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44 FREEPORT-McMoRan COPPER & GOLD INC. 2003 Annual Report
Atlantic Copper Cathode Cash Production Cost
Per Pound Of Copper
Atlantic Copper cathode cash production cost per
pound of copper is a measure intended to provide
investors with information about the costs associated
with our smelting operations in Spain. Other smelting
companies present this measure, although our
measure may not be comparable to similarly titled
measures reported by other companies.
Below is a reconciliation of our smelting and
refining segment production costs reported in our
consolidated financial statements to the production
costs used to calculate our cathode cash production
cost per pound of copper (in thousands, except per
pound amounts):
MANAGEMENT’S DISCUSSION AND ANALYSIS
Years Ended December 31, 2003 2002 2001
Smelting and refining segment production costs reported in
consolidated financial statements
$892,681
$729,789 $ 738,618
Less:
Raw material purchase costs
(384,347)
(330,516) (355,241)
Production costs of wire rod and wire
(66,106)
(48,953) (52,738)
Production costs of anodes sold
(10,695)
(9,264) (10,522)
Currency hedging
9,625
(1,168) (3,016)
Other
(3,888)
(5,211) (5,295)
Credits:
Gold and silver revenues
(326,948)
(250,766) (227,820)
Acid and other by-product revenues
(20,566)
(17,256) (13,301)
Production costs used in calculating cathode cash production cost per pound
$89,756
$66,655 $ 70,685
Pounds of cathode produced
544,700
552,200 518,700
Cathode cash production cost per pound before hedging
$0.16
$0.12 $ 0.14
PT Smelting Cathode Cash Production Cost
Per Pound of Copper
PT Smelting cathode cash production cost per pound
of copper is a measure intended to provide investors
with information about the costs associated with our
25 percent-owned smelting operations in Indonesia.
Other smelting companies present this measure,
although our measure may not be comparable to
similarly titled measures reported by other companies.
Below is a reconciliation of the production costs
used to calculate PT Smelting’s cathode cash pro-
duction cost per pound of copper to our equity in
PT Smelting earnings (losses) reported in our consol-
idated financial statements (in thousands, except
per pound amounts):
Years Ended December 31, 2003 2002 2001
Production costs – PT Smelting (100%)
$55,787
$64,108 $ 59,943
Add: Gold and silver refining charges
6,200
4,263 5,724
Less: Acid and other by-product revenues
(10,665)
(5,275) (7,915)
Production cost of anodes sold
(3,339)
(4,148) (680)
Production cost used in calculating cathode cash production cost
$47,983
$58,948 $ 57,072
Pounds of cathode produced
492,400
424,100 468,400
Cathode cash production cost per pound
$0.10
$0.14 $ 0.12
RECONCILIATION TO AMOUNTS REPORTED
Production costs per above
$(55,787)
$(64,108) $ (59,943)
Other costs
(780,530)
(517,438) (599,502)
Revenue and other income
859,715
565,788 639,862
PT Smelting net income (loss)
23,398
(15,758) (19,583)
PT Freeport Indonesia’s 25% equity interest
5,850
(3,940) (4,896)
Amortization of excess investment cost
(241)
(241) (241)
Equity in PT Smelting earnings (losses) per consolidated financial
statements
$5,609
$(4,181) $ (5,137)