Freeport-McMoRan 2009 Annual Report Download - page 11

For 2010, FCX expects South America sales to approximate 1.3 billion pounds of copper and
100,000 ounces of gold. South America unit net cash costs, including by-product credits (gold and
molybdenum) averaged $1.12 per pound in 2009 and $1.14 per pound in 2008. South America
unit net cash costs were slightly lower in 2009 because of lower input costs, primarily for energy.
Assuming achievement of current sales estimates and estimates for commodity-based input
costs, FCX estimates that average unit net cash costs, including gold and molybdenum credits,
for its South America copper mines would approximate $1.20 per pound of copper in 2010.
FCX has resumed construction activities associated with the development of a large sulde
ore deposit at El Abra. The project, which was deferred in late 2008 as a result of market
conditions, will extend El Abra’s mine life by over 10 years. FCX has also commenced a
project to optimize throughput at the existing Cerro Verde concentrator, which is designed
to add 30 million pounds of additional copper production per year by increasing mill
throughput from 108,000 metric tons of ore per day to 120,000 metric tons of ore per day.
Indonesia
FCX operates the world’s largest single reserve of both copper and gold through its subsidiary,
PT Freeport Indonesia, in the Grasberg minerals district in Papua, Indonesia. For 2009,
consolidated sales from FCX’s Indonesia operations totaled 1.4 billion pounds of copper at
an average realized price of $2.65 per pound and 2.5 million ounces of gold at an average
realized price of $994 per ounce. For 2008, consolidated sales totaled 1.1 billion pounds of
copper at an average realized price of $2.36 per pound and 1.2 million ounces of gold at an
average realized price of $861 per ounce. Production and sales volumes were signicantly
higher in 2009 because of sequencing in mining areas with varying ore grades, which
resulted in mining higher grade sections of the Grasberg open pit during 2009. FCX expects
Indonesia sales to approximate 1.2 billion pounds of copper and 1.7 million ounces of gold
in 2010, as production transitions to a lower grade section of the Grasberg open pit.
PT Freeport Indonesia unit net cash costs, including gold and silver credits, averaged a
net credit of $0.49 per pound of copper in 2009, compared with a net cost of $0.96 per
pound in 2008. The lower unit net cash costs in 2009 primarily reected higher gold credits
resulting from higher gold sales volumes and prices, as well as signicantly higher copper
sales volumes and lower commodity-based input costs. Assuming achievement of current
2010 sales volumes estimates, average gold prices of $1,100 per ounce in 2010 and current
estimates for energy costs, currency exchange rates and other cost factors, FCX estimates
that average unit net costs for PT Freeport Indonesia would approximate $0.21 per pound
of copper in 2010. Unit net cash costs are expected to be higher in 2010 than the prior year
primarily because of lower projected sales volumes and higher commodity-based input costs.
PT Freeport Indonesia is pursuing several capital projects in the Grasberg minerals district,
including development of the large-scale, high-grade underground ore bodies located beneath
and adjacent to the Grasberg open pit. These projects include continued development of the
Common Infrastructure project, the Grasberg Block Cave and the Big Gossan underground
mines, and future development of the Deep Mill Level Zone underground mine.
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FREEPORT-McMoRan COPPER & GOLD INC.
2009 Annual Report