Freeport-McMoRan Inc. (NYSE: FCX):
- Net loss attributable to common stock totaled $131
million, $0.09 per share, in third-quarter 2019. After adjusting
for net charges of $123 million, $0.08 per share, third-quarter
2019 adjusted net loss attributable to common stock totaled $8
million, $0.01 per share.
- Consolidated sales totaled 795 million pounds of copper,
243 thousand ounces of gold and 22 million pounds of molybdenum in
third-quarter 2019. Consolidated production totaled 864 million
pounds of copper and 333 thousand ounces of gold in third-quarter
2019.
- Full year consolidated sales guidance is similar to prior
estimates, with consolidated sales expected to approximate
3.3 billion pounds of copper, 874 thousand ounces of gold and 92
million pounds of molybdenum for the year 2019, including 870
million pounds of copper, 200 thousand ounces of gold and 24
million pounds of molybdenum in fourth-quarter 2019.
- Average realized prices in third-quarter 2019 were $2.62
per pound for copper, $1,487 per ounce for gold and $12.89 per
pound for molybdenum.
- Average unit net cash costs in third-quarter 2019 were
$1.59 per pound of copper and are expected to approximate $1.76 per
pound of copper for the year 2019.
- Operating cash flows totaled $224 million (net of $146
million of working capital uses and timing of other tax payments)
in third-quarter 2019 and $1.3 billion (including $135 million of
working capital sources and timing of other tax payments) for the
first nine months of 2019. Based on current sales volume and cost
estimates, and assuming average prices of $2.60 per pound for
copper, $1,500 per ounce for gold and $12.00 per pound for
molybdenum for fourth-quarter 2019, operating cash flows are
expected to approximate $1.6 billion (including $0.2 billion of
working capital sources and timing of other tax payments) for the
year 2019.
- Capital expenditures totaled $0.7 billion (including
approximately $0.3 billion for major mining projects) in
third-quarter 2019 and $1.9 billion (including approximately $1.1
billion for major mining projects) for the first nine 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.
- The Grasberg underground and Lone Star copper leach development
projects are progressing according to plan.
- At September 30, 2019, consolidated debt totaled $9.9
billion and consolidated cash totaled $2.2 billion. FCX had
no borrowings and $3.5 billion available under its revolving credit
facility at September 30, 2019.
- On September 25, 2019, FCX declared a quarterly cash
dividend of $0.05 per share on its common stock, which will be
paid on November 1, 2019.
Freeport-McMoRan Inc. (NYSE: FCX) reported net losses
attributable to common stock of $131 million ($0.09 per share) in
third-quarter 2019 and $172 million ($0.12 per share) for the first
nine months of 2019. After adjusting for net charges of $123
million ($0.08 per share), adjusted net loss attributable to common
stock totaled $8 million ($0.01 per share) in third-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, "Our global team has established strong momentum on our three
major initiatives to build value for shareholders. We are
effectively executing our plans to establish large-scale production
from our significant high-grade, low-cost and long-lived
underground ore bodies at Grasberg; advance the Lone Star project
in Arizona as a new cornerstone asset in the U.S.; and progress our
innovation initiatives to enhance productivity and grow our
Americas operations with low capital intensity. These initiatives
are expected to significantly enhance our cost position, cash flow
and the long-term value of our premier copper portfolio, providing
opportunities for increased returns to shareholders. We are pleased
with our progress to date and remain focused on successful
execution of our plans, which would enable us to increase copper
production by 30 percent, gold production by 70 percent, reduce
unit net cash costs by 25 percent and more than double operating
cash flows in 2021 from 2019 levels.”
SUMMARY FINANCIAL DATA
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(in millions, except per share
amounts)
Revenuesa,b
$
3,308
$
4,908
$
10,646
$
14,944
Operating incomea
$
117
$
1,315
$
471
$
4,438
Net (loss) income from continuing
operations
$
(139
)
$
668
$
(138
)
$
2,535
Net (loss) income attributable to common
stockc,d
$
(131
)
$
556
$
(172
)
$
2,117
Diluted net (loss) income per share of
common stock:
Continuing operations
$
(0.09
)
$
0.38
$
(0.12
)
$
1.46
Discontinued operations
—
—
—
(0.01
)
$
(0.09
)
$
0.38
$
(0.12
)
$
1.45
Diluted weighted-average common shares
outstanding
1,452
1,458
1,451
1,458
Operating cash flowse
$
224
$
1,247
$
1,312
$
3,925
Capital expenditures
$
666
$
507
$
1,917
$
1,391
At September 30:
Cash and cash equivalents
$
2,247
$
4,580
$
2,247
$
4,580
Total debt, including current portion
$
9,919
$
11,287
$
9,919
$
11,287
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 $(42) million ($(17) million to net
loss attributable to common stock or $(0.01) per share) in
third-quarter 2019, $(111) million ($(48) million to net income
attributable to common stock or $(0.03) per share) in third-quarter
2018, $58 million ($23 million to net loss attributable to common
stock or $0.02 per share) for the first nine months of 2019 and
$(70) million ($(31) million to net income attributable to common
stock or $(0.02) per share) for the first nine 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 $(123)
million ($(0.08) per share) in third-quarter 2019, $42 million
($0.03 per share) in third-quarter 2018, $(173) million ($(0.12)
per share) for the first nine months of 2019 and $69 million ($0.04
per share) for the first nine 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 (uses) sources and
timing of other tax payments of $(146) million in third-quarter
2019, $59 million in third-quarter 2018, $135 million for the first
nine months of 2019 and $(154) million for the first nine months of
2018.
SUMMARY OPERATING DATA
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Copper (millions of recoverable
pounds)
Production
864
1,006
2,420
2,972
Sales, excluding purchases
795
1,044
2,386
3,026
Average realized price per pound
$
2.62
$
2.80
$
2.71
$
2.96
Site production and delivery costs per
pounda
$
2.05
$
1.73
b
$
2.16
$
1.70
b
Unit net cash costs per pounda
$
1.59
$
0.93
b
$
1.76
$
0.95
b
Gold (thousands of recoverable
ounces)
Production
333
760
659
2,105
Sales, excluding purchases
243
837
674
2,123
Average realized price per ounce
$
1,487
$
1,191
$
1,380
$
1,249
Molybdenum (millions of recoverable
pounds)
Production
21
23
69
69
Sales, excluding purchases
22
22
68
70
Average realized price per pound
$
12.89
$
12.40
$
12.92
$
12.41
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."
b.
Includes charges totaling $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 for Cerro Verde's
three-year collective labor agreement (CLA). Refer to the
supplemental schedule, "Adjusted Net (Loss) Income," on page VII,
which is available on FCX's website, "fcx.com," for additional
information.
Consolidated Sales Volumes
Third-quarter 2019 copper sales of 795 million pounds
were four percent lower than the July 2019 estimate of 830 million
pounds of copper, primarily because of lower production from Cerro
Verde and timing of shipments, partly offset by higher production
and sales from North America. Third-quarter 2019 gold sales
of 243 thousand ounces were six percent higher than the July 2019
estimate of 230 thousand ounces of gold.
Third-quarter 2019 copper and gold sales were lower than
third-quarter 2018 sales primarily reflecting anticipated lower
mill rates and ore grades as PT Freeport Indonesia (PT-FI)
transitions mining from the open pit to underground. Third-quarter
2019 copper sales were also lower in South America, reflecting the
timing of shipments and lower grades and recovery rates at Cerro
Verde, offset by higher copper sales in North America, primarily
related to higher mining and milling rates.
Third-quarter 2019 molybdenum sales of 22 million pounds
were lower than the July 2019 estimate of 25 million pounds and
approximated third-quarter 2018 sales of 22 million pounds.
Consolidated sales volumes for the year 2019 are expected to
approximate 3.3 billion pounds of copper, 874 thousand ounces of
gold and 92 million pounds of molybdenum, including 870 million
pounds of copper, 200 thousand ounces of gold and 24 million pounds
of molybdenum in fourth-quarter 2019. As PT-FI transitions mining
from the open pit to underground, metal production is currently
expected to improve significantly by 2021.
Consolidated Unit Net Cash Costs
Consolidated average unit net cash costs (net of by-product
credits) for FCX's copper mines of $1.59 per pound of copper in
third-quarter 2019, were slightly improved from the July 2019
estimate of $1.63 per pound. As anticipated, consolidated average
unit net cash costs were higher than the third-quarter 2018 average
of $0.93 per pound, primarily reflecting lower sales volumes as
PT-FI transitions mining from the open pit to underground.
Assuming average prices of $1,500 per ounce of gold and $12.00
per pound of molybdenum for fourth-quarter 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 $1.76 per pound of copper for the year 2019, (including
$1.76 per pound of copper in fourth-quarter 2019). The impact of
price changes during fourth-quarter 2019 on consolidated unit net
cash costs for the year 2019 would approximate $0.005 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. 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 identify opportunities to reduce the
capital intensity of its potential long-term development projects.
Early results from innovation initiatives have been positive, and
FCX expects to incorporate these enhancements into its future mine
plans in 2020.
Through exploration drilling, FCX has identified a significant
resource at its wholly owned Lone Star copper leach 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 September 30, 2019, approximately
$575 million has been incurred for this project, which is on
schedule and within budget. The project also advances exposure to a
significant sulfide resource. FCX expects to incorporate 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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Copper (millions of recoverable
pounds)
Production
390
349
1,096
1,051
Sales, excluding purchases
395
350
1,084
1,095
Average realized price per pound
$
2.65
$
2.77
$
2.74
$
3.02
Molybdenum (millions of recoverable
pounds)
Productiona
8
8
24
23
Unit net cash costs per pound of
copperb
Site production and delivery, excluding
adjustments
$
2.03
$
1.98
$
2.05
$
1.92
By-product credits
(0.22
)
(0.26
)
(0.25
)
(0.23
)
Treatment charges
0.11
0.10
0.11
0.10
Unit net cash costs
$
1.92
$
1.82
$
1.91
$
1.79
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 of 395 million
pounds in third-quarter 2019 were higher than third-quarter 2018
copper sales volumes of 350 million pounds, primarily reflecting
higher leach production and higher mining and milling rates. North
America copper sales are estimated to approximate 1.45 billion
pounds for the year 2019.
Average unit net cash costs (net of by-product credits) for the
North America copper mines of $1.92 per pound of copper in
third-quarter 2019 were higher than third-quarter 2018 unit net
cash costs of $1.82 per pound, primarily reflecting higher mining
and milling rates.
Average unit net cash costs (net of by-product credits) for the
North America copper mines are expected to approximate $1.90 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 fourth-quarter 2019. The impact of
price changes during fourth-quarter 2019 on North America's average
unit net cash costs for the year 2019 would approximate $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 and have continued to perform well.
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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Copper (millions of recoverable
pounds)
Production
283
325
863
931
Sales
261
326
838
928
Average realized price per pound
$
2.61
$
2.80
$
2.67
$
2.93
Molybdenum (millions of recoverable
pounds)
Productiona
6
7
21
20
Unit net cash costs per pound of
copperb
Site production and delivery, excluding
adjustments
$
1.89
$
1.84
c
$
1.84
$
1.80
c
By-product credits
(0.26
)
(0.23
)
(0.29
)
(0.24
)
Treatment charges
0.17
0.20
0.18
0.20
Royalty on metals
0.01
—
0.01
—
Unit net cash costs
$
1.81
$
1.81
$
1.74
$
1.76
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."
c.
Includes charges totaling $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 Cerro Verde's
three-year CLA.
South America's consolidated copper sales volumes of 261 million
pounds in third-quarter 2019 were lower than third-quarter 2018
copper sales volumes of 326 million pounds reflecting lower ore
grades and recovery rates at Cerro Verde and the timing of
shipments. Third-quarter 2019 production and sales were impacted by
protests in Peru associated with an unaffiliated copper development
project that blocked access to the shipping ports and main
transportation routes, mill maintenance activities and mine
sequencing changes at Cerro Verde that delayed access to higher
grade material. 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 were $1.81 per pound of copper in both
third-quarter 2019 and 2018. Excluding third-quarter 2018 charges
for Cerro Verde's three-year CLA, average unit net cash costs (net
of by-product credits) for South America were higher in
third-quarter 2019, primarily reflecting lower copper sales
volumes.
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 2019, based on current sales volume and cost
estimates and assuming an average price of $12.00 per pound of
molybdenum for fourth-quarter 2019.
In September 2019, El Abra and its two workers' unions signed
new CLAs, which expire on April 30, 2023.
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 and currently expects to
complete mining in the open pit in fourth-quarter 2019, subject to
geotechnical conditions.
PT-FI has commenced production from its significant underground
ore bodies and continues to achieve important milestones 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 $0.8 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 $0.95
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. Undercutting, drawbell
construction and ore extraction activities in the Grasberg Block
Cave underground mine continue to meet or exceed expectations. Ore
extraction from the Grasberg Block Cave underground mine averaged
10,600 metric tons of ore per day in third-quarter 2019 and is
expected to ramp up to 16,000 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 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 continued its
ramp up of 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. Ore extraction continues to exceed expectations, averaging
9,800 metric tons of ore per day in third-quarter 2019. During
third-quarter 2019, PT-FI elected to temporarily slow undercutting
rates in one of the DMLZ production blocks until the desired cave
shape was achieved. Undercutting re-commenced in September 2019.
Ore extraction 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.
Results to date from the Grasberg Block Cave and DMLZ
underground mine are positive and in line with long-term plans to
reach full production rates. Because of the nature of block caving,
estimates of timing of future production from PT-FI's underground
ore bodies will continue to be reviewed and may be modified as
additional information becomes available.
Indonesian Smelter. 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 approximates $3
billion, and PT-FI is pursuing financing and commercial
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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Copper (millions of recoverable
pounds)
Production
191
332
461
990
Sales
139
368
464
1,003
Average realized price per pound
$
2.59
$
2.81
$
2.70
$
2.93
Gold (thousands of recoverable
ounces)
Production
329
754
645
2,089
Sales
239
831
659
2,105
Average realized price per ounce
$
1,487
$
1,191
$
1,380
$
1,248
Unit net cash costs (credits) per pound
of coppera
Site production and delivery, excluding
adjustments
$
2.44
$
1.40
$
3.00
$
1.36
Gold and silver credits
(2.64
)
(2.72
)
(2.02
)
(2.69
)
Treatment charges
0.25
0.26
0.27
0.26
Export duties
0.05
0.14
0.07
0.15
Royalty on metals
0.17
0.20
0.15
0.21
Unit net cash costs (credits)
$
0.27
$
(0.72
)
$
1.47
$
(0.71
)
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 139 million pounds of copper and
239 thousand ounces of gold in third-quarter 2019 were lower than
third-quarter 2018 consolidated sales of 368 million pounds of
copper and 831 thousand ounces of gold, reflecting anticipated
lower mill rates and ore grades as it transitions mining from the
open pit to underground and timing of shipments.
On September 12, 2019, PT-FI received approval from the
Indonesian government to increase its export quota from
approximately 180,000 dry metric tons (DMT) of concentrate to
approximately 680,000 DMT for the current export period, which
expires March 8, 2020.
Consolidated sales volumes from PT-FI are expected to
approximate 0.6 billion pounds of copper and 860 thousand 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 currently expected to improve significantly by
2021.
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 $0.27 per pound of copper in
third-quarter 2019, compared with unit net cash credits of $0.72
per pound in third-quarter 2018, primarily reflected lower copper
and gold volumes.
Assuming an average gold price of $1,500 per ounce for
fourth-quarter 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 $1.53 per pound of
copper for the year 2019 (including $1.61 per pound of copper for
fourth-quarter 2019). The impact of price changes during
fourth-quarter 2019 on PT-FI's average unit net cash costs for the
year 2019 would approximate $0.03 per pound for each $50 per ounce
change in the average price of gold.
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 and timing of
shipments.
PT-FI and union officials commenced discussions for a new
two-year labor agreement. The existing agreement, which expired in
September 2019, will continue in effect until a new agreement is
consummated.
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 7 million pounds of molybdenum in
third-quarter 2019 and 8 million pounds in third-quarter 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 of $11.64 per pound
of molybdenum in third-quarter 2019 were higher than third-quarter
2018 unit net cash costs of $9.02 per pound, primarily reflecting
lower volumes. Based on current sales volume and cost estimates,
average unit net cash costs for the Molybdenum mines are expected
to approximate $10.50 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 $80 million for the year 2019.
CASH FLOWS, CASH and DEBT
Operating Cash Flows. FCX generated operating cash flows of $224
million (net of $146 million of working capital uses and timing of
other tax payments) in third-quarter 2019 and $1.3 billion
(including $135 million of working capital sources and timing of
other tax payments) for the first nine months of 2019.
Based on current sales volume and cost estimates, and assuming
average prices of $2.60 per pound of copper, $1,500 per ounce of
gold and $12.00 per pound of molybdenum for fourth-quarter 2019,
FCX's consolidated operating cash flows are estimated to
approximate $1.6 billion (including $0.2 billion of working capital
sources and changes in timing of other tax payments) for the year
2019. The impact of price changes during fourth-quarter 2019 on
operating cash flows would approximate $90 million for each $0.10
per pound change in the average price of copper, $10 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 $0.7 billion
in third-quarter 2019 (including approximately $0.3 billion for
major mining projects) and $1.9 billion for the first nine months
of 2019 (including approximately $1.1 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 copper
leach 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.
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, 2019 (in billions):
Cash at domestic companies
$
1.3
Cash at international operations
0.9
Total consolidated cash and cash
equivalents
2.2
Noncontrolling interests' share
(0.3
)
Cash, net of noncontrolling interests'
share
$
1.9
Withholding taxes
—
a
Net cash available
$
1.9
a. Rounds to less than $0.1 billion.
Debt. At September 30, 2019, FCX's consolidated debt totaled
$9.9 billion, with a related weighted-average interest rate of 4.6
percent. FCX had no borrowings, $13 million in letters of credit
issued and $3.5 billion available under its revolving credit
facility at September 30, 2019.
On August 15, 2019, FCX completed the sale of $1.2 billion of
senior notes, consisting of $600 million aggregate principal amount
of 5.00% Senior Notes due 2027 and $600 million aggregate principal
amount of 5.25% Senior Notes due 2029. FCX used the net proceeds
from the senior notes offering to fund its previously announced
make-whole redemption of all of its outstanding 6.875% Senior Notes
due 2023, and the concurrent tender offers to purchase a portion of
its 4.00% Senior Notes due 2021 and its 3.55% Senior Notes due
2022. As a result of the redemption and tender offers, FCX recorded
a third-quarter 2019 loss on early extinguishment of debt totaling
$21 million. The new financing and related redemption and tender
offers resulted in a slight reduction in FCX's weighted-average
interest rate on its senior notes from 4.7 percent to 4.6 percent
and extended the weighted-average maturity from approximately 9
years to approximately 10 years.
FINANCIAL POLICY
On September 25, 2019, FCX declared a quarterly cash dividend of
$0.05 per share on its common stock, which will be paid on November
1, 2019, to shareholders of record as of October 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
third-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, November 22,
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 plans, 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; 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; the potential effects of violence in Indonesia
generally and in the province of Papua; the Indonesian government's
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 September
30,
2019
2018
2019
2018
MINING OPERATIONS:
Production
Sales
COPPER (millions of recoverable
pounds)
(FCX's net interest in %)
North America
Morenci (72%)a
200
170
199
174
Bagdad (100%)
58
45
59
47
Safford (100%)
28
32
29
31
Sierrita (100%)
42
36
43
36
Miami (100%)
4
4
4
3
Chino (100%)
46
46
48
45
Tyrone (100%)
12
15
13
14
Other (100%)
—
1
—
—
Total North America
390
349
395
350
South America
Cerro Verde (53.56%)
234
275
217
280
El Abra (51%)
49
50
44
46
Total South America
283
325
261
326
Indonesia
Grasberg (48.76%)b
191
332
139
368
Total
864
1,006
795
c
1,044
c
Less noncontrolling interests
168
183
149
186
Net
696
823
646
858
Average realized price per pound
$
2.62
$
2.80
GOLD (thousands of recoverable
ounces)
(FCX's net interest in %)
North America (100%)
4
6
4
6
Indonesia (48.76%)b
329
754
239
831
Consolidated
333
760
243
837
Less noncontrolling interests
61
70
45
77
Net
272
690
198
760
Average realized price per ounce
$
1,487
$
1,191
MOLYBDENUM (millions of recoverable
pounds)
(FCX's net interest in %)
Henderson (100%)
2
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%)
6
7
N/A
N/A
Consolidated
21
23
22
22
Less noncontrolling interests
3
3
3
2
Net
18
20
19
20
Average realized price per pound
$
12.89
$
12.40
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 79 million pounds in third-quarter 2019 and 93
million pounds in third-quarter 2018.
Freeport-McMoRan Inc.
SELECTED OPERATING DATA
(continued)
Nine Months Ended September
30,
2019
2018
2019
2018
MINING OPERATIONS:
Production
Sales
Copper (millions of recoverable
pounds)
(FCX's net interest in %)
North America
Morenci (72%)a
548
521
536
544
Bagdad (100%)
170
142
168
146
Safford (100%)
84
94
85
99
Sierrita (100%)
117
113
116
118
Miami (100%)
11
12
11
12
Chino (100%)
129
126
130
133
Tyrone (100%)
37
41
38
42
Other (100%)
—
2
—
1
Total North America
1,096
1,051
1,084
1,095
South America
Cerro Verde (53.56%)
734
780
713
780
El Abra (51%)
129
151
125
148
Total South America
863
931
838
928
Indonesia
Grasberg (48.76%)b
461
990
464
1,003
Total
2,420
2,972
2,386
c
3,026
c
Less noncontrolling interests
490
529
480
528
Net
1,930
2,443
1,906
2,498
Average realized price per pound
$
2.71
$
2.96
Gold (thousands of recoverable
ounces)
(FCX's net interest in %)
North America (100%)
14
16
15
18
Indonesia (48.76%)b
645
2,089
659
2,105
Consolidated
659
2,105
674
2,123
Less noncontrolling interests
121
195
124
197
Net
538
1,910
550
1,926
Average realized price per ounce
$
1,380
$
1,249
Molybdenum (millions of recoverable
pounds)
(FCX's net interest in %)
Henderson (100%)
10
10
N/A
N/A
Climax (100%)
14
16
N/A
N/A
North America (100%)a
24
23
N/A
N/A
Cerro Verde (53.56%)
21
20
N/A
N/A
Consolidated
69
69
68
70
Less noncontrolling interests
10
9
10
9
Net
59
60
58
61
Average realized price per pound
$
12.92
$
12.41
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 310 million pounds for the first nine months of
2019 and 257 million pounds for the first nine months of 2018.
Freeport-McMoRan Inc.
SELECTED OPERATING DATA
(continued)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
100% North America Copper Mines
Leach Operations
Leach ore placed in stockpiles (metric
tons per day)
756,900
657,600
753,400
673,800
Average copper ore grade (percent)
0.24
0.22
0.23
0.25
Copper production (millions of recoverable
pounds)
270
242
741
723
Mill Operations
Ore milled (metric tons per day)
337,700
297,800
324,600
297,900
Average ore grades (percent):
Copper
0.33
0.34
0.34
0.35
Molybdenum
0.02
0.03
0.02
0.02
Copper recovery rate (percent)
88.5
87.4
87.9
88.1
Production (millions of recoverable
pounds):
Copper
198
173
569
531
Molybdenum
8
8
25
24
100% South America Mining
Leach Operations
Leach ore placed in stockpiles (metric
tons per day)
257,300
194,400
205,300
203,100
Average copper ore grade (percent)
0.36
0.34
0.36
0.32
Copper production (millions of recoverable
pounds)
70
72
192
214
Mill Operations
Ore milled (metric tons per day)
381,200
383,900
391,800
384,800
Average ore grades (percent):
Copper
0.35
0.39
0.36
0.39
Molybdenum
0.02
0.02
0.02
0.01
Copper recovery rate (percent)
81.5
86.1
83.5
83.2
Production (millions of recoverable
pounds):
Copper
213
253
671
717
Molybdenum
6
7
21
20
100% Indonesia Mining
Ore extracted and milled (metric tons per
day):
Grasberg open pita
70,000
149,500
75,500
141,100
Deep Ore Zone underground mineb
24,500
31,000
25,300
33,200
Deep Mill Level Zone underground mineb
9,800
2,500
8,100
2,600
Grasberg Block Cave underground mineb
10,600
3,700
7,700
3,800
Big Gossan underground mineb
7,000
3,900
6,000
3,400
Total
121,900
190,600
122,600
184,100
Average ore grades:
Copper (percent)
0.92
1.00
0.77
1.06
Gold (grams per metric ton)
1.23
1.77
0.85
1.73
Recovery rates (percent):
Copper
89.4
92.4
87.6
92.4
Gold
75.6
85.7
73.5
85.5
Production (recoverable):
Copper (millions of pounds)
191
337
461
1,030
Gold (thousands of ounces)
329
817
645
2,306
100% Molybdenum Mines
Ore milled (metric tons per day)
36,100
29,400
33,000
27,100
Average molybdenum ore grade (percent)
0.12
0.17
0.14
0.18
Molybdenum production (millions of
recoverable pounds)
7
8
24
26
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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(In Millions, Except Per Share
Amounts)
Revenuesa
$
3,308
$
4,908
$
10,646
$
14,944
Cost of sales:
Production and deliveryb
2,665
3,069
8,584
8,790
Depreciation, depletion and
amortization
322
458
1,021
1,351
Metals inventory adjustments
41
—
100
2
Total cost of sales
3,028
3,527
9,705
10,143
Selling, general and administrative
expenses
106
101
315
341
Mining exploration and research
expenses
25
27
83
72
Environmental obligations and shutdown
costs
20
8
85
76
Net loss (gain) on sales of assets
12
(70
)
(13
)
(126
)
Total costs and expenses
3,191
3,593
10,175
10,506
Operating income
117
1,315
471
4,438
Interest expense, netc
(123
)
(143
)
(401
)
(436
)
Net (loss) gain on early extinguishment of
debt
(21
)
—
(27
)
8
Other income, net
33
14
52
63
d
Income from continuing operations before
income taxes and equity in affiliated companies' net earnings
6
1,186
95
4,073
Provision for income taxese
(150
)
(522
)
(240
)
(1,543
)
Equity in affiliated companies' net
earnings
5
4
7
5
Net (loss) income from continuing
operations
(139
)
668
(138
)
2,535
Net gain (loss) from discontinued
operations
1
(4
)
2
(19
)
Net (loss) income
(138
)
664
(136
)
2,516
Net loss (income) attributable to
noncontrolling interestsf
7
(108
)
(36
)
(399
)
Net (loss) income attributable to common
stockholdersg
$
(131
)
$
556
$
(172
)
$
2,117
Diluted net (loss) income per share
attributable to common stock:
Continuing operations
$
(0.09
)
$
0.38
$
(0.12
)
$
1.46
Discontinued operations
—
—
—
(0.01
)
$
(0.09
)
$
0.38
$
(0.12
)
$
1.45
Weighted-average common shares
outstanding:
Basic
1,452
1,450
1,451
1,449
Diluted
1,452
1,458
1,451
1,458
Dividends declared per share of common
stock
$
0.05
$
0.05
$
0.15
$
0.15
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.
Includes PT-FI charges, an
environmental-related litigation reserve and other net (charges)
credits, which are summarized in the supplemental schedule,
"Adjusted Net (Loss) Income," on page VII.
c.
Consolidated interest costs (before
capitalization) totaled $163 million in third-quarter 2019, $167
million in third-quarter 2018, $508 million for the first nine
months of 2019 and $508 million for the first nine 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 provision for
income taxes, refer to the supplemental schedule, "Income Taxes,"
on page VIII.
f.
Includes noncontrolling interest impacts
associated with tax charges to record deferred taxes for historical
balances in accordance with tax accounting guidance. Refer to the
supplemental schedule, "Income Taxes," on page VIII.
g.
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)
September 30, 2019
December 31, 2018
(In Millions)
ASSETS
Current assets:
Cash and cash equivalents
$
2,247
$
4,217
Trade accounts receivable
731
829
Income and other tax receivables
269
493
Inventories:
Materials and supplies, net
1,619
1,528
Mill and leach stockpiles
1,302
1,453
Product
1,513
1,778
Other current assets
669
422
Total current assets
8,350
10,720
Property, plant, equipment and mine
development costs, net
29,330
28,010
Long-term mill and leach stockpiles
1,300
1,314
Other assets
2,085
2,172
Total assets
$
41,065
$
42,216
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued
liabilities
$
2,725
$
2,625
Current portion of environmental and asset
retirement obligations
488
449
Dividends payable
73
73
Accrued income taxes
70
165
Current portion of debt
4
17
Total current liabilities
3,360
3,329
Long-term debt, less current portion
9,915
11,124
Deferred income taxes
4,292
4,032
Environmental and asset retirement
obligations, less current portion
3,558
3,609
Other liabilities
2,302
2,230
Total liabilities
23,427
24,324
Equity:
Stockholders' equity:
Common stock
158
158
Capital in excess of par value
25,880
26,013
Accumulated deficit
(12,213
)
(12,041
)
Accumulated other comprehensive loss
(570
)
(605
)
Common stock held in treasury
(3,735
)
(3,727
)
Total stockholders' equity
9,520
9,798
Noncontrolling interestsa
8,118
8,094
Total equity
17,638
17,892
Total liabilities and equity
$
41,065
$
42,216
a. Includes $4.6 billion associated with the December 2018 PT-FI
transaction, including $4.1 billion associated with the PT
Indonesia Asahan Aluminium (Persero) acquisition of Rio Tinto's
joint venture interest.
Freeport-McMoRan Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
Nine Months Ended September
30,
2019
2018
(In Millions)
Cash flow from operating activities:
Net (loss) income
$
(136
)
$
2,516
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation, depletion and
amortization
1,021
1,351
Metals inventory adjustments
100
2
Net gain on sales of assets
(13
)
(126
)
Stock-based compensation
52
70
Net charges for environmental and asset
retirement obligations, including accretion
160
206
Payments for environmental and asset
retirement obligations
(164
)
(179
)
Net charges for defined pension and
postretirement plans
79
59
Pension plan contributions
(58
)
(60
)
Net loss (gain) on early extinguishment of
debt
27
(8
)
Deferred income taxes
119
202
(Gain) loss on discontinued operations
(2
)
19
Dividends received from PT Smelting
33
—
Change in long-term mill and leach
stockpiles
(5
)
54
Charges for PT-FI surface water tax
settlement
28
—
Charges for Cerro Verde royalty
dispute
40
—
Payments for Cerro Verde royalty
dispute
(126
)
(32
)
Other, net
22
5
Changes in working capital and other tax
payments:
Accounts receivable
209
321
Inventories
229
(326
)
Other current assets
15
(16
)
Accounts payable and accrued
liabilities
(45
)
(2
)
Accrued income taxes and timing of other
tax payments
(273
)
(131
)
Net cash provided by operating
activities
1,312
3,925
Cash flow from investing activities:
Capital expenditures:
North America copper mines
(641
)
(413
)
South America
(176
)
(188
)
Indonesia
(992
)
(695
)
Molybdenum mines
(11
)
(6
)
Other
(97
)
(89
)
Proceeds from sales of assets
102
10
Intangible water rights and other, net
(10
)
(91
)
Net cash used in investing activities
(1,825
)
(1,472
)
Cash flow from financing activities:
Proceeds from debt
1,681
475
Repayments of debt
(2,917
)
(2,410
)
Cash dividends and distributions paid:
Common stock
(218
)
(145
)
Noncontrolling interests
(79
)
(241
)
Contributions from noncontrolling
interests
133
—
Stock-based awards net (payments)
proceeds
(7
)
4
Debt financing costs and other, net
(23
)
(23
)
Net cash used in financing activities
(1,430
)
(2,340
)
Net (decrease) increase in cash, cash
equivalents, restricted cash and restricted cash equivalents
(1,943
)
113
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
$
2,512
$
4,823
a. Includes restricted cash and restricted cash equivalents of $265
million at September 30, 2019, and $243 million at September 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 September
30,
2019
2018
Pre-tax
After-taxa
Per Share
Pre-tax
After-taxa
Per Share
Net (loss) income attributable to
common stock
N/A
$
(131
)
$
(0.09
)
N/A
$
556
$
0.38
Metals inventory adjustments
$
(41
)
$
(40
)
$
(0.03
)
$
—
$
—
$
—
Cerro Verde labor agreement
—
—
—
(69
)
(22
)
(0.02
)
Other net charges
(24
)
b
(13
)
(0.01
)
(1
)
—
—
Net adjustments to environmental
obligations and related litigation reserves
(19
)
c
(19
)
(0.01
)
(2
)
(2
)
—
Net (loss) gain on sales of assetsd
(12
)
(12
)
(0.01
)
70
70
0.05
Net loss on early extinguishment of
debt
(21
)
(21
)
(0.01
)
—
—
—
Net tax chargese
N/A
(19
)
(0.01
)
N/A
—
—
Gain (loss) on discontinued
operationsf
1
1
—
(4
)
(4
)
—
$
(116
)
$
(123
)
$
(0.08
)
$
(6
)
$
42
$
0.03
Adjusted net (loss) income attributable
to common stock
N/A
$
(8
)
$
(0.01
)
N/A
$
514
$
0.35
Nine Months Ended September
30,
2019
2018
Pre-tax
After-taxa
Per Share
Pre-tax
After-taxa
Per Share
Net (loss) income attributable to
common stock
N/A
$
(172
)
$
(0.12
)
N/A
$
2,117
$
1.45
Metals inventory adjustments
$
(100
)
$
(67
)
$
(0.04
)
$
(2
)
$
(2
)
$
—
PT-FI charges
(28
)
g
(14
)
(0.01
)
—
—
—
Cerro Verde labor agreement
—
—
—
(69
)
(22
)
(0.02
)
Other net (charges) credits
(48
)
b
(23
)
(0.02
)
5
6
—
Net adjustments to environmental
obligations and related litigation reserves
(63
)
c
(63
)
(0.04
)
(52
)
(52
)
(0.04
)
Net gain on sales of assetsd
13
13
0.01
126
126
0.09
Net (loss) gain on early extinguishment of
debt
(27
)
(26
)
(0.02
)
8
8
0.01
Interest on tax refunds
—
—
—
30
19
0.01
Net tax (charges) creditse
N/A
5
—
N/A
5
—
Gain (loss) on discontinued
operationsf
2
2
—
(19
)
(19
)
(0.01
)
$
(251
)
$
(173
)
$
(0.12
)
$
27
$
69
$
0.04
Adjusted net income attributable to
common stock
N/A
$
1
$
—
N/A
$
2,048
$
1.41
a.
Reflects impact to FCX net (loss) income
attributable to common stock (i.e., net of any taxes and
noncontrolling interests).
b.
The third quarter and first nine months of
2019 included asset impairment charges and prior period adjustments
to PT-FI export duties for final assays. The first nine months of
2019 also included charges associated with weather-related issues
at El Abra and for oil and gas inventory adjustments, partly offset
by a credit for an asset retirement obligation adjustment.
c.
Includes a charge to production and
delivery costs totaling $15 million related to Louisiana coastal
erosion litigation.
d.
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 nine months of 2019 also included a $20 million gain on
sales of oil and gas assets.
e.
Refer to "Income Taxes" on page VIII for
further discussion of net tax (charges) credits.
f.
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.
g.
Reflects an adjustment to the settlement
of the historical surface water tax disputes with the local
regional tax authority in Papua, Indonesia.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191023005405/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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