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Freeport-McMoRan Reports Third-Quarter and Nine-Month 2015 Results

PHOENIX--(BUSINESS WIRE)--

Freeport-McMoRan Inc. (FCX):

  • Net loss attributable to common stock totaled $3.8 billion, $3.58 per share, for third-quarter 2015. After adjusting for net charges totaling $3.7 billion, $3.43 per share, third-quarter 2015 adjusted net loss attributable to common stock totaled $156 million, $0.15 per share.
  • Consolidated sales totaled 1.0 billion pounds of copper, 294 thousand ounces of gold, 23 million pounds of molybdenum and 13.8 million barrels of oil equivalents (MMBOE) for third-quarter 2015, compared with 1.1 billion pounds of copper, 525 thousand ounces of gold, 22 million pounds of molybdenum and 12.5 MMBOE for third-quarter 2014.
  • Consolidated sales for the year 2015 are expected to approximate 4.1 billion pounds of copper, 1.2 million ounces of gold, 90 million pounds of molybdenum and 52.7 MMBOE, including 1.1 billion pounds of copper, 310 thousand ounces of gold, 21 million pounds of molybdenum and 13.3 MMBOE for fourth-quarter 2015.
  • Average realized prices were $2.38 per pound for copper, $1,117 per ounce for gold and $55.88 per barrel for oil (including $11.03 per barrel for cash gains on derivative contracts) for third-quarter 2015.
  • Consolidated unit net cash costs for third-quarter 2015 averaged $1.52 per pound of copper for mining operations and $18.85 per barrel of oil equivalents (BOE) for oil and gas operations.
  • Operating cash flows totaled $822 million(including $507 million in working capital sources and changes in other tax payments) for third-quarter 2015. Based on current sales volume and cost estimates and assuming average prices of $2.40 per pound for copper, $1,150 per ounce for gold, $5.50 per pound for molybdenum and $50 per barrel for Brent crude oil for fourth-quarter 2015, operating cash flows are expected to approximate $3.3 billion for the year 2015. Using similar price assumptions, operating cash flows are expected to approximate $6.8 billion for the year 2016.
  • Capital expenditures totaled $1.5 billion for third-quarter 2015, including $0.6 billion for major projects at mining operations and $0.7 billion for oil and gas operations. Capital expenditures are expected to approximate $6.3 billion for the year 2015, including $2.5 billion for major projects at mining operations and $2.8 billion for oil and gas operations. Capital expenditures are expected to approximate $4.0 billion for the year 2016.
  • The Cerro Verde expansion project commenced operations in September 2015 and is expected to achieve full rates by early 2016.
  • In third-quarter 2015, FCX announced revised capital and operating plans in response to market conditions. The revised plans include significant reductions in planned capital expenditures, production curtailments and cost reductions. FCX also announced today additional actions to further curtail copper and molybdenum production.
  • FCX has sold 114.8 million shares of its common stock and generated gross proceeds of $1.2 billion under its at-the-market equity programs, including 97.5 million shares and gross proceeds of $1.0 billion during third-quarter 2015.
  • At September 30, 2015, consolidated debt totaled $20.7 billionand consolidated cash totaled $338 million.
  • In October 2015, FCX announced it is undertaking a review of its oil and gas business to evaluate strategic alternatives designed to enhance value to FCX shareholders and achieve self-funding of the oil and gas business from its cash flows and resources.
  • In October 2015, the Indonesian government provided assurances to PT Freeport Indonesia on its long-term mining rights.

Freeport-McMoRan Inc. (FCX) reported a net loss attributable to common stock of $3.8 billion, $3.58 per share, for third-quarter 2015 and $8.2 billion, $7.77 per share, for the first nine months of 2015, compared with net income attributable to common stock of $552 million, $0.53 per share, for third-quarter 2014 and $1.5 billion, $1.47 per share, for the first nine months of 2014. FCX’s net loss attributable to common stock includes net charges totaling $3.7 billion, $3.43 per share, for third-quarter 2015 and $8.1 billion, $7.71 per share, for the first nine months of 2015, primarily for the reduction of the carrying value of oil and gas properties and other items described below. Net income attributable to common stock for the 2014 periods included net charges totaling $114 million, $0.11 per share, for third-quarter 2014 and $236 million, $0.23 per share, for the first nine months of 2014, including charges for the reduction of the carrying value of oil and gas properties and other items described below.

James R. Moffett, Chairman of the Board, and Richard C. Adkerson, Vice Chairman, President and Chief Executive Officer, said, "During the third quarter, we took a series of aggressive actions to reduce costs and capital expenditures and to strengthen our financial position. These actions, combined with the recent achievement of several important project milestones, position FCX for enhanced free cash flow generation in a weak market environment while maintaining exposure to improved future market conditions for our large resource base. We remain focused on managing our production, costs and capital expenditures under volatile market conditions as we seek to strengthen our balance sheet and build value for shareholders from our high quality portfolio of assets."

SUMMARY FINANCIAL DATA

Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(in millions, except per share amounts)
Revenuesa,b,c $ 3,681 $ 5,696 $ 12,082 $ 16,203
Operating (loss) incomea,b,c,d,e $ (3,945 ) f,g $ 1,132 h $ (9,282 ) f,g,h $ 3,396 h
Net (loss) income attributable to common stockb,c,d,e,i $ (3,830 ) f,g $ 552 h,j,k $ (8,155 ) f,g,h,l $ 1,544 h,j,k
Diluted net (loss) income per share of common stockb,c,d,e,i $ (3.58 ) f,g $ 0.53 h,j,k $ (7.77 ) f,g,h,l $ 1.47 h,j,k
Diluted weighted-average common shares outstanding 1,071 1,046 1,050 1,045
Operating cash flowsm $ 822 $ 1,926 $ 2,608 $ 4,513
Capital expenditures $ 1,527 $ 1,853 $ 5,055 $ 5,415
At September 30:
Cash and cash equivalents $ 338 $ 658 $ 338 $ 658
Total debt, including current portion $ 20,698 $ 19,636 $ 20,698 $ 19,636

a.

For segment financial results, refer to the supplemental schedule, "Business Segments," beginning on page XI, which is available on FCX's website, "fcx.com."

b.

Includes unfavorable adjustments to provisionally priced concentrate and cathode copper sales recognized in prior periods totaling $126 million ($62 million to net loss attributable to common stock or $0.06 per share) for third-quarter 2015, $22 million ($10 million to net income attributable to common stock or $0.01 per share) for third-quarter 2014, $107 million ($50 million to net loss attributable to common stock or $0.05 per share) for the first nine months of 2015 and $118 million ($65 million to net income attributable to common stock or $0.06 per share) for the first nine months of 2014. For further discussion, refer to the supplemental schedule, "Derivative Instruments," beginning on page X, which is available on FCX's website, "fcx.com."

c.

Includes net noncash mark-to-market (losses) gains associated with crude oil and natural gas derivative contracts totaling $(74) million ($(46) million to net loss attributable to common stock or $(0.04) per share) for third-quarter 2015, $122 million ($76 million to net income attributable to common stock or $0.07 per share) for third-quarter 2014, $(217) million ($(135) million to net loss attributable to common stock or $(0.13) per share) for the first nine months of 2015 and $130 million ($80 million to net income attributable to common stock or $0.08 per share) for the first nine months of 2014. For further discussion, refer to the supplemental schedule, "Derivative Instruments," beginning on page X, which is available on FCX's website, "fcx.com."

d.

Includes charges to reduce the carrying value of oil and gas properties pursuant to full cost accounting rules of $3.7 billion ($3.5 billion to net loss attributable to common stock or $3.25 per share) for third-quarter 2015 and $9.4 billion ($7.9 billion to net loss attributable to common stock or $7.48 per share) for the first nine months of 2015. These after-tax impacts include net tax charges of $1.1 billion for third-quarter 2015 and $1.9 billion for the first nine months of 2015 primarily to establish a valuation allowance against United States (U.S.) federal alternative minimum tax credits and foreign tax credits. The third quarter and first nine months of 2014 also includes charges of $308 million ($192 million to net income attributable to common stock of $0.18 per share) to reduce the carrying value of oil and gas properties.

e.

Includes net (charges) credits for adjustments to environmental obligations and related litigation reserves totaling $(28) million ($(18) million to net loss attributable to common stock or $(0.02) per share) for third-quarter 2015, $1 million ($1 million to net income attributable to common stock or less than $0.01 per share) for third-quarter 2014, $(36) million ($(23) million to net loss attributable to common stock or $(0.02) per share) for the first nine months of 2015 and $(68) million ($(67) million to net income attributable to common stock or $(0.06) per share) for the first nine months of 2014.

f.

Includes charges at mining operations for (i) adjustments to copper and molybdenum inventories totaling $91 million ($58 million to net loss attributable to common stock or $0.05 per share) for third-quarter 2015 and $154 million ($99 million to net loss attributable to common stock or $0.09 per share) for the first nine months of 2015 and (ii) impairment and restructuring charges totaling $95 million ($58 million to net loss attributable to common stock or $0.05 per share) for the third quarter and first nine months of 2015.

g.

Includes charges at oil and gas operations for tax assessments related to prior periods at the California properties, idle/terminated rig costs and inventory write-downs totaling $21 million ($13 million to net loss attributable to common stock or $0.01 per share) for third-quarter 2015 and $59 million ($36 million to net loss attributable to common stock or $0.03 per share) for the first nine months of 2015.

h.

Includes net gains on the sales of assets totaling $39 million ($25 million to net loss attributable to common stock or $0.02 per share) for the first nine months of 2015 associated with the sale of FCX's one-third interest in the Luna Energy power facility in New Mexico and $46 million ($31 million to net income attributable to common stock or $0.03 per share) for the third quarter and first nine months of 2014 associated with the sale of a metals injection molding plant.

i.

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 XI, which is available on FCX's website, "fcx.com."

j.

Includes net gains on early extinguishment of debt totaling $58 million ($17 million to net income attributable to common stock or $0.02 per share) in third-quarter 2014 and $63 million ($21 million to net income attributable to common stock or $0.02 per share) for the first nine months of 2014 related to the redemption of senior notes.

k.

The third quarter and first nine months of 2014 include a tax charge of $54 million ($47 million net of noncontrolling interests or $0.04 per share) related to changes in Chilean tax rules. The first nine months of 2014 also includes a tax charge of $62 million ($0.06 per share) associated with deferred taxes recorded in connection with the allocation of goodwill to the sale of Eagle Ford.

l.

The first nine months of 2015 includes a gain of $92 million ($0.09 per share) related to net proceeds received from insurance carriers and other third parties related to the shareholder derivative litigation settlement.

m.

Includes net working capital sources (uses) and changes in other tax payments of $507 million for third-quarter 2015, $78 million for third-quarter 2014, $342 million for the first nine months of 2015 and $(699) million for the first nine months of 2014.

REVISED OPERATING PLANS AND OIL AND GAS REVIEW

During third-quarter 2015, FCX took aggressive actions to enhance the outlook for free cash flow generation at low commodity prices, including further reductions in capital spending, production curtailments at certain mining operations and actions to reduce operating, exploration and administrative costs. These actions include:

  • A 29 percent reduction in estimated 2016 capital expenditures (from $5.6 billion to $4.0 billion), including:
    • A 25 percent reduction in estimated mining capital expenditures (from $2.7 billion to $2.0 billion)
    • A 30 percent reduction in estimated oil and gas capital expenditures (from $2.9 billion to $2.0 billion)
  • Production curtailments at certain North and South America copper mines
  • Reductions in mining operating costs

FCX continues to review its capital projects and costs to maximize cash flow in a weak market environment and to preserve its resources for improved market conditions. During October 2015, FCX initiated a plan to reduce operating rates at its Sierrita mine in Arizona in response to low copper and molybdenum prices. Initially, the plan involves operating the Sierrita mine at 50 percent of its current operating rate. FCX is also evaluating the economics of a full shutdown. The impact of a 50 percent curtailment is approximately 100 million pounds of copper and 10 million pounds of molybdenum per year. Combined with the previously announced curtailments, the consolidated impact is an aggregate reduction of 250 million pounds of copper and 20 million pounds of molybdenum per year.

As previously announced on October 6, 2015, the FCX Board of Directors is undertaking a strategic review of its oil and gas business (FCX Oil & Gas Inc., or FM O&G) to evaluate alternatives designed to enhance value to FCX shareholders and achieve self funding of the oil and gas business from its cash flows and resources. The previously announced potential initial public offering (IPO) of a minority interest in FCX’s oil and gas business remains an alternative for future consideration, the timing of which is subject to market conditions. Other alternatives currently under consideration include a spinoff of the oil and gas business to FCX shareholders, joint venture arrangements and further spending reductions. FM O&G’s high-quality asset base, substantial underutilized Deepwater Gulf of Mexico (GOM) infrastructure, large inventory of low-risk development opportunities and talented and experienced personnel and management team provide opportunities to generate value.

FCX’s strategy will focus on its global leading position in the copper industry. Near term, this strategy will involve managing its production activities, spending on capital projects and operations, and the administration of its business to enhance cash flows and protect liquidity. While taking prudent near-term steps responsive to the currently weak market conditions, FCX remains confident about the longer term outlook for copper prices based on the global demand and supply fundamentals. A primary objective of FCX's strategy will be a significant reduction over time of FCX’s current debt level. With its established reserves and large-scale current production base, its significant portfolio of undeveloped resources, and its global organization of highly qualified dedicated workers and management, FCX is well positioned to build value for its shareholders.

SUMMARY OPERATING DATA

Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014a 2015 2014a,b
Copper (millions of recoverable pounds)
Production 1,003 1,027 2,895 2,906
Sales, excluding purchases 1,001 1,077 2,925 2,916
Average realized price per pound $ 2.38 $ 3.12 $ 2.54 $ 3.14
Site production and delivery costs per poundc $ 1.74 $ 1.91 $ 1.84 $ 1.92
Unit net cash costs per poundc $ 1.52 $ 1.34 $ 1.56 $ 1.52
Gold (thousands of recoverable ounces)
Production 281 449 907 846
Sales, excluding purchases 294 525 909 871
Average realized price per ounce $ 1,117 $ 1,220 $ 1,149 $ 1,251
Molybdenum (millions of recoverable pounds)
Production 23 24 72 73
Sales, excluding purchases 23 22 69 74
Average realized price per pound $ 7.91 $ 14.71 $ 9.21 $ 13.01
Oil Equivalents
Sales volumes
MMBOE 13.8 12.5 39.4 44.7
Thousand BOE (MBOE) per day 150 136 144 164
Cash operating margin per BOEd
Realized revenues $ 43.00 $ 69.08 $ 45.57 $ 75.04
Cash production costs 18.85 20.93 19.42 19.57
Cash operating margin $ 24.15 $ 48.15 $ 26.15 $ 55.47

a.

The 2014 periods include the results of the Candelaria and Ojos del Salado mines (Candelaria/Ojos) that were sold in November 2014. Sales volumes from Candelaria/Ojos totaled 62 million pounds of copper and 16 thousand ounces of gold for third-quarter 2014 and 236 million pounds of copper and 59 thousand ounces of gold for the first nine months of 2014.

b.

The first nine months of 2014 include the results of the Eagle Ford properties that were sold in June 2014. Sales volumes from Eagle Ford totaled 8.7 MMBOE (32 MBOE per day) for the first nine months of 2014; excluding Eagle Ford, oil and gas cash production costs were $21.16 per BOE for the first nine months of 2014.

c.

Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines. 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 XIV, which are available on FCX's website, "fcx.com."

d.

Cash operating margin for oil and gas operations reflects realized revenues less cash production costs. Realized revenues exclude noncash mark-to-market adjustments on derivative contracts. For reconciliations of realized revenues and cash production costs per BOE to revenues and production and delivery costs reported in FCX's consolidated financial statements, refer to the supplemental schedules, “Product Revenues and Production Costs,” beginning on page XIV, which are available on FCX's website, “fcx.com.”

Consolidated Sales Volumes

Third-quarter 2015 consolidated copper sales of 1.0 billion pounds were slightly below the August 2015 estimate and lower than third-quarter 2014 sales of 1.1 billion pounds. The variance to third-quarter 2014 primarily reflects lower volumes from South America as a result of the sale of Candelaria/Ojos in fourth-quarter 2014 and lower volumes at PT Freeport Indonesia (PT-FI) associated with lower ore grades and the impact of El Niño weather conditions, partly offset by higher volumes from North America.

Third-quarter 2015 consolidated gold sales of 294 thousand ounces were slightly lower than the July 2015 estimate of 315 thousand ounces and lower than third-quarter 2014 sales of 525 thousand ounces, primarily reflecting lower volumes at PT-FI associated with lower ore grades and the impacts of El Niño weather conditions.

Third-quarter 2015 consolidated molybdenum sales of 23 million pounds approximated the July 2015 estimate and the third-quarter 2014 sales of 22 million pounds.

Third-quarter 2015 sales from oil and gas operations of 13.8 MMBOE, including 9.3 million barrels (MMBbls) of crude oil, 22.8 billion cubic feet (Bcf) of natural gas and 0.7 MMBbls of natural gas liquids (NGLs), approximated the July 2015 estimate of 13.6 MMBOE and were higher than third-quarter 2014 sales of 12.5 MMBOE, primarily reflecting higher volumes in the GOM, partly offset by lower volumes in California.

Consolidated sales for the year 2015 are expected to approximate 4.1 billion pounds of copper, 1.2 million ounces of gold, 90 million pounds of molybdenum and 52.7 MMBOE, including 1.1 billion pounds of copper, 310 thousand ounces of gold, 21 million pounds of molybdenum and 13.3 MMBOE for fourth-quarter 2015. Projected 2015 sales volumes are approximately 130 million pounds of copper and 90 thousand ounces of gold below the July 2015 estimates reflecting revised operating plans and ongoing El Niño weather conditions in Indonesia. With the completion of the Cerro Verde expansion project and access to higher grade ore at Grasberg in 2016, FCX expects sales volumes to approximate 5.2 billion pounds of copper for the year 2016.

Consolidated Unit Costs

Mining Unit Net Cash Costs. Consolidated average unit net cash costs (net of by-product credits) for FCX's copper mines of $1.52 per pound of copper in third-quarter 2015 were higher than unit net cash costs of $1.34 per pound in third-quarter 2014, primarily reflecting lower by-product credits, partly offset by lower site production and delivery costs mostly associated with higher volumes in North America.

Assuming average prices of $1,150 per ounce of gold and $5.50 per pound of molybdenum for fourth-quarter 2015 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 $1.52 per pound of copper for the year 2015. Quarterly unit net cash costs vary with fluctuations in sales volumes and average realized prices (primarily gold and molybdenum prices). The impact of price changes for fourth-quarter 2015 on consolidated unit net cash costs would approximate $0.006 per pound for each $50 per ounce change in the average price of gold and $0.003 per pound for each $2 per pound change in the average price of molybdenum.

Unit net cash costs are expected to decline significantly in 2016, principally reflecting higher anticipated copper and gold volumes. Using the same metals price assumptions and assuming 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 $1.15 per pound of copper for the year 2016.

Oil and Gas Cash Production Costs per BOE. Cash production costs for oil and gas operations of $18.85 per BOE in third-quarter 2015 were lower than cash production costs of $20.93 per BOE in third-quarter 2014, primarily reflecting lower production costs in California related to reductions in well workover expense and steam costs.

Based on current sales volume and cost estimates for fourth-quarter 2015, cash production costs are expected to approximate $19 per BOE for the year 2015.

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. All of the North America mining operations are wholly owned, except for Morenci. FCX records its 85 percent joint venture interest in Morenci using the proportionate consolidation method. In addition to copper, molybdenum concentrates and silver are also produced by certain of FCX's North America copper mines.

Operating and Development Activities. FCX has significant undeveloped reserves and resources in North America and a portfolio of potential long-term development projects. In the near term, FCX is deferring developing new projects as a result of current market conditions. Future investments will be undertaken based on the results of economic and technical feasibility studies, and market conditions.

The Morenci mill expansion project commenced operations in May 2014 and successfully achieved full rates in second-quarter 2015. The project expanded mill capacity from 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day, which results in incremental annual production of approximately 225 million pounds of copper and an improvement in Morenci's cost structure. Morenci's copper production is expected to average 900 million pounds per year over the next five years.

FCX's revised plans for its North America copper mines incorporate reductions in mining rates to reduce operating and capital costs, including the suspension of mining operations at the Miami mine (which produced 33 million pounds of copper for the first nine months of 2015), a 50 percent reduction in mining rates at the Tyrone mine (which produced 65 million pounds of copper for the first nine months of 2015), a 50 percent reduction in operating rates at the Sierrita mine (which produced 140 million pounds of copper and 17 million pounds of molybdenum for the first nine months of 2015) as well as adjustments to mining rates at other North America mines. The revised plans at each of the operations incorporate the impacts of lower energy, acid and other consumables, reduced labor costs and a significant reduction in capital spending plans. These plans will continue to be reviewed and additional adjustments may be made as market conditions warrant.

Operating Data. Following is a summary of consolidated operating data for the North America copper mines for the third quarters and first nine months of 2015 and 2014:

Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
Copper (millions of recoverable pounds)
Production 499 423 1,420 1,203
Sales 483 436 1,441 1,230
Average realized price per pound $ 2.42 $ 3.17 $ 2.59 $ 3.19
Molybdenum (millions of recoverable pounds)
Productiona 9 8 28 25
Unit net cash costs per pound of copperb
Site production and delivery, excluding adjustments $ 1.68 $ 1.83 $ 1.76 $ 1.86
By-product credits (0.12 ) (0.26 ) (0.15 ) (0.25 )
Treatment charges 0.12 0.11 0.12 0.11
Unit net cash costs $ 1.68 $ 1.68 $ 1.73 $ 1.72

a.

Refer to summary operating data on page 5 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 XIV which are available on FCX's website, "fcx.com."

North America's consolidated copper sales volumes of 483 million pounds in third-quarter 2015 were higher than third-quarter 2014 sales of 436 million pounds, primarily reflecting higher milling rates and ore grades at Morenci and Chino, and higher ore grades at Safford. North America copper sales are estimated to approximate 1.95 billion pounds for the year 2015, compared with 1.66 billion pounds in 2014.

Average unit net cash costs (net of by-product credits) for the North America copper mines were $1.68 per pound of copper in both the third quarters of 2015 and 2014, with favorable impacts from higher volumes offset by lower by-product credits. Average unit net cash costs (net of by-product credits) for the North America copper mines are expected to approximate $1.70 per pound of copper for the year 2015, based on current sales volume and cost estimates and assuming an average molybdenum price of $5.50 per pound for fourth-quarter 2015. North America's average unit net cash costs for fourth-quarter 2015 would change by approximately $0.004 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 concentrates and silver.

Operating and Development Activities. The Cerro Verde expansion project commenced operations in September 2015 and is expected to reach full rates by early 2016. This expansion will enable Cerro Verde to contribute significant cash flows in coming years from its large-scale, long-lived and cost-efficient operation. The project expands the concentrator facilities from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day and provides incremental annual production of approximately 600 million pounds of copper and 15 million pounds of molybdenum beginning in 2016.

During third-quarter 2015, FCX revised plans for its South America copper mines, principally to reflect adjustments to the mine plan at El Abra (which produced 251 million pounds of copper for the first nine months of 2015) to reduce mining and stacking rates by approximately 50 percent to achieve lower operating and labor costs, defer capital expenditures and extend the life of the existing operations.

Operating Data. Following is a summary of consolidated operating data for the South America mining operations for the third quarters and first nine months of 2015 and 2014:

Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014a 2015 2014a
Copper (millions of recoverable pounds)
Production 204 284 585 898
Sales 207 271 585 888
Average realized price per pound $ 2.37 $ 3.10 $ 2.52 $ 3.12
Gold (thousands of recoverable ounces)
Production 20 62
Sales 16 59
Average realized price per ounce $ $ 1,234 $ $ 1,280
Molybdenum (millions of recoverable pounds)
Productionb 1 3 5 8
Unit net cash costs per pound of copperc
Site production and delivery, excluding adjustments $ 1.54 $ 1.67 $ 1.68 $ 1.61
By-product credits (0.04 ) (0.23 ) (0.05 ) (0.24 )
Treatment charges 0.18 0.16 0.17 0.17
Unit net cash costs $ 1.68 $ 1.60 $ 1.80 $ 1.54

a.

The 2014 periods include the results of Candelaria/Ojos that were sold in November 2014. Candelaria/Ojos had sales volumes totaling 62 million pounds of copper and 16 thousand ounces of gold for third-quarter 2014 and 236 million pounds of copper and 59 thousand ounces of gold for the first nine months of 2014. Excluding Candelaria/Ojos, South America mining's unit net cash costs averaged $1.54 per pound of copper for third-quarter 2014 and $1.52 per pound of copper for the first nine months of 2014.

b.

Refer to summary operating data on page 5 for FCX's consolidated molybdenum sales, which includes sales of molybdenum produced at Cerro Verde.

c.

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 XIV, which are available on FCX's website, "fcx.com."

South America's consolidated copper sales volumes of 207 million pounds in third-quarter 2015 were lower than third-quarter 2014 sales of 271 million pounds, primarily reflecting the sale of Candelaria/Ojos. Sales from South America mining are expected to approximate 885 million pounds of copper for the year 2015, compared with 1.14 billion pounds of copper in 2014 (which included 268 million pounds from Candelaria/Ojos).

Average unit net cash costs (net of by-product credits) for South America mining of $1.68 per pound of copper in third-quarter 2015 were higher than unit net cash costs of $1.60 per pound in third-quarter 2014, primarily reflecting lower by-product credits as a result of the sale of Candelaria/Ojos in fourth-quarter 2014. 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 2015, based on current sales volume and cost estimates and assuming average prices of $5.50 per pound of molybdenum for fourth-quarter 2015.

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 concentrates that contain significant quantities of gold and silver.

Regulatory Matters. PT-FI has advanced discussions with the Indonesian government regarding its Contract of Work (COW) and long-term operating rights. The Indonesian government is currently developing economic stimulus measures, which include revisions to mining regulations, to promote economic and employment growth. In...


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