Freeport-McMoRan (FCX) 25 Jul 182018 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoRan Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the conference over to Ms. President Financial Vice Executive Quirk, and Officer. Chief Kathleen go ahead, ma'am. Please

to and Second good you the morning. Call. Thank Conference Welcome Freeport-McMoRan Earnings Quarter XXXX

of available on released and website at slide were this our for the copy materials are results and press call Our today's fcx.com. release earlier a morning

call. the link and conference conference accessing call Our on our today for clicking may anyone website being is and call page on by webcast the listen the live home broadcast Internet to the

to investors, today's been and webcast and addition invited to our a the has In financial press on analysts the of later available listen call will today. website to be replay

statements begin release in may and factors differ and that Before comments, refer to to like materially. today's We'd filings. our like risk our and remind SEC to included and our XXXX press of presentation language to the cautionary everyone and materials subsequent the forward-looking Form in XX-K actual we certain everyone our results we'd include release press described comments

and by to turn briefly start our on website. molybdenum financial outlook today, On Mike heads Johnson, our who materials Officer; Conger, our results business; summarizing Red who using our call Americas up and our I'll over will performance the then up Richard, oversees Adkerson, recent the heads reviewing our who our be Indonesian who Richard the Kendrick, Chief operations; Executive call business. Mark slide

quarter stock reported per $XXX remarks, $X.XX we'll of income million our after the second common for for Today, usual, up of the XXXX. share net As call questions. attributable to open FCX or

net per totaled per recorded in share. $XXX share, $XX million of our quarter the credits $X.XX million or net or $X.XX income adjusted Excluding

averaged a quarter totaled and XXX higher sales materials. in than the and of sales second of because of timing before shipments the amortization reflecting grades They XXXX, were higher in slide above of and higher And $X.XX copper reconciliation gold reflected primarily price. sales our XX ore XXX,XXX was and price average our year quarter ounce. interest, $X,XXX was at the grades of We and Those ounces, got were ago were we've lower taxes, in That slightly second in our XXX,XXX quarter estimate, were of end substantially but above quarter also rates pound. average gold sold of was $X,XXX were volumes they per Our the XX prices for adjusted mining ounce. million than mining million than realized above our of calculations At milling that quarter average ounces year per EBITDA Gold the per ago XX% the page molybdenum primarily pounds, terms $X.X Indonesia, earnings that on billion, Indonesia. higher price ore just the estimates Grasberg. pounds. we're of for copper depreciation period copper the XXXX high

the net and global quarter. average strong for a on from and on Our for of unit was management. productivity of cost continued consolidated $X.XX that's byproduct pound That quarter, our cash net the costs basis, focus and operations copper per credits reflected performance

of were just cash billion we which cash $XXX expenditures, And Those net operating $X.X capital During interest our flows. taxes, of the exceeded generated quarter, flows were those net below of million. costs.

during sheet the balance our strengthen to quarter. continued We

year. beginning than debt year. totaled June approximately at billion over total consolidated start billion XX $X the of and billion. $X.X $X $X.X consolidated billion, at down that debt number the $XX.X debt Net our since of cash and XX, June billion Our was at totaled the That less the is

that will per quarter, our declared $X.XX a share common new on stock dividend and dividend reinstated saw you be board the policy cash of As in we first under a this materials X. on results our to website. the and slide like now and outlook turn presentation I'd over referring our paid Richard, the will to August reviewing be on call to who

then but PT-FI, to some and Kathleen regulatory noted issues Good from quarter go Kathleen I'm on address our our exports weather time us but concentrate to questions. results for your activities. to and morning, exceeded ahead debt delays discipline, from targets. this were briefly focus of well We when met last through government and reflected the them, year's which issues, productivity, that by The of everyone. labor management, overview positive second material happens we have referred going would shipping on time. our we positive to team's capital quarter cost reduction affected basically out

our recall July resolve the may with to of related that the and at And We Inalum, establishes our Arizona. of stability our and set way by ago, to we're billion debt $XX billion we're XX, that going the the target forward about XX we time which at Heads state-owned in with Agreement plus end a making reduce XXXX talk Star a billion. long-term billion months this of Lone previously You $X in in into now, we've $XX $X.X to operations on here advancement company Rio entered announced by to issues Tinto Indonesia. Indonesia, to we're project that

mid-June commodities markets. June that Copper copper, is other now. trade dealing significantly down. of all Sentiment many for XX% copper after couple we're are including XX issues turned internationally also negative with First, rising, this tied comments down into about commodities in since

copper including supply our is and here today, continuing being global business sentiment between And from marketplace. copper. needed around for the to The to price the there so XX% which to anomaly build underinvestment stocks mid-term Mackenzie copper production, positive today's As development We're down that to an we sit business, all continue positive demand undertaken the develop incentive market real continuing, projects in see going actually and electric balanced from we're China. said and this are renewable vehicles. Exchange future real likely our basis world long, fundamentals to clear an it's growth very significantly below physical for new energy demand price development of be see mid-June, benefit that's outlook being since continues continues in is Wood globally. this to muted. of is are increasingly, the broadly the markets

of supply. ore to this a is and producing in of grades from expected the of a in contained declining context future be projects mines All real – lack for actionable

continue that I to flows time positive this It a you partnership this we've mean inevitable. market understandings Indonesia sounds of in and in a have way resolution Mackenzie very last their consummation actions just call with not chamber between operations Grasberg XXXX in that the long and So our with like when new in over represent It the absent just might government legal that stabilized agreements. of points to is enforceable, the envisioned few for or to XX. this I'm stability in that's goal be retain report. legally Wood it values, to is But would refer shareholders. developed does to having terms an agreements, quick a our fiscal I'll talking net to our of deficits not able long-term standpoint, this the reached past Agreement for questions answer allows company make is offer a recession note to economics. our existing on country We to continued to preserves June And setback our read investment. Agreement. I questions have. to this We I coming. of the July on thing current all I some it FCX of sort year, this announced by our previously give a copper has we major diluted echo in to to any our that be final of to any but would long-term, series long-term excellent. days fiscal the I'm achieve asset share might and It as thing, a you structure Heads on Heads global so a the our importantly be It of appear From China, situation going and of do cash in this out support and its and often, loosen have that us don't China's FCX

last This interest allows exit. operations. a the where we're Papua, of between looking manage looking to going were divest would avoid and of government, continue the part a local August, Inalum, decision really we to situation state-owned Tinto's to significant through have recall and It to in our I'm the to to. at create This us Rio us may company. it a enterprise, is this alignment strong to governments Indonesian our allow something You that, interest that with will forward

we'd all working be So going together. forward,

sometimes be We'll to to XXXX. of communities all quicker things to it likely to We're are dealing government us, Now to mean? to of issues improve, what barrier, are definitive all security, related expect local the have barriers the much that talking about and issues agreements. parties. likely issues to second changes, with say a half for on in positive a close Regulatory Indonesian working the would distractions, does be been it officials less are closing. that regulatory

exceptional. really were operations Our

team Papua all with done dealing in issues job in Our the just has there. great a

this and was you XXX,XXX ore rate which mill copper of gold plus X% quality per X.XX% with day shows Our tons the body.

forward of we're the underground this net to while open beyond had us strong pit, construction We move Grasberg really we second are reduction, – infrastructure $X.XX. of gold continuing component we've to funded our the unit quarter dividend. the and cost concentrate was – $X.X more paid means total paid cash billion a negative PT-FI operating $X.X billion cost than the our That of allow

our in we're way. caving to to And for reflected a a us, efforts to and the some that with we'll right allow resource to done material, initiation confident We're rock We've We're that a lead South led and this about. us reflected so our this calls with deal has these global are run able undertaking would we events Part we harder, be safety, use safe do numbers talking of which our have way. successfully. time, team so with to being with now, plan in with to be very to events. seismic It's underway this into plans. in this Deep mine MLZ more holes indicates competent there take It's going to that's plan have of we which us. done. mine, our our we're working got about normal a some remedial drill commenced cautious program to plan this will the in frac America to in we've mine But year. mining and into seismic competent these water adjustments been Now, last the be to some current in

we're of starting of Block Block same undertook well ore as question is Grasberg is body And up been in it of it's a The that of operations it The so that going affecting a is It's an the MLZ our that, meters of resource because pit we of Think from the basically itself. mine it. started into extend to light we a that in we the And pit want underground take separate significant operations began and We open XX, we're and Deep to sure to with mine XXX to same there's we way. into, pit X,XXX just now it we've announcing rock. In gone economics we dealt this at longer harder up. ore with that to and and Cave meters not of it schematic us depth. this mining mine MLZ Deep a at we're going the of is similar X,XXX and is meters the Grasberg that but study We're are out that to ore to on The The it's in characteristics bulk pit us production some and ramping page that bodies completing MLZ rock It's being open meters the the extension Grasberg underground. just not The be up. year is early block a to what today amount through mining will rock run open a where Block everyone period, taken X. new actually, the know XXX Cave. from through open and will XXXXs very the mining the ramp MLZ will first now the Deep Block have pit, and the I half the next at page the it start-up now underground mining but extension spent and during same, gold an of delay development underground is competent Deep this the recover starting MLZ Over period, like Grasberg we're that mineralization Grasberg of underground XXXX, mine. developing allows new so the Cave. from this time capital are Grasberg Deep we of we've we otherwise be have a surface understands operating mine in Cave. mine, this the its Block five-year would and MLZ. body be virtually on with we'll of accelerate Deep that the make will that cave. copper infrastructure Cave the attractive the

in over production mining the the of with our up year XXXX, we in tons into so that last and up sustainable through a in next as that Volumes years XXXX rates You see infrastructure development by spent XXX,XXX high XXXX, then XXXX would at on only to in underground from and the ongoing going the we would pit be be of full years we have are that year. through and mill. little would caves. the development, we mining will capital XXXX, day be after transition capital transition underground complete the And will open by to system XXXX, ramp end a with beginning be this

great also and that Americas, we government. we and and to it in development America want we've of understands because company the the going has the investor make America. Indonesia. in about talking available size for with Now, has of this in in the that South on to in be been we're level have situation has our sure how the But Indonesia profitable company production just the resources Understandably, asset the resources the more North had issues having future everyone focus the of our and future now, that we're outside to

Star are our We resource Arizona. oxide at we've as Eastern to Lone in currently developing very a talked and Morenci big infrastructure the mining our Safford previously engaged about near in adjacent deposit, mine

in going to have spending We stripping low $XXX of will sulfide aggregate X.X over page year be be very that commenced oxide copper money a that it's this resource, pre-stripping underneath almost going lies earlier facilities deposit, large strip is We mining, to see pounds and taken this are Safford only billion basically and We're make like it deposit million. time our existence stripping to you at It's execution provide this risk. of and exposure but and oxide. to profitable ore a that capital on as we'll oxide reserves, very us X. underutilized can that out of can

underneath developing. have the Now, resource sulfide oxide we to drill this continued that we're deposit

going there rigs six have now. We

about time general. future area And in becoming our I Chino/Cobre of the You in don't real we this those in with to of on have America, during can in a positive America community, The have Star mine resource that of This but attractive core larger. over are holes the other America this mine for communities ahead we our development. significant established at undeveloped existing It company midst we the itself see with get New to local had Mexico. Native at. that operations Codelco, positive Morenci. Outside potential again what's and where our has It American here results quarter. very and regulatory and favorable excited right very Abra anything we're South Morenci we North at second environment for than continues looking our company. the in operations El In a that time Lone Arizona this will to mineralization a have this resource opportunity very of relationships look and the Bagdad for this. we're our our is with have at to get tremendous North it, evaluating large partner, for a focused resources terms in Sierrita, we sulfide of and the another opportunity with at to in take say have we our seriousness for is

large in In We're of meeting drilling Verde now. this studying Cerro an at this as you from core Cerro piece me there. We have last exciting do guys gave week, Verde. footprint our we

major very environment, company's We future the for a in plans a commence we're we large to have the for portfolio that resources. be current to with consider preparing expanding the to project what's going no have company but steps and within our many options

XX. Turning to Slide

unchanged. are for outlook sales molybdenum gold, copper, Our

Our We're order what for unit mean $XXX and sales. leverage we this. plan. operating affected by very what in our $X.X shows that earlier, Obviously, with if would both in be is last this to levered. meet $X.XX we Capital year our cost predicted at our and copper operating cash I copper. had $X.XX price in to for we are of quarter essentially copper billion this what each at remainder line change of are profile gold flows unchanged. for copper XX $X.XX forecast reported the our It's Page goes we ways. flow million expenditures cash earlier,

the that the those That's show numbers, we what different done would a something what XXXX quarter. XXXX quarter. this our year. of then the would and numbers, underground see significant average we with previous at and And and call you Page be showing the a go want the in this XXXX. as up $XX the see, productive that, XXXX us at little at varying year, you current be flow EBITDA plans and molybdenum. that in prices will forward cash will each to block, and ranging average the They make we and the XXXX, forward. are makes. XX. different mines the be slide XX we to the changed $X.XX. showing first end for EBITDA full a And not what as would we the In ramp be quarter. year range XXXX. that We've mode can different copper For to full Capital from and you saw $X can be little to transition are cash line from on shows prices, of difference as in for of shown something done prices, our flow But left, and expenditures sure each transition slide We've show gold sales copper $X,XXX

still our financial Our strengthening balance is on sheet. focused policy

we've significant significant believe we'll sheet. months. more made XX we forward mentioned, in the our I improve than As markets over And – continue we going progress positive past and be to balance

value projects. sake We growth to That disciplined way of to by little chance no the have approach time to we makes value have our But in we're driven the be just I will company. growing mean sense. stock add attractive for We're very resources receive a in invest to in today's invest going not These value. that a prices. over growing.

resources are we our shareholder. cash be across of driven projects, business. the breadth to values all team to expansion to being way copper strategy. successful disciplined cost a in And low throughout and the flows investments create proven really for in able circumstances the world and We're by to ways itself returns operate our a have in has the copper going company. business. operations of As in aspects and that's execute challenging develop on We're this We in focused to in finding team invest going to strong

learned the disciplined for industry lot future years support Our for lessons management in discipline a creating and I recent a is does to more add on emphasize of The and that in supplies. across all this, industry, and team shareholders, value extends board is has want that totally for and way. of focused

a dividend. we So reinstated

to that be We in dividend. expect over a to time position increase

trade hope issues over people it answering board It's economy, to reference here all-out trade that available We My We with have doesn't that. with for is to implications in and them happens slides financial that, meeting. but what uncertain. what industry this for see deal turn specific in use these to Regina, an result wars your of view issues But strategy the of There's policy to I'd have questions. of it's and hope, think, number the at American with like see the in We a mean I review. serious to that world's a economy. some to questions. a call are that future the every results lot we of throughout may

and Ladies the we gentlemen, will begin question-and-answer session. now

Korn with go The from first Please the ahead. Goldman Matthew question come will line Sachs. of

Thanks morning, for question. my Hey, good everyone. taking

Hey, Matthew.

So away Is in in ore a X, from the challenges? tilting other Is XXXX here XXXX pushback to changes showing fit there noticed that where guidance a the we we together? XXXX. of bit bit Grasberg, XXXX, through little slide does that per day? or and Are this from largely tied the all in the and little a look essentially towards How DMLZ? milled you're you us changes noticed

causes high to Deep that It's the got body, we harder to Zone, be happen We've mine, Intermediate further running places much the in into use now rock than the experienced mined as Ore a other unexpectedly now mineralization frac It's Deep underground ore seismic it ore grades expectation MLZ. It and We plan Deep to us And Mark, prepare years for these got Deep several to harder, body would got the and XXXX, Deep we MLZ. GBT we the which XXXX, area water and I the with caving. was to rock very us. And mean, if is industry. Zone, ore the and the the has Ore and this now, you we've cautious. MLZ. started events, original go ramping MLZ this developing for had same up in we the back actually been be mining it that years. as encountered into we've for it available

now first at as thing a open by A of And mining the And step mitigate to keep into pit, open the as to is is we as two. the fine, of the of press that than we that. life that of want those the else sure But effect coming one net the to by looking everything back Grasberg ore this mining pushed just all that different the out factor. the whole in of and see so year, different else. found we start want half characteristics that net the I Everything of and ways is and XXXX, understand And is driven extending continuation from the we that some Grasberg always, very next saw and do a to rock read a going environment, because in what being Cave. make Deep you mining rock deferral are this numbers we articles and people rock mitigate high-grade you MLZ to see it this pit will emphasizing be Block I the that.

of said, mining an it? the we've thousands holes we've drilled, of ore into same I As that's early Mark, body extension XXXXs just been that since the and

Yeah.

experienced the we that understand that don't this the Block have Deep Cave. in to we and be expect in so Grasberg really MLZ problem And

Got we block saw, the year, seemed that it. had listed I your because appreciate near-term there when you next held in like cave the over in all place. the that objectives clarity

you... ask me Let

Yeah, just... I

Yeah.

the actually week that ore from this our train and cave a we've delivered delivered cave delivery to had series block that block the Grasberg is time through of mention the time first system, week a milestones that for just using including Block the me mill. we've one Cave in Let we've week. ore this development system ore from thing. first done This We've of

this this stuff after milestone. and government with So export has through bans has all just achieved things, negotiations of infrastructure and milestone with been and relentless team other all these this in developing the

like in be And mined else. like face ramp in this to like new happens to up starting finishing up same ready starting and mines or a in said, go. It And mine up anywhere Mongolia So that like Arizona finishing But up is it's new in or we're the is one. I just district. mineral up. totally one people

context. in to need you – it's it of that So think

it. right. All Got very clear. That's

to how through then to Let with flows aim does five-year still the work all over of that's under Indonesian the the next as the me been the ask finalized, existing cash period needs maintain with context in government, this JV. negotiated be they were and

there if of to MLZ, you're more of the these example, part through, and issue plan XXXX, If you until areas more there's you're slippage working that there's get with plan. the developing mined still Deep that of that on, mining still don't the For sections we're based is mine are some in makes not would in it or the the some risk would lose sense? activate the copper a stream you JV attributable be no, that which if would under additional still yet

Kathleen. Matthew, forward this is the new venture the structure. will carry joint The under economics of Rio deal, Tinto

Rio interest metal produced know is So PT-FI's there's the PT-FI that then as a is for certain quantity of and XXX% and Tinto. you increment above that shared between XX-XX

PT-FI to produced. And of of continue of have whenever XXX% that the would by that continue PT-FI, expected to that's be existing the currently end the would specific And shareholders volumes they're XXXX. so produced

shareholders. partner of we're that And shares structure So have time. they'll this in then those to PT-FI XX% they'll and new get, we're change go period the not flows certain cash working a new new a expecting that with the existing make our to sure after

So let – me thanks, Kathleen.

we're that. government that wants talked continue never me to venture Let about Rio tell PT-FI. The to was never how you there shares PT-FI, Tinto going PT-FI. a XXXX. in in was shares owning owned shares Rio own doing in With Tinto, joint

would with interest, agree to receive shares that date XXXX achieving shares, have a a cooperating government those to until we would in with dividends – to I cutoff to respect this mean convert there its but the will Tinto step so to dividend And be Rio been we reached. agreement that

very Thanks folks. it. much, Got

line FBR. Our Pipes next Please the B. question of Lucas go come ahead. will with from Riley

morning, everybody. Hey, good

Hey, Lucas.

in bit billion the elaborate to from prepared both to driving billion little the previous know you the a gold your remarks side? wanted in on $X.X I question, this just bit in that spoke but maybe can I XXXX what's about and $X.X follow-up increase little more. you a on

the very grades just start and gold time. It's ramp was the up ramp copper It's ramp and It's start this it's just ramp It's we that the – and it's so to going shifted to of up now. up. up Deep MLZ, high the that. than earlier, more going whether nothing in

specific, kind so or me increase higher explain XXXX in at what's should XXXX? you a driving one-year can operate it then – level continue balance out, is really the it this from And but the to of to

a can like you show next That'll we to Block similar. up ramp it's Grasberg look the XXX,XXX we the to increase pretty reached In so see on slide, what estimate see day the ton Well, years five-year a ton that tons Cave. an and XXX,XXX five for range. average XXX,XXX you basis, on can XXXX, aggregate

earlier XXXX, average Deep increasing. Grasberg at the why five-year with after and kicks that. Grasberg we in this what seeing terms Block a to the of XXXX has MLZ similar. it grades XXXX after That's and become start largest just production our But see shift Block been that So of will to higher you're what really XXXX, and on XXXX have shifted in you do remains have Cave from to on will those said then part Cave profile very Richard

be copper gold tons is But of not suggested. plus very any PT-FI. in We'll There extends all the mill essentially full will grades XXX,XXX up We through of spike like have within you with shares production here not the and of PT-FI. high now and XXXX XX% the this of a level, aggregate, build to and there's here. spike through that

is half it is it half of So government. of ours,

XXXX, a the X that billion in Grasberg that. And detail one disaggregate billion but the XXXX, down you XXXX average of in the in XXXX on slides it little to break That's the very look from greater pounds then up, maybe follow-up. kind be helpful. an more bit, presentation, production aggregate XXXX through for When know I an maybe I a later down at XXXX you ramping level, transition pounds, detail. Thank break and could bit to year little of X.X production more would you and possible

I stage, XXXX billion at is and current this FCX consolidated XXXX XXXX this stage this at pounds. and XXXX mean PT-FI, is similar, are under about X.X is billion scheme and X.X this pounds the at

you. I it and Thank very of it. appreciate best luck. much Got

Our next question...

flavor just XXX XXXX Grasberg Block should million Deep XXXX, more and years, around next would pounds XXX copper in you it XXXX, million give pounds. of would in that. The than by pounds XXX Cave and that two So quick MLZ over doubling to be a the be on the be million

here... So that's going got two ups the ramp – we

Got it.

MLZ Deep the cornerstone of Grasberg the which the be to and our future. is going Block Cave ...with

Thank very it. you Got Great. much.

will Please question go the come Alex next Citi. Hacking of with ahead. Our from line

you're Deep you also doing MLZ And then problem? but the MLZ, how overall about to the currently that Deep is there a that something the caves question, is if this the thanks the than there are call. that seismic and wasn't significant with? Yeah, going it's good if how something are this fracking, other at fracking Grasberg? hydraulic mines, I of Thanks. that the Freeport the resolve may, around guess rather is know technique. question is that and the hydraulic My are second doing problem a morning part and a I already familiar minor concerned Is sure issues risk block of you confident for the I couple I

This is Johnson. Mark

it's for, body the to the something as As the before. the required fracking, ore hydro far density of testing In was We've XXXX. year, ever had need. of of applied the that an half doing calibrate been the drilling we we've first that that to since we've not equipment would end

familiar we've where time of equipment, period the a the had setting. we've with geologic So gotten

met drill been have trained various and with vendors Our we've had consultants. and crews we've

We others industry using been some that for the time. with in also have it collaborated

it. the very the of setting, crews, the we geologic which we density and have understanding to need the and we So in equipment, feel that drill confident

So it's new us. to industry. used to It's it. not has the new Codelco

Newcrest have The and has with that setting. Newcrest consultants their same used working and us. the it, very Codelco that been worked are effective in with it's consultants are

cave doing it's So it's on Deep we advance To the judgment of and and that's we're We do a to doing. a to affect how it do going to controlled the it's going we and some us, that how still MLZ. cave they're and level have we the in their high a of their if essentially us allow MLZ modeling the have confidence guidance, Deep not what safely, is manner, it matter unknowns. cave in cave, how

Richard simple different. started a a much holes, it's from technology. weeks we've We'll equipment. a standpoint, pumping It's not and mentioned, already complicated pumps. couple application wells. but not we'll starting, pressure the very it's in packing. fracking we It's industry, as really of be in the type drilling drill begin high that next – As within these It's been fairly used different it's It's oil the

next So three very I'd that the time. we'll more much as And you to the given from unknowns. we start cave as now, that taking mentioned, to estimate able in contingency And built going in we've We've confident how our some feel that months schedule is give say some be of ourselves for some Kathleen accurate step. right up. we're to

Mark. Thanks,

had a and time forth and area fracking a But much simpler. business lot is and the in is much that oil fracking extensively of experience been fracking narrower technology so gas lot and oil talking company's – spent our a so So differences. so and with This developed of we the has is about business. over

question Mark's it's I it's of if, was a when, So a of not point question safely. think

Richard, Thanks, helpful. Mark and very

Our Orest next from ahead. go with come Scotiabank. question of line will Wowkodaw Please the

good Hi, Two morning. questions.

the curious ramp your of I just where now the of I revised do of potential in is? ore that in terms when level comfort you First this wondering downside And is mine at ramp-up see the aggressive I level was think of all, milled here to if schedule how for up, terms mean risk your throughput? plan you Grasberg, look I'm more Richard's do second cuts elaborate mean potential the Thank willing what you that about press And prices – "your maybe then to necessary I had you with or if adjust respond you. whether what the release to terms to weaken? hoping if copper by that comments and to just in plans" of about production implies the in was company question market conditions. could

again. is This Mark

XX. the as Cave geologic us Block is confident we feel up GBC, required what similar to cave. the we call of the far very for GBC. ramp radius, to it that our in access We've was the we number what got around on much ramping We feel better estimate The a body. Grasberg As took to up ore the a hydraulic that's very of setting, It's the of DOZ. central of the

had see said, flexibility we and some obviously, central DOZ. balancing estimate. we have We I confident in like more a very downside feel lot in there's, ramp upside. up There's, than the some also a and that the We

to knowledge confidence learned had more to So and seen much much a previous we've we before of is similar we've we've the have area. got cave. MLZ, Having I IOZ different, much we've water we've past. that very Deep a more underground. it's lent got water itself the any start managing that extensive in GBC And robust some that as the we've efforts The our that caves, of of ever to on, pit lot what a And plan. and the pit, the build we to the the caving in there, cave. result from the MLZ more we ensure manage access thing good also the inventory had in that to just there a in issues going one on start the to It's block of is Deep globally monitoring in extensive than the up got believe how don't we've

reach imply nameplate Sorry. Does the expect XXXX that throughput based kind that to on level? full in XXXX of you

up, ramping zero, obviously, beginning be We'll XXXX. of starting the from at Yeah.

XXX,XXX-plus We in we're XXX,XXX XXXX. will be going have that ramping XXX,XXX timeframe mines itself to be range. by in up that DOZ-sized the we're establishing tons to two Grasberg. to those tons, level up Grasberg essentially XXXX, And the in

terms in of... then, And Okay.

record. comment the these take on from and month, a we've are great we All for track mid-June and have the in I this – disrupted haven't economy of the the got we've to or taken here world's trade talk economy copper operating mean, the global again really did in look then because steps and actions. what we the current stating we was $X.XX, got numbers showing overhanging trade that we that XXXX. we're turns all kind past we $X.XX do XXXX, cost price based to Orest, of if obvious. at the situation XXXX would go back China of is and $X.XX the seen did you what We've So, uncertainties that down. And gets

correlated environment A to to. are of if We have have input to price the lower we price flexibility lot of the copper. our adjust costs to a

deteriorate, not just We that company this sure of obvious cash our expenditures would flow again, hunker structure. to expenditures. we continue We down would of operations flow we'd again prices We're as deferring adjust capital positive. mines operating we period as locked cash would defer So make our to would for cost sure and positive. was be time, want cost there. well and and a to If are make into our have the adjust all

Great. the color. Appreciate

that's contingency plan. And strictly a

Okay. Thank you.

CIBC. with comes the next Oscar question ahead. of Please line Our Cabrera from go

Thank you, operator. Good morning, everyone.

Hello, Oscar.

Sure.

tons, Block in Just or reaching last of of Grasberg verification XXXX the that Caving statement XXX,XXX was terms getting on (XX:XX:XX) capacity Mark's XXXX?

XXX,XXX current our at and were plans tons. XXXX,

Okay.

of And we tons. up have potential going a XXX,XXX to

Okay.

is running you little tons still are nominal mill bit case the the a you? or of higher so that day, is capacity So could or per XXX,XXX the that

Yeah. it's as there to... shown Well, that one that in slide Kathleen referred

tons. XXX,XXX

XXX,XXX Between the we we're then, now and capital in about $XXX XXXX. tons put ... into of mill. million

mill things is we of do to that capacity. up horsepower additional One to the the have to into that get add

that long-term rock. passes. essentially we has an One the breaking of adding these the move drop Grasberg we the that down, fill that tons be need up capacity rock from is of high ore we have XXX,XXX pit we'll XXX-meter lose mill, currently That get that plan. to recoveries. do to plans in future, mill more the on benefits would by away be in capacity we place back our We the the the mill in impact based we up a when of the horsepower the expansion but that what types the to would that's mining all part And get required grinding rock on

it mean, lot cannot like, grade then, block I said you starts, you have seems there's I you really And Grasberg – Okay. very you correctly, still on like the helpful. pit. could good of caving if If to much. then the once That's open that. that access a remember Thank

to is some going possible equivalent just that is this of just to that eternity? X% later be it left something a copper there at would date for mine or be So grade

– ramp. the of good two-thirds relatively as extension. indicate experts ramp. about that was we months impact, about as X what it's of very but have easy, block the our development have opportunity the portion the No, a from in wish pit concurrent cave geotechnical that makes pit Richard quickly the in leave picked pit that is and our minor modeling grade, tons, what very with and It's it along ramp, an re-mine we we the with this to had gets lower extension we're along I the it pit this this million cave. the can It's doing six volume. up a down We've re-mining block mentioned, of behind way further

We happen have interaction as quickly. for some the didn't that if opportunity, whatever additional reason

not right would through embarking long-term have it's simple, the extension. not We here. up on commitment. waste of straightforward, relatively It's the extensive mine to much of continuing pit a what multi-year several some to months, capability stripping. re-mining a ramp. top, bigger That's on relatively for We a we're go really have That's but

it's deal you be lower That going grade the to cave it's block me, I be is with That going but, it. that that not to material. and just continue with XXXXs widen forever. since to known diluted mean correct we've leave the there cave, economic. into ore just wouldn't Mark, to Oscar,

grade, yeah. Lower

So with All mined, the mixed come access. get ultimately be is ore to grade material but to it's we pit, from processed. going get lower and going to can down, that directly the

I think impressive, regardless, it's pretty guys.

be transition then will getting though portfolio transition a standpoint. unit from years we're we're Grasberg, back at a and low position talking Oscar, XXXX, to keep we're these also have And want years the about Right. XXXX, low net to credit XXXX. even going to during we a very to cost mind, mine Grasberg By continue in into the cost even still cost. in just

and and our the to So in we're even lowest get during we with given have significant transition still net gold high cost copper volume and the that mining, the the increase. ore XXXX will improvements then XXXX we'll be cost as our grades years of

these new And while investing mill. much days. to a and in just Mark I've $XXX starting mines able another, by comparison to one we're how know new develop cost all mine million made mills these said something, going completing to you be And the

to we're during So developed from going infrastructure to benefit since back, the but able be volumes. especially of all XXXXs way to been this that's achieve going these levels

good Great. very and guys much Thank luck. you

Oscar. Thanks,

comes from Jefferies. question Please LaFemina of line next Your go the Chris ahead. with

you Hey, good taking my morning, for Thank Richard. question.

Sure, Chris.

If production materially look and we steadily America delivery costs North been production at the in America Indonesia, South and your have unit increasing. somewhat in America, North costs

around XX%, over good up and the costs well. as were has been been year, flat, Indonesia in pretty think unit South America, more whereas last I they've

how time? Grasberg question first why this And we to in less inflation then do years' to relatively have get deals North Where significant the in American five trend these experienced is, expect American steady assets. you curve exposed cost to the South more and Indonesia you'll asset be the time? over U.S.? the pretty Obviously, and done, in if sit exposed the Indonesian question should cost the the second is, assets So that

the would they'll assets, That become in my of question. to those longer-term. think be first trying just I a positioning Thanks. competitive understand focus, more

North America referenced – more The that been by grades during has changes an But in you that the also in had our can increase change ore and driven Red this. we've period big mining rates. add to

we to much steps as reduce trucks and park downturn, what we take the shapes. did mine to do and During costs possible different could as

where not we now. We're in more North mining change numbers American any in we're Now from step a showing sequence. are sustainable in our costs

that mining give terms our freight experienced have But of volume related energy inflation some big an increase in and dealing prices, ore cost. with acid here us recent in the change, was more sulfuric cost, grade in We months out commodity costs project showing we're American North significant today, our of and in from are flat inputs leaving capacity you ensure future any not now. forward. our we cash if a level costs But costs going where sustainable production cash to changes

That's very helpful. Thank you.

North quite sensitive prices in movements very Yeah, moly would thing North America well. moly other one change add, as is bit America so a I prices, to

quarter quarter I wide delivery I that guess function quarter also just the inflation Is copper for second lower though netting than bit as was like out reason but price more input price yeah, higher just cost grades bit higher production being inflation. I of costs, looking little it materially was a obviously quarter, cost industry higher I the copper a know well, Right, first part grades byproducts to before little of cost at and the it's from sounds concerned about somewhat to even a fell that right? some inherent first second maybe and so that

with just correlated very of are to copper comment, I'll with And it's us, margins. correct. The a a lot profitable, costs That's still prices. industry, mentioned earlier, I good profitable volumes business for high input cost

this at Now, $X.XX we've had situation unusual last were where and over now we $X.XX. month the

currently. going is really the a distorted to right what's all now whatever it's kind affect on at the end But globally going day, So economics results of commodities. from situation of

price back We go going And so our up. what happens is cost our will prices. track with think to copper

mean sulfur. we this and just issue we we every this – to in of week we had this doing I increased meeting harping and were had have of last transportation on how earnings fight all in to this analysis as of to be trucks that's XX margins, making our call things efficient fight mine do week energy is where maintain of to our We and and a the all and fighting But data everyday before all managers like efficient, get an our trying progress we every using fight maintain – we're we use more day. putting we're fight on more and We're our business, how now. sensors more there. can – cost can

Thank you.

go question Gabelli with ahead. next Chris from & the Mancini Your of Co. come Please will line

Grasberg. couple on a questions Hi, guys. on question Quick thanks of –

it end per going that should the forward. when CapEx should get the below billion year level? then is and a trying Just mostly for $X of down that billion of developed $X CapEx, underground around drop it terms to until In the is XXXX capital – sustaining sense the at point

the period net a and PT-FI. million we're $XXX Yes, year that's five-year on to $XXX order spending over million of the

which Okay. once to down assume, materially sustaining developed? drop below be right, all fully All a right. Great. then I should it And that should level it's

to infrastructure, in the got that another have mine time is it's Kucing Liar the that money make, block place. it. called but going that in mill get to be currently you we've that development said Richard look one mine developed. some we'll Yeah, invested the But forward, have contemplated as the the largely more to we all the at enhancements economics over is closer as on today to We've earlier, caves. do We'll

behind So, are in terms us. the those of infrastructure cost, largely

Okay.

decline mine cost of operating around low this cost and declines during costs I more in that ore mining talking like seems Okay, XXXX, and we the open you're $X.X unit are period decline assume spending guess pit as operating you're as that mean, that the it great. the I can Kathleen, less that labor there, in kind – to labor XXXX ore, assume year open costs? than pit meaning we continuing will up a Is costs will on about less the mining production as mean XXXX. the so also, processing XXXX so then in Grasberg then total capital you're ramp I Grasberg and at billion production now those should a And mine – and be at on and somewhere

rate from where in are go mill Yeah., today. the XXXX and will we and also XXXX down

was the we're costs have be still will And we net after lowest net credits, cost the operation that will position unit in then have what then cash looking absolute our than our get portfolio, I enjoying in at to to So currently. lower XXXX. credit this and referring we is really costs gold

Right.

expect a to us fully in what at you're once the, in as Okay. to ramped XXXX the XXXX the time you be Grasberg cost you period? sense I and to give could mean, say,

being we've $X.XX a a before pound. well, than given less Yeah, number

Okay.

earlier In net saying likely to XXXX it these be be Like years, than less I was currently, it'll that. projecting we're credit. a in

than this but period, So that more about than it's likely was less to $X.XX of the mine, pound a in lower was a be talking that. you're life of

lot. a All Okay. Thanks right, great.

Your Timna next go comes the question Bank from Please America. ahead. of of line Tanners with

Hey, good morning, everyone.

morning. Good

you release don't quick. could you the a mind that's to the wanted by subject hope coming I August. any Cerro you change on Verde know decision if real up note color the end negotiations, if provide labor the for But of I us in

Yeah, Timna, we're working under early closely are with all leadership ongoing there. parameters. Discussions negotiation union the

So all we're going is come going of well. But cautiously and ongoing now, optimistic that to together. discussions right that are

But it hasn't settled. been

has not It been.

far, got up contracts South in It a the had America, ours but there's and that big were lot contracts we sort in air. settled of still are haven't been we've that of potentially some there, so has disruptions not labor the and including

could do hits negotiations that fair if are think say Escondida Is you. that knock-on on Verde that those Cerro delayed to snag effect is or you separate? it the have or Got a a

strikes contagious said always diseases. I've are Well,

union what's So it's watch on. people going clearly communicate,

a – that it's So we there answer question, an but is relationship. to don't clearly, have

Okay. be that how know is what I the might mentioned helping strong the thinking about something And of parameters then or mind is could with increase? Thank that's cash the but board move further dividend. my certainly flows, around for the the sense any be parameters revisited you priorities – us you question next that maybe just if understand you. in other wouldn't

have going from Well, the but trade with economy we're we further increases, have see this global and current to goes. how talks, uncertainty we're these expectations past to that looking to get forward all

situation. that So deferred on right that's now depending

price And that? is at mean level what a being higher copper the you by

correct. That's

Okay. Got it.

very Okay. there. I'll go let Thanks much. it

Yeah.

it, through so. right bottom got the You of

Thanks.

Vertical final Please Research. the Dudas go from ahead. line Michael will question of come Our with

second potential first where orders? look help quick is EPCM pre-feasibility half Richard, just copper like relative in the sulfide much the there equipment to half, on Star, stand first that have type of do any and you. at Thank on to XXXX you on hired Lone produced How investment. you or and

a mine that's we oxide between now. year, actually, like two. I divided underway. began transporting looks mean, The earlier this it is project now So Beginning material. We're the actually

any to have... So not still significant really go. that's underway. There's real equipment (XX:XX:XX) We

and shovels. trucks Mainly

Yeah.

that. got we've And

Which go we didn't We to own. have a buy one. new

Right.

And copper so we expect by XXXX. first there

By XXXX. year end

XXXX. By year end

we're six got there we what depth. it oil now. like then we've so it's and drilling to – and – We're of right extended, is. I being the We're ore now, defining working mean, sulfide to-date. and understanding you body turn core I west analyzing east exploration these And our done said, rigs the in keeps recent out results

that total development And in think is what our beginning now, be, and be, how this about large terms stage team of you of initial it in resource. and the would is making so, to right understanding development how stage we're would sure access what you the that to have

early it's So in definition. of the stage

budgeted is growth Star, allocated XXXX And here approximate. Kathleen, at Lone capital of for that's the much how

right it's but $XXX of number I the of plus in me, front order don't have the million. on probably

much. very you Thank everyone. Excellent. luck, Good

Appreciate right. All it.

now call closing remarks. over to the back management turn any We'll for

everybody for forward your participating forward. as speaking and we with look we go Thanks for interest right. you and All to

that Ladies and today. concludes our gentlemen, call for for you Thank participation. your

disconnect. may now You