Freeport-McMoRan (FCX) 24 Oct 182018 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoRan Third 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 third good you the morning. call. Thank conference Welcome Freeport-McMoRan earnings quarter XXXX

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

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

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

our the actual begin today's who'll our We want may refer we our SEC described and Mark Mike in everyone certain and release differ by everyone Richard, to remind Adkerson Kendrick. turn to Red of financial and risk to language materials cautionary presentation to press that to and today's comments our on Before the I'll the to today, include included factors prepared results briefly we release Johnson, and our then well call call is over call Conger, and results, start in referring subsequent for and as Richard filings. comments, our as materially. summarizing be press XXXX the the want statements slides Form XX-K on call. forward-looking

contingent which at call net million, FCX included quarter held offset value of Verde. $XX for to adjusted consideration, per agreement After non-recurring or new As for labor third per associated usual, net gains Today, The three-year income for for fair $X.XX charges the Cerro gains, $XXX totaled attributable the remarks, net per or our $X.XX sale XXXX. $X.XX results and assets questions. share. stock share, up a our with partly adjusting of of to or share, million, of these million, primarily adjustments after open collective we'll by reflected potential $XXX income reported net common the

before the a and earnings of slide on during totaled taxes, XX for adjusted depreciation strong there's calculation the and page reported $X.X quarter. We EBITDA sales or our amortization, of EBITDA, reconciliation the deck. interest, quarter Our third billion,

of sales pounds sales XXX,XXX the – sales were ounces, of billion third X% exceeded than Indonesia our rates higher sales were gold copper and Our These previous X guidance operating Grasberg the reflects phases mine pit. higher, were gold XX molybdenum totaled sales grades as and sales in in principally and pounds higher copper, XX% open and we million final this quarter. the the copper ore

are addition, coming outlook material confirming In the years. operational in respects we guidance our all in

our was copper quarter, That of Our per year's quarter average And was of third third $X,XXX quarter that realized and quarter price gold below per $X.XX average $X,XXX pound. ounce. pound. last year's average $X.XX also was realization was third per last per below

cost strong We operations quarter, which For $XXX averaged management. net global billion million generated that continued with and the debt with cash The and three-year of cash consolidated the expenditures ended of billion. on billion, of focus per We in agreement $XX.X Cerro quarter mines average capital third nonrecurring pound mentioned totaled exceeded our strong from of pound. third the previously. cash also the our $X.X our per those the the operating costs a labor copper That reflects flows and for charges $X.XX productivity $X.XX Verde includes for and quarter, during associated unit I performance quarter. consolidated $X.XX $X.XX

that continues ended we've our quarters. the the with position. strong was billion, deleveraging $X.X at with that net We a the period last liquidity debt September Our over end had of and several

facility and borrowings credit we position, billion under cash facility. our that to addition have have In no revolving $X.X also a

board that X. policy and on paid new who providing this and will that Our quarterly turn to the established – year, be was declared presentation I'll $X.XX a be now over earlier the materials. paid will of our dividend November be under Richard, call referring dividend share additional that will per slide also details quarterly dividend to

everyone. morning, Good

a As the our teams I we'll important solid, milestone us Indonesia, be as mining Operations, there in way. continue current we execute been a it's global had to our review government that. very so with terms our been body to talking with important Results ore Papua progress FCX. and open the quarter about, Grasberg operations made these our we'll we've in our In from plans underground, agreements of stabilization on negotiations mining active have strong, here do signing divestment for our highlights, very in at operations an pit progressing efforts in effective from have about in reach to the business definitive of transitioning of XX. September talk been

things on our shareholder to important continuing are focus about sharp value. business our We build the

X at about in with the in and to quarter unusual typically net about reflect paradox. right future. commodity drop when nine we're we're settlement copper Star. in of other the and growth stability It look yet the the it the But important. about customers, It's this future. optimistic becoming a marketplace indicates establishes ore Fundamental I that excited what tight. year and identified future of you also and at the dropping more to copper very operation the you a running you, rates. when as start is the investor remained it's lot the very costs that's are the the Peru, this company, our global prices, higher $X.X really and concerns copper going inventory but our doing like see in fabricators our labor the we Verde billion And a is of at Physical it's situation to long-term our fundamentals drilling this billion the this a sentiment at not core and more copper ore Inalum mining manufacturing long-term experienced about $X.XX $X.XX at body line does and path de-risk parallel as frank drivers is been mean, in the positive, since [ph], and that it for forth. constructions in a about Slide Indonesia. June. We're market, in and about in they're of over operations pound, Europe ours for U.S. plans, fundamentals, debt, is so what year. body months world-class terms positive higher down reaching very unit has be Net in to drill, our agreement the significantly a with that positive, last at it flows get industry is growing and of their mentioned, Chinese is companies talk are stocks now. the Our very when exceeded drop with decades, Lone successful in $X we the stocks, slide by remain of below you and paradox but steady exchange now, that's in we price are potential result To from Kathleen to Operating CapEx $XXX so Cerro markets million is and was know But and look a global our each in look cash to-date. third good. the grow [ph], large China and

availability low in good. $X, and and Our early Cathode The a a our is of a $X.XX increasingly for stocks. in the United elsewhere absent the constraining and macro forth order But and in is are tight smelters economy, books XX%, sentiment bearish with China Chile over Deficits the issues having in almost India. lot are China are significant long-term copper States June, becoming terms inevitable for are customers China scrap. business disruptions generations, have so project. this is stocks of strong vehicles, on well this and positives multi-year are happening energy is down significant is strong. us electric and and Global globally. speculators There's fundamentals alternative was in in since price. a downturn global impact price and in drivers, on

them. cause us? doing our other uncertainty gap This them, We're us investment believe for develop slow We're until there decisions I this situation about clarity to on is preparation resources. long-term this marketplace. add mean, continuing our is do causing that defer, to to supply for will down to situation it plans this we're the us is will defer the those certainly to and in and but industry. to what's Now, defer to causing work impending companies to going optimistic I them,

we new of terms list and these for resolved is of is LME a XX-year and terms note are a XXXXs, London super that's I as this It's major page day's strength or production roundtable have you on new talked then this to reserves many situation. that to some for XXXX, company more. to The There our industry is and cycle important this in there executives on deal believe said, challenges. skeptical mines it's And paradox. point, and I business issue our global other we going are with supply see a at of with down investors in go think current there years that that's activity was to you since what industry the the in situation and to and trade our Grasberg have So, resources. and for most will production, haven't levels economy. strong Las disrupt get But doesn't when the Week it's to to with is develop here. that points gone old the or projects. times world-class difficult A additions the but We are And in very industry on been started the important mines Star in of Lone makes resource. that in all on way slide it the rare. Escondida future commonly constrained; our show copper current the this replicate and lead of be Bambas chart years in shown to X, charts. XXXXs, an And to supply XXX discoveries information X- I

X. on So page update operations

but offset success some you and As can we've inflation, I and talk that cost that. management. through with largely some our able focused There's cost moves been that in efficiency we're We've see to numbers. about, productivity had on

XXXX, cost of is XXXX, we copper costs. production stabilizing degree some on see situation because maintenance constrained low were outlook forward. going company, back the our costs as and we cut In We focused because of We of the capital. Our and principally. prices

mining We'll rates in about this – see what market we our for disciplined that opportunities that. expansions maintain part operation. forward. have in inflation way, remain but Lone Now numbers the so to now be the you we're plans, do project going in are cut of increasing effective capital we're to is to evaluating do when might and talk and that's we're our decisions some inherently. looking to as involves an going do that to in rank more in looking look and doing volumes we're to chance, we're now XXXX we're make the We costs production our rates, We're mining about what low with going far risk we stabilized. the we able them, right in our pipeline manage And consider doing to an cost important But costs beyond alternatives, Star, future. and think think our Americas, we we

our pit. progress you of and the things the So, period effective year. a the in had are XXXX we into Indonesia, to open of third holes the performance way pit time we of security year-to-date about mining some strong phase now really our in by in operating issues, extended with very operating XXXX final production, can extend to operation, going We're need was We're were the fourth making strong workforce, and we issues address. After systems, pit quarter XXXX. here amazing with and it's in we safe in associated the see in an quarter we the that core of finishing operations to in drilling the Grasberg are think I of this mining. when there on

from some out that so mine idea. came were truck we haul have in guys ore abandon and the ore some a going to those grade just Our ramps originally with We had it, underground. and that high great

of and and we'll it'll going ago pit the back going be we're high and doing in which as early It's in rock of really we is the a it's a pit, that To complete South half hydraulic it's in to to our the bulk Block is the mine. first MLZ now that mine cave. done At we mine, mid-XXXX and of in important in a reserves Now grade and begun we is operating block of separate address and today roads to It's in that which actually. terms mineralization of and complicated mine, started over future, mine events. rights be the first year an of the the fracturing seismic established Cave mineralization go process, from separate Chile. are technology. our with wanted for access using seismicity these Deep Ertsberg Grasberg what This XXXX. area great This in mining-induced we the our of those MLZ By And caving sections effective time down the the years America procedure and commenced the haul experiencing, XXXX/XXXX, in significantly manage we Deep using started pre-condition that. has that, for we've been the XXXXs some our and remaining winding operation, the forward. not do. this to It's began area

So de-risk startup the it's our giving of caving plans us MLZ. the in increased Deep for confidence, mid-XXXX

testing Cave, suitable. It's a this in mining mining third for for of infrastructure Block leader open really ore because confirms system underground initial same the have. the pit, after world's is successfully and the since in all Grasberg the plans, quarter. system. it's investment And With our flow our cave block a that We're that ore been is in we've Grasberg XXXX blast place. rail Rock is during the underground of experience suitable the effective mining. we rock conducting company years and We're undercutting now new testing

is be scale, with of the and worked terms we're going of for in years is technical it. underground things ever operation this terms doing In largest challenges to in But the done. comfortable very we've

who Dodge, us which our this follow operations – So Safford know Lone was production. Arizona now Lone ore you located those is Safford ago the XX is to when of Eastern mine, resource that oxide years began beginning we Star, Phelps and in operations declining adjacent Star acquired

to from And Star. use so have mining we oxide are this. ore excess We're in we processing stripping that going Lone facilities

the end stripping We're billion for pounds pictures Year and annually X.X million XXXX pounds It's You progress reserves of of can only by XX of see oxides. were it's million the got we've it copper; made it. production years. $XXX project. XXX well into

an as this what very be, we extending given And this expanding, confirming Now, previously some oxide us drilled our this drilling drill current are And we has ore then resource. sulfide and the resources sulfide underlying, to large had opportunities. is resource. appears the body, and

over stripping sulfide is we're mountains, future. the just the the it's the This to in potential going in essence a And body what forward. part of be future Morenci this is a So material of FCX's going key doing now world-class project ore be expose nearby. oxide Morenci-type a has to being resource. what could with very

and back returning So PT-FI here's Indonesia, we where to stand.

we the no said, complete our Cave existing is MLZ MLZ MLZ rates we'll years achieve The supplemented changes our see mid-XXXX, that's I above Cave. say decline is its de-risked from have production a our we for Block Grasberg And quarter Kathleen will ramping pit there outlook. this. any transition As up, Deep red significant – two which today up, Activities the ramping in purple the terms of which the you as slots to during Deep previous to the mine, up. slide and activities degree mine, have, that phase. mine rust of in are by significant up But Block DOZ the in ramping mining Deep part to the achieving ramping showing when above ability showing and the this in have view, the

have this couple below that then, when have you of And and copper here gold all And operations the the gold will for will significant And planned. numbers you copper cost for chart. operating very this we one the very and of all attractive economics as we largest be XXXX be year. reaching have can mine will that long-term mines, So, developed mine, and extends we'll of We'll low mixture fully a levels this of this world's long-term, through is shown our a big see operations. because years. both,

all with for and with positive I important state-owned view, parties agreement us the its And XX, the achieving the years. company So, Inalum, that very when to Inalum September had signed government, my very outcome objectives say parties. the over we it's all communicated includes agreement that is clearly they Inalum, in that on

acquiring we Tinto's invest will over divest to A ago, signed all sell. actually XX%. the thought reason the We're agreement. Tinto's just was this, Rio them achieving being might its the in to joint decision was Rio to a partner positive acceptable the have the I any will be Tinto to last when exiting a is then They will Our of shareholders, our objective were that's be we achieving pleased – for partners to we property. interest, venture tell are I'm – key to negotiated divestment expected Rio you effective And which that be more asset. XX% this ultimately both an valuation interest we And the event. I in what for to X% They so than The where year about framework this today much government government. have and having facing is to interest. only year

interest end it will bigger. the was so Rio now and negotiation an will XX% partner Tinto's The ownership come venture difficult the of operations. as with that PT-FI Indonesian shareholder a a very into interest get day, So shareholder Inalum, forth. Previously, total and it will joint The then PT-FI, the avoided entity. own At will the valuation Tinto, and FCX. Rio subsidiary, PT-FI. XX% have continue – be will

a that have protects had that Tinto agreed shareholder arrangement on venture We joint the economics Rio agreement. FCX the under

all ensure with over and to We've corporate be a will be with through governance the agreed the now will of done partners control to. structure, we will that production long-term there that where So be terms we've on way will are but consistent operating mine XXXX. getting we Inalum structure, in agreed substantially corporate a operating committee consistent what agreement run a FCX we've plan with grant shareholders' an in the operations that of

We XXXX, with assured And in work. enforceability. legal those significant and will of terms have there no extension from and rights our are fiscal through contract legal changes terms

this comes positive of all very a gives So, deal. us together that

Now, of Tinto important is to this government finance Freeport. generate to the alignment in I thing to receptive and their appears this be run the activities very And generate need having interest operations flows to and debt as run service positive Inalum see of offering, partner an smoothly, taking is positive XX% terms believe see verge seem to commencing on of and and They want bond – very fund cash from dividends. financing one acquisition have this flows, with Indonesian to is being between very so stability, being will by now on. bond we'll to operation the raising want of to that they'll be because the they're to they'll the debt, the the that cash significant the they a Rio markets

overall we of in divergence environment we've now. create firmly and because this experienced believe be should the about better years for views a doing what opinions I So, what recent will than operations that of

be to be aligned, together I will that think going all and we're helpful.

industry. interest world, our assets. prudent long-term in very that's America. team, us tax States is tax was we to we're gives can Large means a difference execution, taxes benefit a The in that's we carryforward, have environment, a from North very America a development, core in in company effective. That's face gas In assets We allocate internationally. we not and going the innovation, way our located United the set diversified in. shared actually but of States, which a across Tax And we the resources. So situation. One many South significant Three-quarters great United reserves the of in long-term of own global NOL rate large leadership the all leadership loss project for regulatory improved We've the operational the position. That recent the consequence what years. feature for Act We're of positive. operate synergy, also absent tax oil you deal in experienced company with in our from XX%. got big a the today's Reform resources to production effective capital pay around And capacity the a operations, drops are and and expansion. that and

positive for of terms that's So, very us looking going to in be at Indonesia.

this Now, our of FCX that know – replicate. major market that's valuation have chart that recognizing asset talks around the today's going enough is mines I've at of we've valuation back thing that to where to major mines to the very it of three difficult recently portfolio valuations what have just the the about, we looked long about the to market think – is. been way one But is

capacity. our look projects When pounds the around copper and of equivalent it's $XX that means share world that we're $XX And to we high-level we replacement of on looking equity see billion. simple capacity our a capacity Our looking X.X copper order to implied on a is develop the or billion for are to is that that minus cost metric others pound about plus current at at, through year. $X the

where that's are. but at, look to guys we you for thought a Just

Okay, gold's quarter, the costs million credits $X.XX for is just the after for labor bit (sic) would item billion it billion. X.XX over pounds; $X.X a Cerro X.X Verde production at guidance: at flows previous for site before; $X; ounces; fourth molybdenum, this cash in at line by-product copper settlements be $X.XX pounds; higher at we're with operating from reflecting unchanged where copper special XX (sic) so XXXX outlook million

We are have going to some...

Dollars.

$X.X ...dollars. billion.

quarter. – in to $X.XX million we our We are just to means capital usage essentially in from previous prices the tax working totaling changes capital $XXX going fourth million the fourth over And guidance. very course copper tax-related some highly leverage expenditures of have No quarter of us. about $XXX for real

And so outlook our for the transition with the confirming always the (sic) transition And the We've we're see where try we third we on XX, basically profiles given from previously. But we and fourth some of to the then for were XXXX can year. the When quarter quarter years we've are this you guidance after – Sales do consistent XX. our brought fourth are. We'll essentially on We generating slide the years, show in for look flow company showing average try in you XXXX, we slide year, into this XXXX... quarter. and to quarter gold copper forward and presented capacity at how molybdenum. are to do the XXXX our that. the it cash the and keeping up year copper, the guidance goes third the

XXXX, XXXX.

subsequent XXXX, $X.XX, significantly for (XX:XX) $X flows copper, $X would for $X.X transition XXXX, $X over $X.X billion at XXXX with copper, $X.X over cash of $X billion billion and billion. the years grows for that cash EBITDA $X.X XXXX. the billion the $X.X billion And billion flows at $X.X to billion, to EBITDA just to operating be years,

We early to facilities. very the strong net expenditures, existing set really about company already billion that $XX.X Kathleen at debt cash XXXX, flows years. Capital So, plan to we're September. $X reduce ability about. from being billion $XX generate two billion debt by the a it. Financial to characterized billion. policy, from end changes done had talked productive a no our by what we've is of over had $X.X In plan, our at We've sticking talked at we with of our $XX time billion

a we sheet way strong the really addressing balance have the Freeport's and And years. so now long a we've strong in past come situation financial two deleveraging issue after over

forward paying looking forward. We're are that's dividend. With our had sheet. – future flows, cash about these margins with our opportunities. go long-lived diversed of clarity to review pleased this success. We've going and company set higher our continue organization But you looking strengthen for its future dividends. be opportunities, I'm We're our come said, see to We're development growth at success. time up strong uncertainties is you our policy have disciplined company, geographically and copper With balance we We of assets, from that's And from so, forward we resolved, as and when lot I very market P&D outlook, of great fundamental And we'll When in reinstated the the is continue as going to experienced long-term (XX:XX) we copper to hear really with the good XX% need undertake industry. reserves, way financial attractive. the a very the those. some look to really of the something in marketplace, of portfolio got global Americas. to we've others a got we

I documentations balance we're sheet, issue Indonesian our We do believe been addressed I addressed, longer no has to issues we've of will closing. to have say Indonesia. prior in overhang Now, our the complete debating agreements some

would forward and we to in committed And very to – today, looking that outperforming in to closing suggest our – attraction expect of valuation is other that. attractive attraction end of all factors. And value occur, these at not light is are We the I XXXX. if early XXXX, our

So, forward have. questions. I will for line may the you to look I open responding questions to any

Chris with from line ahead. come the Bank. question of Please Terry Deutsche first Our will go

questions. thanks my taking and for Kathleen, Hi, Richard

is had decision I one First allocation going the forward. just on capital

you billion I wanted get as to below net think that your debt target. you'd mentioned previously $X

leading you sheet and path the invest the from for then or sentiment the you sentiment projects that in way i.e., next value copper, et want you the M&A year just the cetera to Thanks. through about talked And potentially believe So, if add you've playing will you isn't question. in talk going see and can fundamentals you first be investment on if at new where look at? forward, the will it in That's balance you the how that, remains even the is bearish, down market continue to right if you see so?

and the second Chris, I'll part. of part that, Richard first the let address take

And target net reached. has that year. debt been had billion. that net set Our reached to get last We to out debt $XX we

capital to about currently We've but initiated feel allocation now balance target. we so, continuing net we strengthen dividend below look debt return shareholders, the that good we'll our continue have, that just shareholders, And to we're the the at sheet. to and is and to

industrial we're respect question, with and got I your on ourselves through that's try decide that there today sort forth question number fundamental China China and is, one thinking view in particularly a not for just strong a that is ranking lever underlying settlement. in that we of this going heading. went what which business it's a believe in prepare in because all reached, and you thing, strategy of a of Chris, the really many still the to would investments. that. We've U.S. China, is and some and of to a policy alternatives of investor really And say, about between a is through then are to economies this if be and people me, this and what posture sentiment, – to issues focus this do first, So, issues creating to people consensus reach with said; if States. that is and I in a question where NAFTA to question United but the talk the resolution – a to style will of it's similar one world address hand, we'll On of going process that's future globally, so one to a in to to and second we're

result has we're China On is of this. China sorts demand in significant all infrastructure, that how of of weakening if and that, this it's goes so a then question has Initiative in ability export in to this and impact hand, manufacturing copper Road there China, on a to in that address in in all are so forth. Belt a going say that economy But direction important, wait of the impact who really a see of and the If what an out. investing those by its different other to results

favorable So, we're all overly we today. of current internal be to so all making increasing on money. clarity bullheaded We're confident are opportunities we're We're be have price to prepare. on outcome start predict not of get If We're not about this, to until a the investors' these ultimate lot and ability going of and investments our it. we weighing to be copper this to a heavily about going we'll to going going minds about returns. recovers, not shareholder outcome focus uncertainties of going that

opportunity We're We a it's be to opportunities increase you there to to can the high outside and that those. in open all assure those have now. value have we internal bankers But for to internally time. with going And our marketplace. we're compete invest we chance be our contacted out goes because on opportunities by no for to dividends. the right companies hurdle get observing everything about I an the going and

also U.S. of advantage comparing looking taxed I you're a in wherever in rates to world. else, future and But we'll huge when and returns after-tax U.S. wherever they We Indonesia strong the at on pay Indonesia, operations mean, taxes. resources here are heavily in pay are taxes no – because the in have that's the

else. than is stronger investment that You have certainty U.S. the in anywhere

we So, sentiment a it as investor Chris. question. question see opposed are, fundamental where more anyway, an that's – as I to it's not And

for how full assume XQ? give or you've in I there. do see that will in just you'll complete – you I color year guess, on results zoom or the period the February. can second open a XQ pit XQ, Grasberg But you'll Thanks. of is Thanks. highest my Okay. guidance is, of those risk specifically. quarters you XQ the just about in And little the two out guess more and question the bit middle around Thanks by talk Which be given or playing guidance end specifically? I XXXX. the

not MLZ caving. the pit point at first half, start we're expecting Deep to Well, and continue for will this the open through

or expecting production pit first half So most production DOZ either from is open in the the the we're coming first that the of established in half.

at We in some activities accelerate appropriate. to completing said, in will still chance half Cave We we got first we've have point plans Block potentially we is – open in for look Cave have the we Grasberg in MLZ begin mid-XXXX that to parallel contingency in Grasberg infrastructure this Block the incorporated But the always time, we and prepared, the as our and startup believe Deep for begin the pit. as estimates And do metal. Richard accelerate that. we the do, with ways always will

very the XXXX small our the than MLZ, of less is XX% through So, a mill. portion ore Richard our production, Deep of it's as said,

And, half refer XXXX in is see of Chris, small production in back that there. of the annual MLZ both growing Cave is pit the Grasberg X, the and completed you XXXX, just can in are and and Deep DOZ Block first parts page XXXX,

starts see So the we're half doing from when altogether. emerging of in out the you where that the year really pit can and we're of that second

leave Okay. you. I'll it Thanks. there. Thank

Chris. Thanks,

Our next go from of Sachs. ahead. with Goldman Matthew Please comes question Korn line the

morning, good Hey, everyone.

Good morning.

little of on quarter operational the Indonesia, in we a could context agreement, understand the solid Question are issues. the there. environmental good a more you on help us bit regarding if where Congratulations

still I think it's an investors element I somewhat find unclear. are

requested material want? interacting expect far result going of of actually that on the operations real they you Second, And to of been at been and what government you Thanks. day, have so then any the to are your read in is again Freeport? this kind part as the the there first, the with what's So, of change what any changes what's at end, there? end do to

to Thanks, from Okay. Good you. Matthew. hear

our working Forestry, a basic our partner, of the the Inalum, in environmental deals Ministry, which industry and So, Ministry; operations; enterprise Ministry is Environmental with government Energy administers the the and state-owned the Finance Mines new coordinated the which across fashion which and manages ministries. issues.

We have add Indonesian way today the to been our operations. disrupt that there given or press recently assurances And, that significant environmental to effect. that issues will is operations additional be articles in a our and resolved in cost not will fact, in

are document call. in announced new to deal out with how Ministry working these earnings to We the and decrees quarter that with Environmental our came first

to so, objective costs. those is achieve not amend decrees adding And objective ways up with to disrupting of the that to come our or additional operations

imagine, activities. their that are to working we've – been banks us financing as understanding working can with significant in working of its terms of and matter with Ministry goal. the that lawyers together All and this a you and And achieve for Inalum is that Environmental

So, everybody goal. is working same with the

close before We get for have it. the It's to that we documentation deal. have necessary to done

to some international have in agreements rights agreement some wording complete. license also new working We're us our to forward. going rights to We arbitration on give the enforce

not what said All as is things, those of I coming of debated. – Work being documentation earlier issues to. together agreed to are we've get

Got that it. all appreciate color. Very I helpful.

– as had simpler, terms effect is Cerro Cost-wise, we Thanks. charge in yeah, you result? pending forward one how the that we a one-time should for for going Second been think the agreement all. for of costs what saw big Verde P&D region that be labor the should

South forward. as changes North any net costs Matthew, not in we our America this in is cash look significant or expecting America Kathleen. We're

taking cost XXXX significantly expecting the capacity have been As to we're and But reestablish and Richard in unit forward... rates during we earlier, production the as XXXX. change steps talked XXXX reinitiate curtailments look here, not the we about following to mining from

great... Yeah,

XXXX. ...for

milling going in I'll largest had with and the that, mean, it recent above I here in industry the our nameplate. mining believe it's the that I Red And is the before there world man, facility sizeable expansion great. and mill compliment that is we

lot flows material years so but lot of cash relatively but ahead a deposit, easy, move, of great our the were it's it mining of charge, a that and a is costs. the one-time all of the that's to with workforce And with very of to low-grade labor of we – pleased meet work, – settlement. us big operation of had aspirations lot it. allowed that a just way this a in do We And controlled it of

it. appreciate of Best luck to I folks. Great. you,

you too, to luck Good Okay. Matthew.

go Please with Your comes Pipes from FBR. question B. Riley next line of ahead. the Lucas

XXXX the Kathleen, have Hey, agreement shareholder good you. economics? to Thank maybe everybody. split a little would XXXX that same where up XXXX, economics In Richard, through that longer things place the preserve bit has I ramp in in still to to impact bit maybe words, maintain then case the hypothetical and morning, on to beyond. the wanted a put split? of follow on your in So, been take you Indonesia, from other goes any would if production little

Yeah.

economics. The answer is, preserve the We yes.

(XX:XX) That's...

We'll we in have Tinto. be would Rio been same the position in with

that... a metal of specified is There amount

a specified amount timing a not of It's metal. deal, it's

Great. Excellent.

thing with venture COW that a I was have popping asset, we're about under And but the on we're new this one about an very equivalent interest if should getting with this preserved NPV overall And arrangements champagne rough when answer we this were talking and about when of we'll to our I extension you that's up come FCX's where it's what to done I have we've timeframe end not much great the joint closing, very operation great mentioned far economic the how this structure. bottles – think accomplishment. the Tinto, it's in and this deal, our under about. of for our And stability we've achieved goal talked in optimistic Rio until

coming yeah, in in Excellent. No, on wanted great agreement I it. Indonesia. here finish follow-up forward the to look on And, to short line job order. the I the over operations

it. in Richard, So, you prepared that you've your de-risked think I mentioned remarks

guidance, changed Now when your hasn't materially. at look it I

next So that, the could milestones you if be helpful. so? should narrowed Block six be DMLZ or on having that And months the the elaborate specifically Grasberg to looking confidence the forward Cave, be and we what So you interval the over of we thinking around that are would should mean? some to about

and not the what the it's So this the much they operations the with those systems, things but of flow issues – the to Then gone to team DOZ mine, now, concentrate development, disruptions with all delivery exceptional mean, delivery job, systems, improved the I we've get important. local of completed using us. is facing done. our pipe and are the mine, also over the development and in from met our current all mill and up. open and ore community had so to Block much, all have important. have the our export and pipelines Johnson just pit I terms forth, the running that his are security, we Mark, slurry and workforce With for with port, respect essentially, really relationship risk Cave with Block an years so and that's of That's bans which infrastructure we But Grasberg security and Cave the that's done the say, Mark good. risk

this the We MLZ. approach, is the for fracking indications which used, dealing common to with that at very industry, Deep going but issue seismicity us be issue are that never in Early are effective going forward. addressing the we've is technology in

So, major that's positive. a

mine big, same it's Cave. similar fully pit. So, Beginning very that watch. rock been the began milestones That's to the know very the mining block XXXXs. since now to drilled, half early from rock in caving XXXX, it's similar we the Block what in second to we've We Grasberg of doing we – but

able we'll results the beginning in of Deep of the see see encouraged about MLZ, half but now. it it. that, the operation of we the So, to the you'll we're year, second as And really of the then, continue results consequence with right be fracking that this in

I question? underground There's always mining. There's don't always So, in your in risk how mining. risk answer why do Mark, But, you...?

elaborate on quarter flow that ore big Yeah, system, GBC. crushing/conveying little which was system. last the a bit to We the commissioned just we the announced

to January, flow do is September, Grasberg took other ramp in in working Block block Block We our GBC, caves, ramping to and that mine to drawbell The we little some the in multiple up. different to the have up as our expected. Cave, from of our what we or the areas. ramp ore in rail And a of Grasberg Cave, – that's continues ore that schedule. blast system, first a system, and than continue We delivers mill little undercut the which the ahead first up

the is over tonnes different three be Richard X,XXX paging past we're day hydrofracking process so, that's we the throughout seismic about is DOZ, the We're a associated and schedule – for away up to areas to cave a don't fourth MLZ, We're to hope that would the significant from seeing response like. Gossan, advance the And we ahead the getting don't same of signs well had it. need production we as and this of ago. It's vertically, we that we producer. year a – mentioned, what very year. full We're we're Big wet it XXXX. tonnes optimistic a of we're and working and look last very still by stresses year areas well. the we're quarter where talk XX,XXX propagating which is And ramping about our next seismic and a we're the encouraged the XXXX, had week then with continuing working day, that's the We've mining a remote that material over by with. that. dealing very we're And good the ramp it's that we seeing but The above cave, Deep a that start. lot,

being milestones as and and the see. be XXXX. lot constraint. year be a systems, won't needed, The those are I mill that So the prepared a for XXXX of doing Power to maintenance, next going we're ramp-up

Mark. Thanks, Okay.

and luck. best the all detail appreciate has of This been helpful. I very on this

Appreciate Thanks. it.

Our next question...

to people of the got we questions through can I we a the queue, to so was move in just interest limit say, could of people's list time, so... one, this. in if going We've

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

Richard talked slowing projects could slowing some I your you in terms (XX:XX:XX). of investments. kind more and also Kathleen. prepared about thanks, down down you're possible, remarks, or guess, of you there, specific cadence if you Richard, the were Yeah, investments that in and be of that

not... it's So

Thanks.

the with but not mean, do our project, continuing forth. initiate I things. underground slowing It's clear, and down maybe Alex, when we Grasberg really Lone development, Star wasn't so we're investments. I it's

include We've mines, do with would resources our potential in an in completed And obviously, project projects in we've we at scale partner Northwest the get market Codelco States of we projects new at those uncertain our start down. But market our looking on Bagdad mill capital. It's really project, El is, at clarity. start lots large our including expansion we slowed in issue United deferred We're, pre-feasibility. attractive until Chile, to mine of a Abra got the them this where at when Arizona. various things we've those So, haven't and our environment. costs major that the and decision constraining

to So, slowed are. where what pulling down trigger the that's start, we we but is

makes the clarification. Thanks for That Okay. sense.

Okay, good

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

interviewed. just the all to some Good of a of Hi. is to I'm suggest to color just articles, open where sale. just to been wanted seems morning. from that curious And media a It you've bit have get Richard, and of a the recent to company ask just resources of bit Can maybe how those context about your are. on and the think you comments? future that, given on sort comments earlier you the about how undervalued you offer the projects ground all

your question. for you Thank to. glad I'm

Trying not this not really So, encourage Indonesia noted, our Indonesia, been I to like used in than in have negotiation and probably giving as conferences, extended partners call been this. period to over interviews most in of media also we've our to as investor other to. have the do earnings I you

that. interview stock for interviews, marketplace end we're was up company, opportunities have asked we're open wide been this of potentially question I some shareholders one range that evolve in signing company, on public interview I'm that didn't I've future there that with that as – our – the be of to no to a answer might a plans the number the a be could Freeport focused including have a opportunities of sell I given LME, going the of have. they had business. where in around comments bring agreement, to internal would be and to our it Two, as we I So, the at a acquired. very saying, we the large

for I've for given transactions was And there it given was something in this that give. in the headlines about. in we world in continue my are to the don't it thing our I'll way in certainly one was personally big a mischaracterized would opportunities be in with the these it I to not stock look one M&A at answer, that talked today's near share term, industry. I years, so price. do view uncertainties, consider believe And

Okay, perfect.

actively it's not you're So something pursuing?

with uncertainties, be No. And today's think world I think in like big I unlikely these that I said, going all don't it's scale anybody's pursuing deals. to

mine just can plan, how in XXXX the X.X Thank you is come one same million when gold XX, slide explain on the show ounces it Okay. that versus of the clarification. you you. basis different, apply is share, Grasberg at maybe And does share assume, year? whereas I Rio's sharing then But in metal and obviously agreement. XXX% the including PT-FI because that the gold In the copper not to

is than production the through less works just And XXXX, substantially applies also the gold It's the strip. gold strip way that sharing some in when the there to But – is for copper. XXXX, in gold. to at all is look XXXX get is It XXXX metal when gold, XXXX metal in the the years the PT-FI's all you for you interest.

you. Okay. Thank

strip for So there is different and metal gold. copper

metal These XXXX, and were strips just (XX:XX:XX) decided they XXXX, fixed. in were

old based that's Tinto. Rio way old with And it government complicated part was plan original with mine just so the the capacity. just was that a works. And on it agreement It of

or consolidate definitive you to you will when way this? to finally, you just agreement And continuing the Okay. going reporting start be Grasberg are of completed this is change sort

This as the criteria So structure that's an operations in different, this shareholders' studying control complete over agreement. the XX% is Normally, share issue consolidation, we deal. base we're the because we have ownership. for currently in through is

detail, control that up. So, some to meetings terms meeting objectives, now. have of this our when its committee and we're is operating controls can ended effective very in terms the it and authority Freeport's we time FCX broad something way with we with that of I'll is the business, and this, authority And the in go forth, considering that the objectives, tell of so you in business. but we're operations satisfied an running of having investor we through thing have

Great. Thank much. very you

limit Thanks. I'll possible. to to question, ask And one if again just

And in the so... line you get if time, back have

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

morning, fair operator. became now Well, that's everyone. enough. one, three Good and my two you, Thank questions but

from So, approach getting want operations. it cash but be capital back strong generating be, disciplined still Balance to sheet where you're appears to allocation, is flows you great. to

mining to So peers can you more share some be buybacks bit with cash about your in shareholders little talk a doing that? returning considered that are of

while So, used be met well, uncertainties Oscar, with targets reduce to to we our cash world, will the in flows today's continue excess debt.

will make cautious that cash And talk so transition Our and years, face about fall that's with initially, flows in going that these question then about conservative marketplace circumstance. off financial policy. to the Chris' overall in I with us these uncertainties we

our and But with So, having we're doing beyond different transition we'll by marketplace and it's years. have do of the the look in company's things. opportunities we what that, driven when we're then to both, these going be circumstances solid lots of to situation

Thank Richard. Okay. you,

get back So, in queue. I'll the

with John the line go Tumazos Research. Tumazos ahead. Our next question John Independent Please of Very comes from

good the asking about even buybacks. all on Congratulations progress and people

roughly? that El many Bagdad, might or ahead of El Bagdad times, the at roughly, might Abra terms potential per tons day projects In mills be how and metric in move better Abra

tonnes Verde roughly Abra, we're the at Baghdad... XXX,XXX and At size Cerro looking of a day, El at X,

XXX,XXX tonnes.

Red, hear XXX,XXX you tonnes. As

XXX,XXX tonnes, John.

equivalent projects. aren't these Now,

partner. El XX% all, of Chile has in Abra a First

water but associated a We for involve have taxes resources from no attendant for We've resource, tailings costs plans to desalinization with Bagdad, pump will XX%. major it, areas. project. developing go to bigger that we with it's and water the forward. It's for it. great energy It years plant elevation a benefits as At infrastructure made a

area, the a sea of there. with And great own We so, a We own project type community, project. it. local in relationships land the and XXX% it's It's smaller aggregate. straightforward remote

environment, forth. good So, are to People the work, their today, that attractive housing, and drive workforce in And have healthcare, U.S., a cost community benefit by terms the bring their energy the of the trucks so then and tradeoffs. those supported of education, regulatory lunch. we in is

like I there's it very copper that lot is too Southwest over remember tradeoffs, the dead. a decisions. district was you years With John, all when attractive. the – into go changes those those So well today, considered totally And of and

Thank you.

Thanks, John.

from comes question next Your of go Raymond the MacArthur line ahead. Please Brian with James.

Good morning.

tax advantage few a the up brought You times.

to each and are the cost blend the on flow? regions? lower less saying me per the couple looking or I'm going of can where for you're cash in and to it's Indonesia quickly, you U.S., unit years pools after tax tax very to So and you in of in if Chile, see whatever, if or just of we copper, XX% So remind flow I sort cash mean, Indonesia. it's cash all I'm XX% going how in in earnings just that's Peru you're have generate XX% or trying next after of tax

tax tax individually then a there. countries of tax companies and that corporate outside for out in income higher Indonesia paid in U.S. pay we're companies, Indonesia, many royalties whereas reform taxed the So, XX% higher rates, global those U.S., unlike We're in a taxes there's many you we There's that the other before you those have to come have that additional the funds and withholding in tax. that's that XX% taxes

And under under retained tax that very that's will current expires of a would that tax rate long XX%. about tax there. have for depletion rate carryforward, U.S., tax. many zero. all And tax on in when our So because laws, loss large the In the so be a time be operations the years future, we the our percentage in effective that's was the U.S.

South that's so And are. America we where In ...

yeah. XX%, around It's

right. You're

to opposed as taxes, are those cash taxes? And accounting right, effective

Correct.

everybody Yeah, we else. write checks internationally like

flow brought down, up but going efficient cash it's your and across go So going just obviously, forward, it tax we said is somewhat great. – look... right? Indonesia after you versus it's It's Perfect, down if being you is at your, first the more as not U.S.

America down. production Well, the South production and our It's down U.S. – is U.S. only... going production not not going is

Right, right.

will by looking at costs will in The that with tax shielded, smelter the associated have degree, to thing ...Indonesia obligation an too. That's be important it. smelter and there. taxes a a effect

see as Great, you're page the tax doesn't as average go thanks. transition much you at the why And is that which that's all because think, chart look EBITDA those down assume the it cash XX, over I and operating embedded, on when you years flow, you all down compressing getting benefits.

Well, yeah, tax consequence...

For tax consequence.

not I a it. benefit, it's get So

Great. very very much. Okay. That's you helpful. Thank

you, Thank Brian.

next ahead. Research. the line go Michael Dudas Please Vertical Your from with question comes of

Hi. everybody. morning, Good

capital non-growth all the increase your Looking next at noticed spending equipment the I going next prices years catch-up? the or there you're what that few there in higher some the see squeeze the unusual to or maintenance chart, Is for or be in Thank over spending. vendor to years Is anticipating that you. opportunities few investing? going for you're any you are plan

maintenance time it some we great There's during there things we've deferred unusual reasonable so of the these – it nothing maintenance size. into But this when's very our are Well, had for bought Red, a is capital operation done some last of catch-up. is is XXXX, and mean, we like of levels XXXX, some XXXX, – truck? I

a XXXX, one. new

we're deals with with you and XXXX. back nature. from truck level rebuild this, this of very got to new increases. suppliers for step our A cost We've cost great size a when working this an reasonable mitigate We maintenance tire of of our And trucks. in this operation our constantly – is all

increase question, seeing, the where our will which got It's this and drive we're always value. more edges effort your we've equipment, why to (XX:XX:XX). of term answer equipment reason only operations, rates, course, not we believe mining is. sustain it the with not capital got long work to add that's rebuild And to latter the Yeah. We've our part to of but and inflation manage vendors, cost

Thank all. you,

Thanks.

Mancini Gabelli ahead. Our go question next & with from Please comes the Chris line of Company.

Hi, everybody. Thanks.

are unit trying also, North will mines reopen in when were America bit Just more were the And, some you you're to little your of when a relative rates. Is Miami two opportunity the you're in what quick the my laybacks at costs mining mine? that doing a of this now to and – you Richard, is down that come the because question. costs. then quarter In Those costs to America? there there back higher completed, of it an the kind the you And these North operations, referenced in mining this are were opening cut is comments saying higher questions.

So, Red. Chris, this is

Hi.

to The of those of levels sustain things dialed mining all us a in. important us down to are mines, ores that copper the able for we bit come higher all to and as those gives cost prices outlook can at flexibility will blend and get that be rates longer kinds long-term, we the and are term and

look We we off out the don't it's Right constantly the the in are Miami, have. see playing catch-up. resources at now, We we future but list anything for that not either.

Yeah.

ongoing an area the things that management environmental and other in operators discuss program of have when possibilities. We there might with we be

be We which mine thought but at very would finding are encouraged completed now, we're in our about New Mexico, by resources we depth. Chino it

project Cobre So, this we to there started help operations. current

job the great future managing some guys well. for currently it are and doing as potential that Our a has

Okay. lot. Thanks a

next line with question Our Murphy Please will ahead. come from Matt of go Barclays. the

Hi, Richard.

pipeline could the quickly the interested these response you more think point be. you in on feel you outlook, your options If Just time comfortable put could I'm into of some Americas. on at price copper another how some production? what the question in

I shovel-ready-type have seven, production pulling the to project and to think five, Bagdad out years So we from is it's trigger six, it. eight at of most the go getting

Now, Star... Lone the you've seen

Yeah.

project one instance. capacity, because adding we higher house will than putting terms in to quicker mill, new that but the additional at going some have that tank for that XXXX. of rates. ...production about from be a some capacities, volumes, to adding in Richard to to there in We'd to put think million be we're could resources quicker XXX expose and additional at there And really be Star we're strip, the could was increase Lone online we end as expecting a oxides, come as earlier, talking of

keep that So the the at increases we've end Lone million for period. on of the Star to XXXX radar XXX got potential the

Okay. Appreciate it. Thanks.

of the from Tanners Bank go of question Timna ahead. Please line final with Lynch. America will Merrill come Our

Oh, letting hey, in. morning. me for Thanks good

small And expectations update I I smelter. if mention next two releases. in you question. I ask the several years, give regarding hear you for noticed could cash flow Grasberg smelter. didn't the of about details please language a to wanted between us on the any one as the a Just change an also were talking

if us on that provide with timing, just thinking So, your could Inalum, would you and split latest be great. cost,

It the be that, billion said documentation, resolution owner it's of of environmental be commitment commitment committed things. our shareholders' equity one-time years build to completion this this is commitment be would a so of of they've share of the smelter. be project. all undertake And agreed the to signing and XX% PT-FI together of do issues, this to any participate the a we the companies It extension, $X the might of in Inalum the this comes we for commitment calls the enhance a required that. as one that would time; agreement, different completed, document. PT-FI, do the it that that would on five and at within a a of these to would standalone basis we with are We've capital So, will that number of of of closing transfers, the fulfill with all our to package

existing financing have smelter We project-type did plans back as to with in develop XXXXs. the the we a that, with

And ongoing so have to we discussions for potential the acquired the Amman, with for PT and maximize of upfront We're project-type with financing capital of discussions the decrease has would Then size debt with increase about having partners this. and Hijau our but bringing proceed us, reducing the the smelter through mine other financing it. company. PT-FI into capital that from – requirements Newmont. potential or the minimize participating of we're we smelter, the to probably Batu which them having commitment They face

gets about the have effects; of to and taxes They about government currently conversation XX% the now projects back economics Going royalties. equity. the big the the through of tax picture, earlier of XX%

what government the forth. under So, now. Rio I is mean, all deal XX% had we and so our this the Tinto of potentially XX% is interest

by So, that account of smelter consequences all these numbers government's effect by into and the the tax the reduced will be participation to need take you it. in

so today for be and with capital be with forth, of then hundred required, out to cash we'll million will it what flow couple deal, with construction, dollars and working and move planning. commitments contractors. lay able So, of the a in We're we've be completion financed, And will plans, us. we'll would spent forward how profile what for contract be

five Okay. just years five years, And within or within clarification. begun completed my one

Completed within five years.

will We package. now, on the transactions of of these we're the part mean, new commence doing commence of all and planning completion – immediately the but project I license we'll other issuance is

very you Okay. much. Thank

Thank you.

turn remarks. will over I back management closing the any now for to call

interest. your All right. Thanks, Appreciate everyone.

have moving and David you back Joint, we'll questions, If on get be to follow-up upward. and

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

You may now disconnect.