Freeport-McMoRan 2009 Annual Report Download - page 23

Download and view the complete annual report

Please find page 23 of the 2009 Freeport-McMoRan annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

KLVWRULFDOWUHQGVDQGRWKHUIDFWRUVLQFOXGLQJPLQHUDORJ\RIWKHRUH
DQGURFNW\SH8OWLPDWHUHFRYHU\RIFRSSHUFRQWDLQHGLQOHDFK
VWRFNSLOHVFDQYDU\VLJQLÀFDQWO\IURPDORZSHUFHQWDJHWRPRUHWKDQ
SHUFHQWGHSHQGLQJRQVHYHUDOYDULDEOHVLQFOXGLQJW\SHRIFRSSHU
UHFRYHU\PLQHUDORJ\DQGSDUWLFOHVL]HRIWKHURFN)RUQHZO\SODFHG
PDWHULDORQDFWLYHVWRFNSLOHVDVPXFKDVSHUFHQWRIWKHFRSSHU
XOWLPDWHO\UHFRYHUDEOHPD\EHH[WUDFWHGGXULQJWKHÀUVW\HDUDQGWKH
UHPDLQLQJFRSSHUPD\EHUHFRYHUHGRYHUPDQ\\HDUV
3URFHVVHVDQGUHFRYHU\UDWHVDUHPRQLWRUHGUHJXODUO\DQGUHFRYHU\
UDWHHVWLPDWHVDUHDGMXVWHGSHULRGLFDOO\DVDGGLWLRQDOLQIRUPDWLRQ
EHFRPHVDYDLODEOHDQGDVUHODWHGWHFKQRORJ\FKDQJHV$W
'HFHPEHUHVWLPDWHGUHFRYHUDEOHFRSSHUZDVELOOLRQ
SRXQGVLQOHDFKVWRFNSLOHVZLWKDFDUU\LQJYDOXHRIELOOLRQDQG
ELOOLRQSRXQGVLQPLOOVWRFNSLOHVZLWKDFDUU\LQJYDOXHRIPLOOLRQ
Reclamation and ClosureCosts. 5HFODPDWLRQLVDQRQJRLQJDFWLYLW\
WKDWRFFXUVWKURXJKRXWWKHOLIHRIDPLQH:HUHFRUGWKHIDLUYDOXHRIRXU
HVWLPDWHGDVVHWUHWLUHPHQWREOLJDWLRQV$52VDVVRFLDWHGZLWKWDQJLEOH
ORQJOLYHGDVVHWVLQWKHSHULRGLQFXUUHG)DLUYDOXHLVPHDVXUHGDVWKH
SUHVHQWYDOXHRIFDVKÁRZHVWLPDWHVDIWHUFRQVLGHULQJLQÁDWLRQDQG
WKHQDSSO\LQJDPDUNHWULVNSUHPLXP2XUFRVWHVWLPDWHVDUHUHÁHFWHG
RQDWKLUGSDUW\FRVWEDVLVDQGFRPSO\ZLWKRXUOHJDOREOLJDWLRQWRUHWLUH
WDQJLEOHORQJOLYHGDVVHWVLQWKHSHULRGLQFXUUHG7KHVH FRVWHVWLPDWHV
PD\GLIIHUIURPÀQDQFLDODVVXUDQFHFRVWHVWLPDWHVIRUUHFODPDWLRQ
DFWLYLWLHVEHFDXVHRIDYDULHW\RIIDFWRUVLQFOXGLQJREWDLQLQJXSGDWHG
FRVWHVWLPDWHVIRUUHFODPDWLRQDFWLYLWLHVWKHWLPLQJRIUHFODPDWLRQ
DFWLYLWLHVFKDQJHVLQVFRSHDQGWKHH[FOXVLRQRIFHUWDLQFRVWVQRW
FRQVLGHUHGUHFODPDWLRQDQGFORVXUHFRVWV5HIHUWR1RWHIRUIXUWKHU
GLVFXVVLRQRIRXUDFFRXQWLQJSROLF\IRUUHFODPDWLRQDQGFORVXUHFRVWV
*HQHUDOO\$52DFWLYLWLHVDUHVSHFLÀHGE\UHJXODWLRQVRULQSHUPLWV
LVVXHGE\WKHUHOHYDQWJRYHUQLQJDXWKRULW\DQGPDQDJHPHQW
MXGJPHQWLVUHTXLUHGWRHVWLPDWHWKHH[WHQWDQGWLPLQJRIH[SHQGLWXUHV
EDVHGRQOLIHRIPLQHSODQQLQJ$FFRXQWLQJIRUUHFODPDWLRQDQGFORVXUH
FRVWVUHSUHVHQWVDFULWLFDODFFRXQWLQJHVWLPDWHEHFDXVHLZHZLOOQRW
LQFXUPRVWRIWKHVHFRVWVIRUDQXPEHURI\HDUVUHTXLULQJXVWRPDNH
HVWLPDWHVRYHUDORQJSHULRGLLUHFODPDWLRQDQGFORVXUHODZVDQG
UHJXODWLRQVFRXOGFKDQJHLQWKHIXWXUHDQGRUFLUFXPVWDQFHVDIIHFWLQJ
RXURSHUDWLRQVFRXOGFKDQJHHLWKHURIZKLFKFRXOGUHVXOWLQVLJQLÀFDQW
FKDQJHVWRRXUFXUUHQWSODQVLLLFDOFXODWLQJWKHIDLUYDOXHRIRXU$52V
UHTXLUHVPDQDJHPHQWWRHVWLPDWHSURMHFWHGFDVKÁRZVPDNHORQJ
WHUPDVVXPSWLRQVDERXWLQÁDWLRQUDWHVGHWHUPLQHRXUFUHGLWDGMXVWHG
ULVNIUHHLQWHUHVWUDWHVDQGGHWHUPLQHPDUNHWULVNSUHPLXPVWKDWDUH
DSSURSULDWHIRURXURSHUDWLRQVDQGLYJLYHQWKHPDJQLWXGHRIRXU
HVWLPDWHGUHFODPDWLRQDQGFORVXUHFRVWVFKDQJHVLQDQ\RUDOORIWKHVH
HVWLPDWHVFRXOGKDYHDVLJQLÀFDQWLPSDFWRQRXUUHVXOWVRIRSHUDWLRQV
$WOHDVWDQQXDOO\ZHUHYLHZRXU$52HVWLPDWHVIRUFKDQJHVLQ
WKHSURMHFWHGWLPLQJRIFHUWDLQUHFODPDWLRQFRVWVFKDQJHVLQFRVW
HVWLPDWHVDQGDGGLWLRQDO$52VLQFXUUHGGXULQJWKHSHULRG)ROORZLQJ
LVDVXPPDU\RIFKDQJHVLQRXU$52VIRU WKH\HDUVHQGHG
'HFHPEHUDQGLQPLOOLRQV
WLPHRIWKH0DUFKDFTXLVLWLRQRI3KHOSV'RGJHPHWDOSULFH
SURMHFWLRQVXVHGWRYDOXHWKHQHWDVVHWVDFTXLUHGUDQJHGIURPQHDU
WHUPSULFHVRISHUSRXQGIRUFRSSHUGHFOLQLQJRYHUDQHLJKW
\HDUSHULRGWRSHUSRXQGDQGSHUSRXQGIRU
PRO\EGHQXPGHFOLQLQJRYHUDÀYH\HDUSHULRGWRSHUSRXQGRXU
'HFHPEHULPSDLUPHQWHYDOXDWLRQVZHUHEDVHGRQSULFH
DVVXPSWLRQVUHÁHFWLQJSUHYDLOLQJFRSSHUIXWXUHVSULFHVIRUWKUHH
\HDUVZKLFKUDQJHGIURPDSSUR[LPDWHO\SHUSRXQGWR
SHUSRXQGDQGDORQJWHUPDYHUDJHSULFHRISHUSRXQG
0RO\EGHQXPSULFHVZHUHDVVXPHGWRDYHUDJHSHUSRXQG2XU
HYDOXDWLRQUHVXOWHGLQWKHUHFRJQLWLRQRIDVVHWLPSDLUPHQWFKDUJHV
WRWDOLQJELOOLRQELOOLRQWRQHWORVVDWWULEXWDEOHWR)&;
FRPPRQVWRFNKROGHUVRUSHUVKDUHIRU5HIHUWR1RWH
IRUIXUWKHUGLVFXVVLRQRIWKHVHDVVHWLPSDLUPHQWFKDUJHV
$GGLWLRQDOO\JRRGZLOOZDVUHFRUGHGLQFRQQHFWLRQZLWKWKH0DUFK
DFTXLVLWLRQRI3KHOSV'RGJHDQGZDVDVVLJQHGWRWKHUHSRUWLQJ
XQLWVRULQGLYLGXDOPLQHVWKDWZHUHH[SHFWHGWREHQHÀWIURPWKH
EXVLQHVVFRPELQDWLRQ*RRGZLOOLVUHTXLUHGWREHHYDOXDWHGDWOHDVW
DQQXDOO\DQGDWDQ\RWKHUWLPHLIDQHYHQWRUFKDQJHLQFLUFXPVWDQFHV
LQGLFDWHVWKDWWKHIDLUYDOXHRIDUHSRUWLQJXQLWLVEHORZLWVFDUU\LQJ
DPRXQW2XUDQQXDOJRRGZLOOLPSDLUPHQWWHVWZDVSHUIRUPHGLQ
IRXUWKTXDUWHUZKLFKUHVXOWHGLQWKHIXOOLPSDLUPHQWRIJRRGZLOO
DQGWKHUHFRJQLWLRQRIFKDUJHVWRWDOLQJELOOLRQELOOLRQWRQHW
ORVVDWWULEXWDEOHWR)&;FRPPRQVWRFNKROGHUVRUSHUVKDUH
5HIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ
Recoverable Copper. :HUHFRUGDVLQYHQWRU\DSSOLFDEOHFRVWVIRU
FRSSHUFRQWDLQHGLQPLOODQGOHDFKVWRFNSLOHVWKDWDUHH[SHFWHGWREH
SURFHVVHGLQWKHIXWXUHEDVHGRQSURYHQSURFHVVLQJWHFKQRORJLHV
0LOODQGOHDFKVWRFNSLOHVDUHHYDOXDWHGSHULRGLFDOO\WRHQVXUHWKDW
WKH\DUHVWDWHGDWWKHORZHURIFRVWRUPDUNHWUHIHUWR1RWHIRU
GLVFXVVLRQRIORZHURIFRVWRUPDUNHW/&0LQYHQWRU\DGMXVWPHQWV
UHFRUGHGLQDQG$FFRXQWLQJIRUUHFRYHUDEOHFRSSHUIURP
PLOODQGOHDFKVWRFNSLOHVUHSUHVHQWVDFULWLFDODFFRXQWLQJHVWLPDWH
EHFDXVHLLWLVJHQHUDOO\LPSUDFWLFDEOHWRGHWHUPLQHFRSSHU
FRQWDLQHGLQPLOODQGOHDFKVWRFNSLOHVE\SK\VLFDOFRXQWDQG
WKHUHIRUHUHTXLUHVPDQDJHPHQWWRHPSOR\UHDVRQDEOHHVWLPDWLRQ
PHWKRGVDQGLLUHFRYHU\UDWHVIURPOHDFKVWRFNSLOHVFDQYDU\
VLJQLÀFDQWO\7KHTXDQWLW\RIPDWHULDOGHOLYHUHGWRPLOODQGOHDFK
VWRFNSLOHVLVEDVHGRQVXUYH\HGYROXPHVRIPLQHGPDWHULDODQGGDLO\
SURGXFWLRQUHFRUGV6DPSOLQJDQGDVVD\LQJRIEODVWKROHFXWWLQJV
GHWHUPLQHWKHHVWLPDWHGFRSSHUJUDGHFRQWDLQHGLQWKHPDWHULDO
GHOLYHUHGWRWKHPLOODQGOHDFKVWRFNSLOHV
([SHFWHGFRSSHUUHFRYHU\UDWHVIRUPLOOVWRFNSLOHVDUHGHWHUPLQHG
E\PHWDOOXUJLFDOWHVWLQJ7KHUHFRYHUDEOHFRSSHULQPLOOVWRFNSLOHV
RQFHHQWHUHGLQWRWKHSURGXFWLRQSURFHVVFDQEHH[WUDFWHGLQWR
FRSSHUFRQFHQWUDWHDOPRVWLPPHGLDWHO\
([SHFWHGFRSSHUUHFRYHU\UDWHVIRUOHDFKVWRFNSLOHVDUH
GHWHUPLQHGXVLQJVPDOOVFDOHODERUDWRU\WHVWVVPDOOWRODUJHVFDOH
FROXPQWHVWLQJZKLFKVLPXODWHVWKHSURGXFWLRQVFDOHSURFHVV
MANAGEMENTS DISCUSSION AND ANALYSIS
  -9,,769;4J4V9HU*677,9.63+05* 21
   (UU\HS9LWVY[