Freeport-McMoRan 2005 Annual Report Download - page 13

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a฀block฀cave฀operation,฀is฀one฀of฀the฀world’s฀largest฀underground฀
mines.฀We฀are฀also฀developing฀Big฀Gossan,฀a฀high-grade฀deposit฀
located฀near฀the฀existing฀milling฀complex,฀which฀is฀expected฀to฀be฀in฀
full฀production฀by฀2010.
Markets
We฀receive฀market฀prices฀for฀the฀copper,฀gold฀and฀silver฀contained฀
in฀our฀concentrates.฀During฀2005,฀our฀mining฀revenues฀were฀derived฀
approximately฀67฀percent฀from฀copper,฀32฀percent฀from฀gold฀and฀
1฀percent฀from฀silver.฀Copper฀and฀gold฀price฀realizations฀were฀
significantly฀higher฀in฀2005฀than฀in฀the฀previous฀year.฀The฀average฀
realized฀price฀for฀our฀copper฀was฀$1.85฀per฀pound,฀while฀the฀average฀
realized฀price฀for฀our฀gold฀was฀$456฀per฀ounce.฀Copper฀realizations฀
were฀up฀35฀percent฀during฀2005฀compared฀to฀2004฀and฀164฀percent฀
since฀December฀31,฀2002,฀while฀gold฀realizations฀were฀up฀11฀percent฀
during฀2005฀compared฀to฀2004฀and฀33฀percent฀since฀December฀31,฀
2002.฀In฀early฀2006,฀copper฀prices฀traded฀at฀all-time฀highs.฀
฀ Market฀fundamentals฀for฀both฀metals฀continue฀to฀be฀strong.฀Future฀
copper฀prices฀will฀be฀influenced฀by฀demand฀from฀China,฀economic฀
performance฀in฀the฀United฀States฀(U.S.)฀and฀other฀industrialized฀
countries,฀the฀timing฀of฀the฀development฀of฀new฀supplies฀of฀copper,฀
production฀levels฀of฀mines฀and฀copper฀smelters฀and฀by฀investment฀
activity,฀which฀has฀become฀increasingly฀significant฀in฀the฀movements฀
of฀near-term฀prices.฀The฀current฀underlying฀supply฀and฀demand฀
conditions฀in฀the฀physical฀copper฀markets฀are฀positive.฀Gold฀prices฀
reached฀a฀new฀25-year฀high฀above฀$570฀per฀ounce฀in฀early฀2006,฀
supported฀by฀increased฀investment฀demand฀for฀gold,฀ongoing฀
geopolitical฀tensions,฀a฀weak฀U.S.฀dollar,฀inflationary฀pressures,฀falling฀
production฀from฀older฀mines,฀limited฀development฀of฀new฀mines฀and฀
actions฀by฀gold฀producers฀to฀reduce฀hedge฀positions.
$320
$390
$460
$530
$600
gold price per ounce
Copper Gold
Copper and Gold Prices
copper price per pound
$0.85
$1.20
$1.55
$1.90
$2.25
00 01 02 03 04 05
Copper and gold concentrate is shipped
from the deepwater port at Amamapare to
smelters around the world.
11 | 2005 ANNUAL REPORT OPERATIONS OVERVIEW