Freeport-McMoRan 2013 Annual Report Download - page 131

Download and view the complete annual report

Please find page 131 of the 2013 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 138

  • 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
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2013 ANNUAL REPORT | 129
Recoverable Proven and Probable Mineral Reserves
Estimated at December 31, 2013
Copper
a
Gold Molybdenum
(billion pounds) (million ounces) (billion pounds)
North America 36.2 0.4 2.55
South America 37.0 1.1 0.71
Indonesia 30.0 29.8 —
Africa 8.0 — —
Consolidated
b
111.2 31.3 3.26
Net equity interest
c
88.6 28.3 2.93
a. Consolidated recoverable copper reserves included 3.3 billion pounds in leach stockpiles
and 1.4 billion pounds in mill stockpiles.
b. Consolidated 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 0.87 billion pounds of cobalt at Tenke and 308.5 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 metal quantities further
reduced for noncontrolling interest ownership. Excluded from the table above were FCX’s
estimated recoverable proven and probable reserves of 0.48 billion pounds of cobalt at
Tenke and 252.9 million ounces of silver in Indonesia, South America and North America.
NOTE 20. SUPPLEMENTARY MINERAL RESERVE
INFORMATION (UNAUDITED)
Recoverable proven and probable reserves have been calculated
as of December 31, 2013, 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, 2013, were determined using long-term average
prices of $2.00 per pound for copper (consistent with the
long-term average copper price used since December 31, 2010),
$1,000 per ounce for gold and $10 per pound for molybdenum. For
the three-year period ended December 31, 2013, LME spot copper
prices averaged $3.64 per pound, London PM gold prices
averaged $1,550 per ounce and the weekly average price for
molybdenum quoted by Metals Week averaged $12.85 per pound.
The recoverable proven and probable reserves presented in the
following table 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.