Freeport-McMoRan 2004 Annual Report Download - page 5

ing฀mine฀in฀the฀Indonesian฀province฀of฀Papua.฀We฀have฀
significant฀exploration฀rights฀and฀data฀throughout฀the฀
mountainous฀area฀of฀the฀province฀and฀believe฀this฀will฀be฀
important฀to฀our฀Company฀in฀the฀future.
฀ Following฀our฀acquisition฀of฀Rio฀Tinto’s฀common฀shares฀
in฀Freeport-McMoRan฀Copper฀&฀Gold฀Inc.,฀R.฀Leigh฀Clifford,฀
Director฀and฀Chief฀Executive฀of฀Rio฀Tinto฀plc฀and฀Rio฀Tinto฀
Limited,฀and฀Oscar฀Y.฀L.฀Groeneveld,฀Chief฀Executive฀of฀the฀
Rio฀Tinto฀Copper฀Group฀and฀a฀director฀of฀Rio฀Tinto฀plc฀and฀
Rio฀Tinto฀Limited,฀resigned฀from฀our฀Board฀of฀Directors฀in฀
2004.฀We฀appreciate฀the฀many฀years฀of฀service฀and฀guidance฀
provided฀by฀Messrs.฀Clifford฀and฀Groeneveld฀during฀their฀
terms฀on฀our฀Board.฀Our฀Board฀of฀Directors฀has฀nominated฀
each฀of฀our฀Advisory฀Directors,฀Gabrielle฀K.฀McDonald฀and฀J.฀
Stapleton฀Roy,฀to฀stand฀for฀election฀at฀the฀Company’s฀2005฀
annual฀meeting฀of฀stockholders.
฀ We฀want฀to฀offer฀our฀deepest฀appreciation฀to฀our฀
employees฀and฀management฀team,฀whose฀hard฀work฀and฀
keen฀focus฀made฀2004฀a฀successful฀year฀of฀progress฀for฀our฀
Company,฀positioning฀us฀to฀continue฀to฀provide฀long-term฀
values฀for฀our฀shareholders.฀We฀also฀wish฀to฀express฀our฀
gratitude฀to฀our฀Board฀of฀Directors,฀which฀continues฀to฀฀
provide฀excellent฀guidance฀and฀counsel.฀Our฀employees,฀
management฀and฀Board฀of฀Directors฀have฀made฀possible฀
a฀future฀of฀strong฀operating฀and฀financial฀results฀for฀our฀
Company.฀Like฀the฀Grasberg฀ore฀body฀we฀mine,฀they฀are฀fine฀
examples฀of฀“Making฀the฀Grade.”
Respectfully฀yours,
near฀term,฀$78.2฀million฀in฀2005฀and฀an฀annual฀average฀of฀
approximately฀$104฀million฀for฀the฀next฀five฀years.฀We฀con-
tinue฀to฀explore฀alternatives฀to฀reduce฀debt฀in฀advance฀of฀
the฀required฀maturities.
฀ Our฀Board฀reinstated฀annual฀dividends฀on฀our฀common฀
stock฀in฀February฀2003฀at฀$0.36฀per฀share,฀after฀several฀
years฀when฀no฀dividends฀were฀paid.฀In฀October฀2003,฀the฀
regular฀annual฀common฀dividend฀was฀increased฀to฀$0.80฀
per฀share฀and฀again฀increased฀to฀$1.00฀per฀share฀in฀October฀
2004.฀In฀addition,฀our฀Board฀declared฀incremental฀special฀
dividends฀of฀$0.25฀per฀share฀paid฀in฀December฀2004฀and฀
$0.50฀per฀share฀to฀be฀paid฀in฀March฀2005.฀During฀2004,฀we฀
purchased฀3.4฀million฀shares฀of฀our฀common฀stock฀for฀$99.5฀
million฀under฀the฀20฀million฀share฀open฀market฀common฀
share฀purchase฀program฀authorized฀by฀our฀Board.฀During฀
March฀2004,฀we฀also฀purchased฀23.9฀million฀shares฀of฀our฀
common฀stock฀previously฀owned฀by฀our฀ongoing฀joint฀ven-
ture฀partner,฀Rio฀Tinto฀plc,฀for฀$881.9฀million.฀The฀purchase฀
was฀funded฀by฀the฀issuance฀of฀$1.1฀billion฀of฀5½%฀฀
convertible฀perpetual฀preferred฀stock.
฀ Entering฀2005฀with฀$552฀million฀of฀cash฀and฀an฀outlook฀
for฀strong฀operations,฀commodity฀prices฀and฀cash฀flows,฀we฀
are฀enthusiastic฀about฀the฀future฀prospects฀for฀our฀Company.฀฀
We฀are฀focused฀on฀executing฀our฀business฀strategy฀effec-
tively฀while฀pursuing฀a฀financial฀strategy฀of฀continuing฀to฀
reduce฀debt฀and฀enhance฀our฀balance฀sheet฀and฀returning฀
cash฀to฀shareholders฀through฀dividends฀and฀share฀purchases.
฀ Through฀our฀active฀exploration฀efforts฀in฀the฀immediate฀
vicinity฀of฀the฀Grasberg฀mine,฀we฀continue฀to฀add฀฀
significantly฀to฀our฀proven฀and฀probable฀reserves,฀extending฀
the฀productive฀life฀of฀our฀operations.฀Since฀its฀discovery฀in฀
1988,฀the฀Grasberg฀district฀has฀already฀produced฀16.1฀billion฀
pounds฀of฀copper฀and฀23.3฀million฀ounces฀of฀gold฀net฀to฀฀
PT฀Freeport฀Indonesia.฀As฀we฀enter฀2005,฀the฀district฀฀
contains฀proven฀and฀probable฀reserves฀sufficient฀to฀allow฀฀
us฀to฀mine฀for฀decades฀to฀come฀—฀more฀than฀40฀billion฀
pounds฀of฀copper฀and฀more฀than฀46฀million฀ounces฀of฀gold฀
net฀to฀PT฀Freeport฀Indonesia.฀
฀ We฀are฀enthusiastic฀about฀our฀future฀exploration฀oppor-
tunities฀outside฀the฀Grasberg฀district.฀After฀conducting฀
field฀exploration฀in฀the฀1990s,฀we฀suspended฀activities.฀
Conditions฀are฀improving฀and฀we฀look฀forward฀to฀exploring฀this฀
highly฀prospective฀area.฀The฀Grasberg฀is฀the฀only฀produc-
James R. Moffett
Chairman of the Board (left)
Richard C. Adkerson
President and
Chief Executive Officer (right)
James฀R.฀Moffett฀ Richard฀C.฀Adkerson
Chairman฀of฀the฀Board฀฀ President฀and
฀ ฀ ฀ Chief฀Executive฀Officer
March฀9,฀2005
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