Freeport-McMoRan Inc. (NYSE: FCX):
- Net loss attributable to common stock totaled $72
million, $0.05 per share, in second-quarter 2019. After adjusting
for net charges of $14 million, $0.01 per share, second-quarter
2019 adjusted net loss attributable to common stock totaled $58
million, $0.04 per share.
- Consolidated sales totaled 807 million pounds of copper,
189 thousand ounces of gold and 24 million pounds of molybdenum in
second-quarter 2019.
- Consolidated sales for the year 2019 are expected to
approximate 3.3 billion pounds of copper, 0.8 million ounces of
gold and 94 million pounds of molybdenum, including 830 million
pounds of copper, 230 thousand ounces of gold and 25 million pounds
of molybdenum in third-quarter 2019.
- Several positive milestones were achieved during
second-quarter 2019 related to the underground production ramp-up
in the Grasberg minerals district, which is expected to produce
large-scale quantities of copper and gold in future years.
- Average realized prices in second-quarter 2019 were
$2.75 per pound for copper, $1,351 per ounce for gold and $13.15
per pound for molybdenum.
- Average unit net cash costs in second-quarter 2019 were
$1.92 per pound of copper and are expected to approximate $1.75 per
pound of copper for the year 2019.
- Operating cash flows totaled $554 million (including
$308 million of working capital sources and timing of other tax
payments) in second-quarter 2019 and $1.1 billion (including $281
million of working capital sources and timing of other tax
payments) for the first six months of 2019. Based on current sales
volume and cost estimates, and assuming average prices of $2.75 per
pound for copper, $1,400 per ounce for gold and $12.00 per pound
for molybdenum for the second half of 2019, operating cash flows
are expected to approximate $1.9 billion (including $0.3 billion of
working capital sources and timing of other tax payments) for the
year 2019.
- Capital expenditures totaled $0.6 billion (including
approximately $0.4 billion for major mining projects) in
second-quarter 2019 and $1.25 billion (including approximately $0.7
billion for major mining projects) for the first six months of
2019. Capital expenditures for the year 2019 are expected to
approximate $2.6 billion, including $1.6 billion for major mining
projects primarily associated with underground development
activities in the Grasberg minerals district in Indonesia and
development of the Lone Star copper leach project in Arizona.
- At June 30, 2019, consolidated debt totaled $9.9
billion and consolidated cash totaled $2.6 billion. FCX had
no borrowings and $3.5 billion available under its revolving credit
facility at June 30, 2019.
- On June 26, 2019, FCX declared a quarterly cash dividend
of $0.05 per share on its common stock, which will be paid on
August 1, 2019.
Freeport-McMoRan Inc. (NYSE: FCX) reported net
losses attributable to common stock of $72 million ($0.05 per
share) in second-quarter 2019 and $41 million ($0.03 per share) for
the first six months of 2019. After adjusting for net charges of
$14 million ($0.01 per share), adjusted net loss attributable to
common stock totaled $58 million ($0.04 per share) in
second-quarter 2019. For additional information, refer to the
supplemental schedule, "Adjusted Net (Loss) Income," on page VII,
which is available on FCX's website, "fcx.com."
Richard C. Adkerson, President and Chief Executive Officer,
said, "We are pleased to report that execution of the underground
ramp-up at Grasberg is advancing according to plan and recent
milestones are encouraging as we target increasing volumes and cash
flows from the Grasberg minerals district. We are also progressing
our Lone Star copper leach project in Arizona and remain optimistic
about the long-term opportunities for this large resource. We are
focused on enhancing value for shareholders through our
well-defined strategy of maximizing the value of our existing
resource base through rigorous cost management, productivity and
technology, successful execution of the underground ramp-up at
Grasberg, generating cash flows to increase shareholder returns and
creating value organically from our large undeveloped resource
position in a disciplined manner.”
SUMMARY FINANCIAL DATA
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
(in millions, except per share
amounts)
Revenuesa,b
$
3,546
$
5,168
$
7,338
$
10,036
Operating incomea
$
33
$
1,664
$
354
$
3,123
Net (loss) income from continuing
operations
$
(74
)
$
1,039
$
1
$
1,867
Net (loss) income attributable to common
stockc,d
$
(72
)
$
869
$
(41
)
$
1,561
Diluted net (loss) income per share of
common stock:
Continuing operations
$
(0.05
)
$
0.59
$
(0.03
)
$
1.08
Discontinued operations
—
—
—
(0.01
)
$
(0.05
)
$
0.59
$
(0.03
)
$
1.07
Diluted weighted-average common shares
outstanding
1,451
1,458
1,451
1,458
Operating cash flowse
$
554
$
1,309
$
1,088
$
2,678
Capital expenditures
$
629
$
482
$
1,251
$
884
At June 30:
Cash and cash equivalents
$
2,623
$
3,894
$
2,623
$
3,894
Total debt, including current portion
$
9,916
$
11,277
$
9,916
$
11,277
a. For segment financial results, refer to the supplemental
schedules, "Business Segments," beginning on page X, which are
available on FCX's website, "fcx.com." b. Includes (unfavorable)
favorable adjustments to prior period provisionally priced
concentrate and cathode copper sales totaling $(83) million ($(35)
million to net loss attributable to common stock or $(0.02) per
share) in second-quarter 2019, $23 million ($9 million to net
income attributable to common stock or $0.01 per share) in
second-quarter 2018, $58 million ($23 million to net loss
attributable to common stock or $0.02 per share) for the first six
months of 2019 and $(70) million ($(31) million to net income
attributable to common stock or $(0.02) per share) for the first
six months of 2018. For further discussion, refer to the
supplemental schedule, "Derivative Instruments," on page IX, which
is available on FCX's website, "fcx.com." c. Includes net (charges)
gains of $(14) million ($(0.01) per share) in second-quarter 2019,
$16 million ($0.01 per share) in second-quarter 2018, $(50) million
($(0.03) per share) for the first six months of 2019 and $27
million ($0.02 per share) for the first six months of 2018 that are
described in the supplemental schedule, "Adjusted Net (Loss)
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." e. Net of working capital sources (uses)
and timing of other tax payments of $308 million in second-quarter
2019, $(192) million in second-quarter 2018, $281 million for the
first six months of 2019 and $(213) million for the first six
months of 2018.
SUMMARY OPERATING DATA
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Copper (millions of recoverable
pounds)
Production
776
1,014
1,556
1,966
Sales, excluding purchases
807
989
1,591
1,982
Average realized price per pound
$
2.75
$
3.08
$
2.78
$
3.10
Site production and delivery costs per
pounda
$
2.26
$
1.69
$
2.21
$
1.68
Unit net cash costs per pounda
$
1.92
$
0.96
$
1.85
$
0.97
Gold (thousands of recoverable
ounces)
Production
160
746
326
1,345
Sales, excluding purchases
189
676
431
1,286
Average realized price per ounce
$
1,351
$
1,274
$
1,315
$
1,291
Molybdenum (millions of recoverable
pounds)
Production
25
24
48
46
Sales, excluding purchases
24
24
46
48
Average realized price per pound
$
13.15
$
12.89
$
12.93
$
12.42
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 XIII, which are available on FCX's website, "fcx.com."
Consolidated Sales Volumes
Second-quarter 2019 copper sales of 807 million pounds
were in line with the April 2019 estimate of 800 million pounds,
with higher copper volumes from North America and South America
offsetting lower copper volumes from PT Freeport Indonesia (PT-FI).
Mine sequencing changes in the Grasberg open pit resulted in lower
second-quarter 2019 gold sales of 189 thousand ounces,
compared with the April 2019 estimate of 265 thousand ounces of
gold. During second-quarter 2019, PT-FI opened an additional area
to extend mining in the Grasberg open pit into third-quarter 2019
and potentially longer. The mine sequencing changes in the open pit
delayed access to the high-grade material previously expected to be
produced during second-quarter 2019.
Second-quarter 2019 copper and gold sales were lower than
second-quarter 2018 sales primarily reflecting anticipated lower
mill rates and ore grades as PT-FI transitions mining from the open
pit to underground.
Second-quarter 2019 molybdenum sales of 24 million pounds
approximated the April 2019 estimate of 25 million pounds and
second-quarter 2018 sales of 24 million pounds.
Consolidated sales volumes for the year 2019 are expected to
approximate 3.3 billion pounds of copper, 0.8 million ounces of
gold and 94 million pounds of molybdenum, including 830 million
pounds of copper, 230 thousand ounces of gold and 25 million pounds
of molybdenum in third-quarter 2019. As PT-FI transitions mining
from the open pit to underground, metal production is expected to
improve by 2021.
Consolidated Unit Costs
Consolidated average unit net cash costs (net of by-product
credits) for FCX's copper mines were $1.92 per pound of copper in
second-quarter 2019. As anticipated, average unit net cash costs
were higher than the second-quarter 2018 average of $0.96 per
pound, primarily reflecting lower sales volumes as PT-FI
transitions mining from the open pit to underground. Unit net cash
costs were 15 percent higher than the April 2019 estimate because
of production deferrals in the Grasberg open pit.
Assuming average prices of $1,400 per ounce of gold and $12.00
per pound of molybdenum for the second half of 2019 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 $1.75 per pound of copper for the year 2019,
(including $1.67 per pound of copper for the second half of 2019).
The impact of price changes on consolidated unit net cash costs for
the year 2019 would approximate $0.01 per pound for each $50 per
ounce change in the average price of gold and $0.015 per pound for
each $2 per pound change in the average price of molybdenum for the
second half of 2019. Quarterly unit net cash costs vary with
fluctuations in sales volumes and realized prices, primarily for
gold and molybdenum. FCX expects consolidated unit net cash costs
to decline by 2021 following a ramp-up period at PT-FI.
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 pursue projects to enhance productivity through
innovative technologies and 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 leachable ores commenced in 2018, with first
production expected by the end of 2020. Initial production from the
Lone Star leachable ores is expected to average approximately 200
million pounds of copper per year, with the potential for future
expansion options. Total capital costs for the initial project,
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
June 30, 2019, approximately $480 million has been incurred for
this project. The project also advances exposure to a significant
sulfide resource. FCX expects to incorporate recent positive
drilling and ongoing results in its future development plans.
Operating Data. Following is summary consolidated operating data
for the North America copper mines:
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Copper (millions of recoverable
pounds)
Production
370
354
706
702
Sales, excluding purchases
369
361
689
745
Average realized price per pound
$
2.78
$
3.12
$
2.80
$
3.14
Molybdenum (millions of recoverable
pounds)
Productiona
9
8
16
15
Unit net cash costs per pound of
copperb
Site production and delivery, excluding
adjustments
$
2.05
$
1.94
$
2.05
$
1.89
By-product credits
(0.26
)
(0.25
)
(0.26
)
(0.22
)
Treatment charges
0.11
0.10
0.11
0.10
Unit net cash costs
$
1.90
$
1.79
$
1.90
$
1.77
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 XIII, which are available
on FCX's website, "fcx.com."
North America's consolidated copper sales volumes totaled 369
million pounds in second-quarter 2019 and 361 million pounds in
second-quarter 2018. North America copper sales are estimated to
approximate 1.4 billion pounds for the year 2019.
Average unit net cash costs (net of by-product credits) for the
North America copper mines of $1.90 per pound of copper in
second-quarter 2019 were slightly lower than forecast, but higher
than second-quarter 2018 unit net cash costs of $1.79 per pound,
primarily reflecting higher mining rates, maintenance activities
and higher cost of consumables, primarily sulphuric acid.
Average unit net cash costs (net of by-product credits) for the
North America copper mines are expected to approximate $1.91 per
pound of copper for the year 2019, based on achievement of current
sales volume and cost estimates and assuming an average molybdenum
price of $12.00 per pound for the second half of 2019. North
America's average unit net cash costs for the year 2019 would
change by approximately $0.02 per pound for each $2 per pound
change in the average price of molybdenum for the second half of
2019.
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. Cerro Verde's concentrator facilities have
continued to perform well, with average mill throughput rates of
407,700 metric tons of ore per day in second-quarter 2019.
Debottlenecking projects and additional initiatives to enhance
operating rates continue to be advanced.
FCX continues to evaluate a large-scale expansion at El Abra to
process additional sulfide material and to achieve higher
recoveries. El Abra's large sulfide resource could potentially
support a major mill project similar to facilities constructed at
Cerro Verde. Technical and economic studies continue to be advanced
to determine the optimal scope and timing for the project.
Operating Data. Following is summary consolidated operating data
for South America mining:
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Copper (millions of recoverable
pounds)
Production
281
313
580
606
Sales
287
312
577
602
Average realized price per pound
$
2.72
$
3.07
$
2.75
$
3.09
Molybdenum (millions of recoverable
pounds)
Productiona
7
7
15
13
Unit net cash costs per pound of
copperb
Site production and delivery, excluding
adjustments
$
1.92
$
1.77
$
1.82
$
1.78
By-product credits
(0.28
)
(0.22
)
(0.31
)
(0.24
)
Treatment charges
0.18
0.18
0.19
0.19
Royalty on metals
0.01
0.01
0.01
0.01
Unit net cash costs
$
1.83
$
1.74
$
1.71
$
1.74
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 XIII, which are available on FCX's
website, "fcx.com."
South America's consolidated copper sales volumes of 287 million
pounds in second-quarter 2019 were lower than second-quarter 2018
copper sales volumes of 312 million pounds, primarily reflecting
lower ore grades and recovery rates at Cerro Verde. Sales from
South America mining are expected to approximate 1.2 billion pounds
of copper for the year 2019.
Average unit net cash costs (net of by-product credits) for
South America mining of $1.83 per pound of copper in second-quarter
2019 were higher than unit net cash costs of $1.74 per pound in
second-quarter 2018, primarily reflecting lower copper volumes.
Average unit net cash costs (net of by-product credits) for
South America mining are expected to approximate $1.68 per pound of
copper for the year 2019, based on current sales volume and cost
estimates and assuming an average price of $12.00 per pound of
molybdenum for the second half of 2019.
Indonesia Mining. PT-FI's assets include one of the
world's largest copper and gold deposits at the Grasberg minerals
district in Papua, Indonesia. PT-FI produces copper concentrate
that contains significant quantities of gold and silver. FCX has a
48.76 percent ownership interest in PT-FI and manages its mining
operations. PT-FI is consolidated in FCX's financial statements. As
a result of the December 2018 transaction regarding PT-FI's
long-term mining rights and share ownership, FCX’s economic
interest in PT-FI is expected to approximate 81 percent through
2022.
Operating and Development Activities. PT-FI continues to mine
the final stages of the Grasberg open pit. During second-quarter
2019, PT-FI opened an additional area to extend mining in the
Grasberg open pit into third-quarter 2019 and potentially longer.
The mine sequencing changes in the open pit delayed access to the
high-grade material previously expected to be produced during
second-quarter 2019, but are expected to meet previous estimates
for copper and gold production for the year 2019. PT-FI will
continue to monitor geotechnical conditions to determine the extent
of mining in the open pit. Material not mined from the open pit is
expected to be available to be mined from the Grasberg Block Cave
underground mine.
During second-quarter 2019, PT-FI achieved important milestones
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.
PT-FI's estimated annual capital spending on underground mine
development projects is expected to average $0.7 billion per year
for the four-year period 2019 through 2022, net of scheduled
contributions from PT Indonesia Asahan Aluminium (Persero) (PT
Inalum). In accordance with applicable accounting guidance,
aggregate costs (before scheduled contributions from PT Inalum),
which are expected to average $0.9 billion per year for the
four-year period 2019 through 2022, will be reflected as an
investing activity in FCX's cash flow statement, and contributions
from PT Inalum will be reflected as a financing activity.
Considering the long-term nature and size of these projects, actual
costs could vary from these estimates.
Grasberg Block Cave. PT-FI has
commenced extraction of ore from the Grasberg Block Cave
underground mine, which is the same ore body historically mined
from the surface in the Grasberg open pit. During second-quarter
2019, undercutting, drawbell construction and ore extraction
activities in the Grasberg Block Cave underground mine exceeded
expectations. Ore extraction from the Grasberg Block Cave
underground mine averaged 7,400 metric tons of ore per day in
second-quarter 2019 and is expected to ramp up to 15,000 metric
tons of ore per day by the end of 2019. Monitoring data on cave
propagation in the Grasberg Block Cave underground mine is
providing increased confidence in growing production rates over
time. As existing drawpoints mature and additional drawpoints are
added, cave expansion is expected to accelerate production rates
from an average of 30,000 metric tons of ore per day in 2020 to
130,000 metric tons of ore per day in 2023 from five production
blocks spanning 335,000 square meters.
Deep Mill Level Zone (DMLZ). The
DMLZ underground mine, located east of the Grasberg ore body and
below the Deep Ore Zone (DOZ) underground mine, has commenced
production. Hydraulic fracturing operations have been effective in
managing rock stresses and pre-conditioning the cave following
mining-induced seismic activity experienced in 2017 and 2018. In
second-quarter 2019, undercutting and drawbell construction were in
line with expectations, and ore extraction exceeded expectations.
Ore extraction from the DMLZ underground mine averaged 7,700 metric
tons of ore per day in second-quarter 2019 and is expected to ramp
up to 11,000 metric tons of ore per day by the end of 2019. Ongoing
hydraulic fracturing operations combined with continued
undercutting and drawbell openings in the two production blocks are
expected to expand the cave, supporting higher production rates
that are expected to average 28,000 metric tons of ore per day in
2020 and 80,000 metric tons of ore per day in 2022 from three
production blocks.
Estimates of timing of future production continue to be reviewed
and may be modified as additional information becomes
available.
In connection with the extension of PT-FI's mining rights from
2031 to 2041, PT-FI committed to construct a new smelter in
Indonesia by December 21, 2023. A site for the new smelter has been
selected and ground preparation is in progress. Engineering and
front-end engineering and design for the selected process
technology are ongoing, with construction of the smelter expected
to begin in 2020. The preliminary capital cost estimate for the
project is in the $3 billion range, and PT-FI is pursuing
financing, commercial and potential partner arrangements for this
project. The economics of PT-FI’s share of the new smelter will be
shared by PT-FI’s shareholders according to their respective share
ownership percentages.
Operating Data. Following is summary consolidated operating data
for Indonesia mining:
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Copper (millions of recoverable
pounds)
Production
125
347
270
658
Sales
151
316
325
635
Average realized price per pound
$
2.71
$
3.05
$
2.77
$
3.07
Gold (thousands of recoverable
ounces)
Production
154
740
316
1,335
Sales
185
671
420
1,274
Average realized price per ounce
$
1,350
$
1,274
$
1,314
$
1,291
Unit net cash costs (credits) per pound
of coppera
Site production and delivery, excluding
adjustments
$
3.40
$
1.33
$
3.24
$
1.34
Gold and silver credits
(1.69
)
(2.76
)
(1.75
)
(2.67
)
Treatment charges
0.26
0.26
0.28
0.25
Export duties
0.07
0.18
0.08
0.16
Royalty on metals
0.11
0.22
0.14
0.22
Unit net cash costs (credits)
$
2.15
$
(0.77
)
$
1.99
$
(0.70
)
a. For a reconciliation of unit net cash costs (credits) 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 XIII, which are available on FCX's website,
"fcx.com."
PT-FI's consolidated sales of 151 million pounds of copper and
185 thousand ounces of gold in second-quarter 2019 were lower than
second-quarter 2018 sales of 316 million pounds of copper and 671
thousand ounces of gold, reflecting anticipated lower mill rates
and ore grades as it transitions mining from the open pit to
underground.
Consolidated sales volumes from PT-FI are expected to
approximate 0.6 billion pounds of copper and 0.8 million ounces of
gold in 2019. PT-FI will continue to monitor geotechnical
conditions to determine the extent of mining in the Grasberg open
pit. As PT-FI transitions mining from the open pit to underground,
metal production is expected to improve by 2021.
During the first half of 2019, PT-FI utilized its approved
export quota of approximately 180,000 dry metric tons of
concentrate for the current export period, which expires March 8,
2020. PT-FI has requested approval from the Indonesian government
to increase its export quota for the current export period for
expected higher production volumes associated with changes to
PT-FI's production plan. PT-FI expects to receive approval during
third-quarter 2019.
Because of the fixed nature of a large portion of PT-FI's costs,
unit net cash costs can vary significantly from quarter to quarter
depending on copper and gold volumes. PT-FI's unit net cash costs
(including gold and silver credits) of $2.15 per pound of copper in
second-quarter 2019, compared with unit net cash credits of $0.77
per pound in second-quarter 2018, primarily reflected lower copper
and gold volumes.
Assuming an average gold price of $1,400 per ounce for the
second half of 2019 and achievement of current sales volume and
cost estimates, unit net cash costs (including gold and silver
credits) for PT-FI are expected to approximate $1.55 per pound of
copper for the year 2019, (including $1.14 per pound of copper for
the second half of 2019). PT-FI's unit net cash costs for the
second half of 2019 are expected to benefit from access to higher
grade ore from the Grasberg open pit. PT-FI's unit net cash costs
for the year 2019 would change by approximately $0.04 per pound for
each $50 per ounce change in the average price of gold for the
second half of 2019.
PT-FI's projected sales volumes and unit net cash costs for the
year 2019 are dependent on a number of factors, including
operational performance, mine sequencing changes, timing of
shipments and export quotas.
Molybdenum Mines. FCX has two wholly owned molybdenum
mines in Colorado - the Henderson underground mine and the Climax
open-pit mine. 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 the molybdenum concentrate produced at the Henderson
and Climax mines, as well as from FCX's North America and South
America copper mines, is processed at FCX's conversion
facilities.
Operating and Development Activities. Production from the
Molybdenum mines totaled 9 million pounds of molybdenum in both
second-quarter 2019 and 2018. 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 $9.15 per
pound of molybdenum in second-quarter 2019 and $8.36 per pound in
second-quarter 2018. Based on current sales volume and cost
estimates, average unit net cash costs for the Molybdenum mines are
expected to approximate $9.60 per pound of molybdenum for the year
2019.
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 XIII, 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 $75 million for the year 2019, compared with $78
million in 2018.
CASH FLOWS, ASSET SALES, CASH and DEBT
Operating Cash Flows. FCX generated operating cash flows of $554
million (including $308 million of working capital sources and
timing of other tax payments) in second-quarter 2019 and $1.1
billion (including $281 million of working capital sources and
timing of other tax payments) for the first six months of 2019.
Based on current sales volume and cost estimates, and assuming
average prices of $2.75 per pound of copper, $1,400 per ounce of
gold and $12.00 per pound of molybdenum for the second half of
2019, FCX's consolidated operating cash flows are estimated to
approximate $1.9 billion (including $0.3 billion of working capital
sources and changes in timing of other tax payments) for the year
2019. The impact of price changes during the second half of 2019 on
operating cash flows would approximate $185 million for each $0.10
per pound change in the average price of copper, $20 million for
each $50 per ounce change in the average price of gold and $55
million for each $2 per pound change in the average price of
molybdenum.
Capital Expenditures. Capital expenditures totaled $0.6 billion
in second-quarter 2019 (including approximately $0.4 billion for
major mining projects) and $1.25 billion for the first six months
of 2019 (including approximately $0.7 billion for major mining
projects).
Capital expenditures are expected to approximate $2.6 billion
for the year 2019, including $1.6 billion for major mining projects
primarily associated with underground development activities in the
Grasberg minerals district and development of the Lone Star
project, and exclude estimates associated with the new smelter in
Indonesia. A large portion of the capital expenditures relate to
projects that are expected to add significant production and cash
flow in future periods, enabling FCX to generate operating cash
flows exceeding capital expenditures in future years. FCX has cash
on hand and the financial flexibility to fund these expenditures
and will continue to be disciplined in deploying capital.
Asset Sales. In second-quarter 2019, FCX entered into an
agreement to sell its cobalt refinery in Kokkola, Finland, and
related cobalt cathode precursor business for total consideration
of approximately $150 million, plus working capital at the time of
closing. FCX and its partners will retain Freeport Cobalt’s
remaining cobalt business. The transaction is expected to close by
year-end 2019, and FCX expects to report a gain on the transaction.
In addition to customary closing conditions, including regulatory
approvals, prior to completing the transaction, Freeport Cobalt is
required to be segregated into two separate businesses. FCX
evaluated the criteria required for assets held for sale
classification and concluded that this transaction did not meet all
of the criteria at June 30, 2019.
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 June 30, 2019 (in billions):
Cash at domestic companies
$
1.6
Cash at international operations
1.0
Total consolidated cash and cash
equivalents
2.6
Noncontrolling interests' share
(0.4
)
Cash, net of noncontrolling interests'
share
$
2.2
Withholding taxes and other
—
a
Net cash available
$
2.2
a. Rounds to less than $0.1 billion.
Debt. At June 30, 2019, FCX's consolidated debt totaled $9.9
billion, with a related weighted-average interest rate of 4.7
percent. FCX had no borrowings, $13 million in letters of credit
issued and $3.5 billion available under its revolving credit
facility at June 30, 2019.
In May 2019, FCX amended its $3.5 billion revolving credit
facility to, among other things, extend $3.26 billion of the
facility by one year to April 20, 2024. The remaining $240 million
matures on April 20, 2023.
FINANCIAL POLICY
On June 26, 2019, FCX declared a quarterly cash dividend of
$0.05 per share on its common stock, which will be paid on August
1, 2019 to shareholders of record as of July 15, 2019. The
declaration of dividends is at the discretion of the Board of
Directors (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
second-quarter 2019 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, August 24, 2019.
-----------------------------------------------------------------------------------------------------------
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 one of the world's largest
publicly traded copper producers.
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 North America and
South America, including the large-scale Morenci minerals district
in Arizona and the Cerro Verde operation in Peru. Additional
information about FCX is available on FCX's website at
"fcx.com."
Cautionary Statement and Regulation G Disclosure: This
press release contains forward-looking statements in which FCX
discusses its potential future performance. Forward-looking
statements are all statements other than statements of historical
facts, such as projections or expectations relating to ore grades
and milling rates; production and sales volumes; unit net cash
costs; operating cash flows; capital expenditures; FCX's
expectations regarding its share of PT-FI's net (loss) income and
future cash flows through 2022; PT-FI's development, financing,
construction and completion of a new smelter in Indonesia; PT-FI's
compliance with environmental standards under the framework
established by Indonesia's Ministry of Environment and Forestry;
exploration efforts and results; development and production
activities, rates and costs; liquidity; tax rates; export quotas
and duties; the impact of copper, gold and molybdenum price
changes; the impact of deferred intercompany profits on earnings;
reserve estimates; consummation of the pending Freeport Cobalt
transaction; and future dividend payments, 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; changes in mine plans; production
rates; timing of shipments; results of feasibility studies;
potential inventory adjustments; potential impairment of long-lived
mining assets; satisfaction of customary closing conditions,
including receipt of regulatory approvals to consummate the pending
Freeport Cobalt transaction; the potential effects of violence in
Indonesia generally and in the province of Papua; the Indonesian
government's approval of an increase in PT-FI's export quota for
the current export period ending March 8, 2020, and extension of
PT-FI's export license after March 8, 2020; risks associated with
underground mining; satisfaction of requirements in accordance with
PT-FI's special mining license (IUPK) to extend mining rights from
2031 through 2041; industry risks; regulatory changes; political
and social risks; labor relations; weather- and climate-related
risks; environmental risks; litigation results; cybersecurity
incidents; 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, 2018, filed with the U.S. Securities and
Exchange Commission (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 adjusted net (loss) income and unit net cash costs (credits) per
pound of copper and molybdenum, which are not recognized under U.S.
generally accepted accounting principles. As required by SEC
Regulation G, reconciliations of these measures to amounts reported
in FCX's consolidated financial statements are in the supplemental
schedules of this press release, which are also available on FCX's
website, "fcx.com."
Freeport-McMoRan Inc.
SELECTED OPERATING
DATA
Three Months Ended June 30,
2019
2018
2019
2018
MINING OPERATIONS:
Production
Sales
COPPER
(millions of recoverable pounds)
(FCX's net interest in %)
North
America
Morenci (72%)a
181
182
181
183
Bagdad (100%)
57
48
58
48
Safford (100%)
28
29
29
32
Sierrita (100%)
39
36
39
38
Miami (100%)
4
4
4
4
Chino (100%)
48
42
45
43
Tyrone (100%)
13
13
13
13
Other (100%)
—
—
—
—
Total North America
370
354
369
361
South
America
Cerro Verde (53.56%)
239
262
240
258
El Abra (51%)
42
51
47
54
Total South America
281
313
287
312
Indonesia
Grasberg (48.76%)b
125
347
151
316
Total
776
1,014
807
c
989
c
Less noncontrolling interests
155
179
163
176
Net
621
835
644
813
Average realized price per pound
$
2.75
$
3.08
GOLD
(thousands of recoverable ounces)
(FCX's net interest in %)
North America (100%)
6
6
4
5
Indonesia (48.76%)b
154
740
185
671
Consolidated
160
746
189
676
Less noncontrolling interests
30
70
35
63
Net
130
676
154
613
Average realized price per ounce
$
1,351
$
1,274
MOLYBDENUM (millions of recoverable
pounds)
(FCX's net interest in %)
Henderson (100%)
4
3
N/A
N/A
Climax (100%)
5
6
N/A
N/A
North America copper mines (100%)a
9
8
N/A
N/A
Cerro Verde (53.56%)
7
7
N/A
N/A
Consolidated
25
24
24
24
Less noncontrolling interests
3
3
4
4
Net
22
21
20
20
Average realized price per pound
$
13.15
$
12.89
a. Amounts are net of Morenci's undivided
joint venture partners' interests.
b. Effective December 21, 2018, FCX's
share ownership in PT Freeport Indonesia (PT-FI) is 48.76 percent.
FCX’s economic interest in PT-FI is expected to approximate 81
percent through 2022 and 48.76 percent thereafter.
c. Consolidated sales volumes exclude
purchased copper of 114 million pounds in second-quarter 2019 and
90 million pounds in second-quarter 2018.
Freeport-McMoRan Inc.
SELECTED OPERATING DATA
(continued)
Six Months Ended June 30,
2019
2018
2019
2018
MINING OPERATIONS:
Production
Sales
Copper (millions of recoverable
pounds)
(FCX's net interest in %)
North
America
Morenci (72%)a
348
351
337
370
Bagdad (100%)
112
97
109
99
Safford (100%)
56
62
56
68
Sierrita (100%)
75
77
73
82
Miami (100%)
7
8
7
9
Chino (100%)
83
80
82
88
Tyrone (100%)
25
26
25
28
Other (100%)
—
1
—
1
Total North America
706
702
689
745
South
America
Cerro Verde (53.56%)
500
505
496
500
El Abra (51%)
80
101
81
102
Total South America
580
606
577
602
Indonesia
Grasberg (48.76%)b
270
658
325
635
Total
1,556
1,966
1,591
c
1,982
c
Less noncontrolling interests
322
346
331
342
Net
1,234
1,620
1,260
1,640
Average realized price per pound
$
2.78
$
3.10
Gold (thousands of recoverable
ounces)
(FCX's net interest in %)
North America (100%)
10
10
11
12
Indonesia (48.76%)b
316
1,335
420
1,274
Consolidated
326
1,345
431
1,286
Less noncontrolling interests
60
125
79
120
Net
266
1,220
352
1,166
Average realized price per ounce
$
1,315
$
1,291
Molybdenum (millions of recoverable
pounds)
(FCX's net interest in %)
Henderson (100%)
8
7
N/A
N/A
Climax (100%)
9
11
N/A
N/A
North America (100%)a
16
15
N/A
N/A
Cerro Verde (53.56%)
15
13
N/A
N/A
Consolidated
48
46
46
48
Less noncontrolling interests
7
6
7
7
Net
41
40
39
41
Average realized price per pound
$
12.93
$
12.42
a. Amounts are net of Morenci's undivided
joint venture partners' interests.
b. Effective December 21, 2018, FCX's
share ownership in PT-FI is 48.76 percent. FCX’s economic interest
in PT-FI is expected to approximate 81 percent through 2022 and
48.76 percent thereafter.
c. Consolidated sales volumes exclude
purchased copper of 231 million pounds for the first six months of
2019 and 164 million pounds for the first six months of 2018.
Freeport-McMoRan Inc.
SELECTED OPERATING DATA
(continued)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
100% North America Copper Mines
Leach
Operations
Leach ore placed in stockpiles (metric
tons per day)
797,600
689,500
751,600
682,100
Average copper ore grade (percent)
0.23
0.24
0.23
0.26
Copper production (millions of recoverable
pounds)
245
241
471
480
Mill
Operations
Ore milled (metric tons per day)
320,300
307,000
317,900
297,900
Average ore grades (percent):
Copper
0.36
0.35
0.34
0.35
Molybdenum
0.02
0.02
0.02
0.02
Copper recovery rate (percent)
87.4
89.1
87.6
88.5
Production (millions of recoverable
pounds):
Copper
195
184
371
358
Molybdenum
9
9
17
16
100% South America Mining
Leach
Operations
Leach ore placed in stockpiles (metric
tons per day)
187,000
246,700
178,400
207,600
Average copper ore grade (percent)
0.38
0.30
0.36
0.32
Copper production (millions of recoverable
pounds)
63
75
122
142
Mill
Operations
Ore milled (metric tons per day)
407,700
385,200
397,200
385,300
Average ore grades (percent):
Copper
0.34
0.38
0.36
0.39
Molybdenum
0.02
0.01
0.02
0.01
Copper recovery rate (percent)
81.7
84.4
84.5
81.7
Production (millions of recoverable
pounds):
Copper
218
238
458
464
Molybdenum
7
7
15
13
100% Indonesia Mining
Ore extracted and milled (metric tons per
day):
Grasberg open pita
54,000
148,400
78,300
136,800
Deep Ore Zone underground mineb
21,100
29,200
25,700
34,300
Deep Mill Level Zone underground mineb
7,700
2,700
7,200
2,700
Grasberg Block Cave underground mineb
7,400
3,800
6,200
3,900
Big Gossan underground mineb
5,400
3,800
5,500
3,100
Total
95,600
187,900
122,900
180,800
Average ore grades:
Copper (percent)
0.80
1.06
0.69
1.09
Gold (grams per metric ton)
0.79
1.77
0.66
1.71
Recovery rates (percent):
Copper
88.3
92.7
86.3
92.4
Gold
74.9
86.1
71.6
85.5
Production (recoverable):
Copper (millions of pounds)
125
353
270
693
Gold (thousands of ounces)
154
816
316
1,489
100% Molybdenum Mines
Ore milled (metric tons per day)
35,200
28,900
31,500
26,000
Average molybdenum ore grade (percent)
0.15
0.18
0.16
0.19
Molybdenum production (millions of
recoverable pounds)
9
9
17
18
a. Includes ore from related
stockpiles.
b. Reflects ore extracted, including ore
from development activities that result in metal production.
Freeport-McMoRan Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
(In Millions, Except Per Share
Amounts)
Revenuesa
$
3,546
$
5,168
$
7,338
$
10,036
Cost of sales:
Production and deliveryb
3,002
2,915
5,978
5,723
Depreciation, depletion and
amortization
352
442
699
893
Total cost of sales
3,354
3,357
6,677
6,616
Selling, general and administrative
expenses
97
109
209
240
Mining exploration and research
expenses
31
24
58
45
Environmental obligations and shutdown
costs
23
59
65
68
Net loss (gain) on sales of assets
8
(45
)
(25
)
(56
)
Total costs and expenses
3,513
3,504
6,984
6,913
Operating income
33
1,664
354
3,123
Interest expense, netc
(132
)
(142
)
(278
)
(293
)
Net gain (loss) on early extinguishment of
debt
—
9
(6
)
8
Other income, net
5
20
19
49
d
(Loss) income from continuing operations
before income taxes and equity in affiliated companies' net
earnings
(94
)
1,551
89
2,887
Benefit from (provision for) income
taxese
15
(515
)
(90
)
(1,021
)
Equity in affiliated companies' net
earnings
5
3
2
1
Net (loss) income from continuing
operations
(74
)
1,039
1
1,867
Net (loss) gain from discontinued
operations
—
(4
)
1
(15
)
Net (loss) income
(74
)
1,035
2
1,852
Net loss (income) attributable to
noncontrolling interests
2
(166
)
(43
)
(291
)
Net (loss) income attributable to common
stockholdersf
$
(72
)
$
869
$
(41
)
$
1,561
Diluted net (loss) income per share
attributable to common stock:
Continuing operations
$
(0.05
)
$
0.59
$
(0.03
)
$
1.08
Discontinued operations
—
—
—
(0.01
)
$
(0.05
)
$
0.59
$
(0.03
)
$
1.07
Weighted-average common shares
outstanding:
Basic
1,451
1,449
1,451
1,449
Diluted
1,451
1,458
1,451
1,458
Dividends declared per share of common
stock
$
0.05
$
0.05
$
0.10
$
0.10
a. 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," on page IX. b. ncludes PT-FI charges, metals
inventory adjustments and other net (charges) credits, which are
summarized in the supplemental schedules, "Adjusted Net (Loss)
Income," on page VII. c. Consolidated interest costs (before
capitalization) totaled $167 million in second-quarter 2019, $165
million in second-quarter 2018, $345 million for the first six
months of 2019 and $341 million for the first six months of 2018.
d. Includes interest received with the refund of PT-FI's prior
years' tax receivables. Refer to the supplemental schedule,
"Adjusted Net (Loss) Income," on page VII. e. For a summary of
FCX's benefit from (provision for) income taxes, refer to the
supplemental schedule, "Income Taxes," on page VIII. f. 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.
Freeport-McMoRan Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, 2019
December 31, 2018
(In Millions)
ASSETS
Current assets:
Cash and cash equivalents
$
2,623
$
4,217
Trade accounts receivable
725
829
Income and other tax receivables
245
493
Inventories:
Materials and supplies, net
1,634
1,528
Mill and leach stockpiles
1,352
1,453
Product
1,391
1,778
Other current assets
760
422
Total current assets
8,730
10,720
Property, plant, equipment and mine
development costs, net
28,841
28,010
Long-term mill and leach stockpiles
1,347
1,314
Other assets
2,168
2,172
Total assets
$
41,086
$
42,216
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued
liabilities
$
2,721
$
2,625
Current portion of environmental and asset
retirement obligations
425
449
Dividends payable
73
73
Accrued income taxes
63
165
Current portion of debt
4
17
Total current liabilities
3,286
3,329
Long-term debt, less current portion
9,912
11,124
Deferred income taxes
4,055
4,032
Environmental and asset retirement
obligations, less current portion
3,617
3,609
Other liabilities
2,399
2,230
Total liabilities
23,269
24,324
Equity:
Stockholders' equity:
Common stock
158
158
Capital in excess of par value
25,949
26,013
Accumulated deficit
(12,082
)
(12,041
)
Accumulated other comprehensive loss
(582
)
(605
)
Common stock held in treasury
(3,734
)
(3,727
)
Total stockholders' equity
9,709
9,798
Noncontrolling interestsa
8,108
8,094
Total equity
17,817
17,892
Total liabilities and equity
$
41,086
$
42,216
a. Includes $4.6 billion associated with the December 2018 PT-FI
transaction.
Freeport-McMoRan Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
Six Months Ended
June 30,
2019
2018
(In Millions)
Cash flow from operating activities:
Net income
$
2
$
1,852
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and
amortization
699
893
Metals inventory adjustments
59
2
Net gain on sales of assets
(25
)
(56
)
Stock-based compensation
40
60
Net charges for environmental and asset
retirement obligations, including accretion
109
152
Payments for environmental and asset
retirement obligations
(100
)
(110
)
Net charges for defined pension and
postretirement plans
53
38
Pension plan contributions
(33
)
(44
)
Net loss (gain) on early extinguishment of
debt
6
(8
)
Deferred income taxes
20
61
(Gain) loss on discontinued operations
(1
)
15
(Increase) decrease in long-term mill and
leach stockpiles
(33
)
38
PT-FI surface water tax settlement
28
—
Cerro Verde royalty dispute
28
4
Payments for Cerro Verde royalty
dispute
(86
)
(21
)
Other, net
41
15
Changes in working capital and other tax
payments:
Accounts receivable
256
309
Inventories
287
(468
)
Other current assets
(26
)
(20
)
Accounts payable and accrued
liabilities
9
114
Accrued income taxes and timing of other
tax payments
(245
)
(148
)
Net cash provided by operating
activities
1,088
2,678
Cash flow from investing activities:
Capital expenditures:
North America copper mines
(417
)
(232
)
South America
(108
)
(138
)
Indonesia
(658
)
(449
)
Molybdenum mines
(6
)
(2
)
Other
(62
)
(63
)
Proceeds from sales of oil and gas
properties
91
—
Intangible water rights and other, net
(7
)
(86
)
Net cash used in investing activities
(1,167
)
(970
)
Cash flow from financing activities:
Proceeds from debt
328
352
Repayments of debt
(1,563
)
(2,297
)
Cash dividends and distributions paid:
Common stock
(146
)
(73
)
Noncontrolling interests
(79
)
(241
)
Contributions from noncontrolling
interests
100
—
Stock-based awards net (payments)
proceeds
(6
)
5
Debt financing costs and other, net
(4
)
(23
)
Net cash used in financing activities
(1,370
)
(2,277
)
Net decrease in cash, cash equivalents,
restricted cash and restricted cash equivalents
(1,449
)
(569
)
Cash, cash equivalents, restricted cash
and restricted cash equivalents at
beginning of year
4,455
4,710
Cash, cash equivalents, restricted cash
and restricted cash equivalents at
end of perioda
$
3,006
$
4,141
a. Includes restricted cash and restricted cash equivalents of
$383 million at June 30, 2019, and $247 million at June 30,
2018.
Freeport-McMoRan Inc. ADJUSTED NET (LOSS)
INCOME
Adjusted net (loss) income is intended to provide investors and
others with information about FCX's recurring operating
performance. This information differs from net (loss) income
attributable to common stock determined in accordance with U.S.
generally accepted accounting principles (GAAP) and should not be
considered in isolation or as a substitute for measures of
performance determined in accordance with U.S. GAAP. FCX's adjusted
net (loss) income follows, which may not be comparable to similarly
titled measures reported by other companies (in millions, except
per share amounts).
Three Months Ended June 30,
2019
2018
Pre-tax
After-taxa
Per Share
Pre-tax
After-taxa
Per Share
Net (loss) income attributable to
common stock
N/A
$
(72
)
$
(0.05
)
N/A
$
869
$
0.59
PT-FI chargesb
$
(28
)
$
(14
)
$
(0.01
)
$
—
$
—
$
—
Metals inventory adjustments
(2
)
(1
)
—
(2
)
(2
)
—
Other net (charges) credits
(2
)
—
—
16
11
0.01
Net adjustments to environmental
obligations and related litigation reserves
(9
)
(9
)
(0.01
)
(50
)
(50
)
(0.03
)
Net (loss) gain on sales of assetsc
(8
)
(8
)
(0.01
)
45
45
0.03
Net gain on early extinguishment of
debt
—
—
—
9
9
0.01
Net tax creditsd
N/A
18
0.01
N/A
7
—
Loss on discontinued operationse
—
—
—
(4
)
(4
)
—
$
(49
)
$
(14
)
$
(0.01
)
f
$
14
$
16
$
0.01
f
Adjusted net (loss) income attributable
to common stock
N/A
$
(58
)
$
(0.04
)
N/A
$
853
$
0.58
Six Months Ended June 30,
2019
2018
Pre-tax
After-taxa
Per Share
Pre-tax
After-taxa
Per Share
Net (loss) income attributable to
common stock
N/A
$
(41
)
$
(0.03
)
N/A
$
1,561
$
1.07
PT-FI chargesb
$
(28
)
$
(14
)
$
(0.01
)
$
—
$
—
$
—
Metals inventory adjustments
(59
)
(27
)
(0.02
)
(2
)
(2
)
—
Other net (charges) credits
(24
)
(10
)
(0.01
)
12
10
0.01
Net adjustments to environmental
obligations and related litigation reserves
(44
)
(44
)
(0.03
)
(50
)
(50
)
(0.03
)
Net gain on sales of assetsc
25
25
0.02
56
56
0.04
Net (loss) gain on early extinguishment of
debt
(6
)
(5
)
—
8
8
—
PT-FI interest on tax refunds
—
—
—
24
13
0.01
Net tax creditsd
N/A
24
0.02
N/A
7
—
Gain (loss) on discontinued
operationse
1
1
—
(15
)
(15
)
(0.01
)
$
(135
)
$
(50
)
$
(0.03
)
$
33
$
27
$
0.02
Adjusted net income attributable to
common stock
N/A
$
9
$
0.01
f
N/A
$
1,534
$
1.05
a. Reflects impact to FCX net (loss) income attributable to
common stock (i.e., net of any taxes and noncontrolling interests).
b. Reflects an adjustment to the settlement of the historical
surface water tax disputes with the local regional tax authority in
Papua, Indonesia. c. Includes adjustments to the fair value of the
potential contingent consideration related to the 2016 sale of
onshore California oil and gas properties, which will continue to
be adjusted through December 31, 2020. FCX would receive additional
contingent consideration related to this transaction consisting of
$50 million per year for 2019 and 2020 if the price of Brent crude
oil averages over $70 per barrel in each of these calendar years.
The first six months of 2019 also included a $20 million gain on
sales of oil and gas assets. d. Refer to "Income Taxes" on page
VIII for further discussion of net tax credits. e. Primarily
reflects adjustments to the estimated fair value of contingent
consideration related to the 2016 sale of FCX’s interest in TF
Holdings Limited, which will continue to be adjusted through
December 31, 2019. f. Does not foot because of rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190724005439/en/
Freeport-McMoRan Inc. Financial Contacts: Kathleen L. Quirk,
602-366-8016 David P. Joint, 504-582-4203
Media Contact: Linda S. Hayes, 602-366-7824
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