OPERATIONS:
Production
 
Sales
 
COPPER (millions of recoverable pounds)
 
 
 
 
(FCX's net interest in %)
 
 
 
 
North America
 
 
 
 
 
 
 
 
Morenci (72%)a
170

 
186

 
174

 
169

 
Bagdad (100%)
45

 
45

 
47

 
41

 
Safford (100%)
32

 
37

 
31

 
35

 
Sierrita (100%)
36

 
40

 
36

 
37

 
Miami (100%)
4

 
4

 
3

 
4

 
Chino (100%)
46

 
48

 
45

 
47

 
Tyrone (100%)
15

 
13

 
14

 
12

 
Other (100%)
1

 
2

 

 
2

 
Total North America
349

 
375

 
350

 
347

 
 
 
 
 
 
 
 
 
 
South America
 
 
 
 
 
 
 
 
Cerro Verde (53.56%)
275

 
284

 
280

 
291

 
El Abra (51%)
50

 
44

 
46

 
36

 
Total South America
325

 
328

 
326

 
327

 
 
 
 
 
 
 
 
 
 
Indonesia
 
 
 
 
 
 
 
 
Grasberg (90.64%)b
332

 
293

 
368

 
258

 
Total
1,006

 
996

 
1,044

c 
932

c 
Less noncontrolling interests
183

 
181

 
186

 
177

 
Net
823

 
815

 
858

 
755

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
2.80

 
$
2.94

 
 
 
 
 
 
 
 
 
 
GOLD (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America (100%)
6

 
6

 
6

 
3

 
Indonesia (90.64%)b
754

 
412

 
831

 
352

 
Consolidated
760

 
418

 
837

 
355

 
Less noncontrolling interests
70

 
39

 
77

 
32

 
Net
690

 
379

 
760

 
323

 
 
 
 
 
 
 
 
 
 
Average realized price per ounce
 
 
 
 
$
1,191

 
$
1,290

 
 
 
 
 
 
 
 
 
 
MOLYBDENUM (millions of recoverable pounds)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
Henderson (100%)
3

 
3

 
N/A

 
N/A

 
Climax (100%)
5

 
5

 
N/A

 
N/A

 
North America copper mines (100%)a
8

 
8

 
N/A

 
N/A

 
Cerro Verde (53.56%)
7

 
8

 
N/A

 
N/A

 
Consolidated
23

 
24

 
22

 
22

 
Less noncontrolling interests
3

 
4

 
2

 
3

 
Net
20

 
20

 
20

 
19

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
12.40

 
$
9.22

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Amounts are net of Morenci's undivided joint venture partners' interests.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
b. Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.
 
 
 
 
 
 
 
 
 
c. Consolidated sales volumes exclude purchased copper of 93 million pounds in third-quarter 2018 and 75 million pounds in third-quarter 2017.
 
 
 
 
 
 
 
 
 

I


FREEPORT-McMoRan INC.
SELECTED OPERATING DATA (continued)
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
 
MINING OPERATIONS:
Production
 
Sales
 
Copper (millions of recoverable pounds)
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America
 
 
 
 
 
 
 
 
Morenci (72%)a
521

 
554

 
544

 
537

 
Bagdad (100%)
142

 
128

 
146

 
122

 
Safford (100%)
94

 
116

 
99

 
120

 
Sierrita (100%)
113

 
121

 
118

 
117

 
Miami (100%)
12

 
14

 
12

 
14

 
Chino (100%)
126

 
168

 
133

 
170

 
Tyrone (100%)
41

 
47

 
42

 
47

 
Other (100%)
2

 
3

 
1

 
3

 
Total North America
1,051

 
1,151

 
1,095

 
1,130

 
 
 
 
 
 
 
 
 
 
South America
 
 
 
 
 
 
 
 
Cerro Verde (53.56%)
780

 
806

 
780

 
803

 
El Abra (51%)
151

 
126

 
148

 
120

 
Total South America
931

 
932

 
928

 
923

 
 
 
 
 
 
 
 
 
 
Indonesia
 
 
 
 
 
 
 
 
Grasberg (90.64%)b
990

 
647

 
1,003

 
630

 
Total
2,972

 
2,730

 
3,026

c 
2,683

c 
Less noncontrolling interests
529

 
497

 
528

 
491

 
Net
2,443

 
2,233

 
2,498

 
2,192

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
2.96

 
$
2.79

 
 
 
 
 
 
 
 
 
 
Gold (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America (100%)
16

 
18

 
18

 
13

 
Indonesia (90.64%)b
2,089

 
992

 
2,105

 
956

 
Consolidated
2,105

 
1,010

 
2,123

 
969

 
Less noncontrolling interests
195

 
93

 
197

 
89

 
Net
1,910

 
917

 
1,926

 
880

 
 
 
 
 
 
 
 
 
 
Average realized price per ounce
 
 
 
 
$
1,249

 
$
1,261

 
 
 
 
 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
Henderson (100%)
10

 
9

 
N/A

 
N/A

 
Climax (100%)
16

 
15

 
N/A

 
N/A

 
North America (100%)a
23

 
25

 
N/A

 
N/A

 
Cerro Verde (53.56%)
20

 
21

 
N/A

 
N/A

 
Consolidated
69

 
70

 
70

 
71

 
Less noncontrolling interests
9

 
10

 
9

 
9

 
Net
60

 
60

 
61

 
62

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
12.41

 
$
9.18

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Amounts are net of Morenci's undivided joint venture partners' interests.
 
 
 
 
 
 
 
 
 
b. Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.
 
 
 
 
 
 
 
 
 
c. Consolidated sales volumes exclude purchased copper of 257 million pounds for the first nine months of 2018 and 195 million pounds for the first nine months of 2017.

 
 
 
 
 
 
 
 
 


II


FREEPORT-McMoRan INC.
SELECTED OPERATING DATA (continued)
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
 
100% North America Copper Mines
 
 
 
 
 
 
 
 
Leach Operations
 
 
 
 
 
 
 
 
Leach ore placed in stockpiles (metric tons per day)
657,600

 
657,200

 
673,800

 
683,700

 
Average copper ore grade (percent)
0.22

 
0.27

 
0.25

 
0.28

 
Copper production (millions of recoverable pounds)
242

 
252

 
723

 
763

 
 
 
 
 
 
 
 
 
 
Mill Operations
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
297,800

 
297,200

 
297,900

 
300,000

 
Average ore grades (percent):
 
 
 
 
 
 
 
 
Copper
0.34

 
0.38

 
0.35

 
0.40

 
Molybdenum
0.03

 
0.03

 
0.02

 
0.03

 
Copper recovery rate (percent)
87.4

 
86.6

 
88.1

 
86.6

 
Production (millions of recoverable pounds):
 
 
 
 
 
 
 
 
Copper
173

 
195

 
531

 
603

 
Molybdenum
8

 
9

 
24

 
27

 
 
 
 
 
 
 
 
 
 
100% South America Mining
 
 
 
 
 
 
 
 
Leach Operations
 
 
 
 
 
 
 
 
Leach ore placed in stockpiles (metric tons per day)
194,400

 
164,000

 
203,100

 
136,900

 
Average copper ore grade (percent)
0.34

 
0.36

 
0.32

 
0.37

 
Copper production (millions of recoverable pounds)
72

 
65

 
214

 
190

 
 
 
 
 
 
 
 
 
 
Mill Operations
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
383,900

 
379,200

 
384,800

 
355,400

 
Average ore grades (percent):
 
 
 
 
 
 
 
 
Copper
0.39

 
0.44

 
0.39

 
0.44

 
Molybdenum
0.02

 
0.02

 
0.01

 
0.02

 
Copper recovery rate (percent)
86.1

 
80.9

 
83.2

 
82.7

 
Production (millions of recoverable pounds):
 
 
 
 
 
 
 
 
Copper
253

 
263

 
717

 
742

 
Molybdenum
7

 
8

 
20

 
21

 
 
 
 
 
 
 
 
 
 
100% Indonesia Mining
 
 
 
 
 
 
 
 
Ore milled (metric tons per day):a
 
 
 
 
 
 
 
 
Grasberg open pit
149,500

 
130,500

 
141,100

 
91,200

 
Deep Ore Zone underground mine
31,000

 
34,500

 
33,200

 
29,400

 
Deep Mill Level Zone underground mine
2,500

 
2,400

 
2,600

 
3,100

 
Grasberg Block Cave underground mine
3,700

 
4,200

 
3,800

 
3,600

 
Big Gossan underground mine
3,900

 

 
3,400

 
500

 
Total
190,600

 
171,600

 
184,100

 
127,800

 
Average ore grades:
 
 
 
 
 
 
 
 
Copper (percent)
1.00

 
0.91

 
1.06

 
1.00

 
Gold (grams per metric ton)
1.77

 
0.98

 
1.73

 
1.08

 
Recovery rates (percent):
 
 
 
 
 
 
 
 
Copper
92.4

 
91.1

 
92.4

 
91.6

 
Gold
85.7

 
84.7

 
85.5

 
84.9

 
Production (recoverable):
 
 
 
 
 
 
 
 
Copper (millions of pounds)
337

 
277

 
1,030

 
670

 
Gold (thousands of ounces)
817

 
405

 
2,306

 
993

 
 
 
 
 
 
 
 
 
 
100% Molybdenum Mines
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
29,400

 
24,200

 
27,100

 
22,600

 
Average molybdenum ore grade (percent)
0.17

 
0.18

 
0.18

 
0.20

 
Molybdenum production (millions of recoverable pounds)
8

 
8

 
26

 
24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Amounts represent the approximate average daily throughput processed at PT Freeport Indonesia's (PT-FI) mill facilities from each producing mine and from development activities that result in metal production.
 
 
 
 
 
 
 
 
 
 
 
 


III



FREEPORT-McMoRan INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2018
 
2017a
 
2018
 
2017a
 
 
(In Millions, Except Per Share Amounts)
 
Revenuesb
$
4,908

 
$
4,310

 
$
14,944

 
$
11,362

 
Cost of sales:
 
 
 
 
 
 
 
 
Production and deliveryc
3,069

 
2,794

d 
8,792

 
7,462

d 
Depreciation, depletion and amortization
458

 
418

 
1,351

 
1,257

 
Total cost of sales
3,527

 
3,212

 
10,143

 
8,719

 
Selling, general and administrative expensesc
101

 
104

 
341

 
362

 
Mining exploration and research expenses
27

 
27

 
72

 
60

 
Environmental obligations and shutdown costs
8

 
72

 
76

 
76

 
Net gain on sales of assets
(70
)
 
(33
)
 
(126
)
 
(66
)
 
Total costs and expenses
3,593

 
3,382

 
10,506

 
9,151

 
Operating income
1,315

 
928

 
4,438

 
2,211

 
Interest expense, netd,e
(143
)
 
(304
)
 
(436
)
 
(633
)
 
Net gain on early extinguishment of debt

 
11

 
8

 
8

 
Other income (expense), net
14

 
(9
)
 
63

f 
(9
)
 
Income from continuing operations before income taxes and equity in affiliated companies' net earnings
1,186

 
626

 
4,073

 
1,577

 
Provision for income taxesd,g
(522
)
 
(387
)
 
(1,543
)
 
(747
)
 
Equity in affiliated companies' net earnings
4

 
3

 
5

 
6

 
Net income from continuing operations
668

 
242

 
2,535

 
836

 
Net (loss) income from discontinued operationsh
(4
)
 
3

 
(19
)
 
50

 
Net income
664

 
245

 
2,516

 
886

 
Net (income) loss attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Continuing operationsd
(108
)
 
35

 
(399
)
 
(106
)
 
Discontinued operations

 

 

 
(4
)
 
Net income attributable to FCX common stocki
$
556

 
$
280

 
$
2,117

 
$
776

 
 
 
 
 
 
 
 
 
 
Basic net income (loss) per share attributable to common stock:
 
 
 
 
 
 
 
 
Continuing operations
$
0.38

 
$
0.19

 
$
1.47

 
$
0.50

 
Discontinued operations

 

 
(0.01
)
 
0.03

 
 
$
0.38

 
$
0.19

 
$
1.46

 
$
0.53

 
 
 
 
 
 
 
 
 
 
Diluted net income (loss) per share attributable to common stock:
 
 
 
 
 
 
 
 
Continuing operations
$
0.38

 
$
0.19

 
$
1.46

 
$
0.50

 
Discontinued operations

 

 
(0.01
)
 
0.03

 
 
$
0.38

 
$
0.19

 
$
1.45

 
$
0.53

 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
1,450

 
1,448

 
1,449

 
1,447

 
Diluted
1,458

 
1,454

 
1,458

 
1,453

 
 
 
 
 
 
 
 
 
 
Dividends declared per share of common stock
$
0.05

 
$

 
$
0.15

 
$

 
 
 
 
 
 
 
 
 
 
a.
The adoption of accounting guidance related to the presentation of retirement benefits resulted in the reclassification of the non-service components of net periodic benefit cost to other income (expense), net.
b.
Includes adjustments to provisionally priced concentrate and cathode sales. For a summary of adjustments to provisionally priced copper sales, refer to the supplemental schedule, "Derivative Instruments," beginning on page VIII.
c.
Includes net mining and oil and gas (credits) charges that are summarized in the supplemental schedule, "Adjusted Net Income," on page VII.
d.
Includes charges associated with disputed Cerro Verde royalties for prior years, which are summarized in the supplemental schedule, "Adjusted Net Income," on page VII.
e.
Consolidated interest costs (before capitalization and excluding interest expense associated with disputed Cerro Verde royalties) totaled $166 million in third-quarter 2018, $196 million in third-quarter 2017, $501 million for the first nine months of 2018 and $583 million for the first nine months of 2017.
f.
Includes $30 million of interest received on tax refunds, mostly associated with the refund of PT-FI's prior years' tax receivables. Refer to the supplemental schedule, "Adjusted Net Income," on page VII.
g.
For a summary of FCX's provision for income taxes, refer to the supplemental schedule, "Income Taxes," on page VIII.
h.
Primarily reflects adjustments to the estimated fair value of contingent consideration related to the 2016 sale of FCX’s interest in TF Holdings Limited (TFHL), which will continue to be adjusted through December 31, 2019.
i.
FCX defers recognizing profits on intercompany sales until final sales to third parties occur. Refer to the supplemental schedule, "Deferred Profits," on page IX for a summary of net impacts from changes in these deferrals.

IV



FREEPORT-McMoRan INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
 
 
 
 
 
 
September 30,
 
December 31,
 
 
2018
 
2017
 
 
(In Millions)
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
$
4,556

 
$
4,447

 
Trade accounts receivable
1,064

 
1,246

 
Income and other tax receivables
226

 
325

 
Inventories:
 
 
 
 
Materials and supplies, net
1,439

 
1,305

 
Mill and leach stockpiles
1,439

 
1,422

 
Product
1,169

 
1,166

 
Other current assets
402

 
270

 
Held for sale