Freeport-McMoRan 2011 Annual Report Download - page 113

Download and view the complete annual report

Please find page 113 of the 2011 Freeport-McMoRan annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2011 ANNUAL REPORT | 111
NOTE 18: Supplementary Mineral Reserve Information
(Unaudited)
Recoverable proven and probable reserves have been calculated as
of December31,2011, in accordance with Industry Guide 7 as
required by the Securities Exchange Act of 1934. FCX’s proven and
probable reserves may not be comparable to similar information
regarding mineral reserves disclosed in accordance with the
guidance in other countries. 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. e term “reserve,” as used in the
reserve data presented here, means that part of a mineral deposit
that can be economically and legally extracted or produced at the
time of the reserve determination. e term “proven reserves”
means reserves for which (i) quantity is computed from
dimensions revealed in outcrops, trenches, workings or drill holes;
(ii) grade and/or quality are computed from the results of detailed
sampling; and (iii) the sites for inspection, sampling and
measurements are spaced so closely and the geologic character is
suciently dened that size, shape, depth and mineral content of
reserves are well established. e 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. e degree of assurance, although lower than that for
proven reserves, is high enough to assume continuity between
points of observation.
FCX’s reserve estimates are based on the latest available geological
and geotechnical studies. FCX conducts ongoing studies of its ore
bodies to optimize economic values and to manage risk. FCX revises
its mine plans and estimates of proven and probable mineral
reserves as required in accordance with the latest available studies.
Estimated recoverable proven and probable reserves at
December31,2011, were determined using long-term average
prices of $2.00 per pound for copper, $750 per ounce for gold,
$10 per pound for molybdenum, $15 per ounce for silver and
$10 per pound for cobalt, consistent with year-end 2010. For the
three year period ended December31,2011, LME spot copper
prices averaged $3.25 per pound, London PM gold prices averaged
$1,245 per ounce and the weekly average price for molybdenum
quoted by Metals Week averaged $14.06 per pound. e recoverable
proven and probable reservespresented in the table below
represent the estimated metal quantities from which FCX expects
to be paid aer application of estimated metallurgical recovery
rates and smelter recovery rates, where applicable. Recoverable
reserves are that part of a mineral deposit that FCX estimates can
be economically and legally extracted or produced at the time of
the reserve determination.
Recoverable Proven and Probable Reserves
December 31, 2011
Copper
a
Gold Molybdenum
(billion pounds) (million ounces) (billion pounds)
North America 40.6 0.4 2.71
South America 39.1 1.3 0.71
Indonesia 31.6 32.2 —
Africa 8.4 — —
Consolidated basis
b
119.7 33.9 3.42
Net equity interest
c
96.1 30.6 3.09
a. Consolidated recoverable copper reserves include 3.1 billion pounds in leach stockpiles
and 1.3 billion pounds in mill stockpiles.
b. Consolidated basis reserves represent estimated metal quantities after reduction for joint
venture partner interests at the Morenci mine in North America and the Grasberg minerals
district in Indonesia. Excluded from the table above are FCX’s estimated recoverable
proven and probable reserves of 0.86 billion pounds of cobalt at Tenke Fungurume and
330.3 million ounces of silver in Indonesia, South America and North America.
c. Net equity interest reserves represent estimated consolidated basis metal quantities
further reduced for noncontrolling interest ownership. Excluded from the table above are
FCX’s estimated recoverable proven and probable reserves of 0.49 billion pounds of cobalt
at Tenke Fungurume and 272.1 million ounces of silver in Indonesia, South America and
North America.