FCX expects South America's sales to approximate 1.33 billion pounds of copper and 140 thousand ounces of gold for the year 2013, compared with 2012 sales of 1.25 billion pounds of copper and 82 thousand ounces of gold, primarily reflecting the mining of higher grade ore at Candelaria.

Average unit net cash costs (net of by-product credits) for South America of $1.54 per pound of copper in fourth-quarter 2012 were higher than unit net cash costs of $1.44 per pound in fourth-quarter 2011, primarily reflecting higher mining and input costs (including energy), partly offset by lower costs relating to labor agreements.

FCX estimates that average unit net cash costs (net of by-product credits) for South America mining would approximate $1.50 per pound of copper for the year 2013, based on current sales volume and cost estimates and assuming average prices of $1,700 per ounce of gold and $11 per pound of molybdenum.

Indonesia Mining. 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.

Operating and Development Activities. FCX has several projects in progress in the Grasberg minerals district, primarily related to the development of large-scale, high-grade underground ore bodies. 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. Development of the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) is advancing. The DMLZ is expected to commence production in 2015, and the Grasberg Block Cave mine is scheduled to commence production in 2017. Over the next five years, estimated aggregate capital spending on these projects is currently expected to average $715 million per year ($565 million per year net to PT Freeport Indonesia).

Production from the Deep Ore Zone (DOZ) underground mine averaged 51,200 metric tons of ore per day in fourth-quarter 2012, and is expected to ramp up to the design rate of 80,000 metric tons of ore per day by year-end 2013, following completion of ongoing panel repairs.

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