false0000831259 0000831259 2020-04-22 2020-04-22


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 22, 2020

FCX_LOGO1A14.JPG
Freeport-McMoRan Inc.
(Exact name of registrant as specified in its charter)
Delaware
001-11307-01
74-2480931
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer Identification No.)
333 North Central Avenue
 
Phoenix
AZ
85004
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number, including area code: (602) 366-8100

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.10 per share
FCX
The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.





Item 2.02. Results of Operations and Financial Condition.

Freeport-McMoRan Inc. ("FCX") issued a press release dated April 24, 2020, announcing its revised operating plans in response to the COVID-19 pandemic and reporting its first-quarter 2020 financial and operating results. A copy of the press release is furnished hereto as Exhibit 99.1.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On April 22, 2020, and in support of the company’s efforts to reduce costs and conserve cash during the current period of uncertainty resulting from low copper prices and the economic downturn in connection with the COVID-19 pandemic, senior management recommended and the Compensation Committee of the Board of Directors of FCX approved a 25% reduction in the base salary of Richard C. Adkerson, the President and Chief Executive Officer, and Kathleen L. Quirk, the Executive Vice President and Chief Financial Officer (each an “Executive”), effective May 1, 2020 through the remainder of 2020. In addition, each Executive agreed that only 10% of the reduced base salary will be paid in cash to cover benefit premiums and other scheduled payroll deductions, with the remainder paid in an award of restricted stock units that will vest on December 31, 2020. Ms. Quirk and FCX have agreed that these changes will not trigger or otherwise modify any rights under her employment agreement.  Mr. Adkerson does not have an employment agreement.

Item 7.01. Regulation FD Disclosure.

The slides to be presented in connection with FCX’s previously announced conference call being webcast on the internet at 10:00 a.m. Eastern Time on April 24, 2020, to discuss FCX's revised operating plans and first-quarter 2020 results are furnished hereto as Exhibit 99.2.

The information furnished pursuant to Item 2.02 and Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.
Exhibit Number
Exhibit Title
Press release dated April 24, 2020, titled “Freeport-McMoRan Announces Revised
Operating Plans in Response to the COVID-19 Pandemic and Reports First-Quarter 2020 Results."
 
 
Slides dated April 24, 2020, titled "FCX Conference Call to Discuss Revised Operating Plans in Response to COVID-19 Pandemic and First-Quarter 2020 Results."
 
 
104
The cover page from this Current Report on Form 8-K, formatted in Inline XBRL.
 
 



                                







SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FREEPORT-McMoRan INC.


By: /s/ C. Donald Whitmire, Jr.
----------------------------------------
C. Donald Whitmire, Jr.
Vice President and Controller -
Financial Reporting    
(authorized signatory and
Principal Accounting Officer)

Date: April 24, 2020












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Freeport-McMoRan Announces Revised
Operating Plans in Response to the COVID-19 Pandemic and
Reports First-Quarter 2020 Results
 
 
 
Highlights of Revised Operating Plans:
$1.3 billion reduction (~18 percent) in 2020 estimated operating costs
$800 million reduction (~30 percent) in 2020 estimated capital expenditures
$100 million reduction (~20 percent) in 2020 estimated exploration and administrative costs
~400 million pound reduction (~15 percent) in the Americas 2020 estimated copper sales volumes
Actions enhance outlook for cash generation and maintenance of strong liquidity at low prices
PHOENIX, AZ, April 24, 2020 - Freeport-McMoRan Inc. (NYSE: FCX) announced today its first-quarter 2020 financial results and revised operating plans in response to the global COVID-19 pandemic and resulting negative impact on the global economy.
FCX’s revised operating plans are designed to protect the health and well-being of its employees, their families and communities where they live, ensure safe and reliable operations to serve customers, and protect the company’s strong liquidity position through reductions in costs and capital spending while preserving the long-term value of the company’s assets.
Prioritizing Health and Safety.  FCX has proactively implemented operating protocols at each of its operating sites to contain and mitigate the risk of spread of COVID-19. A series of actions have been implemented, including, but not limited to, physical distancing, travel restrictions, sanitizing, and frequent health screening and monitoring. FCX is also incorporating testing procedures administered by medical providers at many of its facilities. In April 2020, FCX suspended operations at its Chino copper mine in New Mexico because of the spread of COVID-19 among a limited number of employees. FCX’s protocols have been effective in mitigating and preventing a major outbreak of COVID-19 at its operating sites. As the COVID-19 pandemic and related effects continue to evolve rapidly worldwide, FCX will continue to monitor, assess and update its COVID-19 related response, as needed.
FCX is also working closely with communities where it operates across the globe and has provided monetary support and in-kind contributions of medical supplies and food.
Richard C. Adkerson, President and Chief Executive Officer, said, "Our global team is demonstrating an effective response to protect the health of our workforce, provide for business continuity, and support our communities during this unprecedented challenge. The prudent steps we are taking to safeguard our business, address costs and capital spending, and preserve our strong liquidity position are necessary to protect long-term asset values in the current weak and uncertain economic environment and to position us to ramp up and resume normal operations safely and quickly as health and economic conditions improve. Our team has substantial experience in successfully executing under volatile market conditions. I am confident that we will overcome the current challenges and 'prove our mettle' as we have effectively done in previous periods of economic weakness. We continue to achieve important progress in establishing large-scale, low-cost copper and gold production from our underground ore bodies at Grasberg and advance initiatives in the Americas to position FCX for significant increases in cash flows in 2021 and beyond.”

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Revised Operating Plans.  FCX has assessed its near-term operating plans with a focus on maximizing cash flow and protecting liquidity in a weak and uncertain economic environment and to preserve asset values for anticipated improved copper prices as economic conditions recover. A series of actions are being implemented to significantly reduce all elements of costs and capital spending and adjust mine plans and corresponding mining and milling rates to maximize cash flow at lower prices. The plans also incorporate the impact of lower input costs, principally energy and foreign exchange rates, and higher gold prices.

SUMMARY CONSOLIDATED OPERATING AND FINANCIAL DATA — REVISED OPERATING PLANS FOR 2020
Following are consolidated operating and financial data for 2020, including a comparison of April 2020 estimates to the estimates reported in January 2020:
 
 
 
April 2020
Estimates
 
January 2020 Estimates
 
 
 
 
 
(Based on $2.30 per pound of copper)
 
(Based on $2.85 per pound of copper)
 
 
 
First-quarter 2020 (Actual)
 
Remainder of 2020
 
Total
2020
 
Total
2020
 
Total Percent Change
CONSOLIDATED OPERATING DATA
 
 
 
 
 
 
 
 
 
Sales, excluding purchases
 
 
 
 
 
 
 
 
 
Copper (billions of recoverable pounds)
0.7

 
2.4

 
3.1

 
3.5

 
(11)%
Gold (thousands of recoverable ounces)
144

 
636

 
780

 
775

 
1%
Molybdenum (millions of recoverable pounds)
21

 
59

 
80

 
88

 
(9)%
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pounda
$
1.90

b 
$
1.44

 
$
1.55

c,d 
$
1.75

c 
(12)%
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED FINANCIAL DATA (in billions)
 
 
 
 
 
 
 
 
Operating cash flows
$ (0.0)

 
$
1.8

 
$
1.8

c,d 
$
2.4

c 
(25)%
Capital expenditurese
$
0.6

 
$
1.4

 
$
2.0

 
$
2.8

 
(29)%
Operating cash flows less capital expenditures
$
(0.6
)
 
$
0.4

 
$
(0.2
)
 
$
(0.4
)
 
50%
Cash and cash equivalents
$
1.6

 
N/A

 
$
1.7

 
$
1.1

 
55%
Total debt, including current portion
$
10.1

 
N/A

 
$
9.7

 
$
9.9

f 
(2)%
a.
Reflects per pound weighted-average unit net cash costs (net of by-product credits) for all copper mines, before net noncash and other costs.
b.
For reconciliations of per pound unit costs by operating division to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page X.
c.
April 2020 estimates assume average prices of $1,600 per ounce of gold and $9.00 per pound of molybdenum for the remainder of 2020. The January 2020 estimates were based on average prices of $1,500 per ounce of gold and $10.00 per pound of molybdenum for the year 2020.
d.
Refer to the first-quarter 2020 conference call slides which are available on FCX's website, "fcx.com," for the impact of price changes for the remainder of 2020 on consolidated unit net cash costs and operating cash flows.
e.
Excludes capital expenditures for the development of the new smelter in Indonesia (see page 6).
f.
The January 2020 estimates included $0.5 billion in debt associated with the new smelter for PT Freeport Indonesia (PT-FI).
MINING OPERATIONS

FCX’s revised operating plans and estimates reflect current assumptions, and FCX will continue to closely monitor health and market conditions and make further adjustments to its mine plans as required.
Productivity and Innovation Initiatives. During 2019, FCX advanced initiatives in its North America and South America operations to enhance productivity through the use of new technologies, data science and a more interactive, multi-disciplined operating structure. Capital projects associated with this initiative, which were expected to total $150 million for the year 2020, and were projected to add approximately 200 million pounds of copper per year beginning in 2022, have been suspended in response to current market conditions and capital preservation initiatives. Under current market conditions, FCX’s data analytics tools will be utilized to drive cost performance,

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improve recoveries and other initiatives that do not require significant investment. FCX’s learnings and capabilities in this area are expected to generate value under a broad range of market conditions.
North America Copper Mines. FCX operates seven open-pit copper mines in North America - Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. In addition to copper, certain of these mines produce molybdenum concentrate, gold and silver. FCX is also nearing completion of a development project in eastern Arizona to commence production from the Lone Star leachable ores during the second half of 2020. All of the North America mining operations are wholly owned, except for Morenci. FCX records its 72 percent undivided joint venture interest in Morenci using the proportionate consolidation method.
Revised Operating Plans. FCX has completed a review of mine plans at each of its operating sites in North America to target a lower cost mining configuration, defer all nonessential projects and preserve long-term value in the long-lived resources. Under the revised plans, mining and milling rates for the year 2020 have been reduced by approximately 20 percent, resulting in a projected 12 percent decline in North America copper sales for the year 2020 (compared to the January 2020 estimate), lower unit net cash costs and lower capital spending requirements.    
The plans take into account the impact of currently suspended operations at the Chino mine. FCX is currently assessing options and future timing of restart of the Chino mine, which will take into account health and market conditions. FCX has also deferred approximately $0.3 billion in capital projects from 2020 to future periods for the North America copper mines.
Following extensive review, FCX has elected to complete the initial phase of the Lone Star copper leach project with a remaining investment of approximately $100 million in 2020. The decision was supported by the advanced stage of the project (approximately 90 percent complete), expected quick return of the remaining investment and long-term value of the resource. First production is expected during the second half of 2020. Initial production from the Lone Star copper leach project following a ramp-up period is expected to average approximately 200 million pounds of copper per year, with the potential for future expansion options.
In April 2020, FCX entered into forward sales contracts for 150 million pounds of copper for settlement in May and June of 2020. The forward sales provide for fixed pricing of $2.34 per pound of copper on approximately 60 percent of North America's projected sales volumes for May and June 2020.    
Operating Data. Following is selected summary consolidated operating data for the North America copper mines for 2020, including a comparison of April 2020 estimates to the estimates reported in January 2020:
 
 
 
April 2020
Estimates
 
January 2020 Estimates
 
 
 
First-quarter 2020
(Actual)
 
Remainder of 2020
 
Total
2020
 
Total
2020
 
Total Percent Change
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Sales, excluding purchases
355

 
1,040

 
1,395

 
1,580

 
(12)%
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copper
$
2.04

a 
$
1.67

 
$
1.77

b 
$
1.93

b 
(8)%
a.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page X.
b.
Based on achievement of current sales volume and cost estimates, and assuming an average molybdenum price of $9.00 per pound for the remainder of 2020. The impact of price changes during the remainder of 2020 on North America's average unit net cash costs for the year 2020 would approximate $0.03 per pound for each $2 per pound change in the average price of molybdenum. The January 2020 estimates were based on an average price of $10.00 per pound of molybdenum for the year 2020.
    

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South America Mining. FCX operates two copper mines in South America - Cerro Verde in Peru (in which FCX owns a 53.56 percent interest) and El Abra in Chile (in which FCX owns a 51 percent interest). These operations are consolidated in FCX's financial statements. In addition to copper, the Cerro Verde mine produces molybdenum concentrate and silver.    
Revised Operating Plans. As previously reported, in mid-March 2020, the Peruvian government issued a Supreme Decree and declaration of a National Emergency in its efforts to contain the outbreak of COVID-19, and subsequently extended this order through May 10, 2020. To comply with the government’s requirements, Cerro Verde temporarily transitioned to a care and maintenance status and has adjusted its operations to prioritize critical activities. Cerro Verde has also completed construction of temporary onsite facilities and enhanced protocols to enable critical operations to be maintained in compliance with the Peruvian government order. From April 1, 2020, to April 23, 2020, Cerro Verde has operated at approximately one-third of planned rates. The Peruvian government could extend the declaration of a national emergency beyond May 10, 2020.
Cerro Verde continues to review health guidelines with Peruvian government authorities to position Cerro Verde for a return to normal operations as soon as possible.
Cerro Verde’s revised 2020 plans reflect limited operations during second-quarter 2020 and increased mining and milling rates in the second half of the year. Subject to the timing of Peruvian government approvals associated with the global pandemic, milling rates are currently expected to average approximately 400,000 metric tons per day in the second half of 2020. Cerro Verde’s mine plans have been revised to target a lower cost mining configuration, defer all nonessential projects and preserve long-term value in the long-lived resource. Compared with January 2020 estimates, mining and milling rates have been reduced by 13 percent (including the impact of the Peruvian government order and mine plan optimization in the second half of 2020), resulting in a decline in projected copper sales of approximately 130 million pounds (13 percent) in 2020. The revised mine plans also include significant reductions in capital spending and operating costs.  
Operating plans at El Abra have also been revised to incorporate lower mining rates, operating costs and capital spending.
FCX has deferred approximately $0.2 billion in capital projects for South America mining from 2020 to future periods.
Operating Data. Following is summary consolidated operating data for South America mining for 2020, including a comparison of April 2020 estimates to the estimates reported in January 2020:
 
 
 
April 2020
Estimates
 
January 2020 Estimates
 
 
 
First-quarter 2020
(Actual)
 
Remainder of 2020
 
Total
2020
 
Total
2020
 
Total Percent Change
Copper sales (millions of recoverable pounds)
247

 
705

 
952

 
1,150

 
(17)%
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copper
$
2.00

a 
$
1.89

 
$
1.92

b 
$
1.95

b 
(2)%
a.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page X.
b.
Based on achievement of current sales volume and cost estimates, and assuming an average price of $9.00 per pound of molybdenum for the remainder of 2020. The January 2020 estimates were based on an average price of $10.00 per pound of molybdenum for the year 2020.
Projected sales volumes and average unit net cash costs for the South America operations are dependent on government approvals for Cerro Verde to return to full operations during the second half of 2020.

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Indonesia Mining.  PT-FI assets include one of the world’s largest copper and gold deposits at the Grasberg minerals district in Papua, Indonesia. PT-FI produces copper concentrate that contains significant quantities of gold and silver. FCX has a 48.76 percent ownership interest in PT-FI and manages its mining operations. Under the terms of the shareholders agreement, FCX’s economic interest in PT-FI approximates 81 percent through 2022. PT-FI's results are consolidated in FCX's financial statements.
Revised Operating Plans and Development Activities. PT-FI has implemented a series of actions to prevent a spread of COVID-19 at its remote operating site in Papua. PT-FI has been successful in maintaining the health of its workforce while continuing to make important progress in increasing production from its underground ore bodies.
During first-quarter 2020, PT-FI achieved additional progress in increasing mining rates by adding a total of 49 new drawbells at the Deep Mill Level Zone (DMLZ) and Grasberg Block Cave underground mines to build scale. Combined average daily production from the DMLZ and Grasberg Block Cave underground mines averaged approximately 37,500 metric tons of ore per day, slightly above forecast and 44 percent above the fourth-quarter 2019 average. PT-FI remains on track to continue to ramp-up production rates and expects 2021 production of 1.4 billion pounds of copper (more than 75 percent above the current April 2020 estimate) and 1.4 million ounces of gold (70 percent above the current April 2020 estimate).
The successful completion of this ramp up is expected to enable PT-FI to generate average annual production for the next several years of 1.55 billion pounds of copper and 1.6 million ounces of gold at an average unit net cash cost of approximately $0.20 per pound.
PT-FI’s revised plans incorporate benefits of reduced input costs for energy, foreign exchange and recent increases in gold prices. PT-FI has also deferred approximately $0.2 billion in capital projects from 2020 to future periods, primarily related to a delay in construction and installation of an additional milling circuit from 2022 to 2023, mostly reflecting limitations on work schedules and travel by international contractors during COVID-19 mitigation measures.
PT-FI's estimated annual capital spending on underground mine development projects is expected to average $0.8 billion per year for the three-year period 2020 through 2022, net of scheduled contributions from PT Indonesia Asahan Aluminium (Persero) (PT Inalum). In accordance with applicable accounting guidance, aggregate costs (before scheduled contributions from PT Inalum), which are expected to average $1.0 billion per year for the three-year period 2020 through 2022, will be reflected as an investing activity in FCX's cash flow statement, and contributions from PT Inalum will be reflected as a financing activity.
Operating Data. Following is summary consolidated operating data for Indonesia Mining for 2020, including a comparison of April 2020 estimates to the estimates reported in January 2020:
 
 
 
April 2020
Estimates
 
January 2020 Estimates
 
 
 
First-quarter 2020
(Actual)
 
Remainder of 2020
 
Total
2020
 
Total
2020
 
Total Percent Change
Copper sales (millions of recoverable pounds)
127

 
615

 
742

 
750

 
(1)%
Gold sales (thousands of recoverable ounces)
139

 
636

 
775

 
775

 
—%
Unit net cash costs per pound of copper
$
1.31

a 
$
0.51

 
$
0.65

b 
$
1.04

b 
(37)%
a.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page X.
b.
Based on achievement of current sales volume and cost estimates, and assuming an average gold price of $1,600 per ounce for the remainder of 2020. The impact of price changes during the remainder of 2020 on PT-FI's average unit net cash costs for the year 2020 would approximate $0.05 per pound for each $50 per ounce change in the average price of gold. The January 2020 estimates were based on an average price of $1,500 per ounce of gold for the year 2020.
PT-FI's projected sales volumes and unit net cash costs for the year 2020 are dependent on a number of factors, including operational performance and timing of shipments. PT-FI has received a one-year extension of its export license through March 15, 2021.
    

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Indonesian Smelter.  As a result of disruptions to work and travel schedules of international contractors and current limitations on access to the proposed physical site in Gresik, Indonesia associated with COVID-19 mitigation measures, PT-FI has notified the Indonesian government of delays in achieving the completion timeline of December 2023. PT-FI is currently discussing with the Indonesian government a deferred schedule for the project as well as other alternatives in light of COVID-19 and global economic conditions.

Molybdenum Mines. FCX has two wholly owned molybdenum mines in Colorado - the Henderson underground mine and the Climax open-pit mine. The Henderson and Climax mines produce high-purity, chemical-grade molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of the molybdenum concentrate produced at the Henderson and Climax mines, as well as from FCX's North America and South America copper mines, is processed at FCX's conversion facilities.
Revised Operating Plans. In response to global market conditions, FCX intends to reduce production from the Climax open pit mine by approximately 50 percent for the remainder of 2020. The Climax mine produced 17 million pounds of molybdenum in 2019. Revised operating plans for the molybdenum business also include reductions in operating costs, administrative and centralized support costs and capital spending.

EXPLORATION, CORPORATE ITEMS AND OTHER
FCX’s revised operating plans prioritize existing mine operations and full resource potential of existing operations. Exploration expenditures are being reduced by approximately 60 percent in 2020 (from the January 2020 estimate of $70 million to approximately $30 million) and activities will focus on analyzing and incorporating data from historical drilling programs. FCX has long-lived reserves and a significant resource position in its existing portfolio.
FCX is also implementing a series of actions to reduce administrative and centralized support costs in conjunction with its revised operating plans. Cost savings initiatives include a temporary reduction in certain employee benefits, the initiation of furloughs and employee separation programs and reductions in bonus programs, third party service costs, facilities costs, travel and other expenses.
As part of the cost savings initiatives, the Board of Directors (the Board) has approved a 25 percent reduction in the salary of each of FCX's Chief Executive Officer and Chief Financial Officer through the end of 2020. Each of these executives has also agreed to forgo substantially all their reduced cash salary for the remainder of 2020, which will be paid in an award of restricted stock units that will vest at the end of the year. 
Selling, general and administrative expense for the remainder of 2020 is expected to be over 15 percent below the 2019 total of $414 million.

LIQUIDITY
At March 31, 2020, FCX had $5.1 billion in liquidity, comprised of $1.6 billion in consolidated cash and $3.5 billion of availability under its revolving credit facility maturing in 2024.
During first-quarter 2020, FCX completed the sale of $1.3 billion in new 8-year and 10-year senior notes at an average interest rate of 4.2 percent. The net proceeds were used to purchase a portion of the senior notes due 2021 and 2022, and in early April 2020, to redeem the remainder of the senior notes due 2021. FCX has significant liquidity to manage volatility, and following the April 2020 redemption, no senior notes maturing until 2022.
The aggressive changes in FCX's operating plans are approximately $0.2 billion favorable to 2020 liquidity compared to the operating plans reported in late January 2020, measured on the basis of operating cash flows less capital expenditures, an 18 percent decline in estimated copper prices between the two operating plans (refer to Consolidated Financial Data on page 2). With successful execution of these revised operating plans, FCX expects operating cash flows to improve significantly in 2021 and future years with substantial cash flow above capital expenditures as economic conditions improve.
    
FINANCIAL POLICY
FCX's financial policy will continue to prioritize liquidity and balance sheet management during this period of global economic turmoil associated with the COVID-19 pandemic. The Board suspended the May 2020 quarterly cash dividend of $0.05 per share on FCX's common stock, and under current market and economic conditions, the Board does not expect to declare common stock dividends during 2020. The declaration and payment of future

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dividends will be assessed on an ongoing basis, taking into account FCX’s financial results, cash requirements, future prospects, global economic conditions, and other factors deemed relevant by the Board.

FIRST-QUARTER 2020 RESULTS
FCX reported a net loss attributable to common stock of $491 million ($0.34 per share) in first-quarter 2020. After adjusting for net charges of $256 million ($0.18 per share), primarily associated with inventory valuation adjustments, adjusted net loss attributable to common stock totaled $235 million ($0.16 per share) in first-quarter 2020. For additional information, refer to the supplemental schedule, "Adjusted Net (Loss) Income," on page VI.

SUMMARY FINANCIAL DATA
 
Three Months Ended March 31,
 
 
2020
 
2019
 
 
(in millions, except per share amounts)
 
Revenuesa,b
$
2,798

 
$
3,792

 
Operating (loss) incomea
$
(473
)
 
$
321

 
Net (loss) income attributable to common stockc,d
$
(491
)
 
$
31

 
Diluted net (loss) income per share of common stock
$
(0.34
)
 
$
0.02

 
 
 
 
 
 
Diluted weighted-average common shares outstanding
1,452

 
1,457

 
Operating cash flowse
$
(38
)
 
$
534

 
Capital expenditures
$
610

 
$
622

 
At March 31:
 
 
 
 
Cash and cash equivalents
$
1,602

 
$
2,833

 
Total debt, including current portion
$
10,074

 
$
9,905

 
 
 
 
 
 
a.
For segment financial results, refer to the supplemental schedules, "Business Segments," beginning on page VIII.
b.
Includes (unfavorable) favorable adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $(107) million ($(45) million to net loss attributable to common stock or $(0.03) per share) in first-quarter 2020 and $70 million ($29 million to net income attributable to common stock or $0.02 per share) in first-quarter 2019. For further discussion, refer to the supplemental schedule, "Derivative Instruments," on page VII.
c.
Includes net charges of $256 million ($0.18 per share) in first-quarter 2020 and $36 million ($0.03 per share) in first-quarter 2019 that are described in the supplemental schedule, "Adjusted Net (Loss) Income," on page VI.
d.
FCX defers recognizing profits on intercompany sales until final sales to third parties occur. For a summary of net impacts from changes in these deferrals, refer to the supplemental schedule, "Deferred Profits," on page VII.
e.
Working capital and other sources (uses) totaled $119 million in first-quarter 2020 and $(56) million in first-quarter 2019.


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SUMMARY OPERATING DATA
 
Three Months Ended March 31,
 
 
2020
 
2019
 
Copper (millions of recoverable pounds)
 
 
 
 
Production
731

 
780

 
Sales, excluding purchases
729

 
784

 
Average realized price per pound
$
2.43

 
$
2.90

 
Site production and delivery costs per pounda
$
2.19

 
$
2.17

 
Unit net cash costs per pounda
$
1.90

 
$
1.78

 
Gold (thousands of recoverable ounces)
 
 
 
 
Production
156

 
166

 
Sales, excluding purchases
144

 
242

 
Average realized price per ounce
$
1,606

 
$
1,291

 
Molybdenum (millions of recoverable pounds)
 
 
 
 
Production
19

 
23

 
Sales, excluding purchases
21

 
22

 
Average realized price per pound
$
11.10

 
$
12.69

 
a.
Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, before net noncash and other costs. For reconciliations of per pound unit costs by operating division to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page X.

Consolidated Sales Volumes
First-quarter 2020 copper sales of 729 million pounds and gold sales of 144 thousand ounces were higher than January 2020 estimates of 725 million pounds of copper and 105 thousand ounces of gold, mostly reflecting higher production from PT-FI, partly offset by lower sales volumes in North America and South America. First-quarter 2020 copper and gold sales volumes were lower than first-quarter 2019 sales volumes primarily reflecting anticipated lower mill rates at PT-FI as it continues to ramp-up production from its underground ore bodies and lower mill and recovery rates at Cerro Verde, partly offset by higher mining rates in North America.
First-quarter 2020 molybdenum sales of 21 million pounds approximated both the January 2020 estimate and first-quarter 2019 sales of 22 million pounds.
Consolidated Unit Net Cash Costs
Consolidated average unit net cash costs (net of by-product credits) for FCX's copper mines of $1.90 per pound of copper in first-quarter 2020, were lower than the January 2020 estimate of $2.02 per pound, primarily reflecting higher gold sales volumes. Consolidated average unit net cash costs in first-quarter 2020 were higher than the first-quarter 2019 average of $1.78 per pound, primarily reflecting lower by-product credits and higher mining and milling costs in North America, partly offset by lower site production and delivery costs from PT-FI associated with the completion of mining the Grasberg open pit.

FCX_LOGO1A10.JPG
8
 
            


 
 
 

MINING OPERATIONS
North America Copper Mines.    Following is summary consolidated operating data for the North America copper mines:
 
Three Months Ended March 31,
 
 
2020
 
2019
 
Copper (millions of recoverable pounds)
 
 
 
 
Production
346

 
336

 
Sales, excluding purchases
355

 
320

 
Average realized price per pound
$
2.56

 
$
2.85

 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
Productiona
8

 
7

 
 
 
 
 
 
Unit net cash costs per pound of copperb
 
 
 
 
Site production and delivery, excluding adjustments
$
2.15

 
$
2.06

 
By-product credits
(0.22
)
 
(0.26
)
 
Treatment charges
0.11

 
0.11

 
Unit net cash costs
$
2.04

 
$
1.91

 
 
 
 
 
 
a.
Refer to summary operating data on page 8 for FCX's consolidated molybdenum sales, which includes sales of molybdenum produced at the North America copper mines.
b.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page X.
North America's consolidated copper sales volumes of 355 million pounds in first-quarter 2020 were higher than first-quarter 2019 copper sales volumes of 320 million pounds, primarily reflecting higher mining rates. North America copper sales are estimated to approximate 1.4 billion pounds for the year of 2020, consistent with 2019.
Average unit net cash costs (net of by-product credits) for the North America copper mines of $2.04 per pound of copper in first-quarter 2020 were higher than first-quarter 2019 unit net cash costs of $1.91 per pound, primarily reflecting higher mining and milling costs, partly offset by higher sales volumes.
South America Mining. Following is summary consolidated operating data for South America mining:
 
Three Months Ended March 31,
 
 
2020
 
2019
 
Copper (millions of recoverable pounds)
 
 
 
 
Production
245

 
299

 
Sales
247

 
290

 
Average realized price per pound
$
2.33

 
$
2.93

 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
Productiona
4

 
8

 
 
 
 
 
 
Unit net cash costs per pound of copperb
 
 
 
 
Site production and delivery, excluding adjustments
$
2.00

c 
$
1.73

 
By-product credits
(0.17
)
 
(0.34
)
 
Treatment charges
0.16

 
0.19

 
Royalty on metals
0.01

 
0.01

 
Unit net cash costs
$
2.00

 
$
1.59

 
 
 
 
 
 
a.
Refer to summary operating data on page 8 for FCX's consolidated molybdenum sales, which includes sales of        molybdenum produced at Cerro Verde.

FCX_LOGO1A10.JPG
9
 
            


 
 
 

b.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page X.
c.
Excludes COVID-19 related costs of $0.08 per pound of copper, primarily associated with idle facility costs at Cerro Verde as a result the Peruvian government's issuance of a Supreme Decree and declaration of a National Emergency in its efforts to contain the outbreak of COVID-19 and contract cancellation costs at El Abra.
South America's consolidated copper sales volumes of 247 million pounds in first-quarter 2020 were lower than first-quarter 2019 copper sales volumes of 290 million pounds, primarily reflecting anticipated lower recovery rates and lower mill rates associated with Cerro Verde's temporary transition to a care and maintenance status associated with the COVID-19 pandemic. Sales from South America mining are expected to approximate 1.0 billion pounds of copper for the year 2020, compared with 1.2 billion pounds of copper for the year 2019.
Average unit net cash costs (net of by-product credits) for South America mining of $2.00 per pound of copper in first-quarter 2020 were higher than unit net cash costs of $1.59 per pound in first-quarter 2019, primarily reflecting lower sales volumes and lower by-product credits.
Indonesia Mining. Following is summary consolidated operating data for Indonesia mining:
 
Three Months Ended March 31,
 
 
2020
 
2019
 
Copper (millions of recoverable pounds)
 
 
 
 
Production
140

 
145

 
Sales
127

 
174

 
Average realized price per pound
$
2.28

 
$
2.92

 
 
 
 
 
 
Gold (thousands of recoverable ounces)
 
 
 
 
Production
152

 
162

 
Sales
139

 
235

 
Average realized price per ounce
$
1,606

 
$
1,291

 
 
 
 
 
 
Unit net cash costs per pound of coppera
 
 
 
 
Site production and delivery, excluding adjustments
$
2.68

 
$
3.10

 
Gold and silver credits
(1.85
)
 
(1.81
)
 
Treatment charges
0.30

 
0.29

 
Export duties
0.03

 
0.10

 
Royalty on metals
0.15

 
0.16

 
Unit net cash costs
$
1.31

 
$
1.84

 
 
 
 
 
 
a.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page X.
PT-FI's consolidated sales of 127 million pounds of copper and 139 thousand ounces of gold in first-quarter 2020 were lower than first-quarter 2019 consolidated sales of 174 million pounds of copper and 235 thousand ounces of gold, reflecting anticipated lower mill rates as PT-FI continues to ramp-up production from its underground ore bodies. Consolidated sales volumes from PT-FI are expected to approximate 742 million pounds of copper and 0.8 million ounces of gold in 2020, compared with 667 million pounds of copper and 1.0 million ounces of gold in 2019.
Because of the fixed nature of a large portion of PT-FI's costs, unit net cash costs can vary significantly from quarter to quarter depending on copper and gold volumes. PT-FI's unit net cash costs (including gold and silver credits) of $1.31 per pound of copper in first-quarter 2020, were lower than unit net cash costs of $1.84 per pound in first-quarter 2019, primarily reflecting lower site production and delivery costs associated with lower mining and milling rates.

FCX_LOGO1A10.JPG
10
 
            


 
 
 

Molybdenum Mines. Production from the Molybdenum mines totaled 7 million pounds of molybdenum in first-quarter 2020 and 8 million pounds in first-quarter 2019. Refer to summary operating data on page 8 for FCX's consolidated molybdenum sales and average realized prices, which includes sales of molybdenum produced at the Molybdenum mines and from FCX's North America and South America copper mines.
Average unit net cash costs for the Molybdenum mines of $10.03 per pound of molybdenum in first-quarter 2020 were higher than average unit net cash costs of $9.80 per pound in first-quarter 2019. Based on current sales volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate $10.60 per pound of molybdenum for the year 2020.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page X.
CASH FLOWS, CASH and DEBT
Operating Cash Flows. Cash used in operating activities totaled $38 million (including $119 million of working capital and other sources) in first-quarter 2020. Based on current sales volume and cost estimates, and assuming average prices of $2.30 per pound of copper, $1,600 per ounce of gold and $9.00 per pound of molybdenum for the remainder of 2020, FCX's consolidated operating cash flows are estimated to approximate $1.8 billion (including $0.8 billion of working capital and other sources) for the year 2020.
Capital Expenditures. Capital expenditures totaled $0.6 billion in first-quarter 2020, including approximately $0.3 billion for major projects. Capital expenditures are expected to approximate $2.0 billion for the year 2020, including $1.3 billion for major projects primarily associated with underground development activities in the Grasberg minerals district and completion of the Lone Star copper leach project.
Cash. Following is a summary of the U.S. and international components of consolidated cash and cash equivalents available to the parent company, net of noncontrolling interests' share, taxes and other costs at March 31, 2020 (in billions):
Cash at domestic companies
$
0.8

 
Cash at international operations
0.8

 
Total consolidated cash and cash equivalents
1.6

 
Noncontrolling interests' share
(0.3
)
 
Cash, net of noncontrolling interests' share
$
1.3

 
Withholding taxes

a 
Net cash available
$
1.3

 
 
 
 
a.
Rounds to less than $0.1 billion.
Debt. Following is a summary of total debt and the weighted-average interest rates at March 31, 2020 (in millions, except percentages).
 
 
Weighted-
Average
Interest Rate
Senior Notes
$
9,130

4.7%
Cerro Verde credit facility
826

2.9%
Other
118

2.6%
Total debt
$
10,074

4.5%
 
 
 
At March 31, 2020, FCX had no borrowings, $13 million in letters of credit issued and $3.5 billion available under its revolving credit facility.
During first-quarter 2020, FCX issued $1.3 billion in new senior notes. FCX used the net proceeds to repay all of the senior notes due 2021 and a portion of the senior notes due 2022 (refer to Liquidity on page 6 for further discussion).     


FCX_LOGO1A10.JPG
11
 
            


 
 
 

WEBCAST INFORMATION
A conference call with securities analysts to discuss FCX's first-quarter 2020 results is scheduled for today at 10:00 a.m. Eastern Time. The conference call will be broadcast on the Internet along with slides. Interested parties may listen to the conference call live and view the slides by accessing “fcx.com.” A replay of the webcast will be available through Friday, May 22, 2020.
-----------------------------------------------------------------------------------------------------------
FCX is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. FCX is one of the world's largest publicly traded copper producers.
FCX’s portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits; and significant mining operations in North America and South America, including the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru. Additional information about FCX is available on FCX's website at "fcx.com."
Cautionary Statement and Regulation G Disclosure: This press release contains forward-looking statements in which FCX discusses its potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as plans, projections, or expectations relating to ore grades and milling rates; forecasts or expectations regarding business outlook; production and sales volumes; unit net cash costs; cash flows; capital expenditures; liquidity; operating costs; operating plans; cost savings; FCX's expectations regarding its share of PT-FI's net (loss) income and future cash flows through 2022; PT-FI's development, financing, construction and completion of a new smelter in Indonesia; improvements in operating procedures and technology; exploration efforts and results; development and production activities, rates and costs; tax rates; export quotas and duties; the impact of copper, gold and molybdenum price changes; the impact of deferred intercompany profits on earnings; reserve estimates; execution of the settlement agreement associated with the Louisiana coastal erosion cases; and future dividend payments, share purchases and sales. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” "targets," “intends,” “likely,” “will,” “should,” “could,” “to be,” ”potential," “assumptions,” “guidance,” “future” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of the Board and will depend on FCX's financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.
FCX cautions readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Important factors that can cause FCX's actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, the duration and scope of and uncertainties associated with the COVID-19 pandemic, and the impact thereof on commodity prices, FCX’s business and the global economy, which are evolving and beyond FCX’s control, and any related actions taken by governments and businesses (including the Peruvian government’s order); FCX’s ability to contain and mitigate the risk of spread or major outbreak of COVID-19 at its operating sites, including at PT-FI’s remote operating site in Papua; supply of and demand for, and prices of, copper, gold and molybdenum; mine sequencing; changes in mine plans or operational modifications, delays, deferrals or cancellations; production rates; timing of shipments; results of feasibility studies; potential inventory adjustments; potential impairment of long-lived mining assets; the potential effects of violence in Indonesia generally and in the province of Papua; the Indonesian government's extension of PT-FI's export license after March 15, 2021; risks associated with underground mining; satisfaction of requirements in accordance with PT-FI's special mining license (IUPK) to extend mining rights from 2031 through 2041; the Indonesian government's approval of a deferred schedule for completion of the new smelter in Indonesia; expected results from improvements in operating procedures and technology, including innovation initiatives; industry risks; regulatory changes; political and social risks; labor relations; weather- and climate-related risks; environmental risks; litigation results; cybersecurity incidents; changes in general market, economic and industry conditions; financial condition of FCX’s customers, suppliers, vendors, partners and affiliates, particularly during weak economic conditions and extended periods of low commodity prices; reductions in liquidity and access to capital; and other factors described in more detail under the heading “Risk Factors” in FCX's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the U.S. Securities and Exchange Commission (SEC), as updated by FCX's subsequent filings with the SEC.
Investors are cautioned that many of the assumptions upon which FCX's forward-looking statements are based are likely to change after the forward-looking statements are made, including for example commodity prices, which FCX cannot control, and production volumes and costs, some aspects of which FCX may not be able to control. Further, FCX may make changes to its business plans that could affect its results. FCX cautions investors that it does not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in its assumptions, changes in business plans, actual experience or other changes, and FCX undertakes no obligation to update any forward-looking statements.
This press release also contains certain financial measures such as adjusted net (loss) income and unit net cash costs per pound of copper and molybdenum, which are not recognized under U.S. generally accepted accounting principles. As required by SEC Regulation G, reconciliations of these measures to amounts reported in FCX's consolidated financial statements are in the supplemental schedules of this press release.



FCX_LOGO1A10.JPG
12
 
            


Freeport-McMoRan Inc.
SELECTED OPERATING DATA
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
 
2020
 
2019
 
MINING OPERATIONS:
Production
 
Sales
 
COPPER (millions of recoverable pounds)
 
 
 
 
(FCX's net interest in %)
 
 
 
 
North America
 
 
 
 
 
 
 
 
Morenci (72%)a
173

 
167

 
178

 
156

 
Bagdad (100%)
46

 
55

 
48

 
51

 
Safford (100%)
29

 
28

 
28

 
27

 
Sierrita (100%)
41

 
36

 
41

 
34

 
Miami (100%)
4

 
3

 
4

 
3

 
Chino (100%)
42

 
35

 
44

 
37

 
Tyrone (100%)
11

 
12

 
11

 
12

 
Other (100%)

 

 
1

 

 
Total North America
346

 
336

 
355

 
320

 
 
 
 
 
 
 
 
 
 
South America
 
 
 
 
 
 
 
 
Cerro Verde (53.56%)
203

 
261

 
206

 
256

 
El Abra (51%)
42

 
38

 
41

 
34

 
Total South America
245

 
299

 
247

 
290

 
 
 
 
 
 
 
 
 
 
Indonesia
 
 
 
 
 
 
 
 
Grasberg (48.76%)b
140

 
145

 
127

 
174

 
Consolidated
731

 
780

 
729

c 
784

c 
Less noncontrolling interests
141

 
167

 
140

 
168

 
Net
590

 
613

 
589

 
616

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
2.43

 
$
2.90

 
 
 
 
 
 
 
 
 
 
GOLD (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America (100%)
4

 
4

 
5

 
7

 
Indonesia (48.76%)b
152

 
162

 
139

 
235

 
Consolidated
156

 
166

 
144

 
242

 
Less noncontrolling interests
29

 
30

 
26

 
44

 
Net
127

 
136

 
118

 
198

 
 
 
 
 
 
 
 
 
 
Average realized price per ounce
 
 
 
 
$
1,606

 
$
1,291

 
 
 
 
 
 
 
 
 
 
MOLYBDENUM (millions of recoverable pounds)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
Henderson (100%)
2

 
4

 
N/A

 
N/A

 
Climax (100%)
5

 
4

 
N/A

 
N/A

 
North America copper mines (100%)a
8

 
7

 
N/A

 
N/A

 
Cerro Verde (53.56%)
4

 
8

 
N/A

 
N/A

 
Consolidated
19

 
23

 
21

 
22

 
Less noncontrolling interests
2

 
4

 
3

 
3

 
Net
17

 
19

 
18

 
19

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
11.10

 
$
12.69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Amounts are net of Morenci's undivided joint venture partners' interests.
 
 
 
 
 
 
 
 
 
b. FCX’s economic interest in PT Freeport Indonesia (PT-FI) is expected to approximate 81 percent through 2022 and 48.76 percent thereafter.
 
 
 
 
 
 
 
 
 
c. Consolidated sales volumes exclude purchased copper of 88 million pounds in first-quarter 2020 and 117 million pounds in first-quarter 2019.
 
 
 
 
 
 
 
 
 

I


Freeport-McMoRan Inc.
SELECTED OPERATING DATA (continued)
 
 
 
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
 
100% North America Copper Mines
 
 
 
 
Leach Operations
 
 
 
 
Leach ore placed in stockpiles (metric tons per day)
728,100

 
705,000

 
Average copper ore grade (percent)
0.27

 
0.23

 
Copper production (millions of recoverable pounds)
235

 
226

 
 
 
 
 
 
Mill Operations
 
 
 
 
Ore milled (metric tons per day)
333,400

 
315,600

 
Average ore grades (percent):
 
 
 
 
Copper
0.32

 
0.33

 
Molybdenum
0.02

 
0.02

 
Copper recovery rate (percent)
87.0

 
87.8

 
Production (millions of recoverable pounds):
 
 
 
 
Copper
178

 
176

 
Molybdenum
8

 
8

 
 
 
 
 
 
100% South America Mining
 
 
 
 
Leach Operations
 
 
 
 
Leach ore placed in stockpiles (metric tons per day)
182,500

 
166,700

 
Average copper ore grade (percent)
0.37

 
0.34

 
Copper production (millions of recoverable pounds)
63

 
59

 
 
 
 
 
 
Mill Operations
 
 
 
 
Ore milled (metric tons per day)
349,600

a 
386,500

 
Average ore grades (percent):
 
 
 
 
Copper
0.35

 
0.37

 
Molybdenum
0.01

 
0.02

 
Copper recovery rate (percent)
78.4

 
87.2

 
Production (millions of recoverable pounds):
 
 
 
 
Copper
182

 
240

 
Molybdenum
4

 
8

 
 
 
 
 
 
100% Indonesia Mining
 
 
 
 
Ore extracted and milled (metric tons per day):
 
 
 
 
Grasberg open pit
7,500

b 
102,800

 
Deep Ore Zone underground minec
20,200

 
30,300

 
Grasberg Block Cave underground minec
19,000

 
5,000

 
Deep Mill Level Zone underground minec
18,500

 
6,800

 
Big Gossan underground minec
6,800

 
5,600

 
Total
72,000

 
150,500

 
Average ore grades:
 
 
 
 
Copper (percent)
1.15

 
0.62

 
Gold (grams per metric ton)
0.99

 
0.58

 
Recovery rates (percent):
 
 
 
 
Copper
91.8

 
84.7

 
Gold
76.7

 
68.7

 
Production (recoverable):
 
 
 
 
Copper (millions of pounds)
140

 
145

 
Gold (thousands of ounces)
152

 
162

 
 
 
 
 
 
100% Molybdenum Mines
 
 
 
 
Ore milled (metric tons per day)
26,900

 
27,700

 
Average molybdenum ore grade (percent)
0.15

 
0.16

 
Molybdenum production (millions of recoverable pounds)
7

 
8

 
 
 
 
 
 
a. Beginning on March 16, 2020, Cerro Verde mill operations were impacted as a result of the Peruvian government's issuance of a Supreme Decree and declaration of a National Emergency in its efforts to contain the outbreak of COVID-19. The Cerro Verde mill operations averaged over 400,000 metric tons of ore per day from January 1, 2020, through March 15, 2020.
 
 
 
 
 
b. Represents ore from the Grasberg open-pit stockpile.
 
 
 
 
 
c. Reflects ore extracted, including ore from development activities that result in metal production.
 


II


Freeport-McMoRan Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2020
 
2019
 
 
(In Millions, Except Per Share Amounts)
 
Revenuesa
$
2,798

 
$
3,792

 
Cost of sales:
 
 
 
 
Production and deliveryb
2,545

c 
2,919

 
Depreciation, depletion and amortization
341

c 
347

 
Metals inventory adjustments
222

 
57

 
Total cost of sales
3,108

 
3,323

 
Selling, general and administrative expenses
110

 
112

 
Mining exploration and research expenses
16

 
27

 
Environmental obligations and shutdown costs
26

 
42

 
Net loss (gain) on sales of assets
11

 
(33
)
 
Total costs and expenses
3,271

 
3,471

 
Operating (loss) income
(473
)
 
321

 
Interest expense, netb,d
(127
)
 
(146
)
 
Net loss on early extinguishment of debt
(32
)
 
(6
)
 
Other income, netb
20

 
14

 
(Loss) income from continuing operations before income taxes and equity in affiliated companies' net earnings (losses)
(612
)
 
183

 
Benefit from (provision for) income taxese
60

 
(105
)
 
Equity in affiliated companies' net earnings (losses)
3

 
(3
)
 
Net (loss) income from continuing operations
(549
)
 
75

 
Net gain from discontinued operations

 
1

 
Net (loss) income
(549
)
 
76

 
Net loss (income) attributable to noncontrolling interests
58

 
(45
)
 
Net (loss) income attributable to common stockholdersf
$
(491
)
 
$
31

 
 
 
 
 
 
 
 
 
 
 
Diluted net (loss) income per share attributable to common stock:
 
 
 
 
Continuing operations
$
(0.34
)
 
$
0.02

 
Discontinued operations

 

 
 
$
(0.34
)
 
$
0.02

 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
Basic
1,452

 
1,451

 
Diluted
1,452

 
1,457

 
 
 
 
 
 
Dividends declared per share of common stock
$

 
$
0.05

 
 
 
 
 
 
a.
Includes adjustments to provisionally priced concentrate and cathode sales. For a summary of adjustments to provisionally priced copper sales, refer to the supplemental schedule, "Derivative Instruments," on page VII.
b.
Includes other net charges totaling $16 million for first-quarter 2020 and $22 million for first-quarter 2019, which are summarized in the supplemental schedule, "Adjusted Net (Loss) Income," on page VI.
c.
Includes COVID-19 related costs totaling $28 million, primarily associated with idle facility costs at Cerro Verde as a result of the Peruvian government's issuance of a Supreme Decree and declaration of a National Emergency in its efforts to contain the outbreak of COVID-19 and contract cancellation costs at El Abra, which are summarized in the supplemental schedule, "Adjusted Net (Loss) Income," on page VI.
d.
Consolidated interest costs (before capitalization) totaled $171 million in first-quarter 2020 and $178 million in first-quarter 2019.
e.
For a summary of FCX's income taxes, refer to the supplemental schedule, "Income Taxes," beginning on page VI.
f.
FCX defers recognizing profits on intercompany sales until final sales to third parties occur. For a summary of net impacts from changes in these deferrals, refer to the supplemental schedule, "Deferred Profits," on page VII.

III


Freeport-McMoRan Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
 
 
 
 
 
 
March 31,
 
December 31,
 
 
2020
 
2019
 
 
(In Millions)
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
$
1,602

 
$
2,020

 
Trade accounts receivable
515

 
741

 
Income and other tax receivables
591

 
426

 
Inventories:
 
 
 
 
Materials and supplies, net
1,614

 
1,649

 
Mill and leach stockpiles
1,106

 
1,143

 
Product
1,134

 
1,281

 
Other current assets
795

 
655

 
Total current assets
7,357

 
7,915

 
Property, plant, equipment and mine development costs, net
29,899

 
29,584

 
Long-term mill and leach stockpiles
1,272

 
1,425

 
Other assets
1,691

 
1,885

 
Total assets
$
40,219

 
$
40,809

 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued liabilities
$
2,465

 
$
2,576

 
Current portion of environmental and asset retirement obligations
305

 
436

 
Current portion of debt
245

 
5

 
Accrued income taxes
128

 
119

 
Dividends payable

 
73

 
Total current liabilities
3,143

 
3,209

 
Long-term debt, less current portion
9,829

 
9,821

 
Deferred income taxes
4,087

 
4,210

 
Environmental and asset retirement obligations, less current portion
3,758

 
3,630

 
Other liabilities
2,439

 
2,491

 
Total liabilities
23,256

 
23,361

 
 
 
 
 
 
Equity:
 
 
 
 
Stockholders' equity:
 
 
 
 
Common stock
158

 
158

 
Capital in excess of par value
25,875

 
25,830

 
Accumulated deficit
(12,771
)
 
(12,280
)
 
Accumulated other comprehensive loss
(668
)
 
(676
)
 
Common stock held in treasury
(3,739
)
 
(3,734
)
 
Total stockholders' equity
8,855

 
9,298

 
Noncontrolling interestsa
8,108

 
8,150

 
Total equity
16,963

 
17,448

 
Total liabilities and equity
$
40,219

 
$
40,809

 
 
 
 
 
 
a.
Includes $4.6 billion associated with the December 2018 PT-FI transaction, including $4.1 billion associated with the PT Indonesia Asahan Aluminium (Persero) acquisition of Rio Tinto's joint venture interest.


IV


Freeport-McMoRan Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2020
 
2019
 
 
 
(In Millions)
 
Cash flow from operating activities:
 
 
 
 
 
Net (loss) income
 
$
(549
)
 
$
76

 
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
 
 
 
 
 
Depreciation, depletion and amortization
 
341

 
347

 
Metals inventory adjustments
 
222

 
57

 
Net loss (gain) on sales of assets
 
11

 
(33
)
 
Stock-based compensation
 
27

 
29

 
Net charges for environmental and asset retirement obligations, including accretion
 
60

 
64

 
Payments for environmental and asset retirement obligations
 
(71
)
 
(46
)
 
Net charges for defined pension and postretirement plans
 
18

 
26

 
Pension plan contributions
 
(26
)
 
(16
)
 
Net loss on early extinguishment of debt
 
32

 
6

 
Deferred income taxes
 
(118
)
 
33

 
Charges for Cerro Verde royalty dispute
 
9

 
15

 
Payments for Cerro Verde royalty dispute
 
(57
)
 
(10
)
 
Other, net
 
(56
)
 
42

 
Changes in working capital and other:
 
 
 
 

 
Accounts receivable
 
205

 
19

 
Inventories
 
154

 
192

 
Other current assets
 
(89
)
 
42

 
Accounts payable and accrued liabilities
 
(149
)
 
(247
)
 
Accrued income taxes and timing of other tax payments
 
(2
)
 
(62
)
 
Net cash (used in) provided by operating activities
 
(38
)
 
534

 
 
 
 
 
 
 
Cash flow from investing activities:
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
North America copper mines
 
(184
)
 
(210
)
 
South America
 
(74
)
 
(61
)
 
Indonesia
 
(326
)
 
(319
)
 
Molybdenum mines
 
(7
)
 
(4
)
 
Other
 
(19
)
 
(28
)
 
Proceeds from sales of assets
 
66

a 
84

b 
Other, net
 
(2
)
 
(8
)
 
Net cash used in investing activities
 
(546
)
 
(546
)
 
 
 
 
 
 
 
Cash flow from financing activities:
 
 
 
 
 
Proceeds from debt
 
1,478

 
114

 
Repayments of debt
 
(1,242
)
 
(1,356
)
 
Cash dividends and distributions paid:
 
 
 
 
 
Common stock
 
(73
)
 
(73
)
 
Noncontrolling interests
 

 
(9
)
 
Contributions from noncontrolling interests
 
32

 

 
Stock-based awards net payments
 
(4
)
 
(7
)
 
Debt financing costs and other, net
 
(18
)
 

 
Net cash provided by (used in) financing activities
 
173

 
(1,331
)
 
 
 
 
 
 
 
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents
 
(411
)
 
(1,343
)
 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year
 
2,278

 
4,455

 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of periodc
 
$
1,867

 
$
3,112

 
 
 
 
 
 
 
a.
Includes $60 million in contingent consideration associated with the 2016 sale of TF Holdings Limited because the average cobalt price exceeded $20 per pound during the 24-month period ending December 31, 2019.
b.
Includes $50 million in contingent consideration associated with the 2016 sale of onshore California oil & gas properties because the average oil price exceeded $70 per barrel during 2018.
c.
Includes restricted cash and restricted cash equivalents of $265 million at March 31, 2020, and $279 million at March 31, 2019.


V


Freeport-McMoRan Inc.
ADJUSTED NET (LOSS) INCOME
Adjusted net (loss) income is intended to provide investors and others with information about FCX's recurring operating performance. This information differs from net (loss) income attributable to common stock determined in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. FCX's adjusted net (loss) income follows, which may not be comparable to similarly titled measures reported by other companies (in millions, except per share amounts).
 
Three Months Ended March 31,
 
 
2020
 
2019
 
 
Pre-tax
 
After-taxa
 
Per Share
 
Pre-tax
 
After-taxa
 
Per Share
 
Net (loss) income attributable to common stock
N/A

 
$
(491
)
 
$
(0.34
)
 
N/A

 
$
31

 
$
0.02

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metals inventory adjustments
$
(222
)
 
$
(182
)
 
$
(0.12
)
 
$
(57
)
 
$
(26
)
 
$
(0.02
)
 
COVID-19 related costs
(28
)
b 
(9
)
 
(0.01
)
 

 

 

 
Other net charges
(16
)
c 
(8
)
 
(0.01
)
 
(22
)
d 
(10
)
 
(0.01
)
 
Net adjustments to environmental obligations and related litigation reserves
(14
)
 
(14
)
 
(0.01
)
 
(35
)
 
(35
)
 
(0.02
)
 
Net (loss) gain on sales of assets
(11
)
 
(11
)
 
(0.01
)
 
33

 
33

 
0.02

 
Net loss on early extinguishment of debt
(32
)
 
(32
)
 
(0.02
)
 
(6
)
 
(5
)
 

 
Net tax (charges) credits
N/A

 
(1
)
 

 
N/A

 
6

 

 
Gain on discontinued operations

 

 

 
1

 
1

 

 
 
$
(323
)
 
$
(256
)
e 
$
(0.18
)
 
$
(86
)
 
$
(36
)
 
$
(0.03
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net (loss) income attributable to common stock
N/A
 
$
(235
)
 
$
(0.16
)
 
N/A
 
$
67

 
$
0.05

 
a.
Reflects impact to FCX net (loss) income attributable to common stock (i.e., net of any taxes and noncontrolling interests).
b.
Includes $20 million recorded to production and delivery and $8 million to depreciation, depletion and amortization, primarily related to idle facility costs at Cerro Verde and contract cancellation costs at El Abra.
c.
Includes other charges recorded to production and delivery ($5 million), other income, net ($4 million), and interest expense, net ($7 million), primarily related to a change in a tax position at Cerro Verde and asset impairments.
d.
Includes charges recorded to production and delivery, primarily associated with weather-related issues at El Abra and for non-recurring employee costs at PT-FI.
e.
Does not foot because of rounding.

INCOME TAXES
Following is a summary of the approximate amounts used in the calculation of FCX's consolidated income tax benefit (provision) (in millions, except percentages):
 
Three Months Ended March 31,
 
 
2020
 
2019
 
 
 
 
 
 
Income Tax
 
 
 
 
 
Income Tax
 
 
Income
 
Effective
 
(Provision)
 
Income
 
Effective
 
(Provision)
 
 
(Loss)a
 
Tax Rate
 
Benefit
 
(Loss)a
 
Tax Rate
 
Benefit
 
U.S.b
$
(451
)
 
1%
 
$
4

c 
$
(97
)
 
1%
 
$
1

 
South America
(202
)
 
39%
 
78

 
263

 
40%
 
(105
)
 
Indonesia
(19
)
 
(63)%
 
(12
)
d 
79

 
33%
 
(26
)
e 
Eliminations and other
60

 
N/A
 
(11
)
 
(62
)
 
N/A
 
10

 
Rate adjustmentf

 
N/A
 
1

 

 
N/A
 
15

 
Continuing operations
$
(612
)
 
10%
g 
$
60

 
$
183

 
57%
 
$
(105
)
 
a.
Represents (loss) income from continuing operations before income taxes and equity in affiliated companies' net earnings (losses).
b.
In addition to FCX's North America mining operations, the U.S. jurisdiction reflects corporate-level expenses, which include interest expense associated with senior notes, general and administrative expenses, and environmental obligations and shutdown costs.
c.
Includes a tax credit of $6 million associated with the removal of a valuation allowance on deferred tax assets.
d.
Includes a tax charge of $8 million ($7 million net of noncontrolling interest) associated with an unfavorable 2012 Indonesia Supreme Court ruling.
e.
Includes a tax credit of $8 million ($6 million net of noncontrolling interest) associated with the reduction in PT-FI's statutory tax rates in accordance with its special mining license (IUPK).
f.
In accordance with applicable accounting rules, FCX adjusts its interim provision for income taxes equal to its consolidated tax rate.
g.
FCX's first-quarter 2020 consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which FCX operates, excluding the U.S. jurisdiction. Because FCX's U.S. jurisdiction generated net losses in first-quarter 2020 that will not result in a realized tax benefit, applicable accounting rules require FCX to adjust its estimated annual effective tax rate to exclude the impact of U.S. net losses.

VI


Freeport-McMoRan Inc.
INCOME TAXES (continued)
Assuming achievement of current sales volume and cost estimates and average prices of $2.30 per pound for copper, $1,600 per ounce for gold and $9.00 per pound for molybdenum for the remainder of 2020, FCX estimates its consolidated effective tax rate for the year 2020 would approximate 62 percent. Changes in sales volumes and average prices during 2020 would incur tax impacts at estimated effective rates of 38 percent for Indonesia, 34 percent for Peru and 0 percent for the U.S.
Variations in the relative proportions of jurisdictional income result in fluctuations to FCX's consolidated effective income tax rate. Because of FCX's U.S. tax position, it does not record a financial statement impact for income or losses generated in the U.S.

DERIVATIVE INSTRUMENTS
For the three months ended March 31, 2020, FCX's mined copper was sold 49 percent in concentrate, 24 percent as cathode and 27 percent as rod from North America operations. Substantially all of FCX's copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted London Metal Exchange (LME) monthly average copper prices. FCX records revenues and invoices customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on provisionally priced concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until final pricing on the date of settlement. LME copper settlement prices averaged $2.56 per pound during first-quarter 2020 and settled at $2.18 per pound on March 31, 2020. Because a significant portion of FCX's copper concentrate and cathode sales in any quarterly period usually remain subject to final pricing, the quarter-end forward price is a major determinant of the average recorded copper price for the period. FCX's average realized copper price was $2.43 per pound in first-quarter 2020.

Following is a summary of the adjustments to prior period and current period provisionally priced copper sales (in millions, except per share amounts):
 
Three Months Ended March 31,
 
2020
 
2019
 
Prior
Perioda
 
Current
Periodb
 
Total
 
Prior
Perioda
 
Current
Periodb
 
Total
Revenues
$
(107
)
 
$
(131
)
 
$
(238
)
 
$
70

 
$
52

 
$
122

Net (loss) income attributable to common stock
$
(45
)
 
$
(54
)
 
$
(99
)
 
$
29

 
$
20

 
$
49

Net (loss) income per share of common stock
$
(0.03
)
 
$
(0.04
)
 
$
(0.07
)
 
$
0.02

 
$
0.01

 
$
0.03

a.
Reflects adjustments to provisionally priced copper sales at December 31, 2019 and 2018.
b.
Reflects adjustments to provisionally priced copper sales during the three months ended March 31, 2020 and 2019.
At March 31, 2020, FCX had provisionally priced copper sales at its copper mining operations totaling 187 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average price of $2.24 per pound, subject to final pricing over the next several months. FCX estimates that each $0.05 change in the price realized from the quarter-end provisional price would have an approximate $6 million effect on 2020 net income attributable to common stock. The LME copper price settled at $2.32 per pound on April 23, 2020.

DEFERRED PROFITS
FCX defers recognizing profits on sales from its mining operations to Atlantic Copper and on 25 percent of PT-FI's sales to PT Smelting (PT-FI's 25 percent-owned Indonesian smelting unit) until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net additions (reductions) to operating (loss) income totaling $11 million ($7 million to net loss attributable to common stock) in first-quarter 2020, $(31) million ($(14) million to net income attributable to common stock) in first-quarter 2019. FCX's net deferred profits on its inventories at Atlantic Copper and PT Smelting to be recognized in future periods' net income attributable to common stock totaled $2 million at March 31, 2020. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in FCX's net deferred profits and quarterly earnings.


VII


Freeport-McMoRan Inc.
BUSINESS SEGMENTS
FCX has organized its mining operations into four primary divisions – North America copper mines, South America mining, Indonesia mining and Molybdenum mines, and operating segments that meet certain thresholds are reportable segments. Separately disclosed in the following tables are FCX's reportable segments, which include the Morenci, Bagdad, Cerro Verde and Grasberg (Indonesia Mining) copper mines, the Rod & Refining operations and Atlantic Copper Smelting & Refining.
Intersegment sales between FCX’s business segments are based on terms similar to arms-length transactions with third parties at the time of the sale. Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, the timing of sales to unaffiliated customers and transportation premiums.
FCX allocates certain operating costs, expenses and capital expenditures to its operating divisions and individual segments. However, not all costs and expenses applicable to an operation are allocated. U.S. federal and state income taxes are recorded and managed at the corporate level (included in Corporate, Other & Eliminations), whereas foreign income taxes are recorded and managed at the applicable country level. In addition, most mining exploration and research activities are managed on a consolidated basis, and those costs along with some selling, general and administrative costs, are not allocated to the operating divisions or individual segments. Accordingly, the following segment information reflects management determinations that may not be indicative of what the actual financial performance of each operating division or segment would be if it was an independent entity.


VIII


Freeport-McMoRan Inc.
BUSINESS SEGMENTS (continued)
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic
 
Corporate,
 
 
 
 
North America Copper Mines
 
South America Mining
 
 
 
 
 
 
 
Copper
 
Other
 
 
 
 
 
 
 
 
Other
 
 
 
Cerro
 
Other
 
 
 
Indonesia
 
Molybdenum
 
Rod &
 
Smelting
 
& Elimi-
 
FCX
 
 
Morenci
 
Bagdad
 
Mines
 
Total
 
Verde
 
Mines
 
Total
 
Mining
 
Mines
 
Refining
 
& Refining
 
nations
 
Total
 
Three Months Ended March 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
2

 
$

 
$
7

 
$
9

 
$
376

 
$
98

 
$
474

 
$
445

a 
$

 
$
1,115

 
$
429

 
$
326

b 
$
2,798

 
Intersegment
442

 
159

 
375

 
976

 
38

 

 
38

 

 
71

 
8

 
11

 
(1,104
)
 

 
Production and delivery
349

 
126

 
385

 
860

 
424

 
110

 
534

 
343

 
66

 
1,119

 
411

 
(788
)
 
2,545

 
Depreciation, depletion and amortization
44

 
14

 
34

 
92

 
93

 
15

 
108

 
101

 
16

 
2

 
7

 
15

 
341

 
Metals inventory adjustments
4

 

 
141

 
145

 

 
60

 
60

 

 
4

 

 

 
13

 
222

 
Selling, general and administrative expenses
1

 

 

 
1

 
2

 

 
2

 
28

 

 

 
5

 
74

 
110

 
Mining exploration and research expenses

 

 
1

 
1

 

 

 

 

 

 

 

 
15

 
16

 
Environmental obligations and shutdown costs

 

 

 

 

 

 

 

 

 
1

 

 
25

 
26

 
Net loss on sales of assets

 

 

 

 

 

 

 

 

 

 

 
11

 
11

 
Operating income (loss)
46

 
19

 
(179
)
 
(114
)
 
(105
)
 
(87
)
 
(192
)
 
(27
)
 
(15
)
 
1

 
17

 
(143
)
 
(473
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
1

 

 

 
1

 
28

 

 
28

 
1

 

 

 
3

 
94

 
127

 
(Benefit from) provision for income taxes

 

 

 

 
(52
)
 
(26
)
 
(78
)
 
12

 

 

 

 
6

 
(60
)
 
Total assets at March 31, 2020
2,814

 
800

 
4,293

 
7,907

 
8,471

 
1,655

 
10,126

 
16,711

 
1,788

 
231

 
635

 
2,821

 
40,219

 
Capital expenditures
44

 
25

 
115

 
184

 
59

 
15

 
74

 
326

 
7

 
2

 
6

 
11

 
610

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
12

 
$

 
$
95

 
$
107

 
$
727

 
$
98

 
$
825

 
$
705

a 
$

 
$
1,128

 
$
571

 
$
456

b 
$
3,792

 
Intersegment
458

 
178

 
291

 
927

 
126

 

 
126

 
58

 
91

 
6

 
5

 
(1,213
)
 

 
Production and delivery
295

 
120

 
328

 
743

 
439

 
100

 
539

 
556

 
71

 
1,133

 
552

 
(675
)
 
2,919

 
Depreciation, depletion and amortization
40

 
10

 
33

 
83

 
100

 
14

 
114

 
105

 
16

 
2

 
7

 
20

 
347

 
Metals inventory adjustments


 

 

 

 

 

 

 

 

 

 

 
57

 
57

 
Selling, general and administrative expenses
1

 

 
1

 
2

 
2

 

 
2

 
30

 

 

 
5

 
73

 
112

 
Mining exploration and research expenses

 

 

 

 

 

 

 

 

 

 

 
27

 
27

 
Environmental obligations and shutdown costs

 

 

 

 

 

 

 

 

 

 

 
42

 
42

 
Net gain on sale of assets

 

 

 

 

 

 

 

 

 

 

 
(33
)
 
(33
)
 
Operating income (loss)
134

 
48

 
24

 
206

 
312

 
(16
)
 
296

 
72

 
4

 
(1
)
 
12

 
(268
)
 
321

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
1

 

 

 
1

 
29

 

 
29

 

 

 

 
6

 
110

 
146

 
Provision for (benefit from) income taxes

 

 

 

 
110

 
(5
)
 
105

 
26

 

 

 
1

 
(27
)
 
105

 
Total assets at March 31, 2019
2,904

 
709

 
4,051

 
7,664

 
8,674

 
1,720

 
10,394

 
15,792

 
1,785

 
232

 
771

 
4,421

 
41,059

 
Capital expenditures
62

 
25

 
123

 
210

 
56

 
5

 
61

 
319

 
4

 
1

 
4

 
23

 
622

 
a.
Includes PT-FI's sales to PT Smelting totaling $380 million in first-quarter 2020 and $409 million in first-quarter 2019.
b.
Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.


IX


Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS

Unit net cash costs per pound of copper and molybdenum are measures intended to provide investors with information about the cash-generating capacity of FCX's mining operations expressed on a basis relating to the primary metal product for the respective operations. FCX uses this measure for the same purpose and for monitoring operating performance by its mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. These measures are presented by other metals mining companies, although FCX's measures may not be comparable to similarly titled measures reported by other companies.
FCX presents gross (loss) profit per pound of copper in the following tables using both a “by-product” method and a “co-product” method. FCX uses the by-product method in its presentation of gross (loss) profit per pound of copper because (i) the majority of its revenues are copper revenues, (ii) it mines ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of FCX's costs to revenues from the copper, gold, molybdenum and other metals it produces and (iv) it is the method used by FCX's management and Board of Directors to monitor FCX's mining operations and to compare mining operations in certain industry publications. In the co-product method presentations, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent FCX's metals sales volumes and realized prices change.
FCX shows revenue adjustments for prior period open sales as a separate line item. Because these adjustments do not result from current period sales, these amounts have been reflected separately from revenues on current period sales. Noncash and other costs, which are removed from site production and delivery costs in the calculation of unit net cash costs, consist of items such as stock-based compensation costs, inventory adjustments, long-lived asset impairments, idle facility costs, restructuring and/or unusual charges. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. The following schedules are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in FCX's consolidated financial statements.


X


Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Three Months Ended March 31, 2020
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
906

 
$
906

 
$
77

 
$
25

 
$
1,008

 
Site production and delivery, before net noncash
and other costs shown below
 
760

 
698

 
71

 
18

 
787

 
By-product credits
 
(75
)
 

 

 

 

 
Treatment charges
 
38

 
36

 

 
2

 
38

 
Net cash costs
 
723

 
734

 
71

 
20

 
825

 
Depreciation, depletion and amortization (DD&A)
 
92

 
84

 
6

 
2

 
92

 
Metals inventory adjustments
 
145

 
145

 

 

 
145

 
Noncash and other costs, net
 
34

 
29

 
2

 
3

 
34

 
Total costs
 
994

 
992

 
79

 
25

 
1,096

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(22
)
 
(22
)
 

 

 
(22
)
 
Gross loss
 
$
(110
)
 
$
(108
)
 
$
(2
)
 
$

 
$
(110
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
354

 
354

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
 
8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross loss per pound of copper/molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.56

 
$
2.56

 
$
9.69

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
2.15

 
1.97

 
8.93

 
 
 
 
 
By-product credits
 
(0.22
)
 

 

 
 
 
 
 
Treatment charges
 
0.11

 
0.10

 

 
 
 
 
 
Unit net cash costs
 
2.04

 
2.07

 
8.93

 
 
 
 
 
DD&A
 
0.26

 
0.24

 
0.73

 
 
 
 
 
Metals inventory adjustments
 
0.41

 
0.41

 

 
 
 
 
 
Noncash and other costs, net
 
0.10

 
0.08

 
0.23

 
 
 
 
 
Total unit costs
 
2.81

 
2.80

 
9.89

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(0.06
)
 
(0.06
)
 

 
 
 
 
 
Gross loss per pound
 
$
(0.31
)
 
$
(0.30
)
 
$
(0.20
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metals
 
 
 
 
 
 
 
Production
 
 
 
Inventory
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
Adjustments
 
 
 
Totals presented above
 
$
1,008

 
$
787

 
$
92

 
$
145

 
 
 
Treatment charges
 
(8
)
 
30

 

 

 
 
 
Noncash and other costs, net
 

 
34

 

 

 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(22
)
 

 

 

 
 
 
Eliminations and other
 
7

 
9

 

 

 
 
 
North America copper mines
 
985

 
860

 
92

 
145

 
 
 
Other miningc
 
2,591

 
2,473

 
234

 
64

 
 
 
Corporate, other & eliminations
 
(778
)
 
(788
)
 
15

 
13

 
 
 
As reported in FCX's consolidated financial statements
 
$
2,798

 
$
2,545

 
$
341

 
$
222

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.
Includes gold and silver product revenues and production costs.
c.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page VIII.

XI


Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
914

 
$
914

 
$
87

 
$
23

 
$
1,024

 
Site production and delivery, before net noncash
and other costs shown below
 
658

 
616

 
52

 
17

 
685

 
By-product credits
 
(83
)
 

 

 

 

 
Treatment charges
 
36

 
35

 

 
1

 
36

 
Net cash costs
 
611

 
651

 
52

 
18

 
721

 
DD&A
 
83

 
77

 
3

 
3

 
83

 
Noncash and other costs, net
 
23

 
22

 
1

 

 
23

 
Total costs
 
717

 
750

 
56

 
21

 
827

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
12

 
12

 

 

 
12

 
Gross profit
 
$
209

 
$
176

 
$
31

 
$
2

 
$
209

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
320

 
320

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.85

 
$
2.85

 
$
11.68

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
2.06

 
1.92

 
6.98

 
 
 
 
 
By-product credits
 
(0.26
)
 

 

 
 
 
 
 
Treatment charges
 
0.11

 
0.11

 

 
 
 
 
 
Unit net cash costs
 
1.91

 
2.03

 
6.98

 
 
 
 
 
DD&A
 
0.26

 
0.24

 
0.44

 
 
 
 
 
Noncash and other costs, net
 
0.07

 
0.07

 
0.14

 
 
 
 
 
Total unit costs
 
2.24

 
2.34

 
7.56

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
0.04

 
0.04

 

 
 
 
 
 
Gross profit per pound
 
$
0.65

 
$
0.55

 
$
4.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
 
Totals presented above
 
$
1,024

 
$
685

 
$
83

 
 
 
 
 
Treatment charges
 
(13
)
 
23

 

 
 
 
 
 
Noncash and other costs, net
 

 
23

 

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
12

 

 

 
 
 
 
 
Eliminations and other
 
11

 
12

 

 
 
 
 
 
North America copper mines
 
1,034

 
743

 
83

 
 
 
 
 
Other miningc
 
3,515

 
2,851

 
244

 
 
 
 
 
Corporate, other & eliminations
 
(757
)
 
(675
)
 
20

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
3,792

 
$
2,919

 
$
347

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.
Includes gold and silver product revenues and production costs.
c.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page VIII.


XII


Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Mining Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
Three Months Ended March 31, 2020
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
Method
 
Copper
 
Othera
 
Total
Revenues, excluding adjustments
 
$
575

 
$
575

 
$
54

 
$
629

Site production and delivery, before net noncash
and other costs shown below
 
494

 
457

 
49

 
506

By-product credits
 
(42
)
 

 

 

Treatment charges
 
40

 
40

 

 
40

Royalty on metals
 
1

 
1

 

 
1

Net cash costs
 
493

 
498

 
49

 
547

DD&A
 
107

 
98

 
9

 
107

Metals inventory adjustments
 
60

 
60

 

 
60

Noncash and other costs, net
 
30

b 
28

 
2

 
30

Total costs
 
690

 
684

 
60

 
744

Other revenue adjustments, primarily for pricing
on prior period open sales
 
(75
)
 
(75
)
 

 
(75
)
Gross loss
 
$
(190
)
 
$
(184
)
 
$
(6
)
 
$
(190
)
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
247

 
247

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross loss per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.33

 
$
2.33

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
2.00

 
1.85

 
 
 
 
By-product credits
 
(0.17
)
 

 
 
 
 
Treatment charges
 
0.16

 
0.16

 
 
 
 
Royalty on metals
 
0.01

 
0.01

 
 
 
 
Unit net cash costs
 
2.00

 
2.02

 
 
 
 
DD&A
 
0.44

 
0.40

 
 
 
 
Metals inventory adjustments
 
0.24

 
0.24

 
 
 
 
Noncash and other costs, net
 
0.12

b 
0.11

 
 
 
 
Total unit costs
 
2.80

 
2.77

 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(0.30
)
 
(0.30
)
 
 
 
 
Gross loss per pound
 
$
(0.77
)
 
$
(0.74
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metals
 
 
 
 
Production
 
 
 
Inventory
 
 
Revenues
 
and Delivery
 
DD&A
 
Adjustments
Totals presented above
 
$
629

 
$
506

 
$
107

 
$
60

Treatment charges
 
(40
)
 

 

 

Royalty on metals
 
(1
)
 

 

 

Noncash and other costs, net
 

 
30

 

 

Other revenue adjustments, primarily for pricing
on prior period open sales
 
(75
)
 

 

 

Eliminations and other
 
(1
)
 
(2
)
 
1

 

South America mining
 
512

 
534

 
108

 
60

Other miningc
 
3,064

 
2,799

 
218

 
149

Corporate, other & eliminations
 
(778
)
 
(788
)
 
15

 
13

As reported in FCX's consolidated financial statements
 
$
2,798

 
$
2,545

 
$
341

 
$
222

 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 0.9 million ounces ($17.71 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b.
Includes COVID-19 related costs of $20 million ($0.08 per pound of copper), primarily associated with idle facility costs at Cerro Verde as a result the Peruvian government's issuance of a Supreme Decree and declaration of a National Emergency in its efforts to contain the outbreak of COVID-19 and contract cancellation costs at El Abra.
c.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page VIII.


XIII


Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Mining Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Othera
 
Total
 
Revenues, excluding adjustments
 
$
850

 
$
850

 
$
112

 
$
962

 
Site production and delivery, before net noncash
and other costs shown below
 
503

 
450

 
66

 
516

 
By-product credits
 
(99
)
 

 

 

 
Treatment charges
 
56

 
56

 

 
56

 
Royalty on metals
 
2

 
2

 

 
2

 
Net cash costs
 
462

 
508

 
66

 
574

 
DD&A
 
114

 
101

 
13

 
114

 
Noncash and other costs, net
 
24

b 
24

 

 
24

 
Total costs
 
600

 
633

 
79

 
712

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
47

 
47

 

 
47

 
Gross profit
 
$
297

 
$
264

 
$
33

 
$
297

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
290

 
290

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.93

 
$
2.93

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
1.73

 
1.55

 
 
 
 
 
By-product credits
 
(0.34
)
 

 
 
 
 
 
Treatment charges
 
0.19

 
0.19

 
 
 
 
 
Royalty on metals
 
0.01

 
0.01

 
 
 
 
 
Unit net cash costs
 
1.59

 
1.75

 
 
 
 
 
DD&A
 
0.39

 
0.34

 
 
 
 
 
Noncash and other costs, net
 
0.09

b 
0.09

 
 
 
 
 
Total unit costs
 
2.07

 
2.18

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
0.16

 
0.16

 
 
 
 
 
Gross profit per pound
 
$
1.02

 
$
0.91

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
Totals presented above
 
$
962

 
$
516

 
$
114

 
 
 
Treatment charges
 
(56
)
 

 

 
 
 
Royalty on metals
 
(2
)
 

 

 
 
 
Noncash and other costs, net
 

 
24

 

 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
47

 

 

 
 
 
Eliminations and other
 

 
(1
)
 

 
 
 
South America mining
 
951

 
539

 
114

 
 
 
Other miningc
 
3,598

 
3,055

 
213

 
 
 
Corporate, other & eliminations
 
(757
)
 
(675
)
 
20

 
 
 
As reported in FCX's consolidated financial statements
 
$
3,792

 
$
2,919

 
$
347

 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 1.3 million ounces ($15.75 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b.
Includes charges of $12 million ($0.04 per pound of copper) associated with weather-related impacts at El Abra.
c.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page VIII.


XIV


Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
Three Months Ended March 31, 2020
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
Method
 
Copper
 
Gold
 
Silvera
 
Total
Revenues, excluding adjustments
 
$
290

 
$
290

 
$
223

 
$
8

 
$
521

Site production and delivery, before net noncash
and other costs shown below
 
341

 
190

 
146

 
5

 
341

Gold and silver credits
 
(236
)
 

 

 

 

Treatment charges
 
38

 
21

 
16

 
1

 
38

Export duties
 
4

 
2

 
2

 

 
4

Royalty on metals
 
19

 
12

 
7

 

 
19

Net cash costs
 
166

 
225

 
171

 
6

 
402

DD&A
 
101

 
56

 
43

 
2

 
101

Noncash and other costs, net
 
27

 
15

 
12

 

 
27

Total costs
 
294

 
296

 
226

 
8

 
530

Other revenue adjustments, primarily for pricing
on prior period open sales
 
(20
)
 
(20
)
 
5

 

 
(15
)
PT Smelting intercompany profit
 
25

 
14

 
11

 

 
25

Gross profit (loss)
 
$
1

 
$
(12
)
 
$
13

 
$

 
$
1

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
127

 
127

 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
139

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit (loss) per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.28

 
$
2.28

 
$
1,606

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
2.68

 
1.49

 
1,052

 
 
 
 
Gold and silver credits
 
(1.85
)
 

 

 
 
 
 
Treatment charges
 
0.30

 
0.17

 
118

 
 
 
 
Export duties
 
0.03

 
0.02

 
11

 
 
 
 
Royalty on metals
 
0.15

 
0.09

 
50

 
 
 
 
Unit net cash costs
 
1.31

 
1.77

 
1,231

 
 
 
 
DD&A
 
0.79

 
0.44

 
310

 
 
 
 
Noncash and other costs, net
 
0.21

 
0.12

 
82

 
 
 
 
Total unit costs
 
2.31

 
2.33

 
1,623

 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(0.16
)
 
(0.16
)
 
33

 
 
 
 
PT Smelting intercompany profit
 
0.20

 
0.11

 
77

 
 
 
 
Gross profit (loss) per pound/ounce
 
$
0.01

 
$
(0.10
)
 
$
93

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
Totals presented above
 
$
521

 
$
341

 
$
101

 
 
 
 
Treatment charges
 
(38
)
 

 

 
 
 
 
Export duties
 
(4
)
 

 

 
 
 
 
Royalty on metals
 
(19
)
 

 

 
 
 
 
Noncash and other costs, net
 

 
27

 

 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(15
)
 

 

 
 
 
 
PT Smelting intercompany profit
 

 
(25
)
 

 
 
 
 
Indonesia mining
 
445

 
343

 
101

 
 
 
 
Other miningb
 
3,131

 
2,990

 
225

 
 
 
 
Corporate, other & eliminations
 
(778
)
 
(788
)
 
15

 
 
 
 
As reported in FCX's consolidated financial statements
 
$
2,798

 
$
2,545

 
$
341

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 0.6 million ounces ($14.09 per ounce average realized price).
b.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page VIII.


XV


Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Gold
 
Silvera
 
Total
 
Revenues, excluding adjustments
 
$
507

 
$
507

 
$
303

 
$
9

 
$
819

 
Site production and delivery, before net noncash
and other costs shown below
 
538

 
333

 
199

 
6

 
538

 
Gold and silver credits
 
(314
)
 

 

 

 

 
Treatment charges
 
51

 
31

 
19

 
1

 
51

 
Export duties
 
17

 
11

 
6

 

 
17

 
Royalty on metals
 
28

 
17

 
11

 

 
28

 
Net cash costs
 
320

 
392

 
235

 
7

 
634

 
DD&A
 
105

 
65

 
39

 
1

 
105

 
Noncash and other costs, net
 
2

b 
1

 
1

 

 
2

 
Total costs
 
427

 
458

 
275

 
8

 
741

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
19

 
19

 
2

 

 
21

 
PT Smelting intercompany profit
 
3

 
2

 
1

 

 
3

 
Gross profit
 
$
102

 
$
70

 
$
31

 
$
1

 
$
102

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
174

 
174

 
 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
235

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.92

 
$
2.92

 
$
1,291

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
3.10

 
1.92

 
850

 
 
 
 
 
Gold and silver credits
 
(1.81
)
 

 

 
 
 
 
 
Treatment charges
 
0.29

 
0.18

 
80

 
 
 
 
 
Export duties
 
0.10

 
0.06

 
27

 
 
 
 
 
Royalty on metals
 
0.16

 
0.10

 
46

 
 
 
 
 
Unit net cash costs
 
1.84

 
2.26

 
1,003

 
 
 
 
 
DD&A
 
0.61

 
0.37

 
166

 
 
 
 
 
Noncash and other costs, net
 
0.01

b 
0.01

 
4

 
 
 
 
 
Total unit costs
 
2.46

 
2.64

 
1,173

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
0.11

 
0.11

 
9

 
 
 
 
 
PT Smelting intercompany profit
 
0.02

 
0.01

 
5

 
 
 
 
 
Gross profit per pound/ounce
 
$
0.59

 
$
0.40

 
$
132

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
 
Totals presented above
 
$
819

 
$
538

 
$
105

 
 
 
 
 
Treatment charges
 
(51
)
 

 

 
 
 
 
 
Export duties
 
(17
)
 

 

 
 
 
 
 
Royalty on metals
 
(28
)
 

 

 
 
 
 
 
Noncash and other costs, net
 
19

 
21

 

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
21

 

 

 
 
 
 
 
PT Smelting intercompany profit
 

 
(3
)
 

 
 
 
 
 
Indonesia mining
 
763

 
556

 
105

 
 
 
 
 
Other miningc
 
3,786

 
3,038

 
222

 
 
 
 
 
Corporate, other & eliminations
 
(757
)
 
(675
)
 
20

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
3,792

 
$
2,919

 
$
347

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 0.6 million ounces ($14.85 per ounce average realized price).
b.
Includes credits of $19 million ($0.11 per pound of copper) recorded in revenues associated with adjustments to prior year treatment charges.
c.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page VIII.


XVI


Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
(In millions)
 
2020
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
77

 
$
98

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
64

 
70

 
 
 
 
Treatment charges and other
 
6

 
7

 
 
 
 
Net cash costs
 
70

 
77

 
 
 
 
DD&A
 
16

 
16

 
 
 
 
Metals inventory adjustments
 
4

 

 
 
 
 
Noncash and other costs, net
 
2

 
1

 
 
 
 
Total costs
 
92

 
94

 
 
 
 
Gross (loss) profit
 
$
(15
)
 
$
4

 
 
 
 
 
 
 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
7

 
8

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross (loss) profit per pound of molybdenum:
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
10.97

 
$
12.49

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
9.17

 
8.94

 
 
 
 
Treatment charges and other
 
0.86

 
0.86

 
 
 
 
Unit net cash costs
 
10.03

 
9.80

 
 
 
 
DD&A
 
2.29

 
2.00

 
 
 
 
Metals inventory adjustments
 
0.51

 

 
 
 
 
Noncash and other costs, net
 
0.30

 
0.16

 
 
 
 
Total unit costs
 
13.13

 
11.96

 
 
 
 
Gross (loss) profit per pound
 
$
(2.16
)
 
$
0.53

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metals
 
 
 
 
Production
 
 
 
Inventory
Three Months Ended March 31, 2020
 
Revenues
 
and Delivery
 
DD&A
 
Adjustments
Totals presented above
 
$
77

 
$
64

 
$
16

 
$
4

Treatment charges and other
 
(6
)
 

 

 

Noncash and other costs, net
 

 
2

 

 

Molybdenum mines
 
71

 
66

 
16

 
4

Other miningb
 
3,505

 
3,267

 
310

 
205

Corporate, other & eliminations
 
(778
)
 
(788
)
 
15

 
13

As reported in FCX's consolidated financial statements
 
$
2,798

 
$
2,545

 
$
341

 
$
222

 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
 
 
 
 
 
 
 
Totals presented above
 
$
98

 
$
70

 
$
16

 
$

Treatment charges and other
 
(7
)
 

 

 

Noncash and other costs, net
 

 
1

 

 

Molybdenum mines
 
91

 
71

 
16

 

Other miningb
 
4,458

 
3,523

 
311

 

Corporate, other & eliminations
 
(757
)
 
(675
)
 
20

 
57

As reported in FCX's consolidated financial statements
 
$
3,792

 
$
2,919

 
$
347

 
$
57

 
 
 
 
 
 
 
 
 
a.
Reflects sales of the Molybdenum mines' production to FCX's molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, FCX's consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.
b.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page VIII. Also includes amounts associated with FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.


XVII