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Freeport-McMoRan Copper & Gold Inc. Reports Fourth-Quarter And Year Ended December 31, 2012 Results

James R. Moffett, Chairman of the Board, and Richard C. Adkerson, President and Chief Executive Officer said, "Our global team continues to achieve strong and safe production while aggressively managing costs and executing on financially attractive projects to grow our copper production from 3.66 billion pounds in 2012 to over 5 billion pounds per annum in 2015. We are positive about the long-term outlook for our business, the markets we serve and the opportunities that the pending oil and gas acquisitions will provide. We are focused on executing our strategy of developing long-term resources in a cost effective and financially attractive manner to generate long-term value for shareholders."

SUMMARY FINANCIAL AND OPERATING DATA

       
Three Months Ended Years Ended
December 31, December 31,
  2012     2011 2012     2011
Financial Data (in millions, except per share amounts)
Revenues a $ 4,513 $ 4,162 $ 18,010 $ 20,880
Operating income $ 1,358

b,c,d,e

$ 1,297 b,d $ 5,814 b,c,d,e $ 9,140 b,d
Net income attributable to common stock f $ 743 b,c,d,e $ 640 b,d $ 3,041 b,c,d,e,g,h $ 4,560 b,d,g,h
Diluted net income per share of common stock $ 0.78 b,c,d,e $ 0.67 b,d $ 3.19 b,c,d,e,g,h $ 4.78 b,d,g,h
Diluted weighted-average common
shares outstanding 954 953 954 955
Operating cash flows i $ 1,265 $ 746 $ 3,774 $ 6,620
Capital expenditures $ 976 $ 785 $ 3,494 $ 2,534
 
Mining Operating Data
Copper (millions of recoverable pounds)
Production 1,005 823 3,663 3,691
Sales, excluding purchases 972 823 3,648 3,698
Average realized price per pound $ 3.60 $ 3.42 $ 3.60 $ 3.86
Site production and delivery costs per pound j $ 2.01 $ 1.96 $ 2.00 $ 1.72
Unit net cash costs per pound j $ 1.54 $ 1.57 $ 1.48 $ 1.01
Gold (thousands of recoverable ounces)
Production 251 181 958 1,383
Sales, excluding purchases 254 133 1,010 1,378
Average realized price per ounce $ 1,681 $ 1,656 $ 1,665 $ 1,583
Molybdenum (millions of recoverable pounds)
Production 24 18 85 83
Sales, excluding purchases 21 19 83 79
Average realized price per pound $ 12.62 $ 15.08 $ 14.26 $ 16.98

a. Includes the impact of adjustments to provisionally priced sales recognized in prior periods (refer to the "Consolidated Statements of Income" on page IV for further discussion).

b. Includes net (credits) charges for adjustments to environmental obligations and related litigation reserves totaling $(42) million ($(24) million to net income attributable to common stockholders or $(0.03) per share) for fourth-quarter 2012, $29 million ($23 million to net income attributable to common stockholders or $0.02 per share) for fourth-quarter 2011, $(62) million ($(40) million to net income attributable to common stockholders or $(0.04) per share) for the year 2012 and $107 million ($86 million to net income attributable to common stockholders or $0.09 per share) for the year 2011.

c. The 2012 periods include a gain of $59 million ($31 million to net income attributable to common stockholders or $0.03 per share) for the settlement of the insurance claim for business interruption and property damage relating to the 2011 incidents affecting PT Freeport Indonesia's concentrate pipelines.

d. The 2012 periods include a charge of $16 million ($8 million to net income attributable to common stockholders or $0.01 per share) associated with labor agreement costs at Candelaria. The 2011 periods include charges totaling $116 million ($50 million to net income attributable to common stockholders or $0.05 per share) primarily associated with bonuses for new labor agreements and other employee costs at PT Freeport Indonesia, Cerro Verde and El Abra.

e. The 2012 periods include charges of $9 million ($7 million to net income attributable to common stockholders or $0.01 per share) for costs associated with the PXP and MMR transactions.

f. FCX defers recognizing profits on intercompany sales until final sales to third parties occur (refer to the "Consolidated Statements of Income" on page IV for a summary of net impacts from changes in these deferrals).

g. Includes net losses on early extinguishment of debt totaling $149 million ($0.16 per share) for the year 2012, and $60 million ($0.06 per share) for the year 2011.

h. The year 2012 includes a net credit of $98 million, net of noncontrolling interests ($0.11 per share) associated with adjustments to Cerro Verde's deferred income taxes. The year 2011 includes a charge of $49 million, net of noncontrolling interests ($0.05 per share) for additional taxes associated with Cerro Verde's election to pay a special mining burden during the remaining term of its current stability agreement. For further discussion refer to the supplemental schedule, "Provision for Income Taxes," on page XXVI, which is also available on FCX's website, " www.fcx.com ."

i. Includes net working capital sources (uses) and other tax payments of $122 million for fourth-quarter 2012, $(335) million for fourth-quarter 2011, $(1.4) billion for the year 2012 and $(461) million for the year 2011.

j. Reflects per pound weighted-average site production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, excluding 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 schedule, “Product Revenues and Production Costs,” beginning on page VII, which is also available on FCX's website, “ www.fcx.com .”

OPERATIONS

Consolidated. Fourth-quarter 2012 consolidated copper sales of 972 million pounds were higher than the October 2012 estimates of 930 million pounds, primarily reflecting higher production in North and South America. Fourth-quarter 2012 consolidated sales of 254 thousand ounces of gold and 21 million pounds of molybdenum approximated the October 2012 estimates of 255 thousand ounces of gold and 20 million pounds of molybdenum. Fourth-quarter 2012 consolidated copper and gold sales were higher than fourth-quarter 2011 sales of 823 million pounds of copper and 133 thousand ounces of gold primarily reflecting the impact of PT Freeport Indonesia labor disruptions in fourth-quarter 2011. Operations and productivity have improved in 2012 at PT Freeport Indonesia.

Consolidated sales from mines for the year 2013 are expected to approximate 4.3 billion pounds of copper, 1.4 million ounces of gold and 90 million pounds of molybdenum, including 940 million pounds of copper, 230 thousand ounces of gold and 23 million pounds of molybdenum in first-quarter 2013. Projected copper sales for 2013 are expected be 18 percent higher than 2012 sales, reflecting access to higher grade ore at PT Freeport Indonesia and in South America and higher production in North America and Africa. Projected 2013 gold sales are expected to be 37 percent higher than 2012, primarily reflecting higher ore grades at Grasberg.

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