FCX Operates Seven Open Pit Copper Mines In North America

PHOENIX, AZ - Freeport-McMoRan Copper & Gold (FCX) operates seven open-pit copper mines in North America - Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Tyrone and Chino in New Mexico. All of the North America mining operations are wholly owned, except for Morenci. FCX records its 85 percent joint venture interest in Morenci using the proportionate consolidation method. In addition to copper, certain of FCX's North America copper mines (Sierrita, Bagdad, Morenci and Chino) also produce molybdenum concentrates.

FCX has completed projects to increase production at its North America copper mines, including restarting milling operations and increasing mining rates at Morenci and Chino, and restarting the Miami mine. Ramp up activities at Chino are continuing, with annual production of approximately 250 million pounds of copper targeted in 2014. FCX continues to evaluate a number of opportunities to invest in additional production capacity at several of its North America copper mines. Exploration results in recent years indicate the potential for significant additional sulfide development in North America.

At Morenci, FCX completed a feasibility study to expand mining and milling capacity to process additional sulfide ores identified through exploratory drilling. The approximate $1.4 billion project would target incremental annual production of approximately 225 million pounds of copper in 2014 through an increase in milling rates from the current level of 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day, and mining rates from the current level of 700,000 short tons per day to 900,000 short tons per day. FCX has commenced initial construction and engineering, and procurement activities are in progress.

Consolidated copper sales volumes from North America of 361 million pounds in second-quarter 2012 were higher than second-quarter 2011 sales of 331 million pounds primarily reflecting increased production at Chino and Safford.

FCX expects sales from the North America copper mines to approximate 1.3 billion pounds of copper for the year 2012, compared with 1.2 billion pounds of copper in 2011.

As anticipated, average unit net cash costs (net of by-product credits) for the North America copper mines of $1.62 per pound of copper in second-quarter 2012 were higher than unit net cash costs of $1.36 per pound in second-quarter 2011 reflecting increased mining rates and lower molybdenum credits, partly offset by higher volumes.

FCX estimates that average unit net cash costs (net of by-product credits) for the North America copper mines would approximate $1.65 per pound of copper for the year 2012, based on current sales volume and cost estimates and assuming an average molybdenum price of $13 per pound for the second half of 2012. North America's average unit net cash costs for 2012 would change by approximately $0.02 per pound for each $2 per pound change in the average price of molybdenum for the second half of 2012.

FCX operates four copper mines in South America - Cerro Verde in Peru and El Abra, Candelaria and Ojos del Salado in Chile. FCX owns a 53.56 percent interest in Cerro Verde, a 51 percent interest in El Abra, and an 80 percent interest in both the Candelaria and Ojos del Salado mining complexes. All operations in South America are consolidated in FCX's financial statements. South America mining includes open-pit and underground mining. In addition to copper, the Cerro Verde mine produces molybdenum concentrates, and the Candelaria and Ojos del Salado mines produce gold and silver.

During 2011, FCX commenced production from El Abra's sulfide ores. Production from the sulfide ore is expected to approximate 300 million pounds of copper per year, replacing the currently depleting oxide copper production.

FCX is also engaged in pre-feasibility studies for a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries. Exploration results at El Abra indicate the potential for a significant sulfide resource.

At Cerro Verde, plans for a large-scale concentrator expansion continue to be advanced. The approximate $4 billion project would expand the concentrator facilities from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day and provide incremental annual production of approximately 600 million pounds of copper and 15 million pounds of molybdenum beginning in 2016. An environmental impact assessment was filed in fourth-quarter 2011. Permitting is being advanced and engineering and procurement of long-lead items are in progress.

Copper sales from South America mining of 301 million pounds in second-quarter 2012 were lower than second-quarter 2011 sales of 331 million pounds primarily reflecting anticipated lower ore grades at Cerro Verde and Candelaria, partly offset by increased production at El Abra.

FCX expects South America's sales to approximate of 1.2 billion pounds of copper and 100 thousand ounces of gold for the year 2012, compared with 2011 sales of 1.3 billion pounds of copper and 101 thousand ounces of gold. Copper sales estimates for South America are approximately 35 million pounds lower than previous estimates reported in April because of revisions to El Abra production.

Through its 90.64 percent owned and wholly consolidated subsidiary PT Freeport Indonesia, FCX operates the world's largest copper and gold mine in terms of reserves at its Grasberg operations in Papua, Indonesia. PT Freeport Indonesia produces copper concentrates, which contain significant quantities of gold and also silver.

FCX has several projects in progress in the Grasberg minerals district, primarily related to the development of the large-scale, high-grade underground ore bodies located beneath and nearby the Grasberg open pit. In aggregate, these underground ore bodies are expected to ramp up over several years to approximately 240,000 metric tons of ore per day following the currently anticipated transition from the Grasberg open pit in 2016. Over the next five years, estimated aggregate capital spending on these projects is expected to average $700 million per year ($550 million per year net to PT Freeport Indonesia). Considering the long-term nature and large size of these projects, actual costs could differ materially from these estimates.

The high-grade Big Gossan underground mine, which began producing in fourth-quarter 2010, is expected to reach full rates of 7,000 metric tons of ore per day in 2013. Substantial progress has been made in developing infrastructure and underground workings that will enable access to the underground ore bodies. Development of both the Grasberg Block Cave and Deep Mill Level Zone spurs is advancing, and the tunneling required to reach these underground ore bodies is complete.

Indonesia's second-quarter 2012 copper sales of 183 million pounds and gold sales of 247 thousand ounces were significantly lower than second-quarter 2011 copper sales of 265 million pounds and gold sales of 330 thousand ounces, primarily reflecting anticipated lower ore grades and production rates.

Copper sales from Africa of 82 million pounds in second-quarter 2012 were higher than second-quarter 2011 copper sales of 75 million pounds primarily reflecting higher mining and milling rates.

FCX expects Africa's sales to approximate 310 million pounds of copper and 25 million pounds of cobalt for the year 2012, compared with 283 million pounds of copper and 25 million pounds of cobalt for the year 2011.

FCX is the world's largest producer of molybdenum. FCX conducts molybdenum mining operations at its wholly owned Henderson underground mine and Climax open-pit mine in Colorado, and also sells molybdenum produced from its North and South America copper mines.

Construction activities at the Climax molybdenum mine, which included the installation of a 25,400 metric ton per day mill facility, mining equipment and environmental management systems, is substantially complete. During second-quarter 2012, the operation began commercial production. Production from Climax is expected to ramp up to a rate of 20 million pounds of molybdenum per year during 2013 and, depending on market conditions, may be increased to 30 million pounds of molybdenum per year. FCX intends to operate the Climax and Henderson mines in a flexible manner to meet market requirements. FCX believes that Climax is one of the most attractive primary molybdenum mines in the world, with large-scale production capacity, attractive cash costs and future growth options.

Freeport-McMoRan Copper & Gold Inc reported second-quarter 2012 net income attributable to common stock of $710 million compared with $1.4 billion for second-quarter 2011. Second-quarter 2012 net income included charges for environmental obligations and related litigation reserves totaling $53 million compared with $40 million in second-quarter 2011. For the first six months of 2012, FCX reported net income attributable to common stock of $1.5 billion compared with $2.9 billion for the first six months of 2011.

James R. Moffett, Chairman of the Board, and Richard C. Adkerson, President and Chief Executive Officer, said, "Our second-quarter results reflect our global team's focus on achieving strong operating results in a safe and efficient fashion, and the pursuit of opportunities to grow our production and large resource base. We are on track to increase our annual copper production by more than 25 percent over the next three years through financially attractive brownfield investments. We are positive about the long-term fundamentals of the metals we produce, our geographically diverse portfolio of large-scale operations with long-lived reserves and mineral resources, and the strong track record of our team to execute our plans."

The company's address is 333 N. Central Ave.,Phoenix, AZ 85004, 602.366.8100.