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Management’s Discussion and Analysis
50 FREEPORT-McMoRan COPPER & GOLD INC. 2008 Annual Report
By-Product Co-Product Method
Year Ended December 31, 2007
a
Method Copper Molybdenum
b
Other
c
Total
(In millions)
Revenues, excluding adjustments primarily for pricing on prior period
open sales and hedging $ 4,273 $ 4,273 $ 865 $ 61 $ 5,199
Site production and delivery, before net noncash and nonrecurring costs $ 1,883 $ 1,616 $ 308 $ 21 $ 1,945
By-product credits
b
(865) – – – –
Treatment charges 119 116 – 3 119
Net cash costs $ 1,137 $ 1,732 $ 308 $ 24 $ 2,064
Reconciliation to Pro Forma Revenues and Production and Delivery Costs
Production
and
Revenues Delivery
(In millions)
Totals presented above $ 5,199 $ 1,945
Net noncash and nonrecurring costs N/A 21
Treatment charges per above N/A 119
Revenue adjustments, primarily for pricing on prior period open sales and hedging (170) N/A
Purchase accounting adjustments – 344
Eliminations and other 17 166
Combined North America copper mines 5,046 2,595
Combined South America copper mines 4,438 1,465
Indonesia mining 4,808 1,388
Combined Africa mining – 8
Combined Molybdenum 2,193 1,593
Combined Rod & Refining 6,437 6,411
Atlantic Copper Smelting & Refining 2,388 2,329
Eliminations and other (6,077) (5,979)
As reported in FCX’s pro forma consolidated financial results
d
$ 19,233 $ 9,810
a. Reflects our historical data beginning March 20, 2007, combined with Phelps Dodge pre-acquisition data through March 19, 2007. As the pre-acquisition data represents the results
under Phelps Dodge management, such data is not necessarily indicative of what past results would have been under FCX management or of future operating results.
b. Molybdenum by-product credits and revenues reflect volumes produced at market-based pricing and also include tolling revenues at Sierrita.
c. Includes gold and silver product revenues and production costs.
d. Refer to Note 18 for summary of unaudited pro forma financial information for year ended December 31, 2007.
Combined Product Revenues and Production Costs
For comparative purposes, the following tables summarize net
cash costs for the North America copper mines for the year
ended December 31, 2007, which combines our historical data
beginning March 20, 2007, with Phelps Dodge pre-acquisition
data through March 19, 2007, and for the year ended
December 31, 2006, which reflects Phelps Dodge pre-acquisition
data. As the pre-acquisition data represents the results of the
North America copper mines under Phelps Dodge management,
such data is not necessarily indicative of what past results
would have been under FCX management or of future operating
results. Presentations shown below have been reconciled to
the revenues and production and delivery costs included in our
pro forma consolidated financial results for the year ended
December 31, 2007, and as reported in Phelps Dodge’s Form 10-K
for the year ended December 31, 2006.