Freeport-McMoRan 2012 Annual Report Download - page 110

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18: SUPPLEMENTARY MINERAL RESERVE
INFORMATION (UNAUDITED)
Recoverable proven and probable reserves have been calculated
as of December 31, 2012, 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. The 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.
The 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 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.
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, 2012, were determined using long-term average
prices of $2.00 per pound for copper, $750 per ounce for gold and
$10 per pound for molybdenum, consistent with the long-term
average prices used at year-end 2011 and 2010. For the three-year
period ended December 31, 2012, LME spot copper prices
averaged $3.67 per pound, London PM gold prices averaged
$1,480 per ounce and the weekly average price for molybdenum
quoted by Metals Week averaged $14.64 per pound.
The recoverable proven and probable reserves presented
in the table below represent the estimated metal quantities from
which FCX expects to be paid after 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, 2012
Copper
a
Gold Molybdenum
(billion pounds) (million ounces) (billion pounds)
North America 38.8 0.4 2.69
South America 38.8 1.2 0.73
Indonesia 31.0 30.9 —
Africa 7.9 — —
Consolidated basis
b
116.5 32.5 3.42
Net equity interest
c
93.2 29.4 3.08
a. Consolidated recoverable copper reserves included 2.9 billion pounds in leach stockpiles
and 1.4 billion pounds in mill stockpiles.
b. Consolidated basis reserves represented 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 were FCX’s estimated
recoverable proven and probable reserves of 0.84 billion pounds of cobalt at Tenke and
321.4 million ounces of silver in Indonesia, South America and North America, which were
determined using long-term average prices of $10 per pound for cobalt and $15 per
ounce for silver.
c. Net equity interest reserves represented estimated consolidated basis metal quantities
further reduced for noncontrolling interest ownership. Excluded from the table above
were FCX’s estimated recoverable proven and probable reserves of 0.47 billion pounds
of cobalt at Tenke and 264.2 million ounces of silver in Indonesia, South America and
North America.
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