Freeport-McMoRan 2005 Annual Report Download - page 91

฀88฀|฀FREEPORT-McMoRan฀COPPER฀&฀GOLD฀INC.฀฀฀FINANCIAL฀&฀OPERATING฀INFORMATION฀88฀|฀FREEPORT-McMoRan฀COPPER฀&฀GOLD฀INC.฀฀฀FINANCIAL฀&฀OPERATING฀INFORMATION
฀ 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฀฀฀฀฀฀
97฀percent฀in฀2005,฀96฀percent฀in฀2004฀and฀95฀percent฀in฀2003.฀
The฀only฀customers฀under฀long-term฀contracts฀with฀over฀฀฀฀฀฀฀฀฀฀฀฀฀฀
10฀percent฀of฀revenues฀in฀at฀least฀one฀of฀the฀past฀three฀years฀is฀
PT฀Smelting฀with฀24฀percent฀in฀2005,฀29฀percent฀in฀2004฀฀฀฀฀฀฀฀฀
and฀23฀percent฀in฀2003฀and฀one฀customer฀at฀Atlantic฀Copper฀
with฀16฀percent฀in฀2005.
฀ FCX฀revenues฀attributable฀to฀various฀countries฀based฀on฀the฀
location฀of฀the฀customer฀follow฀(in฀thousands):
฀2005฀ 2004฀ 2003฀
Indonesia฀(PT฀Smelting)฀ $฀1,008,488฀ $฀ 696,022฀ $฀ 510,245
Japan฀ ฀ ฀ ฀ 805,066฀ ฀ 414,386฀ ฀ 412,404
Spain฀ ฀ ฀ ฀ 783,039฀ ฀ 490,647฀ ฀ 372,791
Korea฀ ฀ ฀ ฀ 289,464฀ ฀ 142,924฀ ฀ 69,134
India฀฀ ฀ ฀ ฀ 241,017฀ ฀ 70,874฀ ฀ 84,557
Switzerland฀ ฀ 219,074฀ ฀ 64,145฀ ฀ 130,518
Others฀ ฀ ฀ ฀ 832,970฀ ฀ 492,868฀ ฀ 632,516
฀ Total฀฀ ฀ $฀4,179,118฀ $฀2,371,866฀ $฀2,212,165
FCX฀revenues฀attributable฀to฀the฀products฀it฀produces฀follow฀
(in฀thousands):
฀2005฀ 2004฀ 2003฀
Copper฀in฀concentratesa฀$฀1,868,491฀ $฀ 996,331฀ $฀ 612,443
Gold฀in฀concentrates฀ ฀1,013,773฀ ฀ 516,554฀ ฀ 685,230
Silver฀in฀concentrates฀ ฀ 23,151฀ ฀ 17,091฀ ฀ 16,374
Refined฀copper฀products฀ ฀1,128,087฀ ฀ 716,959฀ ฀ 603,177
Gold฀and฀silver฀in฀slimes฀ ฀ 206,506฀ ฀ 124,383฀ ฀ 272,050
Royalties฀ ฀ ฀(103,726)฀ ฀ (43,498)฀ ฀ (26,472)
Sulphur฀and฀other฀ ฀ 42,836฀ ฀ 44,046฀ ฀ 49,363
฀ Total฀฀ ฀ $฀4,179,118฀ $฀2,371,866฀ $฀2,212,165
a.฀ Amounts฀are฀net฀of฀treatment฀and฀refining฀charges฀totaling฀$277.0฀million฀
for฀2005,฀$175.9฀million฀for฀2004฀and฀$179.1฀million฀for฀2003.
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.
฀ PT฀Freeport฀Indonesia’s฀reserve฀estimates฀are฀based฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
on฀the฀latest฀available฀geological฀and฀geotechnical฀studies.฀
PT฀Freeport฀Indonesia฀conducts฀ongoing฀studies฀of฀its฀฀฀฀฀฀฀฀฀฀฀฀
ore฀bodies฀to฀optimize฀economic฀values฀and฀to฀manage฀risk.฀
PT฀Freeport฀Indonesia฀revises฀its฀mine฀plans฀and฀฀฀฀฀฀฀฀฀
estimates฀of฀proven฀and฀probable฀mineral฀reserves฀as฀required฀
in฀accordance฀with฀the฀latest฀available฀studies.
฀ 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฀44฀percent฀of฀aggregate฀proven฀and฀probable฀
ore,฀representing฀approximately฀52฀percent฀of฀its฀share฀of฀
recoverable฀copper฀reserves฀and฀approximately฀65฀percent฀of฀
its฀share฀of฀recoverable฀gold฀reserves.
Notes to Consolidated Financial Statements