Freeport-McMoRan 2004 Annual Report Download - page 80

Notes To Consolidated Financial Statements
Through฀its฀operating฀subsidiaries,฀FCX฀markets฀its฀
products฀worldwide฀primarily฀pursuant฀to฀the฀terms฀of฀long-
term฀contracts.฀As฀a฀percentage฀of฀consolidated฀revenues,฀
revenues฀under฀long-term฀contracts฀totaled฀approximately฀96฀
percent฀in฀2004฀and฀95฀percent฀in฀2003฀and฀2002.฀The฀only฀
customer฀under฀long-term฀contracts฀with฀over฀ten฀percent฀
of฀revenues฀in฀at฀least฀one฀of฀the฀past฀three฀years฀is฀
PT฀Smelting฀with฀29฀percent฀in฀2004,฀23฀percent฀in฀2003฀
and฀20฀percent฀in฀2002.
FCX฀revenues฀attributable฀to฀various฀countries฀based฀on฀
the฀location฀of฀the฀customer฀follow฀(in฀thousands):
฀2004฀ 2003฀ 2002
Indonesia฀(PT฀Smelting)฀ $฀ 696,022฀ $฀ 510,245฀ $฀ 391,071
Spain฀ ฀ ฀ ฀ 490,647฀ ฀ 372,791฀ ฀ 378,817
Japan฀ ฀ ฀ ฀ 414,386฀ ฀ 412,404฀ ฀ 342,899
Korea฀ ฀ ฀ ฀ 142,924฀ ฀ 69,134฀ ฀ 79,352
Switzerland฀ ฀ 64,145฀ ฀ 130,518฀ ฀ 146,062
Others฀฀ ฀ ฀ 563,742฀ ฀ 717,073฀ ฀ 572,261
฀ Total฀ ฀ $฀2,371,866฀ $฀2,212,165฀ $฀1,910,462
FCX฀revenues฀attributable฀to฀the฀products฀it฀produces฀follow฀(in฀thousands):
฀2004฀ 2003฀ 2002
Copper฀in฀concentratesa฀$฀ 996,331฀ $฀ 612,443฀ $฀ 599,358
Gold฀in฀concentrates฀ ฀ 516,554฀ ฀ 685,230฀ ฀ 546,048
Silver฀in฀concentrates฀ ฀ 17,091฀ ฀ 16,374฀ ฀ 14,740
Refined฀copper฀products฀ ฀ 716,959฀ ฀ 603,177฀ ฀ 532,769
Gold฀and฀silver฀in฀slimes฀ ฀ 124,383฀ ฀ 272,050฀ ฀ 209,136
Royalties฀฀ ฀ (43,498)฀ ฀ (26,472)฀ ฀ (24,532)
Sulphur฀and฀other฀ ฀ 44,046฀ ฀ 49,363฀ ฀ 32,943
฀ Total฀ ฀ $฀2,371,866฀ $฀2,212,165฀ $฀1,910,462
a.฀ Amounts฀are฀net฀of฀treatment฀and฀refining฀charges฀totaling฀$175.9฀million฀for฀2004,฀$179.1฀million฀for฀2003฀and฀$215.8฀million฀for฀2002.
Note 13. Supplementary Mineral Reserve
Information (Unaudited)
Proven฀and฀probable฀reserves฀were฀determined฀by฀the฀use฀of฀
mapping,฀drilling,฀sampling,฀assaying฀and฀evaluation฀methods฀
generally฀applied฀in฀the฀mining฀industry,฀as฀more฀fully฀
discussed฀below.฀The฀term฀“reserve,”฀as฀used฀in฀the฀reserve฀
data฀presented฀here,฀means฀that฀part฀of฀a฀mineral฀deposit฀
which฀can฀be฀economically฀and฀legally฀extracted฀or฀produced฀
at฀the฀time฀of฀the฀reserve฀determination.฀The฀term฀“proven฀
reserves”฀means฀reserves฀for฀which฀(a)฀quantity฀is฀computed฀
from฀dimensions฀revealed฀in฀outcrops,฀trenches,฀workings฀or฀
drill฀holes;฀(b)฀grade฀and/or฀quality฀are฀computed฀from฀the฀
result฀of฀detailed฀sampling;฀and฀(c)฀the฀sites฀for฀inspection,฀
sampling฀and฀measurements฀are฀spaced฀so฀closely฀and฀the฀
geologic฀character฀is฀sufficiently฀defined฀that฀size,฀shape,฀
depth฀and฀mineral฀content฀of฀reserves฀are฀well฀established.฀
The฀term฀“probable฀reserves”฀means฀reserves฀for฀which฀
quantity฀and฀grade฀are฀computed฀from฀information฀similar฀
to฀that฀used฀for฀proven฀reserves฀but฀the฀sites฀for฀sampling฀
are฀farther฀apart฀or฀are฀otherwise฀less฀adequately฀spaced.฀
The฀degree฀of฀assurance,฀although฀lower฀than฀that฀for฀proven฀
reserves,฀is฀high฀enough฀to฀assume฀continuity฀between฀
points฀of฀observation.
All฀of฀PT฀Freeport฀Indonesia’s฀current฀aggregate฀(including฀
Rio฀Tinto’s฀share)฀proven฀and฀probable฀reserves,฀shown฀below,฀
are฀located฀in฀Block฀A฀of฀PT฀Freeport฀Indonesia’s฀Contract฀
of฀Work.฀The฀initial฀term฀of฀the฀Contract฀of฀Work฀covering฀
Block฀A฀expires฀at฀the฀end฀of฀2021.฀PT฀Freeport฀Indonesia฀can฀
extend฀this฀term฀for฀two฀successive฀10-year฀periods,฀subject฀
to฀the฀approval฀of฀the฀Indonesian฀government,฀which฀cannot฀
be฀withheld฀or฀delayed฀unreasonably.฀PT฀Freeport฀Indonesia’s฀
reserve฀amounts฀reflect฀its฀estimates฀of฀the฀reserves฀that฀can฀
be฀recovered฀before฀the฀end฀of฀2041฀(the฀expiration฀of฀the฀two฀
10-year฀extensions).฀PT฀Freeport฀Indonesia’s฀current฀mine฀plan฀
has฀been฀developed฀and฀its฀operations฀are฀based฀on฀receiving฀
the฀two฀10-year฀extensions.฀As฀a฀result,฀PT฀Freeport฀Indonesia฀
does฀not฀anticipate฀the฀mining฀of฀all฀of฀its฀reserves฀prior฀to฀
the฀end฀of฀2021฀based฀on฀its฀current฀mine฀plan,฀and฀there฀can฀
be฀no฀assurance฀that฀the฀Indonesian฀government฀will฀approve฀
the฀extensions.฀Prior฀to฀the฀end฀of฀2021,฀under฀its฀current฀
mine฀plan฀PT฀Freeport฀Indonesia฀expects฀to฀mine฀approximately฀
47฀percent฀of฀aggregate฀proven฀and฀probable฀ore,฀representing฀
approximately฀55฀percent฀of฀its฀share฀of฀recoverable฀copper฀
reserves฀and฀approximately฀69฀percent฀of฀its฀share฀of฀
recoverable฀gold฀reserves.
78฀| FREEPORT-McMoRan COPPER & GOLD INC.