Freeport-McMoRan 2011 Annual Report Download - page 41

2011 ANNUAL REPORT | 39
2011 2010
By-Product Co-Product By-Product Co-Product
Method Method Method Method
Revenues, excluding adjustments $ 3.77 $ 3.77 $ 3.68 $ 3.68
Site production and delivery, before net noncash
and other costs shown below 1.38
a
1.27 1.21 1.14
By-product credits
(0.35) — (0.21) —
Treatment charges 0.17 0.17 0.15 0.15
Unit net cash costs 1.20 1.44 1.15 1.29
Depreciation, depletion and amortization
0.20 0.18 0.19 0.18
Noncash and other costs, net 0.02 0.02 0.01 0.01
Total unit costs 1.42 1.64 1.35 1.48
Revenue adjustments, primarily for pricing on prior period open sales 0.01 — (0.01) (0.01)
Other non-inventoriable costs (0.04) (0.03) (0.04) (0.04)
Gross profit per pound $ 2.32 $ 2.10 $ 2.28 $ 2.15
Copper sales (millions of recoverable pounds) 1,322 1,322 1,335 1,335
a. Includes impacts of $50 million ($0.04 per pound) associated with bonuses paid at Cerro Verde and El Abra pursuant to the new labor agreements.
Unit net cash costs (net of by-product credits) for our South
America mining operations increased to $1.20 per pound of copper
in 2011, compared with $1.15 per pound in 2010, primarily
reecting higher site production and delivery costs ($0.17 per
pound) associated with higher input costs and the impact of
bonuses paid pursuant to new labor agreements, partially oset by
higher gold, molybdenum and silver credits ($0.14 per pound).
Our South America mines have varying cost structures because
of dierences in ore grades and characteristics, processing costs,
by-products and other factors. During 2011, unit net cash costs for
the South America mines ranged from $0.93 per pound to
$1.67 per pound at the individual mines and averaged $1.20 per
pound. Assuming achievement of current sales volume and cost
estimates and average prices of $1,600 per ounce of gold and
$13 per pound of molybdenum in 2012, we estimate that average
unit net cash costs (net of by-product credits) for our South America
mining operations would approximate $1.41 per pound of copper
in 2012. Higher projected unit net cash costs in 2012, compared with
2011, primarily reect increases in input costs, including labor and
energy, lower by-product credits and slightly lower projected volumes.
2010 2009
By-Product Co-Product By-Product Co-Product
Method Method Method Method
Revenues, excluding adjustments $ 3.68 $ 3.68 $ 2.70 $ 2.70
Site production and delivery, before net noncash
and other costs shown below 1.21 1.14 1.08 1.02
By-product credits (0.21) — (0.11) —
Treatment charges 0.15 0.15 0.15 0.15
Unit net cash costs 1.15 1.29 1.12 1.17
Depreciation, depletion and amortization 0.19 0.18 0.20 0.19
Noncash and other costs, net 0.01 0.01 0.02 0.02
Total unit costs 1.35 1.48 1.34 1.38
Revenue adjustments, primarily for pricing on prior period open sales (0.01) (0.01) 0.08 0.08
Other non-inventoriable costs (0.04) (0.04) (0.02) (0.02)
Gross profit per pound $ 2.28 $ 2.15 $ 1.42 $ 1.38
Copper sales (millions of recoverable pounds) 1,335 1,335 1,394 1,394
Unit net cash costs (net of by-product credits) for our South
America mining operations increased to $1.15 per pound of copper
in 2010, compared with $1.12 per pound in 2009, primarily
reecting higher site production and delivery costs ($0.13 per
pound) associated with higher input costs and the impact of higher
copper prices on prot sharing programs. Partly osetting higher
site production and delivery costs were higher molybdenum, gold
and silver credits ($0.10 per pound) associated with higher
molybdenum volumes and prices and higher gold prices.
Indonesia Mining
Indonesia mining includes PT Freeport Indonesia’s Grasberg
minerals district. We own 90.64 percent of PT Freeport Indonesia,
including 9.36 percent through our wholly owned subsidiary,
PT Indocopper Investama.
PT Freeport Indonesia produces copper concentrates, which
contain signicant quantities of gold and silver. Substantially
all of PT Freeport Indonesia’s copper concentrates are sold under
MANAGEMENT’S DISCUSSION AND ANALYSIS