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Freeport-McMoRan Copper & Gold Inc. Reports Second-Quarter And Six-Month 2012 Results

North America Copper Mines. 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.

Operating and Development Activities. 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.

Operating Data. Following is summary consolidated operating data for the North America copper mines for the second quarters and first six months of 2012 and 2011:

  Three Months Ended     Six Months Ended
June 30, June 30,
  2012     2011 2012     2011
Copper (millions of recoverable pounds)
Production 331 313 668 595
Sales, excluding purchases 361 331 699 607
Average realized price per pound $ 3.57 $ 4.19 $ 3.68 $ 4.28
 
Molybdenum (millions of recoverable pounds)
Production a 9 10 19 17
 
Unit net cash costs per pound of copper:
Site production and delivery, excluding adjustments $ 1.88 $ 1.78 $ 1.84 $ 1.76
By-product credits, primarily molybdenum b (0.36 ) (0.52 ) (0.39 ) (0.50 )
Treatment charges 0.10   0.10   0.12   0.10  
Unit net cash costs c $ 1.62   $ 1.36   $ 1.57   $ 1.36  

a. Reflects molybdenum production from certain of the North America copper mines. Sales of molybdenum are reflected in the Molybdenum division (refer to page 9).

b. Molybdenum credits reflect volumes produced at market-based pricing and also include tolling revenues at Sierrita.

c. 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 schedule, "Product Revenues and Production Costs," beginning on page VII, which is available on FCX's website, " www.fcx.com ."

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.

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