Freeport-McMoRan 2008 Annual Report Download - page 109

Notes to Consolidated Financial Statements
2008 Annual Report FREEPORT-McMoRan COPPER & GOLD INC. 107
NOTE 20. SUPPLEMENTARY MINERAL RESERVE
INFORMATION (UNAUDITED)
Recoverable proven and probable reserves have been calculated
as of December 31, 2008, in accordance with Industry Guide 7 as
required by the Securities and Exchange Act of 1934. FCX’s
proven and probable reserves may not be comparable to similar
information regarding mineral reserves disclosed in accordance
with the guidance in other countries. Proven and probable
reserves were determined by the use of mapping, drilling,
sampling, assaying and evaluation methods generally applied in
the mining industry, as more fully discussed below. The term
“reserve,” as used in the reserve data presented here, means
that part of a mineral deposit that can be economically and legally
extracted or produced at the time of the reserve determination.
The term “proven reserves” means reserves for which
(i) quantity is computed from dimensions revealed in outcrops,
trenches, workings or drill holes; (ii) grade and/or quality are
computed from the results of detailed sampling; and (iii) the sites
for inspection, sampling and measurements are spaced so
closely and the geologic character is sufficiently defined that size,
shape, depth and mineral content of reserves are well
established. The term “probable reserves” means reserves for
which quantity and grade are computed from information similar
to that used for proven reserves but the sites for sampling
are farther apart or are otherwise less adequately spaced. The
degree of assurance, although lower than that for proven
reserves, is high enough to assume continuity between points
of observation.
FCX’s reserve estimates are based on the latest available
geological and geotechnical studies. FCX conducts ongoing
studies of its ore bodies to optimize economic values and to
manage risk. FCX revises its mine plans and estimates of proven
and probable mineral reserves as required in accordance with the
latest available studies. At December 31, 2008, FCX’s estimated
consolidated recoverable reserves include 102.0 billion pounds of
copper, 40.0 million ounces of gold, 2.48 billion pounds of
molybdenum, 266.6 million ounces of silver and 0.7 billion pounds
of cobalt. At December 31, 2008, recoverable reserves include
estimated recoverable copper totaling 2.8 billion pounds in leach
stockpiles and 1.1 billion pounds in mill stockpiles, including
FCX’s joint venture partner’s interest in the Morenci mine.
Recoverable Proven and Probable Reserves
a
at December 31, 2008
Copper Gold Molybdenum
(billion (million (billion
pounds) ounces) pounds)
North America 28.3 0.2 2.08
South America 32.2 1.3 0.40
Indonesia 35.6 38.5 –
Africa 5.9 – –
Consolidated basis
b
102.0 40.0 2.48
Net equity interest
c
82.4 36.2 2.30
a. Proven and probable recoverable reserves are estimated metal quantities from
which FCX expects to be paid after application of estimated metallurgical recovery
rates and smelter recovery rates, where applicable. Recoverable reserves are that
part of a mineral deposit that FCX estimates can be economically and legally
extracted or produced at the time of the reserve determination.
b. Consolidated basis reserves represent estimated metal quantities after reduction for
joint venture partner interests at the Morenci mine in North America and the
Grasberg minerals district in Indonesia.
c. Net equity interest reserves represent estimated consolidated basis metal quantities
further reduced for minority interest ownership.
Estimated recoverable reserves were determined using long-term
average prices of $1.60 per pound for copper, $550 per ounce
for gold, $8.00 per pound for molybdenum, $12.00 per ounce for
silver and $10.00 per pound for cobalt. The London spot metal
prices for the past three years averaged $3.15 per pound for
copper and $724 per ounce for gold, and molybdenum prices for
the past three years averaged approximately $28 per pound.